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Peru:

Business Hub in the South American Pacific

Great potential and excellent conditions for your investment

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Peru:

Hub in the South American Pacific Located on the central western coast of South America, Peru is poised to project itself as a regional commercial and production hub. El Callao, the main port of the country (currently undergoing an expansion process) already stands out as the most dynamic terminal port on the South American Pacific coast. Furthermore, the development of the

Initiative for Infrastructure Integration of South America (IIRSA) will consolidate Peru as the most efficient gateway between the markets of South America, Asia and the United States. Peru is consolidating as an attractive investment destination, projecting itself as an efficient exportation platform which, thanks to the signed Trade Agreements, offers preferential access to a market of over 2 million people.

peru in the world

peru in Latin America

■■ 1st silver producer and 2nd producer of copper. 3rd country with the largest gold, silver, copper and zinc reserves. ■■1st producer of fishmeal and fish oil ■■1st in sugar cane productivity and 8th in oil palm (potential for bio-fuel development) ■■1st exporter of asparagus, organic coffee and organic bananas and 2nd in dry paprika. ■■ Investment grade credit rating

■ ■L e a d i n g p l a c e i n b u s i n e s s c l i m a t e / 1 , and in government receptivity for private investment in infrastructure /2 . ■■1st producer of gold, zinc, tin and lead ■■2nd in the natural forests ■■3rd largest country in South America ■ ■Important source of natural gas on the South American Pacific Coast

ACTIVE INTEGRATION TO THE WORLD The US – Peru Trade Promotion Agreement signed in 2007 and which came into force on February 1st, 2009, enhances and expands the trade preferences temporarily awarded to Peruvian exports through the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The US – Peru TPA has established new standards for goods and services circulation and investment protection. Said agreement set forth the bases for negotiation of free trade treaties with Singapore, Canada, China and the European Free Trade Association (EFTA) countries, the Early Harvest Protocol with Thailand and the strengthening of the Economic Complementation Agreement with Chile. Based on this, Peru has been negotiating an expansion of its Economic Complementation Agreement with Mexico and Free Trade Agreements with South Korea and Japan.

Additionally, Peru has been negotiating an Association Agreement with the European Union, a bloc that through the Andean Generalized System of Preferences sets zero tariffs for fishing, textile and agricultural products. At Latin American level, Peru is member of the Andean Free Trade Zone, a trade bloc comprising Bolivia, Ecuador and Colombia (The Andean Community). Also, within the framework of the Latin American Integration Association (ALADI in Spanish), Peru has entered into an Economic Complementation Agreement with Mercosur. Lastly, as of 1998 Peru is member of the AsiaPacific Economic Cooperation (APEC) forum which presided in 2008. Investors interested in establishing in Peru will have access to these expanded markets taking advantage of our natural resources and competitive advantages

/1 Getulio Vargas Foundation from Brazil /2 World Economic Forum: Benchmarking National Attractiveness for Private Investment in Infrastructure, 2007

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Message from Alan GarcĂ­a, President of Peru

Photo: Government Palace

P

eru offers investors a fast development economic platform based on export and investment growth, and with less risk when compared with other countries in the region. It also offers a wide range of investment opportunities in various sectors with the diversity of natural resources and progress achieved by Peruvian and foreign entrepreneurs as support. We promote foreign investment attraction with a favorable legal framework that treats foreign investors in the same way as domestic investors and is in accordance with solid international principles. In 2008, Peru became 41st adherent to the Organization of Economic Cooperation and Development (OECD) Declaration on International Investment and Multinational Enterprises in acknowledgement to its impressive progress in fostering political reforms and improving business climate in the country. Peru welcomes foreign investors who seek to improve sustained wellbeing in the land and to increase world economic dynamics. Our main objective is to contribute to the consolidation of prosperity, political stability and peace in our region as well as in the international community

