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Executive Summary

The Government of Peru’s (GOP’s) focus on sound fiscal management and macroeconomic fundamentals contributed to the country’s region-leading economic growth since 2002. The COVID-19 pandemic caused a severe economic contraction of over 11 percent in 2020, but Peru recovered with 13.3 percent GDP growth in 2021. Recent political instability (Peru has had four presidents since 2020) is restricting near-term growth, with consensus forecasts calling for approximately 3.0 percent GDP growth in 2022, and 2.9 percent in 2023. COVID-19 health costs and an economic stimulus package strained Peru’s fiscal accounts somewhat, but the deficit stabilized to 2.6 percent of GDP in 2021. The surge in spending, however, continues to impact Peru’s debt, which increased from 26.8 percent of GDP in 2019 to 36.1 percent in 2021. Net international reserves remain strong at $78.4 billion. Global price pressures moved inflation higher, to 4.0 percent in 2021, a significant spike from the 1.8 percent in 2020. Inflation continued in 2022, with Peru’s 12-month rate through March reaching 6.8 percent.

Along with recent political instability, corruption, and social conflict negatively impact Peru’s investment climate. As of April 1, 2022, President Castillo had appointed four cabinets since taking office in July 2021. Allegations of corruption plague the current and previous administrations. Transparency International ranked Peru 105th out of 180 countries in its 2021 Corruption Perceptions Index. Peru’s Ombudsman office reported 157 active social conflicts in the country as of February 2022. More than half of them (86) occurred in the mining sector, which represents 10 percent of Peru’s economic output. Citing political instability, including contentious relations between the administration and congress, and governance challenges, the three major credit rating agencies (Fitch, Moody’s, and S&P) downgraded Peru’s sovereign credit ratings since Castillo’s inauguration. All three, however, maintained Peru at investment grade.

Peru fosters an open investment environment, which includes strong protections for contract and property rights. Peru is well integrated in the global economy including with the United States through the United States-Peru Trade Promotion Agreement (PTPA), which entered into force in 2009. Peru’s investment promotion agency ProInversion seeks foreign investment in nearly all areas of the economy, particularly to support infrastructure. Prospective investors would benefit from seeking local legal counsel to navigate Peru’s complex bureaucracy. Private sector investment made up more than two-thirds of Peru’s total investment in 2021.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank/Amount Website Address
TI Corruption Perceptions Index 2021 105 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 70 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 7,394 https://apps.bea.gov/international/factsheet/  
World Bank GNI per capita 2020 USD 6,030 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD   

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Peru seeks to attract investment, both foreign and domestic, in nearly all sectors. Peru reported $2 billion in Foreign Direct Investment (FDI) in 2021 and seeks increased investment for 2022. It has prioritized public-private partnership projects in transportation infrastructure, electricity, education, telecommunications, ports, health, and sanitation, among other sectors.

Peru’s 1993 Constitution grants national treatment for foreign investors and permits foreign investment in almost all economic sectors. Under the constitution, foreign investors have the same rights as national investors to benefit from investment incentives, such as tax exemptions. In addition to the constitutional provisions, Peru has several laws governing FDI including the Foreign Investment Promotion Law (Legislative Decree (DL) 662 of September 1991) and the Framework Law for Private Investment Growth (DL 757 of November 1991). Other important laws include the Private Investment in State-Owned Enterprises Promotion Law (DL 674) and the Private Investment in Public Services Infrastructure Promotion Law (DL 758). Article 6 of Supreme Decree No. 162-92-EF (the implementing regulations of DLs 662 and 757) authorized private investment in all industries except within natural protected areas and weapons manufacturing.

Peru and the United States benefit from the United States-Peru Free Trade Agreement (PTPA), which entered into force on February 1, 2009. The PTPA established a more secure, predictable legal framework for U.S. investors in Peru. The PTPA protects all forms of investment. U.S. investors enjoy the right to establish, acquire, and operate investments in Peru on an equal footing with local investors in almost all circumstances. The PTPA can be found here: https://ustr.gov/trade-agreements/free-trade-agreements/peru-tpa 

The GOP created the investment promotion agency ProInversion in 2002 to manage privatizations and concessions of state-owned enterprises and natural resource-based industries. The agency currently focuses on private concessions in the energy, education, transportation, health, sanitation, and telecommunication sectors, and organizes international roadshow events to attract investors. Specific project opportunities are available on the ProInversion website: https://www.investinperu.pe/es/app/cartera-de-proyectos-de-proinversion . Companies are required to register all foreign investments with ProInversion.

Peru’s National Competitiveness Plan 2019 – 2030 outlined a set of recommendations aimed to make Peru’s economy and investment climate more competitive. The 2019 National Infrastructure Plan (PNIC) identified 52 priority infrastructure projects to help address an estimated $110 billion infrastructure gap, some of which are underway including construction of Lima metro lines, an expansion to the Jorge Chavez International Airport, and multiple energy projects. Investors report in recent years that Peru’s energy projects advance more quickly than transport and agricultural projects, which can suffer extended delays. The GOP announced in February 2022 that it will update the PNIC by July 2022 with an emphasis on sustainable development opportunities. Of note, in May 2021, Peru signed a government-to-government (G2G) agreement with France for a $3.1 billion highway project, an opportunity that was not included in the PNIC.

Although Peru has generally supported private investments since the 1990s, administrations occasionally pass measures that some observers regard as contrary to the nation’s open and free market orientation. In December 2011, for example, Peru signed into law a 10-year moratorium on the entry of live genetically modified organisms (GMOs) for cultivation. In December 2020, the government extended the moratorium for an additional 15 years, until 2035.

