Peru: Investment destination

Ministry of Foreign Affairs of PeruOctober, 2012

Peru: Investment destiny

¿Why invest in Peru?Why invest in Peru?

Macroeconomic stability

Friendly investment environment

Open trade and market access policy

Peru will continue to lead regional growth:

Source: International Monetary FundSource: Central Reserve Bank of Perú, Ministry of Economy and Finance.* Estimated figures

A healthy debt level in relation with its international reserves:

Source: Central Reserve Bank of Peru and Ministry of Economy and Finance.*Preliminary figure

*As of July 20, 2012.

The lowest annual average inflation rate in Latin America:

Source : Central Reserve Bank of Peru and Ministry of Economy and Finance

Investment grade - A Latin American comparison:

Source : Standard & Poor's, Fitch Ratings and Moody‘s.Updated to March 2, 2012.

Country

A favorable legal framework:

Non discriminatory treatment. Unrestrictive access to most economic sectors.Free competition.Free capital transfer.Guarantee for Private Property.Freedom to purchase stocks from locals.Freedom to access internal and external credit.Freedom to pay royalties.Network of investments agreements and member of ICSID and

MIGA.Peru participates in the Investment Committee of the OECD.

Special Regimes: The Legal Stability Agreements

The Peruvian Government grants the following:

These treaties are ruled by the Legislative Decree 662 – Legislative Decree N° 757, Supreme Decree N° 048-98, Supreme Decree 030-2000PCM, Law 27342.

Requirement: Minimum investment of US$ 5 million in any economic sector . US$ 10 million for hydrocarbon and mining sector.Validity: 10 years. Concessions:Term according to the contracts life (Max. 60 years).

Benefits:

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

Applicable to all economic sectors.

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

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

Special Regime: VAT Anticipated Recovery

The Peruvian Government grants the following:

Doing Business 2012: Peru in the world

Source: The World Bank, 2012

Ranking by each topic :

Doing Business 2012: Peru 2nd in Latin America

Source: The World Bank, 2012

Investment Agreements:

Peru has signed 33 International Investment Agreements, that underpin its liberalization policy.

Investment Agreements:

Agreements to avoid double taxation

In force:

Chile; since 1/01/2004

Canada; since 1/01/2004

Andean Community; since 1/01/2005

Brazil; since 1/01/2010

3Open trade and market access policy:

US $ 56 trillion

Investment Opportunities:

WHERE TO INVEST ?

Agribusiness sector:

Natural greenhouse. Seasonal window in the most important markets. Projections expect the 90,000 ha. currently used for agro

exports to double as consequence of large irrigation projects in portfolio.

Over US$ 4,400 billion in exports of fresh and processed products to more than 156 countries.

Organic and natural products with high export value.

Fisheries sector:

1st producer of fishmeal and fish oil in the world. Extensive fishing coast and “water mirrors” that offer

adequate conditions for the development of marine and continental aquaculture.

Distribution of Peruvian fisheries products to over 100 countries.

Trend towards product diversification.

Forestry sector:

Great biological diversity and highly valued timber. 78, 8 million ha. of natural forests. 2nd country with the largest natural forest area in Latin

America. Development of hard tropical timber in the forest and soft

timber in the highlands.

Investment opportunities in industrial timber complexes.

Textile sector:

Recognized quality of Peruvian pima cotton. 1st world producer of the finest South American camelids

fibers. Long textile tradition favors workforce professionalization and

training. International recognition as “full package” supplier of the best

brands in the world. Sound trend towards exports growth.

Mining sector: Polymetallic country: 2nd in copper, 3rd in zinc and 1st in

silver reserves worldwide. 13.61% of the territory is subject to mining concessions, and

only 1.09% is used for mining exploration and exploitation. 2nd silver and copper producer worldwide. 1st gold, tin, zinc and lead producer, and 2nd copper, silver

and molybdenum producer in Latin America. In 2011, mining exports grew by 23.25%.Peru is one the few countries with non- metallic mineral deposits, such as mercury, selenium and cadmium.

Energy sector: Energy matrix mostly based on renewable sources. In the last five years, the energy production has increased in

40.3% due mainly to the thermoelectric generation growth with annual average rate of 16%.

Main economic groups that comprise 62% of energy production in Peru are Globeleq, Suez and Duke Energy.

Great energy potential.

Renewable energy sources to explore.

Petrochemical sector: Peru has important natural gas reserves. Natural gas production reached 401,169 million cubic feet in

2011. Petrochemical industry merges with natural gas production

and other hydrocarbons using the “Upstream Integration” Development Strategy.

Peru has oil fields which have not been explored yet.

US $ 17,150 million from private investment will be assigned to the construction of ammonia, urea and ethylene plants in the southern region of the country.

Tourism sector:

Machu Picchu: One of the New Seven Wonders of the World. Diversity of natural landscapes. Destination for bird and orchid watchers. Lima is the gastronomic capital of Latin America. Significant investment from hotels of international

recognition. Investment opportunities in the 8 prioritized tourist destinations: North beaches, Amazon Rivers, Amazonas-Kuelap, Moche Route, Lima, Nazca-Paracas, Colca Valley and Lake Titicaca.

Real state sector:

Housing deficit affects 25% of population. Annual growth of construction sector for 2010 was 18%. There are several programs for housing financing based on

households socio-economic conditions and income level. Mortgage credits grew an average of 17% in the last 4 years (2008-2011).

Technological Services: The lowest labor cost per operator in Latin America. The contact centers services exports, data processing,

application of IT program and similar are exempted from VAT. The software sector had in the last 6 years an annual average

growth of 15%. The industry currently represents 15.574 positions, and it

generates 29.665 direct jobs, and exports have tripled in 5 years.

The implementation of the Data Protection Law will strengthen the position of companies, making possible to establish more trading links.

ONGOING PROJECTS IN PROINVERSION’S PORTFOLIOPrivate investment promotion process – short term 2012-2013:

Source: Proinversión

1/ VAT not included.2/ Investment amounts of Land transport (Road Concessions Project), Telecommunication (National Optical Fiber Backbone Network), Tourist (Kuelap cable cars) and Airport (New International Airport Chinchero – Cusco) sectors include VAT.

LAND TRANSPORT PROJECTS

*VAT is included

RAILROAD PROJECT

HYDROCARBONS PROJECTS

ENERGY (ELECTRICITY) PROJECTS

AIPORT PROJECT

PORT PROJECTS

TELECOMMUNICATION PROJECTS

*VAT is included

AGRICULTURE AND IRRIGATION PROJECTS

SANITATION PROJECT

TOURISM PROJECT

CULTURE PROJECT

MINING PROJECTS

CAPITAL MARKET PROJECTS

Thank you

• www.proinversion.gob.pe• www.rree.gob.pe• www.promperu.gob.pe

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