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Peru

Offers solid macroeconomic results and attractive conditions for private investment A healthy and sustained growth Peru stands out for its excellent economic performance. In 2008, the gross domestic product posted a 9.8% growth rate, accumulating by March 2009 an unprecedented 93 consecutive month growth. These results are among the highest in the world. According to estimates, Peruvian economy will keep a 4.8% /4 annual average growth pace during 2009 – 2012, achieving 10 consecutive years of fast expansion. These positive expectations for the coming years are based on investment announcements, public and private; in the high domestic consumption perspectives and mainly in the responsible economic policies which have enabled to accumulate international reserves, strengthen the financial system, maintain the fiscal surplus and reduce the GDP – debt ratio, which puts us in a better position than many

other countriy in the region to face the current international crisis scenario. Exports increased 13% in 2008, exceeding US$ 31.500 million after having tripled their value between 2003 and 2007. Meanwhile, private investment posted ─for third consecutive year a growth rate in excess of 20%. These are the growth divers of Peruvian economy. Construction is growing at over 16% rates annually and capital goods imports expanded 58% in the last year. Local demand has been providing an additional boost to economic growth, thus employment increases in rates close to 9%. High tax revenues which increased in 28% in 2006, 15% in 2007 and 11% additional in 2008 public investment was benefited, enabling levels in excess of 4% of the GDP.

Private Investment

PBI (Thousands of Million in New Soles) * Macro-economical Multiannual Framework 2010 – 2012 estimates

373

Exports

(Millions of US$)

27,296

(Millions of US$)

31,529

449 417 388

27,882

19,478 23,830

336 303 213

238

15,117

262

17,368

12,285

200

10,545 8,668 8,356 8,395

12,809

9,221 6,955 7,026

2002

2003

2004

2005

2006

2007

2008 2009* 2010* 2011*

Source: Central Reserve Bank of Peru and Ministry of Economy.

2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Central Reserve Bank of Peru and Ministry of Economy.

/4 Macro-economical Multiannual Framework 2010 – 2012

4

7,714

9,090

2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Central Reserve Bank of Peru and Ministry of Economy.


SOLID MACROECONOMIC EQUILIBRIUM Peru’s economic solid results are framed within a clear macroeconomic equilibrium. As a result of its good economic management, Peru keeps one of the lowest inflation rates in Latin America. Its floating exchange rate is also one of the most stable in the region.

RECENT RESULTS RELATED TO INVESTMENT 2004

2006

2007

2008

2009 *

GDP (var%)

5.1

6.8

7.7

8.9

9.8

2.2

Private Investment (var%)

8.1

12.0

20.1

23.2

25.6

-6.7

Public Investment (var%)

5.7

12.2

13.0

19.7

41.9

40.0

PCI (var%)

3.5

1.5

1.1

3.9

6.7

1.5

3.41

3.30

3.27

3.13

2.93

3.06

Average Exchange Rate (New soles per US$) Employment in companies of 10 or more workers (var%)

3.6

5.7

8.7

8.9

8.5

n.d.

Exports (var% in US$)

40.9

35.3

36.9

17.5

13.1

-21.2

Capital goods imports (var% in US$)

19.6

29.6

35.4

41.9

57.6

n.d.

4.7

8.4

14.7

16.6

16.5

5.3

13.6

14.3

27.8

15.3

11.0

n.d.

Construction GDP (var%)

INTERNATIONAL RECOGNITION

2005

Tax collection (var%)

Source: Central Reserve Bank of Peru, Ministry of Economy and National Institute of Statistics and Informatics of Peru. * Estimated growth rates in the Mult-annual Macroeconomic Framework 2010 - 2012

Apr-09

Jun-09

Jan-09

Sep-08

Nov-08

Jul-08

Mar-08

May-08

Jan-08

Oct-07

Mar-07

Aug-07

Latin America

May-07

Jan-07

Aug-06

Nov-06

Jun-06

Feb-06

Apr-06

Dec-05

Oct-05

EMBI + Peru

Aug-05

On July 2008, credit rating agency Standard and Poor’s (S&P) rated Peru with the “investment grade” from “BBB” to “BB+” (speculation grade). This upgrading adds to prior rate granted by Fitch Ratings and Canadian Dominion Bond Rating Service (DBRS). The improvement in the classification of the Peruvian debt responds to the reduction of the degree of “dollarization”, improved in fiscal accounts, red u c t i o n o f t h e d e b t b u r d e n and an increase in international reserves as a result of the remarkable trade surplus in the last years. In this way Peru maintains a level of international reserves of over US$ 30 billion, an amount equivalent to 14 months of imports, 5 times primary emission and 1.6 public foreign debt, which allows us to meet the international obligations Furthermore, in 1999 the 3.2% fiscal deficit reversed to a surplus of more than 2 points of the GDP. It is noteworthy that Peru’s fiscal equilibrium is one of the most remarkable in the region.