Limits on Foreign Control and Right to Private Ownership and Establishment

Peru’s Constitution (Article 6 under Supreme Decree No. 162-92-EF) authorizes foreign investors to carry out economic activity provided that investors comply with all constitutional precepts, laws, and treaties. Exceptions exist, including exclusion of foreign investment activities in natural protected reserves and military weapons manufacturing. Peruvian law requires majority Peruvian ownership in media; air, land, and maritime transportation infrastructure; and private security surveillance services. Foreign interests cannot “acquire or possess under any title, mines, lands, forests, waters, or fuel or energy sources” within 50 kilometers of Peru’s international borders. However, foreigners can obtain concessions in these areas and in certain cases the GOP may grant a waiver. The GOP does not screen, review, or approve foreign direct investment outside of those sectors that require a governmental waiver.

Other Investment Policy Reviews

The World Trade Organization (WTO) published a Trade Policy Review ( https://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm#bycountry ) on Peru in February 2020. The WTO commented that foreign investors received the same legal treatment as local investors in general, although Peru restricted foreign investment on property at the country’s borders, and in air transport and broadcasting. The report highlighted the government’s ongoing efforts to promote public-private partnerships (PPPs) and strengthen the PPP legal framework with Organization for Economic Cooperation and Development (OECD) principles. The report noted that Peru maintained a regime open to domestic and foreign investment that fostered competition and equal treatment.

In January 2022, the OECD formally opened accession discussions with Peru. The GOP expects the OECD will adopt an individual Accession Roadmap for Peru later in 2022, which will establish the terms, conditions, and process for accession. The process will include a rigorous evaluation by more than 20 OECD technical committees that will establish expectations covering a wide range of policy areas, including open trade and investment, public governance, integrity and anti-corruption, and environmental protection. There is no deadline for completion of the accession processes, although typically the process takes three-to-five years or more. The outcome and timeline will depend on Peru’s political will and capacity to adjust its regulations and policies to further align with OECD standards and best practices.

Peru has not had a third-party investment policy review through the OECD or UNCTAD in the past five years. Post is also not aware of any major civil society-led investment policy review within the last five years.

Business Facilitation

The GOP does not have a specific regulatory agency that facilitates business operations, but the Institute for the Protection of Intellectual Property, Consumer Protection, and Competition (INDECOPI) reviews the enactment of new regulations by government entities that can place burdens on business operations. INDECOPI has the authority to block any new business regulation. INDECOPI also has a Commission for Elimination of Bureaucratic Barriers: https://www.indecopi.gob.pe/web/eliminacion-de-barreras-burocraticas/presentacion .

Peru allows foreign business ownership, provided that a company has at least two shareholders and that its legal representative is a Peruvian resident. Businesses must reserve a company name through the national registry, SUNARP, and prepare a deed of incorporation through a Citizen and Business Services Portal ( https://www.serviciosalciudadano.gob.pe/ ). After a deed is signed, businesses must file with a public notary, pay notary fees of up to one percent of a company’s capital, and submit the deed to the Public Registry. The company’s legal representative must obtain a certificate of registration and tax identification number from the national tax authority SUNAT (www.sunat.gob.pe). Finally, the company must obtain a license from the municipality of the jurisdiction in which it is located. Depending on the core business, companies may need to obtain further government approvals such as sanitary, environmental, or educational authorizations.

Outward Investment

Peru’s Trade Commission Offices (OCEXs), which promote the exports of Peruvian goods and services, under the supervision of Peru’s export promotion agency PromPeru, are located in numerous countries, including the United States. The GOP does not restrict domestic investors from investing abroad.

2. Bilateral Investment and Taxation Treaties

The PTPA eliminated any need for a separate bilateral investment agreement between the United States and Peru. Peru also has free trade agreements with Australia, Canada, Chile, China, Costa Rica, the European Union, the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland), Honduras, Japan, Mexico, Panama, Singapore, South Korea, Thailand, the United Kingdom, and Venezuela. Peru also has Framework Agreements with the South American Common Market trade bloc (MERCOSUR) countries (Argentina, Brazil, Paraguay, Uruguay, and Venezuela). It has a partial preferential agreement with Cuba.

The Peruvian congress ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership CPTPP (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Singapore, and Vietnam) in July 2021 and former President Sagasti issued a supreme decree the same month establishing September 2021 as the date of entry into force of the agreement. Peru ratified the WTO Agreement on Trade Facilitation, which entered into force in February 2017. The Peruvian government has signed additional agreements that await full implementation, including with Guatemala, the Pacific Alliance (Mexico, Colombia, and Chile), and Brazil.

Peru is a party to 29 bilateral investment agreements which can be found here: https://www.mef.gob.pe/es/?option=com_content&language=es-ES&Itemid=100713&view=article&catid=201&id=4993&lang=es-ES .

Peru does not have a bilateral taxation treaty with the United States. Peru has signed and ratified tax treaties with the Andean Community (Bolivia, Colombia, Ecuador), Chile, Brazil, Canada, Mexico, Switzerland, South Korea, and Portugal. Peru has also signed bilateral taxation treaties with Spain and Thailand, but these have not been ratified by the Peruvian Congress. Peru is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and is party to BEPS’s October 2021 agreement on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

3. Legal Regime

Transparency of the Regulatory System

Laws and regulations most relevant to foreign investors are enacted and implemented at the national level. Most ministries and agencies make draft regulations available for public comment. El Peruano, the state’s official gazette, publishes regulations at the national, regional, and municipal level. Ministries generally maintain current regulations on their websites. Rule-making and regulatory authority also exists through executive agencies specific to different sectors. The Supervisory Agency for Forest Resources and Wildlife (OSINFOR), the Supervisory Agency for Energy and Mining (OSINERGMIN), and the Supervisory Agency for Telecommunications (OSIPTEL), all of which report directly to the President of the Council of Ministers, can enact new regulations that affect investments in the economic sectors they manage. These agencies also have the right to enforce regulations with fines. Regulation is generally reviewed on the basis of scientific and data-driven assessments, but public comments are not always received or made public. The government does not promote or require companies’ environmental, social, and governance (ESG) disclosure.

