A ‘profound and far-reaching change of attitude’ is how the government of Peru plans to reinvigorate the economy, develop foreign trade and attract investment. The country is entering a new development phase to reduce poverty and make better use of its rich, yet largely untapped, resources.
Minister of foreign affairs Diego Garcia-Sayan says the government has been working hard to restore transparency and public confidence in the country’s institutions. A new investment promotion strategy has been devised, “revitalizing the possibilities of integrating us in the global market for international investment, especially from Europe.”

The minister says farming development is a priority. “We have an agricultural area larger than the size of the entire country of Chile, yet they produce so much more than we do.”
Another key element in the government‘s strategy is decentralization as most foreign direct investment (FDI) has been concentrated in the capital, Lima. “The rest of the country has vast amounts of potential and we will be ensuring the provision of improved infrastructure to lure investors to other parts of Peru,” he says.
“Europe is very important to our strategies of investment and development. Spanish firms that have invested in Peru have done very well, and these are examples we want to show to the rest of Europe, as we need more of these quality investments.”

Spain is the biggest investor in Peru, representing around 24 per cent of all FDI, followed by the UK and U.S. Spanish ambassador to Peru Carlos Diaz Valcarcel says: “Spain has been crucial in many sectors such as telecommunications, banking and energy, and companies have shown that you can make a very good return in Peru. Of the 300 largest firms in Peru, 26 are Spanish, generating more than seven percent of gross domestic product.”
The ambassador says tourism will be vital to development: “It is a great area for investment. Peru is a very varied country, from its jungles and mountains to its colonial towns and pre-Columbian ruins. The Spanish government has approved one million euros ($873,000) for projects in the tourism industry and that is a demonstration of our confidence in the country.”

A good example of the potential for investment in Peru can be found in local company Industrias Añaños. In the early 1990s, the firm launched a new cut-price soft drink, Kola Real, in direct competition to the well-known brand names. Today, Kola Real has 16-20 percent of the market.
Chairman Angel Añaños Jeri says the company captured this market share simply because it targeted the people who were ignored by the major brands – the poor. He says: “I agree that 75 per cent of the market is poor, but if you can produce at the right price you open up a huge market for yourself, and that is what we did.”

The rising fortunes of Industrias Añaños enabled it to open plants in Venezuela and Ecuador. “In just one year in Venezuela we managed to achieve what took us 13 years in Peru,” says Mr Añaños.
“Peru should position itself as a country of opportunity – this is a great country to invest in. As we say, there is a market of 20 million people who have been forgotten about, and even though they are poor they need products just like rich people – if what they buy is at the right price.”
The government in Lima recognizes it faces fierce competition from other Latin American countries, all desperate for FDI. “Peru’s problem is that, business-wise, it is pretty much at the bottom of people’s lists of places to go,” says Gareth Hughes, president of the British Peruvian Chamber of Commerce.
“President Toledo has promi-sed a lot of things and all cost a lot of money. But in Peru there are always surprises and changes and Peruvians are very adept at getting on with life.”