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Foreign Trade and Investment:
Challenges of the new
Government of Peru
Eduardo Ferreyros Minister of Foreign Trade and Tourism
Republic of Peru
October 2016
2
Economic Performance
Source: Central Reserve Bank of Peru , International Monetary Fund
* Estimated figures of BCRP (Inflation report as of June 2016), IMF (World Economic Outlook Database – April 2016)
3
Macroeconomic Soundness
Real GDP, 2006 – 2020 (% Variation)
4.0 3.9
1.5
-2.0
4.1
3.0 2.5 2.4
2.7 2.4 2.5 2.9 3.0 3.1 3.1
7.5
8.5
9.1
1.0
8.5
6.5 6.0 5.9
2.4
3.3 3.7
4.1 3.6 3.5 3.5
-4
-2
0
2
4
6
8
10
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017* 2018* 2019* 2020*
GD
P (
Pe
rce
nt
Ch
ange
)
World Peru
Macroeconomic Soundness
Peru continues leading regional growth
Real GDP – Forecasts for Latin America 2016 – 2017
(Annual Average Variation %)
-4.5
0.0
2.1
2.6
2.8
3.0
4.1
-5 -4 -3 -2 -1 0 1 2 3 4 5
Venezuela
Brazil
Chile
Mexico
Argentina
Colombia
Peru
Source: IMF / CENTRAL BANK OF PERU
4
Peru leads economic growth in the region
Source: IMF WEO April 2016.
Structural changes support the outstanding performance of the Peruvian economy
5
0.2
2.22.0
3.6
2.8
4.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Peru World LAC World LAC Peru
1961-1990 1990-2021
GDP (Average annual % change)
6
Peru’s Trade Performance
Global integration fosters trade and investment
1/ Not including Mexico.
Source: BCRP, MEF, MINCETUR.
Free Trade Agreements (FTA) with People’s Republic of China, United States, European Union, among others. (18 FTAs
with 52 countries).
We have preferential tariff access to 73% of the world GDP (92% of world trade).
Member of the Pacific Alliance.
Access process to the OECD.
Recently, subscribed the Trans-Pacific Partnership (still to be ratified by the Congress of each of the 12 partners).
Peru: Total Exports
7
US$ 8.0 billion
North America1
(21.9%)
US$ 6.1 billion
LAC
(18.8%)
US$ 8.3 billion
Europe
(24.6%)
US$ 0.3 billion
Africa
(0.9%) US$ 0.1 billion
Oceania
(0.5%)
US$ 11.1 billion
Asia
(33.3%)
Exports, 2015 (US$ 33,9 Billion)
Entered into force
Cuba
Canada
Chile Thailand
Venezuela
Costa Rica
European
Union
Mexico
United States
Andean
Community
Panama
Singapore
China
Korea
Japan
Trade Agreements Network
Honduras
Guatemala
Pacific Alliance
Chile
Brunei
New Zealand
Australia
Mexico
Viet Nam
Canada
Malaysia
Singapore United States
Japan
Peru
El
Salvador
Turquía
Tailandia
Brazil India
Indonesia
Negotiating Feasibility
study
In 2025 Peru
will have 27
FTAs into
force which
means 72
trade
partners
Source: http://www.acuerdoscomerciales.gob.pe
Signed
TPP WTO
These countries stand for enlarged market of 3,3 billion people (45% of global
population) with a joint GDP over US$ 60 trillion
91% of Peruvian exports
89% of Peruvian imports 8
Open Trade and Market Access Policy
Main Goal: Double exports by 2021, including non traditional exports
4,829 4,761 5,396 6,401 9,229
12,988
18,514 21,767 23,159
20,864
28,091
36,130 35,153
31,490 26,915
22,757
2,054 2,195 2,270 2,594
3,488
4,286
5,286
6,318 7,469
6,209
7,715
10,190 11,206
11,076
11,726
11,225
6,883 6,956 7,665 8,995
12,716
17,273
23,800
28,084 30,628
27,073
35,806
46,319 46,359
42,567
38,641
33,982
-
10,000
20,000
30,000
40,000
50,000
