OBG talks to Javier Illescas, Executive Director, ProInversión

Interview: Javier Illescas

Outside of the mining sector, which is where investment has so far been concentrated, what opportunities exist for international investors?

JAVIER ILLESCAS: Peru has many other opportunities available beyond traditional mining investments, though that sector is expected to continue to see the largest share of investments in the coming years. For example, the textile and industrial sectors have grown significantly over the past few years, as demand for Peruvian exports has risen around the world. We also see significant opportunities for investment in the chemicals, agriculture, fishing, forestry and tourism sectors, as well as the metallurgical industry.

ProInversión currently has a portfolio of around 30 projects with an estimated total value of higher than $15bn that are set to be awarded between 2014 and 2015. The largest and most significant of these projects is the addition of a second line to the Lima metro system, which will be the country’s first subterranean line. The works are expected to cost around $5.7bn altogether upon completion. This is the second of five lines that are due to be awarded in the coming years. Additionally, ProInversión is currently managing projects across numerous other sectors, including road and airport infrastructure, telecommunications, sanitation, energy and hydraulic works for irrigation.

Spain, the UK and the US continue to be Peru’s primary sources of foreign investment. What is being done to attract interest from other regions?

ILLESCAS: Together with Peru’s other organisations and agencies, we have been particularly pro-active during the past year, making numerous trips to the US, Europe, Asia and the Middle East already, and we expect many more in the coming months. These events feature not only presentations, but also bilateral meetings with potential investors for more in-depth discussions about projects and opportunities.

In Asia, we see a lot of potential for investment from China, Japan and Korea. From Europe we are hoping to attract more investment from countries such as Germany, France, the UK and Nordic countries. Even the US, which is one of our major sources of investment, has little presence in any sector beyond mining, so we are also seeking to expand the scope of investments for the investors that are already here.

As a tool to promote such opportunities, Peru is pursuing a number of agreements and partnerships with countries and various international organisations. During an early 2013 visit to Peru by the Emir of Qatar, we signed an agreement that will help our foreign ministries to work more closely with each other and to identify joint developmental interests and investment opportunities. We see plenty of potential for agreements of this kind with other partners.

To what extent is promoting social inclusion a purely domestic affair? How can external players contribute to these goals?

ILLESCAS: Inclusive development is of course primarily the government’s responsibility, but from ProInversión’s perspective there are a number of opportunities for foreign investors to contribute as well, especially in terms of new investments in socially minded sectors. The investment potential of health and education have been overlooked in the past, as investors have primarily been drawn to traditional sectors such as infrastructure and energy, but this is slowly changing over time as opportunities expand.

The Ministry of Health is looking to form public-private partnerships for the rehabilitation of a number of its health facilities, and we are working with them to handle the concessions for these projects. Additionally, the Ministry of Development and Social Inclusion is examining the execution of energy, telecommunications, sanitation and transport projects through the Fund for Economic Inclusion in Rural Areas and with the intervention of private investors. We hope to see a range of investment packages in rural areas in the near to medium term.