Faster permitting seen as key to attract infra investment to Chile

Private investment is key to develop modern infrastructure, but long review times and slow policymaking are hindering Chile's progress, according to former president Eduardo Frei Ruiz-Tagle.

“Works the country needs won’t happen if they're not carried out by the private sector in combination with the public sector,” Frei (pictured), who is currently head of infrastructure think tank CPI, told the Chile 2050 seminar hosted by Pontificia Universidad de Chile.

Frei praised the concessions system, which saw a major boost during his administration between 1994 and 2000. But he said the system was currently under-utilized, especially when reservoirs, prisons, ports, rails and hospitals are being planned.

He highlighted that the system is being used well for airports, however, as terminals were built in a timely manner and tenders launched swiftly. “If we had done with prisons or hospitals what we did with airport capacity, we would have solved the problem,” he added.

Frei said 75% of Chile’s economy will remain tied to external trade, so it is important to increase road, port and rail capacity, but investment is far below the 3.6% of GDP industrialized countries spend per year. 

Excessive permitting, even in early stages, “is killing us,” he said, adding that policy remedies to the problem are also taking too long. 

The government acknowledged the problem and is studying options to shorten review times, while maintaining high social and environmental standards. 

At a recent seminar, sector players suggested launching infrastructure concession tenders only after a positive environmental qualification (RCA) is obtained and not leave the task to concessionaires after the contract is awarded.

On the sidelines of the Chile 2050 event, former finance minister Felipe Larraín told BNamericas review delays could be addressed without involving congress. 

“An important part of this can be done through the executive. And this is not about lowering standards, but making the process more expedient. Why does it take four or five months to review a project when it can be done much faster? That doesn’t require legislation,” he said.

Larraín, who served 2010-14 and 2018-19, said all previous governments tried dealing with permit bureaucracy, but the issue has become more urgent now in the face of sluggish growth and lacking investments. 

He said the number of public entities involved was contributing to investment bottlenecks. “For large projects, all of this is a nightmare,” he said, adding that sometimes a decade goes by before works start.