peru consolidates growth in a changing global scenario · fael venegas, ceo of insur-ance group...

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Our WorldTuesday, October 6, 2015

#PeruTheWorldfolio#TheWorldfolio

L ima, which hosts the annual meet-ing of the Inter-national Mone-tary Fund (IMF)

and the World Bank open-ing here today, is a striking illustration of Peru’s vibran-cy and economic renais-sance. Long ignored by visi-tors and even once dubbed “Lima the ugly”, the 8.5 mil-lion capital city has become a hotspot for creative and business-minded trendset-ters alike. With the emer-gence of a Peruvian middle class, thanks to an average annual growth of 6.4% since the mid-2000s, Lima is now peppered with trendy res-taurants, art galleries, and all kinds of innovative small businesses, fashion shops and retail malls.

The rise in commodity prices over the past 15 years has fuelled the economic boom of this predominantly mining country, but econo-mists and international institutions all agree that the keys that unlocked the Andean nation’s potential are good governance, eco-nomic diversification, and market-friendly policies combined with hands-on measures to fight poverty and lack of education.

Even though the fall in commodity prices last year has slowed down growth to a projected 3.1% for this year, the mining-led economy is expected to re-gain momentum as diver-sification efforts continue

and government measures to stimulate investment take effect.

Peru’s main economic ac-tivities include agriculture, fisheries, mining, the ex-ploitation of petroleum and gas, and the manufactur-ing of goods, most notably textiles. Peru is the world’s top producer of fishmeal (2012), and the sixth largest producer of coffee, accord-ing to international consult-ing firm Ernst & Young. In mining, according to the Mineral Commodity Sum-maries Publication of the U.S. State Department, Peru ranked third in the world in 2012 in the production of silver, copper, tin and zinc, fourth in mercury and sixth in gold, besides having large deposits of iron ore, phos-phates, manganese, petro-leum, and gas.

As the authorities strive to diversify the economy, tourism is also becoming a leading sector. Accord-ing to the Ministry of For-eign Trade and Tourism, it is now the third most im-portant source of revenue for the national economy.

International arrivals in-creased 7.9% in the first semester of 2015, totaling 1.6 million, according to the Ministry. The improvement of security and investments in infrastructure connectiv-ity are among the key ele-ments that drive tourism.

The present administra-tion elected in 2011 and led by the left-leaning President Ollanta Humala, whose po-litical views are comparable to those of Brazilian Presi-dent (from 2003 to 2011) Luis Ignacio “Lula” da Silva, has pledged to pursue free-market policies while at the same time giving top prior-

ity to the fight against social exclusion, in particular of the indigenous population. According to figures of the National Institute of Statis-tics and Information (INEI according to the Spanish acronym), poverty levels have fallen from half of the population 20 years ago to 22.7% today.

“We have created an es-sential basis for growth – macroeconomic stability – which encourages investors, providing them with clarity and transparency. We were a very closed economy. Now we are one of the most open

economies in Latin Amer-ica. These factors were key to achieving sustainable growth,” said the Governor of the Central Reserve Bank of Peru, Julio Velarde.

Over the past decade, Peru has become, accord-ing to the World Economic Forum, one of the most business-friendly coun-tries in the world, ranking among the top 20 for its macroeconomic environ-ment. The world’s leading rating agencies consistently give it an investment grade level. Furthermore, Peru has signed trade agreements with the U.S. the European Union, and a number of other countries and regions representing in total 73% the world’s GDP and 92% of the world’s trade, according to the Ministry of Economy and Finance.

Christine Lagarde, the Managing Director of the IMF who is expected here today, said, “Peru continues to be one of the most vibrant economies in the world. Economic performance over the past decade has been exceptionally strong

– nurtured by positive fun-damentals, a sound policy framework, and prudent macroeconomic policies. The economic expansion al-lowed per capita income to double, and employment to increase substantially. Peru also made good progress on its social agenda as poverty and inequality rates contin-ue to decline.”

As for the President of the World Bank Group, Jim Yong Kim, who spent a lot of time in Peru earlier in his career when he was an infectious disease doctor, he said after a meeting with President Humala in May, “This impressive and im-proving track record shows that Peru has much to share with the world about pro-moting development and doing development right.”

As IMF and World Bank officials gather in the reju-venated Peruvian capital, the President of the central bank is keen to advocate for a better representation of emerging countries in the world’s financial institu-tions. “The structure of the IMF dates back to the post-WWII period and increas-ingly big economies, such as China or Brazil, still have little weight in it,” said Mr. Velarde. “A debate is neces-sary on this issue because if reforms aren’t made, I wouldn’t be surprised to see the creation of new interna-tional financial institutions representing better the emerging countries.”

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Peru consolidates growth in a changing global scenario

W ith the In-ternatio-nal Mon-etary Fundand World

Bank Group arriving in Lima for their annual meetings to-day, the city, for a short time, will be transformed into the fi-nancial capital of the world and will provide Peru with a unique opportunity to strengthen its increasingly relevant position on the global stage.

The country’s strong eco-nomic performance over the last decade has led to Lima

being chosen to host the an-nual meetings of the boards of governors of the World Bank Group (WBG) and the International Monetary Fund (IMF). It will be the first time in 48 years, the annual meetings of both multilateral agencies will be held in Latin America.

For seven days the country will be at the center of world focus and will have the oppor-tunity to showcase its achieve-ments and the policies it has implemented in becoming an example and a reference point at a regional and global level.

The WBG/IMF Annual Meetings each year bring together central bankers, ministers of finance and de-velopment, private sector executives, and academics to discuss progress on the work of the IMF and the World Bank Group. Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial markets.

World Bank Group Sec-retary Mahmoud Mohieldin

pointed to the fact that Peru was selected for the event due to its growing interna-tional prestige, something that it has managed to build due to its standout econom-ic and social performance. “This designation is a clear reflection of Peru’s achieve-ments in recent years in terms of political and insti-

tutional stability, economic soundness, investor confi-dence, and integration with the world economy,” he said.

Lima is primed to receive around 12,000 participants in total during this year’s Annual Meetings, with unprecedent-ed efforts having been made to build infrastructure that will turn the capital of Peru

into a preferred destination for yet more important inter-national events in the future.

Peru is a full member of the WB Group and the IMF, and was selected to host the An-nual Meetings in 2012. The last time the WBG/IMF An-nual Meetings were held in the region was in 1967, in Rio de Janeiro, Brazil.

A UNITED WORLD SUPPLEMENT PRODUCED BY: Gemma Gutierrez (Regional Director), Fernando-Diógenes Mora (Editorial Director), Virginia Towers (Project Director), Napoleon Lacroze (Business Analyst), Pablo Dabrio (Market Analyst)

“We have created an essential basis for growth – macroeconomic stability – which encourages investors, providing them with clarity and transparency. We were a very closed economy. Now we are one of the most open economies in Latin America”

JULiO VeLARDe.Governor of the Central Reserve Bank of Peru

“Peru continues to be one of the most vibrant economies in the world. Economic performance over the past decade has been exceptionally strong – nurtured by positive fundamentals, a sound policy framework, and prudent macroeconomic policies”

CHRiSTine LAGARDe, Managing Director of the iMF

As Lima prepares to play host to the World Bank and IMF Annual Meetings, the eyes of the world turn to Peru after more than a decade of growth that has transformed the country into a shining economic example on a regional and global level

2 Tuesday, October 6, 2015 Distributed by USA TODAYPERU


Economy set to grow 5% by 2020Peru’s economic growth during the past decade means the Andean nation is well-placed to further expand despite recent commodity pressures

P eru has expe-rienced a great turnaround in fortunes over thepast decade as

economic policy has helped to create an affluent middle class, which is now using its increased purchasing power to bolster prospects.

This virtuous circle is driv-ing the South American country’s future and deliver-ing demand to sectors that had previously laid dormant such as housing, health care, investment markets, and in-surance. Over the past decade annual growth of around 7% was commonplace and while the more recent commodities downturn has undoubtedly proven a challenge, plans to instill a sustainable economic framework mean the country’s prospects are still widely con-sidered positive.

“Nowadays we have a good middle class, with a much greater purchasing power than that which citizens had 10 years ago,” explains Ra-fael Venegas, CEO of insur-ance group Rimac Seguros y Reaseguros S.A.

The result has been growth across these new sectors,

with Mr. Venegas’s insurance outfit expanding at a rate of between 12% and 16%. This has slowed more recently, however, as the onset of the global economic downturn hit Peru harder than others, largely because of its heavy reliance on the mining sector.

Policy difficulties have also affected some market sectors and Mr. Venegas admits that an “excess of regulations” ham-pered development in some quarters although more recent political changes appear to have set Peru’s economy back on a course for growth, using the likes of Chile and Mexico as comparisons.

Part of Peru’s growth over the past decade has been made possible thanks to the considerable spur provided by the country’s pension fund administrations that operate widely, an unusual occurrence for the region. The market is estimated at around $40bn - equivalent to around 20% of the coun-try’s GDP - and it has prov-en to be a highly attractive aspect of Peru’s economic make-up, as Renzo Ricci Cocchella, general chief at AFP Prima, explains.

“It’s been extremely posi-tive because it’s also a fund for individual accounts, not a distribution system and there-fore it’s the actual savings of the more than 5.7 million Pe-ruvians who are in the AFP system,” he says.

Mr. Cocchella adds that groups such as Prima do not simply invest in domes-tic markets but spread their interests, providing boons for investors based on inter-national fortunes as well as those at home. That’s not to say local investments are ig-nored however, he adds, with the majority of the company’s interests residing within the country’s borders.

“Most of our portfolio is lo-cal, we are very interested in long-term projects, such as in-frastructure or private equity. In that sense we have also been a leverage for growth, the AFPs have participated in a number of infrastructure investments that represent about 10% of the port-folio and they are increasing,” he adds, reflecting on reforms to the pension system in 2012 that sought a more efficient in-vestment model allowing for an increase in the limits for invest-ment in alternative funds.”

Such economic develop-ments have enabled Peru to outpace its regional rivals in terms of growth: the Interna-tional Monetary Fund fore-cast a regional rate of growth around 1% for this year and approximately 3% over the next five. Peru, meanwhile, is set to grow nearly 4% this year and by 5% by 2020.

Such figures led IMF presi-dent Christine Lagarde to note the Peruvian economy as one of the “brightest” in the world and it’s this growth that has helped entice the IMF and the World Bank Group’s an-nual meeting to the country. Yet Julio Velarde, Governor of the Central Reserve Bank of Peru, says much of the success has been based on previous experiences - and not neces-sarily all positive.

“We’ve had hyperinfla-tion and irresponsible fiscal policies with huge deficits, we were one of the few countries where the economy had been stagnant for almost 30 years,” he explains. Today, however, it is this recent history that is helping to forge such a strong economic future.

“Those problems meant we could also learn, in the last 25

years we’ve adopted prudent, sensible macroeconomic policies that let us maintain monetary stability and deal successfully with the effects of the worldwide financial crisis. Therefore, as soon as fiscal or monetary policies are regarded to be going be-yond prudency, the govern-ment’s popularity starts going down,” he adds.

“There are many other countries that suffered hyper-inflation, but our advantage is that we’ve learnt from that; other countries have not al-ways done that. I believe we’ve created an essential basis for growth - macroeconomic stability - which encourages investors, providing them with clarity and transparency at the markets they want to invest in. Once the idea of a transparent market is gener-ated, the economy grows.”

An open economy is help-ing propel prospects and Mr. Velarde says the country is “absolutely open to capi-tal markets,” which have all helped sustainable growth. This is evidenced by the fact that growth is not simply be-ing driven by Peru’s capital, Lima. Cross-sector success is

clear, such as the agricultural growth being experienced on the country’s northern coast.

“Currently, the economy of Peru is undergoing a sig-nificant change in its pattern of development and growing on a regional, decentralized level, which affects various sectors,” says Daniel Moisés Schydlowsky Rosenberg, Su-perintendent of Banking, In-surance and Private Pension Fund Administrators.

“The fact that at least one part of Peru is facing a labor shortage is a great achieve-ment, enabled by 15 years of sustained growth,” he con-tinues, “but the question and challenge that arises is how to apply this to the Peruvian economy in its entirety.”

According to Luis Felipe Castellanos, CEO of Inter-bank and Intercorp Financial Services, the real challenge is incorporating more people into the financial system. “In Peru 60% of people still don’t have access. In other countries we’ve observed a significant advance through e-money,” he says.

Indeed decentralized growth in Peru is by no means easy because of the

Education investment drives poverty alleviation pushPoverty eradication has become one of Peru’s key focus areas and economic growth, coupled with increased spending on education, is being prioritized to reach that target

Peru’s explosive eco-nomic growth over the past 10 years has enabled the country to invest

across its public services to alleviate poverty, with an im-proved education sector one of the biggest benefactors.

Improvements have been seen across the sector, with en-rollment of three to five-year olds up to 72%, while 97% of those aged between six and 11 now attend school. Mean-while more than nine out of ten youngsters aged between 12 and 16 are in education, a direct result of increased spending.

