Q: Are the policies of Peruvian president Ollanta Humala intended to provide continuity from the pro-business approach of former president Alan Garcia?
A: We focus on consolidating things from the past [while tackling] new challenges. There is continuity in the economic and the microeconomic team, both at the central bank and the finance ministry. There is also continuity in terms of keeping our economy open and pursuing free-trade agreements [FTAs], and in attracting FDI by an adequate legal framework.
What is more, there is further emphasis in terms of tackling social issues, closing the gap between the rural and the [better developed] areas. The main changes can be seen in our emphasis on social inclusion. We also aim to strengthen the performance of some state-owned companies, but in order to do so, we need to strengthen corporate governance and do appropriate pre-investments in these companies.
Q: In the past, Peru experienced clashes between local residents and foreign investors over mining projects. How is this issue being addressed?
A: We are trying to establish a new relationship with the mining industry. We want to be able to reconcile the interests of investors with environmental and social concerns voiced by residents who live near the mining project sites. It is also vital to ensure that these new policies are being pursued via dialogue and respecting contracts and rule of law in general.
Q: You are being described as an 'orthodox free-market economist', and yet one of the focal points of Mr Humala’s presidency is the call for social inclusion. Is it possible to successfully marry these two things?
A: You can be a free-market orthodox economist and still have social inclusion as a priority. I don’t think it is incompatible at all. We have a lot of revenues, but we need to work on the effectiveness of policies and pursue projects that improve the quality of life for everyone. If stability is lacking, both in societal and economical dimension, what is the point of development at all?
[At the same time], I have to say that we are quite concerned about the introduction of non-tariff barriers by some of the countries in the [Latin America] region. I think we should work on furthering regional integration and removing physical barriers by connecting our infrastructure, not on introducing protectionist measures.
Q: Peru’s economy is booming, and the country’s GDP is growing much faster than, for example, Brazil's. Yet the volume of crossborder investments is higher in Brazil, and even in Argentina. Why is that? Is it purely because Argentina and Brazil are much bigger than Peru and therefore have bigger economic potential?
A: Size matters. But I think that businesses are increasingly looking also at countries such as Peru and Colombia, which may not have the size, but have pursued the right policies in order to attract investors. In the case of Peru, there is still a huge potential to be tapped. Of course, there is a lot of interest in the country’s mineral riches, but investment opportunities also exist in many other fields, from the banking sector to high-end textile manufacturing.
Additionally, Peru and Chile are the regional leaders when the number of free trade agreements are concerned. That gives us a strategic position, especially when it comes to exporting products to Asian countries. Now we are also in the midst of negotiating the Trans-Pacific Partnership – an FTA that will have the biggest export potential in the world, especially given that Japan and Canada recently expressed an interest in joining it.