“Investments are focusing on adding productivity”

Given the scenario of economic recession, the private sector will evaluate its investments in greater detail. Paul Romero, president of the Family Business Associationreviews 2023 and the need to regain confidence in 2024.

—It was announced that the economy entered a recession in the last part of 2023. How did this impact companies?

The impacts were differentiated by each of the companies. I must say that the country’s strengths have helped us. We still have solid fundamentals that allow us to transmit optimism to the business community. Especially family businesses that have an important characteristic: a long-term view. We are thinking about transcendence, succession and leaving a business legacy.

—Which sectors are reevaluating investment levels?

Like everything, there are sectors that are more and less affected. In the association we are 75 family businesses from different sectors. Each of them is having a different impact. This leads each sector to have a different view for its investments. While investments are being evaluated in sectors such as construction, in sectors such as services – where investment turnover is faster – it is seen with more optimism. Investments are focusing on what adds to productivity. We are leaving aside high-risk investments such as research and development, new products and so on.

—Also expansion?

What I see more is regional and product diversification. That helps offset the local risks we have. Always betting on specialization.

—And what opportunities do family businesses see in these episodes of recession?

Innovation is the key. Part of the sustainability that companies seek comes from technological innovation. Today it is a quality that companies are valuing more.

—What expectations do you have about 2024?

We believe it will be a year of recovery, but very slow. We have a slightly clearer field in the face of social conflicts, inflation is relatively controlled and interest rates are falling. And we think that the El Niño phenomenon will be moderate. Although we are not so optimistic, we know that the recovery will be moderate and better than in 2023.

—This week there was talk of a departure by the Minister of Economy that he himself later ruled out. Beyond the person, how much do episodes like this affect trust?

The investor entrepreneur needs a certain predictability and stability about what may happen in the future. There is a certain distrust. Episodes like these don’t help anything. Moving ministers with capabilities knowing that the development of public policies takes time generates distrust.

—And what signals should be given from the State?

Great care must be taken not only with people who are in important positions, but with the signals they give. In terms of communication, there is a lot to improve. Logically, there are some things that have not been corrected and that will depend a lot on the Government.

-For example?

There are interesting topics. There are projects pending award in the hands of Pro Inversión. We should give that priority. Although they are long-term projects, as they come out, confidence will be transmitted to the private sector. The role of Pro Inversión for what is coming is important. We have seen that it is on that path, but we believe that the Government must work more in its coordinating role.

Data

• “80% of the companies in Peru are family-owned.”
• “About half of them have already experienced at least one generational change.”
• “Only 3% of family businesses reach the third generation.”