Peru’s Booming Sectors: Recent Developments Increased the Opportunities for Dutch Companies in Peru
Peru’s economy is booming the past years, which was one of the reasons Peru is an interesting country for such a project as IFP. Peru has experienced an uninterrupted average growth of 4.6% over the last 20 years, with the expectation that this growth will continue. This is higher than all surrounding countries and more than double the average growth in Latin America. For this reason, there is a great
need for knowledge and technology, which makes it interesting for Dutch companies who are leading in this business to invest in Peru.
This strong economic growth and careful financial management plus a free trade agreement with the European Union makes Peru a very attractive market for investment. The Netherlands is among the top 5 foreign investors in Peru with an amount of more than 1.5 billion euros per year (6.1% of FDI). Lima is the economic center of Peru, 50.8% of the economic activity takes place here, while about 32% of
the population lives in Lima. Lima is located at the coast, which makes it very interesting for import and export of goods.
Because of its multitude of climate zones and differences in altitude Peru possesses the characteristics to produce a wide range of agri-cultural products. The last 20 years, Peru has experienced an explosive growth in its agricultural sector. This development is mainly driven by the increasing popularity of ‘superfoods’, of which avocado is the perfect example.
The current expectations are a steadily increasing global demand for food products, paired with future production increases in Peru. This offers great opportunities for small and medium producers to offer niche products or products with an ‘origin’. This development will furthermore increase the potential export market for sophisticated Dutch technologies and knowledge in the agriculture sector.
Peru is one of the world’s biggest producers of base and precious metals worldwide. Currently it is the second largest producer of copper in the world and stands amongst the top four producers for silver, lead, zinc, tin, and molybdenum. Despite the price volatility of minerals, investments in the mining sector are key to the country’s economic growth. This success can partly be attributed to the attractive
legal and tax regime designed to support the industry.
The natural phenomena El Niño and La Niña have far-reaching consequences for the level of water-related risk in the country. Both from floods and droughts. Even in non-extreme water years, mismanagement of water can result in substantial economic losses for the country. According to research by the Peruvian ANA (National Water Authority), every dollar spent on flood prevention could save on average 13 dollars of reconstruction costs. In this respect Peru almost doubles the UN average.
To guide reconstruction projects, as well as to prevent future disasters, the Reconstruction with Changes Authority was created. The reconstruction authority has an initial budget of 7,8 billion USD, and expressed its interest in contracting the Dutch. Considering the Dutch expertise in water management and its long history in successfully dealing with different water issues. The relationship between the
Netherlands and Peru is excellent considering the water sector, thanks to various visits of Dutch Water Ambassador Henk Ovink. Mr. Ovink remains in direct contact with the Peruvian president and the reconstruction authority.
In conclusion, there are many good reasons to invest in Peru. Are you working at a company or do you know a company that could be interested to join our International Financial Program? Contact us! We provide tailor made professional consultancy services against a cost price.
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