Accounting, legal, and regulatory standards are consistent with international norms. Peru’s Accounting Standards Council endorses the use of IFRS standards by private entities. Public finances and debt obligations, including explicit and contingent liabilities, are transparent and publicly available at the Ministry of Economy and Finance website: https://www.mef.gob.pe/es/estadisticas-sp-18642/deuda-del-sector-publico .

International Regulatory Considerations

Peru is a member of regional economic blocs. Under the Pacific Alliance, Peru looks to harmonize regulations and reduce barriers to trade with other members: Chile, Colombia, and Mexico. Peru is a member of the Andean Community (CAN), which issues supranational regulations (based on consensus of its members) that supersede domestic provisions.

Peru follows international food standard bodies, including: CODEX Alimentarius, World Organization for Animal Health (OIE), and International Plant Protection Convention (IPPC) guidelines for Sanitary and Phytosanitary (SPS) standards. When CODEX does not have limits or standards established for a product, Peru defaults to the U.S. maximum residue level or standard. Peru’s system is generally more aligned with the U.S. regulatory system and standards than with its other trading partners. Peru notifies all agricultural-related technical regulations to the WTO Technical Barriers to Trade (TBT) committee.

Legal System and Judicial Independence

Peru uses a civil law system. Companies are generally regulated through Peru’s civil code, which includes sections governing contracts and general corporate law. Peru’s civil court system resolves conflicts between companies. Companies can also access conflict resolution services in civil courts. Litigation processes in Peruvian courts are slow.

Peru has an independent judiciary. The executive branch does not interfere with the judiciary as a matter of policy. Regulations and enforcement actions are appealable through administrative process and the court system. Peru is in the process of reforming its justice system. The National Justice Board (Junta Nacional de Justicia), which began operating in January 2020, supervises the selection processes, appointments, evaluations, and disciplinary actions for judges.

Laws and Regulations on Foreign Direct Investment

Peru has a stable and attractive legal framework used to promote private investment. The 1993 Peruvian Constitution includes provisions that establish principles to ensure a favorable legal framework for private investment, particularly for foreign investment. A key constitutional and regulatory principle is equal treatment of domestic and foreign investment. Some of the main private investment regulations include:

  • Legislative Decree 662, which establishes foreign investment legal stability regulations;
  • Legislative Decree 757, which establishes Peru’s private investment growth framework law; and
  • Supreme Decree 162-92-EF, which establishes private investment guarantee mechanism regulations.

Peru’s legal system is available to investors. All laws relevant to foreign investment along with pertinent explanations and forms can be found on the ProInversion website: https://www.investinperu.pe/en/climate/legal-framework-for-investments .

Competition and Antitrust Laws

INDECOPI is the GOP agency responsible for reviewing domestic competition-related concerns. Congress published a mergers and acquisitions (M&A) control law in January 2021. The law currently requires INDECOPI to review and approve M&As involving companies, including multinationals, that have combined annual sales or gross earnings over $146 million in Peru and if the value of the sales or annual gross earnings in Peru of two or more of the companies involved in the proposed M&A operation exceed $22 million each.

A legislative decree issued in September 2018 (DL 1444) modified the public procurement law to allow government agencies to use government-to-government (G2G) agreements to facilitate procurement processes.  The GOP considers the G2G procurement model as a suitable method for expediting priority infrastructure projects in a manner that is more transparent and less susceptible to corruption. However, the USG, outside of the US Army Corps of Engineers, does not have a mechanism to support Peru’s G2G contracts. Peru expanded the use of G2G agreements in 2021 to include large infrastructure projects including a $1.6 billion general reconstruction initiative (related to damages caused by the El Nino event of 2017) and a $3.0 billion Central Highway project.

Expropriation and Compensation

The Peruvian Constitution states that Peru can only expropriate private property based on public interest, such as public works projects or for national security. Article 70 of the Constitution establishes that the State can only expropriate through a judicial process or prior mandate of the law, and only after payment of compensation, including for damages. Peruvian law bases compensation for expropriation on fair market value. Article 70 also guarantees the inviolability of private property.

Public dialogue has at times touched the theme of expropriation or nationalization of the extractives sectors, including during political campaigns, but the GOP has not to date moved forward with any direct expropriation of sectors or businesses. Landowners have alleged indirect expropriation due to government inaction and corruption in “land-grab” cases that have, at times, been linked to projects endorsed by subnational governments.

Dispute Settlement

ICSID Convention, New York Convention

Peru is a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and to the International Center for the Settlement of Investment Disputes (ICSID convention). Disputes between foreign investors and the GOP regarding pre-existing contracts must still enter national courts, unless otherwise permitted, such as through provisions found in the PTPA. In addition, investors who enter into a juridical stability agreement may submit disputes with the government to national or international arbitration if stipulated in the agreement. Several private organizations and entities — including the American Chamber of Commerce, the Lima Chamber of Commerce, and the Pontifical Catholic University of Peru (PUCP) — operate private arbitration centers. The quality of such centers varies, and investors should choose arbitration venues carefully.

Investor-State Dispute Settlement

The PTPA includes a chapter on dispute settlement, which applies to implementation of the Agreement’s core obligations, including labor and environment provisions. Dispute panel procedures set high standards of openness and transparency through the following measures: open public hearings, public release of legal submissions by parties, admission of special labor or environment expertise for disputes in these areas, and opportunities for interested third parties to submit views. The Agreement emphasizes compliance through consultation and trade-enhancing remedies and encourages arbitration and other alternative dispute resolution measures.

The PTPA provides investor-state claim mechanisms. It does not require that an investor exhaust local judicial or administrative remedies before a claim is filed. The investor may submit a claim under various arbitral mechanisms, including the Convention on the Settlement of Investment Disputes (ICSID Convention) and ICSID Rules of Procedure, the ICSID Additional Facility Rules, the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, or, if the disputants agree, any other arbitration institution or rules. Peru has paid previous arbitral awards; however, a U.S. court found in one case that Peru altered its tax code prior to payment, thus reducing interest payments.

