MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE OF PERU www.amcham.org.pe Year 20 / Volume 1, January – March 2015 WHAT SHOULD BE DONE TO TRANSFORM LIMA INTO A TOURIST ATTRACTION AND A SUSTAINABLE CITY IN FINANCIAL AND ENVIRONMENTAL TERMS? TO KEEP ON WORKING 25 THE BEST AT THE NORTH OF PERU A thorough guide of the hotels and places to take into account before your next trip to Peru IS LIMA A CULTURAL DESTINATION? The city is doing well in these terms, but can improve its corporate government and issue more debt 05 LIMA’S FINANCIAL SITUATION A mindful analysis to answer this question 09
Transcript
MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE OF PERU
www.amcham.org.pe
Year
20
/ Vo
lum
e 1,
jan
uar
y –
mar
ch 2
015
What should be done to transform lima into a tourist attraction and a sustainable city in financial and environmental terms?
to keep on Working
25 THE BEST AT THE NORTH OF PERUA thorough guide of the hotels and places to take into account before your next trip to Peru
IS LImA A CULTURAL DESTINATION?The city is doing well in these terms, but can improve its corporate government and issue more debt
05 LImA’S FINANCIAL SITUATION A mindful analysis to answer this question
09
www.amcham.org.pe2
CONTENTS
Editorial
Central ReportHow to increase corporate tourism in Lima Lima Ricardo Larrabure, CEO of BCD Travel
Central Report How to increase receptive tourism in Lima, based on the cultural offer Diana Guerra, director of the carreer of Tourism Administration at Universidad San Ignacio de Loyola
Central Report Which are the advances of the Project for enlarging Jorge Chávez International Airport?Rodrigo Acha, chief of economic analysis at AmCham Perú
Central Report Funding options for the Municipality of Lima Oscar Jasaui, president of Pacific Credit Rating
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cÁmara de comercio americana del perÚ(amcham perÚ) Avenida Víctor Andrés Belaúnde 177, Piso 1, San Isidro, Lima 27, Perú / T. (51-1) 705 8000 / F. (51-1) 705 8026 / www.amchamperu.org.pe / [email protected]
board of directors
honorary president Brian Nichols, U.S. Ambassador to Peruhonorary director Luis Miguel Castilla, Ambassador of Peru to the U.S.president Lieneke Schol, Microsoft Perú S.R.L.1st vicepresident Federico Cúneo, Amrop S.A.treasurer Esteban Chong, PricewaterhouseCooperssecretary Raúl Barrios, Barrios & Fuentes Abogados
eXecutive director Aldo R. Defilippi
directors Félix Antelo, Lan Perú S.A., Guillermo Browne, Merck Sharp & Dohme Peru S.R.L., Bárbara Bruce, Hunt Oil Company of Peru L.L.C. Suc. del Perú, Luis Felipe Castellanos, Banco Interbank, Alejandro Desmaison, Delosi S.A., Ricardo Fernández, IBM del Perú S.A.C., Mariela García, Ferreyros S.A., María Jesús Hume, A.F.P. Integra, Dario Lareu, 3M Peru S.A., Luis Rivera, Glencore Perú S.A.C., Norberto Rossi, Grupo Ripley, Rafael Venegas, Rímac Seguros, Fernando Zavala, U.C.P Backus y Johnston S.A.A.
eX oficio members Mark Cullinane, United States Embassy Economic Counselor, Ricardo Pelaez, United States Embassy, Commercial Counselor, Diego De la Torre, Perú 2021.
editor Rodrigo Acha coordinator Francesca Camere subscriptions and publicity [email protected] design and layout Antonio Revilla pre-press and printing Comunica 2, Los Negocios 219, Surquillo, T. (511) 610 4242 - F. (511) 610 4250
amcham peru stipulates that signed articles contained in this magazine are their author’s responsibility
Legal Deposit Nº2008-11949
Years 20Volume 1january – march 2015
Central Report Ideas for making Lima a sustainable city Gonzalo Morante, CEO of Walsh Perú
7 13A M E R I C A N C H A M B E R O F C O M M E R C E O F P E R U
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Legislative Analysis New mining environmental regulationFrancisco Tong, partner at Rodrigo, Elías & Medrano Abogados
Economic Analysis Big pending comercial agreementsRodrigo Acha, chief of economic analysis at AmCham Perú
Economic analysis – Statistics Perception of Lima
Opinion The critic situation of the potable water utility in Lima Contribuyentes por Respeto
Legal AnalysisBills review
AmCham News Institutional AgendaPrioritized aspects in the activity of the chamber
Travel & LeissureThe bets beaches and hotels at the north of PeruBCD Travel
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MAGAZINE OD THE AMERICAN CHAMBER OF COMMERCE OF PERU
www.amcham.org.pe
Year
20
/ Vo
lum
e 1,
jan
ury
– m
arch
201
5
What should be done to transform lima into a tourist attraction and a sustainable city in financial and environmental terms?
to keep on Working
25THE BEST AT THE NORTH OF PERUA torough guide of the hotels and places to take into account before your next trip to Peru
IS LImA A CULTURAL DESTINATION?The city is doing well in these terms, but can improve its corporate government and issue more debt
05 LImA’S FINANCIAL SITUATION A mindful analysis to answer this question.
09
www.amcham.org.pe 3
MAGAZINE OF THE AMERICAN CHAMBER OF COMMERCE OF PERU
Changes always bring opportunities. The beginning of a new administration at the city of Lima is an opportunity for correcting mistakes or starting new actions, taking advantage of the renewed atmosphere that the arrival of a new governor may bring.
It is natural that an administration comes to its end with unfinished plans, changes that could not be executed, or mistakes generated without any perverse intention. Things could hardly happen in a different way. If the right attitude is taken, the bases of an improved continuity must be established without the need of falling in an inquisitional and discontinuous stance. Otherwise, the leading figure of the authority gets undermined and will finally harm the one who is currently working.
This does not mean that any inspection needs to be done to corroborate that everything complies with the rule of law. It may be said that the major is a tenant that rents a property and has to return it in better conditions than the ones it had when he received it. The Metropolitan Municiplity of Lima (MML) belongs to all the citizens and they wish to maximize their benefit when they elect the tenant.
Accounts need to be given through the mechanisms that are considered in the law, and actions must be ruled by the highest institutional transparency, but the inquiries of the incoming administrations should find differences that are not measurable through public information. Nevertheless, findings should be aligned with the interest of the landlord, and not only with tenant’s interests. Projects’ modifications of cancellations must be the result of technical evaluations. Walls are constructed putting bricks over the bases, if and when they are well prepared.
In which situation is Luis Castañeda Lossio, the new major of Lima, receiving the administration of the municipality, and which improvements does the city require for being transformed into a more attractive space para for citizens, investors and tourists? All this subjects are analyzed in the main topic of this issue of Contact, that starts with the evaluation of the financial situation of the MML made by Oscar Jasaui, president of Pacific Credit Rating.
He warns that the results of the institution were buffered by the item “other incomes”, which remarks the importance of achieving efficiency and generating recurrent incomes. To this is added the importance of maintaining a good corporate governance for improving the credit rating.
Indeed, it is a must to raise funds and continue signing alliances with the private sector to improve the infrastructure of the city. The articles about the optimization of receptive and corporative tourism, as the one about the
EditorialLima’s new tenant
DecodingHamstrung projects and social expenditure
• AccordingtothePeruvianRepublicComptroller’s Office, it has been detected thar 339 projects valued in S/. 1,355 millon (US$430 million) have been hamstrung nationwide. Among them, 7 of each 10, valued in S/.999 million (US$322 million) are under the administration of local governments. The regions with the highest amount of hamstrung projects are Cuzco and Apurimac, both located together at the south-center of the country.
• Investmentinthemainminingprojects that were hamstrung since 2012 because of social conflicts would have summed US$8,435 millon. These are Tambo Grande (US$325 million), hamstrung in 2012; Cerro Quillish (US$250 million), hamstrung in 2004; Rio Blanco (US$1,500 million), hamstrung in 2009; Santa Ana (US$60 million), hamstrung in 2011; Conga (US$4,800 million), hamstrung in 2011; and Cañarico (US$1,500 million), hamstrung in 2013. To these has to be added, in hydrocarbons, Block 108 (US$50 million), recently hamstrung for the protests at Pichanaki.
• Itisestimatedthatanactionstartedby the Canadian company Bear Creek Mining against Peruvian Government for canceling Santa Ana project may turn into a compensation up to US$1.2 billion. Ir would be an international arbitration process at the ICSID.
• Atotalof77localgovernments,13 regional governments and 53 private enterprises use the Tax for Works Mechanism. According to the Agency for the Promotion of Private Investment of Peru (Proinversión), 151 proyects valued in S/.1,481 million have been awarded between 2009 and 2014. Arequipa has been the most benefited region, with investments for S/.379 million. Southern Perú Copper Corporation and Banco de Crédito del Perú are the enterprises that most have contributed, with amounts of S/.418 million and S/.391 million, respectively.
situation of the project for increasing the capacity of Jorge Chavez International Airport, give an idea of the importance of this.
Tourism is one of the activities that most benefit can bring to the city and the country, and maybe the best reference of the level of sophistication reached by the services they provide. In the same sense, Diana Guerra, director of the career of Tourism Administration at Universidad San Ignacio de Loyola, comments in her article which are the improvements needed to achieve a higher attendance of visitors to the city.
But Lima is also a venue with high potential for doing business. Ricardo Larrabure, CEO of BCD Travel, wrote for this issue of Contact about how to take advantage of the peculiarities of the city of Lima to increase the influx of businessmen to the country.
One page further, we remark the contribution of the concession of Jorge Chavez International Airport to the connectivity and economy of the country. Also, we explain the curren situación of the expansion project, the necessity of executing it, and the additional benefits that this will bring.
Finally, a key aspect for the improvement of the life quality in the city such as the care of the environment cannot be left aside. Gonzalo Morante, CEO of Walsh Peru, explains the changes that can be done for reducing the impact of the urban activity. It should be noted that converting Lima in an ecological city also contributes to improve the access to financing through funds specialized in sustainable development.
