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Peru: Investment opportunities Harry Chang Director of Investment Promotion March 2011.

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Presentation on theme: "Peru: Investment opportunities Harry Chang Director of Investment Promotion March 2011."— Presentation transcript:

1 Peru: Investment opportunities Harry Chang Director of Investment Promotion March 2011

2 1.Internationally acknowledged macroeconomic stability WHY INVEST IN PERU? 2.Friendly investment environment 3.Open trade and market access policy 4. Foreign Direct Investment 5. Investment opportunities

3 Peru has recorded the highest annual average real GDP growth in Latin America in the last decade 2009 / / Chile5,06Chile2,97Peru1,72 2Uruguay3,79Peru2,69Ecuador1,63 3Colombia3,51Argentina2,52Uruguay1,60 4Ecuador2,96Uruguay2,46Colombia1,54 5Peru2,94Colombia2,04Argentina1,53 6Argentina2,91Ecuador2,01Chile1,50 7Brazil2,79Bolivia1,96Venezuela1,46 8Mexico2,75Brazil1,96Brazil1,45 9Paraguay2,37Mexico1,86Bolivia1,43 10Bolivia2,30Venezuela1,78Paraguay1,36 11Venezuela2,27Paraguay1,54Mexico1,27 1/ On a constant purchasing power basis / 1980 GDP per capita increase 1/ 1.MACROECONOMIC STABILITY

4 Peru is one of the fastest growing economies in the World Fuente: FMI – Abril Accumulated GDP Growth (Var. %) 1.MACROECONOMIC STABILITY

5 (Average annual CPI inflation during 2001 – 2009 in %) Peru also recorded the lowest annual average inflation in Latin America in the last decade… 1.MACROECONOMIC STABILITY

6 Private investment (% GDP) Balance of Trade (US$ Million) Source : Central Reserve Bank of Peru 1.MACROECONOMIC STABILITY Source : Central Reserve Bank of Peru * Projections …growth has been driven by rising investment and labor productivity and sustained corporate sector confidence

7 …has supported a massive growth of consumption markets outside Lima

8 2005 Poverty Poverty > 50% 2010 Poverty 1 1/ Expected. Source: National Bureau of Statistics, National Electoral Tribunal Sustanined growth has promoted a dynamic increase in employment, a steady decline in poverty, and a reduction in inequality

9 Net International Reserves (US$ Million) Source : Central Reserve Bank of Peru *Projection Latin America benchmarking Investment grade Source : Standard & Poor`s, Fitch Ratings y Moody´s Peru has obtained investment grade from all major rating agencies 1.MACROECONOMIC STABILITY CountryS&PFitchMoody´s Chile A+AAa3 Mexico BBB Baa1 Peru BBB- Baa3 Brazil BBB- Baa3 Colombia BBB-BB+Ba1 Venezuela BB-B+B2 Argentina BBB3 Bolivia BB+B1 Ecuador B- Caa3

10 Peru offers a favorable legal framework for foreign investment... Recognition of a favorable Investment environment 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° PCM 2.FRIENDLY INVESTMENT ENVIRONMENT Non discriminatory treatment. Peru offers to foreign investor the same treatment as local investors. Unrestrictive access to most economic sectors * 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 Legal Stability Agreements Peru is adherent to the OECD Declaration on International Investment and Multinational Enterprises. *Investments that require authorization: Located within 50 km in the border line and those destined to arms, ammunitions and explosive. Likewise, a principal local partner for investments in radio and television as well as in air transport is required.

