Transcript Peru

INVESTMENT
INVESTMENT OPPORTUNITIES
OPPORTUNITIES IN IN
PERU
May 2007
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 process
and with access to regional
commercial blocks.
Stable and favorable
investment climate.
Investment policies based on
international principles.
GDP Growth of 8% for 2006 and
expected 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
GDP (var%)
Private Investment (var %)
Public Investment (var %)
Employment in companies with over 10 employees (var %)
2004
4,8
9,1
5,7
2,7
2005
6,4
13,9
12,2
4,5
2006
8,03
20,1
13,0
7,3
Exports (var % en US$)
Imports of capital goods (var % in US $)
GDP of the construction sector (var %)
Tax Collection (var %)
40,9
19,6
4,7
13,6
35,3
29,6
8,4
14,3
36,9
35,4
14,7
27,8
Credit System of the Private Finnancial Sector
Pensions Funds (var%)
4,7
17,5
7,9
25,5
16,6
41,3
IGBVL General Index of the Stock Exchange Market of Lima
(var %)
52,3
29,4
168,3
Source: Central Reserve Bank of Peru, National Institute of Statistic and Information and SUNAT:
Sustainable economic growth with annual forecasted
rate greater than 8%
Peru
8
8,03
(Annual variation %)
GDP Growth
6,4
6
5,2
5,2
3,9
4
Developed
2
World
0
80
82
84
86
88
90
92
94
96
Source: International Monetary Fund and the Central Reserve Bank of Peru.
*Forecasted by Central Reserve Bank of Peru (9th February 2007), Ministry of
Economy and Finance and the National Institute of Statistic and Information.
98
00
02
04
06
Annual Exports growth greater than 30%
Accompanied by private
investment growth
(average annual % variation)
23 750
22 000
25.0
0,7
0,6
17 336
0,5
17 000
9 090
6 955
7 026
41%
35%
37%
7 714
7 000
20.0
Private
Investment
15.0
0,4
12 809
12 000
Private Investment grew
20,1% in 2006*
0,3
10.0
0,2
5.0
18%
0,1
10%
1%
2 000
2000
2001
0
2002
2003
Exports in millons US$"
2004
2005
0.0
2006
% Exports Growth (base 2000)"
-5.0
Source: Central Reserve Bank of Peru.
* Forecasted
06
05
04
03
02
01
-10.0
Rise in the commercial
exchange
Increase in the imports of capital
Goods
(Millions of US$)
( Millions of US$)
40 000
4500
35 000
4000
30 000
3500
3000
25 000
2500
20 000
2000
15 000
Capital goods for
the Industry
1500
10 000
1000
5 000
500
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total Exports (US $ mill.)
Total Imports (US $ mill.)
Source: Central Reserve Bank of Peru.
Transport Equipment
Others
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Peru is progressively reducing its
fiscal deficit
By increasing its central government
tax revenues
(% of GDP)
2,5
2,5
14 000
13 134
12 123
2,0
12 000
0,3
31,1%
1,5
10 247
8 915
8 038
0,5
0.0
8 000
6 968
7 501
7 696
0,15
18,3%
7 821
14,9%
0,1
14,0%
0,0
0,05
6 000
7,7%
-0,5
-0,4
-1,0
0
1,6%
4 000
-0,05
-0,1
-1,1
-2,0
-1,7
-2,5
-2,5
-2,3
-0,15
-13,3%
0
-0,2
1998
1999
2000
2001
2002
2003
2004
2005
Central Government Tax Revenues (in US$ MM)
% Annual change in the Central Government Tax Revenues
-3,0
-3,5
2,6%
2 000
-1,5
-3,3
2000 2001 2002 2003 20042005 2006 2007*
Source Central Reserve Bank of Peru.
* Forecasted by the Ministry of Economics and Finance
0,25
0,2
10 000
1,0
0,35
Source: SUNAT
2006
... in a framework of macroeconomic stability...
Exchange rate in Latin America
Inflation in Latin America
(Index January 2001=100)
Peru
Argentina
Peru
205
Brasil
30
Brasil
Chile
25
165
Variación anual
Colombia
Mexico
145
125
(Porcentaje)
185
Chile
Mexico
20
15
10
5
105
Source: Bloomberg and Central Reserve Bank of Peru.
2005
2004
2003
2002
-5
2001
N-06
M-06
N-04
A-03
A-02
E-01
85
2000
0
Source: Central Reserve Bank of Peru, Chile, Mexico and Argentina.
Until October 2006
Net International Reserves (in US$ Millions)"
Annual Variation
Updated 17 April, 2007
Source: Central Reserve Bank of Peru.
Source: Bloomberg
Abr-07
Dic-06
Feb-07
Nov-06
Sep-06
Jun-06
Abr-06
Latinamerica
Feb-06
Ene-06
Oct-05
Nov-05
Jun-05
Ago-05
Mar-05
May-05
Nov-04
Ene-05
Oct-04
Ago-04
Jul-04
EMBI+ Peru
Ago-06
700
600
500
400
300
200
100
May-04
17 275
18 000
0,5
0,45
16 000
14 097
0,4
12 681
14 000
0,35
12 000
9 598 10 194
0,3
10 000 8 180 8 613
22,5%
0,25
8 000
0,2
24,4% 11,2%
6 000
11,4%
0,15