In the line of enviromental care, but in terms of industry, the presentation of the Envoronmental Regulation for Mining in janury of this year cannot go unnoticed in the analysis of the economic activity of the country. Francisco Tong, partner of the Peruvian law firm Rodrigo, Elías & Medrano Abogados specialized in environment and mining regulations, analyzes the content of this law and makes clear that the balance of its dispositions is positive.
Appartly from that, and as usual, issue makes an extensive analysis of the economic conjuncture in our Entrepreneurial Overview Survey. Added to that, we take a look at the bills proposed by our congressmen.
And in the end, don’t miss the article about the most attractive tourist destinations in the beaches locates al the north of Peru. You have probably never heard about them, but the text will give you all the information you need for making your best choice the next time you come to Peru.
As always, we are sure of offering you a complete coverage of the most relevant issues for the business environment in Peru through all these months. Enjoy your reading.
C e n t r a l r e p o r t
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The corporate travel segment has had a substantial growth over the past few years, driven by the strong progress of the Peruvian economy and the increa-sed interest in doing business in our country. Bolstered by the mining, energy and agriculture sectors, the flow of bu-siness men towards Lima has grown by two digits per year over the last decade.
Beyond major special events, we can now see great hotel occupancy with average rates considerably higher than 10 years ago. Additionally, it is worth mentioning that Peru is not only a good place to do business, but its cuisine culture is also a motivating factor that places us as a main destination on the agenda of travelers. In that regard, Peru is still a thriving market and it is expec-ted that the corporate sector will conti-nue to grow in the coming years.
At the center of the world attention
Peru will host a number of major events this year. Among them, the Annual Mee-ting of the Boards of Governors of the World Bank and the International Mone-tary Fund, which will be held in October in Lima, and the X Presidential Pacific Alliance Summit, to be held in Urubam-ba, Cuzco, in June. For next year, among several other events, Peru APEC 2016 Summit stands out.
While Lima is positioned as the region business hub, there are still some factors that limit the sector’s growth at national level.
As said by Antonio Villaroel, Corpora-te Sales Manager of Libertador Hotels Resorts & Spas, the main problems bu-siness tourists have to face are the lack of investment in aerial and ground transportation connectivity infrastruc-ture (expansion of airports, roads and access), insecurity and urban transit. Be-sides the Lima airport, there are no VIP senior lounges, formal public transport or car rental for such travelers in the ci-ties within the country. In order to maintain the increasing trend observed in the sector over the recent years, Enrique thinks it is a good idea to boost corporate incentive travel groups, conferences, meetings, as well as to pro-mote a new law encouraging Foreign Trade in Tourism Services easy to imple-ment and control. The public and private sectors need to review their inconsisten-cies in order to enhance the business tourism, including tax refunds on pur-chases in the country as other countries in Latin America.
Peru has managed to succeed as a cor-porate tourism destination despite the-se limitations, but if they are not tackled they can ruin the sector’s performance. If special attention is given to the above mentioned factors, the market will conti-nue its auspicious path of growth of the last decade.
The Peruvian hotel industry has made significant investments in infrastructu-re in order to meet the demands of the businessmen coming to our country. A conversation with the President of the Peruvian Association of Inbound Tour Operators - Apotur, Enrique Quiñones, made me realize that there is a clear trend towards investment in four- star hotels. The intention is that they must be well lo-cated, have a functional profile with mee-ting rooms and, above all, broadband in-ternet access for online conferences and access to remote servers.
Meanwhile, the five-star hotels are being upgraded to meet the competition with the international hotel brands so as to continue serving business travelers. Ac-cording to Apotur, small and midsize meetings currently prevail in the bu-siness world. Even though both, large conventions and fairs are significant en-gines and windows of knowledge, con-ferences are still the great promoters of the investment in hotels, transportation, restaurants, etc.
The bad news
Notwithstanding the above, it is impor-tant to note that there are factors limi-ting the growth of the corporate travel segment in our country that threaten the future development of the sector.
RICARDO LARRABURE, CEO
of BCD TravelPERU AS A DESTINATION FOR BUSINESS TRAVELS
C e n t r a l r e p o r t
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There is a difference between tourists traveling driven by the culture of a pla-ce from tourists who carry out cultural activities when in destination. A tourist that visits a museum, an archaeological site or participates in festivals is not a culture tourist, since its trip purpose may have been another one. Visiting a local food restaurant in Lima does not make a gourmet tourist, but someone who comes to town specifically to attend the Mistura food festival is certainly a gour-met tourist.
Defining the type of tourist has to do with the central purpose of the trip. If a business tourist attends a music concert while staying at destination, such activity is considered as a cultural consumption complementary to its trip main purpose.
So, is Lima a destination for cultural tou-rism?
Not yet
According to the Foreign Tourist Profile 2013 presented by PromPeru last year, 87% of the tourists that came to our city carried out cultural activities. That is, they did cultural consumption at desti-nation, but the report did not establish the number of cultural tourists visiting the city.
The same report indicates that 57% of the tourists visiting Lima arrive to Peru for vacations, recreation or leisure pur-
Cultural tourism is still an under exploited niche in the city of Lima. The Peruvian capital could enhance its appeal by offering more articulated and specialized activities rather than sporadic ones.
Is Lima capable to encourage cultural tourism? May any of our museums, archaeological sites, music festivals, craft fairs or religious holidays lead to purchase Lima destination from other countries?
Limited offer
Currently, the activities carried out by tourists in the Peruvian capital are focused on visits to its historical, religious and archeological heritage and, and to a lesser extent, on con-sumption of contemporary culture (cinema, theater, music concerts, folk performances, cultural centers, art galleries, etc.).
Lima does have a diverse cultural offer for residents, but for tourists, this offer should be connected to the tourism industry as in Las Vegas or in Buenos Aires. Thus, we would extend the activities a tourist can do, espe-cially at night, currently restricted to visiting Lima restaurants and shop-ping centers.
And if we want to attract cultural tou-rists (those with a high educational level that stay longer and spend more at destination), the challenge is even greater: create powerful, attractive and quality cultural products as well as differentiating elements that may motivate the trip for its proposal and exclusivity.
poses, 18% for visiting family and friends, and another 17% for doing business. A little further (3%), we find the MICE seg-ment (meetings, incentives, conferences and exhibitions) and 2% for academic purposes (studies, theses, etc.).
But who is this foreign tourist visiting Lima? According to the same source, is a male, who comes alone and organizes its trip on its own (without using a tra-vel agency service), between 25 and 34 years old, and comes primarily from the US and, secondly, from Chile. In most ca-ses he visits the city for the first time and stays in four and five star hotels as well as in three-star hotels. His average stay in Lima is six nights with an expense of US$ 1,305.
Tourists mainly visit the historical center of the city and then Miraflores, San Isi-dro, Larcomar and Barranco (in that or-der). Cultural activities include visits to churches and convents (61%), archaeo-logical sites (46%), historical buildings (40%) and museums (38%). Only 3% say they have followed gastronomic routes in the city and 5% haveparticipated in local festivities.
Therefore, although foreign tourists come to Peru mainly to explore the his-torical sanctuary of Machu Picchu and the city of Cusco, Promperu’s figures in-dicate that in Lima cultural activities are prevalent, at least when the tourist is al-ready at destination.
DIANA GUERRA, director of
the Tourism Administration
Career at Universidad San
Ignacio de Loyola
LImA AS A CULTURAL CITY FOR INBOUND TOURISm
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C e n t r a l r e p o r t
This will be the fourteenth year of Lima Airport Partners (LAP) as the concession holder of Jorge Chávez International Air-port (AIJCH). During this time, the domes-tic flights terminal has been remodeled and expanded. This Project has been one of the main infrastructure works in Lima, and is a clear example of the benefits of including private capital in the manage-ment of public goods.
After an investment of more than US$337 million, the airport infrastructure has achieved a high level of modernity. The table below shows the changes made between 2001 and 2014:
Despite this expansion, the city and the Peruvian economy have grown at a faster pace, which has resulted in an increase of more than 10% in airport traffic per year. With the construction of the second runway and the new termi-nal at an estimate cost of US$1 billion, AIJCH may remain as the best airport in the region and may double traffic to 30 million passengers as of 2031. What is the Project status?
Almost done
Nearly all the lands required for cons-truction have already been delivered
and the design conceptualization is being finished. Once the Peruvian go-vernment provided LAP with part of the lands, environmental audits were carried out in order to identify the environmen-tal liabilities (hydrocarbon-contamina-ted soils, water wells, silos, etc). On the other hand, in 2013 the engineering and construction works regarding the peri-meter fence for the received lands had already been completed with an estima-te investment of US$ 4.3 million.
By September 2014 LAP awarded a con-tract for the execution of the Project to the Dutch company Arcadis, speciali-zed in project engineering and consul-ting. The successful bidder has, in turn, subcontracted a group of well-known design, architecture and engineering companies for the Project design and engineering. The conceptual design, which is deemed to demand an inves-tment of US$17 million, is expected to be ready by the middle of this year. Then, we may specify an investment amount (before Arcadis was entrusted with the design, an amount of U$950 million was estimated).
As for the remaining lands to be recei-ved, the Peruvian government has com-mitted to delivering them until Decem-ber 2015. These lands represent nearly 32 million ft2, almost half of just under 75.3 ft2 of the total land area.
The construction of the second runway should be completed in a five-year term after the delivery of all lands.
Source: Lima Airport Partners
First stepJorge Chávez International Airport infrastructure before and after the concession
Terminal area: 424,819 ft2
Apron area: 1,776,045 ft2
Number of aircraft parking positions: 18
Number of passenger boarding bridges: 0
Number of baggage belts for international
�ights: 3
Immigration positions in international
arrivals: 12
Immigration positions in international
departures: 12
Perú Plaza: Did not exist
Terminal area: 925,596.2 ft2
Apron area: 3,659,729 ft2
Number of aircraft parking positions: 47
Number of passenger boarding bridges: 19
Number of baggage belts for international �ights: 6
Immigration positions in international arrivals: 30
Immigration positions in international departures: 24
Perú Plaza: 41,398 ft2
Total concession area in million square meters: 6.2
Number of commercial concession holders: 68
Number of commercial establishments: 110
Runway length in meters: 3,507
2001 2014
NExT DEPARTURE
The concession of Jorge Chávez International Airport materializes the benefits of granting a public good in the city to the private administration. What remains is to strengthen these benefits with the expansion.
