OBG talks to Gladys Triveño, Minister of Production

Interview: Gladys Triveño

What actions are being taken to aid the growth and increase the competitiveness of micro, small and medium-sized enterprises (MSMEs)?

GLADYS TRIVEÑO: The productive segment of the Peruvian economy is 98% MSMEs. Given the size of these firms, and the resulting lack of economies of scale, it is difficult for these businesses to participate fully in the growth we are currently seeing in the economy.

There are three primary challenges to the industrial sector in Peru. The productive segment is relatively small, it is concentrated in and around Lima, and it lacks sophistication. To address the first two, the ministry is currently prioritising and promoting the opening of manufacturing and production businesses. This includes easing licensing procedures along with efforts to establish industrial parks throughout the country, which is also designed to aid in the decentralisation of the sector away from Lima. The key is to create conditions throughout the country such that areas outside of Lima are also attractive for investment.

In terms of sophistication of the sector, we are looking to create incentives that will enable these entities to move up the value chain. The level of innovation in Peru is quite far from where we want it to be. According to the most recent “Global Competitiveness Report” by the World Economic Forum, Peru stands at 117 out of 144 economies in terms of the level of innovation, something that needs to change.

To increase investment in this area, the government currently has a total of PEN1.5bn ($654.9m) in competitive funds directed at innovation and technology. Companies solicit money from these funds, which are then invested in improving their productive processes, driving up productivity, improving competitiveness and enabling them to better take advantage of the various trade agreements Peru has signed. The government has also authorised tax breaks for firms investing in innovation and training for their employees.

Finally, to facilitate further sophistication in the industrial sector, the ministry has announced the creation of an institute of innovation and technology, which will be the primary driver of knowledge transfer to the private sector. This centre will focus on the sectors with the most potential and those most in need of innovation, such as agro-industrial and metallurgical sectors.

How will you overcome concerns that inclusion is simply a way to tax firms in the informal economy?

TRIVEÑO: What we want to do and need to do is to create a system in which informal businesses are not afraid of becoming formal. This does not mean penalising the informal sector or punishing these companies once they formalise. We need to ensure that informal companies see and understand the opportunities available in the formal sector. It is our intent to craft the incentives for the formal sector in such a way that remaining an informal entity is no longer attractive.

The state has adopted a number of programmes that are meant to encourage firms to move into the formal sector. For example, in 2012 the Cómprale a mi Peru project transferred PEN349m ($131.4m) from the state to over 4600 MSMEs. Only companies within the formal sector were eligible, leading a number of entities to formalise to participate. The more we incentivise the formal market, the more the informal segment seeks to formalise, because it makes good business sense.

How will the domestic fishing industry move forward after drastically reduced fishing quotas?

TRIVEÑO: The ocean around Peru is one of the richest in the world, but it is also very susceptible to climactic change and shifting currents. The ministry recently completed a study that made it clear that Peru’s anchovy resource had been over-exploited. While the industry has in the recent past always had quotas, it was because of this over-exploitation that fishing quotas have been reduced. It is essential that we keep our practices sustainable. If the resource ends, the industry ends. The only way to ensure the future growth and success is to ensure that there remain resources to fish.