Peru is fast becoming a mining powerhouse, with the mining sector experiencing the fastest growth in modern history; with the sector now accounting for over 50% of foreign currency, 20% of tax revenue and 11% of gross domestic product. The country is an attractive market for establishing a legal entity, allowing 100% foreign ownership and minimal capital controls, and a relatively attractive company tax rate.
“According to the data published by the agency of “Promoción de la Inversión Privada en el Perú” (Pro Inversion), there are four (4) points to explain why it is a good decision to invest in Peru:
- Macroeconomic Soundness; since in recent years GDP has grown rapidly (by 1.3% from 2015 to date), 4.0% in June 2016 and with a total growth estimated at 4.3% to 2017.
- Favorable Investment Climate; Peru is one of the Latin American countries with the greater macroeconomic stability, registering one of the lowest inflation rates at regional level (3%), compared to Chile (3.7%), Mexico (3.9%), Colombia (4.2%) and Brazil (5.9%). Also during the past 10 years, Peru has maintained a stable exchange rate and a country risk level below the regional average, consequently reducing the loss risk of the capital invested in the country.
- Policy Trade Integration; Peru offers a favorable legal framework for foreign investment, in which the emphasis is on non-discriminatory treatment, free movement of capital, free competition and freedom to access internal and external credit. Finally, Peru has
- Potential Sectors for Good Investment; particularly the mining sector; ranking as the third largest worldwide producer of copper, silver, tin and zinc, the largest producer in Latin America of gold, zinc, tin and lead, and the second largest producer of copper, silver, mercury, diatomite, rock phosphate and molybdenum. Moreover, Peru is one of the few countries in the world with non-metallic minerals of diatomite, bentonite, limestone and phosphates, among others.
Many consider that the election of Pedro Pablo Kuczynski (PPK) as the new President of Peru, will have a very positive effect on the Peruvian economy and foreign investment will be highly supported. PPK was sworn in as President on 28 July, 2016, and with his background as a former World Bank Official and Wall Street banker, he has lifted investor’s hopes with a plan for infrastructure investment, small business assistance and job programs. PPK is said to be looking to increase foreign investment and grow the country’s all important mining and banking sectors. “This President is going to be very good for Peru,” said Epiphany’s Mr. Creixell, who holds positions in Credicorp, Southern Copper, Buenaventura as well as Peru’s iShares ETF. “He’s going to be good for the markets …and good for the international community.”
Finally, like other countries across Latin America, Peru is becoming more and more welcoming to outside investors and this can be clearly seen from the country’s company incorporation requirements. A Peruvian company can be 100% owned by foreign shareholders and there are minimal (token) capital requirements for incorporation. The same goes for the opening of standard company bank accounts with local Peruvian banking institutions; the opening deposit requirements are minimal, i.e. USD$100 or PEN500 at present. All of which make business in Peru for foreigners to be more accessible and attractive”. – Cheryl Harvey, PBS Country Manager.