RODRIGO ACHA, Head of Economic Analysis at AmCham Peru
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C e n t r a l r e p o r t
Alike in all big metropolises worldwide, Lima presents a series of challenges for becoming a sustainable city. Sustaina-ble cities are those that protect natu-ral resources and social activities in its environs with the aim of providing and keeping high living standards for its ci-tizens.
During the last five years, Lima inhabi-tants identified delinquency and public insecurity, inefficient roads and public transportation service, and environ-mental management of resources as the city’s main problems. The worsening of these last two problems does necessa-rily have effects on personal welfare, air quality, hydric availability and its effect on people’s health.
Public safety is a problem affecting all Lima inhabitants. Statistics on citizen perception regarding this problem intensification has varied from 73% to 85%, only in the 2010-2014 perio-ds. Causes are multiple: from poverty, unemployment and the Judicial System, up to lack of education.
This article does not pretend making a detailed examination of these structu-ral issues. Nevertheless, I will stopover for analyzing how the lack of education finally influences in an integral manner,
Converting Lima into a sustainable city does not depend only on the execution of environmentally friendly works. Among the variety of ideas mentioned below, the need of a better education outstands.
Gonzalo Morante, CEO of Walsh Peru Challenges for a
sustainable lima
in the need of proposals for achieving a sustainable city.
Education
Access to a good education, further be-yond the current national educational system that privileges evaluation on pupil´s memory basis in detriment of an education with values culture that will incentivize productive creativity, turns into the substantial axis that local, regional and national authorities must aboard. There is no other way of initia-ting a concrete and promising proposal towards a city with a life quality oppor-tunity for its citizens.
In this sense, municipal governments have the responsibility of generating so-cial programs that will consider creating spaces for promoting culture, values, leisureliness and sports among others. In this way, idleness opportunities will decrease in vulnerable areas within the Capital.
Transport and Urbanism
On another topic, all of us living in Lima spend a lot of time in travelling appa-rently short distances, both in our own cars as well as in urban public transpor-
tation. The consequences of relentless traffic congestion are the increase in time needed to comply with our daily activities, increase in fuel use and a growing stress in people.
All these are due to the lack of ur-ban planning and road infrastructu-re, which jointly and timely attention is part of the integral solution to this subject. In this sense, usually a road infrastructure increase may be quickly absorbed by greater quantities of ve-hicles in the roads.
one way for reducing water consumption and thus having a
greater availability is through dry
gardens installation (xeriscape gardening)
and through the use of low-water
consumption species adapted to the
Peruvian coast desert conditions.
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C e n t r a l r e p o r t
Hence, road sustainability in the cities starts by planning towards where it ex-pands, both horizontal or vertically, and its connectivity to the economic and recreational activity centers. Connecti-vity includes the correct dimension of the private and public transports axis that will allow its efficiency. This inclu-des the creation of lanes reserved for high-occupancy vehicles and for public transport.
In the case of private transport, many cities and companies worldwide pro-mote shared trips. The aim is to benefit those people travelling from the same area toward their working locations with preferential parking, additionally to the high-occupancy lanes.
Alternatively, public transport service quality, expressed in travel duration, cost and comfort, is the main attracti-ve reason for “transferring” people from private transport use to public trans-port. The greater traffic fluidity will bring lower fuel consumption and fewer emis-sions per person-kilometer traveled, which will convey a better air quality and its effects in health, visibility and in greenhouse gas emissions.
Water Quality
Environmental resources’ managing, as in the case of water, is an essential issue
for Lima due to its location in a desert area. Lima obtains its water from the Ri-mac, Chillon and Lurin rivers. These ba-sins receive, especially when arriving to the urban area, a great discharge of solid and liquid residues. This is again a lack of planning consequence that hinders the city from providing sanitation services and impedes population consciousness that said water source is precisely the one that will provide the so-much nee-ded services.
Much of the water used in Lima is cap-tured from wells that are “replenished” by these basins. A fine indicator for the citizens could be the phreatic sur-face level with the purpose to keep or increase said level. Through Sedapal’s (the state-owned enterprise in charge of bringing potable water to the popu-lation) billing system citizens could not only be informed about their monthly consumption, but also about the phrea-tic surface level, in order to create cons-ciousness about the importance of the responsible and necessary water con-sumption.
One way for reducing water consump-tion and thus having a greater availabi-lity is through dry gardens installation (xeriscape gardening) and through the use of low-water consumption species adapted to the Peruvian coast desert conditions. Some places where Lima
1 For a better reference, I recommend reviewing the following link: http://www.scottsdaleaz.gov/Water.
Township can demonstrate the advan-tages of this landscape type are the central berms of our runways, where watering often causes waterlogging, with the consequent corrosion and tra-ffic problems. With this, I am not propo-sing the elimination of those extended green areas, but on the contrary, these should be relocated where water availa-bility is adequate and its use is the best for the citizens.
Another leadership example in water sustainability is that provided by the city of Scottsdale, Arizona. It offers free cour-ses in dry gardens, provides information and audits on the correct water use, and promotes leakage prevention due to its location in the desert .
Domestic effluents are another sustai-nability source for water and must be treated and reused in the creation of green areas for public use. For achieving this, both population and industries must know and respect the discharging limitations towards waste drainages, so that wastewater treatment and its fur-ther use are feasible.
Towards a better living quality
I can affirm that city sustainability can-not be achieved without an educatio-nal, cultural, civic and citizenship dose expressed as the respect toward other’s rules and rights, and proudness for the achievement of common goals. Edu-cation will allow new generations to keep in mind resources limitations with which we live and the importance of the correct residues disposal that we gene-rate individually and as a society.
Respect for the use of reserved efficient channels rewarded by those making a better use of resources and traffic sig-nals, water resources protection by not throwing in residues, respect to waste water limitations, and personal cons-ciousness of less water consumption challenge meanwhile keeping the city´s enhancement, are the best guarantees for maintaining the people´s life quality during many generations.
G R Á F I C O 0 1
MAIN PROBLEMS OF THE CITY OF LIMA
Source: Annual Report_ “Lima Cómo vamos”, Municipalidad Metropolitana de Lima
2010
Crime
Public Trandport
Pollution
10.0
0.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2011 2012 2013 2014
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CENTRAL REPOR T
In the currently available data, we have noted a positive trend in the net income of the Municipality of Lima (MML), which grew 4.5% in 2012 and 45.4% in 2013. This improvement was driven by growth in the “Other Revenue” budget line, which reached S/.475 million in 2012 and rose to S/.921 million by the close of 2013.
This revenue has made it possible to deal with negative operating income due to an increase in cost estimates and provisions (S/.529 million at the close of 2012 and S/. 689 million at the close of 2013). As a re-sult, the performance indicator (net inco-me over revenue) showed recovery from a downward trend that had begun in 2010, reaching 35.98% by the end of 2013.
Solvency, defined as the ratio of total debt to total assets, had shown improve-ment since 2009, decreasing from 22.19% to 18.29% in 2012. However, in 2013, this dependence showed a slight increase of 1.86 percentage points. In contrast, the overall liquidity ratio, the acid test ratio, improved in 2013 following a reduction in 2012.
A piece of data that is available for 2014 is collections. At the close of the prece-ding year, the MML showed a reduction of 3.2% due to lower revenue from debt, which had fallen 57.8% compared to 2013.
However, the institution showed 133.1% improvement as of December 2014, ex-ceeding the amount projected in the Revised Institutional Budget. In addition, budget execution of expenses was 5.7% higher than in 2013, mainly due to an in-crease in non-financial assets amounting to S/.128 million. Greater progress in the execution of expenses was also noted in 2014 compared to 2013: 81.5% through the end of December 2014 compared to 77.7% through the end of 2013.
In general, it can be stated that the finan-cial situation was similar to that of Luis Castañeda’s previous term, which ended in 2010, in terms of solvency and liquidity. However, when the financial indicators of the last two mayoral administrations are compared directly, it can be noted that net income was higher in 2013 than in the last year of the previous mayor’s term in office.
This means that the MML has a suitable pro-file for obtaining financing from the finan-cial system or the stock market if necessary, as may be the case in the funding of public or co-funded infrastructure projects.
Funding alternative
A good option for the municipality is to recur to the capital market by means of
a bond issue, in light of the growth of its capital spending requirements. Howe-ver, it would be preferable to use trusts or similar mechanisms that provide bon-dholders greater assurance of payment, especially for companies whose income is somewhat exposed to price volatility or political factors. In this manner, a bet-ter rating would be obtained, as well as better financing conditions compared to a bond issue without enhancements or safeguards.
The difference in rates between issues with and without enhancements de-pends on: 1) the market rate, which is associated with the economic context; 2) the maturity period and payment terms, that is, the longer it takes to re-pay the capital, the greater the risk; and 3) the issuer, which may offer safeguards and/or guarantees to ensure payment of the instrument.
For example, the issue of seven-year se-curitized bonds in 2006 in the amount of S/.250 million at a fixed annual nominal rate of 7.19% was backed by flows from toll fees held in trust. These resources crea-ted favorable conditions for obtaining a good credit rating at the local level.
There are also other factors that can help improve access to financing.
The financial situation of the Metropolitan Municipality of Lima has not worsened over the last four years, but it should reinforce its funding and revenue structure.
oscar Jasaui, president of Pacific
Credit RatingFINANCIAL ALTERNATIVES FOR THE mUNICIPALITY OF LImA
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CENTRAL REPOR T
Profitable transparency
Reinforcement of corporate gover-nance and improvement in soft issues such as environmental protection also increase access to financing. According to the CAF, good corporate governan-ce, social and environmental practices contribute to the maximization of the leadership position of local govern-ments and to maintenance of the long-term business outlook. They also make it possible to achieve their objectives more efficiently.
With regard to improved access to fi-nancing, the CAF emphasizes the fo-llowing benefits: better access to the capital market, access to global capital and the ability to attract all kinds of in-vestors.