Source: Central Reserve Bank of Peru

Fiscal Position

Net International Reserves

(% del GDP)

(Total Amount in US$ Million)

3.1 2.1

2.1

31,196

27,689

17,275 -0.3

14,097 12,631

-1.0 -1.7 -2.5

-2.3

8,180 8,613

9,598 10,194

-3.3 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Central Reserve Bank of Peru and Ministry of Economy.

2000

2001 2002 2003 2004 2005 2006 2007 2008

Source: Central Reserve Bank of Peru.

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Infrastructure DEVELOPING COMPETITIVENES OF PERU

Exponential growth of Peru’s economy and in particular its lively international trade are creating significant demand for public use infrastructure and logistic services. It is estimated that Peru requires annual investments exceeding 5% of the GDP. That is, between 6 and 8 billion dollars for the next years. This is a great business opportunity for investors, infrastructure operators and construction companies who can participate in the sector through different modalities, such as public-private partnerships (PPPs) and private initiatives. Currently, ProInversion is in charge of transferring ─under the PPPs scheme, a portfolio of infrastructure projects that exceeds US$ 4 billion in investment requirements. These projects are referred to sectors like energy, telecommunications, irrigation works, gas pipelines, airports, ports and roads, among others. Also, the Peruvian Government prioritized the concession of 12 infrastructure projects which included: 3 river ports, 3 sea ports, 2 road projects, 2 irrigation works projects, a wastewater treatment plant and a six airport package in 6

ProInversion’s Project Portfolio Road Projects • Amazon axis of IIRSA – Central branch • Huancayo – Huancavelica railroad • Lima Urban train Airports • Regional Airports– Second group • Cusco International Airport Ports • San Martin Port Terminal (Pisco) • Pucallpa Port Terminal • Iquitos Port Terminal • Salaverry Port Terminal • Yurimaguas Port Terminal • Ilo Port Terminal Electricity • T.L. Tintaya – Socabaya (220 kv) and associated sub-stations • Strengthening of the North System (second transmission circuit of 220 kv.) • Thermal plant in Quillabamba ( 400MW) • T.L. Chilca-Marcona-Caravelí (500 Kv) • T.L. Las Malvinas - Mantaro (500Kv) • Cold Generation Reserve (600 MW, dual thermal plants) • Natural gas Power Thermal Plant of

combined cycle of 140 MW - Cuzco Natural Gas • Distribution systems in the Ayacucho, Junín & Ancash regions • Pipeline to Chimbote • Distribution system in the cities of Quillabamba, Cusco, Puno, Arequipa, Moquegua and Tacna Telecommunications • Juliaca – Pto.Maldonado rural wide band • Buenos Aires - Canchaque integrated telecommunications service implementation • VRAE Broadband and Camisea – Lurin Wide Band • C Band of 1900 MHZ Agriculture • Majes-Siguas II Special Project • Chavimochic Special Project Tourism • San Lorenzo Island • Kuelap cable cars Real Estate • San Martin former military barracks • Lobitos beach

the southern zone of the country. To date, ProInversion has awarded 3 projects, reaching an investment commitment of US$ 850 million.


Photo: Ana Cecilia Gonzales-Vigil

PROINVERSION’S PROJECT AGENDA

■■ Regional Airports: A package of six regional airports located in the South shall be given in concession for 25 years. This will demand an investment of over US$ 200 million. Additionally, a study is being conducted to build a new airport in Cusco (Chincheros). ■■ Road network: Within the network of the Initiative for the Integration of Regional Infrastructure in South America (IIRSA), ProInversion promotes the concession of the Amazon Axis center sector (IIRSA Center) that will transversally connect the city of Lima with the main cities and production zones of the Highlands and Central Jungle. ■■ Competitive ports: The National Port Authority and ProInversion promote the concession of three sea ports (Salaverry, Pisco and Ilo) and three river ports (Iquitos, Yurimaguas and Pucallpa) which connect the Peruvian Amazon region and Brazil. Investments exceeding US$300 million are expected. ■■ Power Transmission: In order to strengthen the National Electric Power

Grid, ProInversion has been entrusted the concession of 5 power lines, representing an investments of US$700 million approximately. ■■ Irrigations: Important irrigation projects are being implemented to boost the increasing agro-industrial development and ensure the efficient use of water. ProInversion will grant in concession the works of the second stage of the Majes-Siguas Special Project, in the Arequipa region (South coast), and the third stage of Chavimochic, in the La Libertad region (Northern coast). These projects will improve 38,500 and 60,000 hectares of agricultural use, respectively.