11 Peru has signed Bilateral Investment Treaties (BIT) and Free Trade Agreements that underpin its liberalization policy. Australia China* Korea Malaysia Singapore* Thailand Japan Argentina Bolivia Chile* Colombia Ecuador Paraguay Venezuela Cuba El Salvador Germany Belgium and Luxemburg Denmark Spain Finland France Nederland Italy Norway Portugal United Kingdom Czech Republic Romania Sweden Switzerland Canada* United States* * FTA 2.FRIENDLY INVESTMENT ENVIRONMENT It has also signed double taxation agreements with Brazil, Chile and Canada. … we have complemented our open trade policy with Investment Agreements

12 Peru ranks second place in the region as attractive country for investments. And also is one the countries that improved its ranking the most. Source: Doing Business 2011 Ease of doing business ranking 2011 Peru DOING BUSINESS 3646 Starting a business54103 Dealing with Construction Permits Registering Property2428 Trading Across Borders – 2011 Comparison 2.FRIENDLY INVESTMENT ENVIRONMENT

13 Peru is the second most attractive country for investing in the region. Source: Pricewaterhouse Coopers (200 CEOs in LA survey) 2.FRIENDLY INVESTMENT ENVIRONMENT …but there is no room for complacency, and we are working on further improving the investment climate

14 3.PREFERENTIAL ACCESS TO THE MOST IMPORTANT MARKETS An economy working to become globalized and with access to the worlds largest markets and trade blocs. Agreements n force Agreements soon enter into force Agreements under negotiations Transpacific Partnership Agreements (Vietnam, Brunei, Darussalam, Australia, Malaysia, New Zeeland, Chile, EEUU, Peru) FTA Central America

15 Source: Central Reserve Bank of Peru Perus imports structure is strong in raw and intermediate materials as well as capital goods for Industry development. IMPORTS STRUCTURE 3.PREFERENTIAL ACCESS TO THE MOST IMPORTANT MARKETS

16 Source: Central Reserve Bank of Peru Perus Exports are led by the Mining Sector (62.7%), followed by Petroleum and Gas (8.6%) and Fishing, basically fishmeal and fish oil (7.7%) EXPORTS STRUCTURE 3.PREFERENTIAL ACCESS TO THE MOST IMPORTANT MARKETS

17 Trade Peru – United States BILATERAL TRADE (US$ MILLIONS) Main Exports Gold Copper Petroleum derivatives Clothing Vegetables Main Imports Mechanical devices Petroleum derivatives Plastic, rubber Vehicles

18 Source: Proinversion Peru reached US$ 18,840 millions in Foreign Direct Investment in Spain (23%), United Kingdom (20%) and USA (15%) as the most important investors. The main sectors involved were Mining (21%), Communications (19%), Industry (15%), Finance (15%). 4. FOREIGN DIRECT INVESTMENT (Only Equity) …it is therefore not surprising that Peru keeps attracting large FDI inflows

19 PROINVERSIÓN offers its services, free of charge, for the installation of companies in the country throughout its three stages: Pre-establishment, establishment and post- establishment. PRE- ESTABLISHMENT ESTABLISHMENT POST- ESTABLISHMENT 4. SERVICE OR ASSISTANCE TO INVESTORS

20 Main Investment Opportunities by Sectors

21 MAIN PROJECTS IN PROGRESS/TO BE BUILT IN ProjectCompanyLocationSector Total Investment (US$) 1/ Las BambasXstrata CopperApurimacMining4.5 billion ToromochoChinalcoJunínMining2.2 billion AntapaccayXstrata CopperCuzcoMining1.5 billion Antamina Antamina (Xstrata, BHP, Teck, Mitsubishi) AncashMining1.3 billion Fertilizer plantCF IndustriesIcaPetrochemistry1 billion Cerro Verde Cerro Verde (Freeport Mc Moran) ArequipaMining 50 million / 1 billion Camisea CashiriariPluspetrol CamiseaCuzcoHydrocarbons740 million TGP IITGP (Tecgas, Hunt)Lima, IcaHydrocarbons720 million Ammonium nitrate plant Nitratos del Perú (Brescia and Sigdo Koppers) IcaPetrochemistry650 million Lima Electric TrainOdebrechtLimaInfrastructure500 million BayóvarValePiuraMining479 million OlmosOdebrechtLambayequeInfrastructure470 million Road Network 4OHL ConcesionesLa Libertad, AncashInfrastructure360 million Source: companies, media, APOYO Consultoría1/ Investment throughout the construction period.

