Diapositiva 1

1
PERU, land of opportunities
Ambassador Carlos Higueras-Ramos Ambassador
of Peru Ljubljana, 7 November 2007
INVESTMENT OPPORTUNITIES IN
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PERU at a Glance
3
Peru in the World
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• SURFACE AREA
• 1,285,215 square km
• Peru is the third-largest country in South
  America, ranking it amongst the world's 20
  largest nations. 
• Peru is divided into 24 departments.
• Capital Lima

PERU
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Regions
Rainforest
Coast
Highlands
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3 Regions the Coast, the Highlands and the
Rainforest

• Peru is divided into 3 regions the Coast, the
  Highlands
• and the Rainforest
• The Coast is a narrow strip of desert hemmed in
  between the sea and the mountains. The Andes to
  the east and the cold Humboldt sea current that
  runs along the Coast are what make this area so
  arid.
• The Highlands, with the Andes chains, and
• The Rainforest which is the vast region that
  sorrounds the Amazon River and its Basin.

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(No Transcript)
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Population
27.9 million inhabitants
Urban 72,3Rural 27,7
-Peru is a nation of mixed ethnic origins.
Throughout its history, Peru has been the meeting
ground for different nations and cultures. The
indigenous population was joined 500 years ago by
the Spaniards.   -As a result of this encounter,
and later enriched by the migration of Africans,
Asians and Europeans, peruvians emerged as the
representatives of a nation whose rich ethnic mix
is one of its leading characteristics.
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Government The president of the Republic of Peru
and the members of Congress are elected every
five years in a democratic process by universal
suffrage. The Constitutional President of Peru
is Dr. Alan Garcia Pérez (2006-2011).   Religión
Peru is a naturally religious country a
diversity of beliefs and freedom of worship can
be seen from the wide range of festivals and
rituals that feature both Catholic fervor and the
mysticism of age-old pre-Hispanic cultures Roman
Catholic 89,03Evangelical 6,73Other
religions 2,56Any Religion 1.65
  CurrencyThe official currency in Peru is the
Nuevo Sol (S/.), which is divided into 100
centimes. The currency includes coins for 5, 10,
20 and 50 centimes and 1, 2 and 5 sol coins.
There are bills in the denomination of 10, 20,
50, 100 and 200 Nuevos Soles.  
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Archaeological heritage

• Ten thousand years of history are lived
  through 180 museums and historical places. While
  Peru inevitably evokes images of Machu Picchu and
  the Inca empire, the country is also settle with
  archaeological sites which are a legacy of even
  more ancient times, when great civilizations
  bequeathed a legacy of their art, customs and
  rituals, their wisdom and skills.
• Machu Picchu, Wonder of the World

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• MACROECONOMIC
• CONTEXT

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PERU OFFERS
13
Sustainable economic growth with annual
forecasted rate greater than 8
8
6
GDP Growth (Annual variation )
4
Developed
2
World
0
80
82
84
86
88
90
92
94
96
98
00
02
04
06
Source International Monetary Fund and the
Central Reserve Bank of Peru. Forecasted by
Central Reserve Bank of Peru (9th February 2007),
Ministry of Economy and Finance and the National
Institute of Statistic and Information.
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Annual Exports growth greater than 30
Accompanied by private
investment growth
(average annual variation)
Private Investment grew
25.0

