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 2024, FDI inflows reached USD 3.33 billion in 2023, down from the record level registered one year earlier (USD 12 billion). At the end of the same period, the total stock of FDI stood at USD 132.54 billion, around 49.5% of the country’s GDP. The announced greenfield investment projects in 2023 stood at 1,773. The United Kingdom (19%), Spain (18%), Chile (12%), and the United States (11%) are the main sources of capital contributions to Peru, accounting for 58% of the balance as of December 2023. In terms of sectoral distribution, 63% of the contributions were concentrated in mining, finance, and communications (at 23%, 22%, and 18%, respectively – data ProInversión). By the end of 2024, FDI reached USD 6.89 billion, above the decade’s average, with profit reinvestment being the main driver. This reflects investor confidence in the country’s economy. While capital contributions have declined, debt instruments saw negative flows of USD 663 million in 2023 and USD 312 million in 2024, indicating a net outflow as subsidiaries repaid more to parent companies, suggesting a conservative financial approach (data Lima Chamber of Commerce).

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, ProInversión, 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, a lack of infrastructure, a slow and bureaucratic legal framework, and corruption. Peru ranks 75th among the 133 economies on the Global Innovation Index 2024 and 54th out of 184 countries on the latest Index of Economic Freedom.