60,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Tradicionales No Tradicionales Totales
Trade Evolution (US$ FOB Million)
Fuente: SUNAT Elaboración: MINCETUR
67,964
33,244
36,696
9
Traditional Non Traditional Total
EU is Peru’s second main market
Exports from Peru to the world 2015 (%)
Source: CUSTOMS - SUNAT
More dynamic products
US$ 33 982 Millones
European Union
Fresh mangoes (US$ 125 million) 50,6%
(Var.% 2015/2014)
Cacao (US$ 154 million) 33,1%
Fresh avocados (US$ 201 million) 21,8%
China 22%
United States [PORCENTAJE]
Switzerland [PORCENTAJE]
Canada [PORCENTAJE]
Colombia 4%
Japan [PORCENTAJE]
European Union
16% Korea [PORCENTAJE]
Chile 3%
Rest of the World 19%
10
Peru – EU Trade in 2015
US$ 33,9
Billion
11
Country 2015
Total 4,463.1
1 Germany 1,109.4
2 Spain 705.0
3 Italy 638.0
4 France 362.0
5 UK 304.2
Bilateral Trade Peru – UE (by country)
Country 2015
Total 5,481.2
1 Spain 1,092.0
2 Germany 927.0
3 The Netherlands 878.0
4 UK 604.0
5 Italy 561.0
Exports to:
Imports from:
Copper, Zinc & Lead
Mixtures of vegetables
preserved
Organic cocoa
Precooked Giant Squid
Organic Bananas
Preserved asparagus
Fresh Brazil nuts
Fine animal hair, carded
Canned anchovies
Fishmeals
Fresh asparagus
Fats and oil of fish
Organic Coffee
Quinoa
Maca poder
Silver & concetrates
Natural calcium phospates
Fresh avocados
Fresh mangoes
Evaporated milk
Dried paprika
Fresh grapes
Frozen Giant Squid
Frozen fruit & nuts
Frozen scallops
Canned artichokes
Preserved olives
Paprika, crushed or
ground
Peru’s the world leading exporter of different products
Source: CUSTOMS – SUNAT
12
13
Bilateral Relation Peru – UK
UK investment in Peru
Source: CUSTOMS – SUNAT
United Kingdom is our second largest investor since 2006
Main investment sectors: Mining (US$ 2 314 Million), Finance (US$ 753 Million), Telecomunications (US$ 327 Million), Energy
(US$ 292 Million), Industry (US$ 180 Million), Trade (US$ 129 Million) & Services (US$ 121 Million)
2,849 2,961
3,452 3,750
3,944 4,299 4,315 4,315 4,336 4,336
30.6%
3.9%
16.6%
8.7%
5.2%
9.0%
0.4% 0.5% 0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
US
$ M
illio
n
14
UK: 4th market destination of Peruvian exports
Peru exports to United Kingdom 2010 - 2016
Source: CUSTOMS – SUNAT
Traditional Exports
2015: US$ 314 Million Jan – Aug 16’: US$ 166 Million
Minerals: 93% of total
Coffee: 5% of total
NonTraditional Exports
2015: US$ 291 Million Jan – Aug 16’: US$ 188 Million
Main Subsectors:
Agribusiness: US$ 237 Million
Chemical: US$ 21 Million
Textile: US$ 20 Million
Fishing: US$ 7 Million
Iron & Steel: US$ 2 Million
Main Products:
Fresh grapes (US$ 46 Million)
Fresh asparagus (US$ 45 Million)
Fresh avocados (US$ 42 Million)
Fresh mangoes (US$ 20 Million)
Mandarins & tangerines (US$ 18 Million)
Fresh cranberries (US$ 12 Million)
145 172 178 233 255
291
179 188
159
254
432 379 351
314
210 166
304
425
610 612 607 604
389 354
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015 Jan - Aug2015
Jan - Aug2016
US$
Mill
ion
Non Traditional Traditional Total
15
UK: 5th market providing goods to Peru
Peru imports from UK 2010 - 2016
Source: CUSTOMS – SUNAT
Imports
2015: US$ 304 Million Jan – Aug 16’: US$ 172 Million
16
15th
192.3
265.1
319.6 341.1 329.3
304.2
189.4 172.4
2010 2011 2012 2013 2014 2015 2015Jan-Aug
2016Jan-Aug
17
Why Invest in Peru?
