WHY INVEST IN PERU? Carlos Herrera Perret Investor Services Director PROINVERSION

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1 WHY INVEST IN PERU? Carlos Herrera Perret Investor Services Director PROINVERSION

2 ABOUT PROINVERSION The Private Investment Agency of Peru PROINVERSIÓN, is a public entity under the Ministry of Economy and Finance Its Steering Council is composed of 5 Ministers of State and head by the Minister of Economy. PROINVERSION implements national policy on private investment. It encourages the participation of private investments in infrastructure works and utilities, as well as assets, projects and State-owned companies under public and private initiatives. It provides information and services to investors during the execution and development of their investments, especially in investments related to the promotion processes in charge of PROINVERSIÓN. It acts as the National Competent Entity for registration of foreign investments, subscription of juridical stability agreements and contracts for anticipated recovery of VAT. Its scope is nationwide and abroad it acts with the support of the Peruvian diplomatic and commercial missions.

3 WHY INVEST IN PERU? 1. Internationally acknowledged macroeconomic stability 2. Friendly investment environment 3. Open trade and market access policy

4 1. MACROECONOMIC SOUNDNESS Peru among the fastest growing economies in the world World s GDP (Var. Accrued.%) Source: IMF

5 1. MACROECONOMIC SOUNDNESS Peru will continue leading regional growth Peru Gross Domestic Product (US$ Million ) Forecast - LATAM: Real GDP Average annual % variation) Peru Colombia Chile Brazil Argentina Mexico * 2012** Venezuela 3.0 Source: Central Reserve Bank of Peru, Ministry of Economy and Finance, IMF. * Preliminary figures ** Estimated figures

6 1. MACROECONOMIC SOUNDNESS The responsible economic policy granted Peru the investment grade and investors confidence Investment grade 1 Latin America benchmarking Countries as priority destinations for FDI (World Ranking among 21 countries) País S&P Fitch Moody s Chile A+ A+ Aa3 Brazil Brasil (Baa2) 3 4 Dropped 1 position Mexico BBB BBB Baa1 Brazil BBB- BBB Baa2 Peru BBB BBB Baa3 Peru Peru (Baa3) Improved 5 positions Colombia BBB- BBB- Baa3 Bolivia B+ B+ B1 Venezuela B+ B+ B2 Chile Chile (Aa3) Without changes Argentina B B B3 Ecuador B- B- Caa Source: Standard & Poor`s, Fitch Ratings y Moody s. Updated to Sept. 1 st, 2011 Source: UNCTAD WIR 2011

7 2. FRIENDLY INVESTMENT ENVIRONMENT Peru offers a favorable legal framework for foreign investment Non discriminatory treatment: Foreign investors receive the same treatment as local investors. Unrestrictive access to most economic sectors *. Free transfer of capital. Free competition. Guarantee for Private Property. Freedom to purchase stocks from locals. Freedom to access internal and external credit. Freedom to pay royalties. Network of investments agreements and member of ICSID and MIGA. Peru participates in the Investment Committee of the Organisation for Economic Co-operation and Development (OECD) It promotes the implementation of the Guidelines for Multinational Enterprises. *Investments that require authorization: Located within 50 km in the frontier line and those destined to arms, ammunitions and explosive. Likewise, a principal local partner for investments in radio and television as well as in air transport is required.

8 3. OPEN TRADE AND MARKET ACCESS POLICY Working to become a globalized economy, with preferential access to the world s largest markets These countries stand for enlarged market of over 4 billion people with a joint GDP over US$ 56 billion Also represent 96% of Peruvian exports to the world Agreements in force Agreements to become effective Agreements under negotiations

9 Peru Investment opportunities

10 Peru promotes private investments to foster competitiveness and sustainable development by encouraging PPP in infrastructure projects as well as investments that make possible the country reaches its productive development

11 INVESTMENT OPPORTUNITIES IN A WIDE RANGE OF ACTIVITIES

12 GENERAL FLOW OF A PPP PROCESS INCORPORATION TO PROMOTION PROCESS PROMOTION PLAN: GENERAL DESIGN OF THE PROCESS CALL FOR BIDS AND TERMS: RULES OF THE GAME QUESTIONS & ANSWERS SHORT-LISTING OF BIDDERS EVALUATION OF TECHNICAL PROPOSALS CONTRACT: OBLIGATIONS OF THE PARTIES SELECTION OF THE BEST ECONOMIC PROPOSAL SUGGESTIONS AND/OR COMMENTS BY BIDDERS/ENTITIES ARE COLLECTED AWARD CLOSING DATE (SIGNING THE CONTRACT)

13 PORTFOLIO PROJECTS in the short term

14 ONGOING PROJECTS Private investment promotion process up to December projects SECTOR N PROJECTS ESTIMATED INVESTMENT (US$ MILLION)* Agriculture Energy Hydrocarbons Ports and Navigability Land Transport Telecommunication Tourism Culture Capital Markets 2 To be defined Mining 2 To be defined Sanitation Total 22 2,424.3 *VAT is not included, except tourism and culture sectors. In culture sector the estimated cost correspond to operation and maintenance

