What is your strategy for boosting the UK’s trade and investment with Peru?
Ambassador Choudhury: Our general strategy is to focus on areas where Peru has a real need and where the UK has a real strength. The three main sectors that we have identified are health, education and energy. Of course this doesn’t mean that we’re forgetting the traditional sectors, such as mining and exporting machinery. In all we’re aiming to double UK exports to Peru within the next five years.
One of our main priorities is that Britain becomes one of Peru’s top partner in education. To that end we signed a deal worth more than $100million to help Peru become a bilingual country. Peru’s President is keen for the country to reap the benefits of speaking English with the opportunities for global trade and investment that it would bring, so we have set up a programme with to help deliver that over the next seven years. The main emphasis is on training teachers and we have already trained more than 800, with 150 travelling to the UK. In January a further 300 Peruvian teachers will go to the UK, while British teachers are coming here to help train locally.
Health is another big priority for the country and an area where we think the UK can help. There is a potential market of $3billion to be spent of improving Peruvian health infrastructure and medical training and we’ve signed a memorandum of understanding with the Peruvian government to help us work with them in this area.
Another of these is energy, where British firms with leading solar energy technology can help deliver clean energy to Peru’s remote communities. One British firm, Z Energy, has developed a breakthrough solar battery which makes it possible to store solar energy for several days. It’s a solution that can help Peru bring electricity and development to off-grid communities and we will be helping the firm demonstrate this to the Peruvian government.
One disappointment has been that so few British firms have become involved in Peru’s infrastructure programme; why is that?
AC: We have had some wins with consultancy contracts, for example Currie and Brown won a £5.28 million health project, but yes it is true that British firms haven’t moved to other, larger parts of the value chain.
“to win a billion-dollar project you have to spend a bit on local operations to show that you are serious player…”
We’re seeing more interest, but still no major contract wins for building or maintaining these mega projects that Peru needs. We commissioned a report into the reasons why British firms weren’t more involved and found problems on both sides. For many British firms the procurement process, which asks for considerable risk sharing with the government, isn’t attractive while competition is also high. But on the other side these firms are not investing enough into winning contracts here. I mean, to win a billion-dollar project you have to spend a bit on local operations to show that you are serious player. Ultimately neither side is stuck for choice. UK infrastructure firms can choose anywhere in the world to operate, while Peru has a mix of regional and international companies involved in these projects. So there is still some work to be done.
Peru is one of Latin America’s fastest-growing economies; what is the embassy doing to boost trade and investment with the country?
AC: Since I arrived we have had six trade missions, which reflect a growing interest in Peru from British firms. They’re incredibly useful because they help demystify Peru. By coming here, looking around and meeting people investors see the opportunities that exist.
Another important tool would be a government-to-government framework. I have been recommending that HM Government creates one with Peru as this could double our exports to the country [at time of going to print the decision-making process was still ongoing]. These frameworks accelerate investments and exports because they solve two crucial problems. One is that they speed up the procurement process. The other is that they reduce the risk of corruption.
Like many other emerging markets around the world, Peru has a large infrastructure deficit that it’s trying to close quickly. As a result it favours government-to-government frameworks because they help deliver important projects more efficiently than traditional contracting. These platforms are also useful for strategic sectors like defence.
Other countries already have these in place with Peru so we are keen to implement it. Of course for us to this we need to make sure that if HM Government is fronting it up then the UK companies behind it are reliable and will be able to deliver on time. The government has to manage its reputational risk and possible financial liabilities.
We are trying hard to bring about government-to-government contracting option between HM Government and Peru.
British Airways recently announced a new London – Lima route; how important will that be for boosting trade between the two countries?
AC: We are delighted with the news. It’s a route that was cancelled 32 years ago, in the aftermath of the Falkands War, and its reintroduction is a very tangible sign of the strong link between Peru and Britain. It’s something that we have been lobbying hard for but of course a business will only make a decision like this if it sees the commercial potential. I think will give a huge boost to trade. It knocks four hours off the existing routes, which involve changeovers in the US or mainland Europe, and will bring the two countries closer.