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Investment in Peru: An attractive option

by | Feb 25, 2023

Investment in Peru is an attractive option. The Andean nation has experienced the second lowest rate of inflation in Latin America (approximately 2%, remaining in single digits for almost 25 years), and has one of the fastest-growing economies in Latin America, with an average annual growth rate of around 4% over the past decade.

According to information released by Doing Business, setting up a company in Peru is 70% less expensive than the Latin American average. Likewise, the resolution of procedures to obtain construction permits is almost two months faster than the Latin American average. In addition, the fulfillment of contracts in Peru is four months faster than in other Latin American countries. In the Latin American region, Peru has the best investment grade rating and occupies the highest position in Latin America in the world competitiveness ranking after its southern neighbor, Chile.

The country’s government facilitates investment in Peru through the special regime for early recovery of the General Sales Tax (for the refund of the tax paid or transferred in import operations and/or local acquisition of certain goods), the legal stability agreements (legal contracts that offer guarantees to investors for terms of 10 years, or more in the case of concessions) and the tax refund regime (for investors who enter into foreign direct investment contracts, while the investment commitments are developed). In addition, there are incentives in the Peruvian customs regime through drawbacks (restitution of customs duties) and the four Special Economic Zones (Tacna, Paita, Ilo, and Matarani). In the last decade, the three leading foreign companies to invest in Peru through capital contributions have been Entel (Chile), Telefónica (Spain), and Falabella (Chile).

Investment in Peru is made attractive by trade agreements

Peru is commercially engaged with the world. It maintains 19 International Investment Agreements in force (with Germany, Argentina, Australia, Canada, Chile, Colombia, Korea, Costa Rica, Cuba, Denmark, El Salvador, Spain, United States, Finland, France, Iceland, Italy, Japan, and Honduras)

Thirty-two bilateral treaties make investment in Peru an attractive option. It has agreements with Germany, Argentina, Australia, Belgium-Luxembourg, Bolivia, Canada, Chile, China, Colombia, Korea, Cuba, the Czech Republic, Denmark, Ecuador, El Salvador, Spain, Finland, France, Italy, Japan, Malaysia, the Netherlands, Norway, Paraguay, Portugal, United Kingdom, Romania, Singapore, Sweden, Switzerland, Thailand, and Venezuela).

Peru maintains nine agreements to avoid double taxation (with Brazil, Canada, the Andean Community, Korea, Chile, Mexico, Switzerland, Portugal, and Japan) and 14 Free Trade Agreements – FTAs and Economic Integration Agreements – EIA (with Australia, Canada, Korea, Costa Rica, Chile, China, the United States, Honduras, Japan, Mexico, Panama, Singapore, the European Free Trade Association and the European Union).

Investment in Peru carries no limit for the repatriation of capital. Additionally, there are no property restrictions for foreign investors, and there is free access for foreign investors to almost all economic sectors. Furthermore, no specific authorization is required to invest in Peru. Peru is a member of the World Trade Organization (since 1995), the Asia Pacific Economic Cooperation Forum (since 1998), and the Pacific Alliance (since 2011), as well as the Latin American Integration Association (ALADI) and the Common Market. of the South (MERCOSUR), now seeking its incorporation into the Organization for Economic Cooperation and Development (OECD).

Investment in Peru is diverse

Peru is a business-friendly country and has benefited from investments that have been made by:

  • the world’s largest food company (Nestlé, from Switzerland),
  • the world’s largest beer manufacturer (AB InBev, from Belgium),
  • the world’s largest bakery (Grupo Bimbo, from Mexico),
  • the largest hotel chain in the world (Marriott, from the United States), the largest manufacturer of wooden pencils in the world (Faber-Castell, from Germany),
  • the largest professional services firm in the world (PricewaterhouseCoopers, from the United States),
  • the most prominent private signature equity in the world (Carlyle Group, from the United States),
  • the largest telephone company in Latin America (Telefónica, from Spain),
  • the largest retail company in Latin America (Falabella, from Chile),
  • the largest bank in China ( Industrial and Commercial Bank of China – ICBC) and the two leading banks in Spain (Santander and BBVA).

Successful investment in Peru also means finding local players with international projection, such as:

  • the largest evaporated milk company in the world (Gloria),
  • the second largest mass consumption company in the Andes (Alicorp),
  • the largest microfinance group in Latin America (Credicorp),
  • the largest distributor of Caterpillar machinery in the world (Ferreyros),
  • the largest gold mine in South America (Yanacocha),
  • the largest logistics operator in Latin America (Ransa),
  • the
  • eighth largest copper processor in the world (Cerro Verde) and the tenth largest direct sales company (Belcorp).

In Latin America, Peru ranks first in producing tin, zinc, lead, gold, and selenium and second in producing silver, copper, mercury, molybdenum, and cadmium. On the other hand, in the world ranking of exporters, Peru ranks first in the export of asparagus, dried beans, quinoa, and maca. Additionally, Peru produces almost 2.5 times more fishmeal than the European Union. Finally, the Jorge Chávez International Airport was considered the best air terminal in South America (2020). Furthermore, Peru has been recognized for the eighth consecutive time as the Best Culinary Destination in the World.

In summary, investment in Peru is a good option for many reasons. In addition to having a strong potential for economic growth, the country presents a favorable climate for foreign direct investment. Peru has maintained strong economic fundamentals, including low inflation and a stable currency. The country has abundant natural resources, including copper, gold, and silver, thus making investment in Peru an attractive option for mining companies. Lastly, the Andean nation has a young and skilled workforce that includes many engineers, tech workers, and finance professionals.

Overall, Peru’s economic stability, investment-friendly policies, natural resources, strategic location, and skilled workforce make it an attractive destination for foreign investment.

For more further information on investing in Peru, contact LATAM FDI.

Contact LATAM FDI to discuss your foreign direct investment plans in Latin America.

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