August 24, 2020
coronavirus
Logistics and Infrastructure

President Piñera announces US$34 billion public works plan, employment incentives and benefits for SMEs to boost economic recovery

President Piñera announces US$34 billion public works plan, employment incentives and benefits for SMEs to boost economic recovery
The program involves works in the areas of housing, highways, ports and airports, Metro and trains, hydraulic works and rural drinking water. The President also announced a plan of subsidies and incentives to fund up to a million jobs, incentives for private investment and substantial tax benefits for small- and medium-sized companies.

President Sebastián Piñera introduced the “Paso a Paso Chile se Recupera” (Chile recovers step by step) public works program, which involves US$34 billion in investment over the next 24 months and will create 250,000 new jobs.

Furthermore, the President announced the launch of a plan involving subsidies and incentives for job creation and recovery, entailing investment of up to US$2 billion, that will fund a significant portion of the salaries of up to one million workers.

The plan also includes incentives for private investment and priority processing of 138 investment projects for a total investment of US$24.5 billion between 2020 and 2022 and generating 115,000 new jobs.

President Piñera emphasized that the step-by-step recovery plan includes a series of incentives and additional tax relief for SMEs. Highlights among these new incentives include a reduction of corporate income tax from 25% to 10%, deferred VAT payment, immediate depreciation and amortization for 100% of investments in physical assets in property, plant and equipment, as well as certain intangible assets. These incentives are in addition to the working and investment capital made available through subsidies as well as the FOGAPE, FOGAIN, PAR, CRECER and REACTIVATE loan programs, this last one being targeted mainly at the tourism, hotel and catering industries.

Finally, the plan includes a series of measures to simplify and streamline permits and requirements in order to facilitate investment and promote SME development.

“This step-by-step recovery plan will encourage job creation and recovery through robust public investment and incentives for private investment,” said President Piñera, who was accompanied on the visit by the Treasury, Economy, Labor, Public Works, Environment, Housing, Transportation, Agriculture and Energy Ministers.

The plan includes another US$4.5 billion in public investment over the regular ministerial budget. The investment, which aims to boost economic activity and create jobs, will take place over the next 24 months. A total of US$34 billion in public investment is estimated for the 2020-2022 period.

These projects are expected to create a total of 250,000 jobs.

The project portfolio focuses on infrastructure initiatives to activate the country while directly and indirectly creating jobs; meeting social and productivity demands; addressing the urgent water crisis; supporting municipalities, mobility and integration in our cities as we emerge from quarantine; improving roadway, port and airport infrastructure, and other major initiatives.

The Public Works Ministry will carry out a portfolio of 2,130 projects with particular emphasis on the construction, improvement and widening of roadways, bridges, hydraulic works, rural drinking water systems, coastal areas, fishing wharves, airports and public buildings. The total investment amount of the 2020-2022 portfolio is US$9.4 billion, of which US$2.9 billion is additional budget made available especially for this plan, which includes 2,130 projects.

In transportation, works will include improvements to public transit and accelerated investment in the Metro and trainlines. Between 2020 and 2022, more than US$3 billion will be invested in projects like the Santiago-Melipilla Metrotren, construction of the new railroad bridge in Concepción, extension of Santiago Metro lines 2 and 3 and construction of line 7.

The plan also includes housing solutions that focus on the most vulnerable people, small- and medium-sized companies, as well as construction workers. The 2020 budget for these housing measures totals US$3.5 billion and will serve 412,900 families. Additionally, the US$553 million budget for urban areas includes participatory paving projects as well as parks and plazas, like the Mapocho Río Park in Santiago and Muelle Barón Park in Valparaíso.

“This public investment plan aims to create a more sustainable, more inclusive society with equal opportunities for all of Chile’s regions, as well as better quality of life in both cities and rural areas,” said the President.