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U.S. Department of State
Peru Country Commercial Guide
Office of the Coordinator for Business Affairs
Country Commercial Guide
Peru
Fiscal Year 1996
This Country Commercial Guide (CCG) presents a comprehensive look at
Peru's commercial environment through economic, political and market
analyses.
The CCGs were established by recommendation of the Trade Promotion
Coordinating Committee (TPCC), a multi-agency task force, to consolidate
various reporting documents prepared for the U.S. business community.
Country Commercial Guides are prepared annualy at U.S. Embassies through
the combined efforts of several U.S. governement agencies.
I. Executive Summary
The time to look at the Peruvian market is now. After nearly 25 years
of negative per capita GDP growth, Peru was the fastest growing country
in the world in 1994 and will be the fastest growing in Latin American
in 1995. Inflation will hover at around 10 percent, unemployment at
around 9 percent. Imports will exceed exports by almost $2 billion with
the U.S. share of the market at approximately 20 percent.
The landslide reelection of President Fujimori and diminished terrorist
activity allow Peru to continue with its disciplined economic course.
An ambitious program of privatization will add resources to a budget for
1995 which contains significant increases for infrastructure, energy and
health. This program which has privatized 90 enterprises since 1991,
will continue to offer investment opportunities this year in petroleum,
mining, electric power generation and distribution, water/waste water,
ports and railroads. Peru's liberal investment laws offer "national
treatment" to all investors.
In addition to investment opportunities, U.S. companies looking for
representation in Peru should act now to locate the best agents or
distributors. U.S. products and services are well-regarded in the
market and Peruvian companies are interested in expanding their business
ties with the U.S. Sectors offering the best opportunities for U.S.
products are: construction equipment, mining equipment,
telecommunications, oil and gas, medical equipment, computers and
peripheral equipment, auto parts, food processing and packaging,
agricultural machinery and franchising. If you plan to visit Lima, we
recommend you use the Gold Key Service offered by the commercial section
to prepare your meetings while in Lima.
The agricultural sector also provides good opportunities for U.S.
business. The livestock sector is expected to show the strongest
growth, as producers, backed by government programs, continue to
increase herd and flock size. Opportunities for grains, animal
genetics, and meat will be strong. One of the fastest growing sectors,
however, is processed foods. Imports of U.S. processed foods, such as,
snacks, cereals, beverages, nuts, etc. have gone from $ 8.5 million in
1990 to $21 million in 1994.
Peru offers opportunities for all types of U.S. business. The U.S.
Embassy in Lima is ready to help you capitalize on these opportunities.
Country Commercial Guides are available on the National Trade Data Bank
on CD-Rom or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate Country Commercial Guides via
the Internet, please use the following world wide web address:
www.stat-usa.gov. CCGS can also be ordered in hard copy or on diskette
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS.
II. Economic Trends and Outlook
Major Trends and Outlook
Peru's economy continued improving in 1994, achieving a GDP growth of 13
percent (versus 6.5 percent in 1993), the highest growth rate in the
world for that year. Inflation has dropped from 7,650 percent in 1990
to 15.4 percent in 1994 as a result of tight monetary and fiscal
policies. For the first five months of 1995, GDP was up 10 percent
compared with the same period of 1994, and indications suggest overall
1995 growth could exceed 8 percent. The IMF letter of intent calls for
1995 economic growth of 6-7 percent. The Fujimori Administration hopes
to achieve single-digit inflation in 1995, but if trends for the first
five months of the year continue, the result could be around 12 percent.
The IMF letter of intent calls for a CPI increase of 9-11 percent in
1995.
Principal Growth Sectors
In 1994, the construction sector turned in the strongest performance,
growing 34.7 percent above the previous year. The fisheries industry
also surged ahead in 1994, increasing 31.5 percent. Other sectors
reporting significant growth included manufacturing (17.1 percent),
commerce (17 percent) and agriculture (13.2 percent). The mining sector
grew 4.3 percent overall with metals up 7 percent and petroleum 0.9
percent. The petroleum sector achieved steady growth through the first
seven months of 1994 but declined during the balance of the year.
Through the first five months of 1995, construction continued to lead
other sectors, growing 32.8 percent. Commerce and agriculture also
performed well, increasing 15.0 and 12.2 percent respectively. Mining
increased 4.2 percent, thanks to a 10.5 percent growth in the metals
sector. Although the petroleum sector was down 4.1 percent in the first
five months of 1995, the industry should start rebounding by the end of
the year as output from new development wells is projected to increase.
Government Role in the Economy
Since coming to power in July 1990, the Fujimori administration has
liberalized trade, investment and foreign exchange regulations.
Fujimori's economic restructuring program also has eliminated domestic
deficit financing through tax reform, corrections in public prices and
expenditure control including elimination of subsidies. The government
has attained major successes in the pursuit of its goal of privatizing
all state-owned enterprises. In 1994, the GOP sold 29 companies for
$2.6 billion. The privatization program was put on hold temporarily
during the run-up to the April 1995 presidential and congressional
elections but has since gotten back on track. President Fujimori has
promised to continue the economic restructuring program into his second
five-year term which will begin on July 28, 1995.
The GOP's 1995 budget totals $9.68 billion, an 18 percent increase in
real terms over 1994 and about 16.8 percent of projected GDP. Sectors
receiving an increase in budget include health, energy, and general
infrastructure.
Balance of Payments Situation
Peru's balance of payments position improved in 1994 as record capital
inflows offset by a large margin a $2,261 million current account
deficit. Merchandise imports totaled $5,611 million in 1994 against
exports of $4,502 million, resulting in a trade deficit of $1,109
million, the largest such deficit since 1989. Net financial services
(i.e., interest payments on debt) totaled $1,011 million in 1994,
including $223 million or 22 percent paid by the private sector. A net
outflow of $614 million was reported for non-financial services, the
lowest level since 1991. Freight, insurance and communications
accounted for the bulk of expenditures for non-financial services.
Earnings from tourism rose 50 percent in 1994 to $402 million, exceeding
for the first time since 1991 outflows from Peruvian tourists. Net
transfer payments for Peru were $473 million, the highest level since at
least 1970.
In 1994, long-term capital flows into Peru were a record $3,652 million,
195 percent above 1993. The lion's share stemmed from privatization
sales which brought $2,054 million to the GOP's coffers, against only
$160 million in 1993. Foreign investment in the Lima stock market also
rose sharply in 1994, raising the intake of capital further.
Peru's exports were up a respectable 36 percent in the first two months
of 1995 but they lagged well behind imports, which jumped 51 percent.
Growth in imports could slow by the third quarter, ending the year
around 34 percent above the 1994 level. At the same time, exports could
slow down (with the recent reduction in key commodity prices), ending
the year about 27 percent above 1994. The ratio of capital goods to
total imports should remain approximately 30 percent. As in the past, a
large portion of those goods will be purchased by foreign-owned
companies undergoing modernization, which means they will not put an
undue burden on the country's ability to service its debt. Since the
majority of companies importing capital goods are also exporters, the
end result is expected to be a more favorable trade balance down the
road.
Inflows of capital for direct and portfolio investments are expected to
offset almost three-quarters of Peru's 1995 current-account deficit.
With those inflows and an estimated $1,800 million of short-term
capital, Peru could report a net capital inflow of $1,200 million in
1995, against $3,118 million in 1994.
In 1995, Peru's debt payments (both principal and interest) could rise
slightly if the government negotiates a Brady Plan restructuring of its
overdue commercial bank debt (estimated at $6-9 billion). At the same
time, a Brady Plan would almost certainly include a substantial amount
of debt relief for Peru.
Infrastructure Situation
The distribution of goods and services outside Peru's capital city of
Lima is a major problem for the economy and development of certain
sectors, especially agribusiness. The transport sector is in poor shape
due to long neglect, but efforts are underway to remedy the situation.
In 1994 the IDB funded a $210 million loan. The GOP also contributed
with $90 million to rehabilitate Peru's Pan American Highway as well as
the Lima-Huanuco highway. The IDB approved in March 1995 a loan of $420
million to rehabilitate the transportation infrastructure which includes
2,000 km of highways and 2,500 meters of bridges. The Government is
projecting an investment of $5,800 millions for the next ten years for
transport infrastructure. The GOP recently negotiated a $242 million
transport infrastructure loan that would include funds for the rail
system and airport runway upgrading as well. The railroad system
(Enafer) is slated to be privatized, as are the seaports.
Air transport is the only means to convey goods to many areas not served
by the Pan American and Central Highways. The airline industry has been
liberalized in recent years and domestic air fares are set by market
forces. A number of small airlines have begun passenger and cargo
flights throughout the country since 1991.
In 1995, Peru had the lowest telephone density in Latin America at 3.0
per 100 inhabitants. Modernization of the telecommunications system is
progressing, through the privatization of the phone system. In May
1994, Telefonica of Spain acquired the formerly state-owned
telecommunications companies CPT and Entel with a commitment to invest
$1.5 billion over five years to expand and improve service. The two
companies were formally merged in December 1994, allowing Telefonica to
reduce overhead and improve efficiency. The first digital lines were
installed in August 1994. By 1998, Telefonica plans to have installed
or replaced 1.9 million lines, of which 96 percent will be digital. The
company is also installing a fiber-optic network, with the main branch
along the Pacific coast to be completed in 1995.
Peru suffers from an over reliance on hydropower, which leads to
sporadic power outages, especially in times of drought. Strong economic
growth has brought in an increased demand for electricity. The
government has estimated that, if demand continues to grow at the
present rate, there will be a power deficit of 100 megawatts by 1996.
The power utilities are being privatized and the government is
encouraging foreign investment in new electrical-generating plants.
Water-supply infrastructure in Lima and throughout Peru is decrepit and
unreliable. The water and sewage utility for Greater Lima (Sedapal) is
being privatized and the World Bank, the International Finance
Corporation, and the Japanese Government have provided a total of $375
million in financing to upgrade the system.
III. Political Environment
Peru is a republic with a dominant executive branch headed by President
Alberto Fujimori, who was first elected in 1990 and won reelection by a
landslide in 1995. The President appoints a number of ministers to
carry out and oversee the work of the executive branch. The legislative
branch is a unicameral congress with 120 members elected at large. Like
the president, they serve five-year terms.
Major political parties include President Fujimori's rather loosely
organized "Cambio 90/Nueva Mayoria," which holds a majority in the new
congress; the equally loosely organized "Union por el Peru" whose leader
is former UN Secretary General and presidential runner-up Javier Perez
de Cuellar; and the quasi-socialist "American Popular Revolutionary
Alliance (APRA)". There are a number of smaller parties with seats in
the congress, including the socialist/marxist "United Left," centrist
"Accion Popular," center-right "Partido Popular Cristiano," and the
"Frente Independiente Moralizador". APRA and Accion Popular currently
control most of the country's municipal governments. Nationwide
municipal elections will be held in November 1995.
U.S. policy in Peru reflects varied goals: the strengthening of
democracy, fostering respect for human rights, the curtailment of
illegal narcotics trafficking, supporting U.S. businesses and citizens,
and encouraging sustainable development. The United States development
and humanitarian assistance program is currently the largest in South
America.
There has been considerable progress in Peru's human rights record
during the last few years as the level of political violence has
declined, The numbers of political disappearances and extrajudicial
killings have dropped dramatically since 1992. Nonetheless, the U.S.
government remains concerned about continued arbitrary detentions, lack
of due process, reports of torture of detainees and limited prosecution
of those government and military officials accused of abuses.
