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January 2008

INVESTMENT OPPORTUNITIES IN PERU. January 2008. Why come to PERU?. Indonesia and Peru: total trade (millions of US$). Source: SUNAT. Indonesia and Peru today: Trade. Peru’s main exports to Indonesia (2007): Fishmeal and fish oil Fresh grapes Mangoes Woven fabrics of silk

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January 2008

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  1. INVESTMENT OPPORTUNITIES IN PERU January 2008

  2. Why come to PERU?

  3. Indonesia and Peru: total trade (millions of US$) Source: SUNAT. Indonesia and Peru today:Trade Peru’s main exports to Indonesia (2007): • Fishmeal and fish oil • Fresh grapes • Mangoes • Woven fabrics of silk Indonesia’s main exports to Peru (2007): • Rubber • Printers, copiers and fax machines • Cathode-ray tube monitors • Digital cameras and video camera recorders

  4. Main Investment Opportunities by Sectors Forestry Plantations Agribusiness and Agro exports Fishing and Aquaculture Textile and other manufactures Mining and Hydrocarbons Tourism and other services INFRASTRUCTURE

  5. Agribusiness sector

  6. Advantages of the Agribusiness and agro-exporting Sector • 1st exporter of asparagus and 2nd of paprika worldwide. • Specialization in cultivation of high-value fruits and vegetables. • High levels of productivity worldwide of the following products: • mango, asparagus, grape, avocado, sugar cane and apple. • 8 million hectares of fertile lands, high possibility to program crop periods to obtain the maximum price per season. • Diversity of ecosystems (84 life zones recognized) • Stable weather. • 20% growth of non-traditional agriculture exports (2006). • Skilled workforce available. • More information Source: ProInversión.

  7. Knitting and Sewing the future …

  8. Textile Sector Advantages • High quality of Peruvian Pima cotton. • 1st producer of fine Alpaca and Vicuna fiber. • Highly competitive products based on quality. • Development of Peruvian textile chain enabling rapid service to “full package” orders. • Opportunity to benefit from the ATPDEA – Andean Trade Promotion and Eradication of Drugs Act / Free Trade Agreement, to enter the USA apparel market. • More information Source: ProInversión.

  9. Fishing and Aquaculture Power

  10. Fishing and Aquaculture Advantages • 1st world producer of fishmeal and fish oil. • Hydro biological wealth and variety of microclimates • 8 million MT per year of exploitable biomass. • More than 2500 species in 3000 km of coast line zone. • Strategic location to access Asian market, great consumer of fishing products. • Large export growth for human consumption, sub-sector with great development potential. • Only 19% of usable species are currently processed and trade. • Promotion Law on the Development of Aquaculture. • More information Source: ProInversión.

  11. Forestry Sector

  12. Forestry Sector Advantages • 2nd Latin American country with larger extensions of natural woods and tenth position worldwide. • 53,5 millions hectares of forest reserves and 6 million hectares for reforestation. • High-commercial valued woods: mahogany, tropical cedar, cumula (virola sp.), among others. • Great exporter potential: • Estimated potential: US$ 4000 millions/annual. • Opportunity to export fine wood furniture and to invest in the packing industry (before the increase of exportations of fresh and frozen foods). • Potential to increase up to 17 times the current wood supply. • Forestry concessions to private production sector. • More information Source: ProInversión.

  13. Bet on the future … Tourism Sector

  14. Tourism Sector Advantages • Cultural and historical wealth and great biodiversity make Peru a unique in its own around the world. • High potential to generate investment oriented to expand tourism services. • Possibility to develop private investment not only in tourism infrastructure, but also in providing traveler services. • Peru is promoting the northern tourist circuit which offers new investment opportunities. • Important increase of foreign arrivals. • Peruvian gastronomy is one of the most delicious and varied in the world. • More information Source: ProInversión.

  15. Investment opportunities through concessions *Decentralized (US$ 62 millions), Sugar processing companies (US$ 60 millions), support to private investment (US$ 25,4 million ), mining (US$ 30,0 millions) and tourism (US$ 5 millions). Source: ProInversión.

  16. Iquitos Port Piura Costa -Sierra Yurimaguas Port Paita Port Salaverry Port Pucallpa Port Road Network 4 Road Infrastructure Airports Ports Sanitation Hydrocarbons Energy Telecommunications Electric Train Chimbote Port IIRSA Center Branch Supply drinking water for Lima Puerto Maldonado Electric Train Andahuaylas Regional Pipelines Pisco Port Ayacucho Nazca Arequipa Juliaca Ilo Ilo Port Tacna Infrastructure: Investment Opportunities Marcona Port Source: ProInversión.

  17. Main infrastructure projects in development Source: ProInversión.

  18. Investment plays an important role in the country’s economic growth and signals a promising future *Estimates. Source: ProInversión.

  19. Peru 8,3* 7,6 6,7 5 5,1 4 Sustainable economic growth with annual forecasted rate greater than 7% 8 6 GDP Growth (Annual variation %) 4 Developed 2 World 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 *Estimated for 2007 by the Ministry of Economics and Finance of Peru. Source: ProInversión.

  20. Annual Exports growth greater than 30% Accompanied by private investment growth (average annual % variation) 27,434 Private investment grew 25,5% in 2007 Source: ProInversión.

