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Chile Infrastructure Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: April 2008 Product Code: R302-3084 Description Chile’s infrastructure is modern and reliable and continues to improve due to government concessions.Though the industry is small and fragmented, with over 3,500 players and few local contractors that canhandle major civil engineering projects, the industry has expanded rapidly over the last 10 years and hasbeen sustained by heavy investment in infrastructure projects. The construction industry is estimated tohave contributed an estimated 9.68% to the nation’s GDP in 2007, at a total industry value ofUS$15.45bn. BMI forecasts that Chile’s construction industry value will rise by an annual average of 3.05% during2008-2012, from US$16.40bn in 2008 to US$16.89bn in 2012. Apart from a handful of major schemes,private-sector commercial construction remains subdued, although residential construction is showingsigns of picking up. Employment within the industry will grow 2.71% over the next five years to reach540,660 by 2012. The mining industry, in particular, is expected to undertake several new investmentprojects. Meanwhile, the retail sector also has several new investments in the pipeline, mainly theconstruction of new shopping malls and supermarkets in provincial centres. Construction demand in theform of housing units is also expected to drive the growth in the industry where more than 500,000 unitsare planned to be built by 2010. One of the key problems facing the Chilean economy is lack of electricity generation. Chilean copperexports account for about one third of total world copper production, and the country has been strugglingto keep up with the electricity production needed to fuel its booming mining sector. In recent monthselectricity supply problems have been further exacerbated by falling water levels in the nation’s reservoirsand by the closure of a major generating plant in Region V. The government has recently announced aseries of measures to deal with the problem, such as a two-week extension of daylight savings time, andcalled on electricity providers to reduce voltage by 10%, but it has also moved its focus to increasing thenation’s power generating capacity, and in February 2008 announced its endorsement of the controversialHidroAysen dam project. Chile is also vulnerable to rising oil prices and depends on neighboringArgentina for gas supplies, which in recent years, have been unreliable due to the Argentine natural gascrisis. Chile’s government also envisages US$3.5bn worth of infrastructural development over 2006-2008 underthe build-operate-transfer (BOT) schemes. The BOT was introduced by the government as a means offinancing major infrastructure requirements and has led to an influx of foreign contractors andopportunities for international firms; most international construction players operating in Chile are fromthe US, Spain, Argentina and Brazil. Table of Contents
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