HomeReportsBureau of Economic and Business Affairs2023 Investment Climate Statements…Peru

# 					2023 Investment Climate Statements: Peru			

 In this section										/

													EXECUTIVE SUMMARY											

                -  EXECUTIVE SUMMARY 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties 
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention, New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  Resources to Report Corruption 
                -  10. Political and Security Environment 
                -  11. Labor Policies and Practices 
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 
                -  13. Foreign Direct Investment Statistics 
                -  14. Contact for More Information 

## EXECUTIVE SUMMARY

The Government of Peru’s (GOP’s) tradition of pursing sound fiscal and macroeconomic policies contributed to extended periods of region-leading growth over the last two decades. Since 2020, however, increased levels of political instability and related social conflict negatively impacted investor confidence and growth prospects according to each of the major credit rating agencies (i.e., Fitch, Moody’s, and S&P). Peru’s GDP growth in 2022 was 2.7 percent, below the nation’s pre-pandemic trend and well below its four to five percent growth trends achieved prior to 2015. In March 2023, the Central Reserve Bank of Peru (BCRP) forecasted GDP growth in 2023 would remain relatively low at 2.6 percent due in large part to continued social conflicts curtailing the mining and tourism sectors as well as adverse climatic conditions restricting agriculture and fishing production. After significant COVID-19 related spending, the GOP’s deficit stabilized to 1.6 percent of GDP in 2022. The BCRP anticipated government debt levels to also improve, from 34.0 percent of GDP in 2022 to 32.1 percent of GDP by the end of 2024, according to its March 2023 reporting. The country’s net international reserves remain strong at $74.0 billion. External global forces pushed Peru’s inflation to 8.5 percent in 2022, a significant spike from 1.8 percent in 2020. The BCRP’s March 2023 report forecasted year-end 2023 inflation would settle at 3.0 percent (within the BCRP’s acceptable one to three percent range).

Along with recent political instability – in 2022, President Dina Boluarte became Peru’s fifth president since 2020 – corruption and social conflict pose risks to Peru’s investment climate. Transparency International ranked Peru 101st out of 180 countries in its 2022 Corruption Perceptions Index. Peru’s Ombudsman reported 162 active social conflicts in the country as of February 2023. More than half of them (95) occurred in the mining sector, which represents 10 percent of Peru’s economic output. Citing political instability, including governance challenges and contentious relations between the administration and congress, the three major credit rating agencies (Fitch, Moody’s, and S&P) downgraded Peru’s sovereign credit ratings between September 2021 and March 2022. All three, however, maintained Peru at investment grade.

Private sector investment made up 79.9 percent of Peru’s total investment in 2022. Peru fosters an open investment environment, which includes strong protections for contract and property rights, and grants national treatment for foreign investors. 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 and helped drive more than $22 billion in two-way trade in 2022. Peru’s investment promotion agency, ProInversion, seeks foreign investment in nearly all areas of the economy, particularly to support infrastructure. In the past few years, several companies from the region, and from China, North America, and Europe have begun actively buying local companies in key sectors such as energy generation and distribution, power transmission, fishmeal, and retail. Prospective investors would benefit from seeking local legal counsel to navigate Peru’s complex bureaucracy.

							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. The BCRP estimated $5.1 billion in Foreign Direct Investment (FDI) in 2022 (up from $2.0 billion in 2021). The GOP prioritizes public-private partnership projects in transportation infrastructure, electricity generation and distribution, 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, including 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 relevant 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 and 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 concessions and privatizations of state-owned enterprises. 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. The agency also manages the Works for Taxes (*Obras****por****Impuestos*) program, a private investment mechanism that allows companies to invest in public investment projects and deduct that amount from their income taxes (https://www.investinperu.pe/en/oxi). Foreign companies are required to register all investments with ProInversion. Investors can find specific project opportunities on the ProInversion website (https://www.investinperu.pe/es/app/portafolio-de-proyectos-de-proinversion) as well as details on the Works for Taxes program (https://www.investinperu.pe/en/oxi).

Peru’s 2022-2025 National Sustainable Infrastructure Plan for Competitiveness (PNISC) identified 72 priority infrastructure projects to help address an estimated $110 billion infrastructure gap. Of note, the plan seeks investment to support a $5 billion gas pipeline project and a $6 billion expansion of the Lima metro. Key national infrastructure projects already underway include construction of Lima metro lines, an expansion of the Jorge Chavez International Airport in Lima, and multiple energy projects. Investors report in recent years that Peru’s energy projects advance more quickly than transportation and agricultural projects, which can suffer delays.

Although Peru has generally supported private investment since the 1990s, government administrations occasionally promote measures that some observers regard as contrary to the nation’s traditionally 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.

### 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. Investment exclusions exist, including foreign investment activities in natural protected reserves and 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 its latest Trade Policy Review on Peru in February 2020 (https://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm#bycountry). 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 in line 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.

