contact magazine, april-june 2015

MAGAZINE OF THE AMERICAN CHAMBER OF COMERCE OF PERU

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The possibiliTies for peruvian economy, according To The analysis of Three variables: moneTary policy, oil price and foreign Trade.

i see… recovery?

10 THE PATH TO OECD Which procedures should Peru follow and what does becoming a member imply?

EXPORT TO PERUKnow the most relevant issues for trading between U.S. and Peru.

6 PERU & THE OIL MARKETWhat to expect for the local and regional economies regarding the fall in prices.

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Editorial

Central ReportRicardo Peláez, Senior Commercial Officer at the Embassy of the United States in Peru

Central ReportWhat may happen with the oil and gas industry?Beatriz De la Vega, partner at EY

AmCham StaffThe process for incorporating Peru into the OECDRodrigo Acha, chief of economic analysis at AmCham Perú Legislative Analysis What to do for complying with the Personal Data Protection RegulationAntoni Bosch, Institute of Audit & IT-Governance; Gustavo Rodríguez, Benitez, Forno & Ugaz Abogados

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cÁmara de comercio americana del perÚ(amcham perÚ) Avenida Víctor Andrés Belaúnde 177, Piso 1, San Isidro, Lima 27, Perú / T. (51-1) 705 8000 / F. (51-1) 705 8026 / www.amchamperu.org.pe / [email protected]

board of direcTors

honorary presidenT Brian A. Nichols, Embajador de los Estados Unidos en el Perúhonorary direcTor, Luis Miguel Castilla, Embajador del Perú en los EE.UU.presidenT Federico Cúneo, Amrop Perú1sT vicepresidenT Mariela García, Ferreyros S.A.2nd vicepresidenT Ricardo Fernández, IBM del Perú S.A.C.Treasurer Esteban Chong, PricewaterhouseCooperssecreTary Raúl Barrios, Barrios & Fuentes Abogados

eXecuTive direcTor Aldo R. Defilippi

direcTors Alejandro Desmaison, Delosi S.A., Bárbara Bruce, Hunt Oil Company of Peru L.L.C. Suc. del Perú, Darío Lareu, 3M Peru S.A., David Cahen, Kimberly - Clark Perú, Felix Antelo, Lan Perú S.A., Fernando Zavala, U.C.P Backus y Johnston S.A.A., Guillermo Browne, Merck Sharp & Dohme Peru S.R.L., Lieneke Schol, Microsoft Perú S.R.L., Luis Rivera, MMG, Las Bambas Mining Company S.A., Luis Felipe Castellanos, Banco Interbank, Norberto Rossi, Grupo Ripley, Rafael Venegas, Rímac Seguros, Renzo Ricci, Prima AFP

eX oficio members Mark Cullinane, United States Embassy, Economic Counselor, Ricardo Pelaez, United States Embassy, Commercial Counselor, Adolfo Heeren, President at Peru 2021

ediTor Rodrigo Acha coordinaTor Carla Colonia subscripTions and publiciTy [email protected] design and layouT Antonio Revilla pre-press and prinTing Comunica 2, Los Negocios 219, Surquillo, T. (511) 610 4242 - F. (511) 610 4250

amcham peru stipulates that signed articles contained in this magazine are their author’s responsibility

Legal Deposit Nº2008-11949

Year 20Volume 2April – June 2015

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InterviewDelia Mariátegui, president of the Association of Good Employers of Peru

Economic Analysis – EPE Entrepreneurial overview survey - May

Economic Analysis - StatisticsCompilation of the most relevant variables for Peruvian Economy

Legislative Analysis – The lack of fundamentals in the billsContribuyentes por Respeto

Legislative AnalysisBills review

AmCham NewsInstitutional AgendaPrioritized aspects in the activity of the chamber

Central Report – How much leeway does monetary policy have to boost the Peruvian economy?Alex Müller, Peru economist at BTG Pactual

Legislative Analysis How to avoid excessive tax payments on the customÓscar Vásquez, gerente senior de Tax & Legal de KPMG

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Peru faces the challenge of refloating its economy struggling against a strong supply and demand shock that, undoubtedly, could have been mitigated if more investment projects were executed. Nevertheless, the country has stronger fundamentals than ever for resisting the effects of China’s lower growth, the fall of mineral prices and the rise of the exchange rate.

As it was said by the minister of Transports and Communication, José Gallardo Ku, during AmCham Perú’s last Institutional Luncheon, it is the first time that Peru has passed through a three year reversion of terms of trade without experiencing recession. This is the result of the application of responsible policies through the previous years, now the challenge is to materialize the stimulus programs announced by the Government for being able to apply a counter cyclical policy that impulses demand and encourages investment.

The Government must concentrate on making its procedures more efficient and reducing bureaucracy. One of the ways to encourage the improvement of the quality of the actions taken by the Government is by the signature of treaties and by joining multilateral blocs such as the Pacific Alliance, so it is forced to comply with their norms.

Commercial alliances also allow the country to develop its foreign trade and increase exports while imports become cheaper. For this reason, it is a must to support the Government on the negotiation of the Trans Pacific Partnership (TPP), given that its signature will allow to free the duties currently applied to trade with Australia, Singapur, New Zeland and Brunei, and will leave the country ready for becoming part of a global free trade network after the U.S. signs free trade agreements with China and the EU (T-TIP).

With all this, as also remarked by minister Gallardo, the economic landscape for Peru is good for the long term. Despite the US$10,000 million to US$15,000 million that were not invested in mining as a consequence of social conflicts, the country has predictability for the long term thanks to the stability of the PEN, market openness and, moreover, due to the rise in the production of copper as a result of the beginning of the operations of big projects, and to the big portfolio of infrastructure projects, mainly for transport and telecommunications.

In AmCham Peru, we focus this issue of Contact on the possibilities of Peru to face the situation described above. First Alex Müller,

EDITORIALPassing through the storm

DecodingThe impact of the economic crises

Peru economist at BTG Pactual, tells us about the possibilities and limitations that the Central Reserve Bank of Perú (BCR) has for acting with monetary policy. In his conclusions, he draws the attention about the loss of competitiveness of our exports in comparison with other economies of the region as a consequence of the lower depreciation of the PEN.

Regarding foreign trade, the interview with Ricardo Peláez, commercial officer at the Embassy of the United States of America in Peru, gives us an idea of the vision that his country as a partner for Peru. He also deeply analyzes the situation of the exchange among both countries and gives his perspectives about the products with the highest potential and the eventual performance of exports and imports made by American enterprises.

Another crucial issue for the economy is the price of oil. Beatriz De la Vega, partner at EY, analyzes the consequences that its fall may bring to the region, particularly for Peru, that is benefited for being a net importer.

After that, and turning to another subject, Rodrigo Acha, chief of economic analysis of the Chamber, analyzes what joining the Organization for Economic Co-operation and Development (OECD) implies for Peru. Even though it is an issue that goes beyond conjuncture, the incorporation of the country to that entity will force the compliance of norms that will improve the quality of institutions and, consequently, create a better environment for investment.

Afterward, and as usual in this magazine, regulatory issues are included. First, Antoni Bosch, director of the Institute of Audit & IT-Governance, and Gustavo Rodríguez, partner at Benites, Forno & Ugaz Abogados, review the Personal Data Protection Law and advice on how to avoid failing on its compliance. Added to this, Óscar Vásquez, senior manager at Tax & Legal de KPMG, analyzes the tax applied over the imported goods and suggests how to avoid overpayments due to the presumption of the appliance of transfer prices that will bring the tax authority to over rate the goods and, hence, apply higher taxes when removing them from the customs.

In general, this edition summarizes the conjuncture of adjustment that the country is currently facing, as always, with other contents such as the Entrepreneurial Overview Survey and the analysis made by Contribuyentes por Respeto. Enjoy your reading.

RE VISTA DE LA CÁMARA DE COMERCIO AMERICANA DEL PERÚ

• With a decrease of 0.39% in GDP, the crisis of 1998 was the one with the strongest impact on Peruvian economy; the previous year the country grew in 6.48%. On 2009 the growth rate was 1.05%, below the historic 9.14% of 2008, while in 2014 a rate of 2.35% was registered, in comparison with 5.77% on 2013. The average of the period between 1997 and 2014 is 4.83%. All these figures are expressed in real terms.

• Public investment fell 3.61% on 2014. Excepting 2001 (-23.61%), it has been the only year of strong deceleration in which the Government has diminished its investments. On 2010, 2012 and 2013, public investment grew an average of 15.17%, while on 2011 (electoral year) it was reduced in 11.23%. On 1998 and 2009, years of international crises, public investment grew 7.03% and 32.86%, respectively.

• Private investment fell 1.59% on 2014, far below the rates observed in other years of deceleration. In 1998 it fell 2.4%, in 1999 it fell 15.24%, and in 2009 it fell 9.05%.

• Inflation fell from 6.01% on 1998 to 3.73% on 1999, change that marked the stabilization of PEN. Between 1999 and 2007, the average inflation was 2.37%. After that, the crisis in the U.S. caused the stagnation of demand and a revaluation of Peruvian currency: inflation in 2009 was only 0.25%, while in 2008 the acceleration of the economy brought it up to 6.65%. The average inflation rate for the period between 2009 and 2013 was 2.51%. In 2014 it rose to 3.22% in spite of the slowdown of Peruvian economy due to the rise on the price of some food products, as also happened with fuel at the beginning of the year.

• The employment index in enterprises of more tan 10 employees fell from 100 in 1997 to 85.6 on February of 2002. After that, a rising tendency started.

C e n t r a l r e p o r tC e n t r a l r e p o r t

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C e n t r a l r e p o r t

The Peruvian economy has slowed down for four years in a row –it grew by 2.4% in 2014, below the average of 6% of the last decade– which has led the government to respond with aggressive macroecono-mic policies. As for the fiscal side, since the second half of 2014 six stimulus packages have been announced, which according to the Ministry of Economy and Finance (MEF), should contribute with about 1.5 percentage points to GDP in 2015. Be-sides, the rules to tighten the fiscal belt have relaxed in a more gradual way for 2016 and 2017, when the economy will supposedly recover.

On the monetary front, both the bench-mark rate and reserves in Soles have been cut, from 4.25% to 3.25% and from 30% to 7%, respectively, in order to promote credit and raise the private sector’s con-fidence. However, looking forward, the margin to keep implementing expansio-nary measures –mainly through mone-tary policy– has been reduced.

In theory, it is advisable to adopt an ex-pansionary monetary policy when GDP grows below its potential –drawn by a weak demand, which may be reactivated by boosting investment and consump-tion– in order to avoid heavy fluctuations in the economic activity. This situation is apparent in Peru: for instance, the growth

The effectiveness of monetary policy may be limited if the government plays all its fiscal policy cards. On the other hand, there is no reason to be afraid of letting currency float in order to adjust to the external shocks faced by the economy.

costs (for both the government and com-panies) and the slowdown in productivity growth due to the lack of reforms, among other reasons. All this creates a less “pro-growth” structural context (permanent, long-term) for Peru.

