why invest in peru
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Peru:Endless
investment opportunities
Carlos Herrera Executive Director
2. Friendly investment environment
3. Open trade and market access policy
1.Internationally acknowledged macroeconomic soundness
4. Attractive sectors to Invest
WHY INVEST IN PERU?
MACROECONOMIC SOUNDNESS
Real GDP (US$ billion)
Source: Central Reserve Bank of Peru and IMF / * Estimated figures of BCRP (Inflation report as of July 2014) and IMF
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
2
4
6
8
10
3.52.9
7.0 7.4
PeruLAC
IPC, 2004-2013 (Annual variation %)
Exports (US$ billion)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
12,809.217,367.7
23,830.128,093.8
31,018.526,961.7
35,564.7
46,268.046,228.041,829.039,836.0
Public Debt (% of GDP)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
39.3
32.328.5
25.9 26.023.5
21.4 20.4 19.6 19.2
Peru’s macroeconomic performance over the last decade 2005 – 2014*
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015*
61.4 69.779.4
92.3107.3
126.9 127.0
153.8176.6
199.6 206.5216.7
235.7
Total investment 2003-2015* (% of GDP)
Source: Central Reserve Bank of Peru * Estimated figures CRB Source: IMF and Central Reserve Bank (CRB)
Total investment – LATAM 2013 (% of GDP)
Peru Chile Mexico Colombia Brazil2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
*
2015
*
13.9 13.8 14.5 15.116.8
19.517.6
19.2 19.2 20.4 20.822.5 22.5
3.0 2.93.1 3.2
3.5
4.55.7
5.9 4.85.4 5.8
5.8 6.0Inversión PrivadaInversión Pública
MACROECONOMIC SOUNDNESS
More than 20% of GDP
Public investment
Private investment
Peru maintains a healthy level of debt…
Public Debt– Peru 2003-2015*(% of GDP)
1. MACROECONOMIC SOUNDNESS
Source: Central Bank of Reserve of Peru *Estimated figures, CBRP (Inflation report July 2014)
Public Debt– Latin America 2013(% of GDP)
Source: FMI and BCRP
Chile Perú Colombia México Argentina Venezuela Brasil
12.9
19.2
32.3
44.047.8
53.4
68.3
Chile Peru Colombia Mexico Argentina Venezuela Brazil
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
*
2015
*
46.9
42.639.3
32.3
28.525.9 26.0
23.521.4 20.4 19.6 19.2 18.6
1. MACROECONOMIC SOUNDNESS
Source: Central Reserve Bank of Peru*Up to August 1, 2014
Net International Reserves ( US$ Billion)
...and has accumulated international reserves for a third of the GDP
2004 2009 2014*
NIR ( % of GDP) 19.2 27.2 31.9
NIR / GDP (Short-term Foreign Debt) 171.8 292.2 821.9
NIR /GDP Short-term Foreign Debt plus Current Account deficit) 173.2 281.6 365.8
Source: BCRP. Inflation report July 2014*Projection
NIR Adequacy Indicators
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
*
9,598.110,194.312,631.014,097.1
17,274.8
27,688.831,195.933,135.0
44,105.148,815.9
63,991.465,663.164,554.0
Peru: Middle and Emerging middle class
2005 -2012 (% population)
Total poverty: Latin America and Peru 2005 -2012 (% population)
Source: INEI – ENAHO 2004-2012,ENDES 2012, IDB - Technical note. Middle Class in Peru: quantification and recently evolution.
Source : CEPAL – Social Outlook 2012.
2005 2006 2007 2008 2009 2010 2011 2012
55.649.1
42.437.3
33.5 30.827.8
25.839.736.2 34.0 33.2 32.8 31.0 29.4 28.8
Perú LA
Poor Emerging Population
Middle class High class
48.7
24.8 25.9
0.6
27.8
21.2
48.9
2.1
2005 2011
MACROECONOMIC SOUNDNESS
Peru
Source: Standard & Poor`s, Fitch Ratings and Moody´s. Updated as of July 2014
Peru earned the investment grade and investor`s confidence by practicing a responsible economic policy
Investment gradeLatin America benchmarking
Country S&P Fitch Moody´s
Chile AA- A+ Aa3Peru BBB+ BBB+ A3Mexico BBB+ BBB+ A3Brasil BBB- BBB Baa2Colombia BBB BBB Baa3Bolivia B- BB- Ba3Ecuador B B Caa1Venezuela B- B Caa1Argentina CCC- CC Caa1
MACROECONOMIC SOUNDNESS
Based on the “national treatment” principle. 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. To come: Peru – India FTA negotiations Peru participates in the OECD Investment Committee and has initiated the
process for its future incorporation as a member economy.