In February 2016, a U.S. investor filed a Notice of Intent to pursue international arbitration against the GOP for violation of the PTPA. The investor, which refiled its claim in August 2016, holds agrarian land reform bonds that it argues the GOP has undervalued. The case was argued before the International Centre for Settlement of Investment Disputes (ICSID) in November 2020, but the decision is still pending as of April 1, 2022. In September 2019, a U.S. investor filed an arbitration claim against the GOP over alleged interference on environmental permitting and contractual issues for a hydro power project. The case is still ongoing, with a decision pending as of April 1, 2022. In February 2020, a claimant filed an arbitration claim in the ICSID against Peru for violation of the PTPA regarding a tax and royalty dispute between its mining subsidiary and Peru’s tax authority SUNAT; the case is still ongoing. There is no recent history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

The 1993 Constitution allows disputes among foreign investors and the government or state-controlled enterprises to be submitted to international arbitration.

Bankruptcy Regulations

Peru has a creditor rights hierarchy similar to that established under U.S. bankruptcy law, and monetary judgments are usually made in the currency stipulated in the contract. However, administrative bankruptcy procedures are slow and subject to judicial intervention. Compounding this difficulty are occasional laws passed to protect specific debtors from action by creditors that would force them into bankruptcy or liquidation. In August 2016, the GOP extended the period for bankruptcy from one year to two years. Peru does not criminalize bankruptcy.

4. Industrial Policies

Investment Incentives

Peru offers foreign and national investors legal and tax stability agreements to stimulate private investment. These agreements guarantee that the statutes on income taxes, remittances, export promotion regimes (such as drawbacks, or refunds of duties), administrative procedures, and labor hiring regimes in effect at the time of the investment contract will remain unchanged for that investment for 10 years. To qualify, an investment must exceed $10 million in the mining and hydrocarbons sectors or $5 million within two years in other sectors. An agreement to acquire more than 50 percent of a state-owned company’s shares in a privatization process may also qualify an investor for a legal or tax stability agreement, provided that the added investment will expand the installed capacity of the company or enhance its technological development. The government does not currently offer any incentives for clean energy investments.

Foreign Trade Zones/Free Ports/Trade Facilitation

Peru was accepted as a member of the Association of Free Zones of the Americas (AZFA) as well as the World Free Zone Organization (WFZO) in 2019. Peru has nine Special Economic Zones (SEZ): Free Zones in Tacna, Cajamarca, Chimbote; and Special Development Zones (SDZ) in Ilo, Matarani, Paita, Tumbes, Loreto, and Puno (the last three are currently not in operation).

MINCETUR Supreme Decree 005-2019 published in August 2019 implemented regulations for the SDZ of Ilo, Matarani, Paita, and Tumbes. SDZ businesses can perform activities in seven economic sectors: industry, logistics, repair/overhaul, telecommunications, information technology, science, technological research, and development. SDZs enjoy the same economic benefits as the SEZs. The MINCETUR Foreign Trade Facilitation Office oversees Peru’s free trade zones.

Companies can become SEZ users through public auctions. This condition grants access to tax benefits and customs advantages promoting entry, permanence, and exit facilitation procedures for goods. Benefits include:

Taxes

  • Income Tax exemption (rate outside of the SEZ is 29.5 percent)
  • General Sales Tax (IGV) exemption (rate outside of the SEZ is 16 percent)
  • Municipal Promotion Tax exemption (rate outside of the SEZ is 2 percent)
  • Excise Tax (ISC) exemption (rate outside of the SEZ ranges from 2 to 30 percent depending on the product)
  • Ad Valorem tariff exemption when importing products from overseas (rates outside of the SEZ are 0, 6, and 11 percent)
  • Exemption from all central, regional, or municipal government taxes created in the future, except for social security (EsSalud) contributions and fees

Customs

  • Entry of machinery, equipment, raw materials and supplies from abroad is eligible for the suspension of import duties and taxes payments
  • Indefinite permanence of goods within the SEZ, as long as company maintains user status
  • Products manufactured in the SEZ can be exported directly without having to undergo a nationalization customs regime
  • Products manufactured in the SEZ can be entered into national territory under international agreements and conventions
  • Entry of goods into the SEZ is direct and does not require prior storage

Performance and Data Localization Requirements

Peru adopted the Personal Data Protection Law (Law Number 29733) in 2011, and it went into effect in 2013. A data controller who processes personal data must notify the National Authority for Personal Data Protection (ANPDP), which maintains a public register. Personal data is defined as any information on an individual which identifies or makes him/her identifiable through reasonable means, including: biometric data; data on racial and ethnic origin; political, religious, philosophical or moral opinions or convictions; personal habits; union membership; and information related to health or sexual preference. Unless otherwise exempted by statute, data controllers are generally required to obtain the consent of data subjects for the processing of personal data. Consent must be prior, informed, expressed, and unequivocal. A data controller may transfer personal data to places outside of Peru only if the recipients have adequate protection measures.

Data controllers must adopt technical, organizational, and legal measures to guarantee the security of personal data and avoid their alteration, loss, unauthorized processing or access. Peru’s law does not require any notifications to any data subject or any other entity upon a breach. Peru does not have special regulations related to the processing of the personal data of minors. The ANPDP is responsible for enforcement and can issue administrative sanctions/fines based upon whether the violation is mild, serious, or very serious. The law provides a “principle for availability of recourse for the data subject [i.e., the actual person to which to the identifiable personal data refers],” stating that any data subject must have the administrative and/or jurisdictional channel necessary to claim and enforce their rights when they are violated by the processing of their personal data. There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption.

