Peru consistently ranks among Latin America’s best performing economies. But last year, the country endured not only the pandemic, but also political turmoil that culminated in the appointment of three presidents within one week. Minister of foreign trade and tourism, Claudia Cornejo, tells fDi how the Peruvian government is supporting the country’s recovery and plans to get tourists back.
Q: How challenging was it to attract FDI in 2020? What’s the full-year figure?
A: Last year was incredibly difficult for the whole world and Peru was no exception. We received $3.1bn in foreign direct investment (FDI), down from $8.9bn the year prior. But we remain optimistic because pre-pandemic inflows were very promising. In 2018, we had $6.5bn and then $8.9bn in 2019. We believe Peru has the conditions necessary to return to this level of growth.
Q: What will drive this recovery?
A: The pandemic has made us question everything and made us more active in creating measures to get the economy back on track. The government has introduced monetary and fiscal measures, such as tax incentives and low interest rates on loans, to increase money supply and boost demand. We expect increased demand will enhance productivity and attract more FDI as a result.
Last December, we ratified our free-trade agreement with the UK, which should help our recovery as it is our main source of FDI.
Q: Mining is still the major recipient of FDI. Which other sectors have strong investment potential?
A: First, I should say that our mining industry is very robust and we are among the biggest producers of silver, copper and gold. However there are other sectors with a lot of potential — tourism is one of them. In 2019, tourism FDI totalled $83m and we have now launched a national tourism recovery plan.
Agribusiness is very important and last year saw exports grow 6.7%, which is remarkable as our economy took a hit. The government is investing in textiles, encouraging the tech sector and sees a lot of potential in fishing.
Q: Tourism is a key driver of Peru’s economy. What is the national tourism recovery plan?
A: It is one of the industries that has suffered the most, and could take up to five years for every country to return to 2019’s numbers. We have designed a three-year recovery strategy that promotes economic activity and sustainable development, and incorporates health and safety measures as we believe this trend will stay with us for a long time.
We have received the World Travel and Tourism Council’s ‘Safe Travels’ certification for Machu Picchu, Cusco and Lima, and we aim to have at least 42 other destinations certified this year. Something particular about Peru which we will promote is that our cultural destinations are outdoors — this will be important for the industry in the coming years.
Q: Peru’s government has been very unstable in recent years. How has this affected foreign investment?
A: There’s no doubt that political stability has an impact on various social matters, including the economy. But even through these difficult times, we have been able to grow FDI — in 2019 it was up 37%. Our economic openness, solid macroeconomic foundations and country risk being the lowest in the region makes us believe FDI inflows will come back robustly this year.
Q: How do you plan to improve the investment climate?
A: Our investment policy has to guarantee investors a predictable legal framework that enables them to do business in Peru. We are also thinking about competitiveness and productivity reforms, following the 2019 plan which aimed to create conditions needed for a more productive business climate. Also, the Ministry of Foreign Trade and Tourism recently created a unit within its promotion agency, PromPerú, which is dedicated to attracting FDI.
This article first appeared in the April/May print edition of fDi Intelligence. View a digital edition of the magazine here.