Jan. 7, 2015


Gaston Pacheco

Peru

Gaston Pacheco

President, ADEX

"ADEX is an association of exporters, mostly from non-traditional sectors."

BIO

Gaston Pacheco is the President of ADEX, the Peruvian Association of Exporters. He also acts as Director of the School of Entrepreneurs and the National Society of Industries. On top of that, he is the CEO of Frutarom Peru.

Could you familiarize our readers with ADEX's position in the Peruvian market, and comment on your export-based activities?

ADEX is an association of exporters, mostly from non-traditional sectors, and mostly comprised of SMEs. It has a history of 40 years, and one of its characteristics is that it combines entrepreneurial effort with academic endeavor. We are trying to inform the coming generation of Peruvians about foreign trade, and the processes that it entails in the real world of commerce. Not only does the association have the business component, then, but also an academic one, which imparts the values and lessons that will transform the younger generation into tomorrow's entrepreneurs active in Peru's foreign trade drive.

What is the relevance of ADEX in the context of Peru's new economic outlook?

ADEX has been active in promoting free trade agreements (FTAs) with other markets and also in ensuring the smooth implementation of these treaties. Sometimes countries sign treaties, but then enter into non-tariff areas. We essentially facilitate trade, in which Peru has been highly active. Recently, there was news from the Commerce Ministry that Peru would sign another free trade agreement, this time with Turkey, which should be good news for exporters. Peru is entering new markets and, thus, opening new destinations for its products. We are enthusiastic about this, and are involved in ensuring that these trade agreements work to the advantage of exporters here. For us, that is one side of the coin. The other aspect has to be internal policies, whereby we need to support those policies that add value to production in Peru. Unfortunately, the law in general in Peru is not as comprehensively applied as it should be, which has been a chronic problem with implications not only of an economic, but also a social and political nature.

“ADEX is an association of exporters, mostly from non-traditional sectors."

What are the most important reforms that you would advocate for the Peruvian economy in order to boost SMEs and the manufacturing sector, which is facing some hardship?

In short, the legal system is overly complex, and we need to reduce the requirements and provisions of these laws. In order to properly comply, companies need to hire a lawyer, an accountant, and others that many SMEs can ill afford, whereby they find themselves in the informal economy. This has prevented Peru from developing supply chains internally. Under normal circumstances, a large company would go to an SME to procure raw materials. However, in Peru this is harder to do because the right company is likely to be an informal entity. That breaks the chain of production and, ultimately, few companies are able to comply with the law and become competitive. Peru is, therefore, closing the door on thousands of companies that could be also productive and support economic growth. We think that the government should address this problem more seriously, and pass laws that can help SMEs operate within the boundaries of the law.

How does ADEX encourage foreign investment?

In general, Peru is highly attractive for foreign investment, which is probably why all the entrepreneurial associations have been accommodating of the government. We keep in mind to remain onside with the government, because excessive pressure can backfire. The truth is that current policies have been in place for almost 20 years, and Peru is truly open to foreign investment. Once you are installed in Peru, and find your niche, it can be highly profitable.

How will the export industry develop over the medium term?

We are optimistic about Peru, and believe the super-cycle end of high commodity prices to be over, and that it will not swiftly be seen again. This will oblige all parties, from the government to the private sector, to reexamine their economic policy. It is especially important that we start working with those who have been operating in the informal economy. During the good times, there is some reluctance to amend economic policy, as there is little pressure to do so. Yet by the time the problem becomes evident, it is often too late to take corrective action. At that point economic policies that are restrictive or unpopular tend to materialize. Now is the time to make the necessary reforms, because we are at a mid-point in the trajectory on a gradual decline. Let us hope that we can be wise enough to recognize that change is needed, and act on that realization.

© The Business Year - January 2015

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