The Organic Law on Municipalities (Law No. 27972), passed in 2003, covers con-cepts related to corporate governance such as participatory budgets, accoun-tability, citizen oversight and transpa-rency in information. In addition, muni-cipalities and every state entity should comply with the Law on Transparency and Access to Public Information (Law No. 27806). The purpose of this law is to foster transparency in acts of the state and to regulate the fundamental right of access to information established in article 2, paragraph 5 of the Peruvian Constitution.
In this regard, the Metropolitan Mu-nicipality of Lima has a transparency portal where the main organizational, budget, investment, auditing and stra-tegic plan documents are available to the public. In general, this portal con-tains easily-accessible, useful, detailed information for stakeholders. However, important information such as the mi-nutes of council meetings, some or-ganizational manuals and the MML’s historical financial statements are not accessible or need to be updated.
Additionally, in line with the new Code of Good Corporate Governance for Peruvian Companies published in 2013 by the SMV,
and in the interest of greater transparency, an annual corporate governance report that discloses the main strategies, policies and actions should be published at the end of each year.
Generally, corporate governance con-tributes to the maximization of the leadership position of a state-owned enterprise (SOE) —owned by a local go-vernment, in this case— and to main-tenance of the long-term business out-look. It also makes it possible to achieve its objectives more efficiently. The abo-
1. Implement clearer decision-making processes and structure.
2. Show greater transparency.
3. Have a more stable board of directors and administration.
4. Establish tighter risk controls.
5. manage conflicts of interest and self-dealing.
6. Improve social and environmental practices.
7. Weigh economic and social outcomes.
8. Improve public relations and media relations.
9. Reduce pressure, regarding matters of public interest, as well as those of concern to supervisory agencies.
10. Increase long-term economic performance.
11. Increase competitiveness.
12. Improve access to the capital market.
13. Gain access to global capital.
14. Attract all kinds of investors.
15. Facilitate regulatory compliance.
16. Strengthen communication with stakeholders.
recommendations for good corporate governance
Recommendations for good corporate governance
ve chart lists some matters we would re-commend that the administration of the MML keep in mind in order to achieve better performance.
Taking into account the current situation, in which citizens call for increasing trans-parency, the new municipal administration should reinforce its corporate governan-ce practices. Special emphasis should be placed on those related to access to infor-mation, audit processes, ethics and mana-gement of conflicts of interest and com-munication with the public.
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E o n o m i c a n a ly s i s
POR: RODRIGO ACHA, chief of Economic Analysis at AmCham Peru
mANY TREATIES, ONE WAY
Although having been placed in the Pe-ruvian Government’s Negotiations Agen-da in 2008, the Trans-Pacific Strategic Eco-nomic Partnership (TPP) is still a barely known issue, also by high-level executi-ves. Even less known is the Trade in Ser-vices Agreement (TiSA) that will free from duty charges services exports among the signing countries.
In a recent survey conducted by Am-Cham Peru to 55 high executives and directors of partner companies, only 18 declared having heard about the TPP and just 9 declared knowing about TiSA. Likewise, much less were the ones giving some sort of comment regarding the way in which said treaties would affect their businesses, although the impression was positive.
Due to the lack of information regarding said agreements, it will be worth sum-marizing these initiatives. The TPP emer-ged as an extension to the Asia-Pacific Economic Cooperation Forum (APEC): in 2005 Chile, New Zealand, Singapore and Brunei (block known as P4) agreed to free their trade from duty charges. Afterwards, when the US started negotiations in 2008 for being included into the P4 block and creating the TPP, other APEC members also began integrating this group, among which was Peru. Today the negotiation ta-ble has 12 members and its culmination is expected for this year.
What is remaining for the TPP signing?
In retribution for trade liberation, the
member countries are asking for several requirements, which are the cause of ne-gotiations. Among these, those require-ments with which any country is not in consensus are determined as “red lines”.
In the Peruvian case, the main red lines are referred to respect intellectual pro-perty exigencies, more precisely, to me-dicines patents protection period dura-tion. Currently, these are 20-years periods, including the protection periods for test data protection (PDP).
But this situation does not turn the TPP into an extra-limited or difficult treaty. Herbert Tassano, President of the Board of the National Institute for the Defense of Competitivity and Intellectual Pro-perty (Indecopi), states that intellectual property subjects are usually settled at completion during free trade treaties ne-gotiations.
In general terms, the Peruvian position is to accept those standards set by the free trade treaty with the US as the better pos-sible terms, and hence shall not accept new exigencies unless these imply a new thesis.
Besides this subject, it seems that the challenge is settled so in the following months news on a final agreement can be expected.
Several chapters of the Agreement have been already closed and even the process has been forwarded for its legal review. On the other hand, many other chapters
would only have specific points to be clo-sed, so that the only issue with essential aspects to concert is that of intellectual property. In this way, the signing of the treaty is expected to be achieved during this semester.
What potential benefits does the TPP have?
A net is woven
In general terms, Fernando Gonzales Vi-gil, Principal of the APEC Studies Center from the Universidad del Pacifico, defines the agreement as the signing of six FTA simultaneously: besides the multilateral agreement, duty charges will be free with five countries that were not included in our treaties net (Australia, Malaysia, New Zealand, Singapore and Brunei).
Those figures usually representing the opportunity generated by the other 11 countries negotiating the treaty is the po-pulation size to which it will have access: 800 million inhabitants that together with Peru represent 40% of worldwide economy. Of course, complementation with defined industries from each coun-try turns more evident the benefit, as it happens with the New Zealand food industry, Brunei´s oil production or te-chnological components from Malaysia, regarding imports, and the high potential that all these countries have as a destiny of non-traditional exports. In fact, Malaysia could turn into an im-portant destiny for raw material used in
With the signing of the TPP expected for in this semester, and of other treaties too, a free global-reach trade network that will even incorporate services facilities will soon be possible. Let us explain the path to follow:
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E o n o m i c a n a ly s i s
technological industry, while Singapore is already an important destiny for our cop-per exportation. At simple view, benefits are larger for Peru due to that its expor-ting front seems to have greater opportu-nities than the importing one.
There is another implicit benefit in the TPP that is worth pointing out. Gonzalez Vigil considers that the agreement will serve as a base for the FTAAP signing (Free Trade Area of the Asia-Pacific), APEC’s final goal. This last group was created for esta-blishing a free trade area. Gonzales Vigil explains that this goal would be achieved if the RCEP signing (Free Trade Agreement between Oceania and Asian countries) is added, since it would allow including Chi-na within the free trade network.
It must be remarked that the US is not a part of the RCEP, or China of the TPP, so if both countries sign, a substantial circle will be completed. Nevertheless, establis-hing APEC as a free trade net will take more time due to the great number of countries involved.
The magnitude of benefits for establishing the APEC as a free trade area is colossal. If this initiative and the signing of the Tran-satlantic Trade and Investment Partnership
(TTIP) between the USA and the European Union are concreted, a global free trade area would be available, to which only some few and less relevant economies would need to be included. Certainly, this would bring very positive political consequences worldwide: conditions interlaced between countries as a consequence of a negotiation would constitute a peace guarantee without pre-cedents, given the huge economic damage that the rupture of a multilateral trade trea-ty implies, because the document would come together with internal policy goals, such as anti-drug trafficking or environ-mental defense.
This is the ideal scenario for goods tran-saction, but a service exchange facilita-tion network is still missing. Towards this target, a group of countries, currently 23, are negotiating the signing of the Trade in Services Agreement (TiSA) since 2013.
TiSA, Services Exportation Facilitator
Although the user of a service provided by a foreign legal entity in Peru must only pay sales taxes (VAT) (reimbursable through fiscal credit) and income taxes (to which agreements can be applied in order to avoid double taxation), there are other qualitative aspects that must be
confronted in order to improve services international flow.
TiSA signing would imply assuming compro-mises for eliminating restrictions to services supply by foreign entities. Those subjects analyzed during the six negotiation tables include people rotation, information and communication technologies, sea and air transportation, national regulations, financial services, professional services, electronic tra-de, delivery services and transparency.
Also, as a note from the US Chamber of Commerce has well remarked about the treaty’s benefits, its signing would mean the elimination of regulatory inconsisten-cies generating commercial barriers, as well as the legal framework alignment of the signing countries with conjunct standards from OECD and APEC. These principles in-clude transparency issues, public participa-tion, clarity in coordinations, use of eviden-ces in regulations application, responsibility in front of the law, and fairness.
The US Chamber also proposes that the treaty should back up free information flow, contribute to fraud dissuasion and to secure privacy. Likewise, the US entre-preneurial sector suggests that the treaty must assure that private companies will not be confronted in an unfair competen-ce by State or local companies.
There is no further information about the treaty, which already counted with a main text since the fifth negotiations table, held between April 28th and May 2nd, 2014. It is expected that these are the elements to be included in the discussion. Although there are no references on red lines here, it is ex-pected that discrepancies on subsides and data protection themes will arise, subjects which discussion must serve for eliminating protective practices.
The benefit is clear: countries currently nego-tiating the TiSA treaty generate 70% of global services trade and there are still definitively many administrative barriers to be overco-me. Peruvian incursion in this type of treaty is greatly a consequence of the success achie-ved in the negotiation of the FTA with the US. This is a clear example of the benefits that the country may get from free trade, which seems, everyday will have a greater relevance for the Peruvian State’s policy.
C H A R T 0 1
COmmERCIAL ACTIVITY AmONG TPP COUNTRIES THAT HAVE ALREADY SIGNED AN FTA WITH PERU (US$ mILLION)
ANALYSIS OF THE NEW mINING ENVIRONmENTAL REGULATION
As many are aware, in November 2014 the much awaited Supreme Decree N° 040-2014-EM approving the new Regu-lation of Environmental Protection and Management for Operational Activities, Benefit, General Labor, Transportation and Storage Mining was published. The document was prepared in order to re-place the regulations approved in 1993, in force until few days ago.
The former regulation, as expected, should have been updated and impro-ved long ago. It not only had significant gaps, but also did not conform to the general rules that now govern the as-sessment of environmental impacts.
The new regulation came into effect on March 13, 2015, after the common terms of reference for the preparation of the Detailed Environmental Impact Assessments (DEIA) and Semi-Detailed Environmental Impact Assessments (EIAsd) were published.
