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Chile and Hong Kong Sign Bi-lateral Investment Deal

Chile and Hong Kong signed on the side-lines of the recent Asia-Pacific Economic Co-operation summit in Peru a bi-lateral investment agreement negotiated within the framework of their free trade agreement. The General Directorate for International Economic Relations (DIRECON) indicated that Chile is the first Latin American nation with a comprehensive trade agreement with Hong Kong that provides facilities and benefits in the areas of investment and market access for goods and services. Among other objectives, the agreement incorporates disciplines regarding non-discrimination among investors, expropriation and treatment of investments, ensuring a minimum standard of treatment in accordance with customary international standards.

Chilean officials believe that once the investment agreement enters into force it will protect current investments and promote additional projects. DIRECON Director General Paulina Nazal highlighted at the signing ceremony Hong Kong’s status as one of the world’s most importance financial centres, adding that the Chilean government hopes the agreement will stimulate investment flows from Hong Kong into Chile.

Investment links between Chile and Hong Kong remain relatively modest despite efforts to create a more favourable bi-lateral investment climate. Statistics from Chile’s Central Bank show that Hong Kong’s investment stock stood at a sizable US$1,414 million in 2014 and investment flows were US$854 million during 2009-2014, including inflows of US$198 million in 2013 and US$217 million in 2014. Nevertheless, Hong Kong accounted for only 0.7 percent of total investment flows into Chile during 2009-2014, which stood at US$121,933 million. The United States ranked first with 20.4 percent of total investment flows during that period (US$24,895 million) and Japan was the largest Asian investor in Chile during 2009-2014 with 3.8 percent of the total, or US$4,656 million.

In terms of investment stock as of 2014, Hong Kong held a 0.6 percent share. The United States ranked first with a 15.9 percent share (US$35,813 million), followed by the Netherlands with a 10.4 percent share (US$23,436 million) and Spain with an 8.7 percent share (US$19,638 million). Europe as a whole accounted for 27.8 percent or US$62,383 million of the entire FDI stock in Chile as of 2014, while Japan held a 2.2 percent share or US$4,907 million.

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