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Special economic zones in Peru (SEZs)

by | Jun 8, 2024

During a meeting with President Dina Boluarte, the Peruvian Association of Exporters (Adex) presented a series of proposals to prioritize citizen security and economic reactivation.

The Peruvian Association of Exporters (Adex) president, Julio Pérez Alván, reiterated the need for measures to promote economic reactivation to the Government. One of the new proposals presented in the meeting with the President of the Republic, Dina Boluarte, is the creation of special regimes for the Special Economic Zones in Peru (SEZs).

Income tax concessions need to be included as benefits to users of SEZs

The union representative highlighted the need for the Special Economic Zones in Peru to have a special tax and customs regime with 0% Income Tax and not 15% as recently approved by the Congressional Economic Commission.

“The new Agrarian Law and the regulations of Law No. 31969 are also pending, which promotes competitiveness and employment in the textile, clothing, agricultural and irrigation, agro-export and agro-industrial sectors and promotes their economic reactivation,” he added.

Previously, in November, the unions had already presented the ‘United Plan’ to promote economic reactivation. However,  Pérez Alván points out that, despite some progress, the sessions are pending to be held periodically, and the initiatives evaluated and adjusted.

He also indicated that investment in infrastructure is another critical aspect of economic reactivation. Therefore, he asked the President to implement an aggressive plan encouraging public and private investment, addressing the deficit in essential services.

Likewise, Pérez Alván reiterated the need to combat informality in the economy and strengthen the role of the Ministry of Economy and Finance (MEF) and the Sector Executive Boards, supporting competitive sectors such as forestry, aquaculture, tourism, and mining-energy.

Another request from Adex to the President is to resume coordination with business associations and unions to evaluate the proposals in the face of citizen insecurity and create a strategy.

“The continuous change of ministers and high command officers, the lack of resources, and other factors aggravate the situation. An immediate solution is required,” he said.

On this point, Pérez Alván pointed out that cases from other countries can be evaluated and adapted in our country.

Regarding the President’s next trip to China, which will take place from June 23 to June 30, 2024, where she will meet with her counterpart Xi Jinping, The leader of Adex described it as something positive, taking into account the importance of the Chinese market for the Peruvian economy and the upcoming creation of the Peru-China Business Council.

Special Economic Zones in Peru: Catalysts for Growth and Development

Special Economic Zones in Peru (SEZs), known as “Zonas Económicas Especiales” (ZEE) in Spanish, are designated areas that offer economic incentives and benefits to attract investment, promote exports, and spur regional development. These zones are part of the Peruvian Government’s strategy to stimulate economic growth, create jobs, and enhance competitiveness by providing an environment conducive to business operations.

Overview and Purpose

SEZs in Peru are established to foster industrial, commercial, and service activities. They provide a framework for companies to operate under more favorable economic conditions than those prevailing in the rest of the country. This includes tax incentives, simplified customs procedures, and infrastructural support. SEZs aim to attract domestic and foreign investments, stimulate technological transfer, and improve productivity by concentrating resources and creating a business-friendly atmosphere.

Locations and Number of SEZs

Peru has several SEZs strategically located across the country, each tailored to leverage the specific economic strengths of their regions. As of now, there are five major SEZs in Peru. They are:

Zona Franca de Tacna: Located in the southern city of Tacna, near the Chilean border. This zone capitalizes on its strategic position for cross-border trade.

Zona Franca de Ilo: Situated in the coastal city of Ilo, in the Moquegua region. It is strategically placed to benefit from maritime trade.

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Zona Franca de Paita: Located in the port city of Paita in the Piura region, it is designed to boost the export potential of the northern coastal area.

Zona Franca de Chimbote: Found in the city of Chimbote, in the Ancash region, this SEZ focuses on the fisheries and steel industries.

Zona Franca de Amazonas: Positioned in the Amazonas region, this zone aims to exploit the agricultural and ecological resources of the Amazon basin.

Types of Businesses Allowed in Free Zones in Peru

The types of businesses allowed to operate within these SEZs are diverse, reflecting their respective regions’ economic needs and strengths. Generally, they include:

Manufacturing Industries: These encompass various sectors, including textiles, electronics, automotive parts, and machinery.

Export-Oriented Companies: Firms engaged in the production of goods for international markets, such as agro-industrial products, seafood, and mining products.

Logistics and Distribution: Companies focusing on warehousing, distribution, and logistics services benefiting from the zones’ infrastructure and proximity to major transport routes.

Service Providers: This includes call centers, IT services, and other back-office operations that support global businesses.

Research and Development: Facilities dedicated to innovation, product development, and technological advancements.

Benefits for Companies located in SEZs in Peru

Companies operating within Peru’s SEZs enjoy many benefits designed to enhance their competitiveness and operational efficiency. Key advantages include:

Tax Incentives: Businesses benefit from reduced corporate income taxes, exemption from value-added tax (VAT) on imports and local purchases, and other tax reductions.

Customs Advantages: Simplified and expedited customs procedures, along with duty-free imports of raw materials, machinery, and equipment.

Infrastructure Support: Access to well-developed infrastructure, including transportation networks, utilities, and telecommunication services.

Labor Benefits: Easier hiring processes and more flexible labor regulations than the rest of the country.

Administrative Simplification: Streamlined bureaucratic processes, reducing the time and cost associated with regulatory compliance.

Conclusion

Special economic zones in Peru are critical catalysts for economic growth and regional development, offering various benefits that attract domestic and foreign investment. By providing tax incentives, simplified customs procedures, and robust infrastructural support, these zones create an environment conducive to business operations, fostering industrial, commercial, and service activities. The strategic locations of Peru’s SEZs, such as Tacna, Ilo, Paita, Chimbote, and Amazonas, enable them to leverage regional strengths and boost export potential. These zones accommodate diverse businesses, from manufacturing and export-oriented companies to logistics, service providers, and R&D facilities, all of which enjoy significant competitive advantages. The proposals by the Peruvian Association of Exporters to enhance the tax and customs regimes further underscore the importance of optimizing these zones to maximize their impact on Peru’s economic reactivation and growth. Therefore, special economic zones in Peru represent a pivotal element in the nation’s strategy to stimulate technological transfer, improve productivity, and secure a prosperous economic future.

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