25.0
20,1 in 2006
20.0
20.0
Private
Private
Investment
Investment
15.0
15.0
10.0
10.0
5.0
5.0
0.0
0.0
-
5.0
-
5.0
-
10.0
-
10.0
01
02
03
04
05
06
01
02
03
04
05
06
Source Central Reserve Bank of Peru.
Forecasted
15
Peruvian Exports Boom Total US Billions
Favorable international prices for commodities,
plus buoyant non-traditional exporting sector
Fuente PROMPEX
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During the last 5 years (2001-2006)
621 new products were exported
29 new exporting markets
2,093 new enterprises
Source SUNAT
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Peru Exporting Country World Nº Fresh
Asparragus 1 Paprika 1 Fishing
Nets 1 Virola Wood 1 Fishmeal and
Oil 1 Organic Coffee 2 Fresh Mangoes
7 Cochinilla 8 Artichoke
8 Avocado 10 Women T Shirts (Cotton)
17 Grapes 20
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Increase in the imports of capital goods (
Millions of US)
Rise in the commercial exchange (Millions of US)
Capital goods for the Industry
Transport Equipment
Others
Source Central Reserve Bank of Peru.
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By increasing its central government tax revenues
Peru is progressively reducing its fiscal
deficit ( of GDP)
2,5
2,5
2,0
1,5
1,0
0,5
0.0
0,0
-0,5
-0,4
-1,0
-1,5
-1,1
-2,0
-1,7
-2,3
-2,5
-2,5
-3,0
-3,3
-3,5
2006
2007
2004
2005
2000
2001
2002
2003
Source Central Reserve Bank of Peru.
Forecasted by the Ministry of Economics and
Finance
Source SUNAT
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EXCELLENT MACROECONOMIC FIGURES OF THE PERUVIAN
ECONOMY, HOWEVER...

• .a severe social deficit exists.
• neither the economic growth nor the current
  levels of investment have shown to be
  sufficiently enough to fight poverty and extend
  its benefits to the majority of the Peruvian
  population.
• Low parallelism between the growth in employment
  rates and excellent macroeconomic figures.
• 15 of illiteracy
• 5 million people without access to tap water or
  medical services
• 13 million of Peruvians living below the poverty
  line, including 5 million in conditions of
  extreme poverty (less than 1 USD a day).

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NEW APPROACH TO TACKLE THIS PROBLEM
Socially responsable
Realism

• maintaining macroeconomic stability and viability
  of public accounts combining fiscal and monetary
  policies that are not only prudent but also
  socially viable.
• reinforce the participation of Peru in a
  globalized world as an open economy competing in
  international markets by raising productivity
  levels and improving the quality of its labor
  force
• consolidate market access and attract more
  foreign direct investment and technology.

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GOALS FOR 2006-2011

• Annual inflation not greater than 2.5
• Average yearly GDP growth 5.5
• Balance of Payments annual superavit 0.5
• Decrease level of dollarization of the economy
  to 40
• Keep non financial public deficit less than 1 of
  GDP
• Substantial improvement of public expenditure
  raising in 3 the level of fixed public
  investment by 2011 (more resources to
  infrastructure, direct social programs, austerity
  measures, less resources dedicated to public
  employment) by 2011.
• Open new markets () FTAs USA, EU, Canada, EFTA,
  China, Singapore, Thailand, India, Japan, Korea,
  Russia, Central America) diversification of
  exports.
• () Peru has already an FTA with the Andean
  Community, Chile and MERCOSUR

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MEASURES UNDERTAKEN TO OVERCOME SOCIAL DEFICIT

• Investment shock in infrastructure (rural
  electrification, roads, schools, hospitals,
  irrigation)
• Social corporate responsibility (contributions
  from the private sector)
• Aggressive social policies (Crecer, Agua para
  todos, Programa Juntos)
• Specific social programs to extend to the more
  impoverished sectors in the Andes and the Jungle
  the benefits of free trade (Sierra Exportadora
  and Selva Emprendedora)
• Loans oriented to Micro and Small Enterprises
• New educational policy with specific goals and
  thresholds
• Severe austerity measures in the public sector
• Decentralization process (transfer of power to
  the regions and local governments)

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PERSPECTIVES

• VERY GOOD IF. SOCIAL CONSTRAINTS AND
  INTERNATIONAL CONTEXT IMPACTS ARE WELL MANAGED
  BY A MORE EFFICIENT PUBLIC SECTOR
• FTA WITH USA, EUROPEAN UNION AND CHINA ARE KEY TO
  BOOST INVESTMENT GROWTH AND IMPROVE
  COMPETITIVINESS
• ADEQUATE SCIENCE, INNOVATION AND TECHNOLOGY
  NATIONAL POLICIES SHOULD ALSO BE PART OF THE
  DEVELOPMENT STRATEGY

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INVESTMENT OPPORTUNITIES
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A favorable legal framework for foreign
investment ...

