The pessimistic climate in Chile resulting from the lack of confidence in institutions due to cases of political corruption and business collusion, along with the economic slowdown, seems to be spreading to the once dynamic infrastructure concessions industry.
The pioneering Chilean system of public-private partnerships (PPPs), which allowed the country to overcome its huge deficit in transport infrastructure in the early 1990s and attracted investment of some US$1.8 billion in 2004, has declined to the extent that no more than US$600 million was invested in 2015.
The reforms proposed last year by the government of President Michelle Bachelet to create a new institutional framework for a new generation of PPPs and an infrastructure fund with the dual aim of ensuring funding and avoiding the discontinuity of investment plans between one government and the next, have still not materialized.
Together, these factors are making Chile less attractive compared with neighbors in the region that in recent years have taken large strides in developing PPP institutions, especially Peru, Colombia, Mexico and Brazil.
The results are there to seen. In the infrastructure quality index of the Global Competitiveness Report of the World Economic Forum (WEF) Chile fell 24 positions between 2010 and 2015, coming 48th among 140 nations. Moreover, in highway infrastructure, which has seen most of the investment though PPPs, Chile fell from 12th to 35th in the same timeframe.
The still poor quality of Chilean railway infrastructure led to the country coming 79th in the latest WEF ranking. In airports, on the other hand, Chile made significant progress in a year, rising to 36th (from 45th in 2014), while in ports the country remains among the top 35.
These indicators show that the infrastructure deficit in Chile is still very large and it is urgent to reduce it. According to the Infraestructura Crítica para el Desarrollo (Critical Infrastructure for Development, ICD) study conducted by the Chilean chamber of construction (CChC), in the transport sector alone, which is the focus of the report, the country needs investment of at least US$84.4 billion by 2025.