Peru represents an increasing and dynamic market of PPPs in Latin America

PRIVATE INITIATIVES To promote participation of the private sector, the Peruvian government published in 2008 the framework for the development of Private Initiatives. Private initiatives are a way through which the private sector can submit investment projects in assets, companies, services, infrastructure public works and public utilities. 7


Mining MINING CLUSTER IN LATIN AMERICA In 2008 Peruvian mining exports exceeded US$ 18,500 million, which represented more than 50% of the country’s total exports. The ore Peru produces includes basic metals as well as precious ones. In Latin America, Peru is still a leader in gold, silver, zinc, lead, tin and tellurium production, and the second producer of copper and molybdenum. According to the portfolio projects registered by the Ministry of Energy and Mines (MEM), 25 billion dollars in investments are expected; this would ensure a sustained activity growth in the sector and could imply annual investment levels that could reach US$ 5 billion. Peru’s geological wealth, available cadastre and geological quality data, readily available supplies from top of line vendors and a legal framework that encourages private investment make Peru one of the most attractive destinations for mining investments worldwide.

/5 U.S. Geological Survey – USGS

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Only 10% of the territory with mining potential in Peru has been explored and only 6% has been developed so far.

HIGHLIGHTS – MINING SECTOR ■■ The geological potential of Peru is remarkable. Peru is a world class producer of gold, silver copper and zinc/5, ranking number 3 in the world. ■■ T h e A n d e s M o u n t a i n s a r e Peru’s backbone and the world’s principal source of mineral deposits. ■■ The number and area of mining prospecting projects increase every year driving the Lima Stock Exchange to create a Risk Capital or Project Portfolio Segment. ■■ A m p l e a v a i l a b i l i t y i n t h e necessary domestic raw materials and service markets for development of mining activities, which enables Peru to consolidate itself as a key mining cluster in South America.


Photo: Ana Cecilia Gonzales-Vigil

Mining Exports (US$ Million)

18,656 17,328

14,735

9,790

7,124

3,220 3,205

3,809

Practically all the world major mining companies are operating in the country

4,690

2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Customs and BCRP

NON METALLIC POTENTIAL Additionally, Peru has an interesting potential in non metallic minerals, such as travertines, marble, diatomite (1掳 producer in South America), bentonite and borates, being one of a few countries in the world that have deposits of the latter. Also, after the launching Project Bayovar by CVRD /6 a Brazilian transnational company, Peru will produce 3.9 million tons per year of phosphoric rock, an amount that can be double in the medium term.

MAIN MINING EXPORT COMPANIES IN PERU (FOB US$ Million) COMPANY

2007

2008

Southern Peru Copper Corporation Copper, molybdenum and silver

2,907

2,886

Antamina Mining Company Copper, molybdenum and zinc

3,013

2,845

Freeport Macmoran Cerro Verde Copper

1,622

1,710

Newmont Yanacocha Gold

1,114

1,616

Minera Barrick Misquichilca Gold

1,123

1,379

Doe Run Peru Silver, copper, lead, zinc and others

1,279

1,236

Cormin Copper, lead, zinc and other

611

1,012

AYS Copper, lead and zinc

352

541

Procesadora Sudamericana Gold

460

485

MINSUR Tin

589

455

13,070.5

14,164.8

TOTAL

Source: Customs and Adex Data Trade. Made by: ProInversi贸n.

