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WHY INVEST IN PERU? December 6, 2016

WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

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Page 1: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

WHY INVEST IN PERU?

December 6, 2016

Page 2: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

1. Internationally acknowledged macroeconomic soundness

WHY INVEST IN PERU?

2. Friendly investment environment

3. Trade integration policy – market access

4. Attractive sectors to Invest

Page 3: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

MACROECONOMIC SOUNDNESS

Page 4: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Peruvian economy grew rapidly in the last decade …

Real GDP, 2004-2016*(%Variation)

Source: Central Reserve Bank of Peru , International Monetary Fund

• Estimated figures of BCRP (Inflation report as of September, IMF (World Economic Outlook Database – October

2016)

1. MACROECONOMIC SOUNDNESS

GDP, 2004-2016*(US$ Billion)

5.0

6.3

7.5

8.5

9.1

1.0

8.5

6.56.0 5.8

2.42.9

4.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*2016*

66.775.0

87.9

102.2

121.6 121.2

148.6

170.6

192.5202.0 202.8

192.1180.3

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

Page 5: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

-6.3

-1.9

0.9

1.8

2.5

2.7

4.3

Venezuela

Brasil

Argentina

Chile

México

Colombia

Perú

… and continues leading regional growth allowing the GDP per capita to exceed

the global average by 2020…

Source: IMF / * in Peru case, source: BCRP

Real GDP – Forecasts for Latin America 2016-2017(Annual Average Variation %)

1. MACROECONOMIC SOUNDNESS

GDP per capita, PPP($ International constant prices of 2005)

4,000

6,000

8,000

10,000

12,000

14,000

16,000

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020

World

Latin-American

and Caribe

PeruPeru

Page 6: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

ESTABILIDAD MACROECONÓMICA1. MACROECONOMIC STABILITY

Economic growth has been driven by an increase in private investment…

Private Investment 2004-2016* (Variation %)

Private Investment 2004-2015 (US$ Billion)

1. MACROECONOMIC SOUNDNESS

Source: BCRP

* BCRP Estimated figures (Inflation report as September 2016)

8.1

12.0

20.1

23.3 23.9

-9.1

25.5

10.8

15.5

6.9

-2.3-4.4 -4.3

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

9.6 10.3

13.5

17.9

22.022.2

28.5

33.2

40.440.6

38.9

34.7

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Page 7: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

12.5 13.214.8

16.819.0

17.119.8 20.6

22.5 22.7 21.720.1

18.5

2.93.0

3.3

3.5

4.25.5

5.7 4.8

5.4 5.75.4

4.95.2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

Inversión Privada Inversión Pública

26.024.9

22.2 21.5 21.0

Colombia Perú Chile México Brasil

ESTABILIDAD MACROECONÓMICA1. MACROECONOMIC STABILITY

… which today represents almost 20% of GDP …

Private Investment 2004-2016* (% of GDP)

1. MACROECONOMIC SOUNDNESS

Total investment – LATAM 2015(% of GDP)

Source: International Monetary Fund and figures of Central Reserve Bank Source: Central Reserve Bank of Peru

* Estimated figures of BCRP (Inflation report as of September 2016)

Public Investment Private Investment

Colombia Peru Chile Mexico Brazil

Page 8: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

ESTABILIDAD MACROECONÓMICA1. MACROECONOMIC STABILITY

Investment announcements

1. MACROECONOMIC SOUNDNESS

Announcement of Private Investment projects 2016 - 2018

(US$ million )

Source: BCRP Inflation report, September 2016)

Total Investment

Mining 8,911

Hydrocarbons 4,821

Electricity 3,985

Industry 2,240

Infrastructure 5,028

Other Sectors 8,142

Total 33,127

Page 9: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

8.4%

4.1%3.6% 3.6%

3.3%

2.6%

Chile Colombia Perú Brasil LAC MéxicoChile Colombia Peru Brazil LAC Mexico

ESTABILIDAD MACROECONÓMICA1. MACROECONOMIC STABILITY

… Peru is an attractive market for foreign investment, which

recorded $ 7 billion in 2015

Foreign direct investment flow 2004 – 2016*(US$ Billion)

1. MACROECONOMIC SOUNDNESS

Foreign direct investment – LATAM 2015(% GDP)

Source: IMF and UNCTADSource: BCRP

* Estimated figures BCRP ( inflation report , September 2016)

