In recent years, Peru has been considered as one of the most attractive jurisdictions in the Latin American region to invest in and/or trade with. In the past decade, Peru has had the region’s fastest-growing economy, with an average growth of approximately 6%. Additionally, the home of Machu Picchu and has had very low inflation.
Peru has experienced a strong fall in unemployment, decreasing poverty and a growing middle class (thus creating a larger consumer market). When these factors are combined with a government that is welcoming foreign participation in the market in addition to a wide range of strong national sectors, it becomes clear why companies consider the perfect expansion destination.
Peru has a variety of climates, a large territorial extension with important natural resources and its citizens have great skills and high academic standards. Nowadays, Peru is considered one of the world’s leading emerging countries with a solid economic and industrial background.
See Also: Types of Legal Structures in Peru?
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Why do Business Peru ? Current Economic Status
The El Peruano Newspaper has identified Peru’s extraordinary perspective as a mining country, where the extractive industry is a strong contributor to economic growth. Additionally, the Peruvian mining sector, together with its capacity was published at the fair, called Prospectors and Developers Association of Canada (PDAC) that was held in 2018. Here, a delegation composed of 280 entrepreneurs from the mining industry participated, which showed the potential of Peru with cases such as Quellaveco, where communities of Moquegua agreed on a social agreement to start this promising project. This is a key sector that makes up more than 50% of the country’s exports and massively supports Peru’s Gross Domestic Product (GDP).
According to the last Inflation Report from the Central Bank, it is expected that Peru will grow 4% this year (2019) and will keep this growth in 2020. The Peruvian economy has an uninterrupted annual growth over the past 18 years, at rates above the average for the Latin American region. This is based on the strong private consumption growth and announcements of investment projects both private and public. Furthermore, private investment is estimated to grow by 6.5% in 2019. Investment, together with the increase in public spending, will be the key factors for sustainable development in the Peruvian economy this current and upcoming year.
It must be highlighted that Peru is now under new management with President Martin Vizcarra, who gave confidence to the economic agents reflecting a responsible economic policy. He mentioned the following: ”Our commitment is to ensure that Peru is an accessible and safe country to do business with clear and stable rules. We bet on the promotion of investment, innovation, and diversification to promote a modern economy of increasing productivity and competitiveness, based on national entrepreneurship driven by micro, small and medium enterprises”.
Peru’s Five Pillars for Sustainable Growth
We can say that Peru is an up-and-coming country with sustainable economic growth with more public and private investments. In the same vein, it has a solid macroeconomic framework with improvements in macroeconomic policies and low inflation rates. Peru’s economic success and growth can be attributed to the five pillars of the local economy:
- The evolution of mining.
- The execution of infrastructure projects.
- Middle-class growth.
- A solid macroeconomic framework.
- The development of agro-industry, tourism, and gastronomy.
Another key national sector is the oil and gas industry. This sector has been considered as one of the largest contributors to Peru’s economic growth. Peru has a hydrocarbon potential of 10 billion barrels of oil throughout the country.
However, the economy is usually exposed to natural risks, external factors and the recurrent weather phenomena such as El Niño, which has had a terrible impact in Peru. Thus, in order to overcome these risks, Peru must develop a strong economy, create monetary stability, and promote responsible fiscal management.
Currently, Peru provides individuals and companies with great investment opportunities. The region has excellent regional commercial relationships and takes part in international forums looking for the strengthening of the multilateralism; that is why Peru is a member of the Pacific Alliance, an organization that seeks to facilitate the liberation of trade in goods and services, the free movement of people and capital, and to promote mechanisms for cooperation among member countries (Chile, Colombia, and Mexico). Furthermore, its entry to the Organization for Economic Co-operation and Development (OECD) will strengthen business relationships across the globe. Additionally, Peru has implemented a strategy to improve the quality of public policies and services.
Company Registration Process
Doing business in Peru is a great option for business large and small available in various sectors. To begin with, the Peruvian company registration process is straightforward and can be completed in a matter of weeks. In fact, working with a local partner can allow you to incorporate the company without the need for you to enter the country.
Furthermore, 100% of foreign business ownership is allowed in Peru and companies owned by foreign individuals have the same rights as companies owned by local persons.
In Peru, there a variety of different legal entities that can be incorporated. These include publicly held corporations, joint stock companies, and limited liability companies. Additionally, a foreign branch office can be opened. The business structure that is most commonly used in Peru by foreign corporations is the Closely Held Corporation, called a ‘Sociedad Anónima Cerrada’ (S.A.C.). The SAC is a variable stock company which requires a minimum of 2 shareholders and liability is limited to the shareholders’ capital contribution.
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Peru’s ability to create a strong and welcoming investment climate will obtain a wide range of market opportunities for business looking to expand their business abroad and to access new markets. When considering global expansion, especially in Latin America, it is advisable to work with a local partner.