In April, The International Monetary Fund (IMF) released a complete update of its macroeconomic projections (World Eco-nomic Outlook Report) which included a new estimate of Peru’s potential growth of 4.5%, below the 6% that the Central

of private demand has markedly slowed down (from 7.2% in 2013 to 1.8% in 2014).

Restating Potential GDP

At the same time, it is also true that the potential growth of Peruvian GDP might be lower now compared to previous years. The underlying reasons are the lower prices of export metals (that gene-rate approximately 60% of exports), the lower demand from China (Peru’s main trading partner), the higher foreign debt

ALEX MÜLLER JISKRA,

Peru economist at BTG Pactual

HOw MUCH LEEwAY DOES MOnETARY POLICY HAVE TO bOOST THE PERUVIAn ECOnOMY?

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April 2015 CPI (annualized percentage)

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April 2014 CPI (annualized percentage)

Source: Haver, BTG Pactual

GRAPH 1 In�ation as measured by Consumer Price Index (CPI) versus target range of in�ation as measured by the Central Bank (bar extremes represent the lower and upper limits of the range)


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near the highest levels of the last de-cade, which suggests that Peru still has a considerable debt with the rest of the world to finance its growth. By the way, keeping everything else the same, a high indebtedness level is normally associa-ted with an overheating economy rather than with a cooling economy.

Worthwhile Stimulus

Of course this does not mean that there is not a case to be made for the use of expansionary macroeconomic policy. If we observe the statistics it is clear that the use of monetary and fiscal stimuli is indeed justified to align current growth (1.1% in the fourth quarter of 2014) with the level of potential growth (approxi-mately 4.5%).

The fact is that if we expect fiscal policy (six stimulus packages) to fill a significant part of the lack of demand, there may be a narrower margin for monetary policy. If authorities overshoot, they may take their toll next year with a generalized increase of inflation and a hefty current account deficit that may be harder to fi-nance in a scenario where foreign inves-tment retracts and international interest rates display an upward trend.

In any case, there is a demand-boosting mechanism that Peru has not exploited during this economic slowdown: boos-ting foreign demand –instead of domes-tic demand– through the depreciation of real exchange rate. Indeed, when an open economy slows down the natural response –and probably the healthiest as it does not require intervention– is to reduce the price of export products in order to boost foreign demand. More export competitiveness may be reached by reducing prices (that are still growing at a relatively fast pace) or by deprecia-ting the nominal exchange rate (the Sol has depreciated considerably less than other Latin American currencies). In fact, the real effective exchange rate in Peru (multilateral, with regard to all countries) remains near its strongest levels of the last decade.

Reserve Bank of Peru (BCR) used to esti-mate. In this regard, but looking towards the long-term, the President of BCR, Julio Velarde, has recently stated during the IMF’s Spring Meetings in Washington DC that the potential growth has decreased to a figure closer to 4.5%.

It must be pointed out that the potential growth of GDP is an unobservable va-riable that causes a headache to central bankers as it is estimated with a broad margin of error. Nevertheless, there are certain indicators that signal whether cu-rrent growth is above or below potential growth. In the case of Peru, most indica-tors seem to indicate that the economy is growing below its potential, or not far from it.

Capacity Gap

Presently, there may not be much idle capacity in the Peruvian economy (in res-ponse to the lower potential). Three in-dicators that support this hypothesis are

inflation, unemployment and current ac-count. Inflation, as measured by the Con-sumer Price Index (CPI), remains slightly above the BCRP’s target range (1% to 3%), while underlying inflation (that excludes food and fuel) also remains near the ran-ge limit (2.7%). That is, when the most volatile CPI components are excluded, underlying inflation better reflects the pressure of demand on prices (that of-ten decreases when there are significant capacity gaps). These price indicators su-ggest that the demand is not so weak.

The current unemployment level –his-torically low– and, in general, the labor market conditions (with growing em-ployment rate and salaries) are also not consistent with a situation in which the economy is growing significantly below its potential.

The same happens with the current ac-count, which measures the total foreign debt of a country (public and private). The current deficit (about 4% of GDP) is

Source: Bank for International Settlements (BIS), BTG Pactual

GRAPH 2 Real e�ective exchange rate index (third quarter of 2009 = 100). The higher the level, the stronger the exchange rate and the lower the export competitiveness. The light blue bars indicate the 10 and 90 percentiles of the range in the last ten years.

The real e�ective exchange rate –which re�ects the purchasing power of the Peruvian economy– is overvalued compared with other Latin American countries whose currencies have sharply depreciated in the last quarters in order to reduce the price of its products, thus absorbing part of the economic slowdown. This means that Peruvian exports will lose cost competitiveness and make a lesser use of the economic reactivation of trading partners such as the United States.

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The US is no longer Peru’s major tra-ding partner in terms of value and volume. Is it a government policy to regain this top position?

It is not so much a concern because we are still a strong trading partner for Peru. We have the FTA, we are the leading destination of Peruvian tou-rists and the leading country of origin of foreign tourists who visit Peru, and we have the advantage of sharing the same time zone and a shorter distance compared to other countries.

I think we are on the right direction and will recover the top position in the future.

Would this recovery respond to diver-sification or to the recovery of hydro-carbon and gold prices?

I think it would be due to the export of different products. If we compare inter-national trade between Peru and the US with that between Peru and other coun-tries, we can see a broad diversification of products that are exchanged every day, and also many American companies are still showing their interest to come.

so closely because we are focused on US exports, but we see that PromPe-rú (Commission for the Promotion of Peru) offers several services and pro-grams that support Peruvian exporters and that since the FTA entered into force, food and agricultural product exports to the US have kept growing every year, and I think the best oppor-tunity lies there.

Although the Peruvian exports of non-traditional products decreased in the first quarter 2015…

But in 2014, five years after the FTA en-tered into force, such exports had been doubled. That year was a bit slow, but I think that will change.

On the other hand, our imports of goods other than hydrocarbons have grown this year. What is the expec-tation for the flow of nontraditional goods from the US to Peru?

We see a great interest in medical equipment, information technologies and heavy machinery. We are just re-viewing our annual report, the Coun-try Commercial Gap, in which we are

There is still uncertainty regarding the moment when the Fed interest rate will rise. Would this event have an impact on trade between Peru and the US?

It will have an impact. Every time the rate changes the products will be more expensive or inexpensive, but I think what matters most are the vendor’s competitive advantages, as well as the product acceptance in the market.

US labor market indicators are impro-ving. Can we expect this economic re-covery to have a significant impact on trade with Peru?

I think so because productivity keeps growing in both countries and with such progress we can continue making the most of what was started in 2009 when the FTA entered into force.

What is your opinion about the growth of Peruvian exports regardless of what happens with oil and minerals? Have the products with the highest poten-tial been identified?

We are not following Peruvian exports

RICARDO PELÁEZ, Senior Commercial

Officer at the Embassy of the

United States in Peru

“IT IS EASY fOR An AMERICAn COMPAnY [TO DO bUSInESS In PERU] wHEn IT HAS A LOCAL PARTnER”

The person in charge of opening the doors to doing business with American companies provides an insight of the commercial activity between Peru and the US, and explains the tools he is using to promote it.


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going to highlight the most promising industries.

What do the Peruvian and US gover-nments have to strengthen in order to increase trade between both coun-tries?

I think that the first step is to develop infrastructure in Peru. Next, trading administrative procedures need to be simplified. The US system is open and transparent, information can be obtai-ned easily and procedures can be ca-rried out smoothly, so I could not spe-cify what else to do to support trade, PromPerú might have some sugges-tions though.

What are the effects of the delay in TPP negotiations due to the discussion in the US Congress? Is there a significant complement to the FTA?

The truth is that the agreement we have already signed is so advanced that the TPP will be based on it. We have not seen all the TPP details yet because they are still kept in secret. I believe it will bring new opportunities, not only between Peru and the US, but also with other countries, mainly those in Asia, which do not have a free trade agreement.

Can you make a balance between the realization of the Peruvian-American FTA benefits and the fulfillment of the agreed terms?

I know that both countries are revi-sing FTA chapters such as forestry and environment. I think they are moving forward progressively, but that is not going to have a significant impact on trade, especially regarding our labor that mostly consists of connecting American SMEs with their Peruvian peers.

What are the most active American SME industries interested in exporting to Peru?

A bit of everything. Now that we have four business consultants, each of them has two or three best prospects in their industry portfolios. They may be food

processing equipment, construction equipment or heavy machinery, and in-formation technology.

The exchange rate in Peru has increa-sed and is expected to keep rising. Do you think the strength of US exporters will outweigh the negative impact of dollar appreciation?

Yes, because I think there is still interest from both sides, from the Americans who want to come to Peru and from Peruvians who want to buy an Ameri-can product. Although the American product may be a bit more expensive, it is of better quality than those from other countries and offers good after-sales service, those are the competitive advantages that American companies can offer.

What are the promotion tools used by the US Department of Commerce in Peru?

Our most popular service is match ma-king or Gold Key Service. When an Ame-rican company wants to get a represen-tative or distributor in Peru, we talk to them, receive their information in Spa-nish and proceed to check our contacts’ data to see who may be interested. We then exchange information and after six or eight weeks we arrange an agenda of four or five meetings in one day for the American company to visit the office of the Peruvian company, get to know it and discuss the other products it repre-sents, as well as how adding the Ameri-can product can help their business.

Furthermore, we also conduct trade missions that we sometimes share with AmCham, and organize Peruvian buyer groups and take them to US fairs.

Is Peru a country easy to do business with?

It is easy when the American company has a local partner. For this reason, we advise to first get a partner to help understand Peruvian procedures, and help focus sales efforts. If the company offers different lines of products, the local partner may suggest which of

them would be better to start with.

How big was the impact of the US eco-nomic cool-off after the 2009 crisis on its exports to Peru, and what is your expectation of the future?

What we have seen is that the compa-nies that did not use to export, espe-cially SMEs, began searching for other markets. Other companies that used to export to one or two countries began searching for neighboring markets.

The Secretary of Commerce launched a program called Look South. There are thousands of companies that are expor-ting to Mexico and then can go to Cen-tral America, Colombia, Chile or Peru using their information that was already translated into Spanish.

Does the Look South program still have good prospects despite the effects of the expected rise of the Fed interest rate?

I think so. The visit to Peru of the Under-Secretary of Commerce, Stefan Selig, who spoke at AmCham, was his first Look South activity. He is still suppor-ting the initiative.

How can a Peruvian entrepreneur in-terested in working with American ex-ports get in contact?

