peru: overview of opportunities

Greater Washington Hispanic Chamber of Commerce

Ana Maria DeustuaCommercial Counselor

Embassy of Peru to the USA

Overview and Opportunities

Table of Contents1. PERU: One of the Fastest Growing

Economies.2. PERU – US Bilateral Trade3. PERU Trade Promotion Agreement4. Business Opportunities for US

Companies in trade and in investments

Peru: One of the Fastest Growing Economies

Peru: One of the Fastest Growing Economies

Sustained GDP growth, with an average GDP growth rate 2001-2009 of 5.4%. The maximum rate in 2008 with 9.8% and minimun in 2009 with 1%. Peru’s growth has been the highest in Latin America.

Diversified and growing exports (24% annual average growth from 2001 to 2008)

Sovereign risk below Latin American average (EMBI Global + 273 base points in 2008 compared the 426 base points regional average)

National poverty rate fell 12.4 percent points between 2004 and 2008, from 48.6% to 36.2%

Peru: One of the Fastest Growing Economies

Simultaneously with improved internal indicators, the strong fiscal position explained that in 2008, Peru was awarded investment grade by several international rating agencies.

High foreign currency reserves: $33,135.0 millions in 2009, over 20 months worth of imports

Growth forecast for 2010 is around 5.5%, could reach 6%

Peru is strongly positioned to resume the path of growth once the global economy stabilizes

6

Peru is projected to grow by 5,5 per cent …DOMESTIC DEMAND AND GDP

(Percentage changes)

Trade Balance surplus would continue in the next years

7

TRADE BALANCE(Millions of US$)

8

Continued progress in gaining access to global markets

Multinational Companies Operating in Peru

Shougang Corp Sapet Marubeni Honda SK LS Nikko Sumitomo Matsushita P&O Dover China Fishery Group Chinalco Zijin Mining Nippon Mining Mitsui Mining

Teck Cominco Quebecor Barrick Scotiabank

Firth Ind. Newcrest BHP Chariot Amcor Downing Teal Orica Rio Tinto

Grupo Slim Grupo Mexico Grupo Bimbo Zeta Gas Minas Peñoles Banco Azteca Elektra Café Britt

Techint Pluspetrol Odebrecht Petrobras AmBev Gerdau Votorantim Vale Grupo ISA Falabella Ripley CENCOSUD ENAP LAN

• Hunt Oil• Nextel• Citibank• Phelps Dodge• Duke Energy• Freeport McMoRan• Procter & Gamble• Kimberly Clark• Coca Cola Comp.• Chevron Corp.• Cargill• Kraft• Sempra• PSEG• Newmont• Doe Run

• Telefónica• BBVA• Endesa• Repsol - YPF• HSBC• Flughafen Frankfurt• Suez Group • Xstrata• Acea /Impregilo• Messer• Faber Castell• Deutsche Bank• Grupo Santander• Grupo Fierro• Ashmore• SN Power• Elecnor / Isolux• Polysius• OHL• Orient Express• Cimpor

Anglo American Sonatrach Gold Fields Sab Miller

Peru-US Bilateral Trade

BALANCE OF TRADE PERU – U.S.In 1,000,000 Dollars (2007 / 2008) / (2008 / 2009)