Armed conflict broke out between Peru and Ecuador in January 1995 over a
portion of the undemarcated border. Casualties for both sides were
about 100 to 150 killed. A cease-fire was agreed to in February 1995,
and is still respected. The U.S., along with Argentina, Brazil, and
Chile, are guarantors of the Peru-Ecuador 1942 border treaty and are
supporting Peruvian and Ecuadorian efforts to end the border conflict.
The security situation has improved considerably since the September
1992 capture of terrorist leader Abimael Guzman. However, Peru's two
terrorist groups, Sendero Luminoso and the Tupac Amaru Revolutionary
Movement, although seriously debilitated by the capture of their top
leaders, have not been defeated. Both groups continue to carry out
terrorist activities, including attacks on foreign businesses and
diplomatic missions.
For up-to-date information regarding the security situation, contact the
U.S. Department of State or U.S. Embassy in Lima.
IV. MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
The population of Peru is extremely centralized, with 30% of all
inhabitants living in the capital city of Lima. Therefore, most sales
occur in Lima, but opportunities exist in other major population centers
which should be part of an overall marketing strategy. Representatives
in Lima will have sales agents in these cities, thereby maintaining
constant communication.
The most common method of distribution, is the acquisition of a strong
and qualified representative. Appointing an agent or distributor is
advisable if your company is seriously considering entering the market.
At present, U.S. companies are finding good success in locating
qualified local agents.
An alternative approach in distribution, is to establish a local
subsidiary or branch office. This method can create the best opportunity
for you to give effective service and aggressive promotion of your
product. Expenses for commercial and industrial space are rapidly
rising in the Lima area, which could make this an expensive option.
Use of Agents and Distributors - Finding a Partner
Customarily, suppliers enter the Peruvian market by appointing an agent,
distributor, or wholesaler. Most are located in Lima with branch offices
in the other main cities such as Arequipa, Trujillo, and Tacna.
Peruvian law does not require the use of local distributors for either
private sector commercial sales or for sales to the government.
Nevertheless, it is advisable to have a representative "on the ground"
to keep up with the latest opportunities and developments.
You should be thorough in the selection of an agent or a representative.
You may wish to take advantage of U.S. Department Commerce services by
contacting you local Commercial Service Office in the U.S. These
include the Agent/Distributor service (ADS), which helps identify
interested agents and distributors, and the Customized Marketing Survey
(CMS).
Franchising
Since 1993, franchises have expanded in Peru, although the country still
presents fresh and challenging grounds when compared to other Latin
American countries such as Mexico, Brazil, and Argentina, where
franchising has already matured.
Peru's economic situation, open market mentality, credit access, and
receptivity to foreign investment offers an excellent opportunity for
franchising companies. Economic growth is leading to a faster-paced
society, creating a growing market for fast food and other services. In
fact, most franchises started in Lima are in the fast food sector,
including Burger King, Kentucky Fried Chicken, Domino's Pizza, and Pizza
Hut. McDonalds will enter the market in 1996.
There is no special legislation for franchising. So far, franchise
companies operating in Peru are subject to regular trade laws. There is
a withholding tax on royalties and other off-shore charges, value added
tax of 18 percent and import tariffs of 15 percent.
Unaddressed markets for franchising are in the areas of automotive,
cosmetics, repair and rental services, cleaning (home and industrial),
hotels/motels, clothing store, fitness centers, real state business,
pharmacies, supermarkets, etc.
Direct Marketing
Direct marketing is fairly well-established in Peru in the service
sector, especially among financial institutions and seminar organizers.
One common practice is to hire personnel for telemarketing and mailing
campaigns or to contract these services from specialized firms. Data
bases for direct marketing are zealously guarded thus are not readily
available. Nevertheless, commercial information can be obtained through
the chambers of commerce and trade associations (See Section X, Appendix
E: U.S. Country Contacts).
Catalog sales for consumer goods in Peru is almost non-existent because
of the high degree of mistrust in the quality of the product and the
impossibility of obtaining warranty claims approvals if the good
purchased is not entirely satisfactory to the customer.
Joint Ventures/Licensing
Peruvian law allows for joint ventures and licensing agreements with a
legally established local partner who will be accountable for all legal
matters. Peru is just beginning to integrate itself into the global
commercial network making it attractive to potential joint ventures and
licensing agreements. This is especially true in activities where local
manufacturing or finishing assembly capacity for products whose market
price is strongly affected by shipping costs.
The textile manufacturing industry in Peru is rapidly becoming an
attractive center for licensing and joint ventures. Productivity has
increased through modern technology which has resulted in significant
production in exports for very wellknown clothing brands. Peru offers
qualified labor and competitive production costs which makes it
extremely attractive for local production.
Steps to Establish an Office
Foreign corporations that establish business in Peru permanently do
business within the country, or acquire real state in Peru must be
registered in the Peruvian Mercantile Register. To comply, the
following documents must be provided:
1. Copy of the charter and bylaws of the corporation.
2. Copy of the stockholders' resolution appointing directors.
3. Copy of the directors' resolution to establish the branch in Peru.
This resolution should specify:
- Amount of assigned capital,
- Duration of the branch (may be indefinite) and the commencement of
the operations; and,
- Name of person(s) authorized to act in the registration of the
branch and its representation and powers vested in him.
4. The corporation's legal existence must be certified by a Peruvian
attorney in accordance with the laws of the country of incorporation.
Documents 1 and 3 require certification by a public notary or
appropriate government official in the country of incorporation. The
signatures have to be authenticated by a local Peruvian consul. The
documents should be in Spanish, but if not, they must be translated by
the ministry's official translator.
Fees payable upon registration are as follows:
1. Registry fee of approximately 3 percent per million on the amount of
the assigned capital.
2. Translation fees.
3. Notarial and legal fees and expenses.
The affiliate is directed by the holder of the parent corporation's
power of attorney, duly registered. Such power can be revoked anytime
by the parent corporation. There is no regulation that requires the
parent company to submit its financial statements. It is advisable that
all companies that wish to operate in Peru seek legal assistance from
reputable lawyers to ensure that their operations are within the
framework of the legal system. They should be aware of matters
concerning taxes on corporate income, corporate residence, branch
income, business equity tax, value-added taxes, income determination,
capital gains, intercompany dividends, stock dividends, depreciation and
depletion, net operating losses (tax losses), payment to foreign
affiliates. Other significant points such as workers participation, tax
incentives, withholding taxes, municipal operating permits, vacations
and general labor laws that will affect the business as it starts
operating must be considered.
Limited Liability companies (Empresas de Responsabilidad Limitada) is a
form of business organization that is a legal entity different from its
owner, who must be an individual and whose business liability is limited
to his capital contribution. Profit and losses obtained from the
business activity carried on through this type of business structure are
declared by the owner.
Once a residence or a domicile can be demonstrated, the foreign company
must obtain the Remuneracion Unica del Contribuyente (RUC) number and
officially initiate their corresponding activities. The taxpayer will
use his RUC number in all commercial transactions. This is similar to
the IRS number in the U.S.
A list of local lawyers can be provided by the embassy.
Selling Factors/Techniques
The one most important selling factor in Peru is price. Price
competitive products from Asian countries such as Taiwan and Korea far
outsell more expensive European or North American products in the
consumer product categories, such as, consumer electronics, appliances
and automobiles. With investment in sales promotion and service
infrastructure, goods are more competitive than U.S. products that do
not have quality service and lack high market profile needed to increase
market share.
Dependability becomes more influential in purchases of advanced
electronics and construction machinery. The customer will often prefer
more expensive North American or European products based on the decision
factors of quality, durability, technology, good customer support, and a
strong regional service structure where applicable.
Many of the larger representatives have small regional offices in two or
three additional cities outside of Lima. The rest of the country is
largely underpopulated, underdeveloped and does not offer an attractive
market for technical equipment.
Payment for major purchases is generally on a net 30 days basis when
invoices are used. Over the counter purchases are done in cash, check
or credit card. Most retailers use credit terms as a sale technique and
major department stores are starting to issue their own credit cards.
Advertising and Trade Promotion
Lima boats 15 daily newspapers, each of which strives to be a "national"
newspaper. Locally oriented dailies can be found in most provincial
capitals. First in influence and national readership is "El Comercio",
which is also the nation's oldest paper with over 150 years of
continuous publication. The other most influential dailies are the
right-of-center tabloid "Expreso", it's leftist counterpart "La
Republica" and business daily "Gestion". The government daily which
contains all procurement information is "El Peruano".
EL COMERCIO
Director: Aurelio Miro Quesada
Jr. Antonio Miro Quesada 300
Lima, Peru
Tel: (511) 426-4676/6292/4703 Fax: (511) 426-0810/7224
EXPRESO
Director: Manuel D'Ornellas
Av. Libertad 117, Miraflores
Lima, Peru
Tel: (511) 444-7088/421-9828 Fax: (511) 447-9900
GESTION
Director: Manuel Romero Caro
Calle General Salaverry 156, Miraflores
Lima, Peru
Tel: (511) 447-6919/6634 Fax: (511) 447-6569/6763
EL PERUANO
Director: Daniel Ramsay Romero
Av. Alfonso Ugarte 873
Lima 1, Peru
Tel: (511) 428-3460 Fax: (511) 424-9507
Radio has the largest audience of all communications media, reaching
even the most isolated populations. It is often the first source of up-
to-the-minute news, and is the principal vehicle for transmitting
information about local issues and events outside of Lima. However, it
has little power to shape opinions, particularly among Peru's decision
markers.
In all, there are close to 1,000 radio stations in Peru, broadcasting on
AM, FM, and short wave frequencies. Many of these stations are small
storefront operations that serve relatively limited audiences. Radio's
most influential source of news and information is "Radio Programas del
Peru" (RPP), one of the many media holdings of the Delgado Parker
family. With transmitters and correspondents in virtually every
important city in Peru, RPP constitutes the country's only true national
radio network. In most major cities, including Lima, RPP leads AM
ratings and is second in FM listenership to music-oriented "Radio
Panamericana"
Television permeates the urban environment in Peru and has become
increasingly available to rural audiences as well. As in the U.S.,
television is often the primary source of news for a majority of those
who watch it.
The most important players in TV are the four Lima-based television
networks, along with a government-owned service which for years was the
only station available in many parts of the country. These five
broadcasters use affiliates in the provinces much like their
counterparts in the U.S. In addition there are several independent
stations which serve the needs of a particular city or region.
Cable television has also begun to make inroads into the Peruvian market
with three companies serving approximately 40,000 homes in the greater
Lima areas. These packages include CNN, the major U.S. networks, and
programming from other Latin American and European countries. The
leading cable company, Telecable, also carries the WORLDNET signal.
Pricing the Product
In general, Peru enjoys a very open market with, trade restrictions held
to a minimum. Revised tariff rates are 15 percent ad-valorem.
Distributor mark up varies acording to type of product, but usually
ranges between 15 and 30 percent. All imports are subject to a 18
percent value-added local sales tax. Imports of $ 2,000 or more into
Peru are also subject to pre-shipment inspection, which must be
performed by one of the four selected supervision service companies.
There are some exceptions: government entities do not pay these fees;
decentralized industrial entities as classified by the General
Industrial Law; industrial entities that have signed tax-stability or
tax-exemption contracts with the government of Peru; enterprises
established in the industrial free zones and special treatment zones;
and companies that have their operations in the jungle regions of
Loreto, Ucayali, Madre de Dios, Amazonas, and San Martin in accordance
with the Peruano-Colombiano treaty. Some luxury items have higher
tariffs and some specific goods such as cigarettes, beer, wine, liquors,
automobiles, etc., pay the excise tax according to the lists and rates
included in Appendixes III and IV of Decree Law No. 25748. Imports from
countries with which Peru has bilateral agreements are covered by
different, preferential tariff schedules.