22 Natural greenhouse. The best agricultural yields in the world. Sugar cane (1st) Asparagus, olives and artichokes (3rd) Grapes (5th) Seasonal windows in the most important markets. Projections expect that the 90,000 ha currently used for agro exports to double as consequence of large irrigation projects in portfolio. Over US$ 2,5 billion in exports of fresh and processed products to over 113 countries. Products with high export value. AGRIBUSINESS SECTOR PERÚ: UN CAMPO FERTIL PARA SUS INVERSIONES

23 FISHERIES SECTOR Extensive fishing coast (3,080 km) and water mirrors that offer adequate conditions for the development of marine and continental aquaculture. first producer of fishmeal and fish oil in the world. Distribution of Peruvian fisheries products to over 100 countries. Trend towards product diversification.

24 MINING SECTOR Polymetallic country, third in gold, silver, copper and zinc reserves. Only 20% of territory with mining potential has been explored. First silver world producer. In Latin America: 1 st gold, zinc, silver, tin and lead producer. 2 nd copper and molybdenum producer. The investment in the sector exceeded US$ 14 billion between years 1999 and 2009 and it is projected an investment of US$ 37 billion in the coming years. Peru is one of the few countries with non- metallic minerals deposits.

25 Sole sustainable natural gas source in the cost of the South-American Pacific Ocean. Expansion of gas pipeline to the Marcona and Ilo area: Development of Petrochemical industry and products: Fertilizers, plastics, synthetic fibers, etc. Progress in energy grid transformation and LNG export. Exploration continues in areas adjacent to natural gas and liquid deposits of Camisea. Scheduled investments for over US$ 6.0 billion for petrochemical industry development and LNG export: CF Industries, Orica, Grupo Brescia with Sigdo Koppers Group, Braskem. HYDROCARBON SECTOR

26 TEXTILE SECTOR Recognized quality of Peruvian pima cotton, considered one of the most demanded and finest fiber in the world. First world producer of the finest South American camelids fibers: alpaca and vicuna. Long textile tradition, favors workforce professionalization and training. International recognition as full package supplier of the best brands in the world. Sound trend towards exports growth, reaching its maximum level in 2008: US$ 2 billion.

27 FORESTRY SECTOR Presence of great biological diversity and highly valued timber. Development of hard tropical timber in the forest and soft timber in the highlands of the country. 2nd country with the largest natural forest area in Latin America. 78,8 million ha of natural forests, 10 million ha for reforestation and other areas for afforestation (plantations). Forestry products exports grew to US$ 296 million in Investment opportunities in industrial timber complexes.

28 Important cultural destination due to Inca and Pre-Inca cultures archaeological sites. Machu Picchu was chosen as one of the new 7 Wonders Worldwide. Diversity of natural landscapes. Destination for bird and orchid watchers. Lima is the gastronomic capital of Latin America. Peru has the largest number of gastronomy schools in the world. Significant investment in hotels of international recongnition. Tourism attractions yet to be explored: North-Eastern tourism circuit: Kuelap, Sipan, Chan Chan, among others. TOURISM SECTOR

29 Construction GDP annual average growth for 2010 is 14.4%. Housing deficit affects 25% of households. Lima holds 25% of total deficit, and 48% of quantitative deficit. There are several programs for housing financing, based on households socio- economic conditions and income level: Techo propio, Fondo Mi Vivienda and Commercial Banking. Mortgage credits grew an average of 25% in the last 4 years; construction credits grew 33%. REAL ESTATE SECTOR

30 PROJECTS IN PROINVERSIONS PORTFOLIO

31 PROJECTS GRANTED IN CONCESSION NUMBER OF PROJECTS GRANTED IN CONCESSION

32 14 Concessions US$ 2.55 billion in investment commitments CONCESSIONUS$ MM NORVIAL (2002) Road Network Nº COVIPERU (2005) Road Network Nº IIRSA Norte S.A. (2005) Paita – Yurimaguas218.9 Interoceánica Sur (2005) Section Section Intersur (2005) Section Concesión Canchaque (2005) Buenos Aires-Canchaque31.1 Consorcio Interoceánico (2007) Section Concesionaria del Sur (2007) Section CONALVIAS-INFRACON (2008) Ovalo Chancay – Huaral – Acos34.2 OHL (2008) Road Network Nª 4370 OBRAINSA (2009) Nuevo Mocupe – Cayaltí – Oyotún17.4 CONCESIONARIA VIAL DEL SOL (2009) Autopista del Sol365.1 IIRSA Centro, Section 2 (2010)126 AWARDED ROAD CONCESSIONS (2003 – 2010)