The easiest way is to call our office. We also have a web page: export.gov/peru for American exporters, and buyusa.gov/peru for importers. Every time a tra-de mission comes we add further infor-mation and post the list of companies that come. A mission from Mississippi is coming this July, then another will come from Iowa, and in the following months others will come.

Would you highlight other services?

A service that is not widely used and that may be helpful to support Peruvian companies is our network of more than 100 offices in the US. Besides, when the-re is a good opportunity in Peru, we can send the information to that network and spread it.


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Oil prices have been dropping drastica-lly since July of 2014, with an abrupt pri-ce descent of Brent crude oil at around 50%: the lowest price since 2008 (US$ 66.71 on average by the 21st of May of 2015). While a gradual recovery is ex-pected in the next months to come, it has been estimated that prices will stay below the registered average in the 2011-2014 period.

This situation challenges the economies of Latin America, due to the fact that some countries in the region base their income and investment expectations on an average price of US$100 a barrel.

External Dependence

Was the price drop predictable? As you may remember, oil-price falls are explai-ned by factors that are mostly exoge-nous to the region. On one hand, prices are dependent on the production and supply levels of the Organization of the Petroleum Exporting Countries (OPEC) member countries, Saudi Arabia being the most relevant, that have been above the global demand for the resource. On the other hand, the search for alternati-ve energy sources has lead the USA into

Oil prices are unpredictable on the medium-term and oil-producing countries are vulnerable to their variations. Is Peru taking advantage of the situation?

bEATRIZ DE LA VEGA, tax partner at EY bRIEf REfLECTIOnS

On THE IMPACT Of OIL PRICES In LATIn AMERICA AnD PERU

the development of unconventional fuels such as shale gas; although produ-ced at a higher cost, it can still be sold at lower prices in comparison to the oil prices of the last few years.

Another factor influencing oil price drops is Russia’s role as the main provi-der of energy to the highly industriali-zed countries in the European market that do not possess such resources themselves (for example, Germany). As a consequence, the search for alternati-ve energy sources (renewable energy) and new oil deposits in the African con-tinent has been pushed even further to minimize the dependence on their pro-viders. However, due to the existence of civil war, religious unrest and poverty in

the Middle East and Africa, geopolitics plays a transcendental role in the set-ting of oil prices.

As we can appreciate nowadays, several situations around that world exert an important influence in the price of oil. For this reason it is not easy to forecast for how long and in which way will the price of oil recover in the future. What does this mean for economies like ours?

Varying effects

Inside Latin America, countries like Chile, Colombia, Mexico and Peru are among the economies with the most abundan-ce of natural resources (mining, oil and gas). Economies like Venezuela, despite

AVERAGE OIL PRICE (US$ PER bARREL EACH YEAR)

SOURCE: EIAElaboration: EY

2009 2010 2011 2012 2013 2014

61.86 79.63 110.95 111.96 108.85 98.94


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It is necessary for Peru to make adjustments

on procedures and deadlines for

exploratory activities, environmental requirements,

and the adequate management of social

conflicts.

their resources in the oil field and being the only member of the OPEC in the re-gion, are currently going through a so-ciopolitical crisis with a severe impact to its economy. Meanwhile in Brazil, co-rruption and political patronage cases have been discovered recently in the oil & gas sector, specifically, within the ma-nagement of the state owned oil firm, Petrobras.

In this context, the downward trend of the price of oil in the last few months carries hard challenges for Latin Ame-rica. The value of exports from major producers would be reduced, mainly to China, and with it their fiscal incomes will be affected.

On the other hand, countries considered to be net importers of oil like Peru would be acquiring this resource for their refine-ries at much lower prices. However, even when this situation would benefit the manufacturing sector and consumers in general, it would also have a significant impact in reducing investments on the medium and long term.

As pointed out earlier, in the search to secure energy sources needed for the development of industry and satisfac-tion of consumer demand globally, the challenge Latin American countries face is attracting investment capital to the region. Mexico makes an interesting example of the subject.

In effect, with the modification of the political constitution occurring in De-cember of 2013, Mexico liberalized the access to the country’s oil resources. In the past, state owned Pemex was in charge of the exploration and exploita-tion of oil and only subscribed servicing contracts with international oil com-panies. However, given the absence of the technology required to develop new exploration projects and to secure the provision of energy to the country, Mexico deemed the opening of its bor-ders to new investors who could be able to subscribe licensing or shared produc-

place as the top three countries with the best macroeconomic environment for in-vestment. Furthermore, in the World Bank Group’s most recent Doing Business ran-kings with data up to June of 2014, Peru placed second as the best economy to do business in the region (ranked 35 globally), only behind Colombia.

However, given that Latin American coun-tries are competing against each other to attract investment capital, it is necessary for Peru to adjust its legislation and diverse subjects regarding the models for develo-ping the oil & gas industriy. For example, procedures and deadlines for exploratory activities, environmental requirements necessary to implement these activities, the promotion dissemination of oil field projects available for licensing, and the adequate management of social conflicts.

It is important to point out that Peru has many options to position itself as a top-level country in the region and the world. For example, it is a member of the Ex-tractive Industries Transparency Initiative (EITI). This is a coalition formed by several governments, companies, and civil society works, towards the open management of income coming from the exploitation of natural resources. Peru is a part of this ini-tiative since 2005: It became the first coun-try in the region to be incorporated into the group, in order to ensure the stability and transparency of the rules tied to the management of the fiscal income coming from the extractive industries.

As we can appreciate, the main factors affecting oil prices internationally are not dependent solely on what is happening in Latin America; in todays’ world geopolitics play a transcendental role in the subjects related to the oil & gas sector. Neverthe-less, inside the region, and specially Peru, investment climate is still favorable. To this effect, given that other economies could turn out to be attractive on the short term, like Mexico, it’s necessary to internally review the legal mechanism that could make investments in the oil & gas sector a viable option.

tion contracts with the government as a necessity.

The first rounds of negotiations to licen-se Mexico’s oil fields will be happening in the next months to come. Delays, as expected, are a consequence of the Mexican government’s wait-and-see ap-proach towards oil price recoveries that would make such investments by inter-national oil firms a viable venture.

The important aspect of the case is that developed countries with available ca-pital are looking at this country in the region as an interesting investment possibility. Mexico’s advantage in this case is that constitutional changes lead to the development and implementa-tion of policies and legislation that take into account the positive experiences of other countries in the region with a larger trajectory in the oil & gas business (for example, Brazil, Colombia and Peru).

An Environment to take advantage of

In the case of Peru, an important inves-tment portfolio in the oil & gas sector already exists, which would also help to further develop the Peruvian economy and, particularly, the oil & gas sector on the medium and long term. It’s important to remember that, according to the Latin Business Index 2015, together with Chile and Panama, Peru continues to hold its

L e g i s L at i v e a n a Ly s i s

www.amcham.org.pe10

POR: RODRIGO ACHA, Head of Economic Analysis for AmCham Peru

InCORPORATIOn Of PERU InTO THE OECD: wHAT, wHY, HOw AnD wHEn?

The Road to Lima 2015 seal has been ob-served by members of the business and academic communities at a number of events they have attended during the cour-se of the year. This is an initiative to create dialogue and debate in preparation for the World Bank and International Monetary Fund meetings to be held in Lima in Octo-ber this year.

The numerous presentations that have been made in connection with the above-mentioned program gives one the feeling that never before in Peru has so much been said about the need to improve public insti-tutions as in the last few years. It has been a pervasive fact that these discussions, all ad-dressing topics such as poverty reduction, economic growth, competitiveness and social welfare, revolve around government practices.

And with respect to matters relating to the long-awaited transformation of Peru’s public administration, the most relevant is without a doubt, the desire to become a member of the Organization for Economic Cooperation and Development (OECD). Following Peru’s formal submittal of its in-terest in forming part of the OECD at the end of 2012, in May 2014 the organization invited Peru to follow a Country Program. This Program set forth a list of reforms that Peru would need to set in place before the OECD could even assess its incorporation.

What does the process consist of and when might we expect to be part of this distin-guished group of countries?

What?

While this may sound redundant to some, before going into further detail of the pro-cess, it is important to first explain what the OECD actually is. On its website, it auto-defines itself as a forum created to address the economic and social challenges posed by globalization and at the same time ex-ploit the opportunities that this affords, considering that the pressure exerted by and between the member countries, could act as a powerful incentive to improve their respective policies.

It is important to emphasize that this is not a conventional multilateral organization with an established admission mechanism. In the words of Carlos Anderson, former Chairman of the Board of the National Center for Strategic Planning (Ceplan for its acronym in Spanish), the OECD functions as a club whereby membership is conditioned to approval by its other members.

At the moment, the OECD is composed of 34 countries and only two of them are in Latin America: Mexico (joined in 1994) and Chile (joined in 2010). Colombia and Costa Rica are currently undergoing their respecti-ve incorporation processes, and it is expec-

ted that they will be admitted to the OECD within the next two or three years. After the above-mentioned countries, and provided it is successful in its application, Peru would be the fifth Latin American country to join the OECD, with which it would complete the membership of all of the Pacific Alliance member states.

Brazil is not a member of the organization, although it does participate as a key part-ner and has undertaken a number of policy commitments proposed by the OECD. In the event that Peru follows through with the Country Program proposed by the OECD but fails to be accepted as a mem-ber, it could follow Brazil’s example as this also stresses the importance of applying the organization’s instruments. In fact, , in the document The Organization for the Co-operation and Economic Development - OECD and the Country Program for Peru, highlights that in May 2007, the National Accord (political assembly made for fo-llowing up the Peruvian policy and establis-hing long term goals) highlights that the OECDdecided to strengthen cooperation with non-member countries via heighte-ned commitment programs.

As Anderson rightly said in an interview with the local daily Gestión, more impor-tant than the incorporation per se, is the change that compliance with the Country Program would bring about to Peru’s public

Peru has applied to join the OECD and is undergoing a compliance program to bring it up to standard. What will this mean and when could we expect to be part of this public administration elite?

COVER STORY / I N F O R M E C E N T R A LL E g i S L aT i V E a n a LY S i S

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administration. What is a Country Program? How does the organization operate and what are the benefits of working with it?

Why?

In the Peru 2021: OECD Member Country do-cument, Ceplan defines the Country Program as a mechanism designed to attain levels that are similar to the average of the countries that make up the organization among other aspects. It is a tailor-made procedure created to deepen the understanding of the country. Along with Peru, only three other countries follow this type of scheme: Kazakhstan, Mo-rocco and Thailand.

