AmCham Peru

INDEX

 MACROECONOMIC INDICATORS

 BUSINESS ENVIRONMENT

 U.S. – PERU ECONOMIC RELATIONS

 ABOUT AMCHAM PERU

MACROECONOMIC INDICATORS

GEOGRAPHY AND DEMOGRAPHY

Population:
• 29.4 millions (2011)
• 0-14 years: 29.6% (2011)

Area:
• Total: 1.285.215,6 km2
• Coast: 11,7%
• Highlands/Andean: 28,4%
• Jungle: 59,9%

Life expectancy at birth:
• 74 years (2011)


Peru in the regional context:
2011 48,000
Country GDP Population GDP per Capita Foreign Direct Investment (FDI) in Latin America &
(Billion US$) (Millions) (US$)
United States 15,227.07 312.891 48,665.81
Caribbean, 2010
38,000 (in US$ millions)
Brazil 2,421.64 194.933 12,422.94
Mexico 1,167.12 109.713 10,637.95
Argentina 456.817 40.900 11,168.98
Colombia 307.845 46.052 6,684.78 28,000
Venezuela 294.271 29.767 9,885.86
Chile 231.302 17.399 13,294.33
Peru 167.846 30.009 5,593.14
18,000
Ecuador 65.032 15.005 4,334.08
Dominican Republic 54.912 10.052 5,462.81
Guatemala 46.383 14.708 3,153.67
Uruguay 43.265 3.369 12,843.72 8,000
Costa Rica 40.297 4.626 8,710.96
Panama 29.799 3.590 8,299.70
El Salvador 23.169 5.904 3,924.08
-2,000
Mexico

Haiti
Brazil

Uruguay

Honduras
Panama

Dom. Rep.
Colombia

Nicaragua
Guatemala

Venezuela
Peru

Paraguay
Bolivia
Argentina

Costa Rica

Ecuador
El Salvador
Bolivia 22.778 10.629 2,143.05

Chile
Paraguay 22.143 6.530 3,390.94
Haiti 7.724 10.013 771.373
Nicaragua 7.05 5.889 1,197.24
Source: IMF
Source: ECLAC / United Nations (UN)


According to Perú: PBI
(Var. Anual %)
the IMF, Peru
12.0
will have the 9.8 8.8
10.0 8.9

Porcentaje
highest GDP 8.0 6.8 7.7 6.9
growth rate in 6.0 5.04.0
5.0

Latin America in 4.0
2.0 0.2 0.9
2012
0.0 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: BCRP

Source: BCRP
GDP Growth estimate
2012: 6.3%
2013: 6.9%


TRADE

PERU: Trade Balance Top destinations of exports in 2011
1. China
2. United States
50,000 Imports Exports Trade Balance 46,268 3. Switzerland
4. Canada
40,000
31,019
35,565
5. Japan
28,094
Million US$

30,000 26,962
23,830

20,000
12,809
17,368
Top origins of imports in 2011
10,000 7,026
7,714 9,091 1. United States
2. China
0
3. Brazil
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 4. Ecuador
5. Argentina

Source: SUNAT


TRADE: A CLOSER LOOK
Composition of the Export Basket in 2011

Destination for Traditional Exports
1. China 15%
2. United States 13%
Destination for Non Traditional Exports
3. Switzerland 13%
4. Canada 9% 1. United States 23%
5. Japan 5% 2. Venezuela 9%
3. Colombia 8%
4. Ecuador 6%
Number of Tariff Items 5. Chile 6%
1. United States 2,305 10. China 3%
2. Canada 804 18. Japon 1%
3. Japan 702 19. Canada 1%
4. Suiza 421 Source: SUNAT
5. China 358


TRADE: A CLOSER LOOK
Composition of the Origin of Consumption Goods
Import Basket in 2011 1. China 15%
2. Colombia 13%
3. United States 13%
4. Colombia 9%
5. Mexico 5%

Origin of Non Consumption Goods
(Raw and Intermediate Materials,
Capital Goods, Construction Material)
1. United States 9%
2. China 6%
3. Brazil 3%
Source: SUNAT