Based on the “national treatment” principle.
Trade Policy consistency for the last 15 years.
Unrestrictive access to most economic sectors.
Free movement of capital.
Free competition.
Guarantee for private property.
Special Regimes: Legal Stability Agreements and VAT Anticipated Recovery.
Investment Chapter in FTAs and member of ICSID and MIGA.
Peru participates in the OECD Investment Committee and has initiated the process for its future incorporation as a member economy.
Peru offers a favorable legal framework for foreign investment
Friendly Investment Environment
18
Near- and medium-term reforms will be implemented in
order to increase the country’s growth potential
Near-term measures Medium-term measures
Promoting Investment
Promote (i.e. addressing delays, sourcing pending approvals of) both public and public-private partnership (PPP) investment projects
Redesign of processes for the granting
and monitoring of public and public-
private partnership (PPP) investment
projects
Boosting Business Productivity
(and increasing formality)
Seek a tax framework that promotes a better business environment and the expansion of the tax base: • Commitment to lower taxes (valued-
added tax - VAT) • Increase in the taxpayer base • Greater tax equity • Lower avoidance and evasion • Maximize the flow of resources to
regional and local governments
Strengthen multi sectoral efforts to reduce informality: • National Council of Competitiveness
and Formality • Reform of the tax authority • Red tape removal • Entrepreneurial training for small
businesses • Access to credit and financial
inclusion
Enhancing Fiscal
Responsibility
Promote an institutional framework that improves fiscal transparency and makes fiscal rules more enforceable.
Improve financial programming (e.g. systems, protocols, controls) in regional and local governments
19
20
Pacific Alliance (PA) Financial Integration Process
Capital markets integration
Mutual recognition of issuers and expansion of instruments and trade mechanisms within the
Latin American Integrated Market
Pacific Alliance’s members coordinate measures to foster and expedite the integration process.
Pension funds investments
Easing the pension funds investment schemes among PA members
Tax regimes alignment
Level the playing field to
reduce disadvantages vis-á-vis PA countries' foreign investment tax regimes
Pacific Alliance’s objectives
Source: INEI, ENAHO, Investment announcements gathered by APOYO Consultoría.
Increasing Middle Class
Sector Number of
announcements Investment
(US$ million)
Retail 65 2,338
Real Estate 52 2,129
Tourism 36 1,489
Services 21 1,041
Industrial 40 971
Massive
consumption 23 872
Logistics 11 506
Education 34 446
Health 11 291
Agriculture 12 240
Vehicle sales 13 127
Total 318 10,450
Main private investment announcements
(
Households: 4.5 mm
Households : 6.3 mm
2005 2015
1.5%
46.0%
18.3%
34.3%
19.7%
0.5%
37.6%
42.3%
Middle Class
Emerging lower class
3.0%
52.0%
14.0%
31.0%
2021
Households : 7.7 mm
Middle Class
Emerging lower class
B + C D E A
Urban Peru: Socioeconomic levels
(% de households)
21
Attractive Sectors to Invest
Add Value / connections/ Diversification
22
Food Industry Petrochemical
and Gas Industry
Construction Industry
Metal-mechanics Industry
Foods
Agri-business
Fishing Aquaculture
Forest
Forest Certification
Afforestation and
reforestation
Energy
Hydric Resources
Natural Gas
Hydrocarbons
Natural gas
Petroleum
Mining
Metallic
Non-metallic
Add Value / connections/ Diversification
US$ 159,5 billion
To reduce the long – term infrastructure gap (2016 -2025)*
* Source: Asociación para el fomento de la infraestructura nacional
Infrastructure Gap
Sector Mid-term
2016-2020
Gap
2021-2025
Long term
2016-2025
Water and
sanitation 6,970 5,282 12,252
Telecom 12,603 14,432 27,036
Transportation 21,253 36,246 57,499
Energy 11,388 19,387 30,775
Health 9,472 9,472 18,944
Education 2,592 1,976 4,568
Hydraulic 4,537 3,940 8,477
TOTAL 68,815 90,735 159,551
Infrastructure gap medium and long term (Million US$)
23
Water and sanitation
12,252 (8%)
Telecom 27,036 (17%)
Transportation 57,499
(36%)
Energy 30,775 (19%)
[NOMBRE DE
CATEGORÍA] [VALOR]
(12%)
Education 4,568 (3%)
Hydraulic 8,477 (5%)
Peru: A Growing and Solid Partner for Business
• Peruvian Network of FTAs, its geographic location, economic and policy stability, among
others, give Peru the conditions to consolidate itself as a HUB, offering clear and predictable
rules for trade and investment.
