Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
PERU See this report at worldfolio.co.uk Foreign investment and equity markets Unleashing Peru’s industrial potential Opportunities and diversity in industry National treasures, global attractions Page 2 Page 3 Pages 4 & 5 Page 7 AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT Monday, October 22, 2012 Latin America’s next top performer Agriculture, industry, tourism and finance are driving growth conomic power and political stability: these are the two main characteristics that any foreign investor will find when going to do business in Peru, which has experienced a surprising period of growth and prosperity. “The world needs to know that Peru today is radically different, in a positive sense, to how it was a couple of decades ago,” explains Roberto Hoyle, President of inPERU, one of the country’s most active promotion agencies. “Its sustained growth is based on solid foundations. The macroeconomic indicators are really positive, such as the gross domestic product (GDP), which in the last few years has been growing at a sustained average rate of at least 6%, as well as the region’s lowest inflation level. “Overall, Peru has achieved very good results over the past few years in terms of growth, job creation, development, exports, and in promoting what we really are: one of the world’s most fascinating and culturally rich countries, which today is full of possibilities.” Mr. Hoyle is also President of the Lima Stock Exchange, which has formed an alliance with the stock markets of Colombia and Chile to create one of Latin America’s most powerful financial markets with great future potential. Following poor GDP growth of just 0.8% in 2009, the economy’s expansion rebounded to 8.8% in 2010 and 7% in 2011, coinciding with a drop in unemployment from 8.4% in 2009 to 7.5% in 2011, with the resulting increase in disposable income. Over the past few years, both imports and exports have soared. Peru’s imports reached $36.97 billion in 2011, compared to $28.82 billion in 2010, and exports rose to $46.27 billion in 2011, up from $35.56 billion in 2010. This has no doubt helped the expansion and better functioning of basic national sectors, such as telecommunications, public services and established financing bodies, which contribute to robust, long-term economic development in general. Also in 2011, Peru’s growth in industrial production remained solid at 5%. Peru has proven gas reserves estimated at 345.5 billion cubic meters (bcm), and exports approximately 3.6 bcm a year. In 2010, it became a net exporter of liquefied natural gas (LNG). The recent news that Mexico has signed an agreement to buy 360 million cubic feet per day of Peruvian natural gas in 2013, followed by 400 million in 2014 and 500 million in 2015, comes as no surprise. On the contrary, it reflects the current economic excellence of the Andean country. Another sector that has grown exponentially is tourism. This fact, plus Peru’s economy reflects its varied geography, with an arid western coastal plain that faces the Pacific, the rugged Andean mountain region in the center with the highest point at 22,200 feet, and the eastern lowland jungle of the Amazon basin bordering Colombia and Brazil. The mountainous and coastal regions have important mineral resources, and the coastal areas include abundant fishing grounds. However, Peru’s dependence on mineral and metals exports, as well as imported foodstuffs, means that the economy is subject to world market price fluctuations. In addition, the growth in non-coastal areas is hindered by poor infrastructure. One product the country produces is cocaine. Until 1996, Peru was the world’s biggest producer of the coca leaf. It now occupies the second spot, with an estimated 40,000 hectares in E Since 2006, Peru has signed trade deals with the U.S., Canada, Singapore, China, South Korea, Mexico and Japan; concluded negotiations with the European Free Trade Association and Chile; and begun trade talks with Central American countries the general modernization of the Peruvian economy, has led to the opening of numerous businesses, such as bars, discos and nightclubs, in major cities such as Lima and Cuzco. Business tourism and gastronomy are the two main areas in which Peru wants to strengthen and modernize its offer. The rapid growth experienced by the tourism sector has led the government to impose restrictions on the number of tourists that visit the worldfamous Andean site Machu Picchu, an Inca city that attracts the largest number of visitors to the country. The only aim of the restrictions, say government sources, is to protect the site, which is highly sensitive to negative environmental results, such as soil erosion, and the general impact caused to the environment by the large concentration of tourists. The country’s abundant natural resources, such as copper, silver, gold, petroleum, timber, fish, iron ore, coal, phosphate and natural gas, were chiefly responsible for the rise in exports, as well as other emerging products, including chemical products, coffee, asparagus, and the quinoa plant – a raw material of which Peru is the world’s second biggest producer after Bolivia. 2009, still well behind Colombia. Although the coca leaf is harmless and has been chewed by the indigenous population for centuries, it is used to make cocaine by mixing its main active ingredients with various chemicals. “Peru enjoys legal, economic and political stability,” stresses Mr. Hoyle. “Peru has had sustained annual growth over the past decade. Its biodiversity and natural energy and mineral resources make it an attractive place to develop very big projects. In addition, it has a modern and stable legal framework, a democratic political context, and a solid macro-economic situation. In Latin America, Peru is the main producer of gold, zinc and other minerals. We are the main producer of silver worldwide. The internal market is also growing constantly and now trades, thanks to many treaties, with other markets in South America, the U.S., Asia and Europe. Being such a diverse country, Peru offers investment opportunities in many sectors, with equal conditions for all investors.” Exporting Peru to the world The efforts being made at the Commission for the Promotion of Peruvian Exports and Tourism, PromPerú, to raise the country’s international profile entered the limelight in September at the World Travel Awards when it was named South America’s Leading Tourist Board. Regarded as “the Oscars of the travel industry,” the ceremony also reinforced the reputation of Peru’s rich gastronomy, as the country was crowned South America’s Leading Culinary Destination. At the event, Lima’s Jorge Chávez International Airport and several of the country’s hotels were also lauded as national and continental leaders. When it comes to doing business, Peru is second only to Chile as the most economically free nation in Latin America, according to the Economic Freedom of the World: 2012 Annual Report. The publication’s global analysis of 144 countries based on 42 distinct variables also showed that Peru had risen nine places to its current ranking as the 24th freest economy in the world. The report measures economic freedom according to five broad categories: size of government; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor and business. The International Monetary Fund (IMF) regards the country as a “rising star” among the new wave of emerging markets thanks to its sustained economic growth based on prudent macroeconomic policies and boosted by rising domestic and international demand. PromPerú, complemented by various other Peruvian promotion bodies, goes to great lengths to bring such awards and recognition to the attentions of global investors and travelers. Its 2012 publicity campaign focuses on showcasing the real Peru of today: a country not only of great beauty, culture and cuisine, but also of leading business, investment and export opportunities. Its website, www.promperu.gob.pe, along with inPERU’s www.inperu.pe and ProInversion’s www.proinversion.gob.pe, offer visitors and potential investors a wealth of easily accessible information about investment, export and tourism opportunities now to be had. Roberto Hoyle, Executive Chairman of inPERU and President of the Lima Stock Exchange (BVL) says, “inPERU approaches international financial markets to present the country as a whole, not just as a capital market, but also as a market for finance, tourism and business. It works hand in hand with PromPerú and ProInversión. “inPERU has done a great job exporting Peru, through road shows and private meetings between Peruvian and international peers in the main financial centers of the world.” In 2012, representatives from inPERU visited London, Hong Kong, Shanghai and Singapore. Next year the organization will be in the U.S. (New York, Chicago and San Francisco), Europe (London and Frankfurt), the Middle East (Dubai), and Asia (Beijing, Tokyo and Seoul). Mr. Hoyle adds, “inPERU was created to promote foreign investment and develop investment opportunities in our country, presenting it as a nation where public and private interests are aligned and committed to making Peru an attractive destination with many opportunities.” Global fashion traders connect at the PeruModa trade fair A SPECIAL SUPPLEMENT TO THE MIAMI HERALD PRODUCED BY BUSINESS & INVESTMENT LTD . 