Investment has resulted from the Andean nation’s strong eco-nomic growth during the past decade, and while commodity price changes are affecting ex-pectations, growth forecasts of 3.8% in 2015 and around 5% by 2020 are still predicted. Yet pov-erty remains a challenge and in 2013 the World Bank estimated that 23.9% of the Peruvian pop-ulation lived below the thresh-old - meaning the role of educa-

tion remains vital, according to Jaime Saavedra, the country’s Minister of Education.

“We are far from where we should be in terms of educa-tional standards, achievements and learning,” he explains, adding that the country must invest to deliver a skilled work-force that can continue the country’s economic prosperity.

“If we do not make an un-precedented investment in ed-ucation, the lack of human cap-ital will be a binding constraint in the continuation of this de-velopment project. Sustained growth is achieved only if at the same time there is growth in investment in education. Since 2002, despite an existing agreement, the expenditure on this area has always been 3% of GDP and, while investment grew as a result of increased do-mestic product, the rate has not changed since then.”

“Last year we increased this figure half a point, so it cur-rently amounts to $1,500 mil-lion, but it is still not enough, because the education bud-

get is far below that of other countries in the region.”

Improving this figure has huge implications on reduc-ing poverty for Peruvians, an area that the country has al-ready focused on, receiving praise from the likes of the World Bank for its efforts.

Indeed, World Bank Group President Jim Yong Kim worked in Peru after launching an NGO in Carabayllo several decades back to deal with drug-resistant TB and he admits his experi-ences influence his current role.

“Our organization is here to fight poverty, and to fight pov-erty in places like Carabayllo. It’s a great opportunity to re-mind myself and send a mes-sage to my team that all the work we do has to be based on what we can do in poor com-munities,” Mr. Kim noted.

Mr. Kim’s Socios en Salud have developed their work in the region with Peru’s Min-istry of Health while other government-backed schemes such as the National Strategy for Development and Social

Inclusion (Incluir para Crec-er) is another example of the country focusing its efforts on improving inequality.

Such practices are also found in the educational sphere, where teacher’s salaries and educational infrastructure are both being targeted. Wages are being ratcheted up by around 40% to entice a new wave of professionals and high school hours are being extended.

“We also began to imple-ment a plan called ‘Works by Taxes’ in which any company can offer to build or improve a school, and in return the gov-ernment gives it a certificate that it can accrue from their tax burdens,” adds Mr. Saave-dra. The result is quicker de-velopment, and this along with public-private partnerships, are helping to deliver more schools and better facilities.

The higher education sector has also experienced an uptick in demand, and since 2003 the number of students at private universities has doubled while in public universities it has in-

creased by 12%. More overseas students are also heading to Peru, but there remain regula-tory concerns regarding the quality of education across all sectors and Mr. Saavedra says it is an area that his government is already focused on improving.

“We already have a legal framework to begin to change this, but it will take a long time. Last year we passed a new Uni-versity Law, for which there was much debate and there was great opposition from several universities to the main change we proposed, which is creating a regulatory and su-pervisory body for the basic academic standards,” explains Mr. Saavedra.

US students are regular at-tendees at Peruvian universi-ties while a scholarship pro-gram has also been created to improve social inclusion, par-ticularly amongst low-income students. Similar systems for teachers, post-graduate stud-ies, and professionals in the Armed Forces are also opera-tional, allowing students to at-

tend institutions such as Stan-ford, Columbia, or Harvard.

Peru is also seeking closer ties with the US to improve the educational sector’s abil-ity to deliver English language classes, and a policy is being put in place that will see all high school graduates learn-ing the language to a B1 level on the European system.

“This requires increasing the number of English teachers and from the Ministry we are giving them training programs abroad to improve,” says Mr. Saavedra, who adds that work-ing with the USA to improve ICT services are being devel-oped to strengthen technical education and employability.

The South American coun-try is also in the midst of stan-dardizing higher education across the country with the introduction of a new bill that is currently passing through Peru’s Congress, marking an-other step for the Andean na-tion as it seeks to protect its economic prospects with an educated workforce.

“In the last 25 years we’ve adopted prudent, sensible macroeconomic policies that let us maintain monetary stability and deal successfully with the effects of the worldwide financial crisis. Therefore, as soon as fiscal or monetary policies are regarded to be going beyond prudency, the government’s popularity starts going down”

JULiO VeLARDe,Governor of the Central Reserve Bank of Peru

“We’re not just about financing and macro-economic policy. Our organization is here to fight poverty, and to fight poverty in places like Carabayllo. It’s a great opportunity to remind myself and send a message to my team that all the work we do has to be based in what we can do in poor communities”

DR. JiM YOnG KiM,President of World Bank GroupChristine Lagarde, Managing Director of the international Monetary Fund (left) with President of the

World Bank Group, Dr. Jim Yong KimJulio Velarde, Governor of the Central Reserve Bank of Peru

THe WORLD BAnK iS eSTABLiSHeD

BReTTOn WOODSMOneTARY COnFeRenCe

December 31st,Peru becomes a member

of the World Bank

1944 1952

1945 1960

1970

FiRST PROJeCTS in PeRU“Port of Callao Project”

“Agricultural Machinery Project”

1950 -1960The World Bank finances

infrastructure plans in Peru•Roads

•Railways • electricity infrastructure

World Bank and Peru work together on

basic education programs and help develop

hydrocarbons, energy and agriculture sectors

During World War ii, Peru cooperated with the allies and allowed USA to build Talara Airport. in 1945, when the war ended, Peru participated in the San Francisco meetings and signed the United nations Charter


3Tuesday, October 6, 2015Distributed by USA TODAY PERUAgreement sees U.S.-Peru trade double since 2009The U.S.-Peru Trade Promotion Agreement, implemented in 2009, has seen two-way trade nearly double from $9 billion to $16 billion in 2014

T he United States and Peru have enjoyed diplo-matic relations since its inde-

pendence from Spain in 1827, but trade relations have signifi-cantly strengthened since the countries entered into the US-Peru Trade Promotion Agree-ment in 2009, which saw two-way trade nearly double from $9 billion to $16 billion in 2014.

“I think the US-Peru FTA was a huge step forward in terms of setting the stage for increased investment in Peru, diversifying Peru’s product mix, increasing agricultural trade in particular,” said Brian Nichols, the United States Ambassador to Peru. “The FTA has strengthened the agricultural sector in both directions. Products like avo-cado, asparagus, blueberries, and grapes were not a signifi-cant part of the U.S. market before and have grown since the FTA.”

In the last three years U.S. exports to Peru have increased by 90% while imports from Peru are up by 52%. The Unit-ed States is Peru’s second larg-est export market and primary supplier of imports. Peru was the United States’ 32nd largest goods export market in 2012, up from 36th in 2009.

Nichols also credits the FTA for stimulating interest in other sectors of the economy such as service and tourism.

“Last year we had 450,000 American tourists visit Peru. Many of those people came to see Peru’s great world class sites like Machu Picchu, and the fab-ulous restaurants and hotels.”

The increased interest in Peru has helped reduce pov-erty rates by half over the last twenty years, currently at 22.7%, while the country still faces many challenges in wealth distribution poverty rates continue to decline.

The economic partnership between the two countries has attracted investment interest from private U.S. companies looking to gain a foothold in Peru’s growing economy. American companies are play-ing a key role in developing Peru’s energy sector. Texas based Hunt Oil is a partner in the exploration of the Cami-sea gas fields. General Electric compressors are being used to move gas to pipelines serving the Fenix power plant in Chil-ca, partly built with U.S. funds, while the Luz del Sur, another U.S. Company, distributes gas and electricity to the Lima Metropolitan area.

“It provides Peruvians with some of the cheapest gas and electricity in the hemisphere,” said Nichols. “One of the key drivers for Peru’s economic growth and progress over the last decade has been cheap energy.”

Investment opportunities in Peru are abundant and helping to spur and support U.S. busi-ness interests is AmCham, the American Chamber of Com-merce in Peru, which has car-ried out more than a dozen trade missions to the United States even before the FTA with Peru was finalized.

“We are very active all across the country,” said Aldo R. De-filippi, Executive Director of the 47-year-old organization, made up of 5000 members from 580 companies, a third of which are from the United States, the rest from Peru and other foreign states. “AmCham has played an important role in helping to facilitate relation-ships between U.S. compa-nies and Peruvian companies wanting to export. Peru has a wealth of natural resources, nearly 2000 miles of coastline, a robust manufacturing and energy industry and of course agriculture. AmCham is creat-ing opportunities to help com-

panies explore and maximize their mutual interests.”

One such example is Fer-reycorp, a company that serves the mining, construction, and agriculture sectors through the import, distribution and sale of equipment and heavy machin-ery. It is one of Caterpillar’s larg-est dealers in Latin America.

“We are proud of that, and it encourages us to grow,” said Os-car Espinosa Bedoya, Executive President of Ferreycorp. “Our business activity is not oriented to market products in the U.S. but we are in the same line of most American products and we do it with dedication, be-cause it defines us well in the market in which we operate.”

The U.S. and Peru continue to cooperate closely on eco-nomic matters most recently in negotiations on the Trans Pacific Partnership Agreement, a comprehensive trade agree-ment seeking to expand ex-ports and stimulate job growth among 11 Pacific Rim nations.

The United States is also capitalizing on its collabora-tive relationship with Peru to combat the illegal wildlife trade and illegal mining. Both countries have worked closely to ensure that increased trade does not occur at the expense of the environment. Peru has made enormous strides in implementing institutional changes and legal and regula-tory reforms to preserve the environment, including the creation of a Ministry of En-vironment. With the help of U.S. expertise it has trained members of Peru’s law en-forcement and judiciary to more effectively handle envi-ronmental crimes.

“We have a strong partner-ship between the EPA and Peru’s counterpart in terms of looking at ways to deal with problems like illegal mining and logging,” said Nichols. “We are just now in the process of implementing an agreement on a trade transparency unit.”

The new program endorsed by the Department of Home-land Security would use com-puter programs to analyze and flag illicit trade flows between the two countries.

“If there is too much mer-chandise moving that is not justified by the analysis, you can find who is doing these illicit activities, whether it is gold, logging, or narcotics.”

The outlook for Peru re-mains positive. Its commit-ment to democracy and free speech distinguishes itself from other countries in the region and makes it a valuable partner in Latin America.

“When you look at the play-ing field here, there is tremen-dous confidence in Peru as a country where the fundamen-tals remain very strong,” said Nichols. “So despite the slower growth in the last year, and into this year, people do see Peru as a long term winning bet.”

“This is a country that is committed to free trade, open markets, private-sector-led growth, but also social inclusion, poverty alleviation, protecting the environment and strengtheninglabor rights”

BRiAn niCHOLS,U.S. Ambassador to Peru

“By the time of the opening of the economy and the Free Trade Agreement (FTA) negotiation, AmCham was very active locally in training small entrepreneurs and spreading the benefits of the FTA, but also in the United States. AmCham Peru carried out 18 missions to the United States Congress, talking to 365 congressmen, senators and representatives in 18 months. Each month it took five CEOs of American companies established in Peru, to talk to their congressmen and explain to them that the FTA was good for their country”

ALDO R. DeFiLiPPi,executive Director of the American Chamber of Commerce in Peru

“If we do not make an unprecedented investment in education, the lack of human capital will be a binding constraint in the continuation of this development project. If we do not make that bet on the future, they will close the doors on us, as in the case of the OECD. Sustained growth is achieved only if at the same time there is growth in investment in education”

JAiMe SAAVeDRA, Minister of education

country’s mountainous ge-ography, but technological advances are being used to mount such obstacles, in-cluding improving commu-nication links and consider-ing the use of e-money to avoid having to physically visit banks or ATMs.

Mr. Rosenberg adds that he considers Peru to be a “star of microcredit” which has been in play in the coun-try for more than six years. “We seek to get closer and closer to the lower end of the pyramid, making credit ac-cessible for the people there. Our objective is to facilitate inclusion, but we want to grant this type of financing in a secure and regulated manner, without sacrificing control or security.” To do this new regulatory policies are being put in place to en-sure those receiving finance are unlikely to default.

Challenges certainly re-main, including the coun-try’s informal employment rate, while a reliance on the mining and commodities sectors is also an obstacle to Peru, with Mr. Velarde adding that a fall in the price of exportable prod-

ucts has affected invest-ment in some sectors.

“Our investment in min-ing fell around 8% last year and it’s expected to fall again this year. Obviously, this has implications, and secondly, when you observe your prices falling 25%-30% you look to adjust your costs and if you can adjust your provid-ers, you’ll adjust them.”

Yet technology and diver-sification are providing new avenues, with companies such as Prima looking to of-fer more widespread insur-ance policies to the country’s burgeoning middle class, many of whom are not aware of the value of such services. The firm is also investing in medical centers that incor-porate modern tech such as remote doctor services.

Adjusting to international pressures will be key for Pri-ma, Mr. Velarde, and Peru’s wider economic prospects, but with free trade agree-ments with markets such as the USA, and participation in the Trans-Pacific Partner-ship (TPP), along with Mex-ico, Chile and Canada, the Andean nation is well placed for further growth.