Sales Service/Customer Support
Peruvians consider service and support a critical factor in making the
final purchasing decision, especially for products that require periodic
servicing. The buyer must know and feel that he has service guaranteed.
It is important for the product to be sold through a reliable
distributor that offers the quality and services that the client
requires for his product. Servicing and availability are currently the
two perceived advantage that Asian autos enjoy over their U.S.
competitors in the Peruvian market.
Selling to the Government
To sell to the government you need to register as a supplier with the
appropriate ministry. The second step is to provide credentials
indicating that the firm is a legitimate representative of the company.
This can be done by a letter with the signature of a Peruvian attorney.
If using an agent, it need not be a national of Peru but can be one of
your choosing.
Peruvian law excludes all government officials on active duty from
negotiating contracts with the government. This is to ensure conflicts
in interests do not occur. Former government officials are not affected
by this law.
Payment of commissions or fees to third parties in connection with sales
to the government can be done under Peruvian law by a distributor
working independently. For example, a company in Peru can purchase
certain products from a company in the United States and then resell
them to the Peruvian government.
There are no controls in place on commissions or mark-ups on sales to
the government by either agents or distributors. Neither are there
common nor customary rates in regard to this matter.
Government agencies usually publish tender notices in the main
newspapers. The Fujimori government, in order to ensure transparency
for all government tenders, is currently using the United Nations
Development Program (UNDP) to notify potentially interested suppliers.
Protecting Your Product and IPR Infringement
Protection of intellectual property in Peru has improved significantly
in recent years, but it still falls short of U.S. and international
standards in several areas. Peru thus remains on the special 301 watch
list.
The Peruvian government agency charged with promoting and defending
intellectual property rights is the Institute for the Defense of
Competition and Protection of Intellectual Property (INDECOPI).
Patents, trademarks, utility models, and industrial designs are
protected by Law No. 26017 of 1992 and by Andean Pact Decisions 344 and
345. In case of conflict, the statute offering the stronger protection
will prevail. Copyrights are protected by Law 13714 of 1961 and by
Andean Pact Decision 351. Peru is a signatory to the Berne Convention
for the Protection of Literary and Artistic Works, the Universal
Copyright Convention, the Geneva Convention for the Protection of Sound
Recordings, the Brussels Convention on the Distribution of Satellite
Signals, and the Paris Convention on Industrial Property. In December
1994, the Peruvian Congress ratified the Uruguay Round agreement on
Trade-Related Aspects of Intellectual Property (TRIPS).
Registering a trademark is not a cumbersome procedure, although as a
practical matter local legal counsel must be obtained. Counterfeiting
of trademarks is prevalent. At times the local courts have failed to
uphold INDECOPI trademark enforcement decisions in clear-cut cases.
Illegal copies of copyrighted books, audio cassettes, motion-picture
videos, and computer software are openly sold on the streets, as well as
in video-rental outlets, computer stores, and shopping centers.
INDECOPI enforcement efforts, together with greater availability of
legitimate merchandise, have reduced the level of piracy somewhat in the
last two years.
Decision 344 contains compulsory licensing provisions, but they are not
likely to be applied in Peru, because of the onerous conditions that
must be met. There is no pipeline protection for pharmaceutical
patents. Patents may not be taken out on animal species, materials
derived from the human body, nuclear and other fissible materials, or
inventions deemed to be contrary to the public order or to the
sustainable development of the environment.
Peruvian law does not protect semiconductor chip layout designs, but the
Embassy is not aware of any infringements in this area. Private
freebooting of broadcast satellite signals may exist, but the
commercialization of the captured signals without a license appears to
have ended.
Need for a Local Lawyer
Obtaining legal counsel is a must in doing business in Peru. Potential
investors should contact an able attorney to understand the legal
framework for investments found in the Foreign Investment Promotion Law,
the Framework Law for Private Investment, the Law for the Promotion of
Private Investment in State-Owned Companies, and the Law for the
promotion of Private Investment in Public Utility Facilities.
In the event of a dispute, national or international arbitration is
followed with national or international conformity.
V. Leading Sectors for U.S. Exports and Investment
Best Prospects for Non-Agricultural Goods and Services
(US$ Millions)
A. Rank: 1
B. Name of Sector: Telecommunications Equipment
C. Industry Code: TEL
1994 1995 1996
D. Total Market Size 201.4 401.8 802.3
E. Total Local Production 2.0 2.4 2.9
F. Total Exports 0.6 0.6 0.6
G. Total Imports 200.0 400.0 800.0
H. Total Imports from U.S. 50.0 70.0 98.0
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: Peruvian telephone density is 3.0 telephone lines per 100
inhabitants as opposed to the 9.28 per 100 average throughout South
America. Approximately 40 percent of the population has no access to
telephone service. The new operator, Telefonica del Peru S.A., must
install 638,000 new lines in Lima and 559,600 lines throughout the rest
of the country before the end of the century and must provide
communications for every peruvian town over 500 inhabitants.
Approximately $ 1 billion to US$ 1.5 billion in investment is expected
to meet this criteria. Best sales prospects will be concentrated in
digital switches and network line equipment, cellular infrastructure
equipment and telephones.
A. Rank: 2
B. Name of Sector: Construction Equipment
C. Industry Code: CON
1994 1995 1996
D. Total Market Size 101.2 136.6 172.1
E. Total Local Production 5.5 7.4 9.3
F. Total Exports 0.0 0.0 0.0
G. Total Imports 95.7 129.2 162.8
H. Total Imports from U.S. 52.7 71.1 89.6
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: With the upturn of the Peruvian economy for the past two
years, the construction sector has been growing an average of 35 percent
a year. This is mainly due to the highway rehabilitation program,
maintenance, new highway construction, and new social housing
infrastructure. The effects of this growth could be seen in the cement
industry that grew over 29.6 percent during the first six months of
1995. Similar affects could be seen in the steel corrugated bar
industry that grew by 10.5 percent and asphalt industry by 36.1 percent.
The housing shortage is still unsolved for medium and lower income
families. The best estimate is close to a half million homes just in
the capital, Lima.
Best subsector prospects are cement MFC equipment, highway construction
equipment, and heavy building manufacturing equipment.
A. Rank: 3
B. Name of Sector: Computer/Peripherals
C. Industry Code: CPT
1994 1995 1996
D. Total Market Size 135.2 168.0 209.8
E. Total Local Production 2.5 2.7 3.0
F. Total Exports 0.5 0.6 0.7
G. Total Imports 133.2 166.0 207.5
H. Total Imports from U.S. 84.5 105.0 131.3
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: Demand for these products in still unsatisfied and production
of computers and peripheral equipment is only limited to parts and
accessories that are assembled in the local market. The total 1995
market is estimated at $ 168 million and expected to grow at an annual
rate of 25 percent. Best sales prospects will be concentrated in the
area of computer modular equipment, such as printers, CD readers, modems
and like. Personal computers and microcomputers are also very popular.
A. Rank: 4
B. Name of Sector: Auto Parts
C. Industry Code: APS
1994 1995 1996
D. Total Market Size 238.5 262.35 288.59
E. Total Local Production 63.0 69.3 76.23
F. Total Exports 0.0 0.0 0.0
G. Total Imports 175.5 193.5 212.85
H. Total Imports from U.S. 7.8 8.58 9.44
I. Exchange Rate 1.25 2.85 3.0
The above statistics are unofficial estimates.
Comments: With the increase of imports of new and used vehicles, the
demand for auto parts for 1996 will grow approximately 10%. More than
D600 million in new and used vehicles were imported in 1994 (buses and
vans 20.8%, passenger vehicles 33.2%, and pick ups and trucks 46%).
Peru currently has 750,000 units for a population of 23 million
inhabitants, i.e. one vehicle per 30 persons. Major foreign suppliers
of motor vehicles are Japan, Korea, European countries and the U.S.
American auto parts are well regarded in terms of technology and
reliability; however, the market is very competitive and the decision to
import is based primarily on prices. Local production is mostly
concentrated in tires and batteries.
A. Rank: 5
B. Name of Sector: Mining Industry Equipment
C. Industry Code: MIN
1994 1995 1996
D. Total Market Size 50.1 70.1 112.2
E. Total Local Production 7.1 9.9 15.9
F. Total Exports 0.0 0.0 0.0
G. Total Imports 43.0 60.2 96.3
H. Total Imports from U.S. 28.0 39.2 62.7
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: Due to the size and importance of the mining industry in
Peru, investments in mining equipment should continue to increase
tremendously. U.S. exports in mining equipment have an excellent
reputation in comparison to their main competitors from Japan, Germany,
and Australia. The appreciation of the yen and deutsche mark will also
contribute positively to U.S. exports of mining equipment and parts,
making them even more attractive to mining companies. The Ministry of
Energy and Mines (MEM) expects continued large foreign investments in
the mining sector for exploration, expansion, and new projects, in the
range of approximately $ 6.5. billion from 1995 to the year 2000. For
these reasons, we consider the U.S. mining industry equipment sector to
be well positioned to benefit from the continued growth of the mining
sector in Peru well into future. Best prospect subsectors would be
heavy earth moving equipment, exploration technology, drilling
machinery, purification plants, pollution control equipment, conveyors,
transportation equipment, and parts.
A. Rank: 6
B. Name of Sector: Oil/Gas Equipment
C. Industry Code: OGM
1994 1995 1996
D. Total Market Size 78.2 98.5 128.0
E. Total Local Production 1.2 1.5 1.9
F. Total Exports 0.0 0.0 0.0
G. Total Imports 77.0 97.0 126.0
H. Total Imports from U.S. 62.8 79.1 102.8
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: The oil/gas sector in Peru is one of the few industries well
positioned to take advantage of the investment opportunities in one of
the world's unexplored areas that holds great potential. Customarily,
Peruvian and foreign petroleum companies purchase U.S. exports during
the exploration-construction periods and a steady inflow of spare
equipment during the operation phase. The Ministry Energy and Mines
(MEM) expects approximately $ 2 billion to be spent on oil exploration
in the next few years in Peru, to relieve its dramatically dwindling oil
reserves. U.S. suppliers and manufacturers of oil/gas field machinery
stand to benefit greatly with these future investments.
A. Rank: 7
B. Name of Sector: Medical Equipment
C. Industry Code: MED
1994 1995 1996
D. Total Market Size 33.4 46.4 64.6
E. Total Local Production 3.3 3.6 4.0
F. Total Exports 1.6 1.6 1.6
G. Total Imports 31.7 44.4 62.2
H. Total Imports from U.S. 11.2 12.9 14.8
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: The Peruvian Regionalization process now underway is supposed
to significantly change the structure of the Ministry of Health,
transferring most service delivery and program management
responsibilities to Regional Offices and Municipal Governments. There
is no domestic production of medical equipment. Local production is
limited to simple medical furniture and supplies. Estimated Ministry of
Health investment program which started in 1993 and close in 1998 is
estimated at $ 559.8 million and there is a new pre-investment program
of an additional $ 646.2 million. Best sales prospects will be
concentrated in the area of exploratory examination apparatus,
hemodialysis and electromedical equipment.