The OECD invited Peru to begin the accession process in January 2022 and adopted Peru’s accession roadmap in June 2022. The roadmap set forth a process for the OECD to evaluate Peru’s adherence and alignment to OECD instruments, standards, and best practices 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 accession completion, although the process typically takes countries four-to-five years or more. The outcome and timeline will depend on Peru’s political will and capacity to adjust regulations and policies to align with OECD standards and best practices.

Peru has not had a third-party investment policy review through the OECD or United Nations Conference on Trade and Development (UNCTAD) in the past five years. Embassy Lima 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 seeks to streamline 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 and has the authority to block regulations it deems overly burdensome on business operations. 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 the 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), under the supervision of Peru’s export promotion agency PromPeru, operate in numerous countries (including the United States) to promote Peruvian exports. 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. The Peruvian government has signed additional agreements that await full implementation, including with Guatemala, the Pacific Alliance (Mexico, Colombia, and Chile), and Brazil. Peru ratified the WTO Agreement on Trade Facilitation, which entered into force in February 2017.

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, Japan, 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. Ministries and agencies usually (but not always) make draft regulations available for public comment. El Peruano, the government’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 individual sectors. For instance, the Supervisory Agency for Forest Resources and Wildlife (OSINFOR), the Supervisory Agency for Energy and Mining (OSINERGMIN), the Supervisory Agency for Telecommunications (OSIPTEL), and the Supervisory Agency for Transportation (OSITRAN) – which all 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. 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 International Financial Reporting Standards (IFRS) 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 two regional economic blocs. Under the Pacific Alliance, Peru seeks to harmonize regulations and reduce barriers to trade with Alliance’s members: Chile, Colombia, and Mexico. Peru is also a member (with Bolivia, Colombia, and Ecuador) 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 the WTO Technical Barriers to Trade (TBT) Committee of all agricultural-related technical regulations.

### 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 and through extra-judicial mediation mechanisms. 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 processes and the court 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, prosecutors, and leaders of the National Electoral Processes Office and Peru’s national identification registry (ONPE and RENIEC, respectively).

### 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; and
- Supreme Decree 162-92-EF, which establishes private investment guarantee mechanism regulations.

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

### Competition and Antitrust Laws

INDECOPI is the GOP agency responsible for reviewing domestic competition-related concerns. Congress passed a mergers and acquisitions (M&A) oversight law in January 2021. The law requires INDECOPI to review and approve M&A activity involving companies, including multinationals, that have combined annual sales or gross earnings over $153 million in Peru or if the value of the annual sales or gross earnings in Peru of two or more of the companies involved in the proposed M&A operation exceed $23 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 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 enter into G2G contracts in Peru. Since the introduction of G2G contracting, Peru has used the mechanism for several multibillion-dollar projects, including a $1.6 billion project with the United Kingdom government in 2020 to reconstruct infrastructure caused by 2017 flooding in northern Peru and a $3 billion project with the French government in 2021 to construct Peru’s central highway.

### 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 legal mandate, 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 discourse has at times touched upon expropriation or nationalization of the extractives sectors, including during the presidential campaign and tenure of former President Pedro Castillo (July 2021 to December 2022), 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 purported land expropriation 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 legal or tax 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 in Lima, 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 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 arbitration awards. 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 is a member of the Association of Free Zones of the Americas (AZFA) and the World Free Zone Organization (WFZO). Peru currently has four Free Trade Zones (FTZs): Zofratacna (in Tacna), Matarani (Arequipa), Ilo port (Moquegua), and Paita (Piura). MINCETUR’s Foreign Trade Facilitation Office oversees Peru’s free trade zones. Companies can become FTZ users through public auctions. This FTZ status grants access to tax benefits and customs advantages promoting entry, permanence, and exit facilitation procedures for goods.

### Performance and Data Localization Requirements

Peru’s Personal Data Protection Law (Law Number 29733) has been in effect since 2013. Data controllers who process personal data must be registered with the National Authority for Personal Data Protection (ANPDP). Personal data is defined as any information on an individual which identifies or makes him/her identifiable through reasonable means, including: biometric information; 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 in place.

Data controllers must adopt technical, organizational, and legal measures to guarantee the security of personal data and avoid its alteration, loss, unauthorized processing, or access. Peruvian laws do not require 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 or fines based upon whether the violation is mild, serious, or very serious. The law provides for some recourse for the data subject when violations occur. There are no requirements for foreign IT providers to turn over source code and/or provide access to encryption.

In 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 Government and Digital Transformation 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 country’s property registry, managed by the National Superintendency of Public Records (SUNARP), is reliable. 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) 2023 Special 301 Report, a congressionally mandated annual review of the global state of intellectual property (IP) rights protection and enforcement. 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 IP obligations under the 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 IP rights 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 IP rights categories under the PTPA.

