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Chilean businesses worried about investments heading for Peru

Chilean Wood Corporation (Corma) and the Society for the Promotion of Manufacturing (Sofofa) showed their concern about the announcement made by the directory of Empresas CMPC, owned by Matte Group, that they will not build a paper plant in Chile due to high energy costs, transferring this investment to Peru, instead.

Corma’s president, Fernando Léniz, stated there are other internal problems in Chile besides the high electricity costs that are causing resentment in the business sector.

“Peru has a better labor environment and a better violence control. Chile is being affected by the idea that pressure groups can satisfy their demands through the illegality and violence”, said Léniz to the Chilean journal “El Mercurio”.

Andrés Concha, general secretary of Sofofa, has a similar opinion. He says that companies are considering several factors, such as stability and how the institutions work.

However, the president of the Confederation for Production and Commerce (CPC), Alfredo Ovalle had a different opinion. He ruled out that Chile had a business tendency to move its investment to other countries, such as Peru.

“We regret that Matte has taken this decision. We don’t think this is a tendency, but a reasonable decision especially when you have to think in long-term investments”, said Ovalle to the Chilean journal.

News source: ANDINA

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# Jet says :
10 May, 2008 [ 01:13 ]

This is actually quite common when countries open up their trade to eachother.  Business will go back and forth depending on economic conditions in each country.  I don't think Chile has anything to worry about there.

# it's all good says :
10 May, 2008 [ 06:50 ]

This is why I love free trade.  It will force governments to provide the proper infrastructure, safety and labor force to be competitive.  No hiding because companies can and will go across the border.

Fix your power problems Chile.  Peru fix your education.  Compete.

# CC says :
10 May, 2008 [ 11:54 ]

Please use your brains.

The reason they are going to Peru.
Cheap Labor

When you can pay Peruvians slave wages
for unskilled labor
why would you build a plant in Chile where
an educated populace demand a livable wage?

Case Closed

# Thanks says :
10 May, 2008 [ 15:16 ]

We'll take the jobs, and are happy to work.  Thanks Chile.  Keep them coming.  CC you can collect your livable unemployment check.

# sw33t says :
11 May, 2008 [ 08:05 ]

(When you can pay Peruvians slave wages for unskilled labor)

When there is more demand for labor, higher wages are paid. Chile has high wages because they have a consistently low unemployment. It is the law of supply and demand.

It looks like what destroyed Peru's economy decades ago is now affecting Chile, Ecuador, and Venezuela. I know of several major Ecuadorian companies that are also moving to Peru.

# Anonymous Dave says :
11 May, 2008 [ 09:53 ]

sw33t,

Peru's economy was destroyed by full employement and high wages??

# carl_ says :
11 May, 2008 [ 12:22 ]

Maybe Chileans entrepreneurs feel Peru like were at home. Lan, etc.

# sw33t says :
11 May, 2008 [ 13:03 ]

No silly. Peru's economy was destroyed by a socialist/Marxist Alvarado. Peru is finally recuperating but a few neighboring countries fell for their equivalent of Humala, and have plumetting economies as a result.

My family is from Ecuador and Correa is completely destabalizing the economy with threats of government consfiscations, increased crime, etc. Not to mention his ties to FARC and Chavez.

I have to hand it to Peruvians for realizing what was best for Peru. I'm a little jealous. Americans and Europeans are triping over themselves to invest in Peru.

# sw33t says :
11 May, 2008 [ 13:09 ]

This article explains a lot. It is a must read for those of us interested in Peru and Latin America.

http://www.ibdeditorials.com/IBDArticles.aspx?id=295226032195285