A. Rank: 8
B. Name of Sector: Food Processing/Packaging Equipment
C. Industry Code: FPP
1994 1995 1996
D. Total Market Size 28.7 31.5 37.8
E. Total Local Production 2.0 2.2 2.6
F. Total Exports 0.0 0.0 0.0
G. Total Imports 26.7 29.3 35.2
H. Total Imports from U.S. N/A N/A N/A
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: The food processing industry was seriously affected by import
restrictions of capital goods and the lack of local production from the
early seventies to the early nineties. Most of the equipment is
obsolete, except for that belonging to multinational companies and
export companies that have quickly upgraded their infrastructure to
become competitive in the export market. Best sales prospects will be
in packaging supplies, equipments and processes.
A. Rank: 9
B. Name of Sector: Agriculture Machinery
C. Industry Code: AGM
1994 1995 1996
D. Total Market Size 45.7 52.5 63.1
E. Total Local Production 0.0 0.0 0.0
F. Total Exports 0.0 0.0 0.0
G. Total Imports 45.7 52.5 63.1
H. Total Imports from U.S. 25.5 31.5 41.0
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: The agricultural machinery and equipment industry is expected
to grow approximately 7% over the next year. The greatest demand for
U.S. exports exists in overhaul tractors and water irrigation systems.
Agricultural services, such as consulting, is also in great demand as
Peruvian farmers look for new crops for export and innovative methods of
production.
A. Rank: 10
B. Name of Sector: Franchising
C. Industry Code: FRA
1994 1995 1996
D. Total Market Size N/A N/A N/A
E. Total Local Production N/A N/A N/A
F. Total Exports N/A N/A N/A
G. Total Imports N/A N/A N/A
H. Total Imports from U.S. N/A N/A N/A
I. Exchange Rate 1.85 2.25 3.0
The above statistics are unofficial estimates.
Comments: Franchising is a relatively undeveloped sector in Peru. This
has created an unique opportunity for U.S. investors in the franchising
sector. Specific demands are in the areas of fast food, restaurant,
hotel, and construction services. Excellent potential also exists in
the development of tourist related franchises outside the Lima areas.
Over the next couple of years expect the current level of franchises to
increase by three or four times as the Peruvian market becomes more
accustomed to the franchising system.
Best Prospects for Agricultural Products
Product Statistics & Data Code: Hard Wheat (1000 MT)
1994 1995 1996
A. Total Market Size 1,204 1,408 1,528
B. Total local production 129 178 196
C. Total exports 0 0 0
D. Total imports 1,075 1,230 1,332
E. Total imports from U.S. 461 470 505
F. Exchange Rate(Soles/US$) 2.20 2.40 3.0
Comments: Peru produces about 100,000 MT of soft wheat unsuitable for
milling and used for purees and soups. Peru imports much of its hard
wheat from Argentina, because this country offers better credit terms
and prices under the Latin American Integration System (ALADI).
Product Statistics & Data Code: Yellow Corn (1000 MT)
1994 1995 1996
A. Total Market Size 1,232 1,230 1,328
B. Total local production 536 600 648
C. Total exports 0 0 0
D. Total imports 696 630 680
E. Total imports from U.S. 182 250 270
F. Exchange Rate(Soles/US$) 2.20 2.40 3.0
Comments: Consumption of yellow corn is related mainly to consumption
of poultry meat, which has become the most popular source of animal
protein. Consumption of yellow corn will keep increasing as long as
consumption of poultry meat increases. Argentina is the main supplier of
yellow corn because of generally lower prices during their export
season, and a preference for the greater content of yellow pigment in
its corn. Peru produces about 180,000 MT of starchy corn which is mainly
for direct human consumption. Peru also exports about 2,500 MT of a
special variety of starchy corn.
Products Statistics & Data Code: Milled Rice (1000 MT)
1994 1995 1996
A. Total Market Size 1166 922 950
B. Total local production 954 752 750
C. Total exports 0 80 0
D. Total imports 212 170 200
E. Total imports from U.S. 74 40 70
F. Exchange Rate(Soles/US$) 2.20 2.40 3.0
Comments: In 1995, rice production decreased slightly from the bumper
crop of 1994. Because of relatively high prices for local rice, lack of
credit terms for local sales, and lack of uniform quality, rice
distributors favor imported rice. The main exporters of rice to Peru are
Vietnam and Uruguay, followed by the U.S. (which has higher prices but
superior quality).
Products Statistics & Data Code: Crude Soybean Oil (1000 MT)
1994 1995 1996
A. Total Market Size 84 84 90
B. Total local production 0 0 0
C. Total exports 0 0 0
D. Total imports 84 84 90
E. Total imports from U.S. 0 25 27
F. Exchange Rate(Soles/US$) 2.20 2.40 3.0
Comments: Argentina is the main supplier of crude soybean oil, due to
generally lower prices than the U.S. product, partially because of a
more favorable duty rate.
Product Statistics & Data Code: Beans and Pulses (1000 MT)
1994 1995 1996
A. Total Market Size 112 137 147
B. Total local production 80 96 103
C. Total exports 10 15 16
D. Total imports 42 56 60
E. Total imports from U.S. 32 46 49
F. Exchange Rate(Soles/US$) 2.20 2.40 3.0
Comments: Lentils, whole and split green peas are the most common
pulses imported form the U.S. Peru is the third largest U.S. market for
these products. Consumption of these products has grown dramatically in
recent years.
Other comments: There are other products which Peru also imports in
large amounts but are supplied by countries other than the U.S. Among
these we find sugar, livestock products (mainly offals), dairy products
and vegetable seeds.
The market for U.S. animal genetics, including live animals, promises to
be very interesting over the next several years. Livestock and meat
products show great potential, even though prices for U.S. meat and
offals are higher than those of other countries, mainly Argentina. U.S.
prime and choice meat, are beginning to find acceptance in restaurants
and specialty stores, but its demand is quite limited for the time
being.
One of the fastest growing markets for imports in Peru is the processed
food market. New products are catching the interest of the Peruvian
consumer. Imports of U.S. processed products such as snacks, beverages,
cereals, nuts, processed fruits and dairy products (cheese) have gone
from $ 8.5 million in 1990 to over $ 21 million in 1994.
Significant Investment Opportunities
The government has embarked on a major privatization program, with the
goal of selling off all remaining state-owned enterprises by the end of
1996. Since 1991, the government has privatized nearly 90 enterprises
for a total of more than $3.5 billion. The privatization program was
put on hold temporarily during the lead-up to the presidential and
congressional elections of April 1995, but it has since resumed. In
July 1995 the government was seeking public input as to the best manner
to privatize the state oil company, PetroPeru. The sale is expected to
commence in late 1995. The company is most likely to be broken up into
separate operating units. There are also significant assets left to be
sold in the mining and energy sectors, as well as financial services and
public utilities. For more information about the privatization schedule
below, contact the U.S. Embassy (see Appendix E).
Peruvian Companies to be Privatized in 1995-1996
Company Business
Bayovar phosphate rock deposit mining
Berenguela copper deposit(Minero Peru) mining
Cemento Andino cement plant
Cemento Sur cement plant
Centromin mining-smelting
Copes fish-processing
Corpac airport authority
Edegel electricity-generation
ElectroPeru electricity
Enafer railroads
Enapu port services
Enata cigarettes
Fertisa fertilizer
Incasa mining
Las Bambas copper deposit(Minero Peru) mining
Michiquillay copper deposit (Minero Peru) mining
Paramonga paper mill
PescaPeru fish-processing
PetroPeru petroleum
Popular y Porvenir insurance
Reaseguradora Peruana insurance
Sedapal water/sewage service
SiderPeru steel mill
The government of the United States acknowledges the contribution that
outward foreign direct investment makes to the U.S. economy. U.S.
foreign direct investment is increasingly viewed as a complement or even
a necessary component of trade. For example, roughly 60 percent of U.S.
exports are sold by American firms that have operations abroad.
Recognizing the benefits that U.S. outward investment brings to U.S.
economy, the government of the United States undertakes initiatives,
such as Overseas Private Investment Corporation (OPIC) programs,
investment treaty negotiations and business facilitation programs, that
support U.S. investors.
VI. Trade Regulations and Standards
Trade Barriers and Import Taxes
Peru maintains 15 percent tariffs on 95 percent of the items on the
tariff schedule and 25 percent on the remainder. The weighted-average
tariff is approximately 16 percent, down from 80 percent in mid-1990.
The government intends to move to a flat 15 percent rate, which will
eventually be reduced to 12 percent. This could change, however, if
Peru joins the Andean Customs Union and adopts its common external
tariff schedule of varying rates between 5 to 20 percent.
Most imports are also subject to an 18 percent value added tax on the
same basis as domestically produced goods. In addition, selective
consumption taxes are applied to certain products. Port fees have been
reduced but are still relatively high for Latin America. There are no
quantitative import restrictions.
In March 1991, Peru introduced "temporary" import surcharges on six
basic agricultural commodities: wheat, wheat flour, rice, corn, sugar
and milk products. The government argued that the surcharges were
necessary to offset subsidies by exporting countries. The surcharges
are calculated on a weekly basis, according to prevailing international
prices for each commodity. As a condition for disbursement of a trade
sector loan from the Interamerican Development Bank, the government
agreed to phase out the surcharges over a three year period ending in
1997. The government began reducing the surcharges in increments in
April 1994. It the past, it is difficult for U.S. grain exporters to
compete in the Peruvian market. However, Peru is now eligible under the
CCC-GSM program, which allows for credit soles to Peru. Additionally,
the GOP has been lowering surcharges which are practically zero right
now. This will allow U.S. grain export to increase.
Customs Valuation
The government has recently reformed Peru's Customs service with help
from the Interamerican Development Bank and the UN Development Program.
The reform seems to be working, collections have more than tripled since
1991, despite dramatically lower tariff rates. Corrupt officials have
been fired and computerization has been installed. Contraband has been
reduced but is still estimated at $400-600 million a year. The tariff
schedule was simplified (see above), also facilitating collection. The
Customs service employs foreign import-supervising firms, such as the
Swiss firm SGS, to evaluate all shipments worth more than $2,000. The
importer pays up to 1 percent of the FOB value of the goods to cover the
cost of the valuation. Peru plans to implement the GATT customs
valuation code by the year 2000.
Import Licenses
The government has abolished import licenses for the vast majority of
products. The only remaining products requiring licenses are firearms,
munitions and explosives imported by private persons, chemical
precursors (used in cocaine production) and ammonium nitrate fertilizer,
which has been used as a blast enhancer for terrorist car bombs.
Export Controls
Export licenses are required for cultural relics and items of antiquity.
In addition, end-user certificates are required for the export or re-
export of items on the International Munitions List, the International
Chemical/Biological Warfare (CBW) List and the Missile Technology
Control Regime (MTCR) list. Such licenses cover an extremely small
portion of total Peruvian exports less than one percent.
Import/Export Documentation
For imports, the government requires an invoice, bill of lading, a
packing list, proof of insurance, and a certificate of customs
inspection for items worth over $2,000 prior to shipment. If the
product is imported from the Andean region (Colombia, Venezuela, Ecuador
and Bolivia), a certificate of origin is required to qualify for Andean
Pact tariff preferences. A certificate of quality is required for
pharmaceutical products.
For exports, a bill of lading and invoice are required, as well as an
end-user certificate in the case of the export of munitions-controlled,
CBW, or MTCR items.
Temporary Entry
Goods admitted into the country temporarily for re-export can receive
duty drawback from customs. Documentation requirements are the same as
those listed above.
Labeling, Marking Requirements
Labeling requirements are not onerous. Basically products normally
retain their original labels and the name and taxpayer identification
number (RUC) must be added to the packaging.
