The UK enjoys a strong bilateral trading relationship with Peru, which continues to flourish. This dynamic and robust economy, the fastest growing in South America over the last 10 years (averaging over 6% since 2002), is becoming an exciting key market for British companies to do business in.
The UK is already a major investor in Peru, with some 20 UK FTSE 100 companies currently having direct investments there, while UK exports have increased by almost 50% since 2005. Nonetheless, we could and should be doing much better. Our government has already cemented its intent to increase its engagement with Peru through a programme of intergovernmental visits. A senior ministerial-led delegation visited the UK at the end of May 2013 to meet hundreds of UK companies to discuss opportunities in Peru, an event reinforced by the visit in July of the Lord Mayor of London and a UK delegation.
Thanks to the actions of the Peruvian government over the past couple of years, prudent macro-economic and free-market policies have gone hand-in-hand to stimulate exports, while a favourable and consistent legal framework has encouraged and protected foreign investment into the country. We are also working closely together on issues which are important for our economies, including climate change, security and sustainable development.
I have no doubt that Peru will play an increasingly important role in British business. However, I also want to see more UK companies joining those that are already making their mark there and grasping the opportunities to work with Peruvian partners in local companies. The recently signed Peru/EU Free Trade Agreement and the UK/Peru Defence Agreement signed in October will open up even more opportunities for UK companies in Peru and in the region. Peru is also one of the easiest countries in the region in which to do business, according to the World Bank’s assessment. Out of 185 countries, the Pacific Alliance countries feature prominently, with Peru ranked 43rd (the second best in the region), alongside Chile at 37th, Colombia at 45th and Mexico at 48th.
While the Peruvian economy is now more modern and diversified than ever before, continued economic growth will create more opportunities for UK companies across a range of sectors, particularly for those supplying the extractive industries. Peru’s mineral reserves account for 30% of the world’s silver and 16% of the world’s copper, plus large amounts of other metals. There are extensive projects totalling over $35bn in the pipeline, creating opportunities for British companies that can provide equipment and services to the sector.
If economic growth continues at the same rate, Peru’s energy needs will increase exponentially over the next 20 years. Peru has pledged that by 2020, 40% of its energy use will come from renewable sources – an underexploited resource in Peru – unlocking partnership opportunities in areas such as hydropower, wind and solar energy generation for UK firms.
In other areas, Peru’s burgeoning oil and gas sector, which is a growing market with new reserve discoveries, expects a further $8.3bn investment in the next three years, boosted by the recent opening of South America’s first liquefied natural gas plant in southern Peru. We welcome the development of Peru’s natural resources, which will bring further investments in power, water, road, rail and ports, and will stimulate its financial services sector, where Peru has established itself as a key market for UK services in Latin America, particularly reinsurance. With an infrastructure deficit estimated at some $37bn, Peru is very keen to attract more investment going forward, especially to help support the development and modernisation of its infrastructure.
The UK and Peru are linked by the past and they also share a vision for the future, a future that will continue to unlock new opportunities, strengthen economic ties between our two countries and above all enable business to set up, flourish and prosper.
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