/6 Compahia Vale do Rio Doce

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Fishing

and Aquaculture WORLD’S LEADING FISHING COUNTRY Peru has exceptional natural characteristics for development of fishing and aquaculture. The presence of diverse currents along the 3,080 kilometers of the Peruvian coast favor an extraordinary amount of nutrients making the Peruvian sea one of the most productive marine ecosystems in the world. The oceanographic conditions of the Peruvian sea offer the possibility to sustainably fish close to 8 million metric tons per year in hydro-biologic products. This has enabled the exports of this sector to grow at an average rate of 13% between 2000-2008 reaching export levels in indirect human consumption products (IHC) of US$ 1.791 billion (fishmeal and fish oil) and US$ 621 million in direct human consumption products (DHC). Peru is currently considered as a fishing power for being world leader in unloading, production and export of fishmeal; it annually produces close to 1.5 million metric tons, which almost in their entirety are destined to foreign markets. It represents roughly 35% of world production and has a 45% participation of international commerce. In the last years, there has been dynamism in foreign and domestic investment in the sector. In the IHC segment, investment was aimed at prime

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Our geographical location facilitates Access to the Asian market, our main destination market

Fishing Exports (Million of US$)

2,413 1,958 1,626

1,768

1,381 1,131 1,123

1,056 1,026

2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Customs and Adex Data Trade.

and super prime fishmeal processing. There were also investments in fishing fleets and plants for product developing aimed to attend the DHC (a developing segment), specifically canned and frozen products from various species, such as bonito, giant squid, tuna and anchovy, very abundant in our waters. It is worth noting that DHC exports tripled in the last five years, exceeding US$ 600 million in 2008. This segment’s potential is in its early development stage, thus there are ample business possibilities in that field.


Photo: Ana Cecilia Gonzales-Vigil

Aquaculture Potential Aqua-farming in Peru finds very favorable conditions. The extensive coastline, the numerous continental bodies of water, the availability of super prime quality fishmeal and a territory holding 88% of world life zones define our country as an excellent place for aquaculture activities with the possibilities of all year round and stable production. The north coast is bristling with shrimp farms, tilapia (specially in reservoirs), and scallops, whereas the south coast waters favor farming of turbot, sole, abalone and oysters, among other species.The highlands hold many projects involving trout; and in the Amazon basin aquafarming operations are based on native species like the paiche.

MAIN FISHING EXPORT COMPANIES IN PERU (Million in US$ FOB) COMPANY

2007

2008

Tecnológica de Alimentos

317.2

317.5

Pesquera Hayduk

146.4

212.8

69.4

200.9

Austral Group

160.8

176.4

Pesquera Diamante

103.3

158.5

Pesquera Exalmar

66.6

105.6

CFG Investments

84.8

103.3

Companía Pesquera del Pacífico Centro

51.3

54.4

Colpex International

33.8

43.5

Corporación Pesquera Inca

Companía Pesquera Ribaudo

TOTAL

28.4

37.8

1, 062.0

1,464.7

Source: Customs and Adex Data Trade. Made by: ProInversión.

Additionally, aquaculture activities have tax incentives which include lower income tax rates, anticipated VAT recovery and a 5% for exports, value drawback.

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Agribusiness High Value Products Peru is today a world leader in fresh asparagus, organic coffee and organic banana exports, it is the second exporter of dry paprika; fourth of fresh mango and sixth of fresh avocado and canned artichoke. It is worthy to mention the expansion of table grapes, sweet onion, olives, pecans and diverse local species which are gaining ground in international markets. Sector exports show a sustained growth trend. During 2000-2008, exports increased at an average yearly rate of 19%, reaching US$ 2.597 million. This is the result of important business entrepreneurial ventures (especially in the coast) that have created a greater diversification of the export offer with a growing specialization in high value crops, mainly fruits and vegetables. In Peru the farm land is estimated in 8 million hectares. In order to promote its intensive use, the Peruvian government has been executing and encouraging private investment in irrigation works in high yield zones. This is the case of projects such as Chavimochic and Olmos, both on the northern coast, which have enabled to ensure the availability of regulated irrigation in 38,500 and 40,000 hectares,

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respectively, and creating a ring of agro-export clusters around them.