In January 2020, Peru established the Digital Trust Framework (Urgency Decree 007-2020) which provides for personal data protection and transparency, consumer protection, and digital security. The law established the National Digital Secretariat (SEGDI) under the Prime Minister’s Office as the overall coordinator and governing body for digital security, but it placed data protection and transparency under the Ministry of Justice and Human Rights MINJUS. The order created a national data center as a digital platform to manage, direct, articulate, and supervise the operation, education, promotion, collaboration, and cooperation of data nationwide.

5. Protection of Property Rights

Real Property

Peru enforces property rights and interests.  Mortgages and liens exist, and the recording system is reliable, performed by SUNARP, the National Superintendency of Public Records. Foreigners and/or non-resident investors cannot own land within 50 km of a border.

Intellectual Property Rights

Peru is listed on the Watch List in the United States Trade Representative’s (USTR’s) 2021 Special 301 Report. According to the report, Peru has yet to fully address several of the most important and longstanding recommendations from previous Watch List appearances, including fulfilling its intellectual property (IP) obligations under the United States-Peru Trade Promotion Agreement (PTPA), namely Articles 16.11.8 and 16.11.29(b)(ix) regarding statutory damages and Internet Service Provider (ISP) safe harbor protections, respectively.

Nevertheless, the Government of Peru has increased its enforcement activity over the past five years and generally offers strong regulatory intellectual property rights (IPR) protections. Peru’s legal framework provides for easy registration of trademarks, and inventors have been able to patent their inventions since 1994. Peruvian law does not provide pipeline protection for patents or protection from parallel imports. Peru’s Copyright Law is generally consistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), and it provides the same protections for U.S. companies as Peruvian companies in all IPR categories under the PTPA and other international commitments such as the World Intellectual Property Organization (WIPO) and the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Peru’s intellectual property and competition authority INDECOPI is a reliable partner for the U.S. government, the private sector, and civil society, and it has made good faith efforts to decrease the trademark and patent registration backlog and filing time. Although INDECOPI is the GOP agency charged with promoting and defending intellectual property rights, IPR enforcement also involves other GOP agencies and offices, including: the Public Prosecutor’s Office (Fiscalía), the Peruvian National Police (PNP), the Tax and Customs Authority (SUNAT), the Ministry of Production (PRODUCE), the Judiciary, and the Ministry of Health’s (MINSA’s) Directorate General for Medicines (DIGEMID).

In 2021, the GOP approved regulations for a System of Guaranteed Protections for Traditional Specialties (TSG) and Geographical Indications (GIs), which cover various food and food preparations, such as prepared dishes, beer, chocolate and derived products, pastry, bakery, and pastry products, drinks based on plant extracts, alcoholic beverages and/or cocktails, and cheese and dairy products. The GOP also published a Supreme Decree in 2021 regulating access to genetic resources and by-products, including rules on fair and equitable sharing of benefits in access contracts, as well as the obligation to file with INDECOPI the authorization or access contract in patents, industrial designs, plant breeder’s certificates and other intellectual property applications that use genetic resources or by-products with Peruvian origin.

For additional information on Peru’s intellectual property regime, including national laws and points of contact, please see WIPO’s country profile for Peru at: https://www.wipo.int/directory/en/details.jsp?country_code=PE .

6. Financial Sector

Capital Markets and Portfolio Investment

Peru allows foreign portfolio investment and does not place restrictions on international transactions. The private sector has access to a variety of credit instruments. Peruvian mutual funds managed $8 billion in December 2021. Private pension funds managed a total of $33 billion in December 2021.

The Lima Stock Exchange (BVL) is a member of the Integrated Latin American Market, which includes stock markets from Pacific Alliance countries. As of July 2018, mutual funds registered in Pacific Alliance countries may trade in the Lima Stock Exchange.

The Securities Market Superintendent (SMV) regulates the securities and commodities markets. SMV’s mandate includes controlling securities market participants, maintaining a transparent and orderly market, setting accounting standards, and publishing financial information about listed companies. SMV requires stock issuers to report events that may affect the stock, the company, or any public offerings. Trading on insider information is a crime, with some reported prosecutions in past years. SMV must vet all firms listed on the Lima Stock Exchange or the Public Registry of Securities. SMV also maintains the Public Registry of Securities and Stockbrokers.

London Stock Exchange Group FTSE Russell downgraded Peru from Secondary Emerging Market to Frontier status in March 2020. In a statement, the BVL stated that the decision is not necessarily replicable among the other index providers adding that Morgan Stanley Capital International, which is considered a main benchmark for emerging markets, is not expected to reconsider the BVL’s status.

Citing, in part, political instability that has undermined investor confidence and constrained growth prospects, the three major credit agencies downgraded Peru’s sovereign credit ratings since the beginning of President Pedro Castillo’s term in July 2021: Moody’s downgraded in September 2021, Fitch in October 2021, and S&P Ratings in March 2022. Despite the downgrades, all three agencies maintain investment grade ratings for Peru.

Money and Banking System

Peru’s banking sector is highly consolidated. Sixteen commercial banks account for 90 percent of the financial system’s total assets, valued at $172 billion in December of 2021. In 2021, three banks accounted for 72 percent of loans and 69 percent of deposits among commercial banks. Peru has a relatively low level of access to financial services (50 percent nationwide), with access significantly lower outside of Lima and other major urban areas.

The Central Bank of Peru (BCRP) is an independent institution, free to manage monetary policy to maintain financial stability. The BCRP’s primary goal is to maintain price stability via inflation targeting between one to three percent. Year-end inflation rose to 4.0 percent in 2021, up from 1.8 percent in 2020. Inflation continued in 2022, with Peru’s 12-month rate through March reaching 6.8 percent. President Castillo reappointed the BCRP’s well-respected President Julio Velarde for a fourth consecutive five-year term in October 2021.