In order to understand the Country Program, coordinated by Ceplan on behalf of the Pre-sidency of the Council of Ministers in con-junction with the ministries of Finance and Foreign Affairs, let’s begin by explaining how the OECD functions. The Ceplan document states that today the OECD operates under the framework of three guiding principles adopted at the 2011 Ministerial Council Mee-ting: commitment with pluralistic democracy based on the rule of law and respect for hu-man rights, an open and transparent econo-mic market, and to have sustainable develo-pment as a common goal.At the “Towards OECD International Stan-dards. Experiences for Peru” event, Josée Fecteau, Deputy Director of Legal Affairs at OECD, explained that the organization is ba-sed on 250 legal instruments, most of which are recommendations. She added that these

instruments are also composed of decisions, which are the main vehicles in the determi-nation of their standards, and declarations; they do not require to be collective acts and may be given at ministerial level.

Decisions and recommendations are given by the OECD’s Board of Directors. “Usually the entire standard development process begins with the collection and analysis of data. They are very interested in the eviden-ce. This is then followed by policy talks and finally the instrument is implemented. The proceedings must be approved by consen-sus, no member may vote against a motion but may abstain from voting, in which case the instrument for its jurisdiction is not applied,” indicated Ms Fecteau.

In the same event, Marcos Bonturi, Direc-tor of the OECD Global Relations Secreta-riat, stressed that the organization not only provides guidelines for public policies, but draws on the experience of countries with which it works to develop their practices, even if these countries are less developed or are non-members. “The OECD does not come to tell Peru what has to be done in the country; it comes to showcase the good and bad experiences endured by other countries. It also comes to learn from the Peruvian experience, otherwise the country would not have been invited; the members are interested in learning from the very ambitious reforms that Peru has been capable of introducing,” he said. That is the reason why Country Programs have

been developed for states that are less de-veloped, i.e. Peru, Thailand, Kazakhstan and Morocco.

It should be noted that with the Country Program, Peru can directly participate in the OECD committees and even remain in them after 2016, which would be the se-cond and final year of the term of a com-mittee. Bonturi believes that by the end of the Country Program, Peru will be participa-ting in 15 OECD committees, which implies being present in more groups than any of the G20 countries that take part without being members, such as China and Indo-nesia. He also expects that by the end of that period, 9 or 10 new instruments will have been successfully implemented in the country. Again, this would surpass the number of instruments implemented in the above-mentioned Asian countries.

What are the points to follow under the Country Program?

How?

The Country Program covers 19 of the 250 OECD initiatives. These in turn are divided into five main areas: removal of barriers impeding growth and development, stren-gthening public governance, upgrading anti-corruption measures, raising human capital capabilities and improving environ-mental policies.

In the formerly referred-to interview with Gestión, Anderson explained that three re-ports were going to be drawn up: i) a mul-tidimensional report (analysis of the entire political spectrum, divided into general wel-fare, macroeconomic scenario, productivity and productive structure, and inequality), ii)a report on the political management of the territory, and iii) a governance report to understand how the state organizes is pu-blic administration.

It is important to note that the process of incorporation into the OECD has not always been free of criticism in other countries, even from the entrepreneurial sector itself. In Chile there was strong opposition to the imposition of the joint and several liability of companies for acts of corruption carried out by their officers. This is an instrument that has already prompted a bill that has been observed by this chamber. Our po-sition is such that, while the initiative de-fends a desirable goal for civil society, it is

Legally binding; are decided at OCDE board meeting; tend to contain implementation mechanisms and are subject to monitoring. Are not legally binding, but their implementation is supervised. Normally adopted during large ministerial meetings. More than being og collective use, they are primarilly directed at individual governments and are adopted both by member and non-member countries.

Decisions (30 in all)

Recommendations (180 in all)

Declarations

Source: Josée Fecteau, Deputy Director of Legal Affairs at OCDE

TAbLE 1: OECD InSTRUMEnTS, ACCORDInG TO TYPE

year of incorporation

2008

2009

2010

2011

2013

committee or working group Committee for Investment and Adhesion to the OECD’s Declaration on International Investment and Multinational Enterprises Development Center Working group for Combating Bribery of Foreign Public Officials in International Business Transactions Competition Committee Committee on Consumer Policy

Source : Peru 2021: OECD Country - CEPLAN

TAbLE 2: COMMITTEES OR wORKInG GROUPS In wHICH PERU PARTICIPATES


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necessary to fine-tune the Peruvian judicial system to avoid witch-hunts, “falsely-plan-ted” violations of law and disproportionate sentences. Anyway, it should be made clear that any act of concealment of an offense must be severely punished.

Mexico on the other hand, had to go through the implementation of all the reforms for it to be incorporated into the OECD, in parallel with the negotiation of its FTA with the US and its local currency (peso) crisis. For its part, Colombia had to reform and modernize its tax system.

Undoubtedly, the report causing the greatest implications for the Peruvian public administra-tion will be the one that addresses its territorial policy, given the problems caused by the ato-mization of regional and local political powers. It will also be difficult to deal with the political pressure that will arise when the current regional governors and mayors realize that their political power is being jeopardized.

In general, Anderson draws attention to the need for political will to support the implementation of the Country Program,

and stresses that fortunately there is the support of the National Accord, but the po-litical significance of the issue needs to be transmitted.

The private sector must also contribute. An-derson argues that the work required is two-fold: the population must be informed about the OECD, and made aware of what it means to work with and adhere to the OECD, while it is also necessary to develop mechanisms of incorporation for companies to participate. It is for this purpose that Ceplan signed an agreement with Peru 2021.

Henri Le Bienvenu, General Manager of Peru 2021, states that his office has set up two working groups to address issues related to Country Program compliance: one for public works in lieu of taxes, and another on the use of water. The first of these two has focused on promoting the performance of projects that are not necessarily related to works of infras-tructure, but are intangible projects such as training programs or the application of tech-nology in the education sector. In his opinion, out of the 19 main instruments included in the Country Program, the most relevant are those related to education, formalization and public investment.

They are all extremely pertinent issues for the country and, without a doubt, the imple-mentation of best practices in these areas will inure to the benefit and well-being of all Pe-ruvians, in line with the OECD’s raison d’être. What is to be expected from Peru’s complian-ce with the Country Program and its incorpo-ration as a member?

When?

It is rumored that Peru could be incorpo-rated as an OECD member before 2021. However, as pointed out at the beginning of this article, there is no established ad-mission mechanism so no one can in fact predict a date of admission. However, if we look at Chile’s experience, it took three years for it to become a member country and its admission was the result of an OECD membership expansion process launched in 2007, which also incorporated Slovenia, Israel and Estonia. It should be noted howe-ver, that in the case of Chile, its admission resulted from a specific invitation for mem-bership, while in the case of Peru, the OECD has proposed the implementation of a compliance program as a prerequisite.

Why has 2021 been set as the date? Le Bien-venu explains that in general, countries aim at 2020 as the year in which to assess the achievement of the objectives. In the case of Peru, 2021 is a special year as it is the year of its bicentennial celebrations. On the other hand, if we take the invitation made to Chile as a reference, once it had comple-ted its Country Program (i.e. as from next year), and it is expected that Colombia’s incorporation process will also take three years, Peru could be a member as early as 2019, or even before, since it is the first time that this kind of program has been applied and this could in fact shorten the process of incorporation.

Ultimately, and more importantly than whether or not Peru is finally admitted as an OECD member country, is the transcenden-ce of the actual compliance process itself. What comes after the Country Program? Bonturi believes that Peru is going to be increasingly active in the organization. “We have taken note of Peru’s intention of beco-ming a member of the OECD, and that will be examined at some time, although we do not know exactly when this will be discus-sed. The work needs to be continued. Every time a Peruvian official attends an OECD committee meeting, he/she must demons-trate that his/her participation brings about mutual benefit. The representative must participate actively in the discussions and therefore needs to have the necessary ex-pertise. The political will and capability of the Peruvians to move forward is self-evi-dent,” he said.

But there is an important aspect related to incorporation that should be cause for concern. As Ivo Gagliuffi, partner of Lazo, de Romaña & Gagliuffi Abogados, rightly points out, foreign companies have begun to determine their investment destinations on the basis of whether a country is or is not a member of the OECD. “The adoption of standards makes it work as if it were an ISO certification,” he says metaphorically.

In this context and especially since the OECD offers a structure and economic juncture which provides security for investors, and investment is the most efficient way to gene-rate growth, coupled with the benefits that reach far beyond the economy, it is absolu-tely key to continue to support the incorpo-ration of Peru into the OECD, even if reforms are going to be painful.

Source: CEPLAN

TAbLE 3: PERU’S COUnTRY PROGRAM

1. Nationwide Multidimensional Study

2. Study on skills beyond School, Technical Courses and Training

3. Skills Strategy Project (including scope determination phase and diagnose phase)

4. Reporte “Invirtiendo en la Juventud”

5. CEPAL/OECD Study on the Environmental Performance of Peru

6. Regional consultations on tax base erosion and profit shifting

7. Worksops on International taxation systems

8. Review of healthcare system focused on universal health coverage

9. Review of health data and statistics

10. Review of adherence to OECD liberisation codes

11. Study on Public Governance

12. Review on the Integrity of the Public Sector (including regional and local levels)

13. Public Procurement Review

14. Regulatory Reform Policies Review

15. Support the implementation of best international practices in the Regulatory Impact Analysis

16. Territorial Review

17. Inclusion of Peru in TiVA data base

18. Cooperation to develop statistical infrastructure in connection with OCDE work

19. Assessment of Statistics and Statistical System



In 2011 the Personal Data Protection Act (Ley de Protección de Datos Personales - LDP), which imposes several exigencies to those dealing with personal data, was promulgated. This law has been gradua-lly enforced although the adaptation le-vel of the involved enterprises in these regulations is, worryingly, very low.

This low accomplishing level could be due to misinformation about the signi-ficant legal consequences that the non-accomplishment can bring to the enter-prise. Also, this could be a consequence that an adequate accomplishment plan structuration does not only imply sensi-ble legal aspects, but that it also requi-res a careful job in technical variables.

The truth is that enterprises take per-sonal data in an almost intuitive way in different times and circumstances. It should be thought not only in clients or suppliers’ data base but, inclusively, in the visitors’ registry that could lead to the enterprise’s security area.

Information flow in the economy brings important benefits that all reliable regu-lations must consider. Indeed, the grea-ter accessibility to information is usually translated in significant costs reduction in credit access and insuring, as well as in products design or personalized ser-vices that give a better respond to con-sumers’ expectancies.

Not adapting the enterprise’s processes to data protection regulations may produce severe consequences. What should be taken into account during the adaptation process?

Risk Exigencies

Furthermore, non-controlled information flow could cause private costs that may run from an increase in spam reception up to so delicate issues such as a higher risk in poten-tial identity theft. This is a theme that could be debated about if information flow bene-fits are greater than the costs.

What is clear is that enterprises must perform important changes for the gradual LDP’s in force entry. Hence, in general, before taking a personal data the holder must give his con-sent for processing this information and he should be explained its purpose as well as the use to be given to the collected information.

The LDP obliges enterprises to report their data banks to the corresponding authority and to create some sort of mechanism that will allow the data holders some rights bes-towed by regulations. Usually these rights are called ARCO, in reference to the terms Access, Rectification, Cancellation and Opposition.

