Economic Demographics
Economic Demographics (2020)
- Population: 32.5 million
- Per capita income: US $11,516
- GDP: US $196 billion
Composition of GDP
- Manufacturing: 16.5%
- Commerce: 10.2%
- Mining and Hydrocarbons: 14.4%
- Other Services: 14.9%
- Construction: 5.1%
- Agriculture and Livestock: 5.9%
- Transport and Couriers: 5.0%
- Import Duties and other Taxes: 8.3%
- Public Administration and Defense: 4.3%
- Services Provided to Companies: 4.2%
- Finance and Insurance: 3.2%
- Accommodation and Restaurants: 2.9%
- Fisheries: 0.7%
- Telecommunications: 2.7%
- Electricity and Water: 1.7%
Peru is one of the most important countries in Latin America. Its diverse characteristics include a variety of climates, vast territorial expanse, significant natural resources, people with great skills, high academic standards, and a solid economic and industrial background. Today, Peru is considered one of the world’s leading emerging markets, with a solid recent history of economic stability based on an uninterrupted average annual growth of 4.6% of its Gross Domestic Product (GDP) over this millennium until December 2019.
Peru has been one of the economies with the greatest growth in the region over the past two decades, maintaining stable macroeconomic policies that have allowed the country to promote private investment and drive growth of the internal market, developing, at the same time, a clear policy of integration with international markets.
Peru’s macroeconomic strengths - low levels of debt, inflation, and fiscal deficit, while maintaining high levels of international reserves - have been fundamental in facing the economic impact of COVID-19. Such strengths, in particular the fiscal one, have made it possible to implement one of the most important economic recovery plans in the region (12% of GDP) and experience a rapid rebound after having recorded historical falls due to COVID-19.
Peru will be one of the Latin American countries that manages to return to pre-COVID-19 levels by 2022, as foreseen in the 2021-2024 Multiannual Macroeconomic Framework, and by 2021, the Ministry of Economy and Finance (MEF) has estimated a 10% growth in GDP. The good prospects of the Peruvian economy are based principally on the momentum of the construction business and related industries, which sustain a dynamic growth in investment, thanks to the development of large infrastructure projects granted in recent years. The Peruvian government also has a focus on boosting the development of projects through the National Infrastructure Plan for Competitiveness (PNIC), which prioritizes 52 projects for an investment in the order of USD$30 billion, which means that more than 60% will be executed through Public-Private Partnerships (PPP).
Market Overview
Water and Wastewater Sector
Water scarcity is an urgent threat to the national welfare in Peru. According to the Ministry of Housing, Construction and Sanitation (MHCS), approximately 3.2 million people (9.7% of the total population) do not have access to safe drinking water, and half of these people are in urban areas. An estimated 7.3 million people (22% of the total population) lack functioning sewage systems. The disparity between urban and rural areas is sobering, even in Lima and Callao, where most of the population is concentrated, and not all wastewater is treated. Only 58% of drainage captured by Peru’s main water operator is recycled in treatment plants. There are 50 water treatment companies (EPS) throughout Peru, of which only 29 companies treat wastewater, which is 42% of the total wastewater in the country.
Current water and sanitation services are clearly unsustainable due to insufficient investment, serious economic problems for water operators, lack of state support, and inadequate legal regulations. According to the National Plan of Infrastructure, the potable water and sanitation sectors have an infrastructure gap of US $15 billion. To improve, reform, and manage the water and wastewater sector, the MHCS has established urgent priorities to reinforce existing water infrastructure and expanding geographic coverage, including improving access to public water and sanitation services. The MHCS has established the following strategies to reduce the gap:
- Public work
- PPP
- Works for Taxes (OxI)
- Special Regime for Water Supply and Wastewater Treatment
Investments in water and sanitation are strongly linked to the local governments, which manage the water operators in their regions. These investments should be aimed at developing potable water production infrastructure, the execution of sanitation works, wastewater treatment for reuse and use of solid waste, and improved management of water and sanitation services.
