Jeff Bezos, founder of Amazon, has visited Peru. This has reopened the debate about the opportunities the country has for major investors. We asked three entrepreneurs and executives about the country’s strengths. They are Alonso Rey, Alfonso Bustamante, and Felipe Ortiz de Zevallos.
One of the world’s richest people and the founder of Amazon landed in Peru last week. Although Jeff Bezos was not on business but rather on vacation, the visit of the North American magnate has been a boon for investment expectations. Bezos enjoyed his visit to the Andean country and was able to tour Lima’s gastronomy, which included, among others, Central, La Perlita, and Mayta, and did a tasting in the Pisco Valley.
Bezos’ arrival is not the first visit by a world-famous technology-related businessman to Peru. In 2016, Mark Zuckerberg did it, and last year, the country received TikTok’s CEO Shou Zi Chew. However, Bezos’ presence has reopened the debate about the opportunities in the country to receive companies as big as the e-commerce colossus. For some time now, Peru has been described as a blessed country, not only for its landscapes and strategic location, but also for having raw materials capable of attracting the largest companies in the world. It is a fact that Peru has investment potential.
Macro Stability and an Untapped Promise
Years ago, Peru was not just a country with investment potential but “the star of the region” due to its high growth rates. Currently, growth is around 3% but inflation is kept within the target range (between 1% and 3%), the currency is solid thanks to the Central Reserve Bank, and fiscal stability has been maintained (although with the risk of a change if populist policies are extended). These fundamentals reinforce the idea that Peru has investment potential that remains underexplored.
In order to better understand these opportunities, this blog post brings together the opinions of three experts who have a very clear vision about the doors that Peru should open in order to be able to attract the largest investors in the world. They are the former president of the Confederation of Private Business Institutions (Confiep), Alfonso Bustamante Canny; the current ComexPerú president, Alonso Rey Bustamante, and Apoyo founder, Felipe Ortiz de Zevallos.
Peru has investment potential in several sectors
In the opinion of Felipe Ortiz de Zevallos, the rise in international metal prices places mining at the center of the country’s investment potential. He highlighted the need to advance with projects such as Michiquillay and La Granja, in Cajamarca, and Zafranal, in Arequipa, which would drive growth in those regions. These projects would focus on copper, whose demand will increase in the world due to the energy transition.
Alfonso Bustamante Canny put the energy sector on the table in connection with the demand that data centers will require. “Artificial intelligence is taking over the agendas of governments and business leaders, but electricity is the bottleneck,” he said. In this regard, he pointed out that Peru has 8,000 megawatts of efficient energy installed, plus 4,000 more in backup mode.
Alonso Rey Bustamante agreed on the potential of mining and energy, and also signaled in agriculture. “We are a world producer of avocado, grapes, blueberries, and cocoa, among others. With the irrigation projects that are underway, we can expand the lands, increase planting, and have more industrial exports,” he said.
What Peru should do to attract the largest investors
Private investment is key to fostering economic growth, job creation, and poverty reduction in Peru. However, to be able to attract the largest companies in the world, reforms are required. The three experts agreed that the State must simplify administrative procedures for investment and business creation. If the legal certainty and stability are not there, capital will go to other markets.
“The State has to be more agile and must run at the same speed as private investment,” said the ComexPerú president. In this sense, he asked for more digitalization, transmission lines, better roads, and access to the internet countrywide. “The country is spending public money in ways that we do not agree with, like keeping inefficient state companies alive, when those same resources could be used to close the infrastructure gaps. We cannot tell Amazon that the construction of a facility in Peru takes four years and 200 procedures”, he added.
Felipe Ortiz de Zevallos warned about political unpredictability as another threat. He referred to the prediction markets in the world, where people do not bet on elections in Peru because there are so many candidates that no one knows what may happen. In his opinion, this political uncertainty makes confidence take a back seat and investment over the long term is undermined.
Alfonso Bustamante said that it is necessary to improve infrastructure but at the same time advance in the reform of the judicial system, which is “unpredictable” and not able to administer justice.
A lack of security and problems with governance
Rising violence has been one of the clearest stains on the country’s investment attractiveness in recent times. Extortion, violent crimes, and illegal mining have become obstacles to growth. On that subject, Alfonso Bustamante warned that extending the Comprehensive Mining Formalization Registry (Reinfo) would be sending a negative signal to formal investors. Instead, he called for tougher requirements that take into account not only the environmental and occupational safety standards.
Alonso Rey said that the State has to deliver four basic services to the population: security, health, education, and justice. “We are not doing well in any of the four, which is not the case with the countries with which we compete: Argentina, Bolivia, Ecuador, and Chile,” he said. “They are also after the foreign investment we are looking for,” he added.
Felipe Ortiz de Zevallos agreed that public security should be a basic task of the State and that fighting corruption is also essential. The businessman explained that high-profile visitors like Bezos require large security contingents in Peru, which they would not need in Costa Rica or Uruguay. “We are world champions in the culinary arts, we have some bad spots on security and on integrity. On the other hand, there are very good signals: we have been the ones who have advanced the most in the construction of roads in the last decade,” he said.
The key role of the Port of Chancay
The announcement of the Port of Chancay has placed Peru once again in the international spotlight. “It is the great central piece that will strengthen the country’s infrastructure base, and with that, we should take advantage,” said Ortiz de Zevallos. Alonso Rey said that to be able to take full advantage of it, roads with fast access times and a proactive attitude in the search for investment are needed. Alfonso Bustamante added that it is necessary to eliminate logistical bottlenecks around the port for the project to have a significant impact.
What about the Peruvian investment potential?
Felipe Ortiz de Zevallos summarized that a country can attract investment, not by the size of the companies that can arrive, but by the size of its market, stability and governance, infrastructure, talent, how easy it is to do business, or the incentives. “The situation is good in terms of macroeconomic stability, which is extraordinary for Peru, but we have challenges that are not being fully addressed, such as the informal economy, the inefficient State, and the sometimes sluggish bureaucracy,” he said.
Alonso Rey Bustamante was categorical that in Peru, the State has not shown the required willingness to support private investment and saw an opportunity in data centers with renewable energies. “If we have the energy, we should have the containers in place for the data centers; we have the place. The call is to a bit of deregulation, to eliminate some absurdly expensive and unproductive public holidays that close production for four days a year, do not generate tax revenue, but take away productivity,” he added.
Alfonso Bustamante Canny concluded, saying that Peru has investment potential that is extraordinary, and which nobody in the world has. “I don’t know any country that has as many possibilities as Peru. It’s a shame that this has been wasted because of some ineptitude,” he said.