Finally, these regulation pose requirements referred to adopting safety measures, which have an important technical element.

Procedure Suggestions

As can be observed, this issue is legally sensi-ble and technically complex. For this reason, a jointly approach to the adaptation process to the LDP is imperative. In simple words, this is

not about adapting to, but adapting well to.

In order to achieve a correct adaptation, there are stages that involve data flow determining within the enterprise, including identifying the personnel with access to information, as well as the technical and legal “locks” that must exist in each internal level in the organi-zational structure.

Technical solutions such as information secu-rity and adopting technologies contributing to privacy can balance the data holders’ inter-ests and those of the enterprises processing these data . Adapting reasonable and effi-cient safety measures is essential for “not die trying” to adapt to the LDP exigencies.

Every legal change, especially if it involves modifications with a great potential impact in terms of costs and processes reform, could be seen in a discouraging way. However, these changes should be assumed with the conviction that the steps taken will allow us to grow, and to grow with safety.

When mentioning these steps we must ask ourselves: “How would I like my personal data to be treated?” Our answer to this question will give as a good hint of the degree and significance with which we must face the great challenge of adjusting to the LDP and to preserve the strategic dynamism needed to conduct our businesses adequately. With a serious analysis and a good planning, “not die trying” is absolutely feasible.

1 For further referral, we recommend the reading of: Ramanosky and Acquisti (Berkeley TechnologicalLawJournal, Vol. 24, 2009).

AnTOnI bOSCH PUJOL, Director of the Institute of Audit & IT-GovernanceGUSTAVO M. RODRÍGUEZ GARCÍA, Responsible of Intellectual Property and Competence Practice in Benites, Forno &

Ugaz Abogados.

HOw TO ADAPT TO THE PERSOnAL DATA LAw AnD nOT DIE TRYInG


www.amcham.org.pe14

Customs value is the tax base for tax collection on imports. This is defined in Article 1 of the Customs Valuation Agreement from the World Trade Orga-nization (WTO), which states that the Customs Value must be, in first instan-ce, the transaction value, that is, the real price paid or to be paid for the goods when these are sold for exportation to the importing country.

However, in the case of goods imported by people related to their suppliers this constitutes an exception for the appli-cation of the transaction value as Cus-toms Value. But the same Article 1 of the Agreement states that if a link exists, the transaction value will be accepted if it is proven that the transaction value is much similar to the values declared by non-related parties. Thus, the fact that there is a relationship is not a reason enough to consider the transaction value as unacceptable for customs purposes. Firstly, sales circum-stances must be valuated, and the value in customs will be accepted if the rela-tion has not influenced on the agreed price. In these cases the proof charge belongs to the importer. How can it be determined if there is a link at the time of defining the customs valuation?

It is usual that the amount charged on imported goods is increased due to the use of a higher tax base than the price in which it was purchased. What can be done to avoid this?

Subjects to be valuated

For these effects (exclusively on customs), according to Article 15.4 of the Customs Valuation Agreement from the WTO, there is a relationship between two enterprises (vendor and buyer) in an international goods transaction if the people involved on each side of the transaction:

• Bear responsibility or directing char-ges in the other party’s enterprise.

• Are legally recognized as associates in businesses.

• Are in an employee-to-employer rela-tionship.

• Hold, directly or indirectly, the proper-ty, control or possession of 5% or more of the shares or titles in circulation and with voting rights in both of them.

OSCAR VÁSQUEZ nIEVA, Senior

Manager of Tax & Legal, KPMG

TRAnSfER PRICES In CUSTOMS VALUATIOn

• Control the other party in a direct or indirect way.

• Both persons are directly or indirectly controlled by a third party.

• Their boards controlling directly or in-directly a third party.

• Both are members of the same family.• If it is considered that goods valuation

must be reviewed, in which legal de-vices the procedure nests?

Legal support for the valuation

As I mentioned in the first paragraph, the legal base in which these rules for prices acceptability of imported goods to Peru are sustained, include those dispositions contained in Article 1 of the Agreement related to the Application of Article VII of the General Agreement on Tariffs and Tra-de Taxes of 1994.

In the regional field, we also have Decision No. 571 of the Andean Community, which re-states that for customs valuation, mem-ber countries will be ruled by that stated in the text on the WTO’s Customs Valua-tion Agreement. Afterwards, the General Secretariat of the Andean Community issued Resolution No.846, through which Decision No.571 was regulated, which was later modified by Resolution No. 1648.

Additionally, it must be noticed that ac-cording to that stated in the Instructions

The importer should declare if the relationship

has influenced in the real price. If the answer is positive, the transaction

value will not apply, but the value obtained

from the application of secondary methods

instead.



for Customs Declaration of Goods INTA-IT.00-04, in Form B of the customs declara-tion, presented further down, the importer itself declares information referred to the transactions conditions of the imported goods. This implies declaring if there is a link with its foreign supplier and if this link has affected the agreed prices. Then, how can the importer prove that the link has not affected the declared price?

Tax Base Determination

Article 14 in Resolution No. 846, modified by Article 15 in Resolution No. 1648, con-tains the norms referred to the link bet-ween the buyer and its supplier.

According to that stated, the importer should declare if the relationship has in-fluenced in the real price paid or to be paid. If the answer is positive, the transac-tion value will not apply, but the value ob-tained from the application of secondary methods instead. This could mean an in-crease in the tax debts and in fines appli-cation.

Nevertheless, said articles anticipate that the importer should have the opportu-nity to demonstrate that the relationship has not influenced in the price if it shows proofs that will allow the application of the following procedures:

a) Analysis of Sales Circumstances

This consists in analyzing the particular conditions of the negotiation that deter-mined the price, which should be equally valid in the absence of a link for indepen-dent buyers. This can be done through the analysis of quotes obtained by other vendors not linked, sales contracts price lists from the vendor, quantities sold exa-mination, etc.

In this sense, it should be taken into con-sideration that the relationship has not influenced in the goods price when the following is demonstrated:

• The price has been adjusted accor-ding to the normal practices for pri-ce setting in the branch of industry involved.

• The price has been set according to

the way in which the vendor fixes the prices to non-related buyers to him.

• This price allows recovering all costs and achieving a benefit in accordance to global benefits performed by the enterprise during t h e sale of the same kind of goods or base during a representative time period.

b) Use of a criterion value

Consists in the use, for comparative pur-poses of identical or similar goods values that have been accepted by the customs authorities and nationalized by importers not linked with its vendor.In this regard, paragraph 4 in Article 16 of Resolution No.1648 states that when the transaction value declared by an importer linked to its vendor is much alike to the criterion value, there is no need of perfor-ming an analysis of the circumstances of the imported goods sales.

According to that established in Article 15, Resolution No. 846, we should consider as a criterion value any of those complying with the mentioned conditions and also found within any of the following supposals:

• Identical or similar goods customs value taken for comparison that has been determined through the Tran-saction Valuation Method, and which is in force at the very or about time of the exports of the goods being va-lued.

• Identical or similar goods customs value taken for comparison that has been determined through the De-ductive Method application, and which is in force at the very or about time of the sale of the goods being valued.

• Identical or similar goods customs value taken for comparison that has been determined through the Re-constructed Value Method applica-tion, and which is in force at the very or about time of the imports of the goods being valued.

Info on declared values can be found in the Price Verification System – SIVEP (Sis-tema de Verificación de Precios) of the Pe-ruvian Customs. According to Article 134 of the Peruvian Customs General Act, the

information published in the web page of the Customs Admin is fully legally in force.

This search of criterion values must be done considering the relevant customs classification features of the goods, since according to that established, identical or similar goods should be considered.

Likewise, according to Article 36 in Reso-lution No. 1648, in determining customs value by applying the Transaction Value of Identical or Similar Goods Method, the exportation date is the time to be consi-dered for the criterion value used. Hence, only those goods exported at the same or about time than the valued goods should be taken into account.

In this sense, according to item e) of Article 2 in Resolution No.846, as the approxima-te time for accepting the criterion value is considered that period as closer as possi-ble to the importation, exportation or sa-les date of the goods. During said period, trade practices and market conditions affecting the price must have remained identical.

Proofs Significance

In summary, customs value is the tax base for imports taxes, defined in the WTO’s Va-luation Agreement as the transaction va-lue. That is, the price really paid or to be paid for the goods.

However, the price agreed among related enterprises could not be accepted. Without prejudice, connection is not always a pri-ce determining factor. This can be proven through a transfer price analysis (for cus-toms effect) that will develop the com-parative procedure regarding operations between two non-related enterprises in identical or similar conditions. This would be achieved by submitting proofs that will allow applying the following procedures: a) sales circumstances analysis, or b) use of a criterion value.

In this sense, if the number of importa-tions from related suppliers is relevant, we would recommend obtaining a re-port including a transfer price analysis done accordingly to customs valuation regulations.

www.amcham.org.pe16

I n t e r v I e w

How was the ABE Award conceived? Has any referral been taken from abroad?

This was a pre-conceived idea since a couple of years ago. Finally last year the decision was taken and we had our first experience, an extraordinary one. We expected approximately 40 cases, but finally 92 showed up.

We have not taken any referral from abroad. What we seek is to promote, document, reward and spread out the best working practices in which respect shown toward the worker is the main issue.

Which is the process for entering this contest?

A registration form must be filled with the required information, which must be submitted together with the pay-ment voucher for participating, one per category presented to.

This Award is open to all kind of en-terprises. There are no requirements of being certified as an ABE member or of belonging to AmCham. Any company responsible at labor can participate. Be-sides, there are no limits in the number of cases to be presented by any enter-prise.

Categories will be the same ones as last year’s?

We have added three new categories: Best Working Flexibility Program, Best Succession Program, and Best Knowled-ge Management Program, besides last year’s categories. We are trying to crea-te new categories for awarding good working practices that create prosperity and respect toward the workers.

Have you planned some target for the number of cases you will receive this year?

We expect to receive at least the same number of cases.

And how do you expect to publicize about the award so more people get involved in presenting their cases or even in belonging to ABE?

We have a media plan that will help us to publicize this award’s second edi-tion. Also, we have several communica-tions tools such as brochures and flyers, among others. We also count with im-portant mass media as strategic allies. I believe that last year’s extraordinary experience of the award has helped us in diffusing ABE mission. We have also organized talks with each one of the enterprises that won the award last year, to whom we invited to participate together with all ABE and AmCham members as well as other in-terested companies. These talks have been well accepted and have helped us in spreading both the Award and ABE information.

Besides these three new categories recently incorporated, is there any

“LAST YEAR APPROXIMATELY 40 CASES wERE EXPECTED, bUT fInALLY 92 CASES SHOwED UP. 2015 EXPECTAnCY IS TO REACH AT LEAST THE SAME nUMbER”

DELIA MARIÁTEGUI, President of the Board of Directors of Asociación de Buenos Empleadores - ABE (Good

Employers Association)

The President of the Good Employers Association (ABE) advances details on the second edition of the ABE Award for Social Responsibility in Labor, to be held on September.


