JAN. 13, 2020

Minister Palacios increases the urgency of the bill to modernize the Environmental Impact Assessment System as a signal to foreign investors

During his visit to the newly expanded beer plant owned by international company AB InBev Chile, Economy, Development and Tourism Minister Lucas Palacios made a series of announcements designed to boost foreign investment in Chile.

The first announcement was that greater urgency is being given to the Congressional passage of the bill to modernize the Environmental Impact Assessment System (SEIA), an initiative still in the first legislative stage in the Chamber of Deputies.

Minister Palacios highlighted the importance of international investment in Chile since “all countries that seek to be developed and want an integrated economy that incorporates people and provides work, need investment. Our country has been, is and will continue to be one that welcomes investment with open arms. Do you know why? Every US$10 million in investment generates around 900 new jobs.”

As an example, Minister Palacios cited beer company AB InBev, which is responsible in Chile for brands like Corona, Stella Artois, Budweiser, Cusqueña, Becker, Báltica, Leffe and Goose Island. The company has expanded its plant at an investment cost of US$130 million.

Built in 1991, the international company’s plant will now be able to triple its beer production in Chile to 330 million liters a year.

Using the plant as an example, the Economy Minister noted that “during this period of expansion, the company got in touch with 80 supplier companies with close to 4,500 employees.”

Speaking about the changes to the environmental institutional structure that are under debate, Minister Palacios said, “it is important to streamline processes so that investors have greater certainty from a legal point of view, while always defending and caring for the environment.”

Country Head at AB InBev Chile Luis Vives commented that “this expansion reflects our commitment to the local economy through expanding our robust brand portfolio and taking up the challenges presented by Chilean consumers. We are doing this while also ensuring that our production is sustainable and aligned with the highest energy efficiency and environmental management standards, enabling us to reduce our CO2 emissions and cut our consumption of water, electricity and gas. Today, all our efforts are concentrated on generating a positive impact on the community where we operate. We aim to contribute to our employees as well as to the municipality of Quilicura.”

The transnational company has also made a commitment to producing 100% of its beers using energy from non-conventional renewable sources by 2025, which would make it the company’s first South American subsidiary to implement that initiative.

 

Strengthen Sustainable Project Management and depreciation

The Minister also announced two complementary measures to boost foreign investment. The first is to strengthen the Economy Ministry’s Sustainable Project Management Office (Oficina de Gestión de Proyectos Sustentables, GPS) through “a joint strategy with the Foreign Affairs Ministry and the International Economic Relations Undersecretary to attract foreign investment.”

The second is to incorporate measures like instantaneous depreciation, which is currently being debated as part of the proposed Tax Modernization bill. However, he explained that “the percentage in the bill is 50%, a figure they plan to increase, but the final figure has yet to be defined.”

He noted that nonetheless 50% instantaneous depreciation is “quite significant, representing a tax cost of about US$700 million.” It therefore “means less tax revenue and so we need to ensure a balance is maintained.”