Pinera Says Chile to Be Developed Economy, Eliminate Poverty Within Decade
Chile will eliminate poverty and become a developed country within a decade, President Sebastian Pinera said in his first state-of-the-nation address.
Pinera set out plans for recovering from, and moving beyond, February’s devastating earthquake in the speech to congress today in the coastal city of Valparaiso.
The 60-year-old billionaire promised to increase average income per capita to more than $22,000 by the end of the decade from $14,000 now by improving education and labor laws, creating jobs and guaranteeing a minimum income for families.
“We have to recover lost time and set Chile once again on the path to solid and sustainable progress,” he said. “Our target of growing at 6 percent a year will allow us to achieve development in eight years, before the end of this decade, beating the level of per capita income of southern European countries” such as Portugal.
Chile’s economy is on course to grow at an average of 4.9 percent in the five years through 2014, according to International Monetary Fund estimates, racking up income per capita of more than $19,000 per capita by 2015.
Pinera campaigned on a pledge to spur 6 percent annual economic growth, create 1 million jobs and defeat crime and poverty. His Jan. 17 election victory unseated the coalition that had governed Chile for two decades, the first time since 1970 that a Chilean government lost an election.
Damages of $30 Billion
He took office March 11 during the aftershocks of the world’s biggest earthquake in a century. The quake’s estimated $30 billion in damages and losses have dominated his government’s agenda in the last two months.
The magnitude 8.8 earthquake and ensuing tsunami wreaked havoc across a 700-kilometer swath of central Chile, including Concepcion, the nation’s second-largest city responsible for 17 percent of gross domestic product. More than 500 people died and 800,000 were left homeless, Pinera said today. The government and charities have built 50,000 emergency homes, he said.
About 2 million of Chile’s 17 million people suffered damage to homes or businesses, most in the nation’s poorest regions. The temblor toppled hospitals and bridges, spilt open highways, leveled villages and turned industrial plants into heaps of twisted steel.
The quake also hammered the export companies that help fuel Chile’s economy, including wine, pulp and timber producers. Industrial output shrank 17 percent in the month after the earthquake and the economy contracted 6.9 percent in March from February.
Creating Jobs
Pinera amassed his fortune by setting up Chile’s first credit card network before acquiring a controlling stake in Lan Airlines SA, Latin America’s biggest airline by market value. He sold the last of his Lan holdings in March, raising a total of $1.5 billion.
To create 200,000 jobs a year, Pinera promised training for 5 million people and measures to help small and mid-sized companies, which account for 80 percent of Chile’s employment. A new law aims to cut the time needed to set up a new company to 16 days from 27 days, and halve the cost of the procedure.
Other proposed reforms seek to increase access to capital markets for small companies and help entrepreneurs keep operating after a bankruptcy. Tax on loans will stay at 0.6 percent instead of rising to 1.2 percent in July as had been planned. Pinera also promised to boost productivity and investment and double science and technology spending.
“There are lots of promises and we will have to wait and see how they’re fleshed out,” said Marcelo Diaz, a congressional deputy from the opposition Socialist Party. “Many are things that have been suggested many times before and are now being put forward by a government of a different stripe. I hope that when we see the small print we aren’t disappointed.”
To contact the reporter responsible on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net
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