Living in Peru : your everyday companion

The president of state-owned Aluminum Corp of China (Chinalco), Xiao Yaqing, said Thursday that more than 30 Chinese companies are currently operating in Peru with total cumulative investment of US$ 800 million.

"Chinese companies have stepped up their internationalization and cooperation with their Peruvian counterparts, obtaining very positive results in recent years," Chinalco's`president Xiao Yaqing said Thursday.

He said that Chinese companies want to continue investing in Peru and he considered that it is very important that the Peruvian government protects these capitals generating a favorable environment.

On behalf of the Chinese companies, Yaquing suggested investors from both countries to join forces to compete and take advantage of development opportunities that will arise in the future.

He said that Chinese capital firms always insist on promoting principles of mutual benefit, equality, complementarity and cooperation, and they are also respectful of international norms and market economy rules, the Peruvian laws and to maintain good relations with local communities.

In this regard, he stated that Chinalco will seek a harmonious development of the Toromocho project with local communities, in addition to boosting employment and socio-economic development of residents.

The Toromocho copper project is located in the district of Morococha, province of Yauli (Junín), where Chinalco plans to invest more than 2.1 billion dollars generating 2,500 direct and 7,500 indirect jobs.

Living in Peru
Israel J. Ruiz

Even though a global financial crisis has many investors planning and rethinking projects, 91 percent of companies in Peru have affirmed they will continue investing in the Andean country.

According to a business investment report released by the University of Lima, 91.1 percent of almost 150 companies in Peru confirmed they would continue investing in the country.

From October 3 to 22, the study interviewed the presidents of 146 companies, the majority of which affirmed they would keep betting on Peru.

The study also showed that over 92 percent of these investors did not trust the country's Judicial System but said this did not affect their business decisions.

Other results showed that 70.5 percent of those interviewed felt it was very important to develop regions outside of Lima. This was despite the fact that 84.9 percent of investors said they did not trust regional governments.

It was also revealed that while 69.9 percent of the company presidents did not trust municipal authorities, 82 percent said they trusted the country's Minister of Finance, Luis Valdivieso.

It was reported that 17.1 percent of the investors interviewed said Peru's economy would be better in 2009, while 63 percent said it would remain the same.

Peruvian business owners from Gamarra’s famous garment district in Lima expect to attract one million customers during the Christmas season in November and December this year.

The president of the Coordinating Committee of Gamarra Entrepreneurs, Diógenes Alva, mentioned that sales in Gamarra by the end of the year would amount to more than 1.2 billion dollars, a 20 percent increase compared to last year.

"The crisis has not affected Christmas sales. At the moment, we have exported our quality products to Ecuador, Bolivia, Venezuela, Chile and the United States," he added.

Diogenes Alva said that the Christmas season started two weeks ago when local textile manufacturers sent their exports to Peruvian provinces and overseas markets.

On the other hand, he noted that a joint effort between textile entrepreneurs and local authorities had helped to improve security and infrastructure in Gamarra.

Living in Peru
Israel J. Ruiz

Peru will continue to lead the world in the exportation of fresh asparagus throughout 2008, said a press release based on forecasts made by the agro-exporters association known as the Asociación Civil Frío Aéreo.

The association affirmed that the exportation of fresh asparagus shipped by plane would increase at least 10 percent this year, surpassing the 106 million kilograms exported in 2007.

It was reported that these exportations were worth $235 million in 2007 (FOB).

The continuous growth in the demand for Peru's asparagus was attributed to high standards of production quality and an efficient refrigeration chain that kept these products fresh.

With main destinations being Miami and Los Angeles, 70 percent of the Andean country's fresh asparagus is exported to the United States.

Other countries that receive this product are the Netherlands, the United Kingdom and Spain.

To handle this increasing demand, the Asociación Civil Frío Aéreo reported that it has made its plant and warehouses two times as large.

Living in Peru
Israel J. Ruiz

During CADE, a national business executives meeting held annually, Federico Salas, governor of Huancavelica affirmed that this Peruvian highland region would soon lead the country in the exportation of fish.

Salas explained that a new processing plant was being established in the region and that it would help make Peru the leading trout-exportation country in South America.

"A large trout-processing plant is being established; this will make Peru the country in South America that exports the largest quantity of trout," said the governor, affirming this was thanks to the work being done in his region.

He explained that this and other projects would give citizens in Huancavelica more opportunities to make their way out of poverty.

When asked about the narco-terrorists in the region, Governor Salas assured that the region and the central government were working on projects to increase safety and generate more investments.