1.6

2.6 3.5

5.5

6.9 6.4

8.5 7.7

11.9

9.3

7.9 7.8

5.1

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

Page 10: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Furthermore, the domestic demand is strengthening …

1. MACROECONOMIC SOUNDNESS

Real domestic demand 2004–2016*(real annual Var. % )

Imports of vehicles for private use(US$ million)

7 Times

Imports of domestic assets /1(US$ million)

3 Times

Source: SUNAT

1/ Includes imports of machines and appliance. Furniture and other house equipment'sSource: Central Reserve Bank of Peru and MEF

Estimated figures BCRP (Inflation report, September 2016)

458

1,567

2005 2015

268

1,801

2005 2015

2.7

4.2

11.412.1

13.6

-3.3

14.9

7.7 7.2 7.2

2.22.9

1.8

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

Page 11: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

ESTABILIDAD MACROECONÓMICA1. MACROECONOMIC STABILITY

This is complemented by a dynamic commercial trade…

Balance of Trade 2004-2016* (US$ million)

1. MACROECONOMIC SOUNDNESS

Source: BCRP

* Estimated figures BCRP ( Inflation report, September 2016)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

Exportaciones 12,809 17,368 23,830 28,094 31,019 27,071 35,803 46,376 47,411 42,861 39,533 34,236 35,299

Importaciones 9,805 12,082 14,844 19,591 28,449 21,011 28,815 37,152 41,018 42,356 41,042 37,385 35,741

Balanza Comercial 3,004 5,286 8,986 8,503 2,569 6,060 6,988 9,224 6,393 504 -1,509 -3,149 -442

-10,000

0

10,000

20,000

30,000

40,000

50,000

Exports

Imports

Trade Balance

Page 12: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

3.0

3.6

4.0 4.1

5.6

Perú Chile México Colombia Brasil

2.1

4.4 4.4

6.8

10.7

México Perú Chile Colombia Brasil

... all this, in a frame of macroeconomic stability, Peru records the lowest

inflation rate at a regional level….

1. MACROECONOMIC SOUNDNESS

Source: Central Bank of Reserve of Peru,IMF (World Economic outlook Database – October 2016

CPI – Latin America 2005- 2015(Annual Average Variation %)

CPI – Latin America 2015(Annual Average Variation %)

BrazilMexico Peru Chile Colombia Brazil Peru Chile Mexico Colombia Brazil

Page 13: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

100

200

300

400

500

600

700

800

900

F-1

5

O-1

4

M-1

4

J-14

S-1

3

A-1

3

D-1

2

A-1

2

A-1

2

D-1

1

A-1

1

M-1

1

N-1

0

J-10

M-1

0

O-0

9

J-09

F-0

9

O-0

8

M-0

8

J-08

Spread - Perú (pbs)

Spread - AmericaLatina (pbs)

… has maintained stable exchange rates and a level of risk under the regional

average

Exchange Rate in Latin America 2004-2016 (*)(Index, Base year 2005 = 100)

JP Morgan EMBI+ (Basic points)

1. MACROECONOMIC SOUNDNESS

(*) As of August 2016

Source: CEPAL

Spread Peru (pbs)

Spread LATAM (pbs)

Source: BCRP

60.00

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

150.00

E-04

J-0

4E-

05J-

05

E-06

J-0

6E-

07J-

07

E-08

J-0

8E-

09J-

09

E-10

J-1

0E-

11J-

11

E-12

J-1

2E-

13J-

13

E-14

J-1

4E-

15J-

15

E-16

J-1

6

Perú Chile Colombia México BrasilPeru Mexico Brazil

Page 14: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Peru maintains a healthy level of debt…

Public Debt– Peru 2004-2016*(% of GDP)

1. MACROECONOMIC SOUNDNESS

Public Debt– Latin America 2015(% of GDP)

Source: IMF; and Peru figures source BCRP

Source: Central Bank of Reserve of Peru

*Estimated figures, BCRP (Inflation report September 2016)

17.1

23.3

48.8 49.454.0

56.5

73.7

Chi

le

Per

ú

Ven

ezue

la

Col

ombi

a

Méx

ico

Arg

entin

a

Bra

sil

44.541.7

33.9

29.9

25.1

28.4

24.322.7 21.6

19.7 20.1

23.325.4

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

Page 15: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

… and has accumulated international reserves for a third of the GDP

Net International Reserves ( US$ Billion)

