Foreign Direct Investment

Peru is very much open to trade with its neighbours and the rest of the world, and has a favourable business environment for foreign investors. According to UNCTAD 2022 World Investment Report, FDI inflows reached USD 5.9 billion in 2021, a significant increase from the previous year, when inflows totalled USD - 871 million amid the economic crisis triggered by the Covid-19 pandemic. That same year, total stock of FDI stood at USD 117.8 billion, a slight increase from 2020, when stock stood at USD 111.9 billion. Thanks to its attractive legislative and fiscal framework and a dynamic mining sector, Peru was able to attract new investment in recent years. The country is the fourth recipient of FDI in Latin America after Brazil, Colombia, and Chile. FDI comes primarily from Spain (the largest investor), the rest of the European Union, the United States and the UK. Chile, Brazil and the Netherlands are also among the major investors. The sectors that attracted most of the FDI are mining, communications, industry, finances and energy.

According to the Economist Business Environment, Peru ranks 48 out of the 82 countries reviewed for their investment climate. Peru's attractiveness for FDI comes from its low cost of wages 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. Among the most notable investments to happen in the country in recent years are the construction of the mega-port of Chancay by the Chinese state-owned Cosco Shipping Ports for about USD 3 billion, and the Amazon Waterway, a USS 95-million initiative involving China’s Sinohydro.