1990s 2008

2010 201520092001

Peru’s GDP growth rate achieves a record: 9.1%

United States – Peru Trade Promotion

Agreement is formally imple-mented, shaping the future of the country’s economy

The PRiMARY eDUCA-TiOn QUALiTY PROJeCT and the Basic Health & nutri-tion Project get underway

2001: institutional democracy is re-established in Peru. The U.S. strengthens cooperation with Peru in areas such as democracy and human rights2002: President George W. Bush’s becomes first incumbent President of the United States to visit Peru

2000s: improved water supplies and better quality of life

achieved through programs such as indigenous Management of Protected Areas in the Peruvian Amazon Project and the indigenous and Afro-Peruvian Peoples Development Project in 2001

During the 1980s and 1990s, USA and Peru work together in the fight against production and traffic of illegal drugs and terrorism

• The bilateral relationship between the U.S. and Peru is today stronger than ever• Peru’s exports have increased from $696 million in 2009 (before the United States – Peru Trade Promotion Agreement) to $3.3 billion in 2015 • Both nations are committed to improving education in Peru through scholarships and exchange programs• Multiple initiatives are being implemented, for example, to preserve Peru’s glaciers• Combat against illegal mining and illegal drug traffic continues and has achieved major results

The largest investment in the history of Peru in a single project, South America’s first gas liquefaction plant, is inaugurated

by Peru LnG

World Bank and Peru in numbers today

15 projects totalling $553.26m operating in 191 locations across 1 country with 1 goal: Sustain-able growth and social equality

2015 LiMA AnnUAL MeeTinGS

World Bank Groupinternational Monetary Fund

2002

The “growth decade” begins

9.1%


1Day, Month 00, 2015Distributed by USA TODAY PERU

A griculture has been a vital com- ponent in Pe-ru’s economic

growth and employment generation over the years, yet according to Agrobank, the country’s only develop-ment bank, some 86% of all farmers are outside the fi-nancial system, with 1.9 mil-lion of the country’s total 2.2 million farmers able to enter the banking system. “This sector has remarkable poten-tial,” says Enrique Benjamín Díaz Ortega, President of the Board at Agrobanco. “We can help farmers diversify their production, with higher standards and new market opportunities, so they in-crease their productivity and enter the financial system.”

Agrobanco provides low-interest loans to farmers who have previously had no in-volvement with the financial system. It works alongside farming cooperatives and as-

sociations, to make credit ac-cess as wide as possible, and has been awarded for creat-ing special products that in-crease financial inclusion.

The bank also gives credit to medium and large-scale agriculture projects that are not usually covered by com-mercial institutions because of lengthy production cycles, such as in the grape industry.

So far, the bank has issued as many as 10,000 loans.

“One of the most impor-tant things about Agrobanco

is its know-how. Why are there not more private finan-cial institutions in this sec-tor? Because you need cer-tain know-how that can only be acquired with time,” ex-plains Mr. Ortega. “We know how to give credit to a small farmer, or a coffee producer in the north of the Amazonas Region; the conditions for giving credit will not be the same for everyone. We devel-op our risk profiles based on our own experience in each individual case; we have 600 different profiles. We have a database that is a translat-able model. You can feed it with more information and it will give you a probabilistic analysis of the risks. This tool for risk assessment is some-thing we are actually willing to share with others.”

Potential 1.9m new customersAgrobanco is the only development bank in Peru and serves the vast number of unbanked farming communities that have been traditionally neglected by providing many with their first experience of financial credits

“We want private financial institutions, both national and international, to look for opportunities in alliances with us while we help them to minimize risks, and together we will boost the Peruvian agriculture sector”

EnriqUE BEnjAMín DíAz OrTEgA,President of the Board of Agrobanco



“Driver for development”: Mining’s contribution to socioeconomic growth

“A great deal of geological potential”: Exploration ofPeru’s mineral resources

Mining as an environmental change agent

Peru has become one of the most successful economic performers in the developing world. The resurgence of mining, at a time of high metal prices, has been one of the key drivers behind the country’s stellar growth record.

High rates of production, historically high prices for producers, and favorable legal and tax regulations mean that foreign investors would benefit from further exploration

Companies are now more careful in their operations towards environmental regulations

With aver-age annu-al growth rates a-bove 6%,

in the past decade Peru has become one of the most suc-cessful economies in the developing world. Roque Benavides, the Executive President, Chief Executive Officer and Chairman of the Board of Compañia de Minas Buenaventura, believes that Peru’s socioeconomic devel-opment is laudable. “Peru has managed to reduce inflation and almost eliminated ter-rorism, which has granted plenty of economic stability to the country.” He adds that Peru “is currently one of the most open economies in the world,” thanks in part to free trade agreements “with 55

countries in the world, which represent two thirds of the global GDP.”

Mining plays a central role in the national and interna-tional economies. Manuel Fumagalli, Executive Director of Barrick Gold Corporation, calls mining “a driver for de-velopment” in Peru. In the last decade, “mining has accounted for at least 10% of the GDP, and in the last five years, around 59% of that has been due to mining exports.”

Oscar Espinosa Bedoya, Executive President of Fer-reycorp (supplier to mining companies), explains what this growth means for Peru’s population. “The income lev-

el of the population is grow-ing; statistics show strong growth of the middle class.” Peru has increased its middle class to one-half the popula-tion and reduced its poverty rate by half, to one-quarter of the population.

Economic success is also partly due to the government’s relationship with businesses. “Foreign investors… get the same treatment as domestic investors regarding tax and profit repatriation issues,” Mr. Bedoya points out.

The government’s stable economic policy had ben-efited the mining industry as well. “The economic policy has remained the same for twenty years. … Because of the continuity of this ef-fort, the cumulative rates of growth have been impressive,” Mr. Bedoya explains.

Though the rate of growth for this year is projected to be below the average rate due to lower metal prices, optimism is warranted, according to Mr. Bedoya. “Growing 2.5% or 3% is not the end of the world. There are some countries that would give anything in their power to grow at these rates…We are very optimistic.”

Currently, Peru’s mining industry makes up be-tween 10-14% ofthe nation’s GDP,

and Peru has enjoyed annual average growth rates of above 6%. But the industry has the potential to grow more by in-creasing natural resource ex-ploration and development. The industry’s high rates of production, historically high prices for producers, and fa-vorable legal and tax regula-tions mean that foreign inves-tors would benefit as well from further exploration.

According to Carlos Galvez Pinillos, President of the Na-tional Society of Mining, Pe-troleum, and Energy, “Only 1.38% of the country has mining activities (between exploitation and exploration). So we have to dispel a myth: although we are the leading producers of different met-als (since the mountain range offers lead, zinc, copper, gold,

etc.) only less than 1% is in production, so there is still much to be developed.

“There are many areas to be developed in Peru, as not even 10% of the territory has been explored to look for different types of mining products yet,” says Oscar González Rocha, President and CEO of Southern Copper Corporation of Peru. His company has invested $1.6 million for expanding its work at Toquepala and its future Tía María project. “With this, I be-lieve, we will become the third or fourth largest producer of copper, with more than 1.2 mil-lion tons by 2018, almost the same amount that the entire country is producing at the mo-ment,” he explains.

Manuel Fumagalli, Executive Director of Barrick Gold Cor-poration, is optimistic about mining’s future in Peru. “We see Peru as a country with a great deal of geological potential that also provides the conditions for carrying out world-class

projects, and our Pierina and Lagunas Norte mining projects are proof of this.” The favorable conditions include equal treat-ment by the government of domestic and foreign investors, and clear, easy-to-understand industry regulations that make successful projects much easier to implement and manage.

A minority opposes the role of mining in the country, but the Peruvian Institute of Min-ing Engineers’ convention, PeruMin, is one way that the industry seeks to work with dissenters. Its President of the Board of Directors, Antonio Sa-maniego, says, “Although they make up only about 5% of vot-ers, they definitely have some-thing to say and we need to lis-ten… This is one of the biggest contributions we can make: a frank and open dialogue, with-out restrictions.” This desire for cooperation, when combined with continued exploration, will ensure that mining contin-ues to benefit the nation.

In the past, mining un-fortunately had a poor environmental reputa-tion. Oscar González Rocha, President and

CEO of Southern Copper Corporation of Peru, con-cedes that the industry has an image problem. “Yes, there used to be pollution because there were no laws, but from 1997 to 2007,

there were many improve-ments, with investments of more than $600 million to modernize mining process-es in order to avoid all types of pollution.”

Now, mining compa-nies recognize their role as “change agents” in Peru, and are careful in their op-erations to respect environ-mental regulations. When

Peru’s Minister of Energy and Mines, Rosa María Or-tiz, spoke at the IX Inter-national Congress of Pros-pectors and Explorers in Lima, there were 51 mining projects on current record, which were worth nearly $64 billion over the next five years. Around 45% of these projects have had their envi-ronmental impacts assessed

“We see Peru as a country with a great deal of geological potential that also provides the conditions for carrying out world-class projects, and our Pierina and Lagunas Norte mining projects are proof of this”

MAnUeL FUMAGALLi,executive Director of Barrick Gold Corporation

“The economic policy has remained the same for twenty years. … Because of the continuity of this effort, the cumulative rates of growth have been impressive”

OSCAR eSPinOSA BeDOYA,executive President of Ferreycorp

MyTHS

MyTHS AND BENEFITS

“Mining severely pollutes the environment”experts do not deny the negative physical impacts of mining on the environ-ment; this however does not mean severe pollution. Advances in technology, environmental legislation and stakeholders have managed to transform modern mining into a sustainable and eco-friendly industry.

“Deforestation of the Amazon”illegal mining in Peru is one of the major challenges the country is working to overcome. illegal mining indiscriminately deforests the Amazon and pollutes water with toxic wastages. it is estimated that 30% of the total production of gold in Peru comes from this type of industry and both public and private sectors work hand in hand to combat this activity.

“Mining creates informal jobs and exacerbates poverty”illegal mining, as it is not supervised by regulations and does not operate under safety regulations, environmental laws and labor rights, damages the social condition of people who work in those kinds of operations. Formal and responsible mining generates formal jobs, enables investment by and contributes to the state income.

“Mining consumes water that should be used for other activities”Of all the water available for human consumption in Peru, only 1% is being used by formal mining, compared to the agriculture sector (6.7%) and industrial activity (6%). it is more cost efficient for mining companies to reprocess the water than purifying it for human consumption after being used in mining operations.


5Tuesday, October 6, 2015Distributed by USA TODAY PERUVirtuous Circles: Mining and community involvement Mining companies are today making the change from extractive approaches to inclusive, participatory approaches, working together with the government and local communi-ties to ensure everyone’s needs are met

Historically, min-ing companies in Peru focused more on short-term benefits

and plans and less on long-term plans for the commu-nities in which they mined. However, over the past few decades mining companies have been making the change from extractive approaches to inclusive, participatory approaches. In these types of approaches, the mining companies, governments, and local communities work together to ensure that every-one’s needs are met, as much as possible, in a spirit of coop-eration and compromise.

Carlos Galvez Pinillos, the president of the National So-ciety of Mining, Petroleum and Energy, sees one of the goals of his non-profit orga-nization as improving Peru’s economy. “We have a port-folio of about $65 billion to date to still be developed. … We have to be able to prop-erly inform the population that these outstanding proj-ects are the fulcrum for us to continue to grow and reduce poverty. If we could reduce more than half of the pov-erty over a period of 10 or 15 years, by implementing these projects we will be able to reduce the other half in the next decade,” he estimates.

In addition, mining activ-ity in Peru serves the nation’s infrastructure, which can be lacking due to the country’s geography. “This is a country that has a semi-desert coastal strip, the almost impregnable Andes that reach 6,000-7,000 meters, and an Amazonian jungle where it is quite diffi-cult to develop any economic activity,” Roque Benavides, Executive President, Chief Ex-ecutive Officer and Chairman of the Board of Compañia de Minas Buenaventura, de-scribes. “One of the economic activities that can contribute to generating the infrastruc-ture needed to integrate this complicated country is the mining sector.”

Oscar Espinosa Bedoya, the Executive President of Ferreycorp (a supplier of min-ing equipment and services), explains, “It is estimated that $90 billion in infrastructure projects are needed. This represents valuable oppor-tunities for companies like ours… An expanding market should generate investments, which leads to the revitaliza-tion of the virtuous circle of growth: private investment, product growth, job creation, rise in consumption…”

Ernesto Balarezo Valdéz, General Manager of Gold Fields La Cima, agrees. “Mining takes welfare to the places where the govern-ment does not do enough. It takes with it infrastructure, health, education. It gives Peruvians who live up in the heights [of the Andes] access to the world, Internet access, and well-being.”

Communication with all stakeholders, including local community members, is im-portant for everyone’s success. Barrick Gold Corporation has a community relations man-agement system, according to the company’s executive director Manuel Fumagalli, which helps it ensure that it “covers various key aspects, among them local employ-ment, the development of lo-cal suppliers, and a complaint management system.”