COVER STORY / I N F O R M E C E N T R A LI n T E R V I E w

other important change regarding the methodology or the process for the Award this year?

We have not changed the process with regard to last year. The process conti-nues being very simple, and besides we provide personal advisory to the nomi-nating enterprises so that they can learn how to present their cases.

ABE is well known for recognizing the enterprises’ practices, not its collabora-tors’ perception. Does your award have a comparison within the country?

The ABE Award is not similar to any other one bestowed in the country. We seek to recognize and diffuse the most outstanding work practices in industry and to highlight the main management models of the participating enterprises, presenting them as standards of exce-llence.

In this way, what is sought is to reward merit and leadership in those enterpri-ses constituted as models to be pur-sued. Our aim is that these enterprises with good working practices succeed in ma-king their providers assume these good practices. How? By forcing them to be-come ABE, by guiding them in order to repeat these good practices. Unfortuna-tely in Peru formality is measured accor-ding to whether invoices are extended or not. It is important to achieve respect toward the worker and that enterprises become labor responsible. For us, when small enterprises are certified means a success, because we all know that in Peru mostly big enterprises are the for-mal ones.

Is there any reference to other emplo-yers’ associations similar to ABE?

Some Latin American countries have con-tacted us in order to replicate the ABE model and we are willing to provide them the knowhow so that they turn into enter-prises which mission is to act as changing agents in sake of their countries’ develop-ment. We would be delighted if ABE rea-ches an international extension.

How was 2014 for ABE and which were its goals achieved?

This has been a very intensive year. This has been the year in which we finally made our dream come true by launching the ABE Award for the first time.This award is helping to eradicate working informality; we shall not lose our focus in this objective.

We cannot always ask the State to be the sole responsible, I believe that everyone has to cooperate and say: “I also did so-mething for my country”. I believe this has been an awakening for many enterprises, many of them are thankful.

Is there any supervising process perfor-med by ABE? How do you assure that those certified enterprises continue their good practices?

A re-certification is done every two years ba-sed on a certification protocol carried out by SGS, an international auditing enterprise. It should be noticed that there are three cate-gories in which an enterprise can certificate:

Firstly, the Entrepreneurial Partner. When an enterprise certifies for the first time, a minimum 100 points score is demanded from it, which guarantee the minimum indispensable accomplishment of good working practices within its organization. In second place is the Promotional Partner, to which a minimum 150 points score is demanded in the evaluation, and that has achieved to incorporate at least one enterprise to the association in the prior period to its re-certification. At last comes the Master Partner, to which a minimum of 250 score over a 300 maximum is deman-ded, as also the incorporation of at least two enterprises to ABE in the prior period.

The idea is to create a multiplying effect.

Certified enterprises in every category are compromised to support ABE’s diffusion and good working practices both within and outside their organization.

How is the certification process performed?

In first place, the enterprise must fill a for-mal application for membership according to the category it is postulating. It must also complete the auto-evaluation form and ve-rify that it counts with the minimum needed score. In this case, the enterprise pays the amount corresponding to the certification concept, after which an auditing visit by SGS for verifying the score is coordinated. The SGS auditor issues a report which is afterwards re-vised by ABE’s Board of Directors, which fina-lly decide whether the enterprise is ready or not to be admitted in the Association.

The complete process will last no longer than one month, if the enterprise is well prepared.

What benefits does an Enterprise obtain when associating to ABE?

The enterprise achieves several benefits. Among which we can mention prestige and recognition for being an organization that is socially responsible and concerned about its workers’ respect and which foments the de-velopment of its suppliers, and to turn itself into a highly productive enterprise as a con-sequence of having well-respected, motiva-ted and compromised workers.

What do you expect for ABE this year?

All ABE participants’ dream is that our partner-ship will generate a formal working market in Peru. We will keep working in publicizing ABE at all entrepreneurial levels. Formal enterprises can help other organiza-tions to step into formality. One way to achie-ve this is through the ABE Award.

A great portion of the effort is oriented toward the strengthening and positioning of this award. We hope that our associates will help us to eradicate informal work for the sake of a better Peru.

Eradicate working informality; we shall not

lose our focus in this objective.

www.amcham.org.pe18

E o n o m i c a n a ly s i s

EPE RESULTS – MAY 2015

The minister of Economy, Alonso Segura, recently stated that the country would ex-perience an increase in growth this year, and that we have reached the turning point toward an upward trend in GDP. These sta-tements did not come without warnings, as he remarked that the speed of our exit will depend fundamentally on the actions of not only the public sector, but also the private sector.

Although the results of the EPE reflect the fact that members’ perceptions are not completely in agreement with the minister’s statements, a slight improvement in expec-tations in comparison with the past month can be noted.

Peculiar results

In general, the overall results can be sum-marized by saying that members may once again be taking a cautious stance, despite the fact that negative outlooks outnumber positive ones for the third month in a row.

It could hardly be any other way, if the news about the downward adjustment in growth projections for the Peruvian eco-nomy is taken into account. This revision was made mainly due to internal and sea-sonal clashes that led to low growth rates during the first quarter of this year. The main factors to which they attribute this conservatism and the fact that positive are exceeded by the negative ones are the so-ciopolitical climate, internal demand, the exchange rate and legislation.

Even so, it is expected that these effects will be temporary, due to which projections for 2016 remain above 4%.

During the month of May, our members were not optimistic about the coming se-mester. The main reasons were the sociopo-litical setting, lower forecasted consumption

Sectoral inconsistency

The Business Outlook Survey (Encuesta de Proyección Empresarial/EPE) for the month of May indicates that sector outlooks are more volatile than those for the economy as a whole, in which pessimism prevails.

(internal demand) and the effects of the in-crease in the exchange rate.

The critical reasons are mostly political, among which a feeling of mistrust toward the actions of the current administration stand out. Those surveyed mentioned that sociopolitical instability is increasing the im-pact of the slowdown in private investment, in addition to delaying the execution of pro-

jects and affecting efforts to reactivate the economy by stimulating demand.

It is noteworthy that the results regarding sectorial economic activity have seen a sig-nificant reduction in pessimism, to the point that expectations of a worsening situation are exceeded nearly twofold by their positi-ve counterpart. The most frequent response is that the situation in their sector will remain

abr-15 may-15

EXPECTATIVAS A SEIS MESES SOBRE EL CLIMA ECONÓMICO

Mejores Peores Iguales

13% 12%

45% 38% 42%50%

abr-15 may-15

FACTORES INFLUYENTES EN EL CLIMA ECONÓMICO

Demandaexterna

Demandainterna

Costos INS. Precio deminerales

Legislación ClimaPol-Soc

Tipo decambio

6% 5%

16%21%

2% 5%10% 7% 4% 7%

38%36%24%19%



the same, but survey respondents were less critical than in the last survey.

With regard to the sociopolitical situation, their criticisms are the same as the ones about the economic climate. The feeling of mistrust toward the government, as well as political and social instability, affects their ability to do business.

Individual results also help. The extractive sectors, among which the mining and oil & gas sectors stand out with 4.1% growth, have recovered and experienced 2.8% growth du-ring the first quarter. However, both sectors are sensitive to social conflicts.

Meanwhile, the construction and manu-facturing sectors have contracted 6.8% and 5.2% respectively, mainly affected by a lower propensity to consume. Higher government spending seeks to spur demand, but low execution levels still persist and hinder the proper operation of expansive fiscal policies. Some members reveal that their companies have recovered, but that they fear it is un-likely they will grow during the year.

With regard to the exchange rate, the Peru-vian Central Bank (BCR) has sought to de-dollarize the economy in order to cushion the impact of the increase in the exchange rate. For this reason, it has given companies the option to convert their debts in dollars to soles. At the same time, facilities that have been provided so that banks can borrow soles from the BCR and not increase rates in local currency. Wait and see

As expressed in expectations for the eco-nomic and sectorial climate, expectations regarding investment levels are mostly un-certain, mainly due to factors related to de-mand. Survey respondents indicated that their investment levels would remain fixed or that they would only be making short-term investments. Among those who said they would reduce their investment levels, it was mentioned that they would do so in order to improve their companies’ profitabi-lity in light of slow growth of their business. In summary, investment levels remain low, since companies seek to take care of their resources and maintain positive returns.

Regarding payroll levels, 74% of the survey respondents said that they will remain un-

changed during the next 6 months, while 21% will seek to reduce them, largely be-cause lower growth than that initially fo-recasted by their companies is expected.

Seeking efficiency was also mentioned as a reason for reduced hiring. In addition, the lack of optimism has to do with the lack of plans to increase investment.

It remains to be seen whether this caution will continue during the coming months and whether the worst is over in terms of the political situation. As the year 2016 ap-proaches, the headlines will focus more on the upcoming elections.

However, the current imbalance due to accusations of corruption and inaction on the part of the government with regard to those involved, as well as protests in the

southern part of the country, could further worsen the outlook if the situation conti-nues to progress. For the present, the sen-se of calm that the appointment of Pedro Cateriano as prime minister brought was offset by concern about anti-mining vio-lence in the southern part of the country.

Meanwhile, the actions taken by the go-vernment to stimulate the economy could be insufficient to recover optimism. The key is to foster the execution of projects and take action on proposals.

Technical information

Universe: 36 senior executives and directors of AmCham

member companies

Survey period: 06/May/2015 – 09/May/2015

abr-15 may-15

EXPECTATIVAS A SEIS MESES SOBRE LA ACTIVIDAD ECONÓMICA SECTORIAL


21% 21%

34%

12%

45%

68%

abr-15 may-15

EXPECTATIVAS A SEIS MESES DE LOS NIVELES DE INVERSIÓN


16%12%

32%

15%

53%74%

www.amcham.org.pe20

E co n o m i c a n a ly s i s – s tat i s t i c s

TÍTULO DE LA PÁGInA: MAIn ECOnOMIC InDICATORS fOR PERU

1. GDP recovered in March impulsed by the non-primary

sectors, trend that kept going through April, according to

BBVA Research. The higher production of copper and the

recovery of the harvest of anchovy contributed to that

improvement.

2. Inflation stayed stable (up to April of this year it accumu-

lates 1.62%, against 1.83% at the same month of 2013)

and allows applying expansive policies. Even, as stated

on page 6 of this magazine, PEN could be depreciated for

gaining competitiveness in exports, and one of the ways

for doing so would be reducing the reference interest rate

in the near future. It is expected to have a 2.5% rate at the

end of this year, below the 3.2% of 2014.