• Peruvian Real GDP Average of the last 10 years is 5,8%.
• Peru is the fourth most populated country in South America, but we are not a market of 30
million. Because of our FTAS we have Access to 3,3 billion people/market around the world.
Ranking on the Ease of Doing Business (2015):
• Opportunity for foreign investors to make business in Peru, importing capital goods and industrial machinery and exporting products or services, under the benefits of Peruvian FTAs Network.
• Attractive business environment: Peru is the second country in South America rank at Doing Business 2015.
Rank Country
1 Chile
2 Peru
3 Colombia
4 Uruguay
5 Paraguay
24
25
Investment Opportunities
Sector Projects
Estimated
investment
(USD million)
Estimated Award
Date
TRANSPORT INFRAESTRUCTURE
LONGITUDINAL DE LA SIERRA HIGHWAY, SECTION 4 446 Q IV 2016
HUANCAYO - HUANCAVELICA RAILWAY 204 Q IV 2016
THE AMAZON WATERWAY 70 Q I 2017
PANAMERICANA SUR HIGHWAY: ICA- DV. QUILCA SECTION Under evaluation 2017
LONGITUDINAL DE LA SIERRA HIGHWAY, SECTION 5 Under evaluation 2017
PORT TERMINALS (Ilo and Salaverry) Under evaluation 2017
LINES 3 AND 4 OF THE METRO OF LIMA AND CALLAO Under evaluation To be defined
PERIPHERAL RING ROAD FOR METROPOLITAN LIMA Under evaluation To be defined
LURÍN – CHINCHA COMMUTER TRAIN Under evaluation To be defined
THIRD GROUP OF AIRPORTS Jauja, Jaén, and Huánuco Airport Under evaluation To be defined
REAL STATE ANCÓN INDUSTRIAL PARK (AIP) Under evaluation 2017
AGRICULTURE AUCTION OF AGRICULTURAL LANDS - CHAVIMOCHIC PROJECT 5000 /ha 2017
Project Porfolio
26
Sector Projects
Estimated
investment
(USD million)
Estimated Award
Date
ENERGY
AGUAYTÍA – PUCALLPA 138 KV ELECTRIC TRANSMISSION LINE 20.3 Q IV 2016
NEW POWER SUBSTATION: LA PLANICIE 500/200 kV 20.1 Q III 2017
500 KV MANTARO – NUEVA YANANGO – CARAPONGO & ASSOCIATED SUBSTATIONS LINK
276.5 Q IV 2017
500 KV NUEVA YANANGO – NUEVA HUÁNUCO & ASSOCIATED SUBSTATIONS LINK
232.5 Q IV 2017
REACTIVE POWER COMPENSATOR (SVC o similar) +400/-100 MCAR in 220 kV LA PLANICIE S.S.
