Chile: Development, Advantages and Opportunities

1. Chile: Development, Advantages and Opportunities

2. Chile and China, putting things in perspective Chile China Government of Chile| Ministry of Transportation and Telecommunications Source: IMF

3. Chile Overview

4. Chile, un país abierto al mundo Globally integrated economy • A country with an open economy: 22 Free Trade Agreements with 59 countries. • Turkey • Ecuador • Colombia • Australia • Peru • Cuba • Panama • Japan • India • P-4 • China • EFTA • Korea • United States • European Union • Central America • Mexico • Canada • MERCOSUR • Venezuela • Bolivia • Malaysia • Thailand • Hong Kong • Nicaragua • Vietnam Agreements In force Agreements signed but not yet in force Agreements under negotiation 63% of world population 90.5% of Chile´s export markets 86% of the global GDP Government of Chile| Ministry of Transportation and Telecommunications

5. Avoidance of Double Taxation agreements • Chile has entered into 25 ADTA with 25 countries. • Thailand • Malaysia • New Zealand • UnitedStates • Russia • Australia • Belgium • Denmark • Spain • France • Ireland • Poland • Portugal • United Kingdom • Sweden • Switzerland • Norway • Croatia • Canada • Colombia • Ecuador • Mexico • Peru • Argentina • Brazil • Paraguay • South Korea Agreements in force Agreements signed but not yet in force Agreements under negotiation Government of Chile| Ministry of Transportation and Telecommunications

6. Outstanding Business Environment Doing Business 2012 Competitiveness Yearbook 2012 Economic Freedom Index 2012 (7 out of 179 economies)* (39 out of 183 economies)* • Telecommunications in the Region Overview Chile leads Latin America. *Selected economies.

7. Latin America Overview / Services Penetration in the Region Mobile Penetration Q32011 (per 100 inhab.) Internet Users Penetration 2011 (per100 inhab) In Mobile Telephony Chile is ranked N°2 in the region Chile Ranked N°1 Internet user penetration ,mainly because the last 2 years 3G Mobile internet growing Mobile Broadband Penetration 2011 (per 100 inhab.) Pay TV Penetration Q32011 (per 100 inhab.) Chile growing during 2011 was 138% in Mobile Broadband In Pay TV Chile is ranked N°2 in terms of penetration Source: Subtel based on BNAmericas data Source: UIT

8. Latin America Telecommunications / Key aspects • The traffic still growing and heavily • The way how the world is connected We are here • The countries in the region are working • to have a South American Fiber Ring: • Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay & Venezuela. Source: BID Nov 2011 Government of Chile| Ministry of Transportation and Telecommunications

9. Telecommunications in Chile Overview

10. Telecommunications in Chile / Main Players Local Group (Almendral Holding): 2G, 3G and soon LTE network (already awarded) Provide a complete telecommunication solutions: Fix, Mobile, Enterprise, Datacenter, internet, Transport networks. Spanish Group (Telefonica Group): 2G, 3G and soon LTE network (already awarded) Provide a complete telecommunication solutions: Fix, Mobile, Enterprise, Datacenter, internet, Transport networks, TV. Mexican Group (America Movil): 2G, 3G and soon LTE network (already awarded) Provide a complete telecommunication solutions: Fix, Mobile, Enterprise, Datacenter, internet, Transport networks, TV. US Group (NII Holding): 3G Network just deployed. Provide Services focused in Enterprise market US Group (Liberty Group): 3G Network just deployed. Main Cable Operator, Provide triple play Services and now 4th play Services including mobile phone Government of Chile| Ministry of Transportation and Telecommunications

11. Telecommunications in Chile / Market Share Overview Mobile Fixed Pay TV Internet Source:: subtel Government of Chile| Ministry of Transportation and Telecommunications

12. Telecommunications in Chile / Sector Investment Telecomm GDP compared with Country GDP Investment by kind of Service in Telecomm Sector (Million USD currents) Source: Subtel Government of Chile| Ministry of Transportation and Telecommunications

13. Telecommunications in Chile / Some Figures 25% of penetration Services Penetration along different telecomm segment per 100 inhabitants Broadband Connections, Fixed & Mobile (2009– 2012) Pay TV Services growing and penetration Source: SUBTEL Government of Chile| Ministry of Transportation and Telecommunications