1. MACROECONOMIC SOUNDNESS

Source: Central Reserve Bank of Peru

*Up to May 31 th, 2016

NIR Adequacy Indicators

Source: BCRP. Inflation report June 2016

*Projection

2006 2011 2016*

NIR (% del GDP) 19.6 28.6 32.4

NIR (% short -term foreign debt) 166 471 580

RIN (% Short-term Foreign Debt plus Current Account deficit)

230 360 346

12.614.117.3

27.731.2

33.1

44.1

48.8

64.0 65.762.3 61.5 60.6

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

Page 16: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Source: Standard & Poor`s, Fitch Ratings and Moody´s.

Updated as of August 24th, 2016

1. MACROECONOMIC SOUNDNESS

Peru earned the investment grade and investor´s confidence by practicing a responsible political economy

Investment gradeLatin America benchmarking

Country Moody's S&P Fitch

Chile Aa3 AA- A+

Peru A3 BBB+ BBB+

Mexico A3 BBB+ BBB+

Colombia Baa2 BBB BBB

Uruguay Baa2 BBB BBB-

Paraguay Ba1 BB BB

Brazil Ba2 BB BB

Bolivia Ba3 BB BB-

Ecuador B3 B B

Argentina B3 B- B

Venezuela Caa3 CCC CCC

Page 17: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

FRIENDLY INVESTMENTENVIRONMENT

Page 18: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Non discriminatory treatment: Foreign investors receive 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.

Access to international disputes settlement mechanism

Peru participates in the Investment Committee of the Organization for Economic Co-operation and Development (OECD) – It promotes the implementation of the Guidelines for Multinational Enterprises.

*Investments that require authorization: Located within 50 km in the frontier line and those destined to arms, ammunitions and explosive. Likewise, a principal local partner

for investments in maritime cabotage as well as in air transport is required.

2. FRIENDLY INVESTMENT ENVIRONMENT

Peru offers a favorable legal framework for foreign investment:

Page 19: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

INVESTORS

Stability of regulations regarding nondiscriminatory treatment.

Stability of income tax regime applicable todividends.

Stability to use freely the most favorableexchange rate available in the market.

Stability of the free availability andremittance of foreign currency, dividendsand royalties regime.

Requirement: Minimum investment of US$ 5 million in any economic sectors. US$ 10 million for hydrocarbon and mining sectors.

Validity: 10 years. Concessions: Term according to the contracts life (Max. 60 years).

RECEIVING COMPANY

Stability of the recruitment regimes.

Stability of the regimes for the promotionof exports.

Stability of the Income Tax Regime

2. FRIENDLY INVESTMENT ENVIRONMENT

Special Regimes: Legal Stability Agreements

Regime whereby the Peruvian Government guarantees:

Page 20: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Granting the return of the Value Added Tax during the pre-productive stage of theproject (minimum 2-year term).

Applicable to all economic sectors

For agricultural activity it is not necessary to meet a minimum investment amount. Forother activities the minimum investment amount is US$ 5 million.

The project can be divided into stages, phases or similar.

Special Regime: VAT Anticipated Recovery.

Regime whereby the Peruvian Government grants the following benefits:

2. FRIENDLY INVESTMENT ENVIRONMENT

Page 21: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

A steady tax regime:

2. FRIENDLY INVESTMENT ENVIRONMENT

Tax Applicable Rate

INCOME

Corporate profits

28.0% (2015-2016)

27.0% (2017-2018)

26.0% (2019 henceforth)

Agriculture and agribusiness 15%

Dividends

6.8% (2015-2016)

8.0% (2017-2018)

9.3% (2019 henceforth)

Royalties 30.0%

Interest rate on loans from abroad 4.9%

Value Added Tax (VAT) 18.0%

Financial Transactions Tax 0.005%

Temporary to net assets, applicable to the

excess of S/. 1 000 0000.4%

Page 22: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

in the regional ranking of ease of doing business in Latin America

.

2. FRIENDLY INVESTMENT ENVIRONMENT

Continuous effort to facilitate the establishment and operation of business

Position Country

1 Mexico

2 Colombia

3 Peru

4 Chile

5 Panama

92

Paraguay

3rd

Source: World Bank Doing Business 2017

123

149

90

116

158

124

53

114

57

54

187

Argentina

Uruguay

Bolivia

Brasil

Surinam

GuyanaVenezuela

Colombia

Perú

Chile

Ecuador

Page 23: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Peru has signed and currently has in force Agreements for the Promotion and Reciprocal Protection of Investmentand Trade Agreements of further scope that includes investment chapters that underpin our liberalization policy.

