Q: How is the Chilean government adjusting to the downturn in the commodity market?

A: We need to work on productivity. The commodity boom hid the weaknesses in terms of productivity that our economy has suffered from for several years. Today, the productivity growth is not as sustained as it used to be a few years back.

Q: The government has implemented tax and labour market reforms since President Michelle Bachelet returned to power in March 2014, but these have struggled to gain much traction. Will their expected effects on productivity be apparent any time soon?

A: The tax reform is done. We have approved some improvements to the original version to make its implementation easier, and it’s not necessary to add anything else at this stage. With regard to the labour market reform, we had come up with a bill that struck a delicate balance between equity and efficiency, but unfortunately the constitutional court rejected some of its proposed changes [prompting a presidential veto on the whole reform]. There is a lot of work left to do on that side now, but come what may we want to do it quickly.

Q: On the other hand, the government achieved long-awaited reform of the country’s education sector.

A: The education reform [which makes tertiary education more affordable across Chilean society] is a landmark achievement of this government. The reform touches on the quality of education, but also access and financing. It’s a key step towards improving the productivity of the country. 

Q: Where do you see further scope for boosting the competitiveness of the Chilean economy?

A: I think the most important thing at this stage is improving the country’s ability to export services. We excel in exporting physical goods with little bureaucracy and taxes involved. On the other hand, if, for example, a Chilean accountant wants to provide his services abroad, that is going to be a headache. We need to improve the fiscal regime and address the issue. We also have to work on changes in other key sectors for the domestic economy like banking, where we are planning to send a bill to congress soon to introduce Basel III standards and overhaul the governance of the banking sector authority.

Q: Chile has long been an example for commodity-rich countries looking to better diversify their economies. Yet one of the successes of its diversification strategy, the salmon industry, has now caused an environmental tragedy in Southern Chile and jeopardised the future of the local fishing industry for the years to come, with potential repercussions for the country’s overall exports and economic performance. What is the lesson for the government from the current crisis in the salmon industry?

A: There are industries where rules are more needed than the most liberal part of the society might think. There were regulations in place already, but they were not enough to keep salmon production in check. Laissez-faire doesn’t work that well in some industries after all.