• Non discriminatory treatment.
• Irrestrictive access to most economic sectors.
• No performance requirements.
• Free transfer of capital.
• Free competition.
• Guarantee for Private Property
• Freedom to purchase stocks from locals.
• Freedom to access internal and external credit.
• Freedom to pay royalties.
• Network of investments agreements and member of
  ICSID and MIGA
• Stable tax regime
• Reduced tariff structure and low tariff
  dispersion

Legal Framework Constitutional provisions, Law
for the Promotion of Foreign Investment,
Legislative Decree N 662, Framework Law for
Private Investment Growth, Legislative Decree N
757, Law for the Promotion of Private Investment
in Infrastructure and Public Service Works,
Approved by Supreme Decree N 059-96-PCM
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• Free market access to
• Andean Community of Nations
• Chile
• MERCOSUR
• Mexico
• United States
• European Union
• Thailand

Trade Promotion Agreement with Thailand,
Singapore, Canada and Mexico under negotiations
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Companies from all over the world are already
investing in Peru

• Nestle
• Asea
• Brown Boveri
• Aventis
• Saint Gobain
• Sodexho
• Schneider Electric
• Pechyney
• Degrémont
• Holbah II Ltd.
• Shell
• Stet Mobile
• Adrien

• Telefónica de España
• Banco Bilbao Vizcaya
• Endesa Desarrollo S.A.
• Repsol YPF
• Melia
• BHP
• Firth Ind.
• NZ Dairy Products
• Mount Isa Mines
• Newcrest
• Shougang Corp.
• Marubeni
• Matsushita
• Mitsui

• Honda Motor
• Daewoo Corp.
• Mitsubishi
• SK
• Falabella
• Ripley
• Mantos Blancos
• Empresas Pizarreño
• Empresas IANSA
• Costa S.A.
• Noranda
• Teck Corp.

• Cominco
• HydroQuebec
• Barrick
• Newmont
• Cyprus Minerals
• Nextel
• Citibank
• Duke Energy
• PSEG
• Entergy
• Aguaytia Energy
• Cargill
• Kraft Perú
• Procter Gamble
• Kimberly Clark
• Group Mexico
• Group Portales
• Group Bimbo
• Zeta Gas

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Advantages of the Agribusiness and Agro Exporter
Sector

• 84 green zones of the total 104 worldwide.
• 8 million hectares of fertile lands.
• Because is located in the southern hemisphere
• has access off season windows in the most
• important markets at premium prices (USA,
  Europe, Asia)
• Non traditional agribusiness exports with 19
  growth rate (2006).
• 1st in worlds productivity of mango,
• asparagus and sugar cane,
• among the first ten in grape, avocado and
  coffee
• 1st world exporter of asparagus and dried
  paprika.
• Skilled workforce available.

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Advantages of the Fishing Aquaculture Sector

• 8 million MT per year of exploitable biomass.
• 1st world producer of fishmeal (2 two million Ton
  per year since 1993) and fish oil (150,000 Ton
  per year).
• One of the richest seas of the world home for
  more than 2,500 species.
• Wide variety of microclimates allowing
  development of many fishing and aquaculture
  species.
• 81 useful species could be processed and
  traded.
• Main species
• anchovy, sardine, hake, eel, horse mackerel,
  squid, octopus.
• king prawn, scallops, trout, great potential of
  Amazonian species and ornamental fishes.

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The Mining Sector

• 1st producer of gold, zinc, tin and lead in Latin
  America and 1st producer of silver and vanadiun
  in the world.
• Different projects ready to be transferred to
  private investors, i.e. state mining project just
  awarded in concession Michiquillay (US 450
  Million)
• Foreign investors have achieved internationally
  recognized results (e.g. Alto Chicama prize PDAC
  Prospectors and Developers Association of
  Canada, for the best discovery in the world).
• Peru has received investments of US 1.3 billion
  (1992-2005), and additional investment
  commitments for US 6.6 billion.
• High potential in the non-metallic mining
  industry in common salt, phosphates, diatomite,
  pyrites, kaolin, pyrophilite, baritina, dialomite
  and clays.
• Peru ranks among the most attractive countries ,
  related to geological potential.