FRIENDLY INVESTMENT ENVIRONMENT
Peru offers a favorable legal framework for foreign investment
Peru ranks second in the region in the improvement of business regulations.
.
Doing Business 2014
2. FRIENDLY INVESTMENT ENVIRONMENT
Continuous effort to facilitate the establishment and operation of business
Position Country
1 Chile
2 Peru
3 Colombia
4 Uruguay
5 Paraguay
116
162
88
126
161
115
43
135
34
42
181
Argentina
Uruguay
Bolivia
Brasil
Surinam
GuyanaVenezuela
Colombia
Perú
Chile
Ecuador
109Paraguay
A steady tax regime
Tax Applicable Rate
INCOME
Corporate profits
30.0%
Agriculture and agribusiness 15%
Dividends 4.1%
Royalties 30.0%
Interest rate on loans from abroad
4.9%
Value Added Tax (VAT) 18%
Financial Transactions Tax 0.005%
Temporary to net assets, applicable to the excess of S/. 1 000 000
0.4%
FRIENDLY INVESTMENT ENVIRONMENT
OPEN TRADE AND MARKET ACCESS POLICY
An open trade policy sustained over time
Evolution of nominal and effective tariff; and tariff dispersion 1993 – 2013
Source:MEFNotes: 1) Affective Tariff= (Amount of total revenue Ad valoren CIF / Total Amount of CIF Imports)*100.2)Tariff Dispersion= Standard Deviation
OPEN TRADE AND MARKET ACCESS POLICY
Working to become a globalized economy, with preferential access to the world’s largest markets
These countries stand for enlarged market of over 4 billion people with a joint GDP over US$ 56 billion
96% of Peruvian exports
ATTRACTIVE SECTORS TO INVEST
MINING ELECTRICAL ENERGY
FISHERY AGRO-INDUSTRY
TEXTILE- CLOTHING
HYDRO-CARBONS
Comparative Advantages
TOURISM
Health 0.5%
Educatión 0.4%
Telecom22%
Water/sanitation 6%
Hydraulic Infrastructure 10%
Transport24%
Electrical Energy
37%
Hidrocarbons 1%
AND KEEP GROWING …
Source: Association for the Promotion of National Infrastructure - AFIN (by its Spanish acronym)
Challenge: to reduce the US$ 88 billion infrastructure gap
PROMOTING INVESTMENT THROUGH PPP
PPP are mainly implemented in the form of a concession and generally, the concessionaire is expected to be responsible for the design, financing, construction, operation and maintenance of public infrastructure works or public service provision.
It can be promoted from a state initiative or an unsolicited proposal. Self sustainable / Co-financed. It is not necessary for the companies interested in participating in the
bidding to be stablished in Peru. Only when awarded they will have to set up a company for the purpose of the concession.
Open and transparent international bidding process. Interaction with the market.
PROMOTING INVESTMENT THROUGH PPP
Inve
stm
ent
com
mitm
ent U
S$
MM
PPP Evolution 2005- 2014
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
0
2
4
6
8
10
12
14
16
18
20
1,342744
291912
1,563 1,902
3,663
701
4,543
9,983
54
5
1112
18
9
5
1211
Investment US$ MM ( No VAT) PPP processes
Source: ProInversión. Updated as of Oct, 2014
MAIN PRINCIPLES TO PROMOTE PRIVATE INVESTMENT IN PUBLIC INFRASTRUCTURE
SOCIAL AND ENVIROMENTAL ACCEPTABILITY
TECHNICAL AND ECONOMIC FEASIBILITY OF THE PROJECT
BANKABILITY
GENERATOR OF COMPETITION
TRANSPARENCY
MAXIMUM EFFICIENCY IN THE SERVICE TO GIVE
TECHNICAL, FINANCIAL AND LEGAL REQUIREMENTS ON THE BIDDERS
Discover a rich and generous land
Discover its opportunities
Peru is a country that grows and bui lds i ts future
TRANSPORTINFRASTRUCTURE
PPP are promoted to accelerate the development of transport infrastructure, in order to improve connectivity and competitiveness levels.