Prohibited Imports
Very few items have been prohibited from import in the last three years.
The importation of used clothing and shoes is prohibited, although
imports of donated used clothing and shoes are exempt from the
prohibition. Import of plagicides (insecticides against insect plagues)
and toxic waste is also prohibited.
Standards
The government has no specific standards required for imports. Even
right-hand drive vehicles are permitted, although purchasers are
supposed to adapt them to left-hand drive once they are imported. Some
industry standards are developing in the private electronics and
construction industries.
Free Trade Zones
Peru currently has two free trade zones: Ilo and Tacna. Both are
located near the Chilean border and were areas previously subject to a
substantial contraband trade. Items enter the free trade zones free of
duty, but when they enter the rest of Peru they are subject to normal
duties. The products are exempt from duties only if they are imported
into Tacna or Ilo and used as inputs to manufacture products for export.
Special Import Provisions
Products destined to the sparsely populated jungle area are subject to a
special tariff regime. However, to prevent fraud, the government
attempts to closely monitor these products to ensure they remain in the
jungle.
Membership in Free Trade Arrangements
Peru is a member of the Andean Pact but does not currently participate
fully in the Pact's free-trade area or customs union, because of
disagreements over the Pact's common external tariff and certain
subsidies and other policies maintained by other Pact members. Peru is
to decide by January 31, 1996, whether it will remain in the Pact. In
the meantime, Peru maintains bilateral trade agreements with each of the
other four members of the Pact. The agreement with Bolivia is
essentially a full-fledged free-trade agreement. Peru is in the process
of negotiating a comprehensive free-trade agreement with Chile.
VII. Investment Climate
Openness to Foreign Investment
The Fujimori government seeks to attract both foreign and domestic
investment in all sectors of the economy. Macroeconomic instability, a
hostile political climate and terrorism discouraged significant
investment in the past, but a deepening of the reform process, along
with increasing success in the war on terrorism, have helped attract
more foreign investors. The new constitution (enacted January 1, 1994),
Legislative Decree 662 (DL 662) of September 2, 1991, the Foreign
Investment Promotion Law and DL 757 of November 13, 1991 and the
Framework Law for Private Investment Growth are the basic legal
frameworks for foreign investors in Peru. Supreme Decree 162 (DS 162)
of October 12, 1992, provides the implementing regulations for these
legislative decrees.
Foreign investment is now subject to national treatment and is permitted
in all economic activity. Article 63 of the new constitution states
"national and foreign investment are subject to the same terms,"
although foreign investment is required to be registered with the
National Commission on Foreign Investment and Technology (CONITE). All
investors need prior approval to invest in industries that manufacture
weapons. Foreigners can obtain concessions and rights within 50
kilometers of Peru's borders with the authorization of a supreme
resolution. Otherwise, no screening, authorization or prior registry is
required for foreign investment.
Foreign investors have the same rights as national investors and thus
would benefit from any investment incentives such as tax exonerations.
Foreign investors are offered to obtain tax stability and juridical
stability contracts. Such contracts are currently offered for all
investments, particularly for petroleum and mining concessions. Foreign
investors also have international arbitration rights to settle
investment contract disputes. Industries established in free-trade
zones are allowed to import manufacturing components free of all duties
and fees. Users of these zones are exempt from all taxes for a period
of 15 years. There are no performance requirements. Nor are there
discriminatory or excessively onerous residence or work permit
requirements inhibiting foreign investors.
Conversion and Transfer Policies
There are no exchange controls in Peru. All restrictions on remittances
of profits, dividends, royalties and capital have been eliminated,
although foreign investors are required to register their investments
(an automatic process) to ensure these guarantees. Exporters and
importers are not required to channel their foreign exchange
transactions through the central bank and can conduct their transactions
freely on the open market. Residents and non-residents may open and
maintain accounts in foreign currency in Peruvian financial
institutions. American firms have experienced no problems or delays in
transferring funds or remitting capital, earnings, loan repayments or
lease payments.
Currency is freely convertible and there is a single exchange rate for
all transactions. Such convertibility is guaranteed by the 1993
constitution. Embassy Lima purchases local currency at the free-market
rate. In 1994, the sol depreciated nominally against the dollar by only
1.4 percent. For the first five months of 1995, the sol depreciated 2.7
percent.
Expropriation and Compensation
The government's power to expropriate private property is legally
limited to those instances where it is required by the public interest
and then only through a specific act of congress. Public interest
reasons are defined as those required to carry out public works. The
government's stated intention is to comply with international standards,
although, by virtue of the fact that no expropriations have been carried
out by the current government, it is impossible to judge whether there
actually would be due process or have a prompt, adequate and effective
compensation.
Dispute settlement
The Fujimori administration has worked from the outset to resolve
investment and expropriation disputes it inherited from previous
administrations. The eight year-old dispute over the Belco Petroleum
expropriation was finally resolved on August 28, 1993. The Fujimori
government signed a compensation agreement with the American
International Group for the 1985 expropriation of the Belco assets. The
long-standing dispute between AIG and the GOP came to a close on
September 28, 1993, with the first payment of $30 million towards
settlement of AIG's $184.7 million claim. The next payment under the
seven-year agreement is due July 31, 1994. The GOP paid pay AIG about
$54 million in 1994 and $24 million per year through 1999. Investment
disputes with Southern Peru Copper Corporation (controlled by ASARCO)
and Occidental Petroleum were resolved in December 1991.
Since September 1993, a U.S. investor has tried unsuccessfully to obtain
a license from the GOP to operate a casino. The matter has bounced back
and forth between the courts and Ministry of Industry and Tourism. The
investor, who has spent over $3 million trying to get established in
Lima, has charged the GOP with discrimination. Well-connected Peruvian
casinos apparently have obtained licenses more expeditiously than the
American investor. In May, 1995, the investor was advised that the
Ministry of Industry could not approve the license because the investor
had a pending lawsuit against the GOP. We are not aware of other U.S.
investment disputes ongoing in Peru.
Peru accepts binding international arbitration of investment disputes
between foreign investors and the state, in accordance with national
legislation or international treaties signed by the government. A law
permitting international arbitration of disputes between foreign
investors and the government or state-controlled firms was issued by
decree during December 1992. Peru is a party to the 1958 New York
Convention on Recognition and Enforcement of Foreign Arbitral awards.
Peru's adherence to ICSID (International Center for Settlement of
Investment Disputes) has improved the GOP's ability to attain investment
agreements with European countries. Disputes between foreign investors
and the state regarding existing contracts must still be submitted to
national courts. However, investors who conclude a juridical stability
agreement for new investment (see next section for more details) are
permitted to submit contract disputes with the government to national or
international arbitration by mutual agreement.
Enforcement of property and contractual rights has generally been
effective, although the Peruvian legal system is slow and corruption is
endemic. Improving the efficiency and transparency of the judicial
system is a high priority of the Fujimori government, although a
majority of judges and prosecutors appointed by the Fujimori
administration since the April 5, 1992 coup remain in temporary status.
Some problems with government interference in the court system still
occur. Peru has written commercial and bankruptcy laws. Bankruptcy law
is administered by Indecopi (the National Institute for the Defense of
Free Competition and the Protection of Intellectual Property). The
creditor hierarchy is similar to U.S. bankruptcy law and monetary
judgments are usually made in local currency. In principle, secured
interests in property, both chattel and real, are recognized. In terms
of real property, the government is still working to complete the
retitling of agricultural land expropriated under the agricultural
reform of 1968. A system of home mortgages secured by property has not
existed for several years, but a new system has been established and
should begin operation very soon.
Political Violence
The level of political violence continues to decline in Peru, in large
part due to the government's counter-insurgency efforts. As a result,
actions by Sendero Luminoso (SL) and the Tupac Amaru Revolutionary
Movement (MRTA) in 1994 were roughly one-third the number in 1993.
There were approximately 400 terrorist attacks and 750 violence-related
deaths nationwide in 1994; the level of violence continued to decline in
the first half of 1995. The worst recent violence has occurred in the
Upper Huallaga Valley, especially northern Huanuco Department, southern
San Martin Department, and northwestern Pucallpa Department; the eastern
jungle areas of Junin Department; the mountain provinces of La Libertad
Department and rural Ayacucho Department. Approximately half of Peru's
population lives in a designated emergency zone.
The SL has specifically targeted foreign companies as well as local
businesses in an effort to create an uncertain business climate and
embarrass the government. For instance, telephone company branch
offices were hit by small explosive devices after the company was
privatized and bought by Telefonica de Espa_a. Bank offices and
embassies have been frequent targets of bombs. In May 1995, a large car
bomb at a hotel in the Miraflores district of Lima killed four and
injured two dozen.
Performance Requirements/Incentives
Peru offers foreign and national investors in certain sectors juridical
stability agreements to stimulate private investment. These agreements
guarantee that current statutes on income taxes, foreign exchange,
trade, drawback, administrative procedures and labor hiring will remain
unchanged for that investment for 10 years. To qualify, an investment
must exceed $2 million within two years or exceed $500,000 within the
two years provided that it generates more than 20 permanent jobs or
generates more than $2 million in exports during the first three years
of the agreement. There are no performance requirements for foreign
investors, other than those to obtain juridical stability guarantees.
Companies receiving new investment may also enjoy legal stability with
regard to the income tax, provided the new funds amount to more than 50
percent of the equity capital and retained earnings and will enhance
productivity or technology. Juridical stability agreements are subject
to Peruvian civil law, which means they cannot be altered unilaterally
by the government. Investors are also offered protection from liability
for acquiring state-owned enterprises.
Parties may freely negotiate contractual conditions related to licensing
arrangements and other aspects of technology transfer without prior
authorization. Registry of a technology transfer agreement is required
for a payment of royalties. Such registration is automatic upon
submission to the appropriate government authority.
Rules regarding hiring of foreigners have been liberalized. Legislation
still limits foreigners to no more than 20 percent of total employees in
a local company, whether owned by foreign or national interests and
their combined salaries to no more than 30 percent of total company
salaries. However, legislative decree 689 of November 4, 1991 provided
a variety of exceptions to these limits which effectively negate their
impact in most cases. For example, a foreigner will not be counted
against his company's total if he holds an immigrant visa, has a certain
amount invested in the company ( currently about $5,000), or if his
country has a reciprocal labor or double nationality agreement with
Peru. Foreign banks and service companies and international
transportation companies are exempt from these hiring limits, as are all
firms located in free trade zones. Furthermore, companies may apply for
exemption from the limitations for managerial or technical personnel.
Right to Private Ownership and Establishment
Foreign and domestic entities are permitted to invest in any legal
economic activity and to freely establish, acquire and dispose of their
interests. This includes direct foreign investment, portfolio
investments and investment in real property. Capital contributions may
include goods and technology. The Fujimori government has dismantled
virtually all previously existing monopolies in all sectors of the
economy, including in the provision of public services. Foreign
investors participate in the privatization of state firms on an equal
footing with national investors. The Fujimori government has undertaken
widespread and deep structural reforms to improve the efficiency of
markets and capital allocation decisions and to foster competition,
bureaucratic procedures have been streamlined, price controls and import
license requirements terminated, government monopolies eliminated, the
tax system simplified and labor laws liberalized. The government
intends to privatize or liquidate all state-owned firms by 1996,
although there are indications the privatization of PetroPeru (a GOP
owned petroleum conglomerate) could extend into 1996.
The government created INDECOPI in 1992 to protect free competition and
intellectual property rights, centralizing functions previously carried
out by various government entities. INDECOPI is responsible for anti-
trust enforcement, anti-dumping and subsidy actions, consumer protection
and implementation of other policies to ensure fair competition.