1-7 Harley Street, London W1G 9QT Tel: +44 (0) 207 291 4402 www.opentoamericanbusiness.com [email protected] PERU TEAM: Iris Oliveros, David Barbolla and Jose Tamayo AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT 2 Peru has the largest city in the region, Lima, with 9 million inhabitants, and one of the coastline’s most dynamic ports at Callao, which is currently being expanded eru’s macroeconomic performance over the past decade has been striking and the country has been one of Latin America’s top performers. After GDP expanded at more than 5% for five consecutive years (according to the World Bank) from 2003-2008, peaking at 9.8% in 2008, growth was suddenly halted in 2009, due to the world economic crisis. However, by this time Peru’s economy had sufficiently been tied into the global market through mining and agricultural exports and managed to post positive GDP growth of 0.8% in 2009. This figure grew tenfold in 2010 to 8.8% and decreased slightly in 2011 to 6.9% according to the Central Reserve Bank of Peru. As of the end of 2011, Peru’s GDP reached a value of US$ 176.728 million; thus, the Peruvian economy completed 10 years of continuous growth with rates above the Latin American average. The International Monetary Fund (IMF) has predicted a continuation of GDP growth in coming years, with expansion forecasted at 5.25% in 2012. These assumptions are mainly based on the announcement of investment projects and on the high expectations of domestic consumption. This is accompanied with the economic agents’ confidence generated by the implementation of responsible economic policies, which have been constant throughout the recent series of governments. Peru’s rapid expansion, coupled with cash transfers and other programs have helped to reduce the national poverty rate by 23 percentage points since 2002. A growing number of Peruvians are sharing in the benefits of growth but inequality persists, posing a challenge for the new Ollanta Humala administration, which has championed indigenous and local disenfranchised groups. The government is committed to Peru’s free-trade path and the country has continued to attract foreign investment and carry on with economic modernization, despite provoking concerns from the local business community that the trade-friendly climate that had been built up over the last years was at jeopardy. ProInversión, a government agency has the responsibility to keep up this trend in economic growth. Its duty is to promote Peru and act as the agency that the population and investors acknowledge as a strategic ally for the development of investments in Peru, with the aim of improving the population’s well-being. Promoting investment by private agents not depending on the Peruvian State, so as to boost and reinforce Peru’s competitiveness and sustainable development is also the main function of ProInversión. The agency’s other responsibilities are to develop mechanisms oriented to attract and assist investors, to promote the image of the country as an adequate place to develop national and foreign investments, to promote investments mainly established in regions and provinces, to prioritize investment promotion aimed at creating jobs and to oversee exports, always taking into account national, regional and local interests. ProInversión manages projects in various different sectors, including agriculture, energy, tourism and mining to name just some. According to ProInversión Executive Director Javier Illescas, Peru is a country with a territory that has almost every climate on the planet and with significant resources in the fields of mining and energy. It is these natural advantages that the agency is capitalizing on and coupled with P Overseeing Peru’s international appeal at ProInversión Peru is emerging as a priority destination for foreign direct investment due to its strong macroeconomic and legal framework that are highly favorable to foreign participation the work of Peruvians means that Peru is the leading exporter of asparagus, paprika and fish oil in the world. They are also the largest producer of gold, silver and zinc in Latin America, making the country an extremely attractive choice for investors. ProInversión have the facts and figures at hand, which provide the evidence to sell the country to prospective investors. Peru maintains a pro-active attitude with respect to its participation in integration mechanisms that make it possible to access broader markets, which the investors in Peru can gain access to by harnessing its natural resources and competitive advantages. The negotiation of the trade promotion agreement (TPA) with the United States sets new standards in terms of the movement of goods and services and the protection of investment, which served as the foundation for negotiating the free trade agreements with Singapore, Canada, China and the EFTA countries, the Early Harvest Protocol signed with Thailand and the deepening of the Economy Complementary Agreement (ECA) with Chile. On this same foundation, negotiations are being developed for the expansion of ECAs with Mexico and the signing of free trade agreements with Japan. In addition, Peru is negotiating an association agreement with the European Union, a block that sets zero tariffs for fishing, agriculture and textile products through the General System of Andean Preferences. Peru is also a member of the free trade area agreed upon among the Andean nations that also includes Bolivia, Ecuador and Colombia (Andean Community of Nations) and that comprises a market of nearly 100 million inhabitants. Moreover, since 1998 Peru has been a full member of the Asia-Pacific Economic Cooperation Forum (APEC), whose market totals almost 50% of the world’s population, which is being called to become a natural link between the industrialized economies of Asia and emerging economies in Latin America. There are numerous international groups from all regions of the world that maintain a presence in the country. Investment comes from both European (the largest portion provided by Spain and the United Kingdom) and North and Central American countries (the United States, Canada and Mexico). In addition, there is an increasing trend among Peru’s South American neighbors to invest in the country. A sizable portion of these foreign investments relate to use of the country’s natural resources, providing public services, banking and tourism and infrastructure construction, within the framework of companies’ internationalization strategies. According to Mr. Illescas, the country’s location on the west coast of South America allows it to be projected as the regional business hub of the area. Peru also has the largest city in the region, Lima, with 9 million inhabitants. In addition to this, the port of Callao, which is currently being expanded, is the most dynamic on this coast. All of these factors, along with the work of ProInversión, make Peru an extremely appealing country to invest in. Sustained economic growth over the last decade, increasing participations in global markets, the country’s strategic location in the South Pacific, vast natural resources and many high potential sectors for investment all amount to justifiable reasons to put money into Peru. ‘ IIRSA, the Initiative for the Integration of Regional Infrastructure in South America, consolidates Peru as an effective bridge between the markets of South America, Asia and the U.S. Javier Illescas, Executive Director of ProInversión Regional integration boosts options at the bourse The Lima Stock Exchange (Bolsa de Valores de Lima – BVL) celebrates its 155th anniversary in 2012. Over the years, the stock market has experienced an extensive history allowing it to develop a genuine and trustworthy financing alternative for Peruvian companies and foreign investors. “We shall continue to work on being a viable financing option for companies, so as to be able to offer investors more alternatives,” according to Roberto Hoyle, President of the BVL. The most important event in the past few years, and one which has revolutionized Latin American stock markets, was the 2011 creation of the Integrated Latin American Market (MILA), which links together the Santiago Stock Exchange in Chile, the Colombian Stock Exchange, and the Lima Stock Exchange in Peru. This connection between the three stock markets on the Pacific coast of South America