Solid Waste Management
In Peru, a little more than 21 thousand tons of municipal solid waste is generated per day. Of the total municipal solid waste generated in the country, approximately 55.7% is organic solid waste, 20.8% is recoverable inorganic solid waste, 9.5% is hazardous solid waste, and 14.1% is non-recoverable solid waste.
From the total solid waste generated in the country, just over half of it goes to the Sanitary Landfills, which are authorized infrastructures, where the waste is properly disposed of, helping to prevent environmental contamination. The rest is dumped in the “Dumps,” which are unauthorized places that put the quality of the environment and the health of people at risk. According to the Ministry of the Environment, there are more than 1600 landfills in Peru.
The Government is focusing on a new approach to Comprehensive Solid Waste Management through the Comprehensive Solid Waste Management Law. This law is based on three main objectives:
- The prevention or minimization of the generation of solid waste at source, compared to any other alternative.
- The material and energy recovery of waste, such as recycling and composting.
- The final disposal of solid waste in Sanitary Landfills.
Within the framework of the Paris Agreement, Peru is committed to reducing its greenhouse gas (GHG) emissions by 20% by 2030 through public and private initiatives. An additional 10% is conditional on obtaining resources from international cooperation, and an ambition of up to 40% was announced in 2020.
Air Pollution Control
Peru faces serious environmental problems. Air pollution in urban areas is severe and causes thousands of premature deaths every year. The air quality in Lima is one of the worst among Latin American cities, such as Mexico City or São Paulo. Other environmental challenges that damage people’s health include: air pollution inside homes caused by the use of wood for cooking; insufficient access to clean water, sanitation, and hygiene; and exposure to lead, which is a highly toxic chemical. Together, these environmental problems cause twelve million cases of illnesses annually, dramatically affecting young children, the elderly, and poor people who cannot afford medical care.
The government of Peru recognizes that all of these environmental problems can only get worse without a dedicated commitment. Therefore, a loan agreement with the World Bank was successfully signed at the end of 2016 in order to increase investments, strengthen environmental laws, and get organizations coupled with investments. Additionally, a considerable increase in the national budget helped to achieve notable improvements on a variety of environmental indicators.
However, this does not mean that Peru has solved its environmental problems. Therefore, the new administration will need to turn its attention to strengthening the National Environmental Information System (SINIA).
Market Opportunities
Water Mature Sector Project Portfolio 2021
The Ministry of Environment has a budget of USD$150 million to achieve the following goals/projects:
- Construction of Sanitary Landfills with centralized capture and burning of biogas
- Construction of Sanitary Landfills with semi-aerobic technology
- Segregation of solid organic waste for its material recovery in composting plants
- Segregation of inorganic solid waste for its material recovery
- Use of biogas generated in sanitary landfills for its energy recovery
Competitive Landscape/Market Entry
MARKET ENTRY:
United States (U.S.) companies often find it convenient to appoint a local representative to investigate market opportunities and establish sales networks. Retention of local legal counsel is often required to successfully navigate Peru’s business practices, tax/fee issues, and overall bureaucracy. U.S. exporters, especially those targeting government agencies, are encouraged to contact their local U.S. Commercial Service Export Assistance Center (USEAC), which is part of the U.S. Department of Commerce, prior to travel for a briefing on how the organization assists U.S. businesses. In turn, the USEAC can put businesses in touch with the Commercial Service at the U.S. Embassy in Lima to obtain a market briefing and/or list of relevant local attorneys and customs brokers, receive assistance in arranging appointments during a business trip to Peru, and learn how the Advocacy Center can support efforts for competing in Peruvian government tenders. For more information on these services, please refer to www.trade.gov. The Foreign Agricultural Service (FAS) and the U.S. Department of State Economic Section (ECON) can also provide briefings on the economic, financial, and investment climate in Peru.
TRADE BARRIERS/INTELLECTUAL PROPERTY/VAT:
Import Taxes
As a result of the U.S.-Peru Trade Promotion Agreement (PTPA), exports of U.S. consumer and industrial goods to Peru are no longer subject to tariffs. For agricultural products, tariffs have been eliminated on almost 90% of U.S. exports, with the remaining tariffs to be phased out by 2026. Most imports (93% of codes) are also subject to an 18% value added tax (VAT), as are domestically produced goods. In addition, an excise tax (ISC) is applied to certain products, such as tobacco and alcoholic beverages. There are no quantitative import restrictions.
