Although the southern country has first-class technological infrastructure such as the Humboldt cable and an optimal fiber optic network, the absence of a legal framework harms information technology exports and the formation of human capital.
With an advanced infrastructure and sectors that are friendly to the adoption of artificial intelligence, Chile is positioned as one of the most digitalized countries in Latin America. The Latin American AI Index by ECLAC and CENIA states that the southern country contains all the key enabling factors that the industry demands and high levels of connectivity that facilitate technological development.
However, we cannot speak of an absolute success story. In terms of competitiveness, Chile lags behind other economies in the region. For example, exports of information and communication technologies (ICTs) have grown by only 5.3% in the last 20 years, according to InvestChile. In addition, the southern country ranks sixth in digital services exports in the region, far behind Argentina and Brazil.
Both countries have broad regulations on different areas of the digital economy. For example, Brazil introduced the Marco Civil de Internet in 2014, which imposes rights and duties in the use of the Internet, including neutrality and privacy. While Argentina has established measures such as the Tax PAIS, which taxes digital services contracted abroad at 8% and a digital VAT of 21% for foreign platforms.
But according to Rafael Rizzo, Country Manager of Globant in Chile, the key that Argentina took to promote ICTs was the approval of the Law for the Promotion of the Software Industry in 2004. This initiative created the Trust Fund for the Promotion of the Software Industry (FONSOFT), which grants state subsidies for the completion of careers in the technology sector, as well as the generation of new ventures.
Later, in 2019, the project evolved into the Knowledge Economy Law. This includes changes such as a reduction in Income Tax, depending on the size of the company, which encourages the hiring of workers. The law also requires beneficiary companies to allocate a percentage of their turnover to employee training or investment in research and development.
“There are estimates from consulting firms and companies that are dedicated to producing market reports regarding human capital in the ICT sector and the demand for these talents in the world is well known. This means that the need to receive services from countries exists. So, in Chile we should consider finding out how to make that leap and provide these services on a global level. The country has the capabilities and the infrastructure, but it needs talent and to be competitive,” Rizzo told AméricaEconomía .
For Francisco Guzmán, president of the Chilean Association of Information Technology Companies (ACTI) and manager of Claro Empresas, the absence of a legal framework is also the Achilles heel for the technology sector in Chile. Although the country has great technological infrastructure such as the Humboldt cable and a solid fiber optic network, there is no regulatory framework that encourages investment and promotes exports of knowledge-based services.
According to Guzmán, Argentina's Knowledge Economy Law was very effective in attracting foreign investment, generating employment and increasing exports. “Chile could adopt a similar approach, integrating tax benefits, incentives for MSMEs and a strong commitment to training digital talent. In addition, it is crucial to establish monitoring mechanisms to ensure that companies that receive these incentives actively contribute to the development of the digital economy,” Guzmán told AméricaEconomía.
For his part, Rizzo believes that a digital economy law in Chile should seek collaboration between multinational ICT companies and training centres to train future professionals in the required profiles. In parallel, the Country Manager points out that if Chile wants to develop a competitive technological sector at an international level, the country must have predictable scenarios.
According to this view, understanding that the digital economy is important for Chile would make companies decide to establish themselves in the country and those that are already established would bet on growth and talent development.
“The advantage of this type of industry is that by training increasingly more qualified professionals, it impacts the rest of the industries. This allows us to have professionals who know how to use and implement technology, not only for the companies where they work, but for others where they could potentially rotate,” adds Rizzo.
Meanwhile, Guzmán says that ACTI has promoted specific projects such as the National Data Center Plan and worked together with universities and technical training centers to align the educational offer with the needs of the sector. In turn, the Association's working groups have addressed challenges such as cybersecurity and digital inclusion.
However, perhaps the most important effort is to establish the Digital Economy Law as a priority on the public agenda. “We are collaborating with the Ministries of Finance and Science, Technology and Knowledge to lay the foundations for a regulatory framework that encourages investment in technology, promotes exports of digital services and facilitates the development of specialized talent,” says Guzmán.
The Association's spokesperson adds that the Artificial Intelligence Law, currently under discussion, should be approved as a complement. According to his view, both laws will establish clear guidelines to guarantee a more "ethical, safe and transparent" use of technology in the southern country.
At the same time, Guzmán recognizes that AI must also enjoy incentives for its adoption in companies. These include tax benefits for innovation projects, facilities for small and medium-sized companies that wish to incorporate these tools, and financing mechanisms that promote research in the area. Could Chile become the new hub for information technologies in Latin America?