Peru is a member of the World Intellectual Property Organization (WIPO) and is a signatory to many WIPO-administered treaties including the 1996 WIPO Copyright Treaty (in force since March 2002), the WIPO Performances and Phonographs Treaty (April 2002), and the WIPO Patent Cooperation Treaty (June 2009). In July 2022, Peru’s congress ratified the WIPO Strasbourg, Vienna, and Locarno Agreements. Peru is also a member of the Global Patent Prosecution Highway. Peru is not currently a party to the Madrid Protocol on Trademarks, the Hague System for Industrial Designs, or the WIPO Patent Law Treaty. In July 2022, Peru deposited its instrument of accession to the WIPO Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications (GI), and it entered into force in Peru on October 18, 2022. In addition, Peru enacted Law 31497 that simplifies trademark registration, renewal and protection in June 2022.

Peru’s intellectual property and competition authority INDECOPI is traditionally 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, IP rights 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).

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 $7.6 billion in January 2023. Private pension funds managed a total of $28 billion in January 2023.

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 several 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 was not necessarily replicable among the other index providers adding that Morgan Stanley Capital International (MSCI), which is considered a main benchmark for emerging markets, was not expected to reconsider the BVL’s status. As of March 2023, MSCI maintained Peru’s emerging market status.

Citing, in part, political instability and governance issues undermining investor confidence and growth prospects, the three major credit agencies downgraded Peru’s sovereign credit ratings during former President Castillo’s abbreviated term (from July 2021 to December 2022): Moody’s downgraded in September 2021, Fitch in October 2021, and S&P Ratings in March 2022; all currently with a negative outlook. Despite the downgrades, the three agencies maintain investment grade ratings for Peru.

### Money and Banking System

Peru’s banking sector is highly consolidated. Seventeen commercial banks account for 82 percent of the financial system’s total assets, valued at $159 billion in December of 2022. In 2022, three banks accounted for 71 percent of loans and 70 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 Reserve Bank of Peru (BCRP) is an independent institution with the autonomy 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 8.5 percent in 2022, up from 4.0 percent in 2021. Inflation continued in 2023, with Peru’s 12-month rate through March reaching 8.6 percent. BCRP’s well-respected President, Julio Velarde began his 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 4.0 percent of gross loans as of December 2022, nearly identical to the 3.9 percent registered in 2021.

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 rare.

### 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 (PEN) relative to the U.S. dollar. As of December 2022, 24 percent of loans and 36 percent of deposits were dollar-denominated.

The U.S. Dollar averaged PEN 3.83 per $1 in 2022, up from PEN 3.88 in 2021.

#### 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, 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 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 partially recovered to $1.5 billion by the end of 2022. 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 only exception is Peru’s state-owned oil company Petroperu). 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 and encouraged foreign investors 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 communities, 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. The EITI board, however, subsequently suspended Peru’s membership in May 2022 for failure to submit a long overdue national EITI transparency report. The EITI board reinstated Peru in February 2023 after it finally submitted the report. EITI expects to complete a new validation process for Peru in 2024.

### Additional Resources

Department of State

- Country Reports on Human Rights Practices ;
- Trafficking in Persons Report ;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ;
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ; and;
- Xinjiang Supply Chain Business Advisory 

Department of the Treasury

- OFAC Recent Actions

Department of Labor

- Findings on the Worst Forms of Child Labor Report ;
- List of Goods Produced by Child Labor or Forced Labor ;
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World  and;
- Comply Chain .

### Climate Issues

Peru’s updated Nationally Determined Contribution (NDC) goals include reaching national net zero greenhouse gas emissions by 2050 as set forth in the government’s National Climate Change Strategy (last updated 2015). In September 2022, the government initiated a public consultation process for Peru’s new “National Strategy on Climate Change to 2050.” In January 2023, Prime Minister Alberto Otarola announced in congress that the approval of the revised strategy was a GOP priority although it remains in public consultation as of April 1, 2023. Peru generally lacks a developed regulatory regime related to the reduction of greenhouse gas emissions.

							9. Corruption					

Corruption in Peru is widespread and systemic, affecting all levels of government and society. Embezzlement, collusion, bribery, extortion, and fraud, including by high-level authorities, are common in the justice system, politics, and public works. Corruption in public procurement is relatively common due to weak control and risk management systems, a lack of ethics and integrity on the part of some public officials, lack of transparency and accountability in procurement processes, social tolerance of corruption, and limited or arbitrary law enforcement. This embedded dynamic has eroded trust in public entities and the private sector.

