Emerging Market Study – Top 3 for business in South America. This presentation gives a brief information about the top 3 emerging markets in South America.

1. Emerging Market Study – Top 3 for business in South America
Submitted by
Saurav Das
International Business

2. THE PACIFIC ALLIANCE
• A trade bloc formed with few countries in
the Latin America.
• Currently includes 4 countries: Chile,
Colombia, Peru and Mexico
• The former president of Peru, Alan Garcia
was the back bone for this Alliance.
• 48 countries as observers
• In Oct 2016, two new members entered the
Alliance: Costa Rica and Panama.

3. Why Pacific Alliance?
• Declaration de Lima’, Peace agreement within the countries.
• Reduce trade barriers between the countries
• Visa-free travel
• Common stock exchange
• Having joint embassies in several countries
• Human capital training and oriented academic exchange
• Entrepreneurship and environmental protection (tourism)
• Sports diplomacy programs

4. Chile- Santiago

5. Overview of the Country
• 1USD= 659.3 Chilean Pesos
• Major Exports are Industrial inorganic Chemicals, Lumber and Wine
• Major Imports to Chile are Fuel oil, Industrial machinery.

6. Demography
• Population 17,094,270
• Growth rate is 0.8%
• Urban Population – 89.5% of population
• Life Expectancy - 79.57 years (Male- 76.26 years, Female- 82.96 years)
• Birth Rate- 13.7 births/1,000 population
• Death Rate- 6.1 deaths/1,000 population
Chile population growth rate is very low and large number of the population
live in urban areas

7. Macro-Economic Data
• A Free Trade agreement came in to picture between Canada and Chile in 1996 as the
trade increased by 226%.
• Chile received an A+ credit rating in 2011.
• Ease of doing business - ranked at 34th
• Chile GDP is 258 billion, at the growth rate of 2.9%
• GDP Per Capita is $14047 (2014)
• GDP contribution sector wise- 5.1% Agriculture, 41.8% industry, 53.1% Services.
• Chile Inflation percentage is 3.3%
• 11.7% of the population is below poverty line
• Unemployment rate is 6.9%
• Chile’s External debt is $140 billion.

8. Infrastructure, Natural resources and Industry scenario
• A robust project pipeline across, transport, social infrastructure,
residential, water and energy supports our positive outlook for
construction sector in Chile
Natural resources
• Chile is the world’s largest Copper producer.
• CODELCO which is largest copper company in the world once told that
Chile still has enough copper for another 200 years

9. Industry scenario
• In 2015 Economic slowdown of 2.5%.
• Fall in international copper prices was the main reason behind this.
• Industrial and service sectors, together contribute more than 96% of GDP.
• Those industries are copper, coal and nitrate industries manufactured
products like agro-food processing.
• In construction sector growth Chile government is highly supportive and
through public-private partnerships it created an open investment
environment

10. Economic
• Best growing economy and strongest in OECD.
• One third of GDP from exports.
• High dependence on exports of copper.
• Low R&D expenditure.
• government in Chile has a rule-based countercyclical fiscal policy to accumulate surpluses
in sovereign wealth funds.
Social
• Unemployment rates have decreased.
• Country with largest number of informal labour in Latin America and Caribbean.
• Seasonal and casual workers working under dangerous conditions without the basic
labour rights.
ENVIRONMENTAL ANALYSIS

11. Political or legal
• National Congress of Chile has approved a new law to reduce
business incorporation costs to zero.
• set up an online registration option thus reducing the time frame for
any business operation.
• Chile’s economic reform was strengthened when democratic
government took over military.
• The MSCI Emerging markets (EM) Latin America Index is used to
represent large and mid-cap representation across five emerging
markets in Latin America.

12. SWOT ANALYSIS
STRENGTHS
 Market oriented economy-high level of foreign trade.
 Reputation for strong financial institutions and sound policy.
 High level of exports.
 Strong and transparent financial system.
 Strong base of natural resources.
 More number of bilateral, regional trade agreements.
WEAKNESSES
 Volatile stock markets but they offer high returns.
 Cost of living is high.
 Cost of property going high.
 Short of low cost fuel, produces no oil and gas on its own.
 Difficult to get approval on new energy projects.
 Affected by corruption scandals and illicit financing of election
campaigns.
 Agricultural production accounts for less than 50% of their
domestic needs.
OPPORTUNITIES
 Entering the real estate market.
 Focus on faster delivery of goods and services.
 Invest in people other than the mining sector.
 Implement a package which stimulates public investments.
 Set up LNG terminals.
THREATS
 High dependence on exports on copper.
 Risk of emerging foreign exchange volatility.