We intend to consolidate the country as a Business Hub in the South American Pacific.
The implementation of the Metro for Lima and Callao will give more fluidity, innovation and safety to an urban transport system in this city with more than 10 million people.
The Longitudinal de la Sierra Highway will promote social inclusion and market development in the Andean regions.
INFRASTRUCTURE HIGHLIGTHS
LINES 3 AND 4 - THE METRO OF LIMA AND CALLAO
Concession, through two independent bids, of two lines of the network of the metro of Lima and Callao for the design, financing, construction, equipment, operation and maintenance of 62 Km of this transportation system, which serves a city of more than 10 millions of inhabitants.
Estimated Investment: Under evaluation Type of concession: Co-financed Concession period: 35 years
Line 3 Line 4
32 Km 30 Km
2016 2016Estimated date of award
Approximated length
TO BE CALLED
Lima and Callao
FAST MONORAIL MASS TRANSPORTATION SYSTEM - AREQUIPA
An unsolicited proposal for the design, construction, electromagnetic equipment, systems, rolling stock, financing, operation and maintenance of a 14 Km fast mass transportation system (on elevated track) in the Arequipa Metropolitan Area.
Estimated Investment: Studies in progress
Type of concession: Co-financed
Estimated date of award: Q3 2015
UNDER EVALUATION
Arequipa
Concession, through two independent bids, of the improvement, restoration, initial periodical maintenance, operation and maintenance of more than 1,300 Km on two sections of this major highway across the Peruvian highlands, in order to improve ease of transit.
LONGITUDINAL OF THE SIERRA HIGHWAY, SECTION 4 AND 5
Estimated investment: US$ 720 million Modality: Co-financed
ApproximateLength
Estimate award date
Section 4 965 km Q3 2015
Secton 5 422 km Q4 2015
TO BE CALLED
LOGISTIC PLATFORM AND TRUCK CENTER OF PORT OF CALLAO
The project comprises the design, financing, construction, operation and maintenance of a logistics and outer harbor area of Callao port to be located 2 km away from the port and 1 km from Jorge Chavez international airport, in an area of approximately 33.5 ha.
The logistics platform will attend the port cargo and concentrate the main logistics freight operators by placing them in a zone near the port and the airport, in order to increase competitiveness and reduce costs thereof logistics and transport.
Truck center to parked freigth vehicules. It will have a management system moves in and out of vehicles and a truck center.
Estimated investment: Under evaluation Type of concession: Self –sustaining
Estimated award date: 2015
TO BE CALLED
The expected growth of Peruvian economy and its future sustainability require the continuous development of the energy sector.
Water and natural gas are the most important sources of electricity generation.
Our electricity production rates have increased by 6.62% in average over the last 10 years.
The need to secure electricity supply levels in the medium and long terms creates a wide range of investment opportunities in the energy sector.
Restructuring of the energy matrix will generate new investment opportunities.
ENERGY HIGHLIGTHS
220 kV NEW CÓRPAC SUBSTATION AND 220 kV INDUSTRIALES - CÓRPAC TRANSMISSION LINES
Concession for the design, financing, construction, operation and maintenance of the following projects: New Córpac Substation (underground)220 kV Industrial Transmission Lines - Córpac (underground)
The upgrade of electric power supply will allow to meet the increasing demand in the districts of Ate, Cercado de Lima, La Victoria, Miraflores, San Isidro, San Borja (particularly in commercial and financial areas in the latter three districts) and San Luis. Estimated investment: US$ 148 million Type of concession: Self-sustained Concession period: 30 years plus the construction period
(about 25 months)
Estimated date of award: Q2 2015
Industrial Substations
Industrial TLs - Córpac
Av. Javier Prado
Pana
mer
icana
Nor
te
High
way
Panamericana Sur
Highway
Circunvalación
Lima
San Borja
Ate
New Córpac
Substation
CALLED
Contract for the purchase of 1,200 Mw of power in years 2020 and 2021, to be generated by new hydroelectric power generation projects that will be incorporated to the National Electric Power Grid (SEIN).