Biofuels

Agroindustrial Exports (Million of US$)

2,597

1,967 1,794

There is a great potential for 1,339 biofuel crop development. 1,126 According to the Food and Agricultural Organization 848 766 (FAO), Peru holds the 643 644 world’s highest yield in sugar cane (121 MT / ha.), and holds eighth place in 2000 2001 2002 2003 2004 2005 2006 2007 2008 oil palm yield (17 MT / ha.). It is important to highlight Source: Customs and Adex Data Trade. the fact that Peruvian law fosters biofuel marketing through an obligatory mix of diesel with biofuel, and gasoline with ethanol. To this end, oil palm production investments are being dynamized as well as that of the expansion of sugar cane. To meet with biofuels legislation it is necessary to install an estimated new 60,000 ha. of oil palm and 10,000 ha. of sugar cane.


Photo: Ana Cecilia Gonzales-Vigil

SECTOR HIGHLIGHTS ■■ 84 of the existing 108 types of climate can be found in Peru, which allows the development of a great diversity of crops at different times of the year. ■■ With a dry tropical weather and close to the Equator line, Peru is bathed in vertical solar radiation, which increases crop productivity and allows reaching the optimum organoleptic characteristics. ■■ Being part of the southern hemisphere is very favorable from a price perspective. It allows for off season exports to the great markets of the northern hemisphere. ■■ Agro-industry in Peru has a promotional regulatory framework that includes a lower income tax rate (15% instead of 30% for other sectors), 20% annual depreciation for hydraulic infrastructure investments and irrigation Works, and prior recovery of General Sales Tax.

Seasonal supply calendar of Main Export Products JAN

feb mar aPr may jun

Asparagus Coffee Mango Grapes Avocado Onion Banana Olives Tangerines Tangelo Oranges Paprika

jul

aUG seP

oct nov dEc

It is estimated that Peru has 8 million hectares of farm land of which only 3 are harvested annually

Piquillo Pepper Artichoke Sugar Cane Source: Ministry of Agriculture. Made by ProInversion.

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Tourism PERU: TOURISM CAPITAL OF SOUTH AMERICA The number of tourists visiting Peru went from less than 1 million in 2002 to 1.95 million in 2008 as a result of the promotion effort and the increasing international recognition of Peruvian tourist attractions. Hard currency earned by the sector in that same period skyrocketed to US$ 2.395 million from a previous US$837 million. However, tourist arrival is still on the low end considering the vast offer and diverse destinations with tourist potential yet to be developed and exploited. Currently, 75% of receptive tourism in Peru has historical-cultural characteristics. However, Peru’s tourist attractions offer a wide range of resources, which favors the development of diverse proposals such as: nature tourism, mystic tourism, homestay tourism, adventure tourism, among others. Numerous companies are taking advantage of the great potential offered by tourism business, whether as service providers for travelers or hotel infrastructure, a segment in which investments of at least US$ 1 billion have been announced a great deal of it in 4 and 5 stars hotels and boutique hotels.

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Investment opportunities include:

Close to 2 million tourists visited Peru in 2008, but the number is still low compared to the potential of the Country

■■ T h e d e v e l o p m e n t o f t h e Northern Tourist Circuit, which extends from the coast, where we can find cities and archaeological sites like Chan Chan, Túcume and the Royal tombs of Sipán museum; to the high jungle where the walled citadel of Kuelap awaits visitors; a place with the potential to turn into a destination as famous as Machu Picchu in the future. ■■ The consolidation of the Southern Circuit, with the city of Cusco and the Machu Picchu citadel (chosen as one of the Seven Wonders of the Modern World); which is creating synergies with surrounding attractions as the amazing archaeological rests of Choquequirao; Colca Canyon and the Vulcanoes Valley in Arequipa; and the islands of the Uros in Titicaca Lake in Puno. ■■ Tourism promotion in the Peruvian Amazon with a great potential due to an increasing interest for ecotourism in the world.


Photo: Xavier Conesa

SECTOR HIGHLIGHTS

Tourist arrival (Thousands of people)

1,949

1,812 1,487

1,635

1,277 997

967

998

1,070

2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Mincetur.

We must highlight the fact that Peruvian gastronomy has been gaining international recognition. According to The Economist, Peruvian cuisine rates among the ten best in the world and is one more reason to visit Peru.