Analysts consider the banking system to be generally sound, thanks in part to lessons learned during the 1997-1998 Asian financial crisis. Non-performing bank loans accounted for 3.9 percent of gross loans as of December 2021, nearly identical to the 3.8 percent registered in 2020. The rapid implementation of the $39.5 billion BCRP loan guarantee program in response to the COVID-19 pandemic attenuated loan default risk and prevented any major systemic risk to the financial system.

Under the PTPA, U.S. financial service firms have full rights to establish subsidiaries or branches for banks and insurance companies. While foreign banks are allowed to freely establish banks in the country, they are subject to the supervision of Peru’s Superintendent of Banks and Securities (SBS). Peruvian law and regulations do not authorize or encourage private firms to adopt articles of incorporation or association to limit or restrict foreign participation. However, larger private firms often use “cross-shareholding” and “stable shareholder” arrangements to restrict investment by outsiders (not necessarily foreigners) in their firms. As families or close associates often control ownership of Peruvian corporations, hostile takeovers are practically non-existent. In the past few years, several companies from the region, China, North America, and Europe have begun actively buying local companies in power transmission, retail trade, fishmeal production, and other industries.

Foreign Exchange and Remittances

Foreign Exchange

Under Article 64 of the Constitution, the GOP guarantees the freedom to hold and dispose of foreign currency. There have been no reported difficulties in obtaining foreign exchange. Exporters and importers are not required to channel foreign exchange transactions through the BCRP and can conduct transactions freely on the open market. Anyone may open and maintain foreign currency accounts in Peruvian commercial banks. Under the PTPA, portfolio managers in the United States may provide portfolio management services to both mutual funds and pension funds in Peru, including funds that manage Peru’s privatized social security accounts.

The Constitution guarantees free convertibility of currency. However, limited capital controls still exist as private pension fund managers (AFPs) are constrained by how much of their portfolio can be invested in foreign securities according to a cap (currently 50 percent) set by the BCRP. Over the years, the BCRP has gradually increased this operating maximum, reaching the 50 percent limit authorized by Peruvian law in September 2018.

The foreign exchange market mostly operates freely. Funds associated with any form of investment can be freely converted into any world currency. To limit “extreme variations” in the exchange rate, the BCRP intervenes through purchases and sales in the open market without imposing controls on exchange rates or transactions. Since 2014, the BCRP has pursued de-dollarization to reduce dollar denominated loans in the market and purchased U.S. dollars to mitigate the risk that spillover from expansionary U.S. monetary policy might result in over-valuation of the Peruvian Sol relative to the U.S. dollar. In December 2021, dollar-denominated loans represented 22 percent, and deposits 36 percent.

The U.S. Dollar averaged PEN 3.88 per $1 in 2021, up from PEN 3.49 in 2020.

Remittance Policies

Article 7 of the Legislative Decree 662 issued in 1991 provided that foreign investors may send, in freely convertible currencies, remittances of the entirety of their capital derived from investments, including the sale of shares, stocks or rights, capital reduction or partial or total liquidation of companies, the entirety of their dividends or proven net profit derived from their investments, and any considerations for the use or enjoyment of assets that are physically located in Peru, as registered with the competent national entity, without a prior authorization from any national government department or decentralized public entities, or regional or municipal Governments, after having paid all the applicable taxes.

Sovereign Wealth Funds

Peru’s Ministry of Economy and Finance (MEF) manages the Fiscal Stabilization Fund which serves as a buffer for the GOP’s fiscal accounts in the event of adverse economic conditions. It consists of treasury surplus, concessional fees, and privatization proceeds, and is capped at four percent of GDP. The fund was nearly completely exhausted to finance increased spending in response to the COVID-19 pandemic, dropping from $5.5 billion at the end of 2019 to $1 million at the end of 2020, but has since recovered to $4.3 billion by the end of 2021. The Fund is not a party to the IMF International Working Group or a signatory to the Santiago Principles.

7. State-Owned Enterprises

Peru wholly owns 35 state-owned enterprises (SOEs), 34 of which are under the parastatal conglomerate FONAFE. The list of SOEs under FONAFE can be found here: https://www.fonafe.gob.pe/empresasdelacorporacion . FONAFE appoints an independent board of directors for each SOE using a transparent selection process. There is no notable third-party analysis on SOEs’ ties to the government. SOE ownership practices are generally consistent with OECD guidelines.

The largest SOE is PetroPeru which refines oil, operates Peru’s main oil pipeline, and maintains a stake in select concessions. In March 2022, S&P Ratings downgraded PetroPeru’s global foreign currency rating to “junk” status, citing PricewaterhouseCoopers’ refusal to sign the firm’s 2021 financial audit.

Privatization Program

The GOP initiated an extensive privatization program in 1991, in which foreign investors were encouraged to participate. Since 2000, the GOP has promoted multi-year concessions as a means of attracting investment in major projects, including a 30-year concession to a private group (Lima Airport Partners) to operate the Lima airport in 2000 and a 30-year concession to Dubai Ports World to improve and operate a new container terminal in the Port of Callao in 2006.

8. Responsible Business Conduct

Peru has legal and regulatory frameworks to support responsible business conduct (RBC) standards. However, Peru does not have a holistic action plan or national standards for RBC, and there are still challenges of enforcement – particularly in remote regions of the country and with respect to informal workers, indigenous people, and other vulnerable groups. Many Peruvian and multinational companies already adhere to high standards for RBC. Several independent NGOs freely monitor and promote RBC. Standards for conduct on environmental, social, and governance issues are implemented through sector-specific regulation. The UN Working Group on Business & Human Rights is pressing Peru to join the Voluntary Principles on Human Rights and Security Initiative as part of its work towards implementing the UN Principles.