Estimated Investment: US$ 2.7 billion Type of concession: Self-sustained
Estimated date of award: Q2 2015
ELECTRIC POWER SUPPLY FROM NEW HYDROELECTRIC POWER PLANTS
TO BE CALLED
Nationwide
QUILLABAMBA THERMAL POWER PLANT
Concession for the design, financing, construction, operation and financing of a 200 Mw thermal power plant to be located in Quillabamba (department of Cusco) which shall begin operations in 2017 and be connected to The National Electric Power Grid (SEIN)
Estimated investment: US$ 200 million Type of concession: Self sustained
Estimated date of award: Q2 2015
TO BE CALLED
LNG SUPPLY SYSTEM FOR THE DOMESTIC MARKET
CALLED
Concession to provide with natural gas (NG) supply system to be used in emergency situations (failure in NG production in the forest, or in its transportation from the forest to the Peruvian coast). The system comprises back-up storage capacity for 130,000 m3 and facilities of regasification and shipping of 400 MMSCFD of NG, in order to guarantee the supply of fuel to users in Lima and Callao for up to seven days.
Estimated investment: US$ 250 million Type of concession : Self-sustained Concession period: 20 years plus the construction
period (30 months)
Estimated date of award: 2015
LPG SUPPLY SYSTEM FOR LIMA AND CALLAO
CALLEDConcession for the design, financing, construction, operation and maintenance of a LPG transportation system from the producer, located in the province of Pisco, Ica to the storage (300,000 barrels) and shipping (50,000 barrels/day) plant at the south of Lima.
Estimated investment: US$ 250 million Type of concession : Self-sustained
Estimated award date: 2015
SANITATIONAND HEALTH
A growing drinking water and sanitation infrastructure, particularly in rural areas, is a crucial goal to improve the health and well-being of more Peruvians.
Sanitation services are currently provided by companies owned by local governments (EPS).
The Government is promoting new laws for the modernization of water and sanitation services, including the promotion of private investments for the development of the sector.
SANITATION SECTOR HIGHLIGTHS
MAIN WORKS AND CONDUCTION OF DRINKING WATER SUPPLY FOR LIMA
TO BE ANNOUNCEDConcession for the design, financing, construction, operation and maintenance of the following infrastructure projects in the departments of Lima and Junín: Re-enlargement of the Pomacocha and Huallacocha Bajo dams
(about 90 MCM) Trans-Andean tunnel (about 10 Km) New drinking water plant (5 m3/s) South branch pipeline (about 26 Km), including six reservoirs
(total storage volume: 24,000 m3) and works for the interconnection with the current drinking water supply system.
The concession also includes the operation and maintenance of the following facilities: Current drinking water plant (5 m3/s) North branch pipeline (27.1 Km), including four compensation
reservoirs (total storage volume: 23,000 m3 )
Estimated investment: US$ 400 million Modality: Self-sustained Concession period: 30 years
Estimated date of award: Q1 2015
CALLED
REGULATION WORKS OF THE CHILLÓN RIVER
Concession for the design, financing, construction, operation and maintenance of the following infrastructure projects, intended to ensure drinking water supply to the districts of North Lima. Jacaybamba dam (about 28 million m3) located in the
province of Canta, northeast of Lima. Pipeline (about 30 Km) for an average flow rate of
about 1.5 m3/s, from the projected water intake on the Chillon River to the current Chillon drinking water plant.
Estimated investment: US$ 70 million Type of concession: Self-sustained Concession period: 20 to 30 years
Estimated date of award: 2015
TO BE CALLED
Health services are provided by the Ministry of Health’s (MINSA) network of health facilities, the independent hospital network of Peru’s Social Security System (ESSALUD) and private hospitals.
The sector offers a high growth potential (continuous economy growth, increasing GDP per capita, a large young population).
Private investments are sought to improve hospital infrastructure and increase the coverage and quality of health services.
HEALTH SECTOR HIGHLIGTHS
Concession of the design, construction, equipment, operation and maintenance of complementary services (blue-collar services) in high-complexity hospitals in the Peruvian Social Security System (ESSALUD): a new one in the city of Lima (Instituto de Salud del Niño y Adolescente) and two in provinces (Piura and Chimbote)
Estimated Investment: Studies in progress
Estimated date of award: Q3 2015
TO BE CALLED
THREE NEW HIGH-COMPLEXITY HOSPITALS
SOLID WASTE MANAGEMENT IN HEALTH FACILITIES UNDER THE MINISTRY OF HEALTH IN METROPOLITAN LIMA
An unsolicited proposal that comprises the construction, operation and maintenance of a modern solid waste treatment plant (hazardous bio-contaminated/hazardous special/common) for the project’s integral management.