For imports, Customs (SUNAT) requires a Customs Merchandise Declaration (DAM), a commercial invoice, an airway bill or bill of lading, a packing list, and an insurance letter. Several imports are subject to antidumping and countervailing duties. The list of products and countries is available at ALADI. To avoid these duties, a certificate of origin is required for imports, causing U.S. firms to experience delays clearing products through Customs. A food sanitary registry is required for processed food products (issued by DIGESA’s Food and Environmental Health Bureau or a Sanitary Certificate for animal, plants, or their by-products issued by SENASA). Goods can be brought into the country and kept in a bonded warehouse without paying import duties for up to twelve months. During that period, the importer can pay the duties on the goods kept in the warehouse and clear customs, or re-export the goods. This can be done for the entire shipment, or it can be broken down according to the importer’s needs.
For food and beverages, the importer must submit a sworn application to DIGESA accompanied by a Certificate of Free Trade and Use issued by the health authority of the country of origin, the future label, and the registration receipt. If the certificate is not available, the importer should present a document issued by the Peruvian Consulate in the country of origin. The sworn application includes the contact information of the importer’s company and the manufacturer, taxpayer’s identification (RUC), the list of products requested and for each product, its content, the results of physical-chemical and microbiological analysis, lot code system, expiration date, packaging material, and storage conditions.
Standards
In November 2004, Peru issued a regulation on labeling and marking (Ley del Rotulado- Law 28405). This law established that products exported to Peru should have a label with the following information:
- Name of product
- Country of origin
- Address of exporter, importer, or distributor
- Expiration date
- Conservation method
- Weight in metric system
Testing, Inspection, and Certification
There are accreditation bodies for different industries. The laboratories that can aid U.S. exporters can be found in this PDF from INACAL. Products coming from the U.S. will not experience issues entering Peru if importers receive information in advance regarding the products’ composition and/or ingredients.
The following are the phone numbers of the firms that are certified by the Peruvian standards body (CTR) to provide Conformity Assessment services:
- INASA: (511) 616-5200
- SGS del Perú: (511) 517-1900
- BSI Inspectorate Perú: (511) 613-8080
- EQUAS S.A.: (511) 349-4050
Publication of Technical Regulations
Products coming from the U.S. will not encounter difficulties entering Peru if importers receive information in advance regarding the products’ composition and/or ingredients. The CTR regulatory framework is similar to that of the U.S. It is common to hold seminars sponsored by ANSI, ASTM, NEMA, and others to encourage conformity with global standards.
Contact Information
The contact information for the National Institute for the Defense of Free Competition and the Protection of Intellectual Property (INDECOPI) and CTR in Lima is: (511) 224-7800 ext. 1261; fax (511) 224-7800 ext.1296
Protecting Intellectual Property
Intellectual property rights (IPR) in Peru are covered by the Andean Community Law. Decision 486, which establishes the common provisions on industrial property; Decision 876, which establishes a common regime for nation brands; Decision 351, which establishes a common regime for copyright and related rights; Decision 345, which establishes a common regime for protecting breeders’ rights; and Decision 391, which establishes a common regime for accessing genetic resources) and the National Copyright Law (Legislative Decree 1391). The GOP continues working with the World Intellectual Property Organization (WIPO) to develop a National Policy for Intellectual Property (PNPI) to further strengthen Peru’s intellectual property (IP) policy framework. Peruvian law provides the same protections for U.S. companies as it does for Peruvian companies in all IPR categories under the PTPA and other international commitments, such as the WIPO and the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). Moreover, Peru is member of the Berne and Brussels Convention, Budapest Treaty, Lisbon Agreement, Beijing Treaty on Audiovisual Performances, Marrakesh Treaty, Paris Convention, Patent Cooperation Treaty, Patent Prosecution Highway Program (Global PPH), Phonograms Convention, Rome Convention, Singapore Treaty, Trademark Law Treaty, UPOV Convention, WIPO Convention, WIPO Copyright Treaty, and WIPO Performances and Phonograms Treaty.
