Growth surpasses 2019 levels in a general election year
Image courtesy of Oxiquim
On August 18th, 2021, President Sebastián Piñera of Chile highlighted the country’s latest economic growth figures, as reported by the Central Bank in its latest country finances report. “The Chilean economy grew by 18.1% during the second quarter, to surpass the levels of activity that we had before the social unrest and the coronavirus pandemic,” he stated, adding that investment grew by 24.8% during the second quarter, with an inflow of foreign capital.
For years, Chile had been a bastion of stability in Latin America – a region characterized by political and social unrest. However, rising inequality sparked violent public riots in 2019 and 2020, which led to a referendum on Chile’s constitution, with an overwhelming majority voting “yes” to reform. To what extent, then, has Chile’s business climate been impacted by social protests and constitutional reform?
Werner Watznauer, president of the Chilean Chemical Industry Association (ASIQUIM), suggested that the 2019 protests follow a global trend that has been seen in countries such as the US, and underlined the improvements made by Chile in the previous 30 years in building infrastructure and training skilled professionals. “Importantly, we need to defend what we have established and built in Chile over the last 30 years, that is, a robust business climate that offers opportunities for workers, investors, and the Chilean economy as a whole,” he stated, noting that chemical industry workers want stability, and hope that presidential candidates for the 2021 general election can reflect this.
This sentiment was echoed by Claudio Gorichon, CEO, Grupo Reno S.A. (Reno), the Chilean chemical distributor that also has operations in Argentina and Peru: “In terms of Chile, there will be elections in November, and the candidates have to abandon their radical ideas if they want to win.”
Comparing the three countries in which Reno operates, Gorichon remarked that the open economic model and clear regulations in Chile and Peru create strong competition, in contrast with Argentina which carries more business risk, but is a larger market. Gorichon also commented that Peru’s new President, Pedro Castillo, has had to moderate his speech and take a more centrist stance since gaining power, illuding to the practical realities of running a country that has an established business culture.
Despite the challenges faced in the last two years, the Chilean chemical sector has performed well, according to ASIQUIM’s Watznauer, who highlighted the resurgence of the construction and copper mining industries in 2021, as well as consistently strong demand from the agriculture, food packaging and pulp and paper sectors throughout the pandemic.
Cecilia Pardo Pizarro, general manager of Oxiquim, the integrated Chilean chemical organization which manufactures wood panels and industrial resins, distributes chemical products and operates maritime terminals, revealed that company achieved its best ever results in 2020. “Demand in 2020, for some products, exceeded demand in 2019 because we sell chemicals that are used for sanitizing, such as sodium hypochlorite or ethyl alcohol,” explained Pizarro, noting that although demand for these products has not risen as sharply in 2021, it is still above 2019 levels.
Claudio Gorichon also mentioned that Reno has reached 2019 levels in 2021, having achieved record sales for disinfection, medical and cleaning products in 2020. He spoke of the company’s plans for growth in the coming years, pointing to the mining sector as an area of high potential, as well as expansion with Chile: “We are in the process of building a warehouse and a distribution plant with more than 10 hectares to be ready to operate in August 2022, with 60 tanks, 1,000 cubic meters of storage capacity and 20,000 tons of dry cargo.”
Improving the industry’s image
When asked what ASIQUIM’s main priorities are for the coming years, Werner Watznauer spoke of the importance of improving the reputation of the chemical industry in Chile through education. He gave the example of ASIQUIM’s role in teaching Chilean police how to handle chemical products in the case of an accident, and emphasized the need for community involvement. Elaborting, he added: “I often go to different cities within Chile and have seen the positive impact we have had in the region, creating wealth and employment opportunities. We have to be humble, listen to the local people, and always look to improve what we are doing and how we are working.”
Oxiquim’s Pizarro expanded on this topic, suggesting that the industry has a responsibility to show society its modern reality: “We believe we need to bring the industry closer to the ordinary citizen, who sometimes associates it as polluting or dangerous. Indeed, what we distribute is dangerous, but there is chemistry everywhere, it is vital for society, and the general public may not perceive this.”
As the 2021 general election campaign enters the home stretch, a wide open race presents some uncertainty. The hope, for Chile’s chemical industry, is that fiscal and regulatory stability will remain in spite of the social upheaval which has characterized the Andean nation in recent years.