May 2007

INVESTMENT OPPORTUNITIES IN INVESTMENT OPPORTUNITIES IN PERU

PERU OFFERS:

Maintaining the basic macroeconomic equilibriums Inflation between 1,5% and

3,8% in the last 7 years. Fiscal Surplus of 2%

forecasted for 2006.

An economy, working within the globalization processand with access to regionalcommercial blocks.

Stable and favorable investment climate.Investment policies based on international principles.

GDP Growth of 8% for 2006 andexpected to be close to 8% for the next years.

CAN, APEC, Mercosur,

European Union and the United

States of America with annual

commercial exchange greater

than US$ 38 600 MM.

Legal Stability

Agreements.

32 International Investment Agreements.

Investment plays an important role in the country’s Economic Growth and signals a promising future

Source: Central Reserve Bank of Peru, National Institute of Statistic and Information and SUNAT:

2004 2005 20064,8 6,4 8,039,1 13,9 20,15,7 12,2 13,02,7 4,5 7,3

40,9 35,3 36,919,6 29,6 35,4

4,7 8,4 14,713,6 14,3 27,8

4,7 7,9 16,617,5 25,5 41,3

52,3 29,4 168,3

Pensions Funds (var%)

IGBVL General Index of the Stock Exchange Market of Lima (var %)

Tax Collection (var %)

Credit System of the Private Finnancial Sector

Exports (var % en US$)Imports of capital goods (var % in US $)GDP of the construction sector (var %)

Private Investment (var %)Public Investment (var %)Employment in companies with over 10 employees (var %)

GDP (var%)

Sustainable economic growth with annual forecasted rate greater than 8%

0

2

4

6

8

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.

Developed

World

GD

P G

row

th(A

nn

ua

l va

riatio

n %

)

6,4

5,2

3,9

5,2

Peru8,03

Source: Central Reserve Bank of Peru.

* Forecasted

6 955 7 026 7 7149 090

12 809

17 336

23 750

1%

18%

37%35%41%

10%2 000

7 000

12 000

17 000

22 000

2000 2001 2002 2003 2004 2005 2006

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

Exports in millons US$" % Exports Growth (base 2000)"

Private Investment

Private Investment grew

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

01 02 03 04 05 06

Private Investment

Private Investment grew 20,1% in 2006*

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

01 02 03 04 05 06

Annual Exports growth greater than 30% Accompanied by private investment growth

(average annual % variation)

Increase in the imports of capital Goods

( Millions of US$)

Rise in the commercial exchange

(Millions of US$)

Source: Central Reserve Bank of Peru.

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006  

Total Exports (US $ mill.)  Total Imports (US $ mill.) 

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

Capital goods for the Industry

Transport Equipment

Others

Source Central Reserve Bank of Peru.

* Forecasted by the Ministry of Economics and Finance

Source: SUNAT

Peru is progressively reducing its fiscal deficit

(% of GDP)

0,5

By increasing its central government tax revenues

-3,3

-2,5 -2,3

-1,7

-1,1

-3,5

-3,0

-2,5

-2,0

-1,5

-1,0

-0,5

0,0

-0,4

2,5

0.0

2000 2001 2002 200320042005 2006 2007*

8 038

6 9687 501 7 696 7 821

8 915

10 247

12 123

13 134

31,1%

1,6%7,7% 2,6%

14,0%

14,9%18,3%

-13,3%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

1998 1999 2000 2001 2002 2003 2004 2005 2006

-0,2

-0,15

-0,1

-0,05

0

0,05

0,1

0,15

0,2

0,25

0,3

0,35

Central Government Tax Revenues (in US$ MM)

% Annual change in the Central Government Tax Revenues

1,0

1,5

2,0

2,5

Exchange rate in Latin America(Index J anuary 2001=100)

Source: Bloomberg and Central Reserve Bank of Peru.

85

105

125

145

165

185

205

E-0

1

A-0

2

A-0

3

N-0

4

M-0

6

N-0

6

Peru

Brasil

Chile

Colombia

Mexico

Var

iaci

ón

an

ual

(Po

rcen

taje

)

Inflation in Latin America

... in a framework of macroeconomic stability...