But community involve-ment doesn’t focus just on the present situation. “The idea [of the system] is to ensure that members of the community

become part of the market, that they develop themselves by taking advantage of the mine’s presence, which is finite in time, but to take advantage of the situation to prepare themselves, to provide servic-es, and then to support them-selves apart from the mine,” Fumagalli sums up.

“We are part of the com-munity,” states Mr. Valdez. “We seek to generate the highest possible welfare in a sustain-able way, because when the mine is exhausted we want to be remembered as a company that has left something. For ex-ample, we have already given 57 scholarships to students in Hualgayoc and the neighbor-ing areas, who, thanks to us, are studying at university, and we hope they will return to the areas they come from, to create wealth and leave something.”

Involving local community members in the mining pro-cess can take the form of eq-uity as well. Minera IRL has offered a 5% caring interest in the operating company, so the community –not the individu-als but the community itself– gets to be a participant in the equity of the project.

“As a Peruvian, with roots in Peru, I ask myself how to add value beyond the business itself,” says the executive presi-dent of Compañía de Minas Buenaventura. “The final goals have to be to fight poverty, generate wealth and opportu-nities, especially for the ones that need it the most.”

“PeruMin is inviting the main leaders that do not agree with the mainstream regarding the country’s mining sector. We have to listen to them, and we will make an effort in order to reach an understanding”

AnTOniO SAMAnieGO,President of Board of Directors Peruvian institute of Mining engineers

“Only 1.38% of the country has mining activities (between exploitation and exploration)… only less than 1% is in production, so there is still much to be developed”

CARLOS GALVez PiniLLOS,President of the national Society of Mining, Petroleum, and energy

“Mining takes welfare to the places where the government does not do enough. It takes with it infrastructure, health, education”

eRneSTO BALARezO VALDéz,General Manager of Gold Fields La Cima

“Industry uses the term ‘research and development.’ In mining we do not use ‘research’; we use ‘exploration and development’, which is interesting because it is the key to understanding the industry”

ROQUe BenAViDeS,executive President, CeO and Chairman of the Board of Compañia de Minas Buenaventura

“(There were) investments of more than $600 million to modernize mining processes in order to avoid all types of pollution”

OSCAR GOnzáLez ROCHA,President and CeO of Southern Copper Corporation of Peru

BENEFITS

OF THE FORMAL MINING SECTOR IN PERU

Contributes to development of local communitiesMining projects are committed to improving the economy of the communities where they are active by employing local people and contribute to diversify-ing the sources of incomes of the population. For example, Goldfields La Cima helps the local community improve the quality of cattle and milk production, given the importance of that activity for the community.

Creates formal jobsThe mining sector directly and indirectly creates approximately 820,000 formal jobs. Although it is not the leading sector in job creation, According to the iPe (Peruvian institute of economy) for every job created by the min-ing industry, nine other jobs are created in related industries.

Boosts economic growthAccording to iPe, in 2015 mining is responsible for the 11% of the GDP, represents 50% of foreign currency related to exports, and accounts for 20% of fiscal revenues. it also represents 15% of total foreign investment in the country. With those revenues, the national and regional government can invest towards reducing poverty, education, health and various other programs to redistribute wealth among Peruvians.

Enables economic diversificationSeveral industries have been able to become competitive not only nationally but also internationally by providing services to the Peruvian mining sector, such as the metal- mechanic industry, the energy sector, construction, engineering consultation, infrastructure, and various others.

and approved. The rest are being examined.

When the environmental impact is questionable or negative, companies can re-work their plans to meet en-vironmental standards and to address any concerns. Southern Copper’s $1.4 bil-lion project, Tía María, has had its plans revised several times, and in August 2014 the project’s environmental impact assessment success-fully addressed all envi-ronmental concerns raised by local citizens and envi-ronmentalists about pos-sible contamination of localwater supplies.

Many companies must also answer to internation-al bodies. Minera IRL, for example, must follow UK corporation regulations due to its corporation registra-tion. The company is also listed on the Toronto Stock Exchange, meaning it is governed by rules and regu-lations according to their exchange, as well as the Lima Stock Exchange.

Financial stakehold-ers have an interest in en-vironmental practices as well. Executive President, Chief Executive Officer and Chairman of the Board of Compañia de Minas Bue-

naventura, Roque Bena-vides, signs a letter each year for London-based in-vestment fund Foreign and Colonial to certify that the company complies “with a series of requirements: tak-ing care of the environment, respecting the [local] com-munities… and, of course, we do so,” he says.

With the active par-ticipation of all stakehold-ers–financial, corporation, government, and local–environmental concerns about mining can be ad-dressed and Peru’s unique environmental features can be preserved.



Non-traditional exports triple to $11.6bn over past decade Efforts by Peru to promote non-traditional goods, coupled with the effects of a Free Trade Agreement, or FTA, with the United States have seen the country diversify its exports

American shop-pers browsing the produce de-partments at their supermar-

kets have been surprised this year with the appearance of football-sized Peruvian man-goes and papayas, the “fruit” of new efforts by Peru to pro-mote non-traditional exports, coupled with the effects of a Free Trade Agreement, or FTA, with the United States.

“The FTA with the United States has meant two things,” explains Peruvian Minister of Foreign Trade and Tour-ism Magali Silva. “On the one hand, it had a very posi-tive impact by helping di-versify our products and we have almost quadrupled the number of product lines we were exporting.

“On the other hand, the agreement led to cheaper U.S. technology products which we import and these have helped small and me-dium enterprises undergo a real revolution by boosting their knowledge, productiv-ity, and competiveness so they too can export.”

According to the latest trade figures, the Peru-U.S. Trade Promotion Agreement signed in 2009 increased Pe-ruvian exports to the United States by 26 % during the first six years of the accord.

And while the United States had long been a cus-tomer for Peru’s traditional products such as copper, gold, zinc, and fish meal, trade pacts with the United States and other partners have opened the way for new exports like textiles, seafood, jewelry, metal and wood-based products, along with those giant mangoes.

According to the latest available trade figures from 2014, exports of non-tradi-tional, value-added goods tripled over the past decade to $11.6 billion.

Indeed, thanks to the agreement, non-traditional industries in Peru grew by

80% and the country export-ed more than 900 products worth nearly $1 billion to the U.S. market.

“Peru was the first Latin American country to sign a 21st-century free trade agreement with the United States,” the minister boasts, but it wasn’t easy.

“We signed agreements which were unthinkable be-fore, such as intellectual prop-erty rights, the environment, public purchasing and mutual cooperation. Plus, we had to adapt a new legal frame-work with 200 decrees,” Mrs. Silva recalls.

“And to make sure all this works, we must empower the private sector because a strong and confident pri-vate sector won’t need to rely on public policies and will continue to grow on its own accord.”

In its bid to make sure sales of Peruvian goods abroad remain buoyant and take the sector to the next level, the government is to soon publish its National Strategic Exports Plan for the next 10 years.

“We’re calling it ‘Towards the Internationalization of Peruvian Companies’ be-cause we are no longer fo-

cusing just on exports of goods and services but also penetrating international markets through global value chains, investment funds, joint ventures, strategic part-nerships, and participation in big international conglomer-ates,” the minister says.

“We believe that the coun-try must be ready to be an important international play-er within the next 10 years.”

Cheering on the govern-ment from the sidelines is the Peruvian Exporters As-sociation, or ADEX, with President Eduardo Amor-rortu praising efforts so far but who cautions that much still remains to be done.

“Peru’s exports have been growing thanks to the vision that a group of people had in the 1990’s and among those measures was the first FTA with the United States which was controversial at first but has proved to be very impor-tant,” he says.

“And now, multilateral FTA’s have begun to prolifer-ate taking these kinds of ac-cords to a new level.”

ADEX would like to take the concept of such agree-ments between countries a step further and in the case of the United States, sign similar pacts with individual states.

“We’re thinking about each U.S. state as the equivalent of the economy of a country so we will focus our efforts on every state, designing custom export strategies for each,” the president explains.

A plan of this magnitude and reach would require the cooperation of the na-tional government through working with Peruvian commercial attachés in the United States.

“Despite the economic rivalry between the United States and China with many claiming the latter is getting the upper hand, the United States still has huge potential due to the entire population’s spending and purchasing ca-

pacity and we should take ad-vantage of that,” he says.

One Peruvian company enjoying great success in the export market is Sociedad Mercantil Exportación S.A., or SOMEREX, that taps into Peru’s biodiversity to devel-op, manufacture, and market natural ingredients for agri-culture, food, cosmetics, tex-tiles, pharmaceuticals, and other industries.

“The trend we have seen over the last five years is that the world is looking to adopt healthier behavior so our goal is an organic, natural product,” explains General Manager Manuel Pardo D’Ornellas.

“Our number one require-ment is that all our major inputs, our raw material, must be 100% Peruvian and we are most proud of our derivatives from tara, a crop that grows in Peru, and is a world-renowned leather softener and its gum is a food binder or thickener.”

SOMEREX is also the only Latin American producer

of propyl gallate used as a food grade antioxidant in fats, oils, and food essences, and in cosmetics, emulsions, waxes, packing materials, and other products.

“In terms of quality, we are the only ones to produce this with 99.9% purity and our customers are so impressed that they ask us how we were able to achieve this,” the gen-eral manager says.

The company’s main over-seas markets are the United States, France, China, Italy, and Argentina and for its or-ganic pesticides around 75% are exported to the United States competing directly with synthetic pesticides, with full Food and Drug Ad-ministration approval.

SOMEREX was founded in 1945 as a coffee and cotton exporter but 10 years ago ex-ecutives decided to invest in value-added products.

“We no longer export any-thing that is not processed as the added value generates more income and allows us to develop a specialty prod-uct that sets us apart from the rest, domestically and inter-nationally,” Mr. Pardo says.

“Our production costs are much lower than those in a developed country as labor here is cheaper, and given this perspective we are slowly making a name for ourselves.”

When Mr. Pardo joined the company five years ago, he took a long look at com-panies in Chile, Colombia, and Argentina which pro-duced agribusiness prod-ucts for direct consumption and wondered why no Peru-vian companies were doing the same.

“So we started approach-ing commodities customers and asked them if they were interested in something more elaborate. Realizing that costs were much lower here, they started buying,” he recalls.

“Other Peruvian compa-nies can do this, they just have to take the risk, invest and think in the long term.”

Pacific Alliance boosts regional ties Four years have passed since the Pacific Alliance united Peru with Colombia, Mexico and Chile and the benefits on the agreement are now clear to see

Peru has enjoyed sus-tained economicexpansion duringthe past decade, but with commod-

ity prices falling in more recent times the country’s govern-ment has been exploring new avenues for growth.

Numerous sectors of the Andean nation’s economy have already enjoyed rapid growth including markets such as insurance and finan-cial services, and the result has been an enlarged and af-fluent middle class. With this have come greater amounts of disposable income, much of it derived from the suc-cesses of the country’s exten-sive export-led industries.

Such developments have led the International Mon-etary Fund to label Peru as one of the “brightest” econo-mies in the world and the South American country

is now forging ahead with international expansion by bolstering its ties with neighboring territories.

Indeed the tenth Pacific Alliance summit took place in the seaside town of Pa-racas earlier this year and marked a seminal moment for all the countries involved and the attending presidents of the nations. Peru, along with Chile, Colombia, and Mexico, as well as 2013 en-trant Costa Rica, agreed further integration between their respective capital mar-kets and developments to integrate health care, immi-gration and infrastructure, prompting hopes that further growth will now be enabled.

Such measures are likely to resonate across the re-gion and the impact of the agreements will reverber-ate amongst both member and non-member nations.

The five countries make up around 40% of Latin Amer-ica’s GDP and the collabo-ration makes the Alliance’s combined economies greater in size than Brazil’s.

Yet it was only in 2011 that the Pacific Alliance was formed but since then it has proven to be a stabilizing force for those involved that has generated consistent re-sults and an ever-increasing economic fluidity between participants. Tasked with objectives such as improv-ing the movement of labor and integrating services and capital, the four major play-ers Peru, Chile, Colombia, and Mexico are now seeing tangible rewards from their multilateral cooperation.

Integration is running deep throughout the alliance, with the latest agreement - the Declaration of Paracas - set to further bolster the set-up

of the MILA stock exchange, made up of the equity mar-kets in Mexico City, Santiago, Bogota, and Lima. Indeed, there are clear benefits of working with an exchange where the market cap is in excess of $950bn.

New measures will recog-nize initial public offerings (IPOs) between the five coun-tries while the cross-market trade of an increased variety of instruments will also be enabled. International invest-ment in the region will also be driven by the creation of the Finance Ministers’ Coun-cil, which is set to attempt to work with each country’s re-spective tax authority to avoid taxing investors twice.

Challenges facing the quintet are clear, not least the downturn in commod-ity prices that are impacting on the prospects of Colom-bia, Peru, Mexico, and Chile more than others, but the Al-liance is also aiming to work together on public spending proposals, cutting red tape and simplifying legislation to create greater opportunities for infrastructure projects in the region.