Macroeconomic indicators

Best performing Peru: GDP by economic activity
Annual % variation 2008 2009 2010 2011
economic sectors in Agriculture 6.7 2.3 4.3 3.8
2011: Agriculture and agroindustry 6.6 0.9 4.2 2.8
Livestock 6.9 4.4 4.4 5.2
Fishing 6.2 (7.7) (16.6) 29.7
Mining and hydrocarbons 7.6 0.4 (0.8) (0.2)
• Fishing Metallic mining 7.3 (1.4) (4.9) (3.6)
Hydrocarbons 10.3 16.1 29.5 18.1
• Hydrocarbons Manufactures 8.5 (7.2) 13.6 5.6
Primary resources processing 7.6 0.0 (2.3) 12.3
• Primary resources Non primary 8.7 (8.5) 16.9 4.4
Electricity and water 7.7 1.2 7.7 7.4
processing Construction 16.5 6.1 17.4 3.4
Commerce 12.8 (0.4) 9.7 8.8
Other services 9.0 3.8 8.7 8.3

Source: INEI


Agroindustry Mining
• 1st world producer of fish meal • 1st world producer of silver
• 1st world producer of paprika • 2nd world producer of copper and zinc
• 2nd world producer of asparragus • 3rd world producer of tin
• 2nd world producer of artichokes • 4th world producer of lead
• 6th world producer of coffee • 6th world producer of gold


Inflation Among the lowest
expected inflations in LA
(Annual % var.)
& the Caribbean
according to the IMF
8.0 6.7
6.0
Percentage

3.9
4.0
2.5
3.5 2.1 Inflation estimates
2.0
1.5 1.5 1.1
0.0 0.3 2011= 3,3%
-2.0 2012 = 2,5%
2002

2003

2004

2005

2006

2007

2008

2009

2010
Source: IMF

Source: BCRP


Exchange Rate PEN/USD Exchange Rate PEN/USD
Year
(Annual Average)
(Annual % Var.)
2001 3.51
2002 3.52
2003 3.48 10.00
2004 3.41
2005 3.30
2006 3.28 Percentage 5.00 2.73
2007 3.13 0.52 0.27
2008 2.93 0.00
2009 3.01
2010 2.83 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-5.00 -1.09 -1.88 -3.43 -0.67 -4.45
-6.50 -5.98
Exchange Rate 1/ -10.00

2011: 2,60
PEN/USD Source: BCRP

The Peruvian Nuevo Sol (PEN) is one of the
BCRP
most stable currencies in the world


Private Fixed Investment in Peru
(As % of GDP)

24.0
22.0
20.0
Efective
19.2
19.9
P.F.I estimates
Expected
Percentage

18.0
2012 = 21.2%
16.0
14.0 2012 = 21.4%
12.0 Source: MEF
10.0
1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
Source: BCRP

For every 1% annual variation in Private Fixed Investment,
there is a direct 0.25% variation in GDP.


Net International Reserves amount to US$62.2 billions (Oct 2012)

• Peru’s foreign debt is US$ 36.6 billions (58.9% of NIR)

• Peru’s NIR represents 32% of the GDP

• This NIR ratio doubles some of the region’s leading economies:
Brazil (15.6%), Chile (14.8%), and Mexico (13.9%)

• It triples Colombia’s ratio (9.8%).


Country risk
(Stripped spread in basic points)
800

600
Peru
400 380
Latin EMBI+

200
187
0
J- M M J S N J- M M J S N J- M M J S N J- M M J S N J- M M
07 08 09 10 11
Source: BCRP
Country S&P Fitch Moody's
Chile AA AA- Aa3

Peru holds Investment Mexico A- BBB+ Baa1
Brazil A- BBB Baa2
Grades from all three top Peru BBB+ BBB+ Baa2
rating agencies Colombia BBB+ BBB Baa3
Venezuela B+ B+ B1
Argentina Bu B B3
Bolivia B+ B+ B1
Ecuador B- B- Caa2