Living in Peru
Israel J. Ruiz

Affirming Russia has a large market with excellent opportunities for Peru, the Lima Chamber of Commerce has announced that it has requested permission to establish a commercial agency in the transcontinental country.

According to the Chamber of Commerce's Foreign Trade Committee, Russia is a good market for the exportation of Peruvian products such as chickens, eggs and processed goods including fish products.

The trade committee added that Russia was also a country where Peru could export canned fruits, fish as well as grain derivatives and malt beverages.

It explained that Russia's purchasing power was strong and that industrial consumption had high turnover.

The trade committee affirmed that it was in Peru's best interests to have an agency in the country, explaining that Russia only received products from companies that were registered in their nation.

Furthermore, it as noted that even though Russia did not belong to the World Trade Organization and established its own trade policies, it was an attractive market for Peru.

Living in Peru
Israel J. Ruiz

Peru's textile exports to the United States could decrease by up to 15 percent in 2009, reported the Lima Chamber of Commerce (CCL), explaining the drop was attributed to the slow down in the growth of the North American economy.

The Chamber of Commerce confirmed that 28 percent of Peru's non-traditional exports were textiles and that after buying 14 percent of its production; the United States was the Andean country's main purchaser.

Furthermore, the CCL stated that every net ton of textile that was exported accounted for three jobs, affirming that 10,000 jobs would be lost because of the fall in demand.

It was reported that Peruvian exporters and investors are concerned with the decline in the U.S. demand for textile products from Peru, which has already gone down 9.6 percent.

On the other hand, exports of Peruvian textile products to the world have increased 12 percent.

The loss in sales to the U.S. was compensated by an increase in Venezuelan demand, which has jumped 106 percent between January and August 2008.

Peru’s exports amounted to 2.66 billion dollars in September this year, showing an increase of 4.2 percent compared to the same month last year, and presenting six years and seven months of continued growth, Peru’s Export and Tourism Promotion Board (PromPerú) reported Friday.

Traditional exports in September amounted to 1.98 billion dollars, registering a decrease of 9.6 percent, while non-traditional exports totaled 676 million dollars, presenting a growth of 26.3 percent.

Total exports reached 24.64 billion dollars during the first nine months of this year, showing a 22.6 percent growth with respect to the same period in 2007.

Traditional product exports between January and September totaled 18.98 billion, which represents a growth of 21.4 percent; while the exportation of non-traditional products reached 5.65 billion dollars, presenting a 26.5 percent increase.

During the last 12 months, exports totaled 32.54 billion dollars, 20.9 percent more than the amount registered in the period between October 2006 and September 2007.

Peru's production minister Elena Conterno asked local businessmen to be more creative and increase the added value of their export-oriented products in order to ease the effects of the financial crisis on Peru's export volumes.

"The crisis can also be an opportunity because it challenges business people and I believe that it is necessary to be more creative and look for products of higher added value", she said.

Minister Conterno said that according to current estimates for Peru's exports, there is a significant decline in the export of low value-added products to the United States.

"Regarding low value-added products, competition is much more intense and price is inevitably a relevant factor, so I believe that if we start enhancing products’ competitiveness we will be able to enter niche markets even in this difficult situation," she said.

Despite the financial crisis, British entrepreneurs interested in investing in Peru have started talks with official agencies in order to participate in Public-Private Partnerships (PPP) boosted by the Peruvian government, the British Embassy in Lima reported Wednesday.

The director of Trade and Investments of this Embassy, Nicole Ware, said that one of the projects that attracts more investors in the PPP modality is the construction of jails and hospitals.

In Peruvian legislation, PPP adopts the form of a concession, that is to say, a contract signed between the State and a company (which can be constituted by a consortium), by which the State (national, regional or municipal government) grants the execution and exploitation of particular public work of infrastructure or the provision of public services for a specific term.

Ware said that potential British investors have already contacted Peruvian ministries involved in this process as well as the Promotion Agency of Private Investment (ProInversión).

She also indicated that the United Kingdom has a great deal of experience developing projects in this kind of partnerships, since they were the creators of this system.

Now, they have offered to support the Peruvian government with advice on its implementation and guidance on how to obtain positive results.

“We are supporting the training of some authorities in the respective entities and we are also able to offer the consultancy that can be required”, she added.

Ware highlighted that in the last four years, the interest of investors has registered an uptrend. In fact, the UK ranked this year as the second investor country in Peru.