Easing visa restrictions between member countries is also being introduced to enable more efficient labor movements and the group is also engineering a Pacific Al-liance-wide healthcare group designed to vastly improve the purchasing power for the combined nations. The Al-liance’s nations boast a total population of more than 200 million, with the aim being to greatly improve the ability to buy health-related products at better rates.

Strengthening such cross-border ties has already helped the Alliance participants to expand their economies and it comes in stark contrast to nations such as fellow Latin American powerhouses such as Brazil, which is in the midst of an economic contraction that could have wider reper-cussions on the region.

Yet the Pacific Alliance’s combined economies are be-ing predicted to grow consis-tently over the next few years, with their total GDP of $2.2tn enticing foreign investment. Regulatory improvements have freed up potential, en-abling unemployment figures to drop and domestic con-sumption to rise and there are

clear indicators that expan-sion between member states will be self-fulfilling.

Part of this is thanks to stronger ties with the U.S. providing benefits for mem-ber nations. Foreign direct in-vestment from the USA into Latin America fell between 2013 and 2010, yet Pacific Alliance countries increased their share, from 62% of the $27bn in 2013 up from 55% of the $31bn in 2010, accord-ing to the Peterson Institute. Such trends indicate that for Peru and its fellow Alliance members, prospects remain remarkably bright despite the considerable challenges being faced by their Latin American neighbors.

The four presidents of the founding nations of the Pacific Alliance

“I know of no process more successful than what we have achieved so far. Such fast integration has aroused much interest around the world”

JUAn MAnUeL SAnTOS,President of Colombia

“The challenge for the Pacific Alliance is to strengthen education. It is also necessary to strengthen small and medium enterprises. We need skilled people”

OLLAnTA HUMALA,President of Peru

“Our number one requirement is that all our raw material, must be 100% Peruvian... In terms of organic insecticides, 70% or 80% of products are exported to the US. Depending on the client, the final destination may be Texas, New york or Miami”

MAnUEl PArDo D’ornEllASGeneral Manager of SOMeReX

“The greatest achievement here is the participation of a growing number of SMEs in the process...small companies that usually were not able to enter that market because of the high tariffs”

MAGALi SiLVA,Minister of Foreign Trade and Tourism

7Tuesday, October 6, 2015Distributed by USA TODAY PERU


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What gave you the idea of combining the age-old knowledge of Andean, Am-azonian and Asian cultures with modern biotechnology?One of my passions is to discov-er and understand the impact

of certain foods on our body, mind and spirit. When I was young, I was always curious and surprised by my grand-mother’s knowledge and her understanding of the effects of certain foods on our body. I started to read and experi-ment as a child. Each time my family went on a trip, each time I had the op-portunity, I’d spend time and energy trying to un-derstand more about nutrition and how to achieve a balanced, healthy diet.

In high school and lat-er on during my indus-trial engineering stud-ies, I continued to gather knowledge and experience. Quite naturally, I started my career in the food processing and manufacturing sector. Later on, during my MBA studies, I came up with one of my first business ventures, and after 15 years of experience, I worked on the basic concepts of FuXion: the first one is the concept of “Nutraceutical Fu-sion”, the process of merging ancient nutrition knowledge of the Andes, the Amazon and Asia with modern biotech-nology, and the other core concept was the network marketing distribution model that allows us to deliver our high-quality products through word of mouth, leveraging on customers who share their passion for a healthy lifestyle. It took more than three years of research and development before we really started.

Our team, together with our distributors and custom-ers – the FuXion Movement as we call ourselves – is de-termined to share a healthy lifestyle with Latin passion, a combination of enthusiasm, joy and unconditional love for family, friends and the com-munity. We are convinced that this passion can be shared any-where in the world where there are people who are passionate about their heritage, their cul-ture, and a healthy lifestyle.

How does FuXion imple-ment its “True Health” mission? In what way does it impact physi-cal, emotional and financial wellbeing? “True Health” is about three dimensions of life: physical, emotional and financial health. It’s a transformation process.

First, we focus on the body, in order to under-stand the needs of each indi-vidual customer to prescribe an individualized assortment of FuXion products. This is the essence of our approach: our best argument is that our cus-tomers feel better. Our FuXion Movement is there to share its passion and commitment for good nutrition and exercise to improve physical health.

Most people are enthusias-tic about adopting a healthy lifestyle. But when it comes to action, it’s more difficult. It’s really a journey towards self-transformation. This is why we created the FuX-ion Leadership School, which became SerFuX-ion (BeingFuXion in English), a program of experiential work-shops, courses and seminars to support our customers in their per-sonal development and self-transformation ob-jectives. It is interesting to note that in modern society we are often defined by what we do (the ‘doing’) as opposed to who we are (the ‘being’). FuXion develops training pro-

grams, tools and experiential processes to revalue our true self, thus providing the skills and toolkit to live life to its full extent, with an unparalleled emotional health or wellbeing.

Concerning our distribu-tors, we have one of the

most attractive compensa-tion plans in the industry. However, from the outset, even before our custom-ers reach their expected lifestyle, we encourage them to experience the joy of giving. There is no true happiness without sharing with your family

and society and FuXion promotes abundance as

a mindset, encouraging people to invest time and

money in helping others. We are engaged in a number

of initiatives with our distribu-tors and customers. For exam-ple we participate in initiatives carried out by the non-govern-mental association Aldeas In-fantiles (SOS Children Villages). Furthermore, we have commit-ted to grow significantly our “Buenos Días FuXion” program (“Good Morning FuXion”) that provides breakfasts to deprived

children. This is how we pro-vide financial health to our

team members, making sure they earn money but also experience the joy of giving, sharing within the family, their friends and society.

How is FuXion differ-ent from other leading network marketing companies?

We are humble, passion-ate and relentless. We

spend every second of our life thinking about better ways

to add value to the lifestyle of our customers. There are at least two differential factors that we would like to stress: First, we are one of the few play-ers in the industry that emerged from the food processing and manufacturing industry and we have a long-standing passion and business philosophy that acknowledges that Mother Na-ture has most of the ingredients

needed to nurture a healthy, vibrant and cool lifestyle. We

are always open to learn from any ancient culture and any new technol-ogy that could open new possibilities.

Our products are backed by patents en-compassing decades of research and sev-

eral million dollars of investment. Products

are made by combining almost 1,500 active ingredi-

ents extracted from natural foods using state-of-the-art

processes and blending them in unique formulations that increase the health benefits of each principle. I obtained one of my first patents in 2011, the Bio-Protein+ Colostrum®, a protein created through a process and a formulation that maximizes the bioavailability of high-value natural nutrients.

We are now integrating ef-forts with our key suppliers

and we are investing in a new extraction plant in Iquitos, in

the Peruvian Amazonian region. We have increased our investment in our sci-ence and biotechnology lab. We have started a partnership with the Universidad de la Ama-zonía del Perú (Uni-versity of the Peruvian Amazon, UNAP) to fos-ter and promote food and

nutrition research and to test and implement new

technological processes. Our second differentiat-

ing factor is our commitment to Mother Nature: we have recently acquired 75 acres in

the Amazonian region to build our training and convention center, with plans to build an “Experiencial Learning Cen-ter” called FuXionLand. The project includes: i) a conven-tion center that will serve as a gathering point for people from around the world who are willing to connect with nature; ii) a lodge and spa where guests can focus on rebalancing their emotional wellbeing, relax-ation, meditation and mas-sage; iii) a large area devoted to fun and exercise, which will include activities as part of the Amazon adventure; and, iv) a biotech lab that will show and demonstrate the way we bring nature to their daily beverages, teas and shakes. In addition, we are considering organizing trips to the Amazon River in order to experience nature at its fullest while connecting with local communities.

What are the reasons be-hind FuXion’s exponential growth rates in the last three to four years?The main two forces behind these growth rates are: a global trend to connect with nature and the passion of our team for personal growth and for the growth of our FuXion Move-ment. Learning from nature, we spent significant time learning to prepare for growth and there-fore we want to manage our growth with care and caution. We want to get close to people to understand their needs in or-der to truly improve their lives.

Do you think that North American customers are pre-pared to embrace FuXion’s culture? How are you plan-ning to conquer the market?The North American mar-ket is very competitive and demanding. We believe that our business model, based on sharing value with customers, distributors and society, gives us long-term sustainability.

We also believe that North America will be our largest in-ternational operation within the next three years and we are enthusiastic about the chal-lenges ahead.

Our culture is one of humble-ness, passion and love for who we are and what we do and in every country where we expand to, we first focus on learning from customers and distribu-tors, which is why we expect to learn a lot from the United States and their culture. Actu-ally, the values of the American Declaration of Independence – “life, liberty and the pursuit of happiness” – are really what the FuXion Movement is all about.

We are confident that people in the U.S. will embrace our mis-sion. We will enter this mar-ket with a humble yet strong message from nature. We want to bring value to our custom-ers, distributors, suppliers, and to our people in the U.S., and through them to society, thus growing together.

“FuXion is present in Peru, Colombia, Ecuador, Panama, Costa Rica, Mexico, Bolivia, Chile, Venezuela, Guatemala, Nicaragua, and since early August in the United States. Our company merges ancient Andean knowledge and Amazonian and Asian cultures with the latest scientific advances in cell biology and human nutrition to provide products that achieve unique results in the body, mind and spirit”

ÁLVARO ZUÑIGA BENAVIDES, Founding President and CEO of FuXion Biotech SAC

In 2006, after having worked for more than 15 years in the food processing and manufacturing industry, Álvaro Zúñiga Benavides founded FuXion, a unique venture specialized in high-quality food and food supplements. The uniqueness of FuXion is that it uses ancient knowledge about nutrition and health from century-old cultures and combines them with modern biotechnology to produce shakes, teas and beverages that are marketed and distributed by a growing direct sales network now present in 12 countries. FuXion’s “True Health” integral approach is focused on physical health through nutraceutical products that complement a balanced daily diet; emotional health, through personal development and personal transformation workshops, courses and seminars delivered through SerFuXion, FuXion’s Leadership Institute; and, financial health, through FuXion’s shared-value approach. Indeed, the company distributes close to 50% of its net revenues as compensation and incentives to the direct sales force. Founding President and CEO of FuXion Biotech, Álvaro Zuñiga Benavides, explains what makes the company’s culture so unique and its potential impact in the U.S.

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FuXion Biotech: Ancient Andean and Amazonian heritage combined with the latest scientific advances in cell biology and human nutrition

7 6th, October, 2015 Distributed by USA TODAYPERU




It’s no secret that Peru is home to one of the most attractive invest-ment climates in all of Latin America. Over

the past decade, it has re-ceived more than $70 billion in foreign direct investment, making it a leader on the conti-nent. Globally important mega projects, such as the proposed railway that will link Peru’s Pa-cific port through the Amazon to the Atlantic Coast of Brazil, have drawn attention world-wide. The volume and the pace of work have accumulated in recent years, as Peru’s govern-ment continues to build capac-ity for critical public- private partnerships (PPPs).

Over the last decade, Latin American governments and private sector investors have become increasingly familiar with the PPP model, establish-ing clear regulatory guidance and operational clarity that has served both parties. Many countries now include PPPs in their national development plans, demonstrating grow-ing political support and ac-ceptance amongst the private sector. Peru has been a leader in this movement, consistently ranking amongst the top coun-tries in the region in its execu-tion of PPPs and in its invest-ment in infrastructure.

“The Public-Private Partner-ships (PPP) have been very suc-

cessful in this regard, in roads, communication, ports, energy, transportation, natural gas pipelines, social infrastructure, hospitals, and schools,” says Carlos Herrera Perret, Execu-tive Director of ProInversión (Peru’s Private Promotion In-vestment Agency).

Indeed economists credit Pe-ru’s strong record of infrastruc-ture investment for the impres-sive rates of economic growth, job creation, and poverty re-duction that the country has enjoyed. “Commissioning and building infrastructure gener-ates growth,” says Gonzalo Pri-alé, President of Peru’s Associa-tion for Promotion of National Infrastructure (AFIN), the

country’s promotional organi-zation for infrastructure proj-ects. “With great efforts, a large number of projects have been awarded.” Despite the progress made, Mr. Prialé says that AFIN will continue its drive to mod-ernize the country. “We suggest a rate of about 6 to 7% of Peru’s GDP, which is the same rate Asian countries that emerged from their problems held in the last century.”

Progress made in the early part of the 2000s has enabled Peru to extend the reach of its PPPs into yet another critical area that has a direct impact on people’s lives: health care. Through its existing structure, the government of Peru offers health care benefits and ser-vices to the working popula-tion through a program called EsSalud, which covers working families and individuals similar to most employment-based plans in the United States, but is on a national scale, and offers full coverage within its network of health care profes-sionals and facilities. EsSalud provides health benefits to roughly 20% of the population, some 6 million people.

Through an innovative part-nership with the Brazil-based health care services company Salog S.A., Peru’s first ever health care PPP began in 2010. An expert analysis was carried out that identified significant potential savings in the pro-curement and distribution of medical supplies and medica-

tions, which together can add up to 25% to overall health care costs. Following a bidding process, construction and op-eration contracts were signed for four different health-care projects. Salog signed up to construct and operate medical distribution centers in February of that year.