The main objective of these norms is to adjust the mining environmental regu-latory framework to the National System of Environmental Impact Assessment (EIA) and the General Environmen-tal Law. It should be noted that these much more modern norms set out the basis for all sectors to be governed by the same principles. This will contribute
The new provisions clarify concepts and upgrade several aspects. The overall assessment is positive.
Another positive aspect is the possibility,
now regulated, to request a meeting
with the authorities in order to explain the contents of the
environmental studies prior to their evaluation
or the authorities’ participation in setting
the baselines for the environmental studies.
to the procedures standardization and will reduce the uncertainty of investors.
Below, we will make a brief summary of some of the new elements and of the positive and negative aspects of the Re-gulation.
Clarity is welcomed
In Title I, there are two aspects to highlight. Firstly, the rule is applicable to
the medium and large scale mining, and secondly, the definitions of the terms used. The latter is important because it incorporates at policy level definitions that in practice could be handled di-fferently by the different officials. The-refore, their discretion is reduced and the predictability of the administration decisions is increased.
In Title II, the role of the administrati-ve authorities in environmental mining is defined. In this regard, we point out the attempt to clarify doubts about the competence of the Supervising Agency for the Investment in Energy and Mi-ning, Osinergmin, and the Ministry of Labor in the supervision and control of mining projects.
Title III establishes the general obliga-tions applicable to mining titleholders, including the obligation to submit a re-mediation plan when works not compri-sed in an environmental management instrument have been executed, and the responsibility of the mining titlehol-ders to communicate the beginning of the environmental study. Likewise, if a project had been stalled for five years or more, the mining titleholder must ap-prove or modify its environmental study in order to reassume its activities.
Moreover, Title IV establishes which
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L e g i s L at i v e a n a Ly s i s
activities within the scope of the regu-lation are necessarily considered as po-tential generators of significant environ-mental impacts. Hence, for example, the norm provides that both the exploita-tion and benefit projects should always submit a DEIA.
In this line, it was established that the Mi-nistry of Energy and Mines would prepa-re common terms of reference for all mi-ning projects intended to reduce the risk of arbitrary elements in the evaluation of environmental studies and to increase cer-tainty regarding the applicable technical requirements. However, there are certain exceptional cases in which, because of the projects location (e.g. natural protected areas or areas declared in environmental emergency) specific terms of reference should be prepared.
Another aspect to highlight is that it specifies that the environmental cer-tifications will terminate if, after three years of issuance, the mining titleholder has not begun works to implement the project. This already applied, but under general rules.
Also, it empowers the Agency for As-sessment and Environmental Control, OEFA to order corrective actions or, if con-sidered, the modification of an environ-mental study in its sole discretion. This last point is arguable, as it is giving the OEFA powers that are beyond the supervision and control of mining projects.
Another factor to consider in this Title is the limitations regarding the informa-tion that can be used in the baselines of the environmental instruments, ta-king into account that the information required should come from primary sources. That is, the information must be collected through field work, so as to eliminate the possibility of taking such information from other baselines already approved.
Let the cobbler stick to his last
Title V, in turn, refers to social aspects. A number of principles applicable to the social management of projects are de-fined, including the concept of area of social influence. In this context, mining titleholders are obliged to include a so-cial management plan in their environ-mental studies.
On the other hand, it states that the OEFA is the competent authority for su-pervising social obligations. This is ques-tionable, firstly, because there are exis-ting agreements on social issues whose mechanisms of resolution are not admi-nistrative, and, secondly, because it is questionable that the OEFA competen-ces include these commitments.
From Title VI, I underline the power granted to mining titleholders to extract material from borrow quarries located within its concessions for the construc-tion of the components of their projects.
Title VII regulates the procedures for the approval and modification of en-vironmental studies. In this regard, we point out several aspects. The first is the implementation of the online system (SEAL) for handling procedures gover-ned by the regulations. The second is that the deadlines contained therein cannot be extended to the managed and the authority, unless there is a valid reason.
Another positive aspect is the possibili-ty, now regulated, to request a meeting with the authorities in order to explain
the contents of the environmental stu-dies prior to their evaluation or the authorities’ participation in setting the baselines for the environmental studies. This will help to resolve doubts about the study from the beginning.
Likewise, the norm regulates cases where a supporting technical report is required instead of an environmental impact study. While this is positive, certain cases requi-ring a single communication to the autho-rity rather than a previous assessment should have also been included. Yet another positive aspect concerns the ex-plicit mention of minor variations in a spe-cific project, that is, at detail engineering level that would not require an additional environmental certification. Title VIII regulates compliance with the obligations set out in the environmental studies. Mining titleholders are obliged to keep records on certain activities, which will allow a better control of the mining activities.
Title IX brings an interesting innova-tion in the core of environmental obli-gations. This not only eases the OEFA’s control, but gives greater security to the managed in respect of the obligations under supervision.
A good step, but…
The regulation contains several final complementary provisions, including the obligation to integrate the environ-mental studies of the mining units in operation, update the environmental assessments according to regulations and the possibility to adjust the ope-rations or submit a Corrective Environ-mental Management Instrument (IGAC) when there is no environmental study approved or it has lost its validity.
Finally, we must congratulate the autho-rities for the release of the long awaited regulations. However, we cannot fail to mention that there are some necessary adjustments to be made in order to en-courage the investments our country needs so desperately.
(This regulation) empowers the Agency
for Assessment and Environmental
Control, OEFA, to order corrective actions
or, if considered, the modification of an
environmental study in its sole discretion. This last point is arguable.
1 According to the Regulation, are those resulting from the observation and measurement on site of the environmental and social aspects related to a mining project, as well as their
processing and assessment.
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O p i n i O n
INFORmALITY IS THE NORm
Norman Loayza, a countryman of ours, is an accomplished economist and researcher at the World Bank. We will take his input on informality as the backbone of this article. With the Central Bank, Norman published “Causas y Consecuencias de la Informali-dad en el Perú” (Causes and Consequences of Informality in Peru), and with the World Bank “Informalidad en América Latina y el Caribe” (Informality in Latin America and the Caribbean), “Tendencias y Ciclos de la Infor-malidad” (Trends and Cycles of Informality) and “El Impacto de la Regulación en el Cre-cimiento y la Informalidad” (The Impact of Regulation on Growth and Informality).
We quote part of the abstract of the work applied to our country: “Informality […] does not have a single cause, but rather it is the result of the combination of deficient public services, an oppressive regulatory framework and weak supervisory and exe-cution capacity of the State. This combina-tion is particularly explosive when a country has low educational levels, strong demo-graphic pressures and primary production structures.”
Further on in the work, in the conclusions section, he states: “Informality in Peru is highly generalized, reaching alarming levels. Available measurements place it among the highest in the world. This is reason for concern because it reflects an
What point has the level of informality reached in Peru and what can be done to reduce it?
inefficient allocation of resources (above all, labor) and inefficient use of services of the state, which could place the country’s growth prospects at risk.”
According to the National Household Sur-vey (Spanish acronym: Enaho) for the year 2013, the latest one available from the Na-tional Institute of Statistics and Informatics (INEI), approximately 11.9 million of the 16.1 million working-age Peruvians are informal workers. This is one of the major causes of poverty, due to the fact that, on average, formal workers earn triple the amount in-formal workers earn.
Informality has a more pronounced effect on the most vulnerable: women (78% ver-sus 71% for men), people living in rural areas (95% compared to 66% in cities), or 88% and 89% in the case of young people from 14 to 25 years of age or senior citizens aged 65 and over, respectively, compared to 68% and 70% for ages 25-44 and 45-64, respectively.
The high correlation between informality and education shows the terrible conse-quences of the lack of professional training: 96%, 91%, 72% and 37% are informal wor-kers if they have not completed primary school, have completed primary school, are high school graduates, and have comple-ted a higher education, respectively.
We need focused public goods and services of much better quality, simple procedures at
one-stop windows accessible through branch networks of private companies, in addition to state
networks, with employees available
for the purpose of guiding citizens
through procedures. It is also necessary to
eliminate obstacles that contribute to informality
in the labor market, such as the minimum
wage or hiring and firing restrictions.
BY Peruvian Economy Institute
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O p i n i O n
What has been or is being done? For exam-ple, costs have been reduced for micro and small enterprises by means of a special law for the sector. Different tax systems have been created, Comprehensive Health Care (SIS) coverage has been expanded, as has coverage of some public goods and servi-ces, and new social programs and transfers such as Juntos or Pensión 65 have been created, among other measures.
Policy suggestions
What should be done? Loayza states that additional information is required in order to specify the importance of the determi-nants of informality. It must be produced in order to intervene efficiently.
However, in the meantime, we must act on the information we have. An interna-tional public tender should be held on the preparation of baselines that will make it possible, later on, to assess the impact of existing or new programs, a pilot. Perfor-mance indicators should be prepared, in or-
der to determine adjustments to be made to public programs or to execution units to be rewarded for obtaining the best results. Accounts should be rendered periodica-lly to Congress on the progress made on these policies, and independent observers should be invited to make comments and suggestions.
The agenda is very broad and requires ins-titutions that we lack, or (political) leaders that are conspicuously absent. This is un-doubtedly one of our country’s major deve-lopment challenges.
We need focused public goods and ser-vices of much better quality, simple pro-cedures at one-stop windows accessible through branch networks of private com-panies, in addition to state networks, with employees available for the purpose of guiding citizens through procedures. It is also necessary to eliminate obstacles that contribute to informality in the labor mar-ket, such as the minimum wage or hiring and firing restrictions, and to separate the
wheat from the chaff in higher and tech-nical education, for a start.
It is worthwhile to offer young people scholarships to attend better basic educa-tion schools, technical institutes, universi-ties and the best graduate programs in the world. Eliminating tax systems other than the RUC, reducing the Sunat’s (Peru’s tax regulator) discretionary authority and esta-blishing graduated sanctions according to the economic cost of the infraction are also measures that will work. In addition, private supervisors could be incorporated in the process of issuing operating and construc-tion permits.
General input
The list is long, but the concept is simple: improve the quality of the State and reduce the costs of dealing with it, so that the net benefits of formality far outweigh those of informality.