3. The fall of the trade balance seen this year goes further

than the cyclical fact. The traditional exports have been

affected by the lack of stocks of fishmeal, the lower coffee

exports (-50%) as a consequence of the decrease in the

volume (-60%), and the lower income in the exports of

copper as a result of formerly agreed prices. It is expected

that the increase of the volume and the rise in the price of

copper, as also the fishmeal to be produced, will improve

the situation.

-15.0

-10.0

-5.0

0.0

5.0

10.0

Jan Feb

GDP Primary sector Non primary sectors

Mar Apr May Jun Jul Aug Set Oct Nov Dec Jan Feb Mar

Source: BCRPElaboración: Elaboration: AmCham PerúPerú

CHART 01

IS RECOVERY COMING?Evolution of GDP growth (12m % variation)

-0.5

0.5

1.5

2.5

3.5

3

2

1

0jan-14

feb-14

mar-14

apr-14

may-14

jun-14

jul-14

aug-14

set-1

4oct-1

4

nov-14

dic-14jan-15

feb-15

mar-15

apr-15

Monthly in�ation Accumulated in�ation

Source: BCRPElaboration: AmCham Perú

CHART 02

BELOW 2014Evolution of the in�ation rate

-600

-400

-200

0

400

200

800

600

2013-2014 2014-2015

Apr May Jun Jul Aug Set Oct Nov Dic Jan Feb Mar


CHART 03

UNDERPERFORMANCEComparrisson of the trade balance for the periods april 2013 - march 2014, and april 2014 - march 2015

0.320.60

1.83

3.18

0.52 0.39 0.23 0.160.43

-0.09 -0.150.160.38 0.23 0.17 0.3

0.760.39

1.62

0

2,000

4,000

6,000

8,000

10,000

12,000

Copperminerals,

cathods andconcentrates

Unleadedgasoline

Fishmeal Liqui�ednatural gas

Lead minerals and concentrates

Zinc minerals and concentrates

Iron minerals and concentrates

Gold

May13 - Apr14 May14 - Apr15

Source: Adex Data TradeElaboration: AmCham Perú

CHART 04

PRICE EFFECTExports of Peru's main products(US$ million)

1100

1200

1300

1400

1500

1450

1350

1250

1150

200

240

260

300

340

320

280

220

jun-13

aug-13

oct-13

dic-13

feb-14

apr-14

jun-14

aug-14

oct-14

dic-14

feb-15

apr-15

jul-13

set-1

3

nov-13

jan-14

mar-14

may-14jul-1

4se

t-14

nov-14

jan-15

mar-15

may-15

Oro (US$/oz) Cobre (US$/lb)


CHART 05

RE-COPPERYEvolution of the prices of the two main export metals of Peru

jun-13

aug-13

oct-13

dic-13

feb-14

apr-14

jun-14

aug-14

oct-14

dic-14

feb-15

apr-15

jul-13

set-1

3

nov-13

jan-14

mar-14

may-14jul-1

4se

t-14

nov-14

jan-15

mar-15

may-15

40

50

60

70

90

80

120

110

100

US$/barrel

Source: BCRPElaboraton: AmCham Perú

CHART 06

WILL STAY LOW?WTI oil price


E co n o m i c a n a ly s i s – s tat i s t i c s

4. The fall in the exports of copper, gold, fishmeal, natural

gas and iron reflect the deterioration of the trade balance

observed in the previous chart. Gas and iron exports were

also affected by the fall in the prices.

5. While gold doesn’t take off and has a behavior that is hard

to predict, the Price of copper has slightly recovered as a

result of the expectancy of higher orders from China and

Europe, even though there is still uncertainty for the mid

and long term because of the suppositions of a further

excess of supply.

6. The fall of oil price has been significant and has benefited

Peruvian consumers, although it has negatively affected

the exploration and extraction activities (see article on

page 10). The fact that the OPEP countries have decided

to maintain their production reduces the possibilities of

a rise.

-15.0

-10.0

-5.0

0.0

5.0

10.0

Jan Feb

GDP Primary sector Non primary sectors

Mar Apr May Jun Jul Aug Set Oct Nov Dec Jan Feb Mar

Source: BCRPElaboración: Elaboration: AmCham PerúPerú

CHART 01

IS RECOVERY COMING?Evolution of GDP growth (12m % variation)

-0.5

0.5

1.5

2.5

3.5

3

2

1

0jan-14

feb-14

mar-14

apr-14

may-14

jun-14

jul-14

aug-14

set-1

4oct-1

4

nov-14

dic-14jan-15

feb-15

mar-15

apr-15

Monthly in�ation Accumulated in�ation


CHART 02

BELOW 2014Evolution of the in�ation rate

-600

-400

-200

0

400

200

800

600

2013-2014 2014-2015

Apr May Jun Jul Aug Set Oct Nov Dic Jan Feb Mar


CHART 03

UNDERPERFORMANCEComparrisson of the trade balance for the periods april 2013 - march 2014, and april 2014 - march 2015

0.320.60

1.83

3.18

0.52 0.39 0.23 0.160.43

-0.09 -0.150.160.38 0.23 0.17 0.3

0.760.39

1.62

0

2,000

4,000

6,000

8,000

10,000

12,000

Copperminerals,

cathods andconcentrates

Unleadedgasoline

Fishmeal Liqui�ednatural gas

Lead minerals and concentrates

Zinc minerals and concentrates

Iron minerals and concentrates

Gold

May13 - Apr14 May14 - Apr15

Source: Adex Data TradeElaboration: AmCham Perú

CHART 04

PRICE EFFECTExports of Peru's main products(US$ million)

1100

1200

1300

1400

1500

1450

1350

1250

1150

200

240

260

300

340

320

280

220

jun-13

aug-13

oct-13

dic-13

feb-14

apr-14

jun-14

aug-14

oct-14

dic-14

feb-15

apr-15

jul-13

set-1

3

nov-13

jan-14

mar-14

may-14jul-1

4se

t-14

nov-14

jan-15

mar-15

may-15

Oro (US$/oz) Cobre (US$/lb)


CHART 05

RE-COPPERYEvolution of the prices of the two main export metals of Peru

jun-13

aug-13

oct-13

dic-13

feb-14

apr-14

jun-14

aug-14

oct-14

dic-14

feb-15

apr-15

jul-13

set-1

3

nov-13

jan-14

mar-14

may-14jul-1

4se

t-14

nov-14

jan-15

mar-15

may-15

40

50

60

70

90

80

120

110

100

US$/barrel

Source: BCRPElaboraton: AmCham Perú

CHART 06

WILL STAY LOW?WTI oil price


www.amcham.org.pe22

ARTICLE wRITTEn bY THE STAff Of COnTRIbUYEnTES POR RESPETO

REGULATInG bLInDLY

Regulation without evidence is a bad and highly improvised, but very frequent practice among our authorities. It is the easiest and most popular way to attract votes. On a daily basis, they issue new regulations that lack economic support, failing to achieve the ob-jectives established and doing serious harm to the national economy.

The biggest problem is that that tho-se regulations tend to be issued blindly, without gathering the minimum amount of evidence required to foresee that the measure will achieve the objectives sought, and without monitoring their im-pact over time. In this report, we address two examples of regulating without evi-dence which, as previously noted, is a bad and improvised, but very frequent practice among our authorities.

There are two ways in which this type of regulation comes about. First, there is the lawmaker’s own perception. Due to anec-dotal evidence, hunches or “good inten-tions,” but without arguments to support his or her position, the lawmaker decides to regulate under the premise that so-mething must be going wrong or at least not as it should.

Then there is also the perception of public opinion which, in light of a given incident and influenced by press coverage, places pressure on the lawmaker, who believes that simply confirming or prohibiting a cer-tain matter will solve the problem. Politicians usually prioritize their agendas according to risks the public perceives as high.

Including a cost-benefit analysis in bills presented to Congress is indispensable. Unfortunately, that is almost never the case and, far from achieving good objectives, it makes the situation worse.

Majority baseless

If we consider the period from 2011 to 2015, during which 4,490 bills (www.pro-yectosdeley.pe) have been presented, it has been estimated that 9 out of 10 do not include an acceptable cost-benefit analy-sis (Arias-Schreiber et al, 2015). Of course, this analysis should gather basic evidence prior to regulating.

Undoubtedly, if we need to make re-forms, the time is now. Let’s not wait for an economic slowdown or a drop in pri-vate investment, exports and economic expectations to bring down the Peruvian economy.

Both examples are explained on the fo-llowing pages.

Case 1:Balance-based commission

In 2012, Congress created the balance-based commission for the private pension system (combined commission for 10 years), as an alternative to the flow-based commission. It also mandated that those who did not express their desire to remain under the flow-based scheme would be automatically switched to the new balan-ce-based commission.

This effort to direct our freedom to choose, or regulatory nudge, is not based on any evidence, but rather on the theory that the new commission would align members’ interests with those of the private pension

funds (AFP), given that with a larger fund, the companies would earn more commis-sions. Despite the fact that what is most important to members is the profitability of the fund, it is very difficult to unders-tand how a commission that will change over a 10-year period works.

The minimal success of this measure beca-me evident when an overwhelming majo-rity of the 2.4 million contributing mem-bers as of 2013 decided to “get in line” to keep the flow-based commission: 80% at Prima, 79% at Profuturo, and 72% at Inte-gra. The effect of this was increased tran-saction costs, as well as greater confusion and information asymmetry.

A review of the figures shows that the vast majority of contributing members decided not to migrate to the combined commission scheme and had to approach their respective pension fund administra-tors (AFP) to exercise their right to remain under the commission scheme of their choosing. Therefore, the final effect of this was increased transaction costs, as well as greater confusion and information asym-metry.

Did you know? The balance-based com-mission

Was implemented by means of Law No. 29,903 - Law on Private Pension System Re-form, published in July 2012. The law also mandated that self-employed workers un-der 40 years of age were required to join a retirement system. Absolute rejection



mal business in Peru (and to keep the product out of the hands of minors).

of this obligation led to the enactment of Law No. 30237, which repealed the provi-sions on mandatory contributions for self-employed workers.

with a low level of informality, effective monitoring and high incomes, but this is not the case with Peru. Here, pills can be purchased separately, shampoo in small packets, cough syrup in teaspoons and cigarettes individually. According to Ipsos, which analyzed levels of sales of loose cigarettes from 2003 to 2010, sales of loose cigarettes accounted for 57% of total cigarette sales in Lima in 2003, while in 2010 they accounted for only 4%. Small packs (5 and 7 units), which were intended to combat this problem, were one of the key components in the reduction of the consumption of loose cigarettes.

However, this reduction may have taken an unexpected turn when Congress pro-hibited the sale of packs with fewer than 10 units. It is very likely that from then on, the consumption of loose cigarettes surged once again and the product has become more accessible to minors, sin-ce it can be obtained from any corner grocery store or street seller at a lower price.