has resulted in the formation of the region’s biggest market in terms of issuers, the second largest in stock market capitalization, and the third in trading volume after Brazil and Mexico. In fact, the latter North American country last December signed an accord announcing its intention to join up with MILA. Peru’s BVL is part of the Integrated Latin American Market (MILA) The project of integration offers major advantages to investors, issuers and intermediaries. For the first group, it means more and better investment products, a greater diversification of risks, and the possibility of creating new portfolios for local client distribution. Issuers will have access to greater sources of financing, and they will see their costs reduced. In addition, the intermediaries will benefit from more attractive and competitive stock markets, an increased number of products to offer their clients, and will have the chance to adapt to international standards. Characterized by the weight of mining companies such as Volcán B or Minsur S.A., the Peruvian exchange is diversifying with the aim of creating a full range of sectors with an important presence in the country’s assets. The current big stakeholder in the Lima Stock Exchange over recent years is the medium-sized company. With the aim of accompanying these companies as they prepare to enter the stock market, the Alternative Securities Market (MAV) began functioning last August 29. Companies that make up part of this market “can count on fewer tariffs compared to the main market, fewer obligations and costs, and will be able to accede to greater quantities and lower financing taxes,” says Mr. Hoyle. Other incentives for local and foreign investors to participate in the Peruvian capitals market include the BVL AVANZA program, which helps to restructure midsized companies and prepare their financing on the exchange, and the Corporate Governance Program, aimed at public and private companies, without a limit on turnover, with the intention of instilling good practices in the business management culture. AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT 3 Unleashing the nation’s industrial potential to fuel economic growth Industry has played a major role in the expansion of Peru’s economy eru’s economy has been enjoying a period of solid growth for more than a decade, fueled in large part by investment in mining and minerals and by investors’ discovery of untapped riches in its industrial sector. With growth averaging around 6.4% per year, a trend that looks set to continue, the country’s GDP has more than tripled from $53.3 billion in 2000 to $176.7 billion in 2011. This year, GDP is expected to reach $193.9 billion, and to hit $216.7 billion at the end of 2013. Real GDP growth of 6.9% in 2011 is predicted to be followed by 6% this year and the next, placing Peru among the fastestgrowing countries in Latin America. For 2014, the Central Bank expects to record a higher rate of 6.3%. Mining and the refining of minerals are the country’s main industries. A member of the Extractive Industries Transparency Initiative (EITI), Peru is the sixth-largest producer of gold and copper, and the second largest producer of silver in the world. It also ranks highly in output of zinc and lead. The country is also a significant producer of oil and gas. EITI reports that ongoing development of natural gas and condensates in the Camisea basin is boosting the extractive sector’s contribution to Peru’s economy and to the government revenues. Both governmental and private entities have invested heavily in developing the energy, transport and communications infrastructure, as Peru has sought the attention of foreign investors worldwide to help bring out its full industrial potential. The country has deliberately been shifting toward developing available technologies and manufacturing more value-added products, making goods for the expanding domestic market – which has been bolstered by better wages and greater disposable incomes – as well as consumers overseas. Greater internal demand has strengthened the links between manufacturing, commerce and services, and added to the industry sector’s steady growth. Peru’s industrial sector is the second-largest contributor to GDP, accounting for 38% of the total in 2011. It follows the services sector, which led the way with 54%, but is ahead of agriculture at 8%. Peruvian industry is also a major source of employment, hiring almost 24% of the national labor force. A look into the country’s economic interests reveals an extensive array of industries that are prime for investors’ attention. They include mining and refining of minerals, petroleum extraction and refining and natural gas and natural gas liquefaction. In addition, the country offers opportunities in steel, metal fabrication, fishing and fish processing, cement, glass, textiles, clothing, food processing, beer and soft drinks, rubber, machinery, electrical machinery, chemicals and furniture. Peru’s booming construction sector is currently the main driver of industry’s contributions to its growth. Construction expanded 21.5% year on year (yoy) in July 2012, partly a reflection of various major infrastructure projects under way. The financial sector, P Peru has been deliberately shifting toward developing technologies and manufacturing more value-added goods An extensive array of industries are prime for investors’ attentions, including agriculture, mining, minerals, petroleum, steel, metal fabrication, fishing, cement, glass, textiles, clothing, food processing, beer and soft drinks which expanded 13% yoy in July, followed the construction sector’s leading position and is gaining momentum from a continued growth in private-sector credit. Manufacturing showed a sharp increase in activity mid-2012, accelerating from 1.3% yoy in June to 4.8% in July, and mining activity also showed solid yoy growth of 4.2%, according to the Economist Intelligence Unit. Numerous free trade agreements (FTAs) in recent years have provided Peru with a boost to national production. Over the past three years, it has entered into accords with countries including the U.S., Canada, Chile, Singapore, China and South Korea. The FTAs eliminate tariffs and remove barriers to services, provide a secure, predictable legal framework for investors, and strengthen protection for intellectual property, workers, and the environment. Some 96% of 418 new products that have been exported to the U.S. since the FTA came into effect on February 1, 2009, are classified as non-traditional, meaning that they belong to emerging export industries. The three most prominent sectors that have been sending goods to the U.S. are metalworking (with 36% of the total), chemicals (20%) and textiles (11%). Tourism has been a new growth industry in Peru since the early 1990s. However, the industrial sectors now showing the greatest promise for future growth are agriculture, textiles, metal mechanics, food industry, agricultural industry, manufacturing, chemicals, pharmaceuticals, machinery and services. Peru has ambitions to become a major petrochemicals producer. Although petroleum is regarded as a source of energy, its ability to enhance the productivity of the manufacturing sector as a whole has yet to be explored in great depth. An array of projects are in the pipeline over the coming years to create Pacific coast South America’s only major petrochemicals production center. Innovation sharpens an edge in water pump technology Global demand for inventive pumping solutions from Hidrostal has lead to expansion plans Over the past half century, water-pump manufacturer Hidrostal S.A. has focused on innovation and quality assurance to develop its business into a global, ISO-certified enterprise. Today, increasing local and global demand for innovative pumping solutions has the company looking to expand its plant in Lima and to look for international collaborators. “Hidrostal started out on a foundation of hard work, inventiveness, and in the interest of always making high quality products; that was the impetus and its momentum has always been maintained,” says Pedro Luksic, General Manager of Hidrostal. Seven years after establishing the company in Lima in 1953, founder Martin Stähle invented the screw-type centrifugal impeller, an invention that was key to the development of the fishing industry in the 1960s. Key features of the innovation include easy adjustment, high pumping capacity, and energy savings of up to 50% compared to conventional centrifugal pumps. Maintaining a continuous research and development (R&D) program has given Hidrostal a technological edge in the industry. The company has expanded to offer its customers a wide range of pumping services: engineering expertise, installation of equipment, startup and functioning of technology, repair and maintenance services, and hands-on training programs. “We