A brilliant final idea. Santiago Levy, the father of the Mexican government’s Prospera pro-gram (formerly called Oportunidades and initially Progresa), as well as conditional cash transfer programs such as Juntos, proposed to the current president of Mexico, Enrique Peña Nieto, that social contributions be fi-nanced by part of the general sales tax. Part of every purchase would go to an individual account, breaking the absurd link between the payroll and social contributions.
Can you imagine a greater incentive for for-mality? Health and unemployment insuran-ce, as well as an eventual pension, would be financed by part of the taxes that workers now pay.
In contrast, today, public goods and ser-vices are of inferior quality and are poorly focused, there are excessive bureaucratic mechanisms, and certain government in-terventions in the economy are unjustified, among other defects that plague our pre-carious state.
The main restriction on the design and exe-cution of a set of reforms of this caliber is the lack of a strategy to deal with institutional precariousness. In order to implement one, we need political leadership and vision.
0 1
Source: Schneider (2012) and IMF
1000000
10
20
30
40
50
60
70
20000
Perú
30000 40000 50000 60000 70000 80000 90000 100000
Per capita GFP in PPP
Info
rmal
ity
Informality and GDP Per Capita(in % and international US$)
GRAPHIC
The graph shows the direct relation between the level of informality and a lower pro-duct per inhabitant. Peru’s case is critical: the aforementioned percentages notwithstan-ding, its level of informality is much higher than that of countries with similar or lower GDP per capita.
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E co n o m i c a n a ly s i s – s tat i s t i c s
C H A R T 0 1
WHAT CITIZENS CLAImWHICH OF THE FOLLOWING mEASURES DO YOU THINk BENEFITS YOU mORE AS A CITIZEN?
Source: Lima Como Vamos, Quinto Informe de Percepción sobre Calidad de Vida, 2014
Improvement of roads and paths 58% 47% 59% 62% 50% 54% 64% 63%
Creation of new highways 36% 39% 39% 33% 39% 31% 41% 34%
Increase the amount of public transport stations 29% 27% 27% 31% 29% 40% 18% 27%
Increase the amount of public transport vans 5% 2% 3% 7% 2% 8% 4% 5%
2014
A/B C D/E Central Lima Eastern Lima Northern Lima Southern Lima
Socioeconomic status Interdistrict Area
C H A R T 0 2
PERCEPTION OF THE mAGEmENT OF PUBLIC SPACESHOW SATISFIED ARE YOU WITH THE WAY HOW THE mUNICIPALITY OF LImA
PROmOTES AND TAkES CARE OF PUBLIC SPACES IN THE CITY?
Source: Lima Como Vamos, Quinto Informe de Percepción sobre Calidad de Vida, 2014
Unsatisfied 40.60% 36% 43% 41.50%
Neither satisfied or unsatisfied 41.10% 42.20% 40.60% 40.80%
Satisfied 17.20% 21.60% 15% 16.20%
Doesn’t respond 1.10% 0.20% 1.40% 1.50%
2014
A/B C D/E
Socioeconomic status
C H A R T 0 3
COSTLY PRAGmATISmREGARDING THE NEW BUILDINGS AND CONSTRUCTIONS IN LImA, DO YOU AGREE
THA THE FOLLOWING STATEmENTS CAN NEVER BE jUSTIFIED?
Source: Lima Como Vamos, Quinto Informe de Percepción sobre Calidad de Vida, 2014
Starting a small informal business 35%
Avoid paying taxes 56%
Making an informal energy, water or Tv connection 77%
Not bringing precise information in a credit request to a bank 79%
2014
1. The preference that citizens of lower socioeconomic
status have for works of roads and paths’ improvement
reflects the precariety that the disordered growth of
the city has generated. Precisely, the most critic cases
are at the north and south sides of the city, spaces that
were colinized by new inmigrants. It can also be obser-
ved that the preference for one or other type of work
depends on the direct benefit it brings to the inhabi-
tants of each zone, taking thier experince of use as a
reference: those from the south prefer the extension of
the metro rail because of their experience with Linea 1,
de only line that currently operates in Lima, and wich
goes deeply inside the southern district of Villa el Sal-
vador; meanwhile, the ones from the north would like
an extension of Metropolitano, busway that currently
connects the northern district of Los Olivos with the
center and south of the city.
2. The level of satisfaction with the administration of
Lima’s public spaces is low. Probably, the higher satis-
faction of the citizens with more socioeconomic status
is explained by the higher availabity of public spaces at
the zones where they live, although it must be noted
that much of them are administrated by local munici-
palities.
3. According to the World Bank, 65% of Peruvian enter-
prises are informal. This doesn’t necessarily happen
because of the mere intention to transgress, but for the
elevated costs and rigidities. According to the IDB, Peru
is the country with the highest non-salary costs in the
region (59% of the wage, above the 53.6% of Brazil and
the 53.5% of Colombia, while these costs are between
31.7% y 31.9% of the wage in the cases of Chile, Ecua-
dor, Mexico and Bolivia).
LImA IN NUmBERS
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E co n o m i c a n a ly s i s – s tat i s t i c s
CITIZEN URGENCY
Source: National Instite of Statistics and computing *Forecast
Com
palin
tsPr
isso
n po
pula
tion
125 000 29 000115 000 27 000105 000 25 000
95 000 23 000
85 00021 000
75 00019 000
65 0002006 2007 2008 2009 2010 2011 2012 2013*
15 00017 000
CHART 04
CRIME COMPLAINTS AND PRISSON POPULATION IN
THE REGION OF LIMA
4. In spite of the rise in the amount of complaints may reflect that citizens are coming more to the Government to chase
the criminals, there is no doubt that criminality has been increasing and that drastic measures are required for improving
security. In the other hand, while prisson population has increased in 75% between 2006 and 2013, the infraestructur of
the prissons has not been increased in order to receive the new prisoners. Overcrowding favours the increase of crime.
5. Appartly from the increase of the revenews though the collection of taxes, it is interesting to see the increase of the
item “Other Incomes”. Those are not necessarily recurrent flows, but fortunately don’t generate a significative portion of
Municipaly’s income. The increase of the balance reflects the rise of collectiion beyond the expected levels, but there is still
much to do on the formalization of the enterpises.
6. The increase of the participation of labor expenses among the total expenditures of the Metropolitan Municipality of Lima
reflects the increase of the payroll in more than 60% along Susana Villarán’s administration.
C H A R T 0 5
REVENUES OF THE mETROPOLITAN mUNICIPALITY OF LImA, BY ITEm
Source: Metropolitan Municipality of Lima
Taxes and obligatory contributions 520.3 26% 761.1 32% 6
Social contributions 0.2 0% 0.6 0% 0
Sale of goods, services and administrative rights 317 16% 110.4 5% -11
Donations and transfers 249 13% 320.8 13% 0
Other incomes 88.3 4% 198.5 8% 4
Sale of on financial assets 10.3 1% 0.3 0% -1
Financial assets sales 0 0% 0 0% 0
Debt 189.8 10% 133.9 6% -4
Balance 594.2 30% 856.8 36% 6
Total 1969 2382
2010
% of total % of totalS/. millionS/. million
2014 Variation in share (percentual points)
C H A R T 0 6
ExPENDITURES OF THE mETROPOLITAN mUNICIPALITY OF LImA, BY ITEm
Source: Metropolitan Municipality of Lima
Staff and social liabilities 60.2 4% 165.3 10% 6
Pensions and other social benefits 30.9 2% 68 4% 2
Goods and services 317.1 19% 426 24% 5
Donations and transfers 280.8 17% 397.5 23% 6
Other expenditures 15.9 1% 13.5 1% 0
Acquisition of non financial assets 747.5 45% 562 32% -13
Acquisition of financial assets 0 0% 7 0% -7
Public debt payments 214.7 13% 100.7 6% -7
Total 1667 1740
2010
% of total % of totalS/. millionS/. million
2014 Variation in share (percentual points)
www.amcham.org.pe 19
O p i n i O n
BY: CONTRIBUYENTES POR RESPETO STAFF
FLOOD FOR EVERYBODY
All of us Peruvians are witnesses of the problems we encounter due to water and sewage infrastructure in poor con-ditions. Surely, in some recent time we have found flooded streets, which gene-rate health problems to citizens, while affecting their homes besides causing service interruption in several districts in Lima.
Unfortunately these problems, which are increasingly frequent, are caused due to the lack of pipelines investment or renewal, many of them with an avera-ge age over 35 years old. The situation is quite menacing. In 2012, the Association for National Infrastruc-ture Foment (Asociación para el Fomen-to de la Infraestructura Nacional (AFIN) estimated a breach in water infraes-tructure and health of US$5,000 million. Meanwhile, Sedapal has declared that approximately 20% of the 26,000 Km of potable water and sewerage networks we had by 2013 in Lima and Callao must be replaced due to misuse or antiquity.
Although this situation, Sedapal de-clares that 90% of the problems are originated due to bad habits at home, markets and restaurants, and to the non-accomplishment of the maximum allowed values (VMP) of toxic debris and residues by industries. Nevertheless, this opinion contrasts with that of plan-ning engineers that we have collected in Contribuyentes por Respeto (CpR), and who indeed point out that a good portion of the problems are originated due to lack of investment or pipelines renewal by Sedapal.
The Potable Water and Sewage Service ol Lima (Sedapal) is not sustainable by itself. If reforms were to be applied in the management of this enterpriseand the resources it distributes, things would be different.
The Investment Program
As a result of this problem, in 2012 the enterprise launched an initiative called Programa 148, in allusion to the 148 works to be executed during the 2012-2017 period. At first, an S/.8,443 million investment was planned (afterwards this amount turned into S/.9,273 mi-llion) for water and sewage pipelines expansion and renewal. To date, 72.5% of the executed amount of this plan has been used in coverage expansion pro-jects, while the rest has been used for infrastructure refurbishment, which un-doubtedly will help to improve the con-sumers’ situation.
The truth is that three of the six years during which this program should have been executed have already passed, and only 12.2% of the amount projec-ted by Sedapal has been invested. In Table 1 we can observe the projected investments horizon in comparison to the amounts approved by the National Financing Fund of the State´s Entrepre-neurial Activity ( (Fonafe) and what was finally executed.