The widespread sale of loose cigaret-tes in the country facilitated access to them at a lower unit price, especially among the most vulnerable population. In addition, it hindered adequate disse-mination of warning messages to con-sumers, since they received the product loose, without its respective packaging. Lastly, it also increased tax evasion and the counterfeiting of cigarettes, to the detriment of consumers and the State.

When we communicated with the Ge-neral Directorate of Human Health (DGSP) at the Ministry of Health (Minsa) to find out about the trend in the sale of loose cigarettes following its prohibi-tion in 2010, we were surprised to find a lack of knowledge on the matter.

Did you know? The sale of packs of fewer than 10 units

was prohibited in April 2010 by Law No. 29517. This measure was supported only by the WHO recommendation to prohibit small packs, and ignored the fact that the Ministry of Economy and Finance had offered Congress evidence that small packs helped to reduce infor-

Case 2:Loose cigarettes

In 2010, Congress prohibited the sale of packs of fewer than 10 cigarettes, in line with the World Health Organization’s (WHO) Framework Convention on Tobac-co Control. According to the convention, countries would prohibit the sale of ciga-rettes in small packs that made them more accessible to minors.

Measures such as this one would have a greater probability of success in markets

And there is more…

If Congress and the Executive Branch (and any other authority that issue re-gulations) do not review or produce evidence before promoting regulations, and the Executive Branch fails to moni-tor the impact of measures over time, the likelihood that these interventions create more losers than winners increa-ses exponentially.

Additionally, regulation should be accom-panied by technical analysis that confirms the existence of a causal relationship bet-ween variables. Technical analysis should be complemented by an analysis of the impact of regulatory measures on relevant markets and economic agents. On some occasions, it is necessary to improve en-forcement of the law, without necessarily increasing regulation, but rather ensuring that the rules are followed. The election campaign will undoubtedly bring more micro-populism. Let’s remain alert.

LOOSE CIGARETTES

In 2003

2010 Prohibited

sales of loose cigarettes accounted for

57% of total cigarette sales in Lima.

sales of loose cigarettes accounted for

4% of total cigarette sales in Lima.

Small packs (5 or 7 units) were the key.

x1

x5 x7

BALANCE-BASED COMMISSION

2013An overwhelming majority decided to

“get in line” to keep the �ow-based commission:

89% at Prima

79% at Profuturo

72% at Integra

www.amcham.org.pe24


bILLS REVIEw

EfECTOS POTEnCIALES

EfECTOS POTEnCIALES

Establishing a review of arbitration decisions defeats the purpose of arbitration, since the parties seek a quick solu-tion. Third-party proceedings are not necessary because a decision only governs the parties that sign an arbitra-tion agreement. In this regard, a decision that affects the rights of third parties that did not participate in the arbitra-tion process should have no effect on them and the latter should pursue an “amparo” (order for protection against the action of authorities). In relation to liability for the acts of arbiters (access to the grounds for their decisions is not avai-lable), the cost of arbitration would increase and, therefore, discourage its use.

To begin with, a systemic regulation for every processed food product would not be clear. Secondly, the private sec-tor should be consulted about matters related to labeling, in order to provide information on some requirements (for example, in the case of transgenics, there is no difference with conventional foods that justifies additional informa-tion on the label). What should be sought, to the extent possible, is to adhere to international standards on the mat-ter that combine the objectives of public health policy with consumer information and commercial freedom.

bILL nO. 04505/2014-CR. PROPOSES MODIfICATIOn Of DL 1071, wHICH REGULATES ARbITRATIOn.

bILL nO. 04494/2014-CR. PROPOSES MODIfICATIOn Of THE COnSUMER PROTECTIOn AnD DEfEnSE LAw wITH REGARD TO fOOD LAbELInG.

Due to the consequences of the acts of the organization headed by Rodolfo Orellana, the bill seeks to create an appeals mechanism against arbitration decisions, third-party proceedings, and joint and several liability of arbi-tration centers for the acts of their registered arbiters.

Proposes mandatory labeling of packaged foods, sta-ting the saturated fat content, sodium content, sugar content, trans fat content, potential hydrogen (pH), and the genetically modified organism or transgenic con-tent in percentages and in grams, kilos or the unit of measurement in which the product is sold. In addition, it establishes that statements about a product’s health benefits must be supported according to legislation on the matter or, failing that, according to the Codex Ali-mentarius.

Efecto negativo sobre el clima económico

Efecto ambiguo sobre el clima económico

Efecto positivo sobre el clima económico

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bILL nO. 04505/2014-CR. PROPOSES MODIfICATIOn Of DL 1071, wHICH REGULATES ARbITRATIOn.

EfECTOS POTEnCIALES

This fourth package integrates environmental permits and facilitates expropriation of investment projects. The most important development is the creation of global environmental certification, which will included the corresponding environmental permits for starting up work in the envoronmental impact assessment of a project. However, it should be noted that this package took a long time to be approved by Congress (it also included measures to reduce income tax and duties, and repealed the so called “Pulpín” Law), which diminished the dynamics of structural changes in the process of eliminating obstacles to investment.

EnROLLED bILL fOR bILL nO. 04465/2014-PE. PROPOSES ESTAbLISHInG MEASURES TO SPUR THE ECOnOMY In THE YEAR 2015.

LAw nO. 30327. LAw On THE PROMOTIOn Of InVESTMEnT fOR ECOnOMIC GROwTH AnD SUSTAInAbLE DEVELOPMEnT (fOURTH STIMULUS PACKAGE).

Its purpose is to promote investment for economic growth and sustainable development, through the sim-plification and integration of permits and procedures, as well as measures to promote investment.

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bILL nO. 04501/2014-CR AnD bILL nO. 04429/2014-CR On THE nATIOnAL AGRARIAn HEALTH SERVICE (SEnASA).

EfECTOS POTEnCIALES

EfECTOS POTEnCIALES

Although this fifth consumption stimulus package esta-blished exemption from deductions on bonuses, this was of a temporary nature and its permanence may affect the protection of social security in the future. This measure will affect the Private Pension System, as well as the sustainabili-ty of the National Pension System and Essalud. Also, making CTS funds available permanently will eventually leave wor-kers unprotected from negative contingencies.

We agree with the lawmakers’ objective of turning Senasa into a modern organization capable of taking the lead in proactively facing new challenges and internal and inter-national market trends, based on scientific procedures and systemic quality processes. This same approach could be applied to a number of entities that also require moderniza-tion (such as Digemid and Digesa, among others). However, these processes require providing resources and tools to the professionals who work on them, in order to improve their performance.

Establishes permanent exemption from tax deductions for (legally mandated) July and December bonuses on payrolls, as well as permanent free availability of compensation for years of service (CTS) funds on any amount exceeding four salary payments, and extends the validity of the fuel price range, which was to expire in June.

The first bill seeks to declare the restructuring and ins-titutional development of Senasa, while the second is intended to replace the entity with the National Super-intendence of Agrarian Health (Senasa).

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DESCRIPCIón

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www.amcham.org.pe26

RE VISTA DE LA CÁMARA DE COMERCIO AMERICANA DEL PERÚ

MATTERS RELATED TO THE PROMOTION OF TRADE AND INVESTMENT

1. Meeting with the Minister of Transport and Communications, José Gallardo Ku, May 15.

2. Report on attendance at the II CEO Summit of the Americas held April 8-10 in Panama City, Panama.

3. Report on the meeting with President Ollanta Humala in Panama.

4. NRA Show 2015, May 16-19 in Chicago, USA.

5. General Manager’s trip to the “ICC-World Chambers Congress”, June 10-12, 2015 in the city of Turin, Italy.

6. General Manager’s trip to the “Business Future of the Americas” conference, June 15-17, 2015 in the city of Port-au-Prince, Haiti.

7. Award ceremony for the National Contest for Journalists on Intellectual Property, organized jointly with Indecopi, held on April 30.

8. Report on the official launch of the National Complaint Handling System for the Business Sector, organized by the Office of the Comptroller General of the Republic.

9. I Business Facilitation Mission for the Agricultural Export Sector, June 8-12, in the cities of Houston and Galveston, Texas, USA.

10. Visit from the Assistant Secretary for the Private Sector at the United States Department of Homeland Security, Raúl Perales, on May 18 at the offices of AmCham Perú.

11. Trade mission from Puerto Rico, June 08-11, 2015.

12. Participation in industry association meeting with the Sunat.

13. Submittal of our comments to the National Strategic Export Plan 2025. A working group was formed inside the Trade Facilitation Committee, and suggestions were done.

14. Participation on the meeting of guilds with Peruvian Tax Authority (Sunat) to discuss simplification, compliance promotion and chemical supplies control.

15. Participation on the meeting of the director of Homeland Security of Peru and representatives of AmCham Peru’s member institutions.

16. Launch of the anti-piracy campaign.

DEFENSE OF PRIVATE INVESTMENT AND MEMBERS’ INTERESTS

Laws, bills and regulatory actions analyzed by the chamber

1. Law No. 30309, Law on the Promotion of Scientific Research, Technological Development and Technological Innovation.

2. Ministerial Resolution No. 116-2015-MEM/DM. Common terms of reference approved for the preparation of detailed and semi-detailed environmental studies.

3. Proposed regulations on the Forestry and Wildlife Law.

4. Bill No. 04282/2014-CR. Proposes implementation of a system for returning used bottles.

5. Bill No. 04343/2014-CR. Proposes modification of different articles of the Law on the Promotion of Healthy Food for Children and Adolescents.

6. Bill No. 04320/2014-CR. Proposes Law to Strengthen Perupetro.

7. Bill No. 04308/2014-CR. Proposes modification of the Law on Copyrights.

8. SBS Resolution No. 1928-2015. Regulations on social and environmental risk management.

9. Bill No. 04375/2014-CR. Proposes modification of the General Law on Solid Waste.

10. Enactment of Law on Citizen Participation.

11. Ministerial Resolution No. NC 093 – 2015 – TR. Approved the Sectoral Action Plan for the Formalization of Employment for the year 2015.

12. Bill No. 04466/2014-PE. Proposes Law on the Establishment of Budgetary Measures for the Fiscal Year 2015.

13. Bill No. 04465/2014-PE. Proposes Law on the Establishment of Measures to Boost the Economy in the Year 2015.

14. Bill No. 04451/2014-CR. Proposes increasing competitiveness in the seaport sector.

15. Bill No. 04384/2014-CR. Proposes law on the Promotion of Free Public Access to Wireless Internet Service.

16. Bill No. 04450/2014-CR. Proposes Law on the Promotion of the Development of Low-cost Airlines to Cover Domestic Routes.

InSTITUTIOnAL AGEnDA

THE FOLLOWING ARE THE TOPICS GIVEN PRIORITY ON THE AMCHAM PERU AGENDA IN THE MONTHS OF MARCH THROUGH MAY:

AMCHAM NE WS - AGENDA

contact magazine, april-june 2015

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