INVESTMENT OPPORTUNITIES IN IN PERU May 2007 PERU

INVESTMENT OPPORTUNITIES IN IN PERU May 2007

PERU OFFERS: Maintaining the basic macroeconomic equilibriums Ø Inflation between 1, 5% and 3, 8% in the last 7 years. Ø Fiscal Surplus of 2% forecasted for 2006. An economy, working within the globalization process and with access to regional commercial blocks. Stable and favorable investment climate. Investment policies based on international principles. GDP Growth of 8% for 2006 and expected to be close to 8% for the next years. CAN, APEC, Mercosur, European Union and the United States of America with annual commercial exchange greater than US$ 38 600 MM. Legal Stability Agreements. 32 International Investment Agreements.

Investment plays an important role in the country’s Economic Growth and signals a promising future Source: Central Reserve Bank of Peru, National Institute of Statistic and Information and SUNAT:

Sustainable economic growth with annual forecasted rate greater than 8% Peru 8 8, 03 (Annual variation %) GDP Growth 6, 4 6 5, 2 3, 9 4 Developed 2 World 0 80 82 84 86 88 90 92 94 96 Source: International Monetary Fund and the Central Reserve Bank of Peru. *Forecasted by Central Reserve Bank of Peru (9 th February 2007), Ministry of Economy and Finance and the National Institute of Statistic and Information. 98 00 02 04 06

Annual Exports growth greater than 30% Accompanied by private investment growth (average annual % variation) 23 750 22 000 25. 0 0, 7 0, 6 17 336 0, 5 17 000 6 955 7 026 7 714 7 000 9 090 41% 35% 37% 1% 2000 2001 0, 3 0, 2 18% 2 000 0, 1 10% 0 2002 2003 Exports in millons US$" 2004 20. 0 Private Investment 15. 0 0, 4 12 809 12 000 Private Investment grew 20, 1% in 2006* 2005 10. 0 5. 0 0. 0 2006 % Exports Growth (base 2000)" -5. 0 Source: Central Reserve Bank of Peru. * Forecasted 06 05 04 03 02 01 -10. 0

Rise in the commercial exchange Increase in the imports of capital Goods (Millions of US$) ( Millions of US$) Capital goods for the Industry Transport Equipment Others Source: Central Reserve Bank of Peru.

Peru is progressively reducing its fiscal deficit (% of GDP) By increasing its central government tax revenues 2, 5 2, 0 1, 5 1, 0 0, 5 0. 0 0, 0 -0, 5 -0, 4 -1, 0 -1, 5 -1, 1 -2, 0 -1, 7 -2, 5 -2, 3 -3, 0 -3, 5 -3, 3 2000 2001 2002 2003 20042005 2006 2007* Source Central Reserve Bank of Peru. * Forecasted by the Ministry of Economics and Finance Source: SUNAT

The careful and responsible management of our economic program has allowed us to keep our country risk index among the lowest in the region. JP Morgan Index EMBI+** (Milions of dollars Net International Reserves With increasing Net International Reserves that represent more than 12 months of imports Updated 17 April, 2007 Source: Central Reserve Bank of Peru. Source: Bloomberg

Just one step away from the Investment Grade S&P/ Moody's Characterstic Fitch Investment Grade Peru close to the investment grade AAA AA+ AA AAA+ A ABBB+ BBBBB+ BB BBB+ B BCCC+ CCC- Aaa Aa 1 Aa 2 Aa 3 A 1 A 2 A 3 Baa 1 Baa 2 Baa 3 Ba 1 Ba 2 Ba 3 B 1 B 2 B 3 Caa 1 Caa 2 Caa 3 D Ca Source: Bloomberg Risk free Superior High capacity of repayment Moderate capacity of repayment Some capacity of repayment High uncertainty in the capacity of repayment Highly vulnerable to default Default Latin American Ranking

Peru offers a favorable legal framework foreign investment. . . ü Non discriminatory treatment. ü Irrestrictive access to most economic sectors. ü No performance requirements. ü Free transfer of capital. ü Free competition. ü Guarantee for Private Property ü Freedom to purchase stocks from locals. ü Freedom to access internal and external credit. ü Freedom to pay royalties. ü Network of investments agreements and member of ICSID and MIGA Legal Framework: Constitutional provisions, “Law for the Promotion of Foreign Investment”, Legislative Decree N° 662, “Framework Law for Private Investment Growth”, Legislative Decree N° 757, “Law for the Promotion of Private Investment in Infrastructure and Public Service Works”, Approved by Supreme Decree N° 059 -96 -PCM