Lima Stock Exchange: the 3rd most profitable stock market in
the world in 2010

65%
World Stock Markets Average Return, (%)
60 2010
51.83
50

40 37.59
33.57

30
20.02
18.63
20 16.9116.06
12.7811.03
9
10 5.32
1.04
0

Hong Kong
Frankfurt

London

São Paulo

Euro
Santiago
Lima

Caracas

Shanghai
B. Aires

Bogotá

NY S&P 500

Madrid
NY NASDAQ

NY DJ
Mexico

Tokyo
-3.01
-10 -5.85

-14.31
-20 -17.43

Source: Bloomberg


All this has contributed to drive more than 3 million people out of
poverty over the past 7 years

Poverty and GDP growth
12 60

49 49 9.8
10
45 8.9 8.8 50
Real growth rate (%)

39

% of population
8 7.7 36 40
6.8
35
31
6 5 30

4 20

2 0.9 10

0 0
2004 2005 2006 2007 2008 2009 2010
GDP growth Poverty
Source: BCRP and INEI

BUSINESS ENVIRONMENT

EFTA
Russia
Canada European
Union
U.S.A. Japan
China
Mexico Morocco Korea
India
ACE 8
Central America CARICOM Thailand Vietnam
Andean Community Singapore Brunei

MERCOSUR
ACE 58 Australia
Chile South Africa

Access to several markets New Zealand

Ongoing agreements Close to start negotiations
Signed agreements Future negotiations
Under negotiation process


GLOBAL COMPETITIVENESS INDEX (2011-2012)
Structural
Problems:
Colombia
Institutions Chile
LA Average
• Lack of Infrastructure
7
Innovation Infrastructure Peru (mainly transport)
5
• Poor health system;
Business Sophistication Macroeconomic Environment
3 bureaucratic burden;
1 weakness of institutions
Market size -1 Health and Primary Education • Bad quality education;
absence of innovation
and technology
Technological Readiness Higher Education and Training
• Restrictive labor
regulations
Financial Market Development Goods and Market Efficiency

Labor Market Efficiency
• Inneficient judicial
system
Source: World Economic Forum (WEF)
• Corruption
• Informality


LEGAL
SYSTEM
 Constitutional provisions for private property
 Non-discriminatory treatment for international investors
 Irrestrictive access to most economic sectors
 No performance requirements
 Free transfer of capital
 Free competition
 Freedom to purchase stocks and bonds from locals
 Freedom to access internal and external credit
 Free remittance of profits, dividends and royalties


TAXES Tax Rate
30%
Corporate profits Agriculture and
aquaculture 15%
INCOME
Dividends 4.10%
Royalties 30%
Interest rate on loans form abroad 4.99%
Value Added Tax (VAT) 18%
Financial Transactions Tax (ITF) 0.005%
Temporal tax to net assets (ITAN) for more
0.4%
than S/. 1'000,000
Varies up to 125% for a
Excise tax (*)
few products

* Fuels, luxury goods, liquors and cigarettes

U.S. – PERU ECONOMIC RELATIONS


Peru - U.S.: Trade Exchange
(US$ millions)
TRADE 7,000
Exports 5,625 5,836 5,720
6,000 5,341 5,556
United States is Peru’s top 5,000 Imports 4,729

4,000 Trade Balance 3,563
trading partner for both
3,000 2,410
exports and imports (18% of 2,000
1,751 1,980

total trade exchange) 1,000
0
-1,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Main products exported to the U.S. in 2010 Main products imported from the U.S. in 2010
Copper cathodes, minerals (gold, molybdenum, Petroleum-based products (diesel mainly), wheat,
tin, zinc, silver), petroleum-based products, dumping lorries, hard yellow corn, polyvinyl chloride
coffee, asparagus, cotton apparel, artichokes, (PVC), Polyethylene, steel scrap, cotton, soy oil, digging
liquefied natural gas, grapes, shrimp tails, sugar, machines, acrylonitrile, self-propelled front-end shovel
paprika, jewelry, scallops, mangoes, etc. loaders, vaccines for human medicine, etc.

Source: SUNAT


United
States is
also Peru’s
main
foreign
investor


Nowadays,
American
investment is
more diversified
and keeps
increasing its
share in more
economic
activities.


