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PERU
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Foreign investment
and equity markets
Unleashing Peru’s
industrial potential
Opportunities and
diversity in industry
National treasures,
global attractions
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Page 3
Pages 4 & 5
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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
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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.
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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
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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.