“Without good manage-ment of those costs you can get in some trouble,” says Rogerio Marcondes Barros, General Manager of Salog S.A. “We offered EsSalud a monitoring system because they didn’t have anything like it, they had no best practices when it came to storage or controls, with the result of having a lot of waste and loss. We started in 2010, and now EsSalud has, with-out question, the best public health care infrastructure in all of Latin America.”

Mr. Barros credits Peru’s openness and the strength of its well-established PPP frame-work for the project’s record of

achievement. “Our great ad-vantage was being able to do this under the umbrella of the PPP, which allows us to invest in the long term, a contract that is independent of the different ad-ministrations and very strong in terms of institutional support. The PPPs are 5% inspiration and 95% hard work, being the first in the health sector there are high expectations but also a lot of prejudice.”

While the project met initial skepticism, Mr. Barros says that Salog’s experience in imple-menting global standards and best practices quickly made a positive impact. “We have signed agreements with univer-sities. We invested in staff train-ing and the improvement of the labor conditions, which in turn increased the service quality and reduced costs. It is a continu-ing process. The health system always has new challenges. It is not perfect and usually has lim-ited resources. Our contracts are much stricter than the tradition-al private sector. That makes us ever evolving and stronger.”

Construction projects worth $7bn planned for 2015, as sector grows by 8%The government, with input from private investors is embarking on several mega-projects worth an estimated $7 billion this year. The wave of new activity is expected to stimulate job growth and invigorate the real estate and banking sectors, as government initiatives help more Peruvians with home purchases

One of the main drivers of Peru’s economy has been the con-struction sec-

tor, making up 5% of GDP and coming in second as the most important source of job growth next to manufacturing. While growth is down this year from a high of more than 18% in 2013, the sector continues to reflect tremendous potential.

Construction is projected to grow by more than 8% this year, according to the state-owned Andina news agency. The gov-ernment, with input from pri-vate investors plans to embark on several mega-projects worth an estimated $7 billion this year. The wave of new activity is ex-pected to stimulate job growth and invigorate the real estate and banking sectors, as govern-ment initiatives help more Pe-ruvians with home purchases.

“In the last 10 years we have experienced a real estate boom in our country, predominantly in Lima but in other provinces as well,” said Jésus Blanco Gordon, Corporate General Manager of Ingroup, one of the country’s most prominent real estate de-velopers. “All this growth that we have achieved in the last few years has to do with the fact that many Peruvian families have ac-cess to a mortgage credit.”

Peru uses a common demo-graphic classification system, to identify the socio-economic classes of its population. The segments range from A to E, with the middle class repre-sented by strata C and D. The percentage of Peruvians con-sidered middle-class doubled to 70% of the population between 2005 and 2011, according to the Inter-American Development Bank (IADB).

Ingroup has adopted a strat-egy to help address the coun-try’s changing demographic landscape.

“Our main strength is having a mix of products for the differ-ent socio-economic segments in the country,” said Mr. Blanco Gordon. “We manage three brands; Immobiliari, directed 100% at A and B, a mix of resi-dential and commercial in this class, Recrea directed at C, and Vibien directed at D. Thanks to this distribution we’re able to maintain ourselves through-

out different real estate market downturns.”

The residential market was impacted by changes last year to mortgage protocols, which required clients to prove credit worthiness over 12 months in-stead of four. The change had a significant impact on the C class, made up of mainly small busi-nesses where revenue volatility make it difficult for banks to as-sess credit worthiness.

“As a consequence the cash flows for real estate companies with many projects aimed at segment C changed,” said Mr. Blanco Gordon. The difference of eight months, created a gap between sales related incomes and construction related out-comes. “As a consequence your project’s financial expenses grow or the increase of invest-ment on capital does not gener-ate the expected return.”

The setback is offset by In-group’s diverse portfolio and Mr. Blanco Gordon believes the housing market still represents tremendous opportunity and as an indication of its confidence Ingroup continues to build when others are scaling back.

“This year we’ve launched big projects and we have more left to launch,” he said. “We’re tak-ing chances. We believe in Peru’s real estate sector and we know that it still has great potential.”

Mr. Blanco points to the low penetration rate in mortgages as a sign of the market’s un-tapped potential.

“Our financial system has 250,000 mortgage loans, in a country of 30 million inhabit-ants, while a country like Chile has 1.7 million, for 20 million inhabitants, and Columbia has 1.9 million loans with 40 mil-lion people. That gives us an idea of how much space for growth we have here in Peru.”

The government could help spur growth with mega projects that may encourage more Pe-ruvians to invest in longer-term housing. It announced plans for more than 22 projects worth $7 billion aimed at improving the quality of life for Peru’s residents. An estimated $3 billion will go to improving the infrastructure of hospitals and schools, transport fixtures and roads will get a face-lift, work is under way on Lima’s second metro, and a plan is in the works to build a third line.

“We’ve tried to make im-provements more visible,” said Milton von Hesse, Minister of Housing, Construction and Sanitation. “We think that there’s an opportunity to de-vise public policy that contrib-utes to the population’s access to services and improves the quality of life.”

The housing minister points to the Gasoducto Sur Peruano gas pipeline as a good example. Once completed the $4 bil-lion public-private partner-ship (PPP) project linking the Camisea gas wells to Lima will cover a distance of more than 450 miles and distribute clean cheap energy to millions.

The government is also mak-ing headway in its program to bring water and sanitation to all of its citizens.

“The water access indica-tor had been stuck in the same place for almost a decade,” said Mr. von Hesse. “With the invest-ments we’ve made the indicator has risen ten percentage points

and we’ve already provided ac-cess to more than 87% of the country, and in rural areas which were traditionally the poorest sector of the population, we’ve doubled access to water.”

All public building has not gone unnoticed. International banker Credit Suisse gave a positive outlook for Peru, pro-jecting economic growth to be a healthy 5.6% in 2016.

There are other reasons to be optimistic according to Gonza-lo Prialé, President of AFIN, Pe-ru’s Association for the promo-tion of National Infrastructure. The country’s debt to reserve ratio is 3.5%, low compared to other countries in the region.

“It is said that in an emerg-ing country, indebtedness, ap-proximately 40% debt-product is manageable, and here we are 3%, there is lots of leeway,” said Mr. Prialé, who advocates a five year public-private partnership (PPP) infrastructure investment plan to promote continuity and attract more investment.

“PPP projects generate growth, in the long run the debt-GDP ratio tends to decline. It goes up at first, but then it lowers because the benefits of the proj-ect outweigh the cost of borrow-ing,” said Mr. Priale. “A five-year plan would overcome the un-certainty of a new administra-tion and implies a commitment from the next government.”

But attracting foreign and pri-vate investment could be all the more challenging when public support is lacking such as when it comes to something as vital as water supply. Private funds could help support projects that would provide clean water and sanitation to areas where the only option is to purchase it by the barrel. The suggestion that privatizing water would make it more expensive is a myth that is slowing progress, says Mr. Prialé.

“The people in Lima who pay 13 times more, when they finally have water at home, they will be the happiest customers in the world,” said Mr. Prialé. “There

are many big projects for Peru’s many challenges. We must not be afraid of mega projects, they may sometimes be controver-sial, but at the end of the day, the balance is so favorable that the people will be happy, which is what usually happens.”

“We’ve tried to make improvements more visible. We think that there’s an opportunity to devise public policy that contributes to the population’s access to services and improve the quality of life”

MiLTOn VOn HeSSe,Minister of Housing, Construction and Sanitation

“Our great advantage was being able to do this under the umbrella of the PPP, which allows us to invest in the long term, a contract that is independent of the different administrations and very strong in terms of institutionality”

ROGeRiO MARCOnDeS BARROS,General Manager of Salog S.A

“The Public-Private Partnerships (PPP) have been very successful in this regard, in roads, communication, ports, energy, transportation, natural gas pipelines, social infrastructure, hospitals, and schools”

CARLOS HeRReRA PeRReT,executive Director of Proinversión

Public Private Partnership helps pioneer health projectPeru has consistently ranking amongst the top countries in the region in its execution of Public Private Partnerships (PPPs). Today Peru is extending the reach of its PPPs into yet another critical area that has a direct impact on people’s lives: health care

“In the last 10 years we have experienced a real estate boom in our country. All this growth that we have achieved in the last few years has to do with the fact that many Peruvian families have access to a mortgage credit”

JéSUS BLAnCO GORDOnCorporate General Manager of ingroup

An artists impression of one of the construction projects launched by ingroup


9Tuesday, October 6, 2015Distributed by USA TODAY PERU

A huge influx ofinvestment hastransforme d Peru’s hydro-carbons sector

from an industry in decline into a major contributor to economic growth over the past decade.

By 2016, oil and gas ex-ports are set to yield $6.61bil-lion a year – and the industry already generates nearly 9% of the country’s tax revenue from commercial activities.

Additionally, the boom-ing natural gas industry has helped create a wealth of new opportunities in the country, while also allow-ing it to diversify away from contaminating sources of energy like oil.

Now, with global oil prices at historic lows, the presi-dent of the Peruvian Soci-ety of Hydrocarbons (SPH), Beatriz Merino, has said this is the perfect time to invest in the sector.

“We are at a time of op-portunities,” said Ms. Me-rino. “Whoever wants to invest in the hydrocarbons industry must look at Peru with interest.”

“There have been first-class American companies that have been here and now, due to the fall in oil prices, there are American hedge funds that are invest-ing in these oil companies,” she added.

“I think that we possess the values that a North American investor looks for: stability, clear and transparent rules of the game and protection of their investment.”

Domestic demand for gas has risen sharply in recent years, driven by govern-ment incentives, econom-ic growth and a growing number of gas-fired elec-tricity plants.

But the construction of a new gas field near the Cami-sea River has meant the country can easily keep up with demand, and has even been producing an export-able surplus since 2010.

The facility opened in 2004 and sits on an estimat-ed 13.4 trillion cubic feet of gas and 482 million barrels of natural gas liquids.

“A year with growth of nearly 10% and having been one of the countries that best weathered the 2008 crisis would not have been possible if there had been no Camisea,” said David Lemor, Corporate Manager at Peru LNG.

“It has given the coun-try competitiveness, com-pared to other countries in the region which compet-ed to attract investment in the mining and hydrocar-bons sectors.”

Peru LNG’s General Manager Igor Salazar said the Camisea Project has been a major engine for growth in the country over the past 10 years.

“In the 90s the country had a cleaner, more bal-anced economy without subsidies,” he said.

“In 2004 the world econo-my began to grow, after the Asian crisis.

“In Peru, we took advan-tage of the fact that we were a stable country to attract investment, mainly in the mining sector, which fa-vored development in the past 10 years.

“But there was a funda-mental factor, which was the development of Cami-sea – Camisea gave the market a cheap source of energy, especially given that there was an oil crisis in 2005, and it ended up cost-ing $150 per barrel.”

“I’d like to add that this energy is more environ-mentally friendly, it has re-placed polluting fuels,” said Mr. Lemor.

“On average, between 2003 and 2013, it has con-tributed 6% of the total coun-try’s collection and in these terms it has grown 25%,” Ms.

Merino said, speaking about the Camisea Project.

“This increase is also rep-resented in the royalties, which are 10 times higher than the ones coming from the mining sector as rates are higher in our sector.”

Peru was the first country in Latin America to become a producer of hydrocar-bons, with its first oil well drilled in 1863.

But for many years gov-ernment policy and environ-mental concerns held back production – which peaked at slightly more than 200,000 barrels per day in 1982.

“Peru has succeeded in attracting oil and gas com-

panies and top-rated inter-national projects, but still 65% of the hydrocarbon basin remains unexplored – not even getting to produce 60,000 barrels per day,” ex-plained Ms. Merino.

“Neighboring countries, such as Ecuador, reach around a million barrels per day.

“I think we have fallen into the trap of endless and in-exhaustible red tape and we have lost the opportunity of oil being above $100 a barrel.

“While in neighboring countries with new find-ings of oil fields extracting oil would have taken around four years, in our country that could easily take 17.”

She added: “That is why today, as oil is around $60 a barrel, Peru has the op-portunity to redesign its whole system of procedures and permissions to make it intelligent, just, flexible, executable and highly com-petitive at the international level, while also taking into account the protection of the environment and indig-enous peoples.

“The lesson is that we should take advantage of this crisis to redesign Peru towards energy autonomy and security for the next five years.”

Investment in the coun-try’s hydrocarbons sector in-creased from $20million in 1990 to $4.3billion in 1997. At the same time, the num-ber of areas under operation went from one million to 23 million hectares.

This rapid increase in activity coincided with the arrival of political and economic stability in the country.

“Before the 90s Peru had an erratic economy, chang-

ing from one government to another, with breaks in the democratic process,” ex-plained Mr. Lemor.

“In the 90s there was order in the country, we became part of the inter-national community again, and there was a first wave of structural State reforms, which started to make Peru an investment destination.”