Public sector tariffs have been increased to conform with market forces.
A complex tax reform resulted in occasional mixed signals or current and
new taxes as well as regulations. Due to heavy indirect taxes, fuel and
electricity prices are significantly higher than world averages.
Regulatory System
The GOP has adopted a transparent policy and effective laws to promote
competition including the establishment of INDECOPI. Bureaucratic
procedures, e. g., registration of security licensing, are sufficiently
streamlined and transparent, although difficulties have been encountered
in obtaining licenses for casino operations. High import duties on
capital goods, large payroll taxes and onerous labor laws (e.g., the
requirement to provide severance pay for fired employees) could impede
the efficient mobilization and allocation of investment.
Bilateral Investment Agreements
Peru has signed bilateral investment agreements with the U.K., Spain,
France, Germany, Switzerland, Denmark, Romania, China, Korea, Japan and
Thailand. Peru has expressed interest in negotiating a bilateral
investment treaty with the United States.
OPIC and Other Investment Insurance Programs
The Overseas Private Investment Corporation (OPIC) signed agreements
with Peru in December 1992 and a year and a half later (July 1994) OPIC
approved a request for political risk investment insurance. As of June
1995, OPIC coverage in Peru totaled $230 million.
Peru is a member of the Multilateral Investment Guarantee Agency.
Labor
Labor is abundant and trainable, although there is a shortage of highly
skilled workers. The presence of organized labor in the Peruvian
economy continues to decline. Probably less than 6 percent of the
labor force is organized. As much as 60 percent of the economically
active population works in the informal sector. Nearly 80 percent of
the workforce is either unemployed or working at very low wage levels
(below what the government considers a subsistence wage). Since
February 1992, the legal minimum wage for workers is 72.00 soles per
month (about $33 at the early November exchange rate) which is far below
that necessary to meet minimum living requirements.
A comprehensive labor law was promulgated in 1992, allowing for multiple
forms of unions across company or occupational lines, thus permitting
multiple unions in the same company. Workers in probational status or
on short-term contracts are not eligible for union membership.
Bargaining agreements are considered contractual agreements, valid only
for the life of the contract. The concept of "acquired rights" carrying
over from pervious contracts has been abolished. Productivity
provisions must be included in any collective bargaining agreement. The
number of officials and the amount of time union officials may devote to
union work with pay is limited to 30 days per year. Unless there is a
pre-existing labor contract covering an occupation or industry as a
whole, unions must negotiate with each company individually. A labor
law passed in July 1995 which has further liberalized hiring.
A union can request binding arbitration in contract negotiations.
Strikes may be called only after approval by a majority of all workers
(union and non-union) voting by secret ballot. Unions in essential
public services as determined by the government must provide during the
strike sufficient workers, as determined by the employer, to maintain
operations.
The new constitution provides for a maximum work day of 8 hours, with 48
hours as the maximum per week. The labor code also sets a 45-hour
workweek for women, including 24 hours rest per week and 30 days paid
annual vacation for all workers. These and other benefits are readily
sacrificed in exchange for regular employment. Strike activity has
declined markedly over the past three years with the continued severe
deterioration of the economy during that period.
Foreign Trade Zones/Free Ports
Decree Law 704 of November 1991 governs the four types of free trade
zones in Peru -- export processing zones, special commercial treatment
zones, special development zones and tourist zones. The rules and
benefits applying to these zones are the same for foreign and national
investors.
Activities in export processing zones are exempt for 15 years from the
customs duties and any taxes except social security. In addition,
companies may hire workers under temporary contracts and keep their
accounting in foreign currency. Export processing zones exist at Ilo,
Chimbote, Matarani, Paita and Trujillo. Tourist zones receive the same
benefits as export processing zones to promote national or foreign
tourist development. The only tourist zone created thus far is at Ilo.
Companies locating in special commercial treatment zones in frontier and
jungle areas pay only 10 percent customs duties (normal rates are 15 or
25 percent) are exempt from sales taxes and may keep their accounting in
foreign currency. Tacna and Tumbes are the only special commercial
treatment zones at the moment. Special development zones may be
established by the government to encourage investment in designated
areas. The benefits and locations of these zones are to be established
by presidential decree.
Capital Outflow Policy
Peru has no restriction on capital outflows for both nationals and
foreigners. The GOP does not provide Peruvian citizens any special
incentives (e.g., subsidies, tax rebates) to invest in foreign
countries.
Although the United States was the largest foreign investor in Peru
until 1994, U.S. direct registered investment grew only $54 million
during 1989-1993. This sluggish development reflected, to a large
degree, Peru's mounting foreign debt and the GOP's refusal to repay
foreign loans, widespread corruption, hyperinflation, and political
instability at the hands of the terrorist group Sendero Luminoso. But
President Fujimori's highly successful economic stabilization and
liberalization program, the GOP's successful war against Sendero
Luminoso, and the privatization program have restored much investor
confidence. In 1992, the U.S. company Newmont invested about $37
million and a further $40 million in 1994-95 in the Yanacocha gold mine.
In March 1994, U.S. investors bought the former government owned Cerro
Verde copper mine for $37 million with a commitment to invest an
additional $million in the project. In November 1994, U.S. investors
paid $ 218 million in cash plus $55 in debt paper for the Tintaya Copper
mine, with a commitment to invest $85 million in 5 years. In 1994,
direct U.S. investment rose about $100 primarily due to the Southern
Peru Company's investment in the Ilo copper refinery, and the Magma
company's investment in the Tintaya copper mine.
Based on projections from Conite and other sources, additional foreign
investment in existing foreign-owned companies could exceed $ 6.7
billion in the near future. Most of this investment is expected to go
to already privatized companies, although companies purchased outside of
the privatization program could receive a significant amount of
additional investment. The majority of privatization contracts have
included commitments for further investment. The La Granja copper
deposit was purchased in March 1994 for only $ 1 million, but the
investment commitment was $ 25 million with a projected total investment
of over $770 million. Likewise the Cerro Verde mine was sold for $37
million but the contract called for an additional $485 million
investment. On top of the $2.0 billion privatization of Entel and CPT,
Spain's Telefonica agreed to invest an additional $1 billion in
Entel/CPT. Telefonica recently announced it could invest another $900
million by the end of 1998. (For further information see Appendix D.
Investment Statisitics.)
VIII. Trade and Project Financing
Banking System
The Peruvian banking system consists of 23 commercial banks, plus the
Central Bank, the Banco de la Nacion and the government-operated
development bank Cofide. Total liquidity of the banking system was
about $7.4 billion in May, 1995. Of the 23 commercial banks, 18 are
locally chartered, four operate under rules for "multinational" banks,
and only one, Citibank, is a foreign commercial branch bank. The
banking law of December 1993 allows for the creation of consumer credit
companies and investment banks.
The Peruvian banking system has been cleaned up significantly with the
liquidation of insolvent government sectoral development banks, as well
as most savings and loans and cooperatives. In part this cleanup was
required under the conditions of financial-sector loans from the World
Bank and the Inter-American Development Bank (IDB) that accompanied
Peru's clearance of its arrears to international financial institutions
(IFI's) and reinsertion into the international financial community. The
Superintendency of Banking and Insurance (SBS) has received IMF and IDB
support in reclassifying bank portfolios and setting new standards of
prudence, including norms on concentration of loan portfolios. Under
new banking legislation of 1993, banks were required to recapitalize and
institute more prudent rules and the SBS was given greater supervisory
responsibilities.
Peruvian law allows banks freely to take deposits and make loans in both
foreign and domestic currency. The Peruvian economy is highly
"dollarized." In May 1995, dollars comprised about 65 percent of
liquidity in the banking system, 5 percentage points below the level
in mid-1994. Although some Peruvian bankers have expressed interest in
strengthening the role of the Peruvian sol, the dollar likely will
remain a key part of the banking system for the foreseeable future.
Lending rates for dollars and soles are still relatively high, but they
have come down in the past year. Average sol lending rates were about
37 percent per annum in June 1995; rates for preferred customers were as
low as 25 percent while risky clients were charged over 100 percent
interest. The reserve requirement for sol loans is only 9 percent.
Lending rates for dollar loans averaged about 15 percent in June 1995.
The reserve requirement for dollar loans is 45 percent.
The sol and dollar are freely convertible and there are no exchange
controls or import or export licensing requirements that would affect
access of importers to foreign currency.
Financing Available
The success of Peru's economic stabilization/liberalization program has
brought about a marked expansion of the financial sector in just a few
years. The amount of money in the financial system as a percent of GDP
was about 15 percent in early 1995 compared to only 4 percent in the
early 1990s. Peruvian bankers hope to expand the financial system
further. In September 1994, Banco Wiese sold $ 51 million worth of
stock (in the form of ADRs) on the New York Stock Exchange to bolster
bank assets and expand lending capacity. With annual inflation now
nearing single digits, mortgages are being offered for 15-20 years.
(Previously mortgages had to be renegotiated every few months.) Within
the past year, bond sales in the Lima Stock Exchange have grown
significantly. The creation of private pension funds also have
increased financing capacity.
Top Peruvian banks now boast they have access to short and medium-term
capital for LIBOR plus 2-3 percent. Less than two years ago, the same
banks reportedly had to pay enormous premiums for credit from world
capital markets. While selected Peruvian banks now appear to have the
confidence of the world financial community, most loans for Peru still
are either extended by international financial institutions (e.g., the
World bank, Inter-American Development Bank, and the IMF), or channeled
through the GOP's financing corporation COFIDE. An acceleration of
commercial bank lending to Peru is expected soon, especially if the GOP
negotiates a Brady Plan on the country's commercial debt which was
renounced by the Garcia Administration (1985-1990). That debt totals
$6-9 billion of including $3 billion principal, and $3-6 billion of past
due interest.
Peruvian firms import through letters of credit confirmed by
correspondent banks in the U.S. or other supplying countries. All
Peruvian commercial banks have correspondent relationships with banks in
the United States, Europe and Asia. Given Peru's improving track record,
more foreign commercial banks are expected to show interest in trade
financing and correspondent relationships with Peruvian commercial
banks.
In August 1994, the U.S. Export-Import Bank announced that it would
provide both short- and medium-term (up to 5 years) financing for the
private sector. Under EXIM's medium-term program, U.S. exports of
capital equipment to Peru are eligible for loans, guarantees and
insurance. Exports of consumer goods, spare parts and raw materials are
eligible for short-term (up to 180 days) credit insurance.
In June 1995, Japan's Foreign Cooperation Fund (OECD) approved
concessional loans to Peru totaling $400 million. One loan totaling
about $200 million was earmarked for development of the port of Callao.
Another loan of $200 million was approved for irrigation, water and
sewage systems. The latter loan reportedly will be co-financed by the
World bank with OECD providing about $100 million. The two loans will
be extended for 30 years with a 10-year grace period and an annual
interest rate of 3 percent. In addition, OECD is evaluating yet another
loan totaling $240 million for two hydroelectric facilities and a sewage
treatment plant.
Correspondent Banks: The following is a list of banks based in Peru
which have correspondent relations with U.S. banks:
Banco de Comercio
Banco de Credito
Banco del Sur
Banco Financiero
Banco Interamericano de Finanzas
Banco Interandino
Banco Internacional (INTERBANC)
Banco Latino
Banco de Lima
Banco Wiese
Citibank, N.A.