  21. Capital goods for the industry Capital goods for the Industry Transport Equipment Others Rise in the commercial exchange (Millions of US$) Increase in capital goods imports (Millions of US$) Source: ProInversión.

  22. 2000 2001 2002 2003 2004 2005 2006 2007* Peru is progressively reducing its fiscal deficit (% of GDP) By increasing its Central Government tax revenues *Estimated by the Ministry of Economics and Finance. Source: ProInversión.

  23. Public debt Domestic and external public debt 2002-2007e (as % of GDP) Forecasts Domestic External Source: BCRP.

  24. …in a framework of macroeconomic stability… Exchange rate in Latin America (Index January 2001=100, vs. US$) Inflation in Latin America (Annual var. %) *Forecasted by the IMF. Source: ProInversión. .

  25. Just one step away from the Investment Grade

  26. Peru offers a favorable legal framework for foreign investment Non discriminatory treatment • Unrestrictive access to most economic sectors. • No performance requirements. Free transfer of capital • Free competition. • 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. Legal Framework: Constitutional provisions, “Law for the Promotion of Foreign Investment”, Legislative Decree N° 662, “Framework Law for Private Investment Growth”, Legislative Decree N° 757, “Law for the Promotion of Private Investment in Infrastructure and Public Service Works”, Approved by Supreme Decree N° 059-96-PCM. Source: ProInversión.

  27. Access to several markets EFTA Canada European Union China USA. Japan China Korea India Mexico: ACE 8 CARICOM Thailand CAN APEC Central America Singapore MERCOSUR ACE 58 Australia Chile: ACE 38 ACE Plus New Zealand Countries with ongoing agreements Countries with signed agreements Countries under negotiation process Countries close to start negotiations Countries for future negotiations Free market access to the United States and the European Union

  28. Why come to Peru? Vast Natural Resources: Ores, hydrocarbons, available lands having proper climates, forests, 2 500 km of coast, thousands of lakes, snowcapped mountains. GDP growth: 7,6% annually (2006) • Sustainable growth since 2002 and forecasts above 7% annually 2008-10. • Exports tripled in 5 years. • Investment is increasing 20% annually. Regional Hub/ APEC 2008 Venue • Third largest country in South America / 28 million inhabitants. • Located in the center of the South American Pacific Coast. Economy committed to the trade integration process: • Preferential access to CAN, MERCOSUR, USA and EU. • 32 agreements on investment. Country risk below the Latin American average • Lowest inflation in Latin America and a very stable exchange rate (free). • Domestic capital market’s sound growth. • Fiscal surplus of 2.9% (2007). Favorable investment climate: • Attractive legal framework for Foreign Direct Investment, based on freedom and equality. • First place in Latin America regarding the State receptiveness to investment (WEF). • Second place in Latin America for protecting Foreign Direct Investment (WB).

  29. Peru Strong figures Strategic location Excellent opportunities Welcome to APEC CEO Summit 2008

  30. Productivity of the Peruvian Agribusiness Products Position by Product Product World Latin America Mango 1 1 Asparagus 1 1 Sugar Cane 1 1 Grape 3 1 Avocado 5 4 Coffee 6 4 Paprika pepper 10 3 Agribusiness Products Agribusiness exports (US$ MM) Exports of Agribusiness products (Millions of US$ FOB) Agribusiness Exports Markets (2006) Source: ProInversión.

  31. 1 600 1 400 1 200 1 000 Million US$ 800 600 400 200 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Textile Exports – 2005 Main Markets Textile and Apparel Sector Textile Exports Garmet Yams Fabrics Textile fibers “Proximity to the USA and same time zone, provide Peruvian exporters shorter delivery and replenishing times” Source: ProInversión.

  32. Fishing and Aquaculture Advantages “El Niño” Phenomenon Species under-worked with high potential: Horse Mackerel, Mackerel, Giant Squid or “Pota”, among others. • World’s first exporter of fishmeal and fish oil since 1993. Source: ProInversión.

  33. Forestry Sector Peru is a country with excellent conditions for forestry. 2nd in Latin America and 1oth worldwide thanks to its rich natural resources. Forestry Exports (US$ millions) Forestry exports have increased from US$ 26 MM in 1996 to US$ 168 MM in 2005. This shows a 26% growth rate per year in the last 9 years. Peru has potential to export US$ 3 bn per year in woods and by-products. Source: ProInversión.

  34. Some figures… 2 002 700 000 Tourist entry (millions of people) 600 000 International 500 000 Arrivals by 400 000 Continent 300 000 200 000 100 000 2 005 0 2 003 South America North America Europe Asia Oceania Years 2003 - 2005 : registered arrivals 2 004 Central America Years 2006 - 2013 : projected arrivals International arrivals: main origin countries (in thousands of tourists) Country 2 000 2 001 2 002 2 003 2 004 2 005 2 006 A wide range of attractions: handcrafts, celebrations and Chile 201 167 239 249 307 353 410 USA 99 108 190 240 287 291 311 Ecuador 99 108 62 81 111 88 85 popular rituals, music and typical Bolivia 68 69 59 59 63 71 83 Spain 99 108 30 30 42 58 67 dances, as well as its gastronomy, United Kingdom 5 5 42 48 51 60 61 make Peru an amazing place to France 10 10 37 40 46 54 57 Argentina 26 32 36 38 45 54 57 visit. Colombia 31 28 33 34 49 49 53 Brazil 25 30 25 28 43 43 45 Source: ProInversión.

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