He continued: “In the 2000s, there was the wave of international treaty ne-gotiations, which further strengthened the condi-tions of stability and pre-dictability of the Peruvian economy, which encour-aged more investment.”

Around this time, the country began to shift its attention towards natural gas. While Peru had previ-ously produced large quan-tities of oil, gas had never been considered desirable – and large reserves re-mained untapped.

Peru opened South Amer-ica’s first Liquefied Natural Gas (LNG) plant in 2010, and its increased natural gas output attracted further in-vestment in other sectors of the economy.

“We have been the catalyst for major investments in the country and we want to set an example regarding op-erational environmental and social management,” said Mr. Salazar.

“During these five years, we have proved to interna-tional clients we are a reli-able energy source.”

This development has driven Peru’s economic growth in recent years, stimulating the country’s entire economy.

“The Peru LNG project, the largest private invest-ment, was a signal to the world that Peru is an at-tractive stable country for investors, with the support of world-class international foreign investment,” said Mr. Lemor.

“This has generated a stream of investments in other sectors as well, not only hydrocarbons.”

But Ms. Merino argued that more can and should

be done to grow the coun-try’s hydrocarbons sector, and ensure Peru remains strong and prosperous in the years to come.

“The importance of the contribution of this indus-try to the national economy should be reflected in the government institutions,” she said.

“Currently, the hydrocar-bons sector is represented by a National Direction, which is at the same time inside a Vice Ministry inside the Ministry of Energy and Mines, which in my opinion is a flaw that the Peruvian government needs to fix.

“It would be convenient if this government, before it finishes its term, left as a legacy at least the creation of a Vice Ministry of Hy-drocarbons, providing the sector with a stature in line with its contribution to the national economy.”

She added: “I think that Peru should address this in-dustry with a comprehensive

reform, starting by giving the national public policy of hydrocarbons the necessary priority inside the country’s energy policy.”

The huge level of invest-ment Peru’s oil and gas sector has enjoyed in recent years has helped the hydrocarbons sector grow into a major con-tributor to economic growth in the country.

But despite the transfor-mative effect the industry has had on the country, the majority of its hydrocarbon basin still remains untapped.

Peru has 18 sedimentary basins with hydrocarbon exploration potential. How-ever, only three of them have been exploited to date.

Utilizing this vast store of natural resources could help Peru secure strong econom-ic growth for many years to come – something Presi-dent and General Manager of Hunt Oil Peru, Barbara Bruce, is keen to encourage.

“Peru is still attractive because it is still growing,” she said.

“To be competitive, it has to look outside – otherwise it will not attract investment in the hydrocarbon sector.”

She added: “It was clear for Hunt Oil that we are guests and we really appreci-ate being accepted because the opportunity that Peru has given us is huge.”

She called on the govern-ment to allow for further exploration in the region, so that new gas fields can be developed.

“The only big gas sup-ply is Camisea and due to the exploration restrictions and the lack of incentive to invest in explorations, mainly in the surround-ings of Camisea, we cannot guarantee big fields in the future,” she said.

Mr. Salazar also argued that the country needs to do more to incentivize the development of new oil and gas fields.

“The big challenge we are facing is that the State, the companies, the communi-ties may have a fluid con-versation and confidence, which will allow Peru to at-tract investment,” he said.

“The resources are there, but we have the problem that sometimes we cannot make explorations.

“I think the issue of how to connect the three actors is what is missing at present.”

Ms. Bruce acknowledged that the low price of oil has had an impact on the profit-ability of certain oil and gas fields in the region – such as Lot 152, an area in the north of the country almost bordering Ecuador, which no companies are currently interested in exploiting.

But she argued that there’s no reason these empty lots shouldn’t become profitable again in the future.

“Fields never die, we have seen the price going up and the fields revive,” she said.

“When the price falls, the fields sleep but those which are already producing un-dergo ups and downs but they do not disappear.

“They may dry up but if the price is correct, that last drop which remains

there because of the low price is also valuable at a better price.”

She added: “The same happens with the fields lo-cated in the forest.

“They are also valuable, and proper planning must have been carried out as regards the following ar-eas: environmental, so-cial, operational and tech-nical transference.”

Mr. Lemor stressed the importance of protecting Peru’s unique habitats and ecosystems when exploring new opportunities in the country – and touched on some of the work Peru LNG does to minimize the im-pact their operations have on the environment.

“We have very high cor-porate social responsibility and environmental parame-ters and one of our auditors, who has helped us a lot with our project, has been with the Smithsonian Institute,” he said.

“We are currently carrying out a biodiversity monitor-ing project together, thanks to which new species have been found.

“There are also other im-portant American institu-tions supervising us.

“Both Camisea and Peru LNG are good examples in Peruvian investment of how things can be done well in connection to society and the environment.”

Ms. Merino went even further, and argued that companies have a moral re-sponsibility to consider the environment when expand-ing their operations.

“Something that I quickly learnt in this industry is that environmental degradation is a human disgrace and that the protection that we owe to the planet is a moral man-date,” she said.

“All of us have the obli-gation to take care of our home, to defend it and keep it well for the ones that will come after us.”

But she concluded that the huge wealth the hydro-carbons sector brings to the country outweighs the risks – and easily justifies its com-mitment to investing in the industry in the future.

“No industry is immune to accidents, but the commit-ment is there,” she said.

“I oppose the positions that hold that the industry should be kept away from this country, as those ben-efits remain out of our sys-tem and do not reach the most vulnerable, making their isolation and poverty a permanent thing.”

Natural gas propels hydrocarbons industry to new heightsFollowing a decade of rapid expansion, Peru’s hydrocarbons industry is perfectly positioned to benefit from the historic slump in oil prices

A map of the oil and gas blocks in Peru

“We have seen that it is possible to work with transparency and communication. We’ve brought the know-how and the best-practices (and) worked on the environmental area, from Peru LNG to Lot 76 analyzing the biodiversity, and the protection that the area needs”

BARBARA BRUCePresident and General Manager of Hunt Oil Peru

“The Peru LNG project, the largest private investment (in the country), was a signal to the world that Peru is an attractive stable country for investors, with the support of world-class international foreign investment”

iGOR SALAzAR,General Manager of Peru LnG

“The hydrocarbons industry contributes nearly 9% of the tax revenue from commercial activities, and in general terms, from 100 new soles that the tax administration collects, six come from this activity”

BeATRiz MeRinO President of Sociedad Peruana de Hidrocarburos (SPH)

ECUADOR COLOMBIA

BRAZIL

PERU IN SOUTH

AMERICA

2 Day, Month 00, 2015 Distributed by USA TODAYPERU


Cradle of ancient civilizations and home to one of the planet’s great-

est wonders, Machu Picchu, Peru has always attracted visi-tors. Generations of travelers have been fascinated by its age-old heritage and awe-inspiring landscapes: where else can you trek on some of the world’s highest mountains, the Andes, and in its wildest jungle, the Amazon, without crossing a frontier? But even though the Inca treasures have long mesmerized us (we all have an inner Indiana Jones), up until a decade ago, Peru had an image as a somewhat sleepy place where nothing exciting ever happened.

So if you haven’t heard the news yet, take note: Peru has completely changed in the past few years. The economic bonanza has transformed this country which has become, like other once forgotten Latin American nations, a striving, creative, intensely energetic place that will dazzle even the most blasé traveler.

If you start your trip with Lima, the capital, where

you should definitely stop for a few days, you’ll be gobsmacked by the quality and originality of the gas-tronomy, the joyful beat of the nightlife, and the count-less little shops, art galler-ies and cafés. Not to men-

tion the charming colonial buildings and of course, vari-ous museums with monu-mental collections of pre- Columbian art. After that, be ready to take a plunge into a world out of this world, where the people are warm

and welcoming, nature is powerful and colorful, and where time takes an entirely new meaning. From the mys-terious Nasca Lines to the Amazon, passing through Cusco and the legendary lake Titicaca, here are a few tips.

L ima’s food scene i s i n c r e a s i n g l y praise d g lobal ly and considered to

be one of the drivers of the city’s cultural renaissance.

For example, the opening of the restaurant Isolina, in the Barranco district, was dubbed one of the biggest of the year. According to the British newspaper The

Guardian, it is “part of a new wave of relaxed res-taurants offering reason-ably priced but impeccably prepared food. Another is nearby Sibaris, opened two

years ago, which also oper-ates a food truck.” And there is also Nos, recently opened by one of Peru’s most cel-ebr ate d chefs , Virg i l io Martinez, not far from his

award-winning restaurant Central, in the posh district of Miraflores.

Furthermore, the increas-ing taste for fine gastrono-my has provided Peru with an ideal way of promoting its high quality products and agricultural exports.

Many residents of Lima will tell you that gastrono-my is really what changed the city in the past few years, transforming it into a vibrant, creative capital where the Latin American movida has found new ways of expression.

To discover the new Lima, you can start by exploring its cultural centers and discover the local cinema, art exhibi-tions and concerts. One ex-ample is Lima Fest, the Latin American Movie Festival, held every year in August, that showcases films from the whole sub-continent.

After that , you should definitely take a tour of the art galleries to discover up-and-coming Peruvian art-ists, such as the painters Alberto Quintanilla, Luis Palao Berastain, and Fer-nando de Szyzlo, to name a few. The most popular art galleries in town are Con-

sultoria Lucia de la Puente, Enlace, Artco, Forum, and Corriente Alterna. There are also dozens of cafés and bars where artists exhibit their work.

Young Peruvian artists also express themselves through textile, a century-old craft in this country home to the lamas and alpacas. There are lots of workshops in Lima where you can discover con-temporary designers who use traditional materials such as alpaca wool and Peruvian cotton, or who reinvent the traditional art of embroidery.

The night scene is also particularly rich. Scores of homegrown bands give gigs in bars and clubs, and there are some pretty exciting La-tino DJs who will rock your nights in any of the many local discotheques.

And if you feel a bit dazzled at the end of the night, we recommend you hop back in time and end the night at the bar of the Gran Hotel Bolívar, a cul-tural heritage site in down-town Lima. It’s charmingly old and colonial. And yes, it’s yet another bar where Ernest Hemingway used to hang out.

Situated southwest of Peru along the Pacific Ocean, the region of Ica sits in the middle

of predominantly desert pam-pas land. The region was once home to the ancient Wari, Nasca, and Paracas cultures. Here, you can practice sand-boarding and stroll on the dunes of the Huacachina.

The region is also known for its vineyards. The best season to visit is March, for the celebra-tion of the Festival Internacional de la Vendimia (international harvesting festival), when color-ful parades are organized and grapes are offered to passers-by.

Ica is a traditional Peruvian city, with a mix of modern and colonial buildings, traditional markets, old churches and charming cafés. But truth be told, the best in this part of Peru resides outside of Ica, where there are two marvels not to be missed: the Balles-tas islands in Paracas, and the world-famous Nasca Lines.

The Islas Ballestas are some-times dubbed “the poor man’s Galapagos” because they are so wild, remote and full of wildlife. You can only access them by boat through one of the many local travel agencies. On the way there, you will see the fa-mous Candelabra geoglyph, a giant figure carved out of the hills. No one knows by whom or when it was made. Some relate it to the neighboring Nasca lines, whereas others believe it is a representation of the Southern Cross and that it was once used as a beacon by sailors. On the islands, you’ll see plenty of birds – pelicans, cormorants, Humboldt pen-guins – and if lucky, when gaz-ing at the sea, dolphins.

Situated in the Pampa colo-rada near the town of Nasca, the Nasca Lines are a series of gigantic figures carved on the dark, rocky terrain. A UNES-CO World Heritage Site, this is one of humanity’s most endur-ing mysteries. There are hun-

dreds of figures, from triangles and rectangles that are several kilometers long to stylized animals and birds: monkeys, condors, hummingbirds, fish, sharks, orcas and lizards.

The great mystery is that they can only be seen from high above but not only, con-trary to popular belief, from a plane: you can actually see them from atop the surround-ing hills. They were first men-tioned by the Spanish con-quistador Pedro Cieza de León in 1553, and rediscovered in 1927 by Peruvian archaeolo-gist Toribio Mejia Xesspe.

There are many theories sur-rounding this extraordinary site. Some scholars say it is a representation of the cosmos because the lines seem to con-verge when observed at the winter solstice. But there are also many other interpreta-tions, the most widespread being that these mysterious figures were made by alien visitors from outer space.

Experience the world’s top gastronomic destination, where modernity finds its identity in bohemian neighborhoods and colonial history

Vast desert etched with enigmatic ancient figures characterize the region where Pisco came alive

Peru, land of hidden treasures Peru offers you the opportunity to meet amazing cultures, festivals and captivating live performances. Participate in unique activities ranging from the traditional visit to archaeological sites to experiencing adventure sports

Paracas, Ica & the mysterious Nasca Lines

Lima, the gastronomy capital of Latin America


0Day, Month 00, 2015Distributed by USA TODAY PERU

A l t h o u g h l i t t l e known, Peru is also home to a great portion of

the Amazon forest. To ex-perience it, you must travel north, close to the border with Ecuador. As a matter of fact, Peru occupies 11.2% of the 7.35 million km2 of the Amazon River basin and is home to the source of the mighty Amazon River.