14. Telecommunications in Chile / SmartPhones Facebook In June 2012. The Smartphones sales exceed as the first time the regular phone sales ToMakecalls (Over 90%) ToTake pictures, Videos & SMS, listen to music (Over 80%) Source: GFK Consumer Chioces To Accessweb pages, send &receive mails(70%) To use Facebook, chat & download (60%) Common Usage of smartphones in Chile Source: OECD Source: Mobile Life Radiography ISUC

15. Telecommunications in Chile / Traffics and Contents engines • Alma| Astronomy Capital of the World, 68% of global astronomy infrastructures will be installed in Chile by 2018 with an investment of 6 billion USD • It´s a huge Content and traffic Generator • The First Google Datacenter in Latin America will be located in Chile • Apple will open a headquarter in Chile. • …. Chile is becoming a Technological Pole Government of Chile| Ministry of Transportation and Telecommunications

16. Telecommunications in Chile / Legal Framework Update (last 2 Years) • Infrastructure Operators • Fixed Mobile Convergence • Towers Law • Telephone portability • Technological Convergence – Digital TV (Japan-Brazil Norm) • Early Alert Systems • open a headquarter in Chile. • …. Chile is building a strong legal framework for Technological Pole Government of Chile| Ministry of Transportation and Telecommunications

17. Investment opportunities

18. China in Chile • Chinese investment • In Chile • Cooperation agreement between SUBTEL and the Chinese company Huawei: • The agreement was signed on June 26th 2012 • Based on it Huawei is committed to provide technological transference to SUBTEL in the field of the mobile telecommunications to allow SUBTEL staff can get the technical competences in last generation mobile networks. The agreement considers three specialization levels. Government of Chile| Ministry of Transportation and Telecommunications

19. China in Chile /New Opportunities

20. Chile, Investment Project in Transport

21. Railway sector

22. Railways Projects • Rancagua Express • Investment: US$287 million. • Transport capacity: 22 million of passengers per year. • Length: 90 kilometers Alameda Nos Rancagua Government of Chile| Ministry of Transportation and Telecommunications

23. Railways projects under study • Suburban Rail Alameda – Melipilla • Investment:US$650 million. • Transport capacity: 31 million of passengers per year. • Length: 61 kilometers. Government of Chile| Ministry of Transportation and Telecommunications

24. Railways projects under study • Suburban Rail Quinta Normal - Batuco • Investment: US$287 million • Transport capacity: 15 million of passangers per year • Length: 26 kilometers. Government of Chile| Ministry of Transportation and Telecommunications

25. Railways projects under study • Suburban Rail Coronel - Concepción • Investment: US$87 million • Transport capacity: 15 million of passangers per year • Length: 20 kilometers. Government of Chile| Ministry of Transportation and Telecommunications

26. Railways Projects • Tram in Las Condes, Antofagasta and Concepción • Investment: US$ 200 million each. • Transport capacity: 6000 passengers per hour. • Length: 9 kilometers. each Government of Chile| Ministry of Transportation and Telecommunications

27. Cableway projects under study • CablewayCiudadEmpresarial • Investment: US$55 million • Transport capacity: 10 million passangers per year • Length: 4,5 kilometers. Government of Chile| Ministry of Transportation and Telecommunications

28. Santiago’s Subway (Metro) • Investment • US$ 2.578 million • Line 3 • Extension: 22 km. and 8 stations • Connecting six districts of Santiago • Reducing travel time from 35 to 17 minutes. • Line 6 • Extension: 15,3 km. and 10 stations • Connecting seven districts of Santiago • Reducing travel time from 40 to 22 minutes. Government of Chile| Ministry of Transportation and Telecommunications

29. Maritime ports sector

30. The large – scale port/ Current situation • Chile has an open strategy to develop ports, • Private investors can develop ports freely. • At the same time the government grants concession of state own ports • Last year we granted 4 ports. 400 MMUSD investment commitments. • This will continue in the next years in many port cities of the country Government of Chile| Ministry of Transportation and Telecommunications

