Dubai On a recent visit to the UAE, Peru’s Deputy Foreign Minister, Jose Beraun, met with Foreign Trade Minister Shaikha Lubna Al Qasimi and high officials to promote trade and investment. The visit came ahead of the third Summit of South American-Arab Countries (ASPA) to be hosted in Lima, Peru on October 1 and 2.
Peru is wooing the region with opportunities in agriculture, mining, textiles and construction. It may also offer solutions to food security—a continuing concern for Gulf countries— with opportunities to invest in agricultural land, according to Beraun.
Gulf News talks to Beraun about the potential development of economic ties between Peru and the Arab world.
Gulf News: What are the main trade and investment opportunities between Peru and UAE going forward?
Jose Beraun: I would like to see more trade in food products which is an area where Peru has increased competitiveness. Peru is a country with natural resources with an investment framework that makes it very attractive for the foreign investor. We’d like to see some investments from your country into Peru: in agriculture, energy and petrochemicals.
Gulf News: Did you meet with any major companies explore economic opportunities?
We … met with the director-general of IRENA (the International Renewable Energy Agency). That’s an area of co-operation we’re very interested in. We also visited Masdar Institute and I think this is a dimension for co-operation.
Gulf News. Peru is renowned for its metals and textiles. Are these sectors of collaborative trade between Peru and UAE?
Jose Beraun: [Interjection] In terms of textiles and the agribusiness, we had three companies from UAE visiting us this April and for example Paris Gallery procured new garments for the Emirates. So yes, we’ve already introduced that sector. [Additionally], the first container of home decoration articles from Peru will arrive in Bloomingdale’s by the end of [July].
Gulf News. Trade between the UAE and Peru is quite low, how much growth in trade and investment are you aiming for this year?
Jose Beraun: We’re not putting any limits, not only because it’s low today but because the potential is so big and incredible. For example, only 20 percent of the mining area in Peru has been explored and exploited. Also there is vast potential in the agricultural sector that has not been exploited.
Gulf News: How much foreign direct investments does Peru attract globally and from the UAE?
Jose Beraun: [interjection] From the point of view of the UAE, Peru is the second biggest investment destination of the UAE in South America, after Brazil. We have DP World with around $800 million and they operate in five ports. Another is IPIC [International Petroleum Investment Company] from Abu Dhabi, they have four exploration oil wells that are running as well.
Total investment from the UAE is around $1.3 billion in the last two years.
Gulf News: Peru’s commodity-dependent economy is now set against a background of volatile global markets for copper and textiles. Do you see that impacting Peru’s economic growth for the year?
Jose Beraun: Until now, we don’t see any negative effects but we have to look towards the future and that’s why the priorities of the present government are in the areas of science and technology, education that’s the formation of human resources and industrialization of the country. There is a concern that yes, we cannot be an exporter of commodities forever. That’s why this ASPAA forum gives us the chance to talk about co-operation in different.
Gulf News: In terms of problems with corruption and ease of doing business, how are you addressing such concerns that foreign investors might have?
Jose Beraun: There are specific laws, the Ministry of Interior is taking action regarding the security and regarding corruption it’s a problem dealt with by different government sectors. But the best thing a government can do is create a stable framework for investors. Domestic demand in Peru is growing steadily for example in construction.
Gulf News: What are some of the incentives you are offering to Arab investors coming to Peru?
Jose Beraun: There’s a very clear plus point we’re offering to investors. We give you back in advance two years of VAT if you invest five million dollars at least. In terms of ease of doing business, Peru is the second country in Latin America and the 42nd globally [according to the Doing Business report issued by the World Bank]. For example, it takes three days to set up your company and there’s no restrictions. It doesn’t matter which nationality you are, you have exactly the same treatment as if you were Peruvian so there is no discrimination.
Gulf News: In the light of the Arab Spring, is this a good time to be doing business and encouraging trade or investment with the region?
Jose Beraun: Yes, because don’t forget that our relationship with the Arab world is not only about doing business, it’s about friendship. This is an opportunity for Peru and Latin America to participate and co-operate and share our own regional experience with the events that happened in the Arab world…. Of course, in some places it will take some time to pick up X or Y investment or trade.
Peru’s economy at a glance:
1. GDP growth (2011) = 6.9 %
2. Announced investment projects amount to US$ 35 billion in 2012-2013
3. Peru is forecasted to have the highest growth rate (5.1 percent) and lowest inflation rate (2.8 percent) in South America.
4. Growth of foreign inflows to Peru in May 2012 compared to same period in 2011: 5.8 %
7. Investment contributed 24.1 percent of Peru’s GDP in 2011 and is forecasted to contribute 26 percent to the GDP this year.
8. Foreign direct investment flow in Peru totalled US$ 7.659 million in 2011
Breakdown of Peru’s exports to the world:
Oil and by-products: 11% of Oil
Metallurgy and Iron steel 2.3% and others.
UAE-Peru trade and investment relations:
1. Total bilateral trade in 2011= $14.19 million
2. Total bilateral trade in 2010= $12.67 million
UAE invested US$ 1.35 Billion in Peru held by DP World, IPIC and Abraaj Capital. An estimated US$ 750 Million by DP World, the largest single conrtibutor.
Two UAE companies and one Qatari company are bidding for the greenfield project to build and operate the new Chincheros – Cusco International Airport with estimated investment of $450 million.
Arab-Peru trade relations:
1. Middle East’s exports to Latin American and the Caribbean in 2011:
a) Exports= $12.89 billion
b) Imports= $24.83 billion
c) Trade Balance (deficit)= $11.94 billion
Sources: Trade and Investment Office of Peru in Dubai