As we all know, the Ama-zon is the largest virgin for-est on the planet, one of the most biodiverse ecosystems in the world. There are many lodges in the region where you can drop your gear and enjoy a comfortable stay, and discover for yourself not so much what the jungle looks like – we’ve all seen photo-graphs and documentaries – but more interestingly what it sounds like, especially at night, when thousands of monkeys, birds and who

knows what other nocturnal animals go out hunting.

You could very well spend weeks in the Amazonas re-gion, there’s so much to do. For example visiting the source of the Amazon River and the Pacaya Samiria Na-tional Reserve, where you might see the planet’s tiniest monkey, the impossibly cute pygmy marmoset, which you could hold in the palm of your hand.

Another must during a visit in this region is of course to take a boat trip on the Ama-zon River, especially to cruise down to the Three Borders’ Point, where the borders of Peru, Brazil, and Colombia meet. Other cruises of a more naturalistic nature take you down the Marañon or the Ucayali as far as the border of the Pacaya Samiria National Reserve, which you enter by way of smaller boats or hiking through the jungle.

Moving towards the south is the department of Madre de Dios, with its majestic, vir-gin forest. Its capital, Puerto Maldonado, is considered the world capital of biodiversity. From there, you can visit the Manu National Park, spread out over some 2 million hect-ares, home to an unparalleled number of species.

Moving further south, you should try out one of the lodges on the Tambopata River or on the shores of the Lake Sandoval, where native communities still strive. As you penetrate further into the Tambopata basin, you will cross into the confines of the Bahuaja Sonene National Park, where you will be able to see thousands of multi-colored parrots circling above your head in the bright blue sky. In fact, the great valley of the Amazon is home to a dazzling array of some 950 species of birds.

O nce the capital of the Inca empire (13th century to 1532), the city of

Cusco (also spelled Cuzco), perched in the Peruvian An-des at an altitude of 3,400 meters, is the gateway to the Urubamba (Sacred) Valley and the Inca Trail, which will lead you to the world-famous Machu Picchu.

The oldest continuous-ly inhabited city in Latin America and arguably “the birthplace of the world”, ac-cording to Peruvians, Cusco is both a world-revered Her-itage Site – pre-Columbian plazas, streets, squares and churches abound here –, and a surprisingly vibrant, modern city of about half a million people.

Here, you will see your fair share of indigenous la-dies dressed in traditional dress, coiffed by the distinc-

tive Peruvian bowler hat, as well as the contemporary urban, fashionista crowd hanging out.

This is undoubtedly a prime destination in the whole of South America, well worth a few days stop-over before heading to Pe-ru’s archaeological jewel, the Machu Picchu. Built on the top of a mountain above the Sacred Valley, 80 km from Cusco, the fortified city was erected in the sec-ond half of the 15th century and abandoned at the time of the Spanish conquista. It was voted one of the Seven New Wonders of the world in an Internet-based world-wide poll in 2007. Its three most prominent buildings are the Inti Watana, a ritual stone believed to be a clock or a calendar, the Temple of the Sun and the Room of the Three Windows.

A lso situated in the south of Peru and not far from Areq-

uipa to the east, the Lake Titicaca, which is crossed by the border between Peru and Bolivia, is legendary. Not only because most of us have heard about or seen in documentaries, this gigan-tic lake, the largest in South America, and the strange floating villages built by the locals with knitted reeds, but also because according to old Andean legends, it is the birthplace of the sun. And according to another legend, Manco Capác (“the

royal founder” in Quechua), emerged from the lake be-fore going out and founding the Inca empire.

A prime tourist attraction is of course the 64 floating islands or villages of the lake, which are home to the Uros people who were believed a long time ago, according to yet another legend, to be immune to the cold because they had black blood. But there are many other things to do around here, notably visiting the charming town of Puno, which has the reputation of being the folkloric capital of Peru.

Seductive, striking and natural, Cusco’s history lives in its streets, squares, valleys and towns. Next to the Inca jewel, Machu Picchu was built with the wisdom of the ancient civilizations

S ituated in the south of Peru, Arequipa is an enchanting colo-nial city and a sur-

prising mecca of gastron-omy. Peru’s second largest city is anything but a second choice for the traveler.

Surrounded by no less than three volcanoes and set in a stunning landscape, it was founded in 1540 by a Spanish conquistador and has kept much of its original, baroque buildings, churches and plazas. The

332 hectare historic center was declared a UNESCO World Heritage Site in 2010. If you’re looking for Spanish colonial heritage, this is the place to go.

Furthermore, visitors to the Colca Canyon should keep an eye out for the mag-nificent Andean Condor flying in its natural habitat.

Arequipa is also at the forefront of Peru’s culinary renaissance: here you will find the country’s most var-ied and inventive cuisine.

Classic spicy dishes include the rocoto relleno, chupe de camarones and ocopa best enjoyed in the city ’s communal picantería res-taurants.

Another interesting fact to mention about Arequipa is that it is the birthplace of one of Latin America’s most talented and prominent writer, Mario Vargas Llosa, recipient of the 2010 Nobel Prize in Literature and un-successful candidate at the 1990 presidential elections.

Discover Peru’s ashlar (white stone) city with snow-capped mountains, volcanoes and deep canyons where the condor spreads its wings

A sacred place for the Incas with both natural and artificial islands, Puno is a legend, where the multicolour festivals meet the quechua and Aymara past for an unique experience

Cusco, sacred valley & Machu Picchu; birthplace of the world

Arequipa: noble and volcanic

Amazon rainforest, wild natureDiscover the mysteries of the cloud forest with the world’s greatest biodiversity and countless possibilities for ecotourism

Legends on the shores of lake Titicaca



Ancient traditions and a growing gastronomy scene provide unique cultural experience Peru offers the opportunity to immerse yourself in a truly unique culture – one that balances ancient indigenous traditions with today’s modern, vibrant and stylish way of life, including some of the best gastronomy you can find anywhere in the world

From the Colonial and Incan archi-tecture of Cusco, to the busy streets and beaches in

Lima, Peru draws visitors from all over the world in search of its wonders. Whether it’s climbing up to the UNESCO World Heritage Site of Machu Pic-chu where Inca emperor Pachacuti once ruled, or the beaches of Máncora or Punta Sal – Peru is a per-fect destination for those searching for the opportu-nity to immerse themselves in a truly unique culture – one that balances ancient indigenous traditions with today’s increasingly mod-ern way of life.

Language and culture Language is one area where the diversity of the country can be seen. With 43 native languages there is coexistence in Peru that you don’t see in many oth-er countries.

While Spanish is the of-ficial language, there is also Quechua, which is spoken in the Andes, as well as Shipibo, Ashanin-ka and Aguaruna that are used amongst communi-ties in the Amazon.

The number of civiliza-tions coexisting means there are a wealth of festi-vals that offer a look at Pe-ruvian culture with close to 3,000 annual popular festivals in Peru, including patron saint feasts, proces-sions, carnivals, and ritu-als. The indigenous cul-tures are celebrated in the country’s many religious or seasonal festivals, with lots of pageantry and cel-ebrating. While there are many traditional Catholic

celebrations such as Se-mana Santa (Holy Week) these are also adaptations of older agricultural festi-vals, like the harvest. Be-cause of the amount of lo-cal festivals, visitors to the country can enjoy a slice of local culture and “fiesta” most of the year.

Cuzco’s most important festival, the Inti Raymi (Fes-tival of the Sun) is held on June 24. It attracts tourists from all over Peru, the region and the world to celebrate on the streets. Cajamarca, meanwhile, celebrates Car-nival in style with one of the most popular and rowdy events in the country.

Music and danceMusic and dance have al-ways played an important role in Peruvian society. Pre-Hispanic musicians used seashells, reeds, and even animal bones to pro-duce sounds and explored themes of religion, war, and folklore. One of the most famous instruments is the panpipe, which is still played today. The music of Peru is an amalgamation of sounds and styles drawing on Peru’s Andean, Spanish, and African roots. The tra-

ditional folklórico music that originated in the An-des is famous for its melan-choly pan-flute melodies and rhythmic charango guitar picking. Música criolla, on the other hand, emerged on the Pacific coast of Peru as Spaniards and African slaves blended their cultures with those of the indigenous tribes. Chicha has become one of the most popular hybrid genres for Peru’s urban working class. Chicha is a fusion of rock, cumbia and huayno that combines wistful guitar riffs with shuffling rhythms and soulful lyrics that usually focus around themes of poverty, heartbreak and life’s many struggles. This is the music most tourists hear in large cities coming from homes and cars.

Amazing gastronomyOne area of Peruvian cul-ture which symbolizes the meeting of Peru’s many di-verse and exotic elements is that of its rapidly grow-ing gastronomic scene. While food has long been central to Peruvian cul-ture, the growth in reputa-tion of Peru’s amazing gas-tronomy around the world coincides with the govern-ment’s decision to begin branding the country back in 2003. That year, Pom-perú (The Commission for Promotion of Export and Tourism) launched an aggressive international campaign, starting in Latin America and Spain, and arriving later to other Eu-ropean markets and the United States. The test of this project began in a food festival organized by the Hotel Ritz in Madrid. John-

ny Schuler, connoisseur of pisco (Peruvian brandy), and native chef Rafael Pi-queras were summoned to represent Peru, and word began to spread quick about the tasty treasures of the relatively unknown Pe-ruvian gastronomy.

It was in 2005 when the Peruvian food scene re-ally began to takeoff after a food brand to identify the country was born: Mucho Gusto, an initiative that pays tribute to the coun-try’s cuisine. Lima held the first ever Peruvian food fair with the name of Peru, Mucho Gusto in 2008. The following year, the Peruvi-an Society of Gastronomy then gave life to Mistura; a culinary event which has become one of the most important in the whole of Latin American.

The gastronomic fair is part of the Peruvian “food boom” that has put Lima on the map for gourmet excellence. The festival has grown from just 30,000 attendees back in 2008, to more than 600,000 who went last year. Every Sep-tember, Peruvian restau-rants and famous chefs from around the world gather in Lima for a cele-bration of Peruvian cuisine at the Mistura festival.

It is the diversity of Pe-ru’s agriculture, microcli-mates, geography, and cul-

ture that has enriched the culinary industry in Peru to the point where it is now recognized as one of the best tasting global cui-sines. The tourist-indus-try association estimates that 75,000 people visit Lima every year to enjoy its food, and while they’re there they spend an aver-age of $1,250 each.

These days, the acco-lades for Peruvian gastron-omy keep on coming. The Organization of American States (OAS) appointed Cultural Heritage of the Americas to Peruvian cui-sine in 2011 and for the third consecutive year in 2015, Peru has been cho-sen as the best dining destination in the world by the prestigious World Travel Awards, known as the Oscars of Tour-ism. What’s more, in this year’s list of The World’s 50 Best Restaurants, two Peruvian restaurants are within twenty best in the world and one of them has been named as the best in Latin America.

A culinary melting potIndeed, from the fish of the coast to the exotic fruits that grow high in the mountains, Peru has argu-ably the best food in South America. While there are plenty of traditional dish-es, there is also plenty of influence in Peruvian cui-sine from Spanish food, as well as China, Italy, West Africa, and Japan.

The fusion of flavors has produced dishes like the unique anticucho de corazón, tacu-tacu stew and carapulcra – all dishes that have African heritage. The traditional staples of

Peruvian cuisine are corn, potatoes, and beans, com-bined with the Spanish in-fluence of wheat, rice, and meat. Many traditional Peruvian foods including quinoa, kiwicha, and chili peppers have grown in popularity in recent years, as healthy eating becomes a big factor in people’s lives.

One Peruvian clas-sic that tempts the taste buds of visitors is cevi-che. Thanks to the bounty of seafood available in the country, this dish of raw fish marinated in cit-rus juice is a must-try for any visitor.

Food is a developing in-dustry for Peru and a new generation of chefs are working and experiment-ing with local dishes and giving them a new twist. The availability and vari-ety of ingredients means there is a lot for chefs to play with, from the 3,000 varieties of potatoes to yacon, oca, and kañihua. This combination of Peru’s ancient foods and culture with modern techniques and ingredients is mak-ing its way onto menus in cities like Lima. In the past many chefs took in-spiration from outside the country when it came to dishes, now they are look-ing within and using the rich gastronomic heritage that the country offers.

“We can change the world though cuisine, but we are not the protagonists. We are just a way to spread what is going on in Peru”

ViRGiLiO MARTÍnez VéLiz,Chef and Owner of Central Restaurante

The indigenous cultures are celebrated in the country’s many religious or seasonal festivals, with lots of pageantry and celebrating. While there are many traditional Catholic celebrations such as Semana Santa, these are also adaptations of older agricultural festivals, like the harvest

Traveling in Peru opens a gastronomical door to of some of the finest food in the world. Because of the mixture of cultures and climates, Peru offers a wide variety of cuisine that will suit every palette.

peru consolidates growth in a changing global scenario · fael venegas, ceo of insur-ance group...

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