13. Agricultural sector
• Open economy
• Geographic advantages
• Natural conditions
• International markets
• Fruit farming, diary, wine, meat sector etc. has huge scope.
Real estate sector
• More land in Chile than Hong Kong and Singapore.
• Demand for real estate sector likely to increase.
• the average "real" price of new apartments rose by 6.8% during the year to March 2016.
• In 2016, VAT of 19% will be imposed on sales of properties which will increase the property
prices.
Market suggestions for investment

14. Mode of entry to Chile market
• One of the best ways to enter the market is through the iShares MSCI Chile
Capped ETF (ECH) or the local know how positioned in the country can be of
use.
• For an accountant or a lawyer it would be feasible to get accredited in Chile
and then start their business.

15. COLOMBIA

16. Demography
• Colombia is rich in cultural diversity with Amazon rain forest, Tropical grasslands, Caribbean and
Pacific coast lines.
• Colombia is one of the 17 megadiverse countries in the world.
• The county’s population constitutes of 49,034,411 with 40.74 per sq kms as population density
• Area: 1,141,748 kms(sq)
• Largest cities includes Bogota, Medellin, Cali etc.
• Official Language: Spanish (and also English in Santa Catalina, San Andreas etc.)
• Literacy: 93.4% are educated
• Sex ratio as 1.03 male(s)/female

17. Macroeconomic Data
Economic Indicators 2011 2012 2013 2014 2015
Population (million) 46.0 46.6 47.1 47.7 48.2
GDP per capita (USD) 7286 7932 8060 7940 6044
Unemployment rate 10.8 10.4 9.7 9.1 8.9
Inflation rate 3.4 3.2 2.0 2.9 5.0
Public Debt (% of GDP) 33.2 31.7 34.9 37.7 -
Exports (USD billion) 56.9 60.1 58.8 54.8 35.7
Imports (USD billion) 51.6 56.1 56.6 61.1 51.6

18. Political
Resources
• Colombia’s exports include 69% of extractive sector as of 2011.
• Rich in petroleum and natural gas.
• Other precious metals like gold, silver, nickel.
• Resource Governance Index gave a score of 74, ranking 9th out of 58
countries.
• The Politics of Colombia take place in a framework of
a presidential representative democratic republic
• The President of Colombia is both head of state and head of
government, and of a multi-party system.

19. SWOT ANALYSIS
Strengths
 Sustained GDP growth – 4.7%
 Large population
 Low-cost labour
 High Foreign Direct Investment since
FDI in Colombia has grown more than
500% since 2001
Weakness
 Logistical short come
 Average Literacy rate
 Corruption
 Poverty accentuation inter-ethnic
tension
Opportunities
 Huge growth opportunities for Pharmaceuticals.
 Huge growth opportunities for construction sector
Threat
 Corruption, and unclear regulation
 No laws pertaining of
Intelectual property theft.

20. Market Suggestions
Healthcare
• Health issues is one of the major issue of Colombia.
• Diseases like Malaria affects almost 85% of the Colombian population.
• Indian pharmaceuticals companies can start their operations by collaborating
with the local firms.
Construction
• Colombian’s construction sector currently growing at 5%-7% of GDP.
• Almost 70% of people lives in cities but there is 40% housing deficit.
• Indian construction companies can invest in collaboration with the local
companies

21. PERU
• South American country
• Demography
• Resources
• Scope for growth

22. Macroeconomic Perspective

25. Political environment
• Experienced a great political change in the last 10 years because of the
impeachment of president Alberto Fujimori in 2000.
• After that the current president ollante Humla and former presidents Alenjandro
Toledo and Alan Gracia have significantly reduced the bribery, corruption and
stabilized the political climate for economic growth
• In late 2015, Peru’s trade volume is increased by around 172.5 %( $14,324 to
$39,036 million), which made Peru a more attracting country for Investors and it
increased the Peruvian economy
• Peru-United States Trade Promotion Agreement, 2009 and free trade agreement,
2011 guaranteed Peru for its good access to the United States and European
market respectively
• eliminated the tax complexity in many industries and reduced other technical
barriers between countries