INDECOPI continues to be the most engaged GOP agency and is a reliable partner for the USG, the private sector, and civil society. INDECOPI is responsible for protecting IPR, administering patent, trademark, copyright registrations, and handling administrative enforcement cases. In addition to INDECOPI, IPR enforcement also involves other GOP agencies and offices, such as 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) Directorate General for Medicines (DIGEMID), and the Office of the Attorney General (Fiscalía). Fiscalía has specialized IPR prosecutors’ offices that solely focus on IPR crimes. The Peruvian Customs Service (Aduanas) works along with INDECOPI to make sure that illegal goods do not cross Peru’s borders. INDECOPI is entitled to granting preliminary injunctions (medidas cautelares) to seize infringing goods when Customs alerts the right holders.
Peru remains on the Watch List in 2020 due to the long-standing implementation issues with the IP provisions of the PTPA, particularly with respect to establishing statutory damages for copyright infringement and trademark counterfeiting as well as a notice-and-takedown and safe harbor system for Internet service providers. With respect to IP enforcement, Peru has been a leader in the region over the past few years and took a number of positive steps in 2019. For example, Peru introduced legislation that criminalizes unauthorized recording in movie theaters in a manner that allows for effective enforcement. Peru also conducted more than 2,364 operations to seize over $140 million worth of counterfeit goods in 2019. Peru has also taken many administrative enforcement actions. INDECOPI granted 532 preliminary injunctions on trademark matters, which was an increase of 14.4% from the amount in 2018. In 2019, as part of its anti-piracy efforts, INDECOPI also seized illegal merchandise worth $2.2 million and took actions against online copyright infringement. Peru’s Customs and INDECOPI signed a cooperation agreement in July 2019 to protect IP rights and prevent the entry of high-risk counterfeit goods. In addition, Peru will increase the number of prosecutions against counterfeiting and piracy, continue prosecuting individuals involved in the sale of counterfeit medicines, and expand the imposition of deterrent-level fines and penalties for counterfeiting and piracy more broadly.
In any foreign market, companies should consider several general principles for the effective protection of their intellectual property. For more background information, please visit our article on Protecting Intellectual Property as well as STOPfakes.gov for more resources. For more information on intellectual property, please contact:
U.S. Department of Commerce (U.S. Embassy Lima, Peru)
3230 Lima Place
Washington, DC 20521
Tel.: (511) 618-2442
E-mail: USPTOAndeanRegion@trade.gov
Staff: Silvia Solis, Intellectual Property Legal Specialist
For more information, please contact the International Trade Administration (ITA)’s Office of Intellectual Property Rights Director, Stevan Mitchell at Stevan.Mitchell@trade.gov.
With its network of 108 offices across the U.S. in over 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the local U.S. Commercial Service international trade specialist in the U.S. by visiting https://www.trade.gov/commercial-services-offices-us.
U.S. Department of Commerce (Washington, D.C.)
14th & Constitution Avenue, N.W. Room C-300
Washington, D.C. 20230
Matthew Gaisford, Peru Desk Officer
Email: Matthew.Gaisford@trade.gov
Tel.: (202) 482-0057
Selling to the Public Sector
When selling to the Peruvian government, interested suppliers must participate in a tender process in which registration with the National Registry of Suppliers (Registro Nacional de Proveedores, or RNP) is necessary. The RNP includes the following categories:
- Suppliers of goods
- Services
- Goods and services
- Construction firms
- Construction consultants
To register, a company must follow several steps (in Spanish), including a fee of approximately $80 for non-domiciled foreign suppliers of goods and/or services, or approximately $150 for non-domiciled foreign consultants. Companies must appoint local legal representation registered with the Peruvian Public Registry and are required to provide proof of incorporation demonstrating the company’s legal status, duly apostilled. The documents need to be translated into Spanish by an official Peruvian interpreter.
Peruvian law allows an independent distributor