invest a lot in R&D; 5% of our sales go to R&D, and we are constantly improving products and always creating new products every year. We have the same technical engineering programs that are in more advanced countries. We also focus on teaching and training people,” Mr. Luksic says. Hidrostal now exports its centrifugal pumps, electric motors and vertical turbine pumps to more than 40 countries worldwide. “Ours is a quality product. We are focusing on markets like the U.S. and Europe,” says Mr. Luksic. R&D programs at ISO-certified Hidrostal produce new products every year Demand for Hidrostal’s products and services comes not just from companies involved in the water and waste industry, but also in sectors such as aquaculture, brewing, food processing, construction and civil engineering. Some of its major clients include Pfizer, Exxon, Nestlé, ICI, Wemco and Texaco. “Our products cannot be mass produced because they are targeted at specific sectors. We have to go directly to each sector; we approach our customers directly. It is not a matter of advertising; advertising is good for mass-produced consumer products,” says Mr. Luksic. Hidrostal relies on local, licensed distributors of its products; for examples, its U.S. representative is located in Utah, and distributes the company’s products across the entire country. “We are not interested in exporting everything we make,” says Mr. Luksic. “Rather we have selected some products for export to countries where we really have a technological advantage over others in the world.” 4 AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT At the forefront of foam technology Huge growth forecast for mattress, foam and plastics firm Paraíso del Perú, which has invested almost $30 million in expansion through R&D and innovation hen Baruch Ivcher said recently that “Peru was sleeping, but now it has woken up,” he was not referring to the mattress manufacturing company he presides over. In fact, Productos Paraíso del Perú has three basic divisions: mattresses, foam and plastics. Founded in 1967, Productos Paraíso was the first company in the country to receive a “Made in Peru” certificate from the Ministry of Production. Indeed, Mr. Ivcher’s company has become a reference point in Peru’s industrial sector, in particular for its level of quality, which is recognized beyond Peru in much of Latin America. Mr. Ivcher says that Productos Paraíso will this year start exporting 15,000 mattresses per month to Chile, while its capacity will expand from the current 63,000 mattresses per month to 100,000 within the next 60 months. The company’s marketing and sales emphasis will from now on focus a lot on quality, because previous advertising campaigns – although highly successful – led some consumers to perceive Productos Paraíso’s main product as the “mattress of the people”. Mr. Ivcher wants his company to stay in the first line of technology, which has earned it the ISO-9001-2000 quality certificate. Productos Paraíso has invested heavily in technology, producing its goods with state-of-the-art technology that comes mainly from Europe. “I only buy the very best machines for my factory,” Mr. Ivcher insists. The company has invested almost $30 million over the past 10 years in its expansion process based on R&D, quality and innovation. It is thought to be the country’s first business to apply biodegradable technology in packaging and plastic bags, which it supplies to the majority of Peru’s supermarkets and chain stores. Productos Paraíso’s trademark is its Zebra foam, the raw material for its products and mattresses. Each color represents a different density in the mix, which is a guarantee of origin and quality for the consumer. “Our foam is striped like a zebra, which identifies it as a product of Paraíso,” Mr. Ivcher says. “I have always thought that what I have is not sufficient, and for that reason we send people to international trade fairs, we visit other types of factories and the machine manufacturer with the aim of learning and innovating. At Productos Paraíso we have developed world-level products and technology.” Indeed, another strong factor of Mr. Ivcher’s W company is innovation, proof of which is the development of its Zebra foam. The Zebra foam factory supplies more than 75% of the country’s market that includes furniture and upholstery. To remain at the forefront of innovation, the company has invested in the best technology available and has adapted it to the Peruvian market. Productos Paraíso aims to increase its output, sales and exports by 100% in upcoming years. In particular, it will focus on its plastics division, partly because of the possibilities in the U.S. market. Mr. Ivcher, who is considered one of the most powerful men in Peru, has always thought of himself as the first among equals. His factory has 1,330 employees who he regards as members of his family. He offers all of them the chance of changing their lives, in many cases sponsoring their education. He says of his company: “Paraíso is the real Peru.” His workers took care of the factory and maintained production even when Mr. Ivcher went into exile due to the persecution by the controversial Peruvian president Alberto Fujimori, who ruled between 1990 and 2000, and his then powerful intelligence service chief, Vladimiro Montesinos. “My workers looked after the factory and continued working. They slept in the factory to prevent Mr. Montesinos from burning it down, and that went on for four years,” recalls Mr. Ivcher. “Our workers represent the capacity of work, the capacity of leadership and responsibility, and Peru’s heart and soul, and that is why the true Peru is here.” As an example, he refers to the period of Fujimori’s persecution. “While in exile, I was like an idiot who didn’t know what dangers I was passing. I was no hero. I was not afraid of them until I returned to Peru and discovered the dangers I had passed, and the people that were with me could not say no; they had to continue forward.” He says his female manager of purchases and exports spent 284 days in prison. “I asked her ‘Charlito, please, denounce me, save your life’. She responded: ‘How am I going to denounce you, I am a devout Catholic’. And she didn’t do it, she was jailed for 284 days. She completed 25 years in the company a few months ago. This is the quality of people that Paraíso has, and for that reason, if we are talking of an empire, we are talking about the Paraíso family.” Another example of the company that Mr. Ivcher wants to give is the following. “When you visit the factory, you can see many people who have been working here since the factory be- ‘ Our foam is striped like a zebra, which identifies it as a product of Paraíso. We have developed world-level products and technology. Baruch Ivcher, President of Productos Paraíso del Peru gan operating. The sons and daughters of some of them work here today but they are university graduates, they already have different lives to those of their parents.” Ever since he first started in the factory, Mr. Ivcher has told his employees: “You are poor, it is not your fault, but if your children are poor it will be your fault. Here you have every chance to progress.” “One of my most important female employees is the daughter of a worker; she undertook her studies and Master’s degree with grants paid by us. I have another female worker whose father is in the mattress division. She is now the number two in acquisitions and productions. In Productos Paraíso you can prosper, and it is we who take charge of that. I always say that if anybody wants to know the true Peru, he should come to Productos Paraíso,” he says. Mr. Ivcher points out that Peru has reached its impressive industrial level largely thanks to companies like his. In Peru, family firms make up 80% of the total, and 98% are small or medium sized companies, and yet the industrial sector plays a fundamental role. “The Peruvian worker is extraordinary. Give him faith, give him trust, teach him, and you will see the results,” he says. “For example, our machines are very sophisticated and totally computerized. One of the people who administers them began as a worker, and today he is showing a unique capacity with technology that costs $20 million.” Mr. Ivcher gives the Law of Concerts as an example of Peru’s new sensibility. “Before, an international artist who came to Peru had to pay 30% or 40% of his income in taxes. The government did not realize that an artist who attracted 100,000 fans provides work for at least 10-20,000 people. This Law puts us on the same level as Argentina or Chile. And now the best artists in the world come here to perform.” Top Companies The team at ISM is expanding the group’s global reach General Manager Rafael Venegas predicts greater insurance uptake INDUSTRIAS SAN MIGUEL RIMAC SEGUROS Soft drinks supplier makes brand change Insurance leader Rimac optimistic