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Peru: Morning News Roundup – Friday February 15

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Peru’s hotel industry killing the tourism goose

Between nimbyism and price-gouging

INCA ruins, splendours from even-older cultures, Spanish colonial towns, pristine jungles and good food: Peru has much to offer the tourists who are flocking there in ever-greater numbers. But if it is not careful, its tourist industry risks becoming its own worst enemy. Having doubled so far this decade to 1.8m last year, tourist arrivals were up a further fifth in January compared with the same month in 2007. Adding to hopes of a bumper year of visitors, two big summits—one involving European and Latin American leaders, and the other of APEC, a group of Asian and Pacific economies—are to be held in Lima. Not surprisingly, the government wants to stimulate hotel building and other tourist infrastructure. But not everyone is happy with the way it is doing so. Local authorities in Cusco, the former Inca capital, shut down their city on February 7th in protest at a new law that would allow private investment near cultural heritage sites. Trains to Machu Picchu, the spectacular Inca site which attracts more than 800,000 visitors a year, were halted. (The Economist – click here to read complete article)

House Panel Extends Andean Trade Pact

A House panel on Thursday approved a 10-month extension for a trade program providing reduced tariffs for exports from the four Andean nations of Bolivia, Colombia, Ecuador and Peru. The Ways and Means Committee agreed by voice vote to extend the Andean Trade Preference Act until the end of the year. The full House is expected to vote on the matter before the act expires Feb. 28. Congress enacted the program in 1991 with the goal of reducing illegal drug production in the Andean region by promoting legitimate industries. Ways and Means Committee Chairman Charles Rangel, D-N.Y., said he had sought a longer extension but agreed to 10 months "to accommodate the range of opinions on the issue of renewal." Republicans balked at a longer extension as part of a strategy of pushing Democrats to bring up legislation approving a bilateral free trade agreement with Colombia. (AP – click here to read complete article by Jim Abrams)

Peru’s Road to Reconstruction

Six months ago, a major earthquake struck southern Peru, displacing tens of thousands of people. Yet, even as the central government responded swiftly to create reconstruction programs, some officials and local residents have complained since then of lagging rebuilding efforts. In August 2007 the magnitude-7.9 earthquake shook the area around Ica. At the time, President Alan Garcia and cabinet members temporarily relocated to an air force base nearby to be on hand in the days following the disaster. Within weeks, Garcia’s administration established the South Reconstruction Fund (FORSUR). Start-up funds for the agency included $100 million from the central government as well as $38 million from international sources. Lima also implemented Bono 6000, a bond program allocating roughly $2,000 for home reconstruction per displaced family. As the Economist reported a month later, the fast response gave Garcia’s approval ratings a strong boost. (Americas Society – click here to read complete article by Danielle Renwick)

Peru’s Aje beverages to sell juices in Mexico

Low-cost Peruvian beverage company Ajegroup plans to launch a line of fruit juices in Mexico in March to steal away market share from Coca-Cola and Jumex, Aje’s head of corporate affairs said on Thursday. Ajegroup, which sells drinks in Latin America and Asia, already has operations in Mexico, where it has gained a foothold selling soft drinks at lower prices than competing brands. "We’re going to launch in March; it’s a tough market," Aje’s Alfredo Paredes told Reuters. Fruit juices are expensive in Mexico, where per capita consumption of soda is higher than anywhere in the world, said Paredes. He hopes Aje wins market share by using low prices to lure customers from Mexican drink giants Coca-Cola and Jumex. (Reuters – click here to read complete article)

Demand For Peru’s Sol-Denominated Bonds Seen Strong

Demand for domestically traded sol-denominated Peruvian sovereign bonds is expected to continue to be strong, Banco de Credito said Thursday. A series of measures aimed at cutting down on what the Central Reserve Bank of Peru has called speculative attacks on the local currency combined with volatile market conditions have helped increase demand for the government bonds, it said in a report. Among the central bank measures was one to issue non-negotiable certificates of deposit, which cut into the demand for central bank paper by investors looking for highly liquid sol-denominated instruments. Peru’s sol has appreciated strongly in recent years and especially since the start of this year, and the central bank has worked to ease brusque movements in the exchange rate by intervening to purchase U.S. dollars and more recently with other measures. (Dow Jones – click here to read complete article by Robert Kozak)

Copa Libertadores: Peru’s Cienciano tops Uruguay’s Nacional 2-1

Two second-half goals by Gustavo Vassallo gave Peru’s Cienciano a 2-1 win over Uruguay’s Nacional in Copa Libertadores Group 4 on Thursday. Vassallo scored in the 53rd and 67th minutes at Cuzco’s Garcilaso de la Vega Stadium at 3,300 meters (10,800 feet) above sea level, tiring the Uruguayan club. Mauricio Victorino’s goal two minutes from the end was Nacional’s only consolation. Nacional will stay in Peru to face Bolognesi on Tuesday in the southern city of Tacna. Cienciano plays Flamengo on Feb. 27 in Rio de Janeiro. (AP – click here to see article)

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