26. Economic Environment
• Peru’s currency, Nuevo Sol has been increasing against the dollar for the past 7
years and
• in 2013 Peru’s government injected more than $10 billion to the private
investment.
• In the last decade Peru’s economy was the largest expanding economy in Latin
America.
• They could achieve an average GDP rate increase of 5.75% and in 2008 and 2009
they achieved a growth of 8.9% & 9.8% respectively, which is same as Chinese
growth.
• Even during the 2008-2009 recession the growth remained positive at .9% and
then went back to 8.8%.
• Peru gained recognition for ease of doing business and they have ranked 41st in
the World Bank survey, 2012

27. Social Environment
• Peru’s democratic republic divided in to 25 regions and has a growing population
rate of 1% to 2% since 1950.
• Peru succeeded on some of the social problems that affect the people and the
reason is the growth of the economy and strength of government.
• The major success in the last decade was reducing the poverty rate, which is
down from 53% to 31%.

28. Technological Environment
• In Peru, investment in infrastructure is advancing in rapid rate and it
enhanced the growth of Mining and gas industries.
• But there is a need of high electricity because of the presence of
mining industry.
• The success started in 1993, when the economy is privatised and
there are more than 15 internet providers and variety of television
and radio stations.

29. Swot analysis
STRENGTHS
 Natural resources:
1. Oil, natural gas, minerals etc.
 Mining ,energy , agricultural and fishing resources
1. Mining is the No.1 industry in Peru and Largest producer of metals in Latin America.
2. Agriculture is the No.2 industry in Peru and plenty of Good fertile land and good weather
 Low public debt
 Independent central bank and good banking system
 Attractiveness for tourists
1. Historical sites-MachuPichu, Cusco, Sacsayhuaman
2. Local culture-Clothes and Art crafts
3. Food culture-Exotic dishes
WEAKNESS
 Natural resources depend economy
1. Mining exports are subject to volatile commodity prices
 Dependence on Chinese demand
 High poverty and unemployment rates
 Inadequate infrastructure, health care and education
 Drug trafficking and crimes
OPPERTUINTIES
 Tourism Growth
 Different agreement signed with different countries.
E.g.: Free trade agreement with Europe
 Attractive to investors
THREATS
 Growing competition and lower profitability
 Rising cost of raw materials
 Disparity between classes
 Trade Disputes
 Policy failures: dependence on developed countries

30. Which Indian industry will you suggest for Peru and why?
• In the last decade Peru has established itself as a world’s most interesting tourism
destination and the rate of international arrivals to the country have tripled,
growing from a total of 993,706 in between January and September 2005 to 2.6
million in the same period of 2015.
• The sector profit also increased from $1.2 billion in 2004 to $3.9 billion in 2013,
declining slightly to $3.8billion in 2014
• First half of 2015 has seen a 7.9% rise in foreign arrivals.
• The quarter of 2015 witnessed a 1.6 million visitors and it creating 1 million jobs
annually

31. COUNTRY NAME NUMBER OF VISITORS
 CHILE
 US
 ECUADOR
 ARGENTINA
 SPAIN
 FRANCE
 GERMENY
 ITALIAN
 JAPAN
 SOUTH KOREA
85,0000
514,227
223,995
155,931
131,174
82,260
69,703
55,109
59,853
17,265
By ministry of Foreign trade
and Tourism, 2015

32. • The increase growth in the tourism sector will lead to high
opportunities in hotel management.
• Between 2014 and 2021 more than 100 new hotel project are
expected to be develop in the country.
• The hotel sector definitely benefit from the growing tourism sector
and international hotels are coming to invest in Peru.
• For example the French group Accor, which have 3 hotels in Peru has
going to add 10 more hotels in 2017.
• International hotel group JW Marriot also have good presence in the
country.
• Currently in Peru there is no high Indian chain of hotels and resorts.
• Mumbai headquartered TAJ hotels and resorts have a presence in
Asia, Africa and North America and they have a good opportunity in
Peru also.

33. Continent Country Town / City / Location Hotel Name
Africa South Africa Cape Town Taj Cape Town
Africa Zambia Lusaka Taj Pamodzi
Asia
India
Bangalore The Taj West End
Gwalior Usha Kiran Palace
Hyderabad Taj Falaknuma Palace
Jaipur Rambagh Palace
Jodhpur Umaid Bhawan Palace
Kolkata Taj Bengal
Mumbai The Taj Mahal Palace
New Delhi The Taj Mahal Hotel
Maldives Malé Atoll (South) Taj Exotica Resort & Spa
Sri Lanka Colombo Taj Samudra
North America United States
Boston Taj Boston
New York City The Pierre
San Francisco Taj Campton Place

34. Thank you