Peru

Argentina

Brasil

Chile

Mexico

Peru

Argentina

Brasil

Chile

Mexico

Source: Central Reserve Bank of Peru, Chile, Mexico and Argentina.Until October 2006

-5

0

5

10

15

20

25

30

20

00

20

01

20

02

20

03

20

04

20

05

Source: Central Reserve Bank of Peru.

With increasing Net International Reserves that represent more than 12

months of imports

JP

Mo

rga

n I

nd

ex

EM

BI+

**

The careful and responsible management of our economic program has allowed us to keep our

country risk index among the lowest in the region.

Source: Bloomberg

Updated 17 April, 2007

Ne

t In

tern

ati

on

al

Re

se

rve

s

(Mili

ons

of d

olla

rs

8 180 8 6139 598 10 194

12 68114 097

17 275

5,3%

11,4%6,2%

24,4% 11,2%

22,5%

02 0004 0006 0008 000

10 00012 00014 00016 00018 000

2000 2001 2002 2003 2004 2005 2006

00,050,10,150,20,250,30,350,40,450,5

Net International Reserves (in US$ Millions)"

Annual Variation

100200300400500600700

Abr-0

7Fe

b-07

Dic-06

Nov-0

6Se

p-06

Ago-0

6Ju

n-06

Abr-0

6Fe

b-06

Ene-0

6No

v-05

Oct-0

5Ag

o-05

Jun-0

5Ma

y-05

Mar-0

5En

e-05

Nov-0

4Oc

t-04

Ago-0

4Ju

l-04

May-0

4

EMBI+ Peru Latinamerica

Just one step away from the Investment Grade

Source: Bloomberg

Peru close to the investmentgrade

S&P/Fitch

Moody's Characterstic

InvestmentGrade

AAA Aaa Risk freeAA+ Aa1AA Aa2 Superior

AA- Aa3A+ A1A A2 High capacity of

repaymentA- A3BBB+ Baa1BBB Baa2

Moderate capacity of repayment

BBB- Baa3BB+ Ba1BB Ba2 Some capacity of

repaymentBB- Ba3B+ B1B B2

High uncertainty in the capacity of repayment

B- B3CCC+ Caa1CCC Caa2

Highly vulnerable to default

CCC- Caa3

DefaultCaD

AAA Aaa Risk freeAA+ Aa1AA Aa2 Superior

AA- Aa3A+ A1A A2 High capacity of

repaymentA- A3BBB+ Baa1BBB Baa2

Moderate capacity of repayment

BBB- Baa3BB+ Ba1BB Ba2 Some capacity of

repaymentBB- Ba3B+ B1B B2

High uncertainty in the capacity of repayment

B- B3CCC+ Caa1CCC Caa2

Highly vulnerable to default

CCC- Caa3

DefaultCaD

Latin American Ranking

Countries S&P Fitch Moody's

Mexico BBB BBB Baa1Chile A A A2

Brazil BB+ BB+ Ba2Peru BB+ BB+ Ba3

Colombia BB+ BB Ba2Venezuela BB- BB- B2Argentina B+ B B3Bolivia B- B- B3Ecuador CCC+ B- Caa2

Peru offers a favorable legal framework for foreign investment ...

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

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

With a legal system that guarantees basic rules and statutes that will not change

During ten years.In case of concession, the term is subject to the term of contract (60 years maximum)The only requirement: minimum investment of US$ 5 Million (US$ 10 Million in mining and hydrocarbon sectors)

• Recruitment regimes• Regimes for the promotion of

exports • Income Tax Regime.

• National treatment• Free availability and remittance of

foreign currency*• Income tax rules applicable to

dividends.