31. The large – scale port/ Current situation • The macro central region urgently needs an increased supply of ports, especially as it relates to container cargo. • San Antonio tendered successfully in 2011 a project to modernize its breakwater ('Port Central'), which will add, in its first two phases, 700 meters of quay, equivalent to around 1 MM TEU / year nameplate capacity. The current installed capacity in the region of Valparaíso is estimated between 2.3 to 2.5 MM TEU / year. • Meanwhile, Valparaiso is currently tendering its Terminal 2, which would add about 1 MM TEU / Total Investment 300-400 MMUSD. • With both projects, the idea is to ensure that the economic growth of the central macro maximizing the use of existing sheltered waters and maintaining high levels of competition and competitiveness that have characterized the ports of the Valparaíso Region since the beginning of the model concession. Government of Chile| Ministry of Transportation and Telecommunications

32. The large – scale port/ Alternatives to grow • Completed this cycle provision of new port infrastructure, sheltered waters in the Valparaiso region will be exhausted. We then face the future need to have new works to advancing port projects to meet the expected demand from the next decade onwards. • The MTT is working, with the port companies Valparaiso and San Antonio, in the technical analysis of alternative locations for new large-scale port infrastructure, the first phase is estimated should be incorporated into the system in the next decade. • This port development is more complex than the projects tendered so far, it must necessarily incorporate filler works well esplanades and create artificial shelter works. Thus, Chile is also preparing for the logistics platform entry to Latin America from the Pacific Ocean. Government of Chile| Ministry of Transportation and Telecommunications

33. Air Transport Sector

34. Air transport Policy Free market entry: air transport services, whether coastal or international business can be conducted by national or foreign Price Freedom. Free ownership and control Increase capacity on air terminals of many large cities to be built in the next 6 years. Toatl Investment 500-800 MMUSD Government of Chile| Ministry of Transportation and Telecommunications

35. Air transport Policy Very open market for passengers and cargo Freedom of prices Freddom on ownership and control and open skies. New airport terminal capacity in most of large cities to be built between 2014 and 2020 Total investment opportunity between 600 – 800 MMUSD • Why Chile Government of Chile| Ministry of Transportation and Telecommunications

36. Why to invest in Chile? Chile is the best evaluated economy in Latin America and, indeed, one of the best evaluated among emerging economies worldwide. Its sustained economic growth and social progress have been highlighted by different international organizations and, in 1994 it was recognize as member of the Asia Pacific Economic Cooperation and in 2010, it became the first South American country to join the Organisation for Economic Co-operation and Development (OECD). Government of Chile| Ministry of Transportation and Telecommunications

37. INVESTMENT MECHANISMS • Moreover, since came into force in 1974, most large foreign investors have chosen to use the law number 600 mechanism under which an investor signs a contract with the state of Chile for the transfer of capital or other forms of investment and receives a number of specific guarantees and rights: • Non discriminatory. • Non discretionary treatment. • Assure that all the people, regardless of their nationality, “be treated by the State and its bodies in economic matters without arbitrary discimination”. Government of Chile| Ministry of Transportation and Telecommunications

38. FDI inflows under D.L. 600 from China1974-2011 (US$94.7 million, 0.1%of the total FDI during the period) Government of Chile| Ministry of Transportation and Telecommunications Source: Foreign Investment Committee (www.foreigninvestment.cl).

39. What we can do for you P • Reduce costs of investingin Chile; • Provide relevant information; • Coordinate your efforts with other public organizations; • Offer specific investmentopportunities in public andprivate projects; and • Become your partner! P P P P Government of Chile| Ministry of Transportation and Telecommunications

40. Thanks DISCLAIMER: The information contained in this document is for the purposes of information only and the particular conditions of each specific potential project may vary from those set out here. The contents of this document should in no way be interpreted as a legally binding obligation of the Republic of Chile or any other state agency that participates in any way in the processes of administrative approval or of any other nature corresponding under Chilean law. This information in no way constitutes an authorization to start or exercise the economic activity potentially intended to be developed. The resulting agreements will be governed and interpreted exclusively according to the laws of the Republic of Chile, their related regulation and the national policies applicable to each particular case.