2020 Opportunities for Investment in Peru
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Solid macroeconomic foundations make investing in Peru an attractive opportunity. The nation’s debt and economic outlook have received stable ratings from the main risk rating agencies. On top of that, one of the main economic drivers, private consumption, is expected to accelerate its growth to 3.9% in 2020. Investment in Peru will benefit from the country’s stability and positive outlook.
The economy has remained stable and is expected to reach a growth rate of 4% in 2020; future prospects are even more positive, expecting to reach a 5% growth by 2023.
Peru is a country with promising industries and the government has been working to provide the appropriate environment for investment. Companies considering their expansion options for the year 2020 must start planning their entry strategies and identifying their target market.
We list four high-performing sectors that have significant potential for 2020.
Agribusiness investment in Peru for 2020
In the first 2 months of 2019, agricultural goods reached a total of US$1.327 million in exports, representing an 18% increase compared to the same period last year.
Peru’s geographical biodiversity and a clutch of 20 Free Trade Agreements (FTAs) are a great opportunity to meet the growing world demand for organic products and superfoods. Furthermore, the optimization of FTAs is on the agenda for the year 2020.
Peru has a great reputation internationally for its agricultural products. The country is known for the richness of its natural resources, and in the first 2 months of 2019, agricultural goods reached a total of US$1.327 million in exports, representing an 18% increase compared to the same period last year.
Additionally, the government has put effort into promoting Peruvian superfoods internationally. For instance, Peru participated in the ‘Fruit Logistica’ fair held in Germany, which introduced Peruvian agricultural goods to people from around 130 countries. As detailed, Peru’s strong agro-industry reputation promotes its products internationally.
Potential for higher distribution levels
Peruvian biodiversity gives life to countless agribusiness opportunities that are yet to be fully explored. Currently, the main products exported are grapes, blueberries, mangoes, unroasted coffee, and asparagus. However, Peru has the potential to become a more prominent supplier of quinoa, maca, yacon, chestnuts, sacha inchi, giant corn (from Cusco), purple corn, custard apple, soursop, and tangerine, among others.
An important variable in the Peruvian agribusiness industry is the government. Authorities are working to boost agricultural production in the country and have many irrigation projects underway to achieve that. Chavimochic III and Olmos, for example, are set to irrigate thousands of hectares once finalized.
Investment in Peru will open doors for your product to access millions of people all over the world. As of now, Peru’s trade agreements allow access to customers in America, Europe, and Asia.
Thanks to Peruvian biodiversity, openness to the world and governments’ irrigation projects, agribusiness in Peru is an attractive investment.
Cannabis in Peru
Since Peru legalized the use of cannabis for medical purposes, Law 30681, investments have begun to flow into the country at greater volumes.
There are many variables that make cannabis production in Peru appealing. Cannabis cultivation has low production costs, as land is cheaper in Peru as compared to America. Moreover, profit generation performance in this booming industry is astounding.
According to market observers, one hectare of land cultivated with cannabis could be worth 12 times its original investment, from $120,000 to $1.5 million. On top of that, the availability of land for cannabis production is expected to increase in the next 5 years.
Peru is positioned as a top country to invest in cannabis production given the support from government and competitive profit prospects.
Technology is taking over
Peruvian firms and public institutions are turning to technology to innovate their processes and offerings to consumers, and the government is committed to increasing innovative investment in Peru.
Thanks to the digitalization era, the local business climate is becoming increasingly aware of the benefits and positive impacts of technology.
In Peru, the Ministry of Production has been running the ‘Startup Peru contest’ in which they select more than 80 startups to provide them with seed funds. This project has livened up the startup ecosystem in Peru, making locals more comfortable with innovation in science and technology. Additionally, although below its potential, the government has increased the investment in science, innovation, and tech to 0.12%.
We explain two technologies which have great potential for investment in 2020
High Fintech Adoption
As of 2019, there are over 30 fintech companies focused on US currency exchange in Peru.
One of the technologies with an overwhelmingly positive reception is financial technology, known as ‘fintech’. The impact of fintech businesses has generated great competition. Banks have doubled their efforts and invested to develop their own apps to offer improved financial services to customers.
As of 2019, there are over 30 fintech companies focused on US currency exchange in Peru. Other successful startups are offering easy and secure credit card payment at vast businesses. However, the scope of services is broader; fintech services in Peru include remittance, leasing, currency exchange, etc. Financial technology has received a positive reception and will continue to expand for the year 2020.
Services such as financial management, accounting services, fraud identifiers, and others, are yet to be introduced in Peru, which signifies that there is room for innovation in the financial solution space. Investing in innovative fintech companies has great potential for 2020 as the current range of fintech services isn’t quite extensive yet.
Another important technology to keep an eye on for investment in Peru is cloud technology. Businesses are willing to invest in tools and solutions that offer them greater agility in their operations.
Peruvian firms have been accessing services from public clouds that allow them to load data and automate their functions. This technology is strongly linked with agile methodology, which is also in high demand, opening an opportunity for consultants that have expertise in the area.
Demand in fintech, cloud technology, and agile methodology expertise make technology an appealing investment in Peru.
2020 Infrastructure Projects for Investment in Peru
Infrastructure investment in Peru has a portfolio of projects that amount to US$10.3 million until 2021.
The infrastructure gap in Peru is a priority area for the government, which has passed projects to address the country’s needs.
Peru has set a portfolio of infrastructure projects that amount to US$10.3 million until 2021. In 2019, 16 projects will be granted at a value of US$2.466 million. Additionally, the portfolio over the 2020-2021 period includes 42 infrastructure projects valued at US$7.861 million. These projects include a variety of sectors that have different investment targets.
Breakdown by sector
The transportation portfolio has an extensive list of projects. This sector will tender US$2.513 million for the “Peripheral Highway Beltway” and “Longitudinal of the Andes – Section 4” projects. On the other hand, the education sector will tender US$400 million through projects, such as “COAR Center”, “Metropolitan CER Lima”, and “CER Ate and San Juan de Lurigancho”.
Infrastructure in the Health sector is set to tender for the “New Militar Hospital”, “Huaycán Hospital”, “INA Essalud Lima”, “Hipólito Unanue Hospital”, “Apoyo III–Sullana Hospital” and “Cayetano Heredia Hospital”. Similarly, the Sanitation sector foresees projects for US$1.808 million through “ Cabecera Works”, “PTAR Huaráz”, “PTAR Tarapoto”, ad more. To finalize, Irrigation projects are to tender for US$1.139 million.
The government has ambitious plans to increase Peru’s infrastructure competitiveness. The President of the Association for the Promotion of National Infrastructure, Leonie Roca, stated that to this date, the government has granted a value of US$9.771 million in infrastructure projects, of which 63.7% has been completed.
Bid on Peru’s infrastructure projects
Infrastructure needs are fuelling appealing investment opportunities, such as bidding opportunities. While the above-detailed projects are set for the 2021 period, the infrastructure development plan expands out to 2025, which means more bidding opportunities will be available in the future.
Source: Biz Latin Hub
Post available in: English