Peru has experienced strong and stable economic growth over the past 15 years, with GDP growth of 116% and inflation of only 52%. It has a variety of natural resources and skilled workforce. Peru has adopted policies to attract foreign investment, including free trade agreements, low taxes, and simple regulations. It is now part of the Pacific Alliance, positioning itself for greater economic opportunities within Latin America and with Asia-Pacific countries. Mining makes up 24% of foreign direct investment in Peru.

1. LatAm INVESTOR Q4 2015|30
C
onsidered one of the world’s leading emerging markets
and a rising star, according to the International Monetary
Fund (IMF), Peru has a solid recent history of economic
stability. From the beginning of the new millennium through
2014, Peru has achieved an impressive cumulative growth of
116% of its Gross Domestic Product (GDP) accompanied by a
cumulative inflation during the same period of just 52%, the
best rates of their kind in all of Latin America.
Furthermore, some of its diverse characteristics include a variety
of climates, a large territorial extension, important natural
resources, people with great skills and high academic standards
and a solid economic and industrial background.
Nowadays, Peru is a true economic miracle nearly 20 years after
the end of its history of hyperinflation and terrorism, which have
given way to the best possible conditions of stability, respect,
and promotion of investment in the region, becoming the sixth-
largest economy in South America—measured in purchasing
power parity—after Brazil, Chile, Argentina, Colombia, and
Venezuela.
This year, it is projected that Peru’s economy will be one of the
fastest growing in Latin America, with a growth of 3.5% of GDP.
This is mainly explained by the impulse of private consumption
and domestic demand, improved labor indicators and the
recovery of exports.
Why Peru?
In all sectors of the economy, Peru seeks to attract both
domestic and foreign investment. To achieve this, it has taken
the necessary steps to establish a consistent investment policy
that eliminates any barriers that foreign investors may face. As a
result, Peru is considered a country with one of the most open
investment systems in the world, its current investment regime
is simple, 95% of its export destinations and the countries
origin of its imports are covered by trade agreements, such
as the free trade agreements signed with the United States,
China, and Europe. In other words, Peru is one of the most
open economies. Similarly, Peru’s tax regime is very simple in
the practical application of its taxes, tariffs, and contributions.
These are many times lower than those of our Latin American
neighbors.
According to Doing Business 2015, Peru ranks 35th out of 189
countries in terms of ease
of starting a company
and doing business, and
ranks second in Latin
America, as corroborated
by Forbes. To this we must
add the great projections
for Peru, from the ‘Big
Three’ credit rating
agencies (Standard & Poor’s, Moody’s and Fitch Group), which
has enabled us to have much more international attention. I
have to highlight that Peru had the most accelerated risk rating
evolution of the region in the last 15 years (Moody’s).
These solid perspectives give Peru, as an achievement, the
chance to be considered part of the 23 countries that will
contribute in 73% of all the world growth, between 2013 and
2022 (BBVA Research).
Today, Peru is part of the Pacific Alliance which is positioned
as the eighth-largest economy in the world. Besides its
economic importance and trade liberalisation, it is considered
the commercial complement of the major economies in the
world, especially the Asia-Pacific hub, which makes it even
more attractive. This economic bloc is reinforced by the Latin
American Integrated Market (MILA), which results from the
integration of the stock markets of Chile, Colombia, Mexico and
Peru.
Peru: Countless opportunities
for investment
Direct foreign investment stock by sector in US$
Sector 2014
Mining 5,604
Finance 4,298
Communications 3,932
Industry 3,163
Energy 3,074
Commerce 798
Petroleum 680
Services 674
Transport 364
Others 695
Total US$ 23,283
Mining
24%
Finance
18%
Communications
17%
Industry
14%
Energy
13%
Others
3%
Commerce
3%
Services
3%
Petroleum
3%
Transport
2%
COUNTRY REPORT |PERU

2. LatAm INVESTOR31 Q4 2015|
Key takeaways for investors
Peru has adopted a legal framework for investments that
requires no previous authorisation for foreign investment. In
this regard, foreign investments are allowed without restrictions
in the large majority of economic activities.
Foreign investors may remit abroad the net profits (without
any restriction whatsoever) from their registered investments,
as well as transferring their shares, ownership interests, or
participatory rights, perform capital reductions, and dissolve or
wind-up their companies.
In addition, the Peruvian law recognises the following types of
private involvement: (a) Private Initiative, which may be: i) Self-
Sustainable or ii) Co-Financed (b) Public-Private Partnership
(PPP) and (c) Transfer of Public Works for the Payment of Taxes.
The Peruvian government guarantees legal stability to national
and foreign investors with regard to the legislation governing
income tax and specifically, distribution of dividends. Foreign
investors with the right to obtain legal and tax stability are
those willing to invest in Peru for a period of no less than two
years and for a minimum amount of $5million in any sector
activity (just for Mining and/or Hydrocarbons a minimum of
$10million).
Peru in 2025
The country’s future is promising but the need to reactivate
the economy is vital to overcome challenges and be part of
the Organization for Economic Cooperation and Development
(OECD), where the countries which share the best practices to
multiply their economic and social development belong.
In 2025, Peruvian exports should reach $150 billion; today we
skirt $40 billion. It is a major challenge if we compare the last 10
years (2005-2014) when our exports grew 120%, with a starting
sector not far from being difficult.
Peru is currently in the beginning of his period of “demographic
bonus”, where the population reaches its highest record of
production, consumption, savings and investment, this period
should not be missed for our definitive consolidation, making it
a key to attract more foreign investment.
If all goals are accomplished, in 2025 we should be one of the
10 countries with the greatest ease of doing business, increase
our average annual productivity in 5%, and achieve an annual
growth of 1.8% workforce. This and more information can be
downloaded from the website: www.ey.com/PE/es/Issues/EY-
Issues-libreria-vista-general
ey.com/pe /EYPeru /company/ernstandyoung@EYPeru /EYPeru perspectivasperu.ey.com
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