THEBUSINESSYEAR 197

Executive Guide

Helpful hints and useful tips to guide you through the nitty-gritty of business ettiquette in the country.

204 When in Peru: a selection of the finest hotels from across the country, to suit every business traveler.

202 The human resources sector is providing smart solutions to increase labor market efficiency.

201

n monetary terms, poverty has been reduced by half in recent years, with more Peruvians living in better conditions, with a brighter future.

Nowadays, Peru is a true economic miracle nearly 20 years after the end of hyperinflation and terrorism: these circumstances have given way to the best possible conditions of stability, respect, and promotion of investment in the region, making Peru the fifth-largest economy in South America—measured in purchasing power parity—after Brazil, Argentina, Colom-bia and Chile.

What to expect for Peru in the year 2025?Today, Peru is considered one of the world’s

leading emerging markets, with a solid recent history of economic stability based on an un-interrupted average annual growth over the past 15 years of 5.3% of its GDP, as well as a people who are notable for their productiv-ity and entrepreneurship. According to the IIMF, Peru is part of the new wave of leading emerging markets, and today has solid fun-damentals, a framework of sensible policies, and a prudent macroeconomic approach, all of which enables it to enjoy sustained growth and reduced vulnerability. This outlook gives great expectations towards the country’s en-vironment for doing business in 2025. In the following chart, we present some of the goals the country has to achieve over the period of ten years.

BUSINESS ENVIRONMENT Peru seeks to attract both domestic and foreign investment in all sectors of the economy. To achieve this, it has taken the necessary steps to

IFrom the beginning of

the new millennium through 2014, Peru

has achieved an impressive cumulative

GDP growth of 116% accompanied by a

cumulative inflation during the same

period of just 52%—the best rates of their

kind in Latin America.

INVEST THIS

R E V I E W D O I N G B U S I N E S S

establish a consistent investment policy that eliminates barriers that foreign investors may face. As a result, Peru is considered a country with one of the most open investment systems in the world. According to Doing Business 2015, Peru ranks 35th out of 189 countries in terms of ease of starting a company and doing business, and ranks second in Latin America, as corroborated by Forbes.

Peru has achieved significant progress in its macroeconomic performance in recent years, with very dynamic GDP growth rates, stable currency exchange rates, and low inflation. This dynamism has been driven by the promo-tion and diversification of exports, the world commodity prices, market policies beneficial to investors, and aggressive free trade strat-egies. Over the past decade, Peru’s GDP has tripled as a result of the country’s economic growth, moving increasingly towards a middle and upper-middle income economy.

The development strategy of Peru is based on an economy opened to the world and com-petitive in its export offer. It has been a suc-cessful strategy that has permitted the coun-try to consolidate its foreign trade in goods and services as an instrument for economic development and the reduction of poverty. International trade negotiations, which have benefited from rigorous macroeconomic management and consequent stability, have allowed the Peruvian economy to gradually tackle and reduce its external vulnerability in times of crisis such as the current internation-al situation. In recent years, Peru has negoti-ated Free Trade Agreements (FTA) with large- and medium-sized markets.

THEBUSINESSYEAR198 PERU 2015

PERU’S PRINCIPAL ECONOMIC ACTIVITIESThe Peruvian economy reflects its varied ge-ography. The abundance of resources is found mainly in mineral deposits in the mountainous regions, while its extensive maritime territory has always yielded excellent fishing resources. Despite the fluctuations of the world econo-my, the administration has resisted pressures for fiscal spending and has used the savings generated by the high prices of commodities between 2006 and 2008, investing from 2011 as of today in infrastructure and in social aid programs, paying off part of the public debt, and increasing assets.

In 2014, the non-traditional productive mar-kets that registered the highest exports were the agricultural (21.2%) and handcraft (61.9%) mar-kets. With regards to the traditional products, the most important were gold, copper, silver, lead, tin, zinc, gas, petroleum oil, coffee, quinoa, and fishmeal. In mining, according to the Mineral Commodity Summaries Publication authored by the US State Department, Peru ranked third in the world in 2014 in the production of silver, copper, tin and zinc, fourth in molybdenum and lead, fifth in mercury, and sixth in gold, besides having large deposits of iron ore, phosphates, manganese, petroleum, and gas.

WHAT INVESTORS SHOULD KNOW (LEGAL STRUCTURE, TAXES, AND PROMOTION MECHANISMS)There are different types of legal entities which investors can use in order to incorporate busi-nesses in Peru. The following are those most commonly used by foreign investors:

Joint stock companiesA minimum of two shareholders is required. Non-domiciled shareholders must appoint an attorney-in-fact to sign off on the by-laws on their behalf. Funds in local or foreign currency for the initial capital contribution must be de-posited in a local bank. There is no minimum amount required by law, but financial institu-tions generally require a minimum initial cap-ital of approximately $330.

Closely held corporationsClosely held corporations resemble limited li-ability companies and must have a minimum of two and a maximum of 20 shareholders. Shares cannot be registered in the Public Reg-istry listed on the Stock Exchange.

Publicly held corporationsPublicly held corporations are intended ba-sically for companies with a large number of shareholders (more than 750) or for which an Initial Public Offering has been made, or which have debts that can be converted into shares, or in which more than 35% of the cap-ital stock belong to 175 or more shareholders. They must be registered in the Public Registry listed on the Stock Exchange.

There are different types of legal entities which investors can use in order to incorporate businesses in Peru.

Doing Business

and forbes: Peru is ranked within the ten countries in the world where it is easiest to

do business

Consolidation of the Latin

American integrated Market (MILA) as a global reference on

the stock market

Global Infrastructure

and telecommunications:

Indicator of road density reflects the connectivity

of domestic markets and dynamism of

commercial activity

PERU: FULL MEMBER COUNTRY OF THE OECD

Average annual growth of the GDP per

capita of US$20,000 (measured in PPP):

fourth in Latin America

Boosted production,

consumption and investment utilizing

the demographic bonus: maintains

long-term growth

Investment grade AAA

risk free

Free Trade

Arrangements signed with all the top 20 economies

in the world

Consolidated advantage in

energy costs on a regional level

(utilization of gas, hydric and wind

energy)

Peru is a

country free of the "middle-

income trap"

General progression

of indicators of political stability,

corruption control and judical independence:

absence of violence

Infrastructure gap closes

(today US$ 87 billion)

World leader in

the exploration of fruit, vegetables,

some grains and niche organic

products

Annual exports

of US$ 150 billion

Attraction of High

Annual Direct Foreign Investment,

constant and not less than 6% of

the GDP

Elimination of the

necessity of a visa for the first 50 economies in the

world