Australia China 1

Korea 1

Malaysia Singapore 1

Thailand Japan Brunei New Zealand Vietnam Argentina

Bolivia Chile 1

Colombia Ecuador Paraguay Venezuela

Cuba El Salvador Costa Rica 1

Panama 1

European Union 2

European Association of free Trade (Iceland, Liechtenstein, Switzerland and Norway) 1

Canada 1

United States1

Mexico 1

(1) Trade agreements

(2) Trade Agreement. Besides , Peru has Investment bilateral agreements with Germany, Belgium, Luxemburg, Denmark, Spain, Finland, France,

Holland, Italy, Portugal, United Kingdom, Check Republic, Sweden and Switzerland.

Investment Agreements

It has also signed 8 agreements to avoid double taxation with Andean Community, Brazil, Chile, Canada, Korea, Mexico, Portugal and Switzerland.

2. FRIENDLY INVESTMENT ENVIRONMENT

Page 24: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

TRADE INTEGRATION POLICY - MARKET ACCESS

Page 25: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

3.7

16.3

2.2

12.3

1.10.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0Dispersión Arancelaria (Desv.Estandar)

Arancel Promedio Nominal

Arancel Efectivo

Tariff dispersion Average Nominal tariff

Effective tariff

3. OPEN TRADE AND MARKET ACCESS

POLICY

An open trade policy sustained over time

Evolution of nominal and effective tariff; and tariff dispersion 1993 – 2016 (*)

(*) AS of September 2016

Source:MEF

Notes:

1) Affective Tariff= (Amount of total revenue Ad valoren CIF / Total Amount of CIF Imports)*100.

2)Tariff Dispersion= Standard Deviation

Page 26: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Reduced tariff structure with low tariff dispersion

Source: SUNAT – MEF

3. FRIENDLY INVESTMENT ENVIRONMENT

LEVELS OFAD VALOREM

TARIFF LINES 2/

NUMBER PROPORTION (%)

0 4,224 55.9%

6% 2,538 33.6%

11% 792 10.5%

Total 7,554 100 %

EFFECTIVE AVERAGE TARIFF % 3.2

EFFECTIVE TARIFF % 1.1

STANDARD DEVIATION % 3.8

Page 27: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

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 trillion

96% of Peruvian exports

Page 28: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

INVESTMENTOPPORTUNITIES INATTRACTIVE SECTORS

Page 29: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

AGRIBUSINESS SECTOR

Natural greenhouse.

High agricultural yields: Sugarcane (2nd),Asparagus, Olives (3rd), Artichokes (4th), Grapes(6th) and Avocado (11th).

Seasonal windows in major markets.

The 100,000 ha of land currently devoted toagricultural exports are expected to double as aresult of large agricultural irrigation and expansionexisting projects.

More than US$ 5.000 billion in exports of freshand processed products to more than 150countries.

Organic and Natural Products with high exportpotential.

Page 30: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Agricultural exports according to Target Market – 2015

AGRIBUSINESS SECTOR

Source: ADEX Data Trade., BCRP.

1,1221,338

1,7571,971

2,5552,425

3,177

4,519

4,1774,231

5,096

5,121

0

1,000

2,000

3,000

4,000

5,000

6,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Agro Exports (millions of US$ FOB)

TOTAL TRADITIONAL

TOTAL NON TRADITIONAL

TOTAL

UNITED STATES32%

NETHERLANDS13%

GERMANY6%

SPAIN5%

UNITED KINGDOM 5%

ECUADOR4%

CANADA3%

CHINA3%

CHILE2%

OTHER 27%

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MANUFACTURING INDUSTRY

In the last 10 years (2006- 2015) the sector hasexperimented an annual average growth of 4%,despite of the negative average variation of -2.6% in the past two years.

There are different causes, among them we canemphasize the international situation and thedrastic reduction on the capture of hydrobiological species.

