China’s COSCO Urges Peru to Grant Special SEZ Status to Chancay Port
On November 10, reports emerged that Chinese state-owned shipping company COSCO Shipping Ports is lobbying the Commission on Foreign Trade of the Peruvian Congress to classify the country’s Chancay mega port project as a tax-free, Special Economic Zone (SEZ). If SEZ status is granted, the port’s capacity for production and export would increase significantly, elevating its regional significance as a Pacific trade hub. A more robust Chancay Port would be expected to link directly South American and Chinese markets without a need for transshipment via Mexican and U.S. ports. Averting stops in Mexico and the United States could ultimately offer strategic benefits.
COSCO Shipping, which is developing the $3 billion port complex under a 2018 joint agreement with Peru’s Volcan Mining Company, maintains a 60% controlling stake in the project it acquired for $225 million in 2019. At present, legislation on Chancay’s regulatory framework drafted by Peru’s Ministry of Economy and Ministry of Foreign Trade is awaiting consideration by the country’s legislature. Although no major political opposition to this legislation is evident, the bill appears to have recently stagnated. COSCO’s latest outreach appears to be in an effort to breathe new life into the bill’s and raise its profile among Peruvian lawmakers.
The Chancay terminal is a natural deep-water harbor with a maximum of 16-meter water depth, making it capable of handling the world’s largest Triple‑E type shipping vessels. Once completed, it could foreseeably become Peru’s most strategically important port of trade. The first phase of the port development appears to be ongoing, however, an exact completion date remains unclear. In 2018, it was reported that the project would take 28 months to complete.