Only a small fraction of that initially projected was approved by Fonafe, and only a portion of this amount was exe-cuted. Of the initial projection, 67.6% was executed during the first year, 55% on the second year, and only 26.6% in the third year. With this execution per-centage each time lesser, it is difficult to foresee that all the problems met in the sector will be encountered for 2017.
Management Indicators
Even though it is important that an enter-prise is committed to the development and expansion of its activity, this happens naturally because the enterprise counts with enough economic resources or inde-btedness capacity that will allow guaran-teeing its investments sustainability. Ne-vertheless, PSE performance in Lima and Callao show a different reality.
Services quality conditions, as well as the financial performance indicators, se-riously question about current sustaina-bility of water and sewage services, and place in evidence the lack of suitable management systems (See Figure 1)
Chart 1Projected, approved and executed investment, 2012-2017
MANAGEMENT AND SERVICE QUALITY INDICATORS, 2010-2013
Sources: Fonafe, Sunass, SISS
WASTEWATER TREATMENT (%) POTABLE WATER CONTINUITY (HOURS/DAY)
MICRO-MEASURMENT
OPERATIONAL COSTS/SALES REVENUE ROE
SEDAPAL Aguas Andinas SEDAPAL Aguas Andinas
SEDAPAL Aguas Andinas SEDAPAL Aguas Andinas
SEDAPAL Aguas Andinas SEDAPAL Aguas Andinas
2010 2011 2012
20.7%
100.0%
20.7%
95.0%
21.3%
94.2%
2013
51.3%
94.6%
2010 2011 2012
4.1%
44.1%
9.0%
53.8%
11.8%
53.8%
2013
13.5%
2010 2011 2012
49.10%
63.90%
47.60%
69.50%
46.80%
77.60%
2013
51.20%63.70%
2010 2011 2012
21.7%
24.0%
21.8%
24.0%
21.9%
24.0%
2013
21.9%
23.9%
2010 2011 2012
69.2%
95.3%
77.3%
95.0%
81.6%
93.0%
2013
82.5%
93.0%
2010 2011 2012
0.9%
17.1%
1.5%
18.2%
6.3%
19.6%
2013
3.7%
18.9%
HIGH CONSUMPTION CLAIMS (% OF TOTAL)
FIGUERE
to align consumers’ incentives for not wasting water. 22.3% of Lima and Ca-llao homes do not count with micro-measuring. In Chile, Aguas Andinas has a 94.1% micro-measuring level in homes.
68.7% of Sedapal revenues are desti-ned to cover operational costs, while Aguas Andinas cover these costs with only 48.7%. Capital return in Sedapal stretches only to cover inflation, ma-king it unattractive to investors.
These findings only evidence that one of the main problems is the lack of sui-table management systems.
Neither waste, nor subsidy
An efficient management ranges from counting with good quality water gau-ges that will guarantee fair billing up to submitting audited financial state-ments that enable transparency in the real financial situation of the enterpri-se. A financial diagnosis conducted by Equilibrium (2013) states that Sedapal cannot generate by its own the ne-cessary resources to develop its inves-tments. That is, this is a poorly efficient entity depending on Public Treasury.
Private sector interventions through a concessions system together with a solid institutional public scheme are key factors for greater investments and improvements at coverage level, servi-ce quality and financial balance. Said public institutional scheme must not be dedicated exclusively to subsidize operators, but also to demand results and auto-sustainability from them in the long term.
Summarizing, deficient provision and management of water and sewage services in Peru imply much more than simple statistics that places us in the last places at Latin American level. These are also the cause why millions of people are not being able to reach a basic and indispensable service, and the reason why families with less resources are cu-rrently paying much more than the rest of homes (even 27 times more, accor-ding to an investigation done by Contri-buyentes con Respeto).
During the 2010-2013 periods, was-tewater treatment average by Sedapal was 28.5%. This contrasts with the ave-rage 96% of our similar Chilean private company, that is, 3.5 times a superior treatment almost reaching 100%.
The average of potable water connec-tion during the same period from Seda-pal was 21.8 hours per day, while Aguas
Andinas (Chile) supplied water 24 hours daily during 365 days per year.
From the total claims, those due to high consumptions let us perceive the great gap existing in quality and precision of the micro-gauge devices between both enterprises. Micro-measuring allows charging fares according to the con-sumed volume and in this way helps
www.amcham.org.pe 21
L e g i s L at i v e a n a Ly s i s
POTENTIAL EFFECTS
POTENTIAL EFFECTS
In order to avoid weakening collective bargaining as the principal method of resolving differences, the decree who-se repeal is sought established that the parties could resort to optional arbitration when negotiations do not result in a solution in three months and the parties cannot agree. This flexibility for situations in which there are economic problems has been rejected by the group of members of Congress that believes it violates workers’ rights, without ta-king into account the survival of the company.
Even if the National Food Safety System is created, can a law guarantee that right without creating the conditions neces-sary for compliance with it, which have to do with making Peruvian agriculture competitive? In addition, it would be necessary to revise the Role of the State section (promoting food of national origin is a violation of national treatment). Food manufacturers and producers are not represented among the members of the National Food Safety and Nu-trition Council.
BILLS REVIEW
BILL NO. 04171/2014-CR. PROPOSES TO REPEAL ExECUTIVE ORDER NO. 013-2014-TR (ON COLLECTIVE TERmINATION OF CONTRACTS).
BILL NO. 04181/2014-CR. PROPOSES THE FOOD AND NUTRITION SECURITY LAW (SAN).
Executive Order No.013-2014-TR established the regula-tions on article 48 of the Unified Text of Legislative Decree No. 728, which refers to the collective termination of labor contracts due to economic reasons (when a company has negative earnings for three consecutive quarters, or when keeping all the workers entails a loss). The bill su-ggests that it does not cover safeguarding workers’ rights and only considers the rights of a company. It also states that the possibility of resorting to optional arbitration is restricted, which contradicts the ruling of the Constitu-tional Tribunal.
Peruvians’ right to an adequate, healthy diet is recog-nized and guaranteed, with emphasis on the poorest, most vulnerable population. Children, pregnant or nursing women, and senior citizens are given priority. In addition, it seeks to define the obligations of the sta-te and the responsibility of individuals and non-public institutions in the implementation of the human right to food and to create the National Food and Nutrition Security System, hereinafter called Sinasan.
Negative effects on the economic climate
Ambiguous effects on the economic climate
Positive effects on the economic climate
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www.amcham.org.pe22
L e g i s L at i v e a n a Ly s i s
POTENTIAL EFFECTS
Although this is about a chapter of the text, our country’s main problem is coordinating this plan and its objectives with other, similar planning efforts and finding an institutional and political channel to support scheduled advances.
BILL NO. 04186/2014-CR. PROPOSES TO ESTABLISH mEASURES OF A GENERAL NATURE AND GUIDELINES ON THE ARBITRATION PROCESS.
mINISTERIAL RESOLUTION NO. 051-2015-mINCETUR. PUBLICATION OF NATIONAL STRATEGIC ExPORT PLAN 2025.
The National Strategic Export Plan (PENX 2025), whose purpose is to internationalize Peruvian enterprises, is published in advance. Strategic objectives, the formu-lation and updating process, pillars, components and lines of action and interrelation are established.
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DESCRIPTION
BILL NO. 04192/2014-CR. PROPOSES TO REPEAL ExECUTIVE ORDER NO.001-2015-Em (ON FOSTERING mINING ACTIVITY).BILL NO. 04169/2014-CR PROPOSES TO mODIFY LETTER C.III OF POINT 3.1 OF 3 OF ExECUTIVE ORDER NO.001-2015-Em.
POTENTIAL EFFECTS
POTENTIAL EFFECTS
1. The bill is centered on inappropriate actions of arbitrators that cause economic damages exclusively to the state. 2. It does not establish criteria for ad hoc arbitration in which the arbitrators do not undergo any review. 3. The Peruvian legal system already provides protection systems for misconduct in arbitration. 4. The bill does not establish the sanctions that may be applied. 5. The bill does not establish which information should be included in arbitration records to be reviewed and which would be a violation of confidentiality.
Whether modification or the repeal of Executive Order No. 001-2015-EM is sought, the true intention of the proponents of such bills is to cancel streamlining through simplification of the beneficiation concession of surface lands belonging to rural communities. It is evidently an action taken against further mining investment that creates inconsistency bet-ween executive orders issued by the Executive Branch and legislation proposed by some members of Congress.
It seeks to establish measures of a general nature and guidelines on the arbitration process on matters related to public contracting. In addition, it is intended to esta-blish standards of conduct for arbitrators and sanction those whose inappropriate conduct subjects the State to economic damages. It governs arbitration on public contracting and establishes a council on arbitration sanctions, the grounds for sanctions for arbitrators, and the sanctioning process.
Executive Order No. 001-2015-EM approves provisions for mining procedures that foster investment projects. Both bills are based on the fact that — in an attempt to accelerate mining investment projects — in the simpli-fication of the beneficiation concession procedure go-verned by the Regulations on Mining Procedures, a no-tarized copy of the minutes of the meeting of the board of directors of the rural community authorizing the use of surface lands in its name is required. According to the proponents of the bills, the general assembly is the body that must authorize it.
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www.amcham.org.pe 23
AMCHAM NE WS - AGENDA
ISSUES CONCERNING TRADE AND INVESTMENT PROMOTION 1. Letter addressed to the director of the Pan American
Health Organization regarding food technical parameters.
2. National Journalism Contest on Intellectual Property organized by AmCham Perú and the National Institute for the Defense of Competition and Protection of Intellectual Property (Indecopi).
3. Letter from the Association of American Chambers of Commerce in Latin America (AACCLA) addressed to the US Congress regarding the renewal of the TPA.
4. Letter addressed to Mr. Luis Castañeda, Mayor of Lima, proposing a restricted schedule for freight transport.
5. AACCLA’s planning meeting in Los Angeles, held in February.
6. Mission sent to the “Boston Seafood” Fair, from March 15 to 17.
DEFENSE OF PRIVATE INVESTMENT AND MEMBERS’ INTERESTS
Laws and Projects discussed by the Chamber
1. Draft Law N° 04146/2014-CR, proposing the participation of Petroperú (Peru’s State-owned petroleum company) in diverse projects.