Banco Continental
Banco del Nuevo Mundo
Banco Mercantil
Banco Banex
EXTEBANDES
Banco Regional del Norte
Banco de la Republica
Probank
Banco Sudamericano
Banco Libertador
Banco del Trabajo
Banco Solventa
Banco de la Nacion (GOP owned bank)
IX. Business Travel
Business Customs
Business is conducted in Spanish, although there are a great number of
executives in the Peruvian business community who speak English. All
promotional literature must be in Spanish. Business hours in Peru are
generally from 8 a.m. to 5 p.m. Breakfast meetings are not common, but,
business lunches are normally scheduled between the hours of 1:30 to
3:30 p.m. However, shops and some businesses operate 11:00 a.m. to 1:00
p.m. and from 4:00 p.m. to 8:00 p.m. Business offices are closed on
Saturdays. In the provinces, business hours are usually from 9:00 to
1:00 p.m. and from 4:00 to 7:00 p.m. Lima is situated directly south of
New York and is in the Eastern Standard time zone, but does not follow
Daylight Savings Time. Dates are written starting the day of the month,
the month and finishing with the year. The currency is the Nuevo Sol,
which replaced the Inti. As of July 1995, the exchange rate was 2.25
soles to one U.S. dollar. The metric system is used for weights,
measures, and mathematical expression.
Travel Advisory and Visas
The State Department travel advisory, now called the Consular
Information Sheet, can be obtained from the U.S. Department of State.
The latest information sheet "warns all U.S. citizens of the dangers of
travel to Peru. With the exception of certain tourist areas, terrorist
violence, which has diminished over the past year, continues to occur in
many parts of the country. Foreign visitors have not been specifically
targeted and tourist areas have generally been free of terrorist
activity."
The information sheet also contains reports about crime, terrorist
activity, entry requirements, travelling to emergency zones, drug
penalties, adoptions and registration of U.S. citizens at the U.S.
Consulate upon arriving to Peru. Representatives of U.S. companies
coming to Peru on exploratory trips should do so on a tourist visa. For
more information on Peruvian visa requirements, contact the Peruvian
Embassy in Washington D.C. or consulates in the following cities:
Chicago, Houston, Los Angeles, Miami, New York, Peterson, New Jersey,
Puerto Rico, San Francisco, and Washington D.C.
Holidays
The Peruvian official holidays are:
- New Year's Day January 1996
- Maundy Thursday April 4 1996
- Good Friday April 5 1996
- Labor Day May 1 1996
- Saints Peter And Paul June 29 1996
- Independence Day July 28/29 1996
- Santa Rosa de Lima August 30 1995
- Battle Of Angamos October 8 1995
- All Saints' Day November 1 1995
- Immaculate Conception December 8, 1995
- Christmas Day December 25, 1995
Business Infrastructure
The transport sector is in poor shape due to long neglect, but efforts
are underway to remedy the situation. For more information regarding the
infrastructure situation please refer to Chapter II. The state-run
railroad system is underdeveloped, but as privatization proceeds, expect
the rail system to attract new investments.
Peru has two international air carriers Faucett and Aeroperu. There are
a number of smaller airlines covering domestic routes, such as Aero
Continente, Americana, Expreso Aereo and Imperial Air. Lima is also
served by two U.S. Airlines- American and United. International flights
are available to most major cities in South America. Currently, the
only direct flights to the United States are to Miami, although Aeroperu
has indirect service to Los Angeles. There are daily cargo Flights to
Miami on both Peruvian and U.S. carriers (Challenge Air Cargo). A new
civil aviation agreement between the United States and Peru was
concluded in July 1995, which should lead to an expansion of air service
in the near future, including possible direct flights to New York,
Houston, Los Angeles and Baltimore/Washington.
Public ground transportation is not recommended. Taxis are abundant and
not metered, so fares must be negotiated. More reliable radio taxis are
recommended. Transportation to and from the airport by radio taxi or
taxi service is approximately $15. Tips are not expected on short
rides. If you have a car and driver a tip is common.
The hotel infrastructure is at this time inadequate and relatively
expensive throughout the Lima area. Completion of new hotel projects in
1996 will help ease this problem. Cost and availability of rented
residential space, apartments, or homes is surprisingly high driven by
increased demand by returning businessmen. Construction in these areas
has been expanding rapidly to meet over growing demand.
The telephone system was recently privatized, so some improvement in
service is being seen. It is not possible to directly access credit
card numbers for AT&T, Sprint, MCI, etc. Cost of a call to the U.S. is
approximately $2.50 per minute.
Peruvian medical facilities do not generally meet U.S. standards,
however, if visitors take certain precautions about food and drink, the
level of risk will be reduced. Cholera and other infectious diseases
such as hepatitis are present in Peru. Travelers in Peru should
substitute bottled beverages for potentially contaminated water. Fish,
shellfish and vegetables should not be eaten unless well cooked, and all
food should be eaten while still hot. Peeled fruits are safe.
Travelers to the jungle areas of Peru should have up-to-date yellow
fever vaccine and malaria prophylaxis. There are several clinics in the
Lima area which have U.S. trained personnel and up to date medical
equipment. Since U.S. medical insurance is not always valid outside the
United States, supplemental insurance could prove useful.
X. APPENDICES
Appendix A: COUNTRY DATA
Population: 23.4 million (1994 est.)
Population Growth Rate: 2.1 percent annually
Religions: Roman Catholic Church (89 percent), Evangelical religions
(3.5 percent), other Christian (2 percent)
Government System: Republic, President elected by popular vote in two
rounds, 120 member unicameral congress elected at-large by popular vote.
Languages: Spanish and Quechua (official), Aymara (highlands), dozens
of others spoken by native inhabitants in the Amazon basin
Source: National Statistical Institute
APPENDIX B: DOMESTIC ECONOMY
1994 1995 1996
(proj) (proj.)
GDP in current (USD mil) 32,700 35,500 38,000
Real GDP growth (percent) 13.0 8.0 6.0
GDP per-capita (current $) 1,346 1,485 1,585
Government Spending as
Percent of GDP 10.7 10.9 11.2
Consumer price index
(pct change) 15.4 10.0 9.0
Unemployment (pct) 8.9 8.5 8.0
Foreign exchange reserves
(USD mil) 5,696 6,500 6,000
Av. exchange rate for year
(sol/$) 2.24 2.28 2.32
Foreign debt 1/ (USD mil) 23,398 24,000 24,500
Debt serv. as pct.
of merch. exports 20.3 20.0 20.0
U.S. Econ./Mil. Assistance 151.9 152.2 151
APPENDIX C: TRADE
1994 1995 1996
(US$ Million)
Exports (Fob) 4,502 6,000 8,000
Imports (Fob) 5,611 7,800 10,000
U.S. Exports to Peru 1,069 1,600 1,800
U.S. Imports from Peru 754 900 1,000
APPENDIX D: INVESTMENT STATISTICS
TOTAL REGISTERED DIRECT FOREIGN INVESTMENT IN PERU
(US$ Million)
1990 1,330.4
1991 1,370.1
1992 1,531.8
1993 1,683.4
1994 4,455.6
1995 (Apr 30) 4,505.6
Source: National Commission for Foreign Investment and Technology
(CONITE) Dec 31, 1994
DIRECT REGISTERED FOREIGN INVESTMENT IN PERU BY COUNTRY
1992 - 1995 (US$ Million)
Country 1992 1993 1994 1995
Spain 3.1 3.1 2,058.4 2,058.4
United States 630.3 656.2 756.1 756.3
United Kingdom 133.6 145.9 361.3 375.7
Nethlds. 35.4 40.8 267.6 269.4
Panama /2 175.1 204.7 223.4 195.4
Chile 1.8 35.9 163.9 164.4
China 118.1 118.1 118.1 118.1
Switz. /2 103.7 104.7 108.3 108.3
Canada 36.6 36.6 36.8 87.0
Uruguay 40.6 44.7 45.1 45.1
Others 253.5 292.7 316.6 327.5
TOTAL 1,531.8 1,683.4 4,455.6 4,505.6
1/ As of 30 April 1995.
2/ Note: Peruvians have set up companies in Panama and
Switzerland for the purpose of making investments in Peru.
SOURCE: CONITE. Actual foreign investment is higher as the above table
only reflects foreign direct investment registered with CONITE at book
value.
DISTRIBUTION OF DIRECT INVESTMENT IN PERU BY SECTORS
Sector (US$ million) Percentage
Communications 2,002.2 44.4
Mining 935.3 20.8
Industry 540.3 12.0
Energy 364.3 8.1
Finance 258.3 5.7
Commerce 231.7 5.1
Services 66.7 1.5
Transport 30.7 0.7
Others 76.1 1.7
TOTAL 4,505.6 100.0
SOURCE: CONITE.
MAJOR PRIVATIZATION, 1992 - 1994
Pct of Val of
Shares/ Shares Major
Company Year Assets Mil $ Sharehol.
------- ---- ------ ------ --------
Hierro-Peru
(mining) 1992 90/1 120 China
Gas
Stations 1992 90/1 39 Peru
Petromar
(oil ex- 20 year
traction) 1993 lease 200 U.S.
Aeroperu
(airline) 1993 70 25 Mexico
Cerro Verde
(copper mine) 1993 90/1 35 Peru
Cemento Yura
(Cement) 1994 90/1 67 Peru
Entel/CPT
(Telcom) 1994 35 1,391 Spain
Ilo
Copper
Refinery 1994 100 66 U.S.
Cementos Lima
(Cement) 1994 49 104 Peru
Edelnor
(Electricity) 1994 60 176 Canada
Edelsur
(Electricity) 1994 60 212 Chile
Interbanc
(Finance) 1994 99.8 51 U.S.
Tintaya
(Copper mine) 1994 90/1 273 U.S.
Cajamarquilla
(Zinc refin.) 1994 90/1 153 Canada
Enturperu
(Hotels) 1994 90/1 Peru
1/ Although bids were made for 100 percent of the shares,
under Peruvian law, employees have the right to buy up to
10 percent of the company's shares. Share-holders may buy any of the
shares not purchased by the employees.
Source: Commission for the Promotion of Private Investment
(COPRI).
PROJECTED DIRECT FOREIGN INVESTMENT IN
EXISTING COMPANIES
Investing Company US$ Million
Telefonica International
de Espana, S.A. 1,000 /1
Shell/Mobil 1,900 /2
Cambior Inc.7 771
Empresa Minera de
Mantos Blancos, S.A. 560
Cyprus Amax Metals 485
Panworld Minerals Int. 450 /3
Southern Peru Copper 300 /4
Petro-Tech 265
Maple Corp 150
Magma Copper 85
Newmont Mining Corp. 60
Shell Petroleum Co. 44
Occidental Oil/Gas Co. 34
Others 600
Total 6,707
Footnotes:
1/ As stipulated in Telefonica's agreement to buy
Entel and CPT. In May 1995, Telefonica management
said investment could reach $ 1.9 billion by 1998.
2/ This is the projected investment to develop the
Camisea Gas Deposit.
3/ This investment reportedly is for an iron-ore
mine that probably will not be developed for at
least the next five years because of the lack of
nearby infrastructure facilities.
4/ About half of this amount already has been
invested.
Source: Conite and Private Estimates.
APPENDIX E: US AND COUNTRY CONTACTS
U.S. Embassy Lima, Peru
Unit 3710
APO AA 34031
Av. La Encalada Cdra. 17 S/n
Urbanizacion Monterrico Sur
Surco, Lima 33, Peru
Tel: (511) 221-1202 Fax: (511) 221-3543
Alvin P. Adams, Ambassador
James Mack, Deputy Chief of Mission
U.S. Department of Commerce (U.S. Embassy Lima, Peru)
Unit 3780
APO AA 34031
Tel: (511) 221-1512 Fax: (511) 221-1513
Ann M. Bacher, Senior Commercial Officer
Tom Welsh, Desk Officer Washington D.C.