Estimated Investment: Pre-investment studies in progress
Type of concession: Co-financed
Estimated date of award: 2016
UNDER EVALUATION
Lima and Callao
CORRECTIONALSYSTEM
The government proposes the restoration, re-location and/or modernization of the existing correctional facilities as a part of its efforts to improve our correctional system.
The sector provides new opportunities aiming to decongest prisons and improve related services.
CORRECTIONAL SYSTEM HIGHLIGTHS
Re-location of four correctional facilities that are currently in the urban areas of Metropolitan Lima and the department of Cusco. The project is intended to promote the participation of the private sector in the construction of new replacement correctional facilities in more appropriate areas, under high-quality safety standards1.Chorrillos Women’s Facility (ordinary) and annex.2. Lurigancho 3. Miguel Castro Castro.4. Cusco and Cusco Women’s Facility
Estimated investment: Under evaluation
Estimated date of award: Q2 2015
TO BE CALLED
RE-LOCATION OF CORRECTIONAL FACILITIES
Lima and Cusco
An unsolicited proposal for the construction of a shopping center, houses, warehouses and parking lots on the current location of the San Jorge Prison (Historic center of Lima). Additionally, it includes the construction and equipping of a new correctional facility where the San Jorge inmates will be transferred.
Estimated investment: Under evaluation Type of concession: Self-sustained
Estimated date of award: Q3 2015
UNDER EVALUATION
CORRECTIONAL INFRASTRUCTURE AND URBAN RENEWAL: “TINKUY PLAZA PROJECT”
Lima
The national bandwidth expansion plan is underway, including the promotion of PPPs to enhance Internet services throughout the country (optic fiber and mobile data).
The National Optical Fiber Backbone Network Project (13,000 Km of optic fiber), granted in concession in 2013, will take these services to the interior of the country, increasing the efficiency of the 22 regions involved in the project and support their economic development.
The next step is awarding the processes that will progressively take these services to their final users in the regions that will benefit from the NOFBN Project.
TELECOMMUNICATIONS HIGHLIGTHS
BROADBAND INTERNET ACCESS FOR FOUR PERUVIAN REGIONS
Concession, through four independent bids, to implement broadband internet access in four Peruvian regions (Apurímac, Ayacucho, Huancavelica, Lambayeque). The project involves the implementation of a high-capacity fiber optic network and an access network (microwaves).
Region Location Required fiber length
Estimated investment USD million
1.Ayacucho Central-Southern highlands
1,900 Km 54.9
2.Apurímac Southern highlands 1,400 Km 42.3
3.Huancavelica Central-Southern highlands
1,330 km 46.8
4.Lambayeque Northern coast 570 Km 19.0
Type of concession: Self sustained Estimated award date: IV Q 2014
12
3
4
700 MHZ 4G BAND
Concession of three 698–806 MHz band blocks to provide nationwide 4G broadband internet access services. The band is initially expected to be channeled in 15 MHz + 15 MHz blocks
Estimated investment: Under evaluation Type of concession: Self sustained
Estimated date of award: Q2 2015
MINING
The notable increase in mining investment in Peru has lead to an historical record the year 2013: more than US$ 9,720 million.
There are about 400 mining units under
exploration and some more in early prospecting.
Exploration investments in Peru have sustained its growth for over six years and the last four year it has shown significant development.
Peru remains among the main investment destinations for exploration budgets worldwide.
MINING HIGHLIGTHS
05 MINING EXPLORATION PROSPECTS IN THE NORTH AND CENTRAL REGIONS IN THE SOUTH OF PERU
TO BE CALLED
Investment projects under transfer option contracts for a term of three to four years for the exploration and the feasibility study.
04 prospectus in Apurimac: • Colca: Cu, Mo, Ag, Au, Pb 2016
14,100 ha• Jalaoca: Cu, Mo, Ag, Au, Pb 2016
6,400 ha• Antabamba: Cu, Mo, Au, Zn 2017
19,200 ha• Suparaura: Cu, Fe 2017
2,000 ha
01 prospectus in La Libertad • Pampa Grande: Au, Ag 2017
8,700 ha
PROJECTS AWARD AREA
www.proinversion.gob.pecontact@proinversion.gob.pe
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