In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
After having attained a record level in 2007-2008, the FDI flows into Peru fell in 2009, under the effect of the global recession. Nevertheless, they rebounded in 2010 and the following years, stimulated by the region's growth. Thanks to its attractive legislative and fiscal framework and a dynamic mining sector, Peru continued to attract FDI in 2013. It is now a leader amongst the South-American receptors of FDI, behind Chili but ahead of Argentina with FDI influx reaching USD 12 billion in 2012. The strong appetite of foreign investors continues, with a $70 billion investment expected over the next five years, including $42 billion in the mining sector alone.
Peru's FDI come primarily from Spain (the largest investor), the United States and Great Britain. The sectors that attract most of FDI in 2013 were communications (about one third of the total), industry, finances and the mining industry. Peru's most appealing points in terms of FDI are the low cost of wages compared to the developed countries and the non-restrictive policy concerning dividends. However, the Peruvian authorities must look into reducing customs barriers, making their tax legislation more flexible, improving the efficiency of public institutions as well as strengthening the rule of law, in order to keep the country attractive to investors.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Peru||Latin America & Caribbean||United States||Germany|
|Index of Transaction Transparency*||9.0||4.0||7.0||5.0|
|Index of Manager’s Responsibility**||6.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||7.7||5.0||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||8,233||12,240||10,172|
|FDI Stock (million USD)||51,208||63,448||73,620|
|Performance Index*, Ranking on 181 Economies||17||-||-|
|Potential Index**, Ranking on 177 Economies||36||-||-|
|Number of Greenfield Investments***||61||38||72|
|FDI Inwards (in % of GFCF****)||17.5||21.5||17.7|
|FDI Stock (in % of GDP)||28.3||31.0||35.6|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
Growth is dependent on an external environment which up to now has been favorable, as domestic demand is not yet able to take over from a possible reduction of external demand or from 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 is manifest in the permanently high poverty rate.
Any Comments About This Content? Report It to Us.
© Export Entreprises SA, All Rights Reserved.
Last Updates: January 2015