Foreign Direct Investment
Peru is very open to trade with its neighbours and the rest of the world, and has a favourable business environment for foreign investors. According to UNCTAD's World Investment Report 2023, FDI inflows reached USD 11.6 billion in 2022, more than double compared to the previous year, when inflows totalled USD 5.7 billion. That same year, total stock of FDI stood at USD 129.5 billion, around 53.4% of the country’s GDP. Foreign direct investment reached a total of USD 30,172 million by the end of 2023, as reported by ProInversión. The mining sector emerged as the most appealing for investment, closing 2023 with USD 6,917 million, constituting 22.9% of the total. Following closely were the finance sector (USD 6,624 million; 22%) and communications (USD 5,521 million; 18.3%). Data from the Central Bank show that the sectors receiving most of the FDI stock are mining (22.9%), finance (22%), communications (18.3%), energy (11.6%), and industry (11.4%). In terms of countries, the main investors are the United Kingdom (20.9%), Spain (17.2%), Chile (11.9%), the U.S. (10.7%), the Netherlands (4.6%), Colombia (4.5%), and Brazil (4%).
Peru's attractiveness for FDI comes from its inexpensive labour compared to developed countries and its non-restrictive policy on dividends. Other positive points in investing in Peru are its abundant natural resources, developed domestic market, and its closeness to the Chilean, Colombian and Mexican markets as together they form the Pacific Alliance. The country has an investment promotion agency, ProInversion, which seeks to attract foreign investment particularly in free trade zones and the country's infrastructure sector. However, even though the Peruvian government is open to attracting FDI in the country, the authorities need to reduce customs barriers, make the tax legislation more flexible, improve the efficiency of public institutions and strengthen the rule of law in order to keep the country attractive to investors. In recent years, Peru has been enhancing its strategy to improve the business climate and the country has implemented policies that made it easier to invest in the country, mainly by simplifying post-registration procedures. Some potential barriers to investing in Peru include a high vulnerability to commodity prices, lack of infrastructure, a slow and bureaucratic legal framework, and corruption. Peru ranks 76th among the 132 economies on the Global Innovation Index 2023 and 49th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | -417 | 5,755 | 11,656 |
FDI Stock (million USD) | 111,967 | 117,845 | 129,541 |
Number of Greenfield Investments* | 43 | 60 | 50 |
Value of Greenfield Investments (million USD) | 1,738 | 2,326 | 1,328 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Peru | Latin America & Caribbean | United States | Germany |
Index of Transaction Transparency* | 9.0 | 4.1 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 6.0 | 5.2 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 6.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.