2007 2008%

Change 2008 2009%

Change

PERU X’S TO US 5,207.1 5,839.9 12.20% 5,839.9 4,234.6 -27.50%

PERU M’S FROM US 3,764.3 5,687.0 51.10% 5,687.0 4,355.8 -23.40%

BILATERAL TRADE 8,971.4 11,526.9 28.50% 11,526.9 8,590.4 -25.47%

BALANCE OF TRADE 1,442.8 152.9 -89.40% 152.9 -121.2 -179.26%

Peru Exports to the U.S. Per Chapter / In 1,000 Dollars / 2007 / 2008 / 2009

HTS Number 2007 2008% Change 2007/2008 2009

% Change 2008/2009

71 PRECIOUS OR SEMI PRECIOUS STONES 903,259 1,029,429 14.00% 812,060 -21.10%

27 MINERAL FUELS, MINERAL OILS 810,119 1,182,176 45.90% 641,940 -45.70%

74 COPPER AND ARTICLES 1,067,134 929,734 -12.90% 583,696 -37.20%

61 APPAREL AND CLOTHING ACC. 764,209 749,216 -2.00% 566,743 -24.40%

80 TIN AND ARTICLES 262,168 366,047 39.60% 266,107 -27.30%

7 EDIBLE VEGETABLES AND ROOTS 228,228 230,580 1.00% 237,579 3.00%

9 COFFEE, TEA, MATE AND SPICES 179,254 230,774 28.70% 207,949 -9.90%

20 PREPARATIONS OF VEGETABLES, FRUITS, NUTS 107,971 161,954 50.00% 162,137 0.10%

3 FISH AND CRUSTACEANS, MOLLUSCUOS 74,417 84,443 13.50% 99,940 18.40%

26 ORES, SLAG AND ASH 182,676 195,146 6.80% 98,228 -49.70%

8 EDIBLE FRUIT AND NUTS 81,564 107,288 31.50% 96,253 -10.30%

79 ZINC AND ARTICLES THEREOF 4,033 43,901 988.60% 66,960 52.50%

Sub-Total 4,665,032 5,312,696 13.88% 3,839,592 -27.73%

All Others: 494,084 516,009 4.40% 447,627 -13.30%

Total 5,207,070 5,839,906 12.20% 4,234,615 -27.50%

19.18%

15.16%13.78%13.38%

6.28%

5.61%

4.91%3.83%

2.36%2.32%

2.27%

1.58%

71 Precious or Semi PreciousStones

27 Mineral Fuels, Mineral Oils

74 Copper and Articles

61 Apparel and Clothing Acc.

80 Tin and articles

7 Edible Vegetables and roots

9 Coffee, Tea, Mate andSpices

20 Preparations ofVegetables, Fruits, Nuts

3 Fish and Crustaceans,Molluscuos

26 Ores, Slag and Ash

8 Edible Fruit and Nuts

79 Zinc and Articles Thereof

Peru Exports to the U.S. 2008/2009

713

209

7

80

6174

27

79826

Peru Imports from U.S. Per Chapter / In 1,000 Dollars / 2007 / 2008 / 2009

HTS Number 2007 2008 % Change 2007/2008 2009 % Change

2008/2009

84 MACHINERY AND MECHANICAL APPL 874,132 1,305,826 49.40% 1,077,466 -17.50%

27 MINERAL FUELS 503,801 1,197,981 137.80% 487,463 -59.30%

85 ELECTRICAL MACHINERY 263,694 445,939 69.10% 372,290 -16.50%

39 PLASTICS AND ARTICLES THEREOF 406,580 505,693 24.40% 344,434 -31.90%

87 VEHICLES 178,685 229,127 28.20% 218,442 -4.70%

10 CEREALS 232,112 171,700 -26.00% 180,409 5.10%

38 MISCELLANEOUS CHEMICAL 85,195 109,848 28.90% 138,517 26.10%

98 SPECIAL CLASSIFICATION PROVISIONS 112,700 172,456 53.00% 133,760 -22.40%

29 ORGANIC CHEMICALS 159,849 171,755 7.40% 127,600 -25.70%

90 OPTICAL, PHOTOGRAPHIC 104,118 134,139 28.80% 117,042 -12.70%

72 IRON AND STEEL 36,407 183,352 403.60% 79,517 -56.60%

31 FERTILIZERS 62,014 105,628 70.30% 75,846 -28.20%

Sub Total 3,019,287 4,733,444 56.77% 3,352.786 29.17%

All others 774,996 953,542 28% 1,002,987 5.20%

Total 3,764,282 5,686,984 51.10% 4,355,772 -23.40%

24.74%

11.19%8.55%

7.91%

5.02%

4.14%

3.18%3.07%

2.93% 2.69%1.83%

1.74%

84 MACHINERY ANDMECHANICAL APPL27 MINERAL FUELS

85 ELECTRICAL MACHINERY

39 PLASTICS AND ARTICLESTHEREOF87 VEHICLES

10 CEREALS

38 MISCELLANEOUSCHEMICAL98 SPECIAL CLASSIFICATIONPROVISIONS29 ORGANIC CHEMICALS

90 OPTICAL,PHOTOGRAPHIC72 IRON AND STEEL

31 FERTILIZERS

Peru Imports from U.S. 2008/2009

84

278539

87

1038

98 29 90 72 31

US Agriculture Exports to Peru(million US $)

PRODUCTS 2007 2008 2009 2009/08CORN (MAIZE), OTHER THAN SEED CORN 71 42 98 131.60%WHEAT AND MESLIN 161 127 82 -36.00%COTTON, NOT CARDED OR COMBED 85 82 70 -15.20%SOYBEAN OILCAKE & SOLID RESIDUES 7 11 68 504.10%SOYBEAN OIL 2 0 53 N/ACHOCOLATE AND COCOA PREPARATIONS

6 6 11 99.50%

FATS OF BOVINE , SHEEP OR GOATS 13 15 10 -32.20%MALT, NOT ROASTED 0 1 7 1232.80%LENTILS, DRIED SHELLED, INCL. SEED 4 4 7 94.90%SOYBEANS, WHETHER OR NOT BROKEN 3 13 7 -43.10%TOTAL 352 301 413 37.21%