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Mining
Sector
Advantages
Production Ranking 2006
Latin America
Worldwide
Peru has an outstanding
Copper
2
3
competitive position in worldwide
Gold
1
5
mining, leading this sector in Latin
Zinc
1
3
America
Silver
1
1
Lead
1
4
Tin
1
3
Molybdenum
2
4
Bismuth
2
3
Mining
exports
Mining
exports
Tellurium
1
2
(
US
million
)
(
US
million
)
Source Ministry of Energy and Mining of Peru
Molybdenum production has

risen by 28 in 2005, and it became
the third export metallic mining
product (US100 million/month)
Bismuth production totaled

1000 MT and Tellurium
production 28 MT, in 2005.
Source Central Reserve Bank of Peru
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Advantages of the Textile Sector

• High quality of Peruvian Pima cotton.
• 1st producer of fine Alpaca and Vicuna fiber.
• Highly competitive products based on quality.
• Development of a Peruvian textile chain enabling
  rapid service to full package orders.
• Opportunity to benefit from Free Trade Agreement,
  to enter the USA apparel market.
• High skilled employees, monthly wages from US
  130 to US 300
• Export growth from US 400 mil. (1995) to US 1.4
  Billion in 2006

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Peruvian companies are producing for prestigious
labels such as

• Abercrombie Fitch
• Adolfo Dominguez
• Ara Intersales TNS Mills
• Armani Exchange
• Calvin Klein
• Cole
• Donna Karan Inc.
• Duck Head Apparel Co.
• Eddie Bauer
• Guess
• Inditex / Zara
• Izod
• JC Penney
• J. Meneses Group Inc
• Massimo Dutti
• Nautica

• New Balance
• Lacoste
• Lands End
• Levy Strauss and Co.
• Oakley
• Palacio de Hierro
• Paul Davril Inc. / Kenneth
• Perry Ellis International
• Polo Ralph Lauren
• Ragman
• Reebok
• Russel Corporation
• Saks Inc.
• The Gymboree Corp.
• Tommy Hilfiger
• Vanity Fair

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Advantages of the Forestry Sector

• Forest Reserves of 53.5 million hectares.
• 6 million hectares for reforestation.
• Seventh biggest forestry reserve in the world.
• High quality woods mahogany (sweitenia
  macrophylla), tropical cedar (cedrela odorata),
  and cumula (virola sp.)
• Forestry concession process.
• Forestry potential. Possibility to increase by 17
  times the current supply of wood.
• Forestry exports have increased from US 26 MM
  in 1996 to US 168 MM in 2005. This shows a
  growth rate of 26 per year the last 9 years.
• Peru has potential to export US 3 bn per year in
  woods and by-products.

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Advantages of Tourism Sector

• Cultural and historical wealth and great
  biodiversity, which makes Peru a special place in
  the world.
• High potential to generate investment oriented to
  expand tourism services.
• Possibility in developing private investment not
  only in tourism infrastructure, but also in
  providing traveler services.
• Peru is promoting the northern tourist circuit
  which offers new investment opportunities.
• Important increase of foreign arrivals (1.7
  million in 2006, 3.7 projected for 2013)
• Peruvian gastronomy is one of the most delicious
  and varied in the world.

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Iquitos Port
Piura
Infrastructure Investment Opportunities
Paita and Piura Sanitation
Yurimaguas Port
Costa - Sierra
Paita Port
Salaverry Port
Pucallpa Port
Road Network 4
Chimbote Port
IIRSA Center Branch
Supply drinking water for Lima
Maldonado Port
Minerales Port
Electric Train
Apurímac
Regional Pipelines
Interoceánica Sur
Pisco Port
Ayacucho
Nazca
Costa - Sierra
Arequipa
Juliaca
Ilo Port
Tacna
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Investment Opportunities ProInversion

• Decentralized (62 US millions), Sugar
  processing companies (60 US millions) and
  support to private investment (US 25,4 million ).

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Investment Opportunities in Land Transport
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Investment Opportunities in Port Terminals
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Investment Opportunities in Airports
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Investment Opportunities in Sanitation
43
Investment Opportunities in Agriculture
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Investment Opportunities in Hydrocarbons
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Investment Opportunities in Energy
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Te conozco?? (Do I Know you??)
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• MUCHAS GRACIAS !!
• HVALA LEPA !!
• www.proinversion.gob.pe
• www.promperu.gob.pe
• www.peru.info