Given its importance to the Peruvian economy, the extractives sector has been a GOP priority for promoting RBC. Supreme Decree No. 042-2003-EM promotes social responsibility in the mining sector, encouraging local employment opportunities, community investment, and purchase of local goods and services. The decree requires mining companies publish an annual report on sustainable development activities. In 2012, Peru joined the Extractive Industries Transparency Initiative (EITI) as a compliant country, requiring the GOP and extractive industries to regularly and openly publish government revenues and private firm financials related to oil, gas, and mining. The EITI Board found that Peru had made meaningful progress in meeting the EITI Standard in its first EITI validation in 2017. However, Peru failed to submit its National EITI report due March 2022. Given the reporting lapse, the EITI Board is reviewing Peru’s EITI revalidation.

ProInversion serves as the National Point of Contact (NCP) for the OECD Guidelines for Multinational Enterprises (MNE), to which Peru is an adherent. The NCP participates in activities with the NCP OECD Network located in 50 countries and is in permanent coordination with the OECD Responsible Business Conduct working group.

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

Peru’s updated Nationally Determined Contribution (NDC) goals include reaching national net zero greenhouse gas emissions by 2050. As of March 2022, the Government of Peru is working to update its National Climate Change Strategy (last updated 2015) to align it with the NDC goals. In March 2022 MINAM reiterated the importance of reducing carbon and meetings REDD+ obligations. Peru generally lacks a developed regulatory regime related to the reduction of greenhouse gas emissions.

9. Corruption

Corruption in Peru is widespread and systematic, affecting all levels of government and the whole of society, which, until recently, had developed a high tolerance to corruption. Embezzlement, collusion, bribery, extortion, and fraud in the justice system, politics, and public works by high-level authorities and key public officers is common. Corruption in public procurement is relatively common due to weak control and risk management systems, lack of ethical or integrity values among some public officials, lack of transparency and accountability in procurement processes, social tolerance of corruption, and minimal enforcement. This embedded dynamic has eroded trust in public entities and the private sector.

In 2021, Peru fell to 105 (from 94 in 2020) among 180 countries in Transparency International’s annual Corruption Perceptions Index, below Chile (27), Colombia (87), and Argentina (96), and tied with Ecuador. According to Transparency International, this backsliding reflected, in part, continued problems with structural corruption, impunity, and political instability. National surveys on corruption by Proética, Transparency International’s National Chapter in Peru, identified corruption as one of the leading public issues in the country. The OECD’s January 2022 decision to open accession discussions with Peru may provide momentum for anti-corruption efforts.

It is illegal in Peru for a public official or an employee to accept any type of outside remuneration for the performance of his or her official duties. The law extends to family members of officials and to political parties. In 2019, Peru made the irregular financing of political campaigns a crime, carrying penalties up to eight-years jail time. Peru has ratified both the UN Convention against Corruption and the OAS’ Inter-American Convention against Corruption. Peru has signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and has adopted OECD public sector integrity standards through its National Integrity and Anticorruption Plan.

The Public Auditor (Contraloria) oversees public administration. In January 2017, Peru passed legislative decrees extending the scope of civil penalties for domestic acts of bribery, including by NGOs, corporate partners, board members, and parent companies if subsidiaries acted with authorization.  Penalties include an indefinite exclusion from government contracting and substantially increased fines. The Public Auditor also began auditing construction projects in real time, rather than after project implementation, in an effort to improve transparency. It is also auditing the government’s response to the COVID-19 pandemic.

Resources to Report Corruption

Secretary of Public Integrity of the Prime Minister Office and General Coordinator

Eloy Munive Pariona
Jr. Carabaya Cdra. 1 S/N – Lima,
(51) (1) 219-7000, ext. 1137
emunive@pcm.gob.pe 

General Comptroller’s Office

Jr. Camilo Carrillo 114, Jesus Maria, Lima
(51) (1) 330-3000
contraloria@contraloria.gob.pe 

ProEtica, the Peruvian chapter of Transparency International

Samuel Rotta
Executive Director
Calle Manco Capac 816, Miraflores, Lima
(51) (1) 446-8581, 446-8941, 446-8943
srotta@proetica.org.pe 

10. Political and Security Environment

President Pedro Castillo is Peru’s fifth president in five years (and fourth president since 2020), a reflection of both deep polarization and continued power struggles between the legislative and executive branches over multiple administrations.  Allegations of corruption and incompetence among cabinet ministers spurred Castillo to designate four cabinets in seven months.  There are also ongoing investigations of persons close to the president for alleged high-level corruption. Castillo’s Peru Libre party holds the largest congressional voting bloc, 34 of 130 seats, in an opposition-led congress that took office July 28.  Eleven political parties in the legislature divide the congress in thirds among left, right, and center.  Pedro Castillo has been subject to two failed impeachment motions since his July 2021 inauguration, one in December and the second in March. According to a March 2022 IPSOS poll, Castillo held just a 26 percent approval rating, while President of Congress Maricarmen Alva held just 20 percent approval.

According to the Ombudsman, there were 157 active social conflicts in Peru as of March 2022. Although political violence against investors is rare, protests are common. In many cases, protestors sought public services not provided by the government. Widespread protests in late 2020 across several agricultural producing regions resulted in the repeal and rewriting of the nation’s agricultural law. Protests throughout 2021 and 2022 across several mining producing regions also resulted in temporary suspension of activities at several mining operations, including an intermittent suspension at Peru’s second largest copper mine, Las Bambas, for several months in 2021 and 2022.

Violence remains a concern in coca-growing regions. The Shining Path (Sendero Luminoso, “SL”) narco-terrorist organization continued to conduct a limited number of attacks in its base of operations in the Valley of the Apurimac, Ene, and Mantaro Rivers (VRAEM) emergency zone, which includes parts of Ayacucho, Cusco, Huancavelica, Huanuco, and Junin regions. Estimates vary, but most experts and Peruvian security services assess SL membership numbers between 250 and 300, including 60 to 150 armed fighters. SL collects “revolutionary taxes” from those involved in the drug trade and, for a price, provides security and transportation services for drug trafficking organizations to support its terrorist activities.

