The recent report from the World Bank on ease of doing business states that Chile is the best country to do business in South America. The tiny nation prone to earthquakes has been ranked 48th on the global index, which rates 189 nations by the ease in which firms can operate there.
In Latin America, Chile is second only to Mexico, ranked 38th in the report. Analysts say Chile’s ranking is not surprising at all, given the country has had a sustained growth rate of 4.6 percent in the last 20 years.
But there was a possibility of the country dropping in the ranking if it had not established insolvency courts last year. Not only did it set up insolvency courts, but it also simplified provisions on liquidation and reorganization of firms, introducing provisions to facilitate the continuation of the debtor’s business during insolvency.
Every Latin American country does have bankruptcy laws but Chile’s is most modern, said the bank, according to Spanish papers. Establishing a public office responsible for the general administration of insolvency proceedings and creating specialized insolvency courts have certainly helped the country gain a lot of scores.
Starting a business was made easier in Chile when it created an online system for business registration. It takes just seven procedures and five-and-a-half days to start a business in Chile, the World Bank noted in its previous report on doing business.
Chile still has room for improvement, stated DF Santiago Croci, regional specialist for the World Bank, in an interview with Diario Financiero. For example, it takes seven procedures to start a business in Chile, but OECD average is 4.7.
The lender stated in its report that Chile made paying taxes more costly for companies by increasing the corporate income tax rate. And obtaining loans is not very easy in this South American country. Moreover, the World Bank believes Chile has to reform its judicial process and introduce new alternative mechanisms to resolve disputes.
Chile’s key strengths are its efficient government, strong institutions and low levels of corruption. It has solid macroeconomic stability, with well-functioning markets and high levels of domestic competition and openness to foreign trade.