6,2%
4 000
0,1
2 000
0,05
5,3%
0
0
2000 2001 2002 2003 2004 2005 2006
The careful and responsible management of our
economic program has allowed us to keep our
country risk index among the lowest in the region.
JP Morgan Index EMBI+**
(Milions of dollars
Net International Reserves
With increasing Net International
Reserves that represent more than 12
months of imports
Just one step away from the Investment Grade
S&P/ Moody's Characterstic
Fitch
Investment
Grade
Peru close
to the
investment
grade
AAA
AA+
AA
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
B
BCCC+
CCC
CCC-
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
Caa2
Caa3
D
Ca
Source: Bloomberg
Latin American Ranking
Risk free
Superior
High capacity of
repayment
Moderate capacity of
repayment
Some capacity of
repayment
High uncertainty in the
capacity of repayment
Highly vulnerable
to default
Default
Countries
Mexico
Chile
Brazil
Peru
Colombia
Venezuela
Argentina
Bolivia
Ecuador
S&P
Fitch
Moody's
BBB
A
BB+
BB+
BB+
BBB+
BCCC+
BBB
A
BB+
BB+
BB
BBB
BB-
Baa1
A2
Ba2
Ba3
Ba2
B2
B3
B3
Caa2
Peru offers 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
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
With a legal system that guarantees basic rules and
statutes that will not change
For national and foreign
investments
• National treatment
• Free availability and remittance of
foreign currency*
• Income tax rules applicable to
dividends.
and his receiving company
• Recruitment regimes
• Regimes for the promotion of
exports
• Income Tax Regime.
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)
*With capitals coming from abroad
With a stable tax regime, which main taxes are:
Tax
I
n
c
o
m
e
Corporate profit
Applicable Rate
30%
Agriculture and aquaculture 15%
Dividends
4,1%
Royalties
30%
Interests
4,99%
Value Added Tax (VAT)
Financial Transactions Tax
Excise Tax (*)
19%
0.08% throughout 2007
Varies up to 125% in a few products
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.
and a reduced tariff structure and low tariff
dispersion…
TARIFF LEVELS ADVALOREM +
SURCHARGES
%
TARIFF LINES
0
3 028
43,29%
12
2 843
40,65%
17
48
0,69%
20
759
10,85%
25
316
4,52%
Total
SIMPLE AVERAGE APPLIED TARIFF RATE
Source: SUNAT
6 994
100.00%
8.29
Free market access to:
 Andean Community of Nations
 Chile
 MERCOSUR
 Mexico
 United States
 European Union
 Thailand
Trade Promotion Agreement with Singapore
under negotiations
Peru has concluded the
negotiations for the
Trade Promotion
Agreement (TPA) with
the United States
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
China
Peru
1. Need of inputs to keep
growth rates.
1. Great source of inputs.
2. It requires supply sources
with added value because of
the lack of water and energy.
2. Source of water and energy,
besides the ability to transform
raw material.
3. Availability of funds.
3. Need of investments to develop
infrastructure.
4. Its high volumes of
production justify the
development of added value
proudcts.
4. Demand of value added
products.
Bilateral trade (US$ million)
4.000
3.639
3.500
2.924
3.000
2.500
2.002
2.000
1.321
1.500
1.000
1.063
732
779
2000
2001
500
0
Source: SUNAT
2002
2003
2004
2005
2006
Bilateral trade (US$ million)
2.500
2.271
2.000
Peru exports to China
1.368
1.500
China exports to Peru
1.000
500
0
2000
2001
Source: SUNAT
2002
2003
2004
2005
2006
Bilateral trade – principal products
Principal exports from
Peru to China
 Flour, powder and "pellets" of fish.
 Copper, zinc, molybdenum, lead
and concentrates.
 Preparations and conserves of
mollusks
 Raw Oils of oil
Principal imports from
China
 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
Bilateral trade – exporters & importers
Main exporting firms










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
SA
Main importing firms









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
Investment up to 2006: US$250.000.000
Sectors







Commerce
Finance
Fishing
Hydrocarbon
Mining
Services
Tourism
Principal Investors
 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
Peru
Strong figures
Strategic location
Excellent opportunities