A study prepared by officials from the Central Reserve Bank of Peru (BCRP) examines the actual impact of special economic zones in Peru. Its conclusion: offering tax exemptions, on its own, is not enough.
Special economic zones are a powerful tool, but not an exhaustive solution
Created as spaces to attract private investment, promote foreign trade, and drive regional development, special economic zones (SEZs) could be more productive in Peru if structural obstacles were addressed. That’s according to a recently published study prepared by officials from the BCRP.
Presented by Carlos Mendiburu, Iván Cosavalente, and Rubén Lema from the BCRP’s Structural Policies and Fiscal Policy departments, the document analyzes the development of SEZs around the world and assesses their performance in the country.
Highlights from “Economic Results from Special Economic Zones: Lessons from International Experience”
Releases incentives for specific businesses. The most common incentives offered in SEZs around the world are tax exemptions or reductions in corporate income tax. This benefit is usually accompanied by special customs regimes, logistical facilities, and simplified foreign trade procedures.
Tax exemptions do not automatically lead to successful zones. While tax benefits contribute to improving the profitability of investment projects, countries with the highest impact of SEZs on exports and employment combine these tools with structural policies that promote long-term improvements in infrastructure, human capital, innovation or logistical connectivity.
Structural factors matter more than incentives. Regardless of the incentives offered, special economic zones tend to be more successful when they are located near to major markets, have good access to roads and other infrastructure, provide efficient basic services (energy, telecommunications) and are close to skilled labor forces. Legal stability and certainty are also key.
SEZs’ success depends largely on domestic conditions, not just tax exemptions.
Special economic zones cannot resolve structural problems alone. Even in successful cases, they do not generate immediate effects, and their contribution to exports and employment is generally noticeable only in the medium term (between 5 and 10 years).
Diversification trends in SEZs
Move towards services and higher-value sectors. Initially oriented towards manufacturing activities with high levels of labor intensity, nowadays SEZs are also diversifying into services (digital services, logistics) and sectors with greater technological depth, specialization or value addition (tourism, renewable energies).
Local capacities condition their viability. The diversification of productive projects in SEZs is positive but requires, in turn, qualified human capital and a favorable climate for innovation. Without prior investments in these areas, it will be difficult to attract and consolidate these activities.
The Performance of Special Economic Zones in Peru
Four special economic zones are currently operating in Peru. They are Zofratacna (Callao), ZED Ilo (Moquegua), ZED Matarani (Arequipa), and ZED Paita (Piura). There are also four more zones underway in implementation processes and two others that have been declared of national interest.
Impact remains low despite the potential benefits offered. Tax exemptions make SEZs an attractive option for businesses; however, according to the BCRP study, these four currently operating zones have not managed to position themselves as relevant poles of exports or employment generation. In 2024, they represented only 0.1% of Peru’s total goods exports, while their total trade balance was negative.
Only 10,000 direct and indirect jobs have been reported for all SEZs put together.
Lack of diversification and inefficient use of infrastructure
Greater diversification in exports from ZED Paita. The BCRP study observes that ZED Paita is responsible for most of the exports recorded in SEZs nationwide and presents greater productive diversification than the rest. However, activities carried out by companies in most SEZs are explained by the inward processing of goods imported with little transformation value added.
Available space goes mostly unused. In ZED Paita, only 43% of the available area is used, while in ZED Ilo, the occupancy rate falls to 16%. In addition to indicating the limited use being given to existing infrastructure, this data suggests that the incentives being offered are still not enough to attract more sizable or complex projects.
Weak productive links with the local economy
The study highlights that special economic zones in Peru present low levels of backward and forward linkages with the surrounding economy. This severely limits their potential to drive regional development through the generation of indirect jobs and productive spillovers.
A generous regulatory framework
They receive wide-ranging exemptions. In addition to total exemption from corporate income tax and VAT, companies installed in special economic zones are exempt from municipal taxes and port tariffs (in ports), charges and tariffs from OSINERGMIN (electricity), OSITRAN (transport), and SUNASS (potable water and sanitation).
Tax exemptions are manageable due to low operation levels. Although generous, tax exemptions granted to SEZs have not represented a significant fiscal cost due to low levels of operation. SUNAT estimates reviewed by the BCRP study calculate that total exemptions reach 97 million soles per year.
No minimum conditions for companies. Special economic zones in Peru do not require a minimum investment or employment generation, unlike in other countries like Colombia or Costa Rica. What’s more, granting total exemption from corporate income tax (renta) is particularly generous if we consider that other firms outside SEZs pay income tax at progressively higher rates, even if their activities imply less value addition.
What to expect from new private Special Economic Zones in Peru
New SEZs with private participation were approved by law last year. Recently approved Law 32449 allows for the creation of Private Special Economic Zones, introducing changes to the previous model, such as a private management scheme and graduated tax system for up to 25 years.
Model improvements, but with risks. While changes introduce improvements in terms of zone governance, their success will depend on other underlying conditions that go beyond legal frameworks. Considerations should include whether there is sufficient infrastructure, good logistical connectivity, efficient basic services, and an environment of legal certainty that generates predictability.
Private SEZs should consider productive and logistics realities
Otherwise, they will replicate problems seen with current SEZs. If these factors are not considered, there is a risk that private SEZs become, like those already operating in Peru, tax shelters used to relocate activities rather than true centers of production that contribute to exports and employment.
A good tool if used correctly
Economic zones can be effective if complemented with other policies. Special economic zones can contribute to the country’s productive development as long as they are used as one of several tools aligned with a long-term strategy. However, if they are not accompanied by other improvements in infrastructure, human capital, or competitiveness, their impact will be limited.
There is a risk of competing against local companies. Establishing special economic zones with substantial benefits but without significantly improving the country’s structural characteristics can end up generating competition (including fiscal competition) with companies operating outside these zones.
Results in countries like Chile and Uruguay show that territorial economies of scale, service corridors, and other forms of productive integration can be more effective solutions than special economic zones to stimulate productive investment and drive regional development.