At present, there is little government presence in the remote coca-growing zones of the VRAEM. The U.S. Embassy in Lima restricts visits by official personnel to these areas because of the threat of violence by narcotics traffickers and columns of the Shining Path. Information about insecure areas and recommended personal security practices can be found at http://www.osac.gov  or http://travel.state.gov.

11. Labor Policies and Practices

Labor is abundant, although several large investment projects in recent years led to localized shortages of highly skilled workers in some fields. According to the National Bureau for Statistics (INEI), 76.8 percent of the labor force was informal as of December 2021, following an uptick in informal labor caused by the COVID-19 pandemic’s economic impact. Unemployment was 7.4 percent in 2020. Unemployment is most prevalent among 14-24 year olds (14.7 percent in 2020). Additionally, 96 percent of unemployed people reside in urban areas.

Workers in Peru are usually paid monthly. Some workers, like formal miners, are relatively highly paid and, per statute, receive a share of company profits up to a maximum total annual amount of 18 times their base monthly salary. The statutory monthly minimum wage is PEN 930/month ($266 USD). INEI estimated the poverty line to be PEN 344/month ($99) per person, although it varied by region due to different living costs. Many workers in the unregulated informal sector, most of them self-employed, make less than minimum wage. Peru’s labor law provides for a 48-hour workweek and one day of rest and requires companies to pay overtime for more than eight hours of work per day and additional compensation for work at night.

Peru does not have a specific unemployment insurance program, however the “Compensation for Time of Service” (CTS) requirement mandates an employer pay one month’s salary of an employee per year of work into the employee’s CTS Account set for that purpose. When employees stop working for the employer (willingly or not), they can access the CTS Account. In addition, a fired employee receives one month’s salary per year worked, up to a maximum of twelve months.

In December 2020, in response to agricultural worker protests, Congress repealed a 2019 Executive Order (Urgency Decree 043-2019) that had extended policies originally designed to support investment in the agriculture sector. With Congress’s repeal, businesses in the non-traditional exports (NTE) sector, which includes textiles and certain agricultural products, became subject to the same labor rules as other sectors, such as a five-year limit on consecutive short-term contracts.

Labor unions are independent of the government and employers. Approximately six percent of Peru’s private sector labor force was unionized in 2017 (latest date available), with unionization highest in the electricity, water, construction, and mining sectors (ranging from 22 to 39 percent unionization in each sector). Union membership is more common in the public sector (16 percent). The labor procedure law (No. 29497) requires the resolution of labor conflicts in less than six months, allows unions or their representatives to appear in court on behalf of workers, requires proceedings to be conducted orally and video-recorded, and relieves the employee from the burden of proving an employer-employee relationship.

Either unions or management can request binding arbitration in contract negotiations. Strikes can be called only after approval by a majority of all workers (union and non-union), voting by secret ballot, and only in defense of labor rights. Unions in essential public services, as determined by the government, must provide a sufficient number of workers during a strike to maintain operations.

According to the U.S. Department of Labor’s (USDOL’s) Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/peru ), some children in Peru have been subjected to the worst forms of child labor, including in mining and in commercial sexual exploitation, sometimes as a result of human trafficking.  However, in 2020 (the last available report), USDOL reported that Peru made significant advancement in efforts to eliminate the worst forms of child labor.

While the government has made improvements in recent years, it often does not dedicate sufficient personnel and resources to labor law enforcement. The Ministry of Labor created the National Labor Inspectorate Superintendent (SUNAFIL) in 2014 and oversees regional offices to represent the labor inspectorate nationally. In 2021, SUNAFIL employed 822 labor inspectors. SUNAFIL labor inspectors also help identify and investigate cases of forced and child labor. Additional information on forced labor in Peru can be found in the 2020 Trafficking in Persons Report: https://www.state.gov/reports/2020-trafficking-in-persons-report/peru/.

12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs

The DFC is an independent agency of the U.S. Government that provides financing for private development projects. It was created by the Better Utilization of Investments Leading to Development (BUILD) Act of 2018, which consolidated the Overseas Private Investment Corporation (OPIC) and Development Credit Authority (DCA) of the United States Agency for International Development (USAID). In addition to OPIC and DCA’s existing capabilities, DFC is equipped with a more than doubled investment cap of $60 billion and new financial tools. According to the DFC site ( https://www.dfc.gov/our-impact/all-active-projects ) there is only one active project in Peru as of April 1, 2022.

Peru is a member of the Multilateral Investment Guarantee Agency.

13. Foreign Direct Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $224,664 2020 $202,014 https://www.worldbank.org/en/country/peru 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2021 $3,232 2020 $7,394 BEA data available at https://www.bea.gov/
international/di1usdbal
 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $379 BEA data available at https://www.bea.gov/
international/di1fdibal
 
Total inbound stock of FDI as % host GDP N/A N/A 2020 56.9% UNCTAD data available at
https://unctad.org/system/files/
non-official-document/wir_fs_pe_en.pdf

* Source for Host Country Data: Peru’s Central Bank of Reserve , ProInversion .

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (2013 Inward / 2010 Outward) 
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $75,596 100% Total Outward 1,239 100%
United States $16,316 21.6% Chile $0 29.6%
Canada $11,439 15.1% United States $0 21.5%
Spain $5,823 7.7% Panama $0 17.1%
Cayman Islands $5,298 7% Jamaica $0 15.7%
Chile $4,989 6.6% Bolivia $0 9.4%
“0” reflects amounts rounded to +/- USD 500,000.

*Source: Latest IMF data (from 2013 (Inward) and 2010 (Outward)).  There is no host country data available.

Table 4: Sources of Portfolio Investment
Data not available.

14. Contact for More Information

Michael Gunzburger
Economic Officer
U.S. Embassy Peru
+51 1-618-2414
gunzburgerml@state.gov

Esteban Sandoval
Senior Economic Specialist
U.S. Embassy Peru
+51 1-618-2672
sandovalej@state.gov

2022 Investment Climate Statements: Peru
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