Peru is an international leader in fishing, producing nearly 10 percent of
the world's fish catch. The cold-water Humboldt Current brings nutrient-rich
cold waters that create ideal fishing grounds. Peru exported more than US$1
billion in fish products in 2000—most of it as fishmeal—and fished nearly 10
billion tons, making fishing the second-most important industry after mining.
Fishing has been a mainstay in Peru for thousands of years, playing a key role
in ancient societies. In modern times, fishing has boomed due to whaling in the
late 19th century and demand for guano (bird dung), a byproduct of fishing found
on small islands off the coast.
While always important, the full use of Peru's fishing resources did not
occur until the mid-20th century with the introduction of fishmeal production.
The star of the fishmeal, which is used for animal feed or fertilizer, is the
Peruvian anchovy. For most of the 1960s and 1970s, Peruvian anchovies accounted
for 44 percent of the world fish catch destined for non-human consumption. The
fishing industry's participation in the GDP varies yearly, depending upon the
catch and ocean conditions. In years when El Niño is present, such as 1998, the
sector's participation falls to below 1 percent of GDP. Fishing currently
accounts for roughly 3.5 percent of GDP and, because it is not a labor-intensive
industry, employs approximately 80,000 people.
The government began privatizing the fisheries industry, PescaPeru, in 1994
in a process that continues today. The government has sold its participation in
all processing plants and fishing fleets, and is now preparing to privatize
fishing ports as a general program to privatize all the nation's ports. The
Fisheries Ministry is also beginning a process of privatizing experimental and
research centers as well as fish-farming installations. The industry is facing
another potential downturn because of the fear created by "mad cow" disease in
Europe. The European Union nations voted in early 2001 to ban all feed products
made from animals, including fishmeal. The scope of the ban was later reduced,
but restrictions still apply. Peru's fishmeal exports to Europe declined by 41
percent in the first quarter of 2001.
Mining has been a central element in Peru's history for thousands of years.
The Andes are rich in minerals and gold, and silver pieces can be found in
numerous pre-Columbian societies. Mineral exports are a key to the country's
economy, representing nearly half of Peru's exports in 2000. Peru ranks eighth
worldwide in gold production (first in Latin America), second in copper, and
among the top 5 producers of lead and zinc. Two of Peru's gold mines, Yanacocha
and Pierina, are among the most productive and profitable gold mines in the
world. Peru has an estimated 21 million fine ounces of gold reserves in mines
currently under operation and 42 million fine metric tons of copper reserves. An
additional 100 gold mines are predicted to come on line in the next 5 years.
Also looming in the near future is the massive Antamina project, a Canadian-led
mining operation that will require US$2.3 billion in investments and is expected
to produce copper, zinc, lead, gold, and silver for the next 30 to 40 years.
Antamina is the largest mining project underway in the world.
Mining activity and exports have grown exponentially since 1991, when the
government adopted a series of new rules and tax benefits for large-scale
mining, streamlined the process for filing a mineral claim, and allowed
companies to re-invest upward to 80 percent of profits tax free. Mining exports
grew from US$1.2 billion in 1987 to US$2.7 billion in 1997. Gold witnessed the
greatest increase, rising from less than US$1 million in exports in 1987 to
US$500 million in 1997. Gold exports are now US$1.2 billion, according to the
World Gold Council.
Like fishing, however, mining is not a labor-intensive activity, creating few
jobs and demanding huge investments for each job created. Nevertheless, mining
represents one of the few money-making activities in the Peruvian highlands,
particularly in areas higher than 12,000 feet above sea level where most mining
operations are located. Mining represents 10 percent of GDP, according to the
U.S. State Department's Country Commercial Guide.
Because of its long dependence on raw material exports, Peru has never
developed a strong manufacturing sector. The sector represents 15 percent of GDP
and is tied heavily to mining, fishing, agriculture, and textiles. Manufacturing
is mainly devoted to processing a percentage of the raw materials to gain a
value-added advantage. The most promising sector is textiles, with Peru
exporting nearly US$700 million in garments in 2000, mainly to the United States
and Europe. Textiles represent the largest non-raw material portion of the
Peruvian export economy. Peruvian textiles are currently exported duty
-free to European Union nations under an agreement to help the country fight
the drug trade. The U.S. Andean Trade Preference Act (ATPA), passed in 1991, has
the same goal, exempting nearly 6,000 products produced in Bolivia, Colombia,
Ecuador, and Peru (all major drug-producing nations) from tariffs. Textiles,
however, were left off the list. The 4 governments are lobbying for the U.S.
Congress to include textiles on the trade list when ATPA is renegotiated in
December 2001. Peruvian garment makers generally produce high-end products for
the U.S. markets, including brand names such as Ralph Lauren, Brooks Brothers,
and Bobby Jones.
Tourism has represented a new growth industry in Peru since the early 1990s,
with the government and private sector dedicating considerable energies
to boosting the country's tourist destinations both to Peruvians and foreigners.
Foreign tourist arrivals have jumped from approximately 90,000 in 1990 to more
than 1 million in 2001, with a corresponding upswing in investment in services.
The U.S. State Department's Country Commercial Guide estimates that US$330
million will be spent on new hotels alone between 2000 and 2005. The government
estimates that 1 million new jobs will be created if it reaches the goal of 2.5
million tourists by 2005.
The public and private sector are promoting the country's tourist industry in
2 specific categories: ecotourism and historical/cultural tourism. The
main draws are the Amazon rain forest and high Andes, including the Colca
Canyon, the world's deepest, and archaeological sites such as Machu Picchu,
considered to be the "lost city of the Incas."
With the exception of Banco de Credito—Peru's largest financial institution
(US$8.5 billion in assets)—nearly all the financial sector has fallen into
foreign hands. The financial system has been on somewhat shaky ground since
1997, with a number of bank mergers or failures. The number of banks in the
system fell from 25 in 1998 to 16 in 2001. There were 2 interventions by the
government to save banks in late 2000, and authorities say the system is solid
although it might not be flush with cash.
Nearly all retail is concentrated in Lima and, with a few important
exceptions, is controlled by foreign capital. The 2 major department store
chains, Saga and Ripley, are Chilean-owned and one of the 2 supermarket chains,
Santa Isabel, belongs to the Dutch conglomerate Ahold. The other supermarket, E.
Wong, is Peruvian-owned and solid. Supermarket sales, however, account for less
than 10 percent of overall sales nationwide. In the past 10 years, Peru has
attracted international franchises from apparel to gas stations and fast-food
chains, including McDonald's and Burger King. The most successful franchise in
terms of profit has been Dunkin' Donuts.