Significant recovery is estimated in the 2017,with 4% growth due the full capacity of miningprojects and by the internal market dynamics atthe beginning of several works of the largeprojects of infrastructure granted in concessionin recent years

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MANUFACTURING INDUSTRY

Source: ASOCEM , PRODUCE

5,7826,862

8,298

9,84710,675 10,410

2006 2008 2010 2012 2014 2015

Cement production (thousands of metric tones)

255,853

230,523

250,796

269,436

2012 2013 2014 2015

juices and nectars(thousands kg)

29,606

5,741

29,79926,014

43,998

5,501

Thread andcotton mills

(kg)

Thread andacrilic mills

(kg)

Thread andmills : Mix -Various (kg)

Dril fabric (m) cotton fabrics(m)

Polyesterfabrics (m)

Producción de Hiladura y Tejidos (Miles-2015)

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MINING SECTOR

Polymetallic country

13.61% of the land is subject to miningconcessions, and only 1.25% of the land is takenfor mining exploration and exploitation.

In the world: Third producer of copper, silver, tinand zinc worldwide. In Latin America: Firstproducer of gold, zinc, tin and lead. And 2nd ofcopper, silver and molybdenum.

In 2015, investment in mining reached a value ofUS$ 6,777 million.

Peru is one of the few countries in the world withnon-metallic mineral deposits, includingdiatomite, bentonite, limestone and phosphate.

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*Exports January to May 2016Source: MINEM. Mining Statistical Bulletin May 2016

Elaborated by: ProInversión

** acumulated investment January to May 2016Source: MINEM. Statistical Bulletin of Mining. May 2016

Elaborated by: ProInversión

MINING SECTOR

90%

3%5%

2%

Structure of the mining sector exports *

Mining Non - metallic minerals iron - steel and jewerly Metal-mechanics0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016**

Minig Investment( US$ Million)

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ENERGY SECTOR

Great energy potential: The wide availability of waterresources and natural gas has enabled to meet thegrowing electricity demand in the country.

In 2015, 91% of the population had access toelectricity.

Resources to be discovered and exploited: There areother renewable energy sources to be explored such assolar, wind, biomass and geothermal sources.

Energy production has grown 88% in the past 10 years.In 2015, the thermal generation represents 49.79%,while hydro energy 48.48%, wind energy 1,25% andsolar energy 0.48%.

The main economic groups of power generation are:Enersur, Edegel, ElectroPerú, Transmantaro, REP, Luz delSur, Edelnor, Hidrandina and Electro Dunas.

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/P: Preliminary

Source: MINEM. EVOLUTION OF THE ENERGY SECTOR INDICATORS 1995 - 2015

4,462

12,252

4,075

11,296

2,052

6,275

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1995 1999 2003 2007 2011 2015/P

Energy indicators (MW)

POTENCIA INSTALADA POTENCIA EFECTIVA MÁXIMA DEMANDA DEL SEININSTALLED POWER EFFECTIVE POWER MAXIMUM DEMAND FROM THE SEIN

ENERGY SECTOR

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HYDROCARBONS SECTOR

The hydrocarbons sector growth begins between2004 -2005 once the major natural gas reserve,located near to Camisea rivers, start its productionactivities (Camisea project).

Peru is the most important sustainable sourceof natural gas in the South American Pacific.

As to 12.31.2015 the proven reserves of naturalgas reaches to 14,09 TCF, and the prospectiveresources of natural gas to 60,24 TCF.

For 2025 the estimated demand of natural gas isbetween 1900 MCF and 2400 MCF, this comprisesthe final consumption, petrochemical andelectricity generation.

Peru has oil fields that have not been explored(29.97 million ha), making it a potentialpetrochemical hub.

The petrochemical industry is integrated with theproduction of natural gas and other liquidhydrocarbons, creating a significant added value.

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PETROCHEMICAL SECTOR

Source: MINEM. Reserves books of 2015Elaborated by Proinversion

Natural Gas Reserves and Resources(BCF)

Proven Probables Possibles Contingent Prospects

Page 39: WHY INVEST IN PERU? - proyectosapp.pe · 8.4% 4.1% 3.6% 3.6% 3.3% 2.6% Chile Colombia Peru Chile Colombia Perú BrazilBrasil LAC LAC MexicoMéxico ESTABILIDAD MACROECONÓMICA1.MACROECONOMIC

Important cultural destination for archaeologicalsites of the Inca and pre-Inca cultures.

• Machu Picchu was voted one of the New 7Wonders of the World.