15 AGRICULTURE AND IRRIGATION PROJECTS 1 PROJECTS 1. Chavimochic irrigation project (III Stage) 2 Comprehensive Choclococha project CURRENT STATUS ESTIMATED INVESTMENT US$ MILLION* To be called To be called PLANNED AWARD DATE Second half of the year 2012 Second half of the year Majes Siguas project Land Sale in Majes Call for tender was made 4.2 Second half of the year 2012 * VAT not included. 2 3

16 ENERGY PROJECTS SECTOR / PROJECT TRANSMISSION LINES CURRENT STATUS ESTIMATED INVESTMENT US$ MILLION PLANNED AWARD DATE 1. Moyobamba Yurimaguas - Nauta-Iquitos Transmission Line Callfor tender was made 330 Secondhalf of the year Cajamarca Norte - Carhuaquero 220 kv Transmission Line and associated substations. Callfor tender was made 130 Firsthalf of the year Machu Picchu Quencoro Onocora -Tintaya 220 Kv Transmission Line Callfor tender was made 70 Secondhalf of the year 2012 THERMAL POWER STATION 4. Stand-by Reserve: Mw Pucallpa plant and Mw Puerto Maldonado plant Callfor tender was made 55 Firsthalf of the year 2012 *VAT not included

17 HYDROCARBONS PROJECTS PORTFOLIO PROJECT 1. Supply System of LPG for Lima and Callao CURRENT STATUS Call for tender was made ESTIMATED INVESTMENT US$ MILLION* 90 PLANNED AWARD DATE Second half of the year Supply system of LNG for domestic market To be called 400** Second half of the year Distribution System of Natural Gas for the center north To be called 100** Second half of the year Distribution system of natural gas for the South * VAT not included. ** Preliminary investment amounts. To be called 100** Second half of the year

18 PORT AND LAND TRANSPORT PROJECTS PROJECT PORT PROJECT CURRENT STATUS ESTIMATED INVESTMENT US$ MILLION* PLANNED AWARD DATE Upgrading and maintenance of navigability conditions of Rivers Huallaga, Ucayali, Marañon and Amazonas To be called Second half of the year 2012 LAND TRANSPORT PROJECT Panamericana Sur highway: Ica border with Chile: Section Dt. Quilca Dt. Arequipa; Dt. Matarani Dt. Moquegua; Dt. Ilo Tacna La Concordia Callfor tender was made 50.8 Secondhalf of the year 2012 * VAT not included.

19 TOURIST, CULTURE AND SANITATION PROJECTS SECTOR/ PROJECT TOURIST PROJECT CURRENT STATUS 1. Kuelap Cable car To be called 10.6* CULTURE PROJECT 2. Management of the National Grand Theater SANITATION PROJECT 3. Operation and maintenance, rehabilitation and improvement of 16 SEDAPAL WWTP * Vatincluded To be called 95 Private Initiative Declared of interest ESTIMATED PLANNED INVESTMENT AWARD DATE US$ MILLION * 35.6 Second half of the year 2012 First half of the year 2012 Second half of the year 2012

20 TELECOMMUNICATION PROJECTS PORTFOLIO SECTOR / PROJECT CURRENT STATUS ESTIMATED INVESTMENT US$ MILLION PLANNED AWARD DATE MHz and MHz Bands in Lima and Callao; and, MHz and MHz Bands for the rest of the country. The call for tender was made Firsthalf of the year MHz and MHz Band Nationwide The call for tender was made Under evaluation Second half of the year * VAT not included.

21 CAPITAL MARKET AND MINING PROJECTS SECTOR/ PROJECT CAPITA MARKET PROJECTS CURRENT STATUS ESTIMATED INVESTMENT US$ MILLION ESTIMATED AWARD DATE 2 1 Sale of shares held by FONAFE (Xtrata Las Bambas, Telefonica S.A., Clinica Internacional, Norsac, Telefonica del Peru S.A.A. and Xtrata Tintaya companies) To be called Under evaluation First half of the year 2012 Sale of shares of Cayalti, Pomalca and Tuman To be called Under evaluation First half of the year 2012 MINING PROJECTS 1. Mining prospects of Huayday Ambara To be called Under evaluation Second half of the year Concession of Remaining Michiquillay Project To be called Under evaluation Second half of the year 2012

22 OTHER INVESTMENT OPPORTUNITIES SECTOR Other projects N PROJECTS ESTIMATED INVESTMENT (US$ MILLION)* Airport Agriculture 3 1, Energy Hydrocarbons 3 To be defined Railway 3 To be defined Real estate Ports Telecommunications 1 To be defined Tourism Land Transport 8 To be defined Capital market 1 To be defined Mining 4 To be defined Sanitation 1 To be defines Total 35 * VAT is not included, except tourism sector

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