Tel: (202) 482-2375 Fax: (202) 482-0464
U.S Department State (U.S. Embassy Lima, Peru)
Unit 3730
APO AA 34031
Tel: (551) 221-2410 Fax: (511) 221-3543
John Riddle, Economic Counselor
Marti Melzow, Desk Officer Washington D.C.
Tel: (202) 647-3360 Fax: (202) 647-2628
U.S Department of Agriculture (U.S. Embassy Lima, Peru)
Unit 3785
APO AA 34031
Tel: (511) 221-1514 Fax: (511) 221-1515
Daryl Brehm, Regional Agricultural Officer
American Chamber of Commerce (AMCHAM)
Av. Ricardo Palma 836
Miraflores
Lima 18 - Peru
Tel: (511) 447-9349 Fax: (511) 447-9352
James Plunkett, General Manager
Confederacion Nacional de Comerciantes (CONACO)
AV. Abancay 210, Piso 3
Lima 1 - Peru
Tel: (511) 427-2567, 427-4914, 427-3528, Fax: (511) 427-2567
Joaquin Scwalb Lopez Aldana, President
Herless Buzzio Zamora, Director General Manager
(Traders' association)
Sociedad Nacional de Industrias (SNI)
Los Laureles 365
San Isidro
Lima 27 - Peru
Tel: (511) 421-8830 Fax: (511) 442-2573
Roberto Nesta, President
Bruno Tomatis, General Manager
(Manufacturers' society)
Sociedad Nacional de Mineria y Petroleo
Francisco Grana 671
Magdalena
Lima 17 - Peru
Tel: (511) 460-1560, 460-1600, 460-2088 Fax: (511) 460-1616
Walter Sologuren, President
Carlos Diez-Canseco, General Manager
(Mining and petroleum society)
Asociacion de Exportadores (ADEX)
Av. Javier Prado Este 2875
San Borja
Lima 41 - Peru
Tel: (511) 224-2020, 224-2030, 224-2040 Fax: (511) 437-3773
Juan Pendavis, President
Pedro Martinez Torres Lara, General Manager
(Exporters' association)
Camara de Comercio de Lima
Gregorio Escobedo 398
Jesus Maria
Lima 11 - Peru
Tel: (511) 463-3434 Fax: (511) 463-9864
Juan Musso, President
Pedro Flores, General Manager
(Lima Chamber of Commerce)
Camara Peruana de la Construccion (CAPECO)
Av. Paseo de la Republica 571
Piso 12
Lima 1 - Peru
Tel: (511) 428-7480 Fax: (511) 433-0188
Jose Ortiz, President
Alfonso Merino Reyna, General Manager
(Chamber of Engineering and Construction Firms)
Confederacion Nacional de Instituciones Empresariales (CONFIEP)
Vanderghen 595
San Isidro
Lima 27 - Peru
Tel: (511) 440-6050, 442-9122 Fax: (511) 441-5072
Arturo Woodman, President
(Confederation of Business Executives)
Asociacion de Bancos
Jr. Miro Quesada 247, Of. 409
Lima 1 - Peru
Tel: (511) 428-8850 Fax: (511) 433-3665
Sra. Maria Vivanco
(Association of Banks)
Asociacion de Industriales Lacteos
Los Ibis 120
Urb. El Palomar,Corpac, San Isidro
Lima 27 - Peru
Tel: (511) 440-9758
Rolando Piskulich, Manager
(Largest importers of powder milk, milk fat, whey and other dairy
inputs.)
Asociacion Peruana de Porcitultores
Pomalca 327
Urb. Centro Comercial Monterrico
Surco
Lima 33 - Peru
Tel: (511) 436-3729, 436-4168 Fax: (511) 436-3729
Ana Maria Trelles
(Importers of animals, equipment and feed grain for pork production.)
Asociacion Peruana de Avicultura
Esmeralda 255
Chacarilla del Estanque
Lima 33 - Peru
Tel: (511) 437-9282 Fax: (511) 437-2555
Fernando Caceres, Manager
(Importers of baby chicks, equipment, and inputs for poultry and egg
production.)
Asociacion de Fongales
Pumacahua No. 877, Of. 306
Jesus Maria
Lima 11 - Peru
Tel/Fax: (511) 423-4642
Rodolfo Malarin de Azambuja, President
(Importers of inputs, equipment, and cattle for milk production.)
Comite de Molinos de Trigo
Los Laureles 365
San Isidro
Lima 27, Peru
Tel: (511) 440-8700 Fax: (511) 442-4351
Alejandro Daly, Manager
(Importers of wheat)
Ministerio de Agricultura
Av. Salaverry s/n
Lima 1 - Peru
Tel: (511) 432-4040, 432-0712, 432-9098 Fax: (511) 432-0990
Absalon Vasquez, Minister
(Ministry of Agriculture)
Instituto Nacional de Recursos Naturales
Ministerio de Agricultura
Calle 17 No. 355
Urb. El Palomar, San Isidro
Lima 27 - Peru
Tel: (511) 441-4606, 441-0425 Fax: (511) 441-4606
Miguel Ventura, Chief
(This institute supervises all matters related to use, exports,
development, and preservation of land and natural resources such as
wetlands, woodlands, wildlife, etc.)
Servicio Nacional de Sanidad Agraria
Ministerio de Agricultura
Av. Salaverry s/n
Jesus Maria
Lima 11 - Peru
Tel/Fax: (511) 433-7802
Elsa Carbonell, Director
(Equivalent to APHIS. Supervises sanitary conditions of imported
agricultural commodities and animals.)
Ministerio de Economia y Finanzas
Jr. Junin 319
Lima 1 - Peru
Tel: (511) 427-3930 Fax: (511) 428-2101
Jorge Camet, Minister
(Ministry of Economy and Finance)
Ministerio de Energia y Minas
Av. Las Artes 260
San Borja
Lima 41 - Peru
Tel: (511) 475-0065 Fax: (511) 475-0689
Amado Yataco, Minister
(Ministry of Energy and Mines)
Ministerio de Industria, Turismo, Integracion y Negociaciones
Comerciales Internacionales
Calle Uno s/n
Urb. Corpac, San Isidro
Lima 27 - Peru
Liliana Canale Novella, Minister
Tel: (511) 224-3261, 224-3282, 224-3345 Fax: (511) 224-3144
(Ministry of Industry, Tourism, Integration and International
Business)
Ministerio de Pesqueria
Calle Uno Oeste S/n
Urbanizacion Corpac, San Isidro
Lima 27 - Peru
Tel:(511) 470-4737, 470-9737 Fax:(511) 460-4090
Jaime Sobero Taira, Minister
(Ministry of Fisheries)
Ministerio de Relaciones Exteriores
Jr. Lampa 535
Lima 1 - Peru
Tel: (511) 427-3860 Fax: (511) 432-3479
Efrain Goldenberg, Minister
(Ministry of Foreign Affairs)
Ministerio de Salud
Av. Salaverry Cdra. 8
Lima 1 - Peru
Tel: (511) 432-3535 Fax: (511) 431-3671
Eduardo Yong Motta, Minister
(Ministry of Health)
Ministerio de Transportes, Comunicaciones, Vivienda y
Construccion
Av. 28 de Julio 800
Lima 1 - Peru
Tel: (511) 433-7800 Fax: (511) 433-9378
Alm. A.P. Juan Castilla Meza, Minister
Waldo Carreno, Vice Minister of Transport
Willy Contreras, Vice Minister of Communications
(Ministry of Transport, Communications, Housing and
Construction)
Dun & Bradstreet S. A.
Republica de Chile 388, Piso 2
Lima 1 - Peru
Tel: (511) 433-5533, 433-2989 Fax: (511) 433-2897
Florencio Kohata, Manager
Apoyo S.A.
Gonzales Larra_aga 265
Miraflores
Lima 18 - Peru
Tel: (511) 444-5555/445-5237 Fax: (511) 445-0535/445-5946
Felipe Ortiz de Zevallos
(Consulting firm)
Cuanto S.A.
Plaza del Ovalo 203
San Isidro
Lima 27 - Peru
Tel: (511) 442-3421 Fax: (511) 442-5460
Rosario Cespedes
(Consulting firm)
Gerencia y Marketing S.A.
Arturo Aguilar 289
Surco
Lima 33 - Peru
Tel: (511) 448-0054 Fax: (511) 449-2696
Alfonso Gatanadui
(Consulting firm)
TPCC TRADE INFORMATION CENTER IN WASHINGTON
1-800-USA-TRADE
U.S. DEPARTMENT OF AGRICULTURE, FOREIGN AGRICULTURE SERVICE, TRADE
ASSISTANCE AND PROMOTION OFFICE, (202) 720-7420
APPENDIX F: MARKET RESEARCH
Commercial Service Publications 1995-96.
Computers and Peripheral Equipment; Construction; Telecommunications;
Industrial Chemicals; Franchising; Food/Packaging Equipment; Auto Parts;
Mining Industry Equipment; Oil/Gas Equipment; Medical Equipment;
Agriculture Machinery.
Foreign Agricultural Service Publications
Oilseeds Report: Includes information on fishmeal, soybean meal,
cottonseed meal, fishoil, soybean oil, cottonseed oil, palm and palm
kernel oil;Grains and Feed Report: Includes information on Wheat, Rice
and Corn; Sugar Report; Coffee Report; Asparagus Report;
Agricultural Situation Report: provides general information on the
situation of the agricultural sector in Peru. Also Includes information
on agricultural imports and exports.
Dairy Report: Provides information on production of fresh milk, imports
of powder milk (whole and skim), anhydrous milk fat, butteroil and
consumption of these products.
A complete list of market research topics are available through the
National Trade Data Bank.
APPENDIX G: TRADE EVENT SCHEDULE
AUG 25-29, 1995 West Virginia Trade Mission to South
America, Lima, Peru
West Virginia Development Office
Capitol Complex
Charleston, WV 25305-0311
Tel: (304) 558-2234 Fax: (304) 558-0449
AUG 23-30, 1995 Doing Business with the U.S., Tacna, Peru
U.S. & Foreign Commercial Service
American Embassy
Unit 3780
APO AA 34031
Tel: (511) 221-1512 Fax: (511) 221-1513
NOV 17-26, 1995 21 Pacific International Trade Fair of the
Pacific, Lima, Peru
CMC International Division
200 N. Glebe Rd.
Suite 710
Arlington, VA 22203
Tel: (703) 527-8000 Fax: (703) 527-8006
MARCH 6-7, 1996 Visit USA Workshop, Lima, Peru
Visit USA Committee
U.S. & Foreign Commercial Service
American Embassy
Unit 3780
APO AA 34031
Tel: (511) 221-1512 Fax: (511) 221-1513
MARCH 18-19, 1996 Power Expo'96 Trade Mission, Lima, Peru
U.S. Department of Commerce
Office of Energy, Infrastructure and
Machinery, Room 4033/4326
Washington, D.C. 20230
Tel: (202) 482-2390 Fax: (202) 482-0170
APR 14-23, 1996 8 Tecnotron International Trade Fair,
Lima, Peru
CMC International Division
200 N. Glebe Rd.
Suite 710
Arlington, VA 22203
Tel: (703) 527-8000 Fax: (703) 527-8006
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