Diversity of natural settings. Destination for bird andorchid watchers.

Important investment by internationally renownedhotel chains.

The conventions and gastronomic tourism has gaineda significant boost, Lima is considered as one of themain venues for this international venues and thegastronomic capital of Latin America.

Increased connectivity of the Peruvian air marketwith increased weekly frequencies in internationalflights to allow more connections and destinations,with more and better travel options.

Investment Opportunities in the 8 prioritydestinations: Northern Beaches, Amazon River,Amazonas, Kuelap, Moche Route, Lima, Nazca,Paracas, Colca Valley and Puno-Lake Titicaca.

TOURISM SECTOR

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Source: MINCETUR

(*)from the main 70 countries

TOURISM SECTOR

South America55.7%North America

20.1%

Europe16.6%

Asia4.2%

Central America

2.0%

Oceania1.4%

Africa0.1%

1.41.6 1.7

1.92.1 2.1

2.3

2.6

2.9

3.2 3.2

3.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Tourist arrivals(Millions of persons)

Tourist arrival per region

of origin – 2015*

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The average GDP growth in the construction inthe past 5 years was 4.6%.

The slowdown in the economy reduced thedemand in properties that were registered until2013. Nevertheless in the past year the largestinvestment of the sector were directed to theconstruction of shopping centers and importantinfrastructure projects.

In order to facilitate the access to a property –nationwide – the Ministry of Housing andConstruction has implemented the followingPrograms and Products:

• Leasing• Real estate leasing• New Credit My Housing Fund• My Construction• My materials• Own Roof• Bonus structural reinforcement

REAL ESTATE

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REAL ESTATE

Source: ASOCEM- Association of Cement Producers(*) Includes loans in soles and dollars Source: Superintendency of Banks and Insurance

12,021 13,144 16,011

19,952

24,461

29,665

34,205

38,328

2008 2009 2010 2011 2012 2013 2014 2015

Mortgage credits provided by theFinantial system 2008 - 2015

(millions of soles)*

ConceptUnits

(MTm)

Consumption 10,852

Production 10,410

Exports 363

Installedcapacity

15,080

Main Characteristics

of cement - 2015

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TRANSPORT INFRASTRUCTURE

Peru has prioritized the development oftransport infrastructure (road, rail, port andairport) to increase competitiveness and set aRegional Hub that integrates Latin Americawith the Asia - Pacific.

In this perspective the investmentcommitments in concessions of the sector, in31 projects are around US$ 14.1 billion,creating its modernization.

The sector will keep its expansion during 2016through PPP projects, prioritized by the MTC;with additional investment commitmentsaround US$ 10.440 million.

This new investment cycle representssignificant opportunities for investorsincluding contractors, suppliers andoperators.

INFRAESTRUCTURA DE TRANSITOPuerto marítimo/Fluvial

AeropuertoCENTRO DE PRODUCCIÓN, DISTRIBUCIÓN Y CONSUMOCentro de acopio

Principal centro de consumo

Principal centro de producción

Centro de distribución / almacenaje

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TRANSPORT INFRASTRUCTURE

New Investments in Transport Infrastructure

Programmed for 2016-2017 (1)

(1)Referential investment amount subject to variation (2) final investment amount of Project Longitudinal de la sierra, section 5; and other unsolicited proposals, to be

defined. (3) estimated figures based on the investment amount of Line 2 of Metro of Lima, granted in concession in March 2014 (4)Estimated investment amount of

unsolicited proposals.

Source: MTC, APN and Proinversion.

Transport infrastructure

Investment amount

(US$ million)

Road infrastructure: Longitudinal de La Sierra ,Section 4, Section Sullana – Ecuador; Longitudinal de

La Sierra, Section 5 ⁽²⁾; Panamericana Sur, Ica, Detour Quilca; Peripheral ring road of Lima; Corridor

Económico Central.

2, 796

Railway infrastructure: Line 3 of Metro of Lima ⁽³⁾; Huancayo –Huancavelica Railway10,220

Port infrastructure: San Juan de Marcona, Pucallpa, Iquitos.

Salaverry, Ilo, Chimbote ⁽⁴⁾600

Waterways: Ríos Huallaga, Marañón, Ucayali y Amazonas, 70

Logistic Platforms: Logistics Platform and Pre-Gate Parking & Service Center– Callao 186

US$ Total MM US$ 13,872