U.S. COMPANIES OPERATING IN PERU
• AmCham Peru groups 137 American companies from different economic sectors
(banking, mining, energy, pharmaceutical, telecommunications, food, software, etc.).
• U.S. based Hunt Oil has made the largest single investment in the history of Peru (US$
3.8 billion invested in a natural gas export project).
• American companies with the largest operations in the Peruvian market:

ABOUT AMCHAM PERU

MISSION

The American Chamber of Commerce of Peru (AmCham Peru) is an
organization representing American, Peruvian and non-American foreign
businesses. It promotes the free market system, fostering trade and
investment between Peru and the United States, within a framework of social
responsibility, values and business ethics

ABOUT AMCHAM PERU

 AmCham Peru has nearly 3,000 associates, representing 580
companies

 AmCham Peru gathers companies that:
 Sell a total amount equivalent to 60% of Peru’s GDP

 Pay more than 60% of the annual Income Tax
 Nearly 30% of them are American companies that have
invested more than US$13 billions in assets in Peru

ABOUT AMCHAM PERU

All AmCham Peru members are part of the
Association of American Chambers of Commerce in
Latin America (AACCLA)
• 23 chambers of commerce
• 21 countries in Latin America and the Caribbean
AACCLA is made up of more than 20,000 members
• 85% of the investments in the region

AmCham Peru is also part of the United States
Chamber of Commerce (USCC)
• The world’s largest federation of businesses
• More than three million members

ABOUT AMCHAM PERU

Executive Board
Presided by the Ambassador of the United States

Executive Director
Aldo Defilippi

Government and Legislative Relations
Monitoring and follow-up on policies and legislation that impacts trade,
investment, and the interests of AmCham’s associates

Economic Analysis
Analysis of economics, political and social contexts that impacts trade,
investment, and the interests of AmCham’s associates

Corporate Communication
Communication and promotion of the work done by AmCham

AMCHAM PERU ORGANIZATION

TRADE CENTER
Through the Trade Center, AmCham promotes commercial exchange and businesses
between Peruvian and American entrpreneurs, in order to increase our associates imports
and/or exports, and to identify business opportunities in both markets.

SERVICES

• Permanent commercial orientation • Participation in fairs and missions
• Data base of American buyers and suppliers • Capacity-building workshops and
• Information publication on importing and seminaries
exporting


ABE (ASSOCIATION OF GOOD EMPLOYERS)

ABE is a Corporate Social Responsability initiative that seeks to promote good employer
labor practices.

MISSION
To associate firms known for the respect towards their personnel, through a
certification process and their compromise to fulfill the standards established by the
Association and to demand the same sort of internal practices from their suppliers, in
order to improve the quality of employment in the country, and, consequently,
enhance national productivity.


ARBITRATION CENTER
AmCham Peru’s Arbitration Center believes not only in the necessity of generating
mechanisms to guarantee legal certainty and stability, but pledges to ensure that
such mechanisms are abideded by arbitrators, lawyers and parties, creating a
reliable space for conflict resolution.

WHAT WE DO?

TRADE AND INVESTMENT FACILITATION,
PROTECTION AND DEFENSE OF INTERESTS

Committees
• Alumni USA • Infrastructure, Energy, and Mining
• Executive Assistants • Internet
• Association of Good • Marketing
Employers
• Intellectual Property
• Economic Affairs
• Human Resources
• Financial Affairs
• Supply Chain Management
• Legal Affairs
• Tecnology and Communications
• Labor Affairs
• Tourism
• Tax Affairs
• OSAC – Overseas Security Advisory
• International Trade Committee
• Sustainable Development

WHAT WE DO?


Events

• AmCham organizes and holds around 300
events each year.
• In 2011
• 281 meeting events (forums,
luncheons, work groups, committees)
• 6 missions trade abroad, and hosted 6
foreign missions.
• International Arbitrarion Diplomate, and
negotiation workshops.

WHAT WE DO?


Publications

CONTACT
Trimestral bilingual magazine on business and
economics.

AMCHAM NEWS
Monthly bulletin with analytical articles and
monitoring of legislative activities.

AmCham Peru

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