2. Draft Law N° 04145/2014-CR, proposing the General Labor Law.
3. Draft Law N° 04140/2014-CR, proposing the repeal of Law N° 27360, which approves the Agricultural Sector Promotion Rules.
4. Draft Law N° 04135/2014-CR, proposing the repeal of Supreme Decree 001-2015-MEM, which approves provisions for mining procedures that boost investment projects.
5. Draft Law N° 04133/2014-CR, proposing to lay down the principles that govern the right to adequate food as part of the fundamental human rights.
6. Repeal of Law N° 30288, an Act promoting Youth Access to the Labor Market and Social Protection.
7. Draft Law N° 04115/2014-CR, proposing to lay down new mechanisms to guarantee that contributors to the pension fund system will benefit from a decent pension to ensure a good quality of life.
9. Law N° 29733. Personal Data Protection Law. The organization of informational workshops has been coordinated with the regulatory authority.
10. Draft Laws N° 04192/2014-CR and 04169/2014-CR, proposing to repeal and amend (respectively) the Supreme Decree 001-2015-EM, which approves provisions for mining procedures that boost investment projects.
11. Draft Law N° 04171/2014-CR, proposing to repeal Supreme Decree N° 013-2014-TR, definition of economic situation applicable to collective redundancies due to economic reasons and term to file optional arbitration.
12. Draft Law N° 04181/2014-CR, proposing to create the Food and Nutritional Safety Law-SAN.
13. Draft Law N° 04186/2014-CR, proposing to establish general measures and guidelines to prevent the arbitration process in public contract matters.
14. Ministerial Resolution Nº 051-2015-Mincetur, providing the publication of the project of the supreme decree that approves the 2025 National Strategic Exports Plan in the Ministry of Foreign Trade and Tourism’s (Mincetur) institutional portal for a 30-day term.
15. Draft Law N° 04189/2014-CR, proposing to amend article 47 of Law 28518, Law on Labor Training Modalities.
16. Draft Law N° 04163/2014-CR, proposing to grant tax incentives to the companies that hire youth workers between 18 and 29 years old to perform decent and quality jobs, with full labor rights.
17. Draft Law N° 04170/2014-CR, proposing to amend article 77 of Law N° 29571, Consumer Protection and Defense Code, to provide information to real estate services consumers.
ORDINANCES AND OTHER REVISED PROVISIONS
1. Requests for information from the Financial Intelligence Unit of Peru.
2. Demands from the National Superintendence of Tax Administration (SUNAT) in relation to the illegal acts carried out by illegal mining.
3. Eventual Ordinance of the Municipality of Lima that would prohibit the transit of freight transport units exceeding two tons from 6:00 am to 9:00 am, and from 6:00 pm to 9:00 pm. It was decided to take joint actions with other industries.
INSTITUTIONAL AGENDA
LISTED BELOW ARE THE PRIORITY ISSUES ON THE AGENDA OF AMCHAM PERú DURING JANUARY AND FEBRUARY:
www.amcham.org.pe 25
TRAVEL & LEISURE
PERU´S NORTHERN BEACHES:NO ROOm FOR STRESS
A land of heat, refreshing ocean, deluxe hotels and gourmet food. Peru´s Nor-thern beaches have no need to envy an-ything from the Caribbean luxurious re-sorts. This is a place where temperature seldom descends below 26 º C (78.8ºF) during the year and where food is the protagonist at all times. Peru’s Northern beaches offer hotels not only for all bud-gets and interests, but also spaces for performing activities such as diving, kite surfing, stand up and paddle, snorkeling, as well as massages sessions. Which is the offer from these Northern beaches to their visitors?
Zorritos, Punta Sal, Canoas, Mancora, Las Pocitas, Vichayito, Los Organos, Punta Veleros, El Ñuro, Cabo Blanco, Lobitos and Colan are the main beaches in Nor-thern Peru, where the sun shines over 300 days per year and the nights refres-hes to a minimum 17º C (62.6 º F). Its main visitors: Peruvians arriving during school vacations, New Year or Easter holidays; South American tourists, espe-cially from Chile, Ecuador and Argentina, and less frequently, European and North American tourists. Hotels and resorts in this area offer maximum comfort to its guests. Whether in a hotel or in one’s own house, there is no possibility of avoiding relax.
Deluxe Lodging
After Talara’s Airport recently inaugu-ration, visiting the Northern beaches seems much closer and turns this into an accessible luxury. After an hour and a half flight plus 50 minutes ride to Man-cora, Los Organos and Las Pocitas, it is much easier to reach this Northern pa-radise. Currently there are over eighty hotels in the area and the supply is still growing. Casa de Playa, Las Pocitas, Arennas Mancora, MMH, DCO, Grand Mare, Coco Né, Decameron Punta Sal and K!Chic are some of the main luxury hotels in the area.
“Arennas Mancora has a deluxe and comfortable design. Our innovative and sophisticated gastronomic proposal to-gether with the modern and spacious infrastructure with over three hundred meters of water front, is a great alter-native for enjoying sunshine during 350 days a year”, explains Vanesa Ho-yos, Marketing Corporative Head of the recently remodeled Arennas Mancora Hotel. This hotel has fourteen rooms with ocean view, four rooms viewing the garden and four villas or suites with ocean view too, furnished with private hydro massage and swimming pool in the terrace.
Zorritos, Punta Sal, Mancora, Los Organos, Las Pocitas and the wonder of their seaside resorts
MAIN HOTELS AND THEIR FARES
Casa de Playa
Las Pocitas
Arennas Mancora
MMH
DCO
Coco Né
K!Chic
Hotel Approximate Prices
Peak Season O�-season
US$ 125
US$ 136
US$ 240
US$ 250
US$ 268
US$ 107
US$ 250
US$ 82
US$ 107
US$ 184
US$ 160
US$ 223
US$ 71
US$ 190
BY
www.amcham.org.pe26
TRAVEL & LEISURE
Each hotel has its specialty. Such is the case of DCO, which with only eight rooms pursues their guests’ experience to be absolutely relaxing. “The DCO is an oasis of peacefulness and privacy dialo-ging with its immediate natural surroun-ding: the seashore. Furthermore, it offers several unique features and services in the area, such as the DCO gourmet res-taurant, the terrace and beach lounge, and the spa for couples at the best Asian style. In this way it gives value to the sen-ses care”, details its web page.
Some kilometers further North, Royal Decameron Punta Sal Hotel specialty is being the only all-inclusive resort in the area, that includes lodging, unlimi-ted food and drinks, recreations, shows, gymnasium, tennis court, disco with free drinks, swimming pool, beach and much more. “Royal Decameron Punta Sal Hotel started its activities in early 2012. Today we count with 312 rooms of which 259 are standard, 42 superior twin and six double bungalows. We have a buffet type restaurant and two others à la carte, in which the most required are the Lomo Saltado and the Pescado a lo Macho”, adds Jorge Luis Caro, Marketing and Publicity Head of Decameron Peru.
For those preferring water sports and performing many activities at the beach, Grand Mare is a hotel adapting to that style. “We have almost seven years in the market and we count with jet skis, wake-boarding, knee boarding and other water games such as banana boat and “ocho loco”; we also have ATVs, paddles and ka-yaks, besides billiard, table games and ping pong tables”, explains Jacqueline Moreno, Service Head of Grand Mare Hotel.
The hotel counts with six family bunga-lows, thirty rooms including suites, ju-nior suites, standard rooms – all facing the ocean – all full service: air conditio-ning, safe box, mini bar,cable TV, DVD, hair dryer, and the area is surrounded by lots of green areas. Likewise, includes transfers services from and to the airport.
Casa de Playa is also another option loca-ted at five minutes ride from the town for those who want to lodge in couple or with the family. Its homey infrastructure makes the guests to really feel at home. This ho-
tel, with swimming pool, comfy spaces for reading and twenty four rooms, offers to-tal comfort to its guests. Besides, its home cooking appeals much to its guests.
Fun, Rest and Sports
Ideal beach complements are adven-ture sports, relaxing spas, contact with nature, and undoubtedly, good food. In sports case, Eco Fundo La Caprichosa and Spondylus are some good places offering adventure sports. The former offers adventure sports, living experien-ces, hikes, bird watching, and in general, an ecological environment for those pre-ferring contact with nature. Spondylus, on the other hand, is specialized in di-ving courses and tours.
Decameron, within its all-inclusive sys-tem, also offers sports activities such as kayaks, windsurf, tennis courts and vo-lley ball, and with an additional charge guests can rent surfing, diving and ca-nopy equipment. Likewise, this hotel in its Wayra Spa center offers massages and relaxation.
For those seeking relax and whose ho-tels do not include a spa, Original Spa is the only spa in Mancora not comprised in a hotel, which offers facial massages and floral baths services. Besides, access to the spa allows using its swimming pool, meditation labyrinth and twenty minutes of Jacuzzi. Also, at the end of each treatment, the client is offered a restoring herbal tea, iced or hot. There are also many masseuse ladies with their needed equipment strolling down the beaches offering massages at more eco-nomical prices.
Food is another adventure in the North. Tuna fish is probably one of the most ap-petized and sold fishes, as well as clas-sic white-fleshed fishes like the grouper (“mero”). Other obligatory dishes for any visitor are: causa, chicharrón de pescado, tartar, cebiche and tiraditos, as well as juicy lobsters.
Northern beaches can turn into an ad-venture plan, a relaxing weekend or sim-ply into a place to rest and eat well. It will depend on each visitor’s taste and preferences.
SOME TAXI SERVICES FOR A SAFE TRANSFER IN THE NORTH
TAXI BEACH TRAVELCel.+51 972853621Rpm. #972853621Tumbes O�ce:72 504202 /72 601372Piura O�ce: 73 324023www.taxibeachtravel.comCARLOS SILVA – SERVICIOSTURISTICOS MANCORAE-mail:[email protected] equiped and air conditioning cars and minivans.Routes: Trujillo, Guayaquil, Piura, Tumbes and Talara airports.Beaches: Punta Sal, Zorritos, Cabo Blanco and mangrove tours.
