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

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

  3. GDP per capita increase 1/ 2009/ 1990 2009 / 1980 2009 / 2000 1 Chile 5,06 Chile 2,97 Peru 1,72 2 Uruguay 3,79 Peru 2,69 Ecuador 1,63 3 Colombia 3,51 Argentina 2,52 Uruguay 1,60 4 Ecuador 2,96 Uruguay 2,46 Colombia 1,54 5 Peru 2,94 Colombia 2,04 Argentina 1,53 6 Argentina 2,91 Ecuador 2,01 Chile 1,50 7 Brazil 2,79 Bolivia 1,96 Venezuela 1,46 8 Mexico 2,75 Brazil 1,96 Brazil 1,45 9 Paraguay 2,37 Mexico 1,86 Bolivia 1,43 10 Bolivia 2,30 Venezuela 1,78 Paraguay 1,36 11 Venezuela 2,27 Paraguay 1,54 Mexico 1,27 1/ On a constant purchasing power basis. MACROECONOMIC STABILITY Peru has recorded the highest annual average real GDP growth in Latin America in the last decade

  4. Peru is one of the fastest growing economies in the World MACROECONOMIC STABILITY Accumulated GDP Growth 2002-2009 (Var. %) 4 Fuente: FMI – Abril 2010

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

  6. MACROECONOMIC STABILITY …growth has beendrivenbyrisinginvestment and labor productivity and sustainedcorporate sector confidence Private investment (% GDP) Balance of Trade (US$ Million) Source: Central Reserve Bank of Peru Source : Central Reserve Bank of Peru *Projections * Projections

  7. …has supported a massive growth of consumption markets outside Lima 2000 2010

  8. Sustaninedgrowth has promoted a dynamicincrease in employment, a steady decline in poverty, and a reduction in inequality 2010 Poverty1 2005 Poverty Poverty > 50% 1/ Expected. Source: National Bureau of Statistics, National Electoral Tribunal

  9. MACROECONOMIC STABILITY Peru has obtained investment grade from all major rating agencies Net International Reserves (US$ Million) Investment grade Latin America benchmarking Source : Central Reserve Bank of Peru *Projection Source : Standard & Poor`s, Fitch Ratings y Moody´s

  10. FRIENDLY INVESTMENT ENVIRONMENT Peru offers a favorable legal framework for foreign investment ... Recognition of a favorable 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. 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

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

  12. FRIENDLY INVESTMENT ENVIRONMENT “Ease of doing business” ranking 2011 2010 – 2011 Comparison Peru 2011 2010 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

  13. Peru is the second most attractive country for investing in the region. FRIENDLY INVESTMENT ENVIRONMENT …but there is no room for complacency, and we are working on further improving the investment climate Source: Pricewaterhouse Coopers 2010. (200 CEOs in LA survey)

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

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

  16. PREFERENTIAL ACCESS TO THE MOST IMPORTANT MARKETS EXPORTS STRUCTURE Peru’s 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%) Source: Central Reserve Bank of Peru

  17. Trade Peru – United States BILATERAL TRADE (US$ MILLIONS)

  18. 4. FOREIGN DIRECT INVESTMENT (Only Equity) …it is therefore not surprising that Peru keeps attracting large FDI inflows • Peru reached US$ 18,840 millions in Foreign Direct Investment in 2009. • 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%). Source: Proinversion

  19. 4. SERVICE OR ASSISTANCE TO INVESTORS 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

  20. Main Investment Opportunities by Sectors

  21. MAIN PROJECTS IN PROGRESS/TO BE BUILT IN 2010-2011. 1/ Investment throughout the construction period. Source: companies, media, APOYO Consultoría

  22. PERÚ: UN CAMPO FERTIL PARA SUS INVERSIONES PERÚ: UN CAMPO FERTIL PARA SUS INVERSIONES AGRIBUSINESS SECTOR • 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.

  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: 1st gold, zinc, silver, tin and lead producer. 2nd 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. HYDROCARBON SECTOR • 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.

  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 2009. • Investment opportunities in industrial timber complexes.

  28. TOURISM SECTOR • 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.

  29. REAL ESTATE SECTOR • 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%.

  30. PROJECTS IN PROINVERSION’S PORTFOLIO

  31. PROJECTS GRANTED IN CONCESSION 2000-2010 NUMBER OF PROJECTS GRANTED IN CONCESSION

  32. CONCESSION US$ MM NORVIAL (2002) Road Network Nº 5 73.1 COVIPERU (2005) Road Network Nº 6 228.6 IIRSA Norte S.A. (2005) Paita – Yurimaguas 218.9 Interoceánica Sur (2005) Section 2 263.0 Section 3 332.4 Intersur (2005) Section 4 214.6 Concesión Canchaque (2005) Buenos Aires-Canchaque 31.1 Consorcio Interoceánico (2007) Section 1 98.9 Concesionaria del Sur (2007) Section 5 183.4 CONALVIAS-INFRACON (2008) Ovalo Chancay – Huaral – Acos 34.2 OHL (2008) Road Network Nª 4 370 OBRAINSA (2009) Nuevo Mocupe – Cayaltí – Oyotún 17.4 CONCESIONARIA VIAL DEL SOL (2009) Autopista del Sol 365.1 IIRSA Centro, Section 2 (2010) 126 AWARDED ROAD CONCESSIONS (2003 – 2010) 14 Concessions US$ 2.55 billion in investment commitments

  33. AWARDED PROJECTS PORT SECTOR (1999 – 2009) 4 Concessions US$ 1.00 billionin investment commitments.

  34. AWARDED PROJECTS ENERGY SECTOR (1998 - 2010) 15 Concessions US$ 2.02 billion in investment commitments.

  35. AWARDED PROJECTS AIRPORT SECTOR (1999 – 2010) 3 Concessions US$ 1.59 billion in investment commitments.

  36. PROJECTS GRANTED IN CONCESSION TELECOMMUNICATION SECTOR (2007-2010) 9 Concessions 155.2 M ….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.

  37. PORTFOLIO PROJECTS FOR 2011 Projects in Proinversion’s Portfolio 52 projects*

  38. PERU IS ON THE PATHWAY TO PROSPERITY