■■ U n p a r a l l e l e d c u l t u r a l destination: Nine attractions have been selected as world heritage sites by UNESCO.There a r e n u m e rous archaeological Inca and Pre-Inca places. ■■ L a n d s c a p e I n t e n s i t y : natural attractions range from beaches on the Pacific coast to the tropical jungles of the Amazon, traversing the Andes mountain range with peaks over 6,000 meters above sea level. ■■ Ecosystem major diversity: 84 of the114 existing life zones in the world. ■■ Vast flora and fauna: 1,730 bird species, 330 amphibious species, 462 mammal species and 25,000 plant species (4,000 orchid varieties).

Tourist arrival according to country of origin ( % variation 2007 - 2008)

Poland 55.4%

India 47.3% The Philippines 41.3% Taiwan 33.9% Cuba 29.7% Dominican Republic 26.2% Canada 22.7% Colombia 21.6% Norway 20.9% Source: Mincetur.

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Outstanding conditions for Investing in Peru Peru tops a global macroprudential indicator ranking, according to World Economic Forum, this reflects the country’s financial stability. Furthermore In the World Economic Forum’s index measuring attractiveness for private investment in infrastructure in Latin America, Peru holds the first place.

Peru ranks first in global macroprudential indicator Investor Protection Index Peru

6.53 5.82

China Switzerland

5.70 5.51 5.49

Colombia France Holland Mexico Argentina Brasil Chile Venezuela

• investmentThe same treatment as local investors • sectorsunrestricted access to most economic sectors • No performance requirements are imposed • Free capital transference • Free competition • Private Property guarantees • Freedom for acquiring shares from nationals • Free access to domestic and foreign credit • Freedom of royalty remittance • Free technological hiring • Freedom for hiring insurance abroad • Network of investment promotion and protection agreement.

To • • •

the investor Stability rights for no discrimination Stability of the Income Tax regime Stability of the regime for free availability of foreign currency • Stability of the regime for free transfer of profits, dividens and royalties.

3.18

Peru holds first place in government receptiveness to private investment in infrastructure 5.8 5.6 5.5 4.8 4.6 4.5 4.2 4.2 4.1 4.0 3.2 3.1

Source: World Economic Forum, Benchmarking National Attractiveness for Private Investment in LA Infrastructure 2007.

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Peru offers foreign investors:

With the possibility of signing Legal Stability Agreement that guarantee…

5.48 5.43 5.30 4.78 4.66

Source: World Economic Forum, The Financial Development Report 2009.

Peru Colombia Chile Uruguay El Salvador Bolivia Brasil Dominican Rep. Mexico Guatemala Venezuela Argentina

ATTRACTIVE REGULATORY FRAMEWORK

To • • •

Receiving Company Stability of the labor hiring regime Stability of the export promotion regimes Stability of the Income Tax regime

Conditions of the juridical stability agreement •

Commitment to invest at least US$ 5 million in any sector of the economy; US$ 10 million in case of mining or hydrocarbons The term of the agreement is 10 years. In case of concessions the period shall extends to the concession period.


EFFECTIVE PROTECTION TO INVESTORS Peru has signed 32 bilateral Investment and Protection Agreements that consolidate its liberalization with countries from the Pacific basin, Europe and Latin America. Peru has improved its negotiation standards for International Investment Agreements to consolidate a stable and predictable framework for investments. The recently negotiated bilateral agreements with Colombia and Japan, and the investment chapters in the FTA with the USA, Chile, Canada, Singapore and China are based on a negative list approach, with national treatment principle applying from the establishment phase of the investment. They also have transparency clauses and no imposing performance requirements. Peru has entered into the OPIC /7 agreement that facilitates operations granting coverage to investment from USA carried out in Peru. Peru is also member of MIGA /8 and signed the International Center for Settlement of Investment Disputes –ICSID /9, as well as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Furthermore, Peru promotes using alternative mechanism for dispute settlement, such as arbitration, even in cases involving the State.

