‘Politically stable, economically strong & open to innovation’: Chile positions itself as LATAM's food tech hub

By Niamh Michail

- Last updated on GMT

Chile is on a drive to increase investment and innovation by offering tax breaks for research and development (R&D) in any sector. “Chile is the natural laboratory for companies who want to see how the market responds to a product," says InvestChile

Chile is one of the largest fruit exporters in the world, sending more than 2.6 million tons of fruit to more than 100 countries across the globe each year.

Its 4,300-km coastline makes it the longest country in the world and means it has longer growing seasons as harvesting begins in the north and continues southwards, according to the trade association Fruits from Chile.

Cristian Sagal © InvestChile

However, the country is keen to develop its manufacturing sector.

“We are doing many efforts to pass from being a raw material supplier to add value to our local products by adding technology to our processes,” ​Cristián Sagal, investment promotion officer at InvestChile, the promotion agency of the Chilean government for foreign direct investment.

“This is one of the most important changes we are promoting. We want to produce added-value products and for this, the government supports R&D activities in the country.”

R&D tax breaks

To this end, the government offers tax incentives for R&D activities, for instance, to encourage companies to invest, Sagal said. These are accessible to any company, of any size or industrial sector, he added.

The agency also helps foreign companies prospect by advising them on issues such as labor cost, regulatory compliance, and has worked with food manufacturers and suppliers such as Beneo, Ferrero, Nestlé, Diana Food, and Naturex.

“Chile is the most stable country in Latin America, both politically and economically,” ​Sagal told FoodNavigator-LATAM.

We do not make any kind of discrimination between national and international companies, so the incentives are the same; a stable and competitive economy open to 86,3% of the world’s GDP [through] free trade agreements,” ​he added.

Chile has 26 free trade agreements, reaching 64.1% of the world’s consumers.

According to InvestChile’s own figures, foreign direct investment in the country nearly doubled between 2017 and 2018, increasing from USD $7.7 billion to USD $14.1bn. It put this down to its increased activity in promoting investment.

Between 2017 and 2018, its food exports increased by 13%.

​A natural lab for testing innovation’

chile on globe, Harvepino
© GettyImages/Harvepino

The agency says Chile is the Latin-American hub for developing new technologies.

“It is the natural laboratory for companies who would like to see how the market responds to a certain product or service.”

Asked to give an example of a rising star in Chile’s food tech industry, Sagal pointed to The Not Company.

“[They have] a very innovative model which uses artificial intelligence to create plant-based healthy products. These products are starting to be well-known in Latin America and we hope to see them soon in the rest of the world.”

In fact, InvestChile was so impressed with the plant-based start-up, it invited founder and CEO Matías Muchnick to take part in the inaugural International Investment Forum it organized five years ago.  

“Chilean entrepreneurs have the knowledge and talent to create competitive and innovative companies; we have no doubt about it. Chile's most important attribute is the talent and dedication of the people.”

'In Chile, you can create a company in one day'

According to Sagal, the relative lack of red tape makes things easy for Chilean entrepreneurs who can set up small companies in one day.

“The whole process can be done online avoiding bureaucracy. The tax system is very simple for foreign companies who would like to settle in the country [as it] is very similar to what you will find in Europe or America. This is one of the advantages Chile represents for foreign direct investment.”

The government also launched the public start-up accelerator Startup Chile in 2010 for “high-potential entrepreneurs”.

Collectively, its start-ups have raised US$997 million in capital, 46% of which came from public funds and 54% from private sources.

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