about growth The soft drink manufacturer, Industrias San Miguel, has launched a new corporate image of ISM. Having been established 24 years ago, the new corporate brand is one of the reasons the company is continuing to be a success in its field. “The launch of the new corporate image of ISM is not just a logo change, but also a change in how people work and the way it does things. We are trying to bring under one banner all operations – we have to be a company which has a global reach,” says Francisco Galdos, ISM’s Corporate Sales Manager. This new corporate brand launch is not the only major advancement to have taken place in the firm within the last year or so. At the end of 2011, a strategic planning process mapped out a development plan through to 2015. The company first focused on geographical expansion in various markets, such as in Latin America, and then toward other continents where the firm might experience growth. Industrias San Miguel is about to enter Brazil and the enterprise is now at a stage where it is considering different countries in order to meet its 2015 expansion goal. According to ISM’s Managing Director of Finance, Cintya Añaños Alcazar, the company’s growth is in tandem with its quality policy and adaptation. It is the first Peruvian company to have the triple certification in two countries (Peru and the Dominican Republic). For her, ISM is “very focused” on offering good products at an attractive consumer price. Rafael Venegas, General Manager of corporate insurance specialist Rimac Seguros, has forecast a GDP of 2.5% for Rimac in the next 10 years. Mr. Venegas hopes that the company can make the insurance arena efficient. “In 10 years, Rimac will still be the leader of a bigger market with a penetration of at least 2.5% of GDP. We are beginning to talk about what more we can do to educate the country and how we can secure further professionalism. Usually the people working in insurance were people who never finished university. The problem is that there is not a specific insurance program for people who want to work in insurance.” Technology is one of Rimac’s investments: the company is changing operation systems in a bid to enter markets in a better fashion. The firm is also developing its customer service and health operations. Mr. Venegas states that the most important thing is that brokers are the most important intermediary between insurance and banks. He points out that 52% of the company’s sales came through brokers with the others made through direct “sales forces” of various kinds. These sales forces, he says, are very necessary. “We have several direct sales forces and we have to have more than 1,500 people in sales force, but we also use non-traditional channels through banks, retailers, car dealers, etc., and some sell directly on our platforms.” AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT 5 Alicorp sets ambitious 2021 target The leading Peruvian company in the mass consumption sector aims to be among Latin America’s top 250 companies in 2021. The company currently has 67 trademarks within the Mass Consumption and Industrial Products businesses. Each and every one of these trademarks boasts Alicorp’s quality seal. This product expansion was a continuous growth process thanks, precisely, to the company’s geographical expansion. Alicorp began its internationalization process through investments in Ecuador, followed by Colombia, Argentina and Chile. Duplicating its business model in countries such as those mentioned has contributed without doubt to the company’s global development. “We began our internationalization when our growth began to be important and it gave us a clear advantage in the sector. In licorp Alicorp SAA is Peru’s most important company in the mass consumption sector, and it has set itself a key target for 2021. Although the current global economic situation presents clear challenges for any business, Alicorp hopes by 2021 to have become one of Latin America’s biggest companies. “In addition to Peru, we have operations in Argentina, Colombia, Ecuador and Chile, and we export to more than 23 countries,” We entered Ecuador, followed says the company’s managing director, Paolo Sacchi. by Colombia and then “This year’s international sales must represent 30% of our Argentina. We did well in some total turnover, with the acquiplaces and not in others. sition of Chilean company Salmofood which prepares fish food.” Paolo Sacchi, Alicorp, which also prepares CEO of Alicorp foodstuffs for the aquaculture sector and supplies bread shops and restaurants, forms part of the Romero some places it was good for us, and in othGroup, one of Peru’s biggest economic en- er not so much. We learnt from some stratetities. gies, and copied models that worked well in Alicorp was formed in 1956 with the name some places,” Sacchi says. of Anderson Clayton & Company. In 1971, That internationalization process has been the Romero Group acquired Anderson Clay- strengthened so far this year with the purton. Following a series of new acquisitions chase of Salmofood in Chile, at a price of and mergers, the company was re-launched US$62 million. in February 1997 under the name Alicorp. “Our competitive advantages are in our caThe company is today specialized in three pacity to administer trademarks, with a genbusiness areas: Mass Consumption (mainly uine interest in offering consumers a high foodstuffs, personal care and home matters), value-added product, to make their lives Industrial Products (mainly supplies for bread easier and less complex. We make use of shops and restau- scale economies, we have achieved cost efrants), and Animal ficiency in production processes, and we are Nutrition (bal- constantly developing new innovative prodanced nutrition for ucts,” Sacchi adds. fish and shrimps). The managing director cites many more A ‘ General Manager Mario Alvarado says training makes the difference President and CEO Roque Benavides Ganoza wants more rural employment GRANA Y MONTERO MINAS BUENAVENTURA Engineering and construction to timed precision Mining giant urges rural infrastructure development In Peru, Grupo Graña y Montero (GyM) needs no introduction. As the largest and oldest engineering and construction firm in the country, GyM has been the name behind countless projects of all sizes in the energy, building, mining, petroleum, industrial and infrastructure sectors. Of its many sources of professional pride, the one that stands out most is GyM’s track record for staying true to its Before Deadline Compliance policy, delivering its contracts on or before their due dates. Similarly, GyM’s corporate citizenship is another aspect that makes the company so successful and respected in Peru today. General Manager Mario Alvarado says that the company’s workers receive thorough training that places them at the top of their class. On another corporate social responsibility note, the Peruvian giant is ever aware and respectful of the communities in the areas in which it operates. According to Mr. Alvarado, GyM has grown on average 32% per year for the past seven years. In 2011, the company saw 66% revenue growth over the previous year, to nearly $2.55 million, although part of that can be attributed to the $20 million acquisition of Compañía Americana de Multiservicios (CAM), an electricity products and services company. This acquisition falls right in line with the GyM’s internationalization strategy. Already present in Chile and Colombia on a projectby-project basis, the company would like to take a permanent place in these markets. Buenaventura (Compañía de Minas Buenaventura, S.A), the largest publicly traded mining company in Peru, is one of the world’s major gold and silver producers. Last year, its equity gold production was 1.04 million ounces and total revenues rose 41% to $1.5 billion. The company’s shares are quoted on the New York Stock Exchange, where it currently has a market capitalization of over $10 billion. Mining is a key sector in Peru, accounting for 32% of tax revenues and 70% of exports in 2011. However, the sector’s contribution to Peru’s development has come under scrutiny in recent years, causing the government to adopt a new royalty scheme. In 2010, $1.47 billion of mining taxes and royalties were funnelled into sustainable development programs in the mining regions. Roque Benavides Ganoza, President and Chief Executive Officer of Minas Buenaventura, agrees that the industry should do more to aid the development, especially in rural areas. “Mining accounts for about 15% of GDP, but above all, what we export gives us resources to import,” he explains. “Mining in Peru usually takes place in rural areas and we are doing a lot to improve infrastructure in these parts. Peru must develop its natural resources because it contributes to the creation of more infrastructure and jobs in rural areas. It is said that the difference