In 2022, Peru scored 36 out of 100 in Transparency International’s annual Corruption Perceptions Index (the same as in 2021), ranking 101 among 180 countries (from 105 among 180 countries in 2021), below Chile (27), Colombia (91), and Argentina (94), and tied with Ecuador. According to Transparency International, Peru’s position 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. The OECD’s January 2022 decision to open accession discussions with Peru may provide momentum for anti-corruption efforts. In addition, since 2020 the U.S. Department of Commerce’s Commercial Law and Development Program (CLDP) has been assisting Peru’s Ministry of Economy and Finance (MEF) draft a new procurement reform law in alignment with international best practices including measures to combat corruption. MEF intends to submit the procurement reform bill for consideration by congress in the second quarter of 2023.

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 of up to eight-years in prison. Peru ratified both the UN Convention against Corruption and the OAS’ Inter-American Convention against Corruption. Peru is also a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and adopted OECD public sector integrity standards through its National Integrity and Anticorruption Plan.

Peru’s 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 audits construction projects in real time, rather than after project implementation, in an effort to improve transparency.

### Resources to Report Corruption

******Secretary of Public Integrity of the Prime Minister Office and General Coordinator****Sarah Farfan CubaJr. Carabaya Cdra. 1 S/N – Lima,(51) (1) 219-7000, ext. 1137emunive@pcm.gob.pe

****General Comptroller’s Office****Comptroller Nelson Shack YaltaJr. Camilo Carrillo 114, Jesus Maria, Lima(51) (1) 330-3000contraloria@contraloria.gob.pe

****Proética****, the Peruvian chapter of Transparency International****Samuel RottaExecutive DirectorCalle Manco Capac 816, Miraflores, Lima(51) (1) 446-8581, 446-8941, 446-8943srotta@proetica.org.pe

							10. Political and Security Environment					

President Dina Boluarte became Peru’s sixth president since August 2016 (and fifth president since 2020) in December 2022, following former president Castillo’s impeachment after he attempted to unconstitutionally close congress and rule by decree. There are several factors that contribute to Peru’s political instability including: deep political polarization; weak, transactional political parties and coalitions; and continued power struggles between the legislative and executive branches across multiple administrations. Former President Castillo’s administration (July 2021 to December 2022) experienced frequent cabinet shifts, often amidst allegations of corruption and incompetence. Congress remains fragmented and it faces its own widespread accusations of corruption cutting across parties and political orientations. As of March 26, Congress had an approval rate of six percent.

According to the Ombudsman’s Office, there were 162 active and 59 latent social conflicts in Peru as of March 2023. Although political violence against investors is rare, protests are common, especially in areas where there are mining and agricultural investments. In many cases, protesters sought public services not provided by the government. Protests throughout 2021 and 2022 in several tourism and mining producing regions resulted in temporary suspension of tourist activities and activities at several mining operations.

Violence remains a concern in coca-growing regions. In addition to other transnational criminal organizations, 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), which includes parts of Ayacucho, Cusco, Huancavelica, Huanuco, and Junin regions. Estimates vary, but most experts and Peruvian security services assess SL membership numbers around 500, including 300 armed fighters. SL allegedly collects “revolutionary taxes” from those involved in the drug trade, illegal mining, illegal logging and, for a price, provides security and transportation services for drug trafficking organizations to support its terrorist activities. The SL controls much of the VRAEM, where 40 percent of Peru’s coca leaf is grown, and approximately 260 metric tons of cocaine per year is produced.

At present, there is little government presence in the remote coca-growing zones of the VRAEM aside from Peruvian military and police bases in the area. The U.S. Embassy in Lima restricts visits by official personnel to these areas because of the threat of violence by narcotics traffickers and the SL. The U.S. Government provides information on insecure areas and recommended personal security practices at http://www.osac.gov or http://travel.state.gov.

							11. Labor Policies and Practices					

Labor is abundant, although hiring managers have complained of localized shortages of highly skilled workers in some fields. According to the National Bureau for Statistics (INEI), 75.7 percent of the labor force was informal as of December 2022. Official GOP reporting placed unemployment at 4.3 percent in 2022. Unemployment is most prevalent among 14- to 24-year-olds (10.4 percent in 2022) and in urban areas (5.2 percent in 2022).

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 1,025/month ($270). INEI estimated the poverty line to be PEN 378/month ($97) per person, although it varied by region. 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, but the “Compensation for Time of Service” (CTS) requirement mandates an employer pay one month’s salary per year of work into the employee’s CTS Account. When employees stop working for the employer (willingly or not), they can access their 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), vote 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 2021 (the last available report), USDOL reported that Peru made moderate advances 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, including the establishment of regional offices. In 202l, 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 2022 Trafficking in Persons Report: https://www.state.gov/reports/2022-trafficking-in-persons-report/peru.

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

The U.S. International Development Finance Corporation (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 are four active projects in Peru as of April 1, 2023.

Peru is a member of the Multilateral Investment Guarantee Agency.

							13. Foreign Direct Investment Statistics