FDI in figures

FDI in Peru comes mainly from Spain (the main investor), the United States and the United Kingdom. The most attractive sectors are communications (one third of the total), industry, finances and minerals. Peru's strong points for FDI are the low cost of wages compared to developed countries and the non-restrictive policy concerning dividends. However, the Peruvian authorities must bring down customs barriers, make their tax legislation more flexible, and improve the efficiency of public institutions and the consolidation of the constitutional state for the country to remain attractive to investors.

Why you should choose to invest in Peru

Strong points

For five years Peru has experienced sustained growth which rests, in an external growth environment, on exports and domestic demand which has benefitted from the combined rise in household consumption and public investment. Dynamic activity, rational economic policy and successful management of debt have allowed Peru to show very good results regarding strong macroeconomic balance, and to find confidence again among investors and on the markets. Peru benefits from well directed external demand and the good performance of the prices of raw materials, of which it is a substantial producer. These advantages guaranteed Peru a growth of 9% in 2008. Peruvian GDP was more than 107 billion USD in 2007, i.e. 3,826 USD per inhabitant. Total public debt which represented more than 50% of GDP in 2000 was reduced to 31% at the end of the third quarter of 2007. The strong progress of exports which tripled between 2002 and 2006, the appetite of the markets for the emerging risk and the rigour of the economic policy have contributed to a remarkable recovery of the country's macroeconomic fundamentals. The balance of current payments shows a surplus (+2.8% of GDP in 2006). The balance of trade reached a historic surplus in 2006 of more than 8 billion USD, i.e. more than 8.7% of GDP. With 26.1 billion USD at the end of November 2007, the official reserves covered more than 13 months of imports of goods and services and the totality of public external debt. The forecasts of the Ministry of the Economy and Finance until 2010 confirm the political will to maintain a strict management of public accounts. Inflation should remain around 2%, annual growth should be between 6.2 and 7.3%, which corresponds in 2010 to a per capita GDP of 4 700 USD.

Weak points

If the Peruvian economy's perspectives are favorable in the short term, the sustainability of the present growth is conditioned by Peru's capacity to define a medium term development strategy. As growth is very concentrated on the primary sector and in the agricultural exporting regions, it has only marginally contributed to redressing a difficult social situation. A permanently high level of poverty and under-employment, brought about by growth which is too dependent on a strongly capitalist mining sector, is a principal source of vulnerability.

 

Externally, growth depends on an environment which was favorable up to now, as domestic demand is not yet in a situation to take over from a possible reduction of external demand or of the prices of raw materials. Peru also suffers from a great lack of infrastructures, and the institutional capacity of the country has not improved significantly over the last few years. Moreover, the progress of employment is too concentrated in the most dynamic areas and in the informal sector. The lack of efficiency and means of public policies shows in the permanently high rates of poverty.

Government measures to motivate or restrict FDI

The Peruvian government is trying to attract foreign investors in all sectors of the economy. During the 1990s, the Peruvian government encouraged the stabilization of the economy and promoted liberalization policies by dropping Customs barriers and opening the economy to foreign investors. In April 2002, the government established PROinversion, the sole representative of present and potential investors, which took part in the privatization of public companies and industries based on natural resources. In addition to the Constitution of 1993, there are laws concerning foreign investment in Peru including the Law on the Promotion of Foreign Investment 1991 and the Framework Law on the Growth of Private Investment 1991.

Procedures relative to foreign investment

Freedom of establishment

Peru signed the constituent agreement of the International Center for Settlement of Investment Disputes (ICSID). Foreign investment in Peru is governed by the law on the promotion of foreign investments and its decree-law n°662 of 1991, which establishes, as a basic principle, the equal treatment of national and foreign capital.

Acquisition of holdings

A majority holding interest in the capital of a local company is legal in Peru.

Obligation to declare

To be recognized and be able to benefit from the provisions of the legislation in force, the considered investment must, once carried out, be registered with Proinversion, but this formality is only compulsory when there is an agreement on legal stability.

Competent organization for the declaration

Peruvian Agency for the promotion of investment.

Requests for specific authorizations

Foreign capital can be invested in all sectors of economic activity without prior authorization, with the exception of a few sectors, such as the press, or implantations in border zones.

Finding assistance for further information

Investment aid agency

Invest in Peru

Other useful resources

Official investment agency (Inversion Peru)
Econolatin: Statistics on Peruvian investment