With a legal system that guarantees basic rules and statutes that will not change For national and foreign investments • National treatment • Free availability and remittance of foreign currency* • Income tax rules applicable to dividends. and his receiving company • Recruitment regimes • Regimes for the promotion of exports • Income Tax Regime. During ten years. In case of concession, the term is subject to the term of contract (60 years maximum) The only requirement: minimum investment of US$ 5 Million (US$ 10 Million in mining and hydrocarbon sectors) *With capitals coming from abroad

With a stable tax regime, which main taxes are: Note: * Burden goods: fuels, luxury goods, liquors and cigarettes Legislative Decree No. 973 (12. 03. 07) standardizes the treatment for all economic activities regarding the advance recovery of the value added tax (VAT). It will come into force and effect the first business day of the month following the 90 calendar days that may take for this Decree’s regulations to be prepared and published. It is established that tax payers who purchase capital assets but do not start operations, within the framework of investment contracts subscribed with the State, will be able to recover the VAT paid in said purchases.

and a reduced tariff structure and low tariff dispersion… 　TARIFF LEVELS ADVALOREM + SURCHARGES % TARIFF LINES 0 3 028 43, 29% 12 2 843 40, 65% 17 48 0, 69% 20 759 10, 85% 25 316 4, 52% Total SIMPLE AVERAGE APPLIED TARIFF RATE Source: SUNAT 6 994 100. 00% 8. 29

Free market access to: § Andean Community of Nations § Chile § MERCOSUR § Mexico § United States § European Union § Thailand Trade Promotion Agreement with Singapore under negotiations Peru has concluded the negotiations for the Trade Promotion Agreement (TPA) with the United States

Peru has the largest Chinese population in South America § The Chinese came to Peru in the second half of the 19 th century. Nowadays 15% of the country's total population has some Chinese ancestry. § The Chinese influence in Peru is still very noticeable, especially in the culinary field.

Factors promoting trade and investment China Peru 1. Need of inputs to keep growth rates. 1. Great source of inputs. 2. It requires supply sources with added value because of the lack of water and energy. 2. Source of water and energy, besides the ability to transform raw material. 3. Availability of funds. 3. Need of investments to develop infrastructure. 4. Its high volumes of production justify the development of added value proudcts. 4. Demand of value added products.

Bilateral trade (US$ million) Source: SUNAT

Bilateral trade (US$ million) Source: SUNAT

Bilateral trade – principal products Principal exports from Peru to China § Flour, powder and "pellets" of fish. § Copper, zinc, molybdenum, lead and concentrates. § Preparations and conserves of mollusks § Raw Oils of oil Principal imports from China § Domestic appliances § Machines for the processing of information § Motorcycles § Parts and accessories of machinery § Devices of telecommunication § Units of Memory § Textiles § Tires for cars and trucks § Video cameras

Bilateral trade – exporters & importers Main exporting firms § COMPANIA MINERA ANTAMINA S. A § CONSORCIO MINERO S A CORMIN § TEAM EXPORT S. A. C. § SOUTHERN PERU COPPER CORPORATION § BHP BILLITON TINTAYA S. A. § AYS S. A. § SHOUGANG HIERRO PERU S. A. A. § VOLCAN COMPANIA MINERA S. A. A. § CIA MINERA RAURA S A § CORPORACION PESQUERA INCA S A Main importing firms § § § § § SAGA FALABELLA S A LG ELECTRONICS PERU S. A. DELTRON INTERNATIONAL S A SONY SUCURSAL DEL PERU IMPORTACIONES HIRAOKA S. A. C. NEXTEL DEL PERU S. A. TECH DATA PERU S. A. C. PROCTER & GAMBLE PERU S. R. L. TIENDAS POR DEPARTAMENTO RIPLEY S. A. § TIM PERU SAC

Investment up to 2006: US$250. 000 Sectors § § § § Commerce Finance Fishing Hydrocarbon Mining Services Tourism Principal Investors § Shougang Corporation § Chen Kuo Ksiung § China National Import and Export Commodities Inspection Corp § HSBC Latin America Holdings Limited § Hsiang Sheng Huo § Qixin Su § Lin Zhang

Peru Strong figures Strategic location Excellent opportunities