For national and foreign investments

and his receiving company

*With capitals coming from abroad

With a stable tax regime, which main taxes are:

Note: * Burden goods: fuels, luxury goods, liquors and cigarettes

Legislative Decree No. 973 (12.03.07) standardizes the treatment for all economic activities regarding the advance recovery of the value added tax (VAT).  It will come into force and effect the first business day of the month following the 90 calendar days that may take for this Decree’s regulations to be prepared and published. It is established that tax payers who purchase capital assets but do not start operations, within the framework of investment contracts subscribed with the State, will be able to recover the VAT paid in said purchases.

Dividends

Royalties

Interests

Varies up to 125% in a few products

Value Added Tax (VAT)

Excise Tax (*)

19%

Financial Transactions Tax 0.08% throughout 2007

Applicable RateTax

Income

4,1%

30%

4,99%

30%

Agriculture and aquaculture 15%Corporate profit

　 TARIFF LEVELS AD-VALOREM +

SURCHARGESTARIFF LINES

%

0 3 028 43,29%

12 2 843 40,65%

17 48 0,69%

20 759 10,85%

25 316 4,52%

Total 6 994 100.00%

SIMPLE AVERAGE APPLIED TARIFF RATE 8.29

and a reduced tariff structure and low tariff dispersion…

Source: SUNAT

Free market access to: Andean Community of Nations Chile MERCOSUR Mexico United States European Union Thailand

Peru has concluded the negotiations for the

Trade Promotion Agreement (TPA) with

the United States

Trade Promotion Agreement with Singapore under negotiations

Peru has the largest Chinese population in South America

The Chinese came to Peru in the second half of the 19th century. Nowadays 15% of the country's total population has some Chinese ancestry.

The Chinese influence in Peru is still very noticeable, especially in the culinary field.

Factors promoting trade and investment

1. Need of inputs to keep growth rates.

2. It requires supply sources with added value because of the lack of water and energy.

3. Availability of funds.

4. Its high volumes of production justify the development of added value proudcts.

1. Great source of inputs.

2. Source of water and energy, besides the ability to transform raw material.

3. Need of investments to develop infrastructure.

4. Demand of value added products.

China Peru

Bilateral trade (US$ million)

732 7791.063

1.321

2.002

2.924

3.639

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

2000 2001 2002 2003 2004 2005 2006

Source: SUNAT

Bilateral trade (US$ million)

2.271

1.368

0

500

1.000

1.500

2.000

2.500

2000 2001 2002 2003 2004 2005 2006

Peru exports to China

China exports to Peru

Source: SUNAT

Flour, powder and "pellets" of fish. Copper, zinc, molybdenum, lead

and concentrates. Preparations and conserves of

mollusks Raw Oils of oil

Domestic appliances Machines for the processing of

information Motorcycles Parts and accessories of machinery Devices of telecommunication Units of Memory Textiles Tires for cars and trucks Video cameras

Principal exports from Peru to China

Principal imports from China

Bilateral trade – principal products

COMPANIA MINERA ANTAMINA S.A

CONSORCIO MINERO S A CORMIN TEAM EXPORT S.A.C. SOUTHERN PERU COPPER

CORPORATION BHP BILLITON TINTAYA S.A. AYS S.A. SHOUGANG HIERRO PERU S.A.A. VOLCAN COMPANIA MINERA

S.A.A. CIA MINERA RAURA S A CORPORACION PESQUERA INCA

S A

SAGA FALABELLA S A LG ELECTRONICS PERU S.A. DELTRON INTERNATIONAL S A SONY SUCURSAL DEL PERU IMPORTACIONES HIRAOKA S.A.C. NEXTEL DEL PERU S.A. TECH DATA PERU S.A.C. PROCTER & GAMBLE PERU S.R.L. TIENDAS POR DEPARTAMENTO

RIPLEY S.A. TIM PERU SAC

Main exporting firms Main importing firms

Bilateral trade – exporters & importers

Commerce Finance Fishing Hydrocarbon Mining Services Tourism

Shougang Corporation Chen Kuo Ksiung China National Import and Export

Commodities Inspection Corp HSBC Latin America Holdings Limited Hsiang Sheng Huo Qixin Su Lin Zhang

Sectors Principal Investors

Investment up to 2006: US$250.000.000

Strong figures

Strategic location

Peru

Excellent opportunities