PERU ENTERED OECD INVESTMENT COMMITTEE On July 2008, Peru joined OECDs Declaration on International Investment and Multinational Enterprises and since then takes part in the Investment Committee of this entity. This committee is a place for experience interchange and initiatives to promote economic and investment development. Membership in this committee will enable Peru to efficiently expedite domestic and foreign investment in the country. ProInversion has been designated as Peru’s “Contact point” within the OECD . /7 Overseas Private Investment Corporation /8 Multilateral Investment Guarantee Agency /9 International Center for Settlement of Investment Disputes

–ICSID

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Private Investment Promotion Agency - Peru

Your strategic ally for your investment in Peru Private investment in Peru has increased from US$ 12 billion per year during 2001-2006 to close US$ 27 billion a year now. Private investment has increased over 100% in only 3 years, with similar results for exports, capital assets imports and the construction activity of great projects and industrial plants, like those related to housing, shopping centers and entertainment center, restaurants and hotels. This has occurred within the framework of the excellent conditions Peru offers, with a sustained accelerated macroeconomic increase climate and one of the most stable and “investor - friendly” policies within the OECD and APEC standards. ProInversion is the governmental agency created to promote private investment in Peru with an aim to increase competitiveness and to make viable the potential productivity of the country. Based on these objectives ProInversion has developed at least 80 processes which have allowed transferring (by sale or under the PPPs scheme) assets and services from the Peruvian State to private investors and operators, and which represent investment commitments for over US$ 9 billion. The current project portfolio under promotion process exceeds US$ 4 billion in investment requirements.

Photo: PROINVERSIÓN 18

More than US$ 9 billion in investment commitments

Photo: PROINVERSIÓN

ESSENTIAL ASPECTS OF A WORLD UNIQUE AGENCY

■■ In addition to promoting the business environment in Peru and assisting development of investment projects, ProInversion has been entrusted with carrying out the PPP’s processes and large sale of public assets. ■■ Proinversion’s Board of Directors is comprised of five ministers, among which are the Minister of Economy and Ministers related to production and infrastructure sectors. ■■ ProInversion has an important network of contacts that include international organizations, business organizations, private companies, domestic and foreign non governmental organizations, promotion agencies from other countries and embassies, among others. ■■ The agency has two regional offices and maintains a dynamic relationship with the Regional Governments, assisting them with its expertise and transferring know-how.

Photo: PROINVERSIÓN


SERVICE TO POTENTIAL INVESTORS ProInversion facilitates and assists in the evaluation or effective execution of totally private projects. In these cases its participation encompasses a series of services range from providing information requests from potential investors, confirming local availability of some type of resource or required service and organizing meeting agendas with other information sources or with potential suppliers and even to

request from corresponding authorities information on the application of existing legal framework for specific situations. Additionally, ProInversion takes active part in facilitating investments by identifying, eliminating or reducing impacts from bureaucratic red tape. In this way, ProInversion works as the strategic ally of your investment in Peru.

INVESTOR SUPPORT CENTER : Contact@proinversion.gob.pe CONTACT INFORMATION AT PROINVERSIÓN EXECUTIVE BOARD Executive Bureau Facilitation and Promotion Office Technical Affairs Office

direccionejecutiva@proinversion.gob.pe dfpi-direccion@proinversion.gob.pe dat-direccion@proinversion.gob.pe

CONCESSION PROJECTS, PPPS AND PUBLIC ASSET SALES IN: Ports Trains Agriculture, Hydroenergy and Irrigation Airports Sanitary Mining Telecommunications Electricity and Hydrocarbons Sugar and Capital markets Roads Tourism and Real Estate

dat-puertos@proinversion.gob.pe dat-ferroviarios@proinversion.gob.pe dat-irrigacion@proinversion.gob.pe dat-aeropuertos@proinversion.gob.pe dat-saneamiento@proinversion.gob.pe dat-mineria@proinversion.gob.pe dat-telecomunicaciones@proinversion.gob.pe dat-energia@proinversion.gob.pe dat-capitales@proinversion.gob.pe dat-viales@proinversion.gob.pe dat-turismo@proinversion.gob.pe

ProInversion headquarters in Lima is located on: Av. Paseo de la República 3361, Lima 27, Perú

Private Investment Promotion Agency - Peru

Telephones: In Lima: (511) 6121200 Arequipa: (5154) 608115 Piura: (5173) 310081 Write to us at E-mail: contact@proinversion.gob.pe. Visit us: www.proinversion.gob.pe Legal Deposit has been made at the National Library of Peru at: N° 2008-14672

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Av. Paseo de la República 3361, Lima 27, Perú. Telephones: Lima: (511) 6121200 / Arequipa: (5154) 608115 / Piura: (5173) 310081 contact@proinversion.gob.pe

www.proinversion.gob.pe

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