PERUVIAN AGRICULTURAL EXPORTS TO THE USA

(million US $)PRODUCTS 2005 2006 2007 2008 2009 2009/2008

ASPARAGUS, FRESH OR CHILLED 110 130 161 153 162 6.10%

COFFEE, NOT ROASTED, NOT DECAFF. 74 109 124 155 139 -10.30%

OTHER PREPARED VEGETABLES 0 0 55 77 73 -4.90%

PAPRIKA, DRIED ,CRUSHED OR GROUND

34 39 40 58 42 -26.90%

GRAPES, FRESH 11 16 18 26 32 20.30%

OTHER PRESERVED VEGETABLES 7 12 17 28 30 6.90%

ASPARAGUS, PREPARED OR PRESERVED

17 25 23 38 28 -24.80%

COFFEE, NOT ROASTED, DECAFF. 5 11 13 14 23 65.60%

ONIONS FRESH 17 17 19 19 22 19.90%

MANGOES FRESH OR DRIED 22 24 24 30 22 -26.30%

TOTAL 297 383 494 598 573 -4.18%

Peru Trade Promotion Agreement

Peru Trade Promotion Agreement Balance of the Negotiation for PeruMaintained the access granted to Peruvian

products under the ATPDEA.Duty free treatment to products not included

before in ATPDEA: cotton fiber, yarns and fabrics, other textile products (not apparel), among others. Almost 98% of the Peruvian exports are granted duty free treatment.

Increased cuotas for some food products: dairy products (evaporated milk, cheese, dulce de leche), sugar.

Peru Trade Promotion Agreement Balance of the Negotiation for the

USEighty percent of US exports of consumer and

industrial products to Peru become duty free immediately, with remaining tariffs phased out over 10 years.

More than 2/3 of current US farm exports will become duty free immediately. Other US farm products will be phased out within 15 years, with all tariffs eliminated in 17 years.

Access of remanufactured equipment into the Peruvian market.

Automobiles of more than 3.0 Lt manufactured in the US have duty free acces.

PTPA Main ConsiderationsThe Agreement establishes a secure,

predictable legal framework for US investors operating in Peru.

US investors will enjoy the right to establish, acquire and operate investments in Peru same as local investors.

The Agreement provides for improved standards for the protection and enforcement of a broad range of intellectual property rights, consistent with US and international standars.

PTPA Main ConsiderationsStronger protection for US patents, trademarks

and test data, including an electronic system for the registration and maintenance of trademarks.

US suppliers are granted non-discriminatory rights to bid on contract from a broad range of Peruvian government ministries, agencies, public enterprises, and regional governements.

PTPA Main ConsiderationsThe Agreement’s dispute settlement

mechanisms provide for open public hearings, public access to documents, and the opportunity of third parties to submit views.

Transparency in customs operations will aid express delivery shipments and will require more open and public processes for customs ruling and administration.

The Agreement includes obligations in labor and environmental issues according to international laws.

Business Opportunities for US Companies

Best Prospects for Increased Market Growth for US Companies

Agriculture:- Almost 80% of current agricultural exports

receive duty free treatment, among them: cotton, wheat, soybeans, apples, pears, peaches, cherries and almonds.

Best Prospects for Increased Market Growth for US CompaniesInformation Technology Products:- Almost all information technology products have

duty free treatment. Best prospects in this sector include computers and computer parts, radio and television broadcasting apparatus and software.

Industrial Machinery:- Capital goods exports have duty free treatment.- Agricultural and construction equipment, food

processing, packing equipment, heating and cooling equipment will benefit from the Agreement.

Best Prospects for Increased Market Growth for US Companies

- Peru increasing investment projects in infrastructure as roads, ports and airports will continue to fuel demand for specialized machinery.

- Natural resources in mining in the Andean region and an oil reserves along the northern Coast and in the jungle have ignited interest in prospecting and exploration.

Best Prospects for Increased Market Growth for US Companies

Chemicals:- Best prospects in this sector include polyethylene,

lubricant oil additives and acrylic polymers.- 96% of fertilizer and agrochemical exports have

duty free treatment.

Remanufactured Equipment:- US remanufacturers of products such as: engines,

radiators and alternators for construction equipment and transportation machinery, will be able to export their products without non tariff barriers.

Best Prospects for Increased Market Growth for US Companies

Medical Equipment:- 90% of medical equipment exports receive

duty free access, with remaining duties phased out over five years.

- Best prospects: instrument parts, electro diagnostic apparatus and ultrasound.

Best Prospects for Increased Market Growth for US Companies

Electrical Power Generation and Distribution Equipment:

- The government of Peru is encouraging electric power producers to convert from oil and diesel fuels to natural gas. This request will lead to greater need for power generation equipment in Peru.

Main Investment Opportunities by sectors

Industry Highlights

Industry Highlights

Industry Highlights

Industry Highlights

1st world producer of Alpaca and Vicuna fiber.

High quality of Peruvian Pima cotton.

Textile exports US$2 billion in 2008

Recognized quality as “full package” supplier of knitted cotton apparel for the best international brands.

Industry Highlights

Industry Highlights

Infrastructure projects with concessions granted to the private sector

Main Websites

www.tlcperu-eeuu.gob.pewww.ustr.govwww.export.gov/FTA/peru/index.asp

Ana Maria Deustua Tel 7202-261.0268

E-mail: commercial@embassyofperu.us