24.8 Q IV 2017
QUILLABAMBA THERMAL POWER PLANT 180 2017
220 kV TINTAYA –AZÁNGARO TRANSMISSION LINE (1 circuit) 58.9 Q I 2018
REPOWERING TO 1000 MVA OF THE 500 Kv CARABAYLLO – CHIMBOTE – TRUJILLO TRANSMISSION LINE
32.6 Q I 2018
REACTIVE POWER COMPENSATOR (SVC or similar) +400/-150 MVAR AT 500 kV TRUJILLO S.S.
31.8 Q I 2018
220 kV NEW CARHUAQUERO S.S. 9.5 Q I 2018
MASS USE OF NATURAL GAS FOR THE CENTER AND SOUTH OF PERU
300 To be defined
Project Porfolio
27
Sector Projects
Estimated
investment
(USD million)
Estimated Award
Date
SANITATION AND HEALTH
MAIN WORKS AND CONDUCTION OF DRINKING WATER SUPPLY FOR LIMA
600 2017
WASTE WATER TREATMENT SYSTEM OF TITICACA LAKE Under evaluation 2017
SOLID WASTE MANAGEMENT IN HEALTH FACILITIES UNDER THE MINISTRY OF HEALTH IN METROPOLITAN LIMA
Under evaluation
2017
UPGRADING AND EXPANSION OF SEWAGE NETWORK AND WASTEWATER TREATMENT PLANT OF THE TOWNS OF HUANCAYO, EL TAMBO, AND CHILCA
Under evaluation
2017
THREE NEW HIGH-COMPLEXITY HOSPITALS 400 To be defined
MINING
MICHIQUILLAY Under evaluation 2017
JALAOCA (EXPLORATION PROJECT) Under evaluation 2017
COLCA (EXPLORATION PROJECT) Under evaluation To be defined
ANTABAMBA (EXPLORATION PROJECT) Under evaluation To be defined
PAMPA GRANDE (EXPLORATION PROJECT) Under evaluation To be defined
Project Porfolio
28
Agribusiness Sector
Natural greenhouse.
High agricultural yields: Sugarcane (2nd), Asparagus, Olives (3rd), Artichokes (4th), Grapes (6th) and Avocado (11th).
Seasonal windows in major markets for agricultural exports.
The 100,000 hectare of land currently devoted to agricultural exports are expected to double as a result of large agricultural irrigation and expansion existing projects.
More than US$ 5.000 billion in exports of fresh and processed products to more than 150 countries.
Organic and Natural Products with high export potential.
29
Agricultural exports according to Target Market – 2015
Source: CUSTOMS
1,122 1,338
1,757 1,971
2,555 2,425
3,177
4,519
4,177 4,231
5,096
5,121
0
1,000
2,000
3,000
4,000
5,000
6,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Agro Exports (millions of US$ FOB)
TOTAL TRADITIONAL
TOTAL NON TRADITIONAL
TOTAL
UNITED STATES 32%
NETHERLANDS 13%
GERMANY 6%
SPAIN 5%
UNITED KINGDOM 5%
ECUADOR 4%
CANADA 3%
CHINA 3%
CHILE 2%
OTHER 27%
30
Agribusiness Sector
Important cultural destination for archaeological sites of the Inca and pre-Inca cultures.
• Machu Picchu was voted one of the New 7 Wonders of the World.
Diversity of natural settings. Destination for bird and orchid watchers.
Important investment by internationally renowned hotel chains.
The conventions and gastronomic tourism has gained a significant boost, Lima is considered as one of the main venues for international meetings and we are the gastronomic capital of Latin America.
Increased connectivity of the Peruvian air market with increased weekly frequencies in international flights to allow more connections and destinations, with more and better travel options.
Investment Opportunities in the 8 priority destinations: Northern Beaches, Amazon River, Amazonas, Kuelap, Moche Route, Lima, Nazca, Paracas, Colca Valley and Puno-Lake Titicaca.
Due to its tourist attraction and services of quality Peru will be the venue of important sports events and international forum such as: APEC 2016 and the 2019 Pan American games.
31
Tourism Sector
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