33 4 Concessions DP WORLD PERÚ (2006) Callao Port Terminal – New Container Terminal – South Dock US$ 617 MM TERMINALES PORTUARIOS EUROANDINOS PAITA (2009) Paita Port Terminal US$ 233 MM TISUR (1999) Matarani Direct Docking Port US$ 31 MM US$ 1.00 billion in investment commitments. US$ 120 MM Consorcio Transportadora Callao (2010) Mineral Concentrates Shipping Terminal AWARDED PROJECTS PORT SECTOR (1999 – 2009)

34 CONCESSIONUS$ MM L.T. Mantaro – Socabaya (1998)179 L.T. Socabaya – Moquegua; Moquegua – Tacna; and Moquegua – Puno (1999) 74.5 L.T. Oroya-Carhuamayo-Paragsha -Derivación Antamina (220 Kv); AND LT Aguatia-Pucallpa (138 Kv) (2001) 65.4 ETECEN AND ETESUR (2002)10.5 L.T. Carhuamayo – Carhuaquero (2008) L.T. Mantaro – Caravelí – Montalvo; and Machu Picchu Cotaruse (2008) 181 L.T. Chilca – La Planicie – Zapallal (2008)52.2 L.T. Zapallal – Trujillo (2009)167.5 Energy supply from new hydroelectric power stations (2009) 300 L.T. Chilca Marcona Montalvo (2010)291 Tintaya- Socabaya transmission line (2010)43.5 Strengthening of North system between Talara and Piura (2010) 14.5 Santa Teresa Hydroelectric Power Station (2010)180 L.T. Machupicchu –Abancay-Cotaruse in 220 kV62.5 Cold Power Generation Reserve Concessions US$ 2.02 billion in investment commitments. AWARDED PROJECTS ENERGY SECTOR ( )

35 CONCESSION US$ MM Consorcio Flughafen Frankfurt, Bechtel and Cosapi. (2000) Jorge Chavez International Airport 1,214 Consorcio Swissport GBH - Aeropuertos (2006) First Regional Airports Package 120 Second Regional Airports Package257 AWARDED PROJECTS AIRPORT SECTOR (1999 – 2010) US$ 1.59 billion in investment commitments. 3 Concessions

36 PROJECTAWARD FITEL CO FINANCING (US$ MILLION) Rural Broadband Rural internet program Broadband for isolated localities Juliaca - Puerto Maldonado Rural Broadband Buenos Aires Canchaque implementation of Telecommunication Integrated services Integration of Rural Areas and Locations of special social interest to the Mobile Network- South Centre Integration of Rural Areas and Locations of special social interest to the Mobile Network-North Centre Integration of Rural Areas and Locations of special social interest to the Mobile Network-Forest Broad band for the development of the Valley of Apurimac and Ene Rivers PROJECTS GRANTED IN CONCESSION TELECOMMUNICATION SECTOR ( ) ….and over US$ 668 million in the allocation of 14 spectrums via public concession process. …And 4.3 MM in sale of ENTEL-CPT and Telefonica shares. 9 Concessions M

37 PORTFOLIO PROJECTS FOR 2011 Projects in Proinversions Portfolio 52 projects* SECTORN° PROJECTS ESTIMATED INVESTMENT (US$ MILLION) Airports Agriculture Energy125,160.0 Penitentiary Facilities117.8 Railways2--- Real Estate Ports81,220.7 Sanitation Telecommunication3---- Tourism Land Transport6--- Capital Markets4--- Mining Total548,926.4

38 Harry Chang PERU IS ON THE PATHWAY TO PROSPERITY


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