between a developed and a developing country is in infrastructure. We need to develop infrastructure in those areas.” reasons to explain Alicorp’s success: “A wide knowledge of consumers’ insights, viewing each country as a distinct and exclusive market, the technology we use, and the administration of the talent of our people.” A distinctive and noteworthy element of the success reached by the company is its highly qualified staff. For Sacchi, it is a fundamental aspect towards achieving the targeted aims of excellence. “We need worker employees who are equally able to undertake work in multi-tasks at the same time.” Sacchi makes a car-driving analogy: The company’s employees have to be capable of driving 10 Ferraris at the same time, with the aim of reaching their finishing lines faster. A programme called “Coffee Break” has shown to be very beneficial: it is the moment in which CEO Paolo Sacchi is confident the company’s Sacchi speaks to Alicorp’s competitive advantage can set it apart workers about key company aspects and the tasks that have been assigned to each one of them. He insists that worth less than US$100 million in 1991, yet through this he learns a lot about his em- its value was fixed at US$2,000 million in ployees and listens to their ideas for the fu- 2011. All of this, according to Sacchi, is due in good measure to the economic growth ture. At every stage of the production process- experienced by the country. As far as Ales, Alicorp has reached international com- icorp’s sales volume is concerned, it is sufpetition standards and quality. In addition, ficient to say that in the financial year of it has increased its production levels each 2011, sales reached the not negligible sum of US$1,600 million. year since its creation. Peru is one of the most dynamic An indication of the company’s growth is offered by the increase in its value since the economies in the world, and this has inbeginning of the 1990s. The company was creased the citizens’ buying power, which is reflected in a change in consumer habits. In addition to the expansion of its business to satisfy the new needs of the consumers, Alicorp considers among its challenges the reduction of poverty and the reaching of sustainability in Peru. Its objective is to contribute to a higher level of welfare and an authentic progress of present and future generations. Alicorp also develops “inclusive business” models through business education. It likewise promotes child development and the employability of young people. AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT 6 Agriculture gains new momentum High quality fruit and vegetables from Peru are becoming more commonplace in kitchens around the world, as exports continue to rise lthough a good product can sell itself, it often needs a small push. In the case of Peruvian agricultural products, PromPeru – the country’s export promotion agency – has given them the impetus they needed to make their way into the mainstream global market. Today, worldwide demand for Peruvian products outstrips supply and given the various free trade agreements Peru has signed in recent years which have opened new markets, demand has nowhere to go but up. The agricultural sector accounts for nearly 8% of Gross Domestic Product (GDP) and employs more than 1 million people directly and indirectly. Historically, agriculture had always played an important role in Peru. Indeed, in preColombian times, agriculture was the basis of the Andean society, which devised imaginative techniques like irrigation and terracing to combat the arid conditions found in a large part of the region. Nowadays, agriculture is primarily concentrated in the wetter parts of the country, yet the government is keen to develop the deserts where the soil is surprisingly rich in minerals and has the potential of supporting nearly any kind of agriculture production. Investment is being injected into strategic irrigation infrastructure development, including the diversion of water from rivers via canals and the building of dams. The Ministry of Agriculture has noted that irrigation projects, especially along the coastal desert areas, could expand the agricultural frontier by 225,000 hectares for exportable products. A The nation’s global reputation for quality cuisine is rooted in its agricultural wealth Agriculture Minister Milton von Hesse said this month, that various agricultural land projects up for tender present “opportunities for investment that in the short term the country is offering to the international community, and that will definitively change the face of national agriculture, especially along the coast.” Other investments target raising productivity, operational inefficiency, and the implementation of global standards, especially in the remotest areas, although it must be said that Peru’s agricultural products have for the Healthy pharmaceutical future in stable climate Peru’s biodiversity should be a source for medical research in the upcoming years, but like other Latin American countries, Peru is not a strong manufacturer of active ingredients. These are produced in large quantities, and require a lot of technology. “We Latin American countries begin by formulating mixtures of the active ingredients that we import,” says Antonio Armejo, outgoing President of Peru’s largest pharmaceutical company, Ilender. According to the Peru Pharmaceuticals and Healthcare Report Q4 2012, Peru continues to be seen as a moderately attractive pharmaceutical market, as a result of elevated risks because of regulatory and intellectual property shortcomings, as well as the still-developing healthcare infrastructure. On the more positive side, economic progress and government-led investment in healthcare facilities and public health programs suggest upside risks, the report says. It also expects Peru’s pharmaceutical marked to post a local currency compound annual growth rate of 7.6% in the 2011-2016 period, which is only slightly below that forecast for the country’s healthcare spending, and also in line with Peru’s gross domestic product (GDP) development. The report’s main expenditure projections are that spending on pharmaceuticals in 2012 at $1.62 billion will increase by 10.7% over the $1.42 billion in 2011. Healthcare spending will rise by 7.8% to $7.90 billion compared to last year’s $7.09 billion. At the same time, $360 million will be spent this year on medical devices, against the $326 million in 2011, up 7.0%. The country`s health situation should also be improved by the fact that Peruvian president Ollanta Humala plans to increase government spending on poverty reduction. He aims to slash the poverty rate from 27% to 15% by the end of his term in 2016. In July 2012, Peru’s Association of National Pharmaceutical Industries (ADIFAN) called for mandatory quality checks on imported drugs, arguing that it was a question of reciprocity as well as quality. Experts have said that such checks would make Peruvians more confident when purchasing such medications. ADIFAN president José Enrique Silva said Congress had tabled a bill to improve quality control measures. Another key decision aimed at tackling the rising cancer burden, the National Institute of Neoplastic Diseases of Peru (INEN) announced plans in July 2012 to invest $190.8 million for cancer prevention and treatment between 2012 and 2016. Some $53.4 million will be used specifically for cancer treatment, and the rest will be allocated to specialist training and infrastructure expansion in hospitals for cancer detection or treatment. The report says that Peru is ranked globally as 54th out of the 95 markets surveyed in its Pharmaceutical Risk/Reward Ratings (RRRs), above Kazakhstan and below Ukraine, and 9th out of 17 countries surveyed in the Americas. It adds that Peru will continue to be viewed as a moderately promising longer-term pharmaceutical market for multinationals, due to below-average industrial rewards and risks. Yet in December 2011, U.S.-based John Hopkins Medicine International was contracted to help improve standards at seven Peruvian hospitals in patient safety, management and the quality of delivery at the healthcare facilities. The contract was facilitated by PacificoSalud, a subsidiary of the largest health insurer in Peru. The sector’s most prominent company Ilender is a leader in pharmaceutical products for animals and human consumption. Founded in 1989, Ilender began operations in 1990 with a product by Union Carbide (USA) and a dream to conquer Latin America. One of the companies in the group, Laboratorios Americanos, is the first importer of medical drugs in units and the third supplier to Peru’s health system. From 1993, Ilender began to internationalize in Bolivia, Chile and Colombia, followed by Venezuela. Success was due to the quality of its products, as Ilender’s suppliers have been approved by the U.S. Food and Drug Administration (FDA) and the European Union, and it has been recognized as ISO 9001. When Ilender started, most Latin American countries were reluctant to purchase such sophisticated products from a Peruvian firm, but that soon changed. The company has started a new expansion era and that could see it grow up to 20 times its current size in eight years. Ilender is building a new plant with the latest technology. It could lead Ilender to become the first Peruvian pharmaceutical company to have a product registered worldwide. Another pharmaceutical company, Lima-based Inca Health, manufactures natural botanical extracts from herbs found in the Peruvian rainforest and Andes mountains. Inca Health has a team of research scientists exploring new applications for rainforest botanicals, especially Maca and Camu Camu. most part gained a reputation for world-class quality. Peru’s main exports are coffee, grapes and avocados, which enjoyed 80%, 73% and 94% growth respectively in 2011. Other major breadwinners are asparagus (in 2010 the country exported 138,600 tons of this vegetable at a value of $291 million, making it one of the top fresh asparagus exporters in the world), mangoes, peppers, artichokes, and cotton. Peru’s agricultural diversity stems from its threepronged topographical diversity of mountains, jungles and deserts, which allows for everything from potatoes and corn to sugarcane and cacao. Although quinoa – an edible seed that was once a staple food in the Andean region and is today popular in wealthy countries thanks to its highly nutritious qualities – is not as lucrative as the aforementioned products as of yet, at least, it is rapidly gaining momentum in Peru’s agriculture industry. Already, the country ranks as the world’s second largest producer after Bolivia. According to Promperu, the export value of Peru’s organic quinoa nearly doubled from $13.61 million in 2010 to $25.97 million just one year later. In total, Peru’s agricultural exports reached $915.6 million in the first quarter of 2012, representing a healthy 16.6% increase over ‘ Opportunities for investment... will definitively change the face of national agriculture, especially along the coast. Milton von Hesse, Minister of Agriculture the same period in 2011. According to figures from the Ministry of Foreign Trade and Tourism, Peru’s exports of fruit and vegetables enjoyed an annual growth of 27% between 2000 and 2011, hitting an impressive $1.2 billion in 2011. In light of the results from Q1 2012, this year’s exports are well on their way to leaving that already record-breaking figure far behind. If this trend continues – and growing global demand implies that it very well could – Peru could potentially become the world’s largest exporters of fruit and vegetables. Somerex adds value to Peru’s agricultural sector stability for the workers,” explains Manuel Pardo D’Ornellas, General Manager of Somerex. “On the other hand, we began working with various products: tara, coloring, insecticides. The reason for this was that the world market realized the importance of natural organic products. At Somerex, we began to diversify our activities in order to take advantage of Peru’s biodiversity and offer quality organic products.” Backed by ISO certification, and with its sights set on an ISO 22000 certificate by the end of next year, Somerex has emerged as leader in its field with a reputation for innovation, quality and consistency. Indeed, the company has its own quality control labs and liaises with universities in the U.S. and Germany to develop new technologies suited to Somerex’s needs. Furthermore, Somerex simulManuel Pardo D’Ornellas, General Manager of taneously serves as an ambasSomerex sador of Peruvian products abroad while caring for and proWhile Peru is gaining world renown for its ex- tecting farmers back home. Mr. Pardo says ports of fresh vegetables and fruit – such as that the company tries to avoid middlemen avocadoes and peppers – another, lesser and instead deal directly with growers in the known side of agricultural production is trans- area to guarantee both supply and price. forming it into an added-value sector. “We settle on a price that both Somerex and Somerex is a company that has been pre- the farmers are happy with and we stabilize sent in the agricultural sector for several the prices over a six-month period. You have decades, but 16 years ago decided to invest to bear in mind that we work with products in research and development to add value to like tara, whose prices fluctuate rather a lot,” its raw materials so as to capitalize on the says the General Manager. growing importance and appreciation of orSomerex is also looking into developing its ganic products in global markets. own lands for the more volatile of products The Peruvian firm’s specialty now lies in in- in order to further avoid the seasonal rise in puts for industry, such as tara gum and pow- prices and stabilize costs. This move would der, gallic acid, rotenone and rhatany root complement the company’s recent moves to which are used in food preservation, brew- lower production costs and improve marketing, photography, pharmaceuticals and cos- ing, which resulted in a huge jump in profits. metics, among others. Somerex also “We’ve grown 113% compared to 2010, and manufactures final products, including an- this year we aim to grow 118%. Our growth is tioxidants, coloring, insecticides, degreasers based on optimizations,” says Mr. Pardo. “We’ve and cleaning products – all developed from been in the market for 45 years and even though natural sources. we’ve changed our field, our quality has re“In 1996 the company began to invest in mained intact. This gives the client peace of R&D. In developing products with higher mind. For 2014, we would like to stay on track added value, we lend greater economic and job and again grow more than 100%.” AN INDEPENDENT SUPPLEMENT TO THE MIAMI HERALD BY BUSINESS & INVESTMENT 7 Tourism industry evolving to lure new business The spectacular beauty that Peru boasts is there for all to see, but the tourism industry is looking at other ways to attract people and the country is preparing for an influx of visitors hen one thinks of Peru, the first image that springs to mind is that of the ancient city of Machu Picchu - one of the seven Wonders of the World - and the legendary Inca empire. However, the country holds a wealth of archaeological sites that are the vestiges of even more ancient times, whose civilizations have bequeathed a legacy of art, and customs, rituals and wisdom. This archaeological and cultural legacy has long been the mainstay of Peruvian tourism. However, the sector aims to enhance its future prospects by redesigning tourist circuits and looking for new markets at home and abroad. This shift in approach is also designed to incorporate a growing hotel industry, eager to keep up with international standards, and to be ready for a forecast increase in business and leisure tourists that Peru will enjoy in the coming years. At present, tourism is the third most important sector in Peru, after mining and fisheries, and contributed 3.7% to GDP in 2011. In addition to this, the number of tourists who visit Peru is rising despite the global recession. In 2011, 2.5 million foreigners visited Peru, a 9% increase from the year before. The Ministry of Foreign Commerce and Tourism (MINCETUR) estimates that these numbers generated around $3.3 billion (U.S.) in spending in 2011, marking a 16% increase in revenues from 2010. During 2012, the government expects to see a 12% rise in the number of visitors to Peru, bringing the total number of foreign visits to 2.8 million. While the number of tourists who visit Peru is rising, the demographics are changing. Many foreign visitors are now coming from other Latin American countries, as compared to the more traditional markets of Europe and the U.S. Tourist arrivals during 2011 clearly demonstrate this trend; while North Americans represented 20.1% of the total and Europeans 17.6%, South American visitors amounted to 55.1%. South American tourists may be the key for Peru to consolidate this boost in tourism. Several factors support this assessment, including the proximity of the location; since many foreign visitors from regional countries return to Peru on second trips, visiting areas they did not cover the first time around. Asia is another huge potential market for Peru. An agreement with Korean Airlines , expected to take effect by the end of the year, would provide direct routes from Seoul to Lima and increase the number of Korean tourists to triple, to an estimated 54,000. Business travel is an area that can be exploited more. Due to business thriving in other sectors of the economy and an increase in foreign investment, Peru is seeing more corporate travellers. This segment represents around 20% of all arrivals and, according to the Commission for the Promotion of Peru Export and Tourism (PromPeru), this will continue to grow in the coming years. Most business travellers come W from nations that are important trading partners for Peru, like Spain, the U.S. and South American countries. There is no reliable way to measure business travel, due to it often overlapping with leisure tourism. However, its potential for Peru is very positive for the industry, since it leads to increased spending and benefits numerous parts of the economy. According to the World Travel and Tourism Council (WTTC), Peru’s business travel spending in 2012 is likely to increase by 2.2% to PEN 8.5 billion ($3.11 billion U.S.), and projections suggest that in 2022 it should rise by 4.6% to PEN 13.3 billion ($4.87 billion U.S.). This situation is also changing Peru’s tourism dynamic, which has essentially been focused on cultural attractions and activities. Demand is being generated for other kinds of hotels, catering for the needs and expectations of people who travel for business purposes. Peru’s National Chamber of Tourism (CANATUR) president, Carlos Canales has said he believes that Lima would generate around $1 billion (U.S.) from the business segment, determining that international business travellers tend to stay in Peru for five days and spend on average $300 (U.S.) per day, much more than average daily spending by leisure tourists, which PromPeru estimated to be $100 (U.S.) in 2010. CANATUR has caught on to this trend and aims to contribute by transforming Lima into a major venue for international conventions. Although business and convention tourism are divided into separate categories in PromPeru’s statistics, according to the CEO of CANATUR, Luis Villa Prado, more conventions attract more business because they showcase Peruvian industries and services to international visitors, and establish personal contacts that can lead to future deals. If Peru, and Lima in particular, are to hold more events, subsequently attracting more people to the region, infrastructure will need to be developed to accommodate these larger numbers. Plans to enlarge the Jorge Chavez Airport in Lima will enable it to receive more international visitors, whether for business or leisure travel. The country’s motorway infrastructure continues to be an obstacle for time-pressed travellers. Likewise, further development of regional airports – for example in Iquitos and Cuzco – will make it easier for tourists to access some of the most impressive and culturally valuable sights. After problems in the past over government regulations on the expansion of hotels, airports and infrastructure in general – meaning projects either took years to complete or never got past the planning stages – President Ollanta Humala is showing support for the sector. This is a very positive sign for investors. In its one year in office, his government has displayed its dedication to the industry, strengthening and expanding destinations and infrastructure, which has bolstered confidence in the private sector. PromPeru research coordinator Roxana Patricia Perez A 2012 international marketing campaign reminds people that ‘Peru is not just the perfect place to lose yourself; it’s also the perfect place to find yourself’ hopes tourism will surpass fisheries by 2016, therefore making it the second most important GDP contributor. While affordable lower-scale hotels will continue to cater for the needs of travellers on a tight budget, the quality of these facilities will have to keep up with the benchmarks set by competition. Reducing bureaucratic processes and increasing private sector participation are two areas that will need to be addressed to expand the hotel industry. Awareness of these issues exists among authorities and promoting collective investments has become institutional policy, creating present and future conditions for a friendly business atmosphere. This is crucial as according to Claudia Cornejo, the ViceMinister of Tourism, the sector has the potential to create more jobs than others and they expect one million direct and indirect jobs in 2012 will be linked to the industry. There is much evidence to suggest that Peru is performing well below its potential when it comes to visitor numbers. While Machu Picchu undoubtedly has international appeal, being the main attraction for around 70% of tourists that visit Peru, the site’s daily restriction of 2500 visitors limits the possibilities for growth. The numbers are capped to prevent environmental damage to what is regarded as a national treasure as well as a global attraction. Peru’s cuisine is also gaining international recognition. This year, the country was chosen as the best South American dining destination by the World Travel Awards (WTA), regarded as the Oscars of Tourism by the Wall Street Journal. It will now compete in the world final in New Delhi, India on December 12. Peru already has a great deal to offer tourists. In order to diversify the options available for the consumer and strengthen provincial economies, MINCETUR in 2011 invested heavily in eight tourist destinations across the country. This move was long overdue, according to those involved in the industry, and should help to not only diversify the country’s overall tourism offering, but to strengthen each individual component of it as well so all of the targets that have been set, regarding revenues and people entering the country can be met. The wheels are in motion, but one thing is attracting people, another is satisfying the consumers’ growing wants and needs. However, the Peruvian tourism sector is showing signs of great progress and if all of the proposed plans are carried out, the country will become an even more popular destination for business and leisure travellers alike. Travel made easy, for business and pleasure The world might be experiencing financial difficulties, but one sector that continues to thrive is tourism. In 2011, the total contribution of the industry to world GDP was $6.3 trillion, the equivalent of 9%, and in Peru this percentage was slightly higher, with tourism revenues equating to 9.2% of Peru’s total GDP ($17 billion). Online travel agencies are becoming the preferred way for travelers to book their business trips and holidays, and travel group Costamar is evolving with the times. Costamar is a U.S.-based travel group that offers travel and tourism services with the hallmarks of professionalism and value. Its corporate division enables business travelers to save time and money by taking advantage of the company’s technology and excellent customer service. With a consolidated leadership position in the tourism industry, the group comprises Costamar Agencias, Costamar Travel, Costamar Tours and the business sector-focused Costamar Corporate, as well as the on-line platform Costamar.com. Together, they have achieved a significant impact in the Hispanic market in the United States and a strong position in the Latin American market. Costamar has 67 offices in the U.S. and a further 16 in Peru, Brazil, Ecuador and Columbia. It is looking to exploit Peru’s untainted beauty to attract more visitors to the country. In 2011, 20.1% of the people who visited Peru came from the U.S., and Costamar provides direct flights to Lima from a number of destinations, including Miami, New York and Los Angeles. Costamar was founded in 1980 in Elizabeth, New Jersey, to offer services to local travel agencies. It soon expanded to include offices throughout the state and in New York. Today, the company provides all tourist services, from flights to car rentals, or entire packages. The agency began implementing e-business strategies in 2000. As technology and consumer demands evolve, online travel agencies have become increasingly popular. This has been a revolution in tourism, not just in Peru, but all over the globe. Gerardo Concas, President of Costamar in Peru, realizes the value of the online market. “The traditional industry has been shaken up by the online travel agencies and our plans for internationalization will be through the website,” says Mr. Concas. Gerardo Concas, President of Costamar Travel The company’s president places faith in the people who work for Costamar to maintain its image and continue its growth. “We have a global presence. In Peru, we are market leaders and we are also very strong in the U.S. and Colombia. Day by day, we are developing tools that will allow us to find the best agents and people with the most experience. The war today is not only won with technology, but also with service and by knowning more about the product. We will survive if we know more about our product and we can present it in the correct way to the people who need it,” he says. With the power of the Internet and its ability to connect the world, Costamar has exploited what was once niche market, but today seems a normal way of purchasing travel packages.