Economy ministry outlines reforms to boost innovation

- Thursday, May 26, 2011

Economy ministry outlines reforms to boost innovation

Chile's economy ministry will send to congress in the next 12 months a series of bills and reforms to boost innovation, including eliminating a 15% tax on software imports, reforming bankruptcy laws, allowing for the creation of companies online and providing benefits to hi-tech companies that train local professionals, economy minister Juan Andrés Fontaine told BNamericas.

Speaking on the sidelines of the Council of the Americas Latin American Cities Conference in capital Santiago on Thursday, Fontaine said state development organization Corfo has been providing subsidies for foreign hi-tech companies that invest in Chile and impact the local economy through training in technology and English language, among other areas.

Such companies invested US$140mn in the country last year and are expected to invest US$150mn in 2011.

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"When these companies spread knowledge in the Chilean economy, they receive support from Corfo. We are now applying that initiative to local companies," Fontaine said, adding that the proposal would go to the comptroller in the next few days.

Speaking at the conference, Fontaine said Chile was experiencing the perfect moment for entrepreneurship with its stable political and financial institutions, combined with the country's strong recovery from the global crisis when compared to more developed regions.

Chile's economy grew 9.8% in the first quarter of 2011 compared to the quake-hit period a year ago, the biggest year-on-year expansion in 15 years.

To encourage business productivity, the government introduced a reform in January this year that cuts by half the amount of paperwork needed to start up a company. Now the government is proposing a reform that will allow companies to be created online using a digital signature.

Recently, the economy ministry created an internal office that will carry out surveys with local businessmen with the idea of rooting out the principal obstacles to doing business in Chile. Already, based on feedback, the ministry has come up with three lines of action to incorporate into legal reform.

The first is to increase the efficiency of the state in granting concessions licenses. For example, aquaculture projects currently require 4-7 years to obtain a concessions license. This will require improving access to state assets such as coastal real estate.

Second is a plan to improve logistical efficiency and allowing more third parties to operate at ports and other entrance points to the country.

And third is the creation of an innovation fund especially oriented to Chilean technology. This line of action also implies eliminating the current 15% tax on software imports.