[SANTIAGO] Private companies in Chile who hire universities or research centres to do research and development (R&D) will get tax incentives, as part of a law approved this month (11 January).

With these incentives, companies will be able to use 35 per cent of the money they normally pay in tax to invest in R&D. This is equivalent to receiving a state contribution of US$46 for every US$100 invested in R&D, according to the government.

This law positions Chile "in the list of countries with the strongest use of this sort of incentive", according to a press release issued by the Chilean presidency. In comparison, "for every US$100 invested in R&D the state provides US$40 in Spain, US$23 in Norway, and US$16 in Korea", it adds.

Chile currently invests 0.7 per cent of its GDP in R&D, and just 34 per cent of this investment comes from the private sector.

"It is evident that we need to increase the private participation in R&D. In developed countries this is around 70 per cent. We would like to reach at least a balance between the private and public sector, with 50 per cent each", Carlos Álvarez, executive vice president of the Chilean Economic Development Corporation (CORFO) told SciDev.Net.

"This law is an opportunity for companies who want to make innovation efforts under their own terms, without applying to grants or project competitions", he said.

"We hope that encouraging the association between the private sector and universities will boost more PhD training and employment for these scientists with an income higher than in the academic sector — thus making more people willing to become scientists not just for the sake of it, but as a real way to make a living", says Jorge Babul, head of the Council of Scientific Societies of Chile.

The state estimates it will spend US$4.87 million to implement the law in 2008, reaching US$19.57 million in 2012.

A study released last November by the Organisation for Economic Co-operation and Development (OECD), stressed that Chile must boost innovation and invest more in R&D to improve prosperity and achieve successful incorporation into the OECD (see Chile 'should invest more in R&D and innovation').