Chile now a more attractive alternative for aquaculture

The chief executives of the main aquaculture companies are right in assuming that the new "salmon tax" announced by the Norwegian government will become a gift for countries such as Chile or Canada.

This assumption is especially supported by the fact that Chile is again showing an increasingly healthy behaviour for investment projects in terms of political and legal stability.

Perhaps the most relevant event was the rejection of the proposal for a new Chilean constitution. It was a project that, processed since 2021 by an ad-hoc constitutional body, seriously threatened the aquaculture sector, given that, among many other announcements, it not only attributed a set of rights to the indigenous people, to the extreme of considering them as "nations" − thereby indirectly erasing the principle of equality before the law − but also conferred rights to "sentient animals". Were salmon sentient animals? If they were, how could the right to life of a salmon be reconciled with the property rights of an aquaculture company whose business was to process it?

Reverse gear for government

While the rejection of the constitutional project was good news for the business world and for the aquaculture sector, the magnitude of the rejection was even better, with 61.86% of the Chilean citizens who voted in the mandatory ballot rejecting the project.

This created a monumental impact in the political sector and in the government of President Gabriel Boric, who publicly and decisively supported the new constitutional text. They knew that they did not have a majority in Congress to push forward their reforms if the new constitution was rejected. Therefore, it was of vital importance that the constitutional proposal be accepted.

The government had already been affected by galloping inflation as a result of the exceptionally expansive spending policies promoted during the Covid pandemic (which would translate into lower consumption, higher unemployment and an increasingly devalued currency). And after concentrating almost entirely on supporting the constitutional proposal, it consequently saw its approval rating fall sharply (from 39% to 26%). Few governments have reached this level of disapproval so rapidly in Chilean political history.

At the same time, the dissident political forces of the centre that opposed the new constitution capitalised on the result with new political parties − today in formation − under the banner of a renewed good sense against extremes. It’s a stance that has garnered significant popular support, according to the main polls. In other words, it’s another powerful incentive for moderation in the public debate.

All the above has led Gabriel Boric's government to change its tone and strategy: it has promoted a new pro-growth agenda, returned its attention to the day-to-day contingency, given greater prominence to its Minister of Finance, Mario Marcel, and has moderated not only the rhetoric, but also several of the public policies that promised greater transformation (and instability).

Moderation and prudence

However, and beyond the governmental contingencies, the magnitude of the rejection has been perceived in the political world and by the main analysts as a transversal sign of moderation and prudence. Although the constitutional debate continues, with much less vigour than before, the discussion has focused on how to promote a constituent process that is not as radical or re-foundational as the previous one, by means of clear limits or borders.

Undoubtedly, this is a new political scenario with which Chilean and foreign investors will enjoy greater legal certainty. These new conditions, which are clearly more favourable for investment projects, explain, among other factors, the notable increase in foreign direct investment in Chile this year, which as of this month already exceeds by 12% the total amount invested last year (as of this date it has already exceeded US $17,133 million, according to Central Bank of Chile data).

This is a new scenario that Norwegian companies will surely take advantage of, and even more so if the Norwegian government’s announced “resource tax" is implemented. It will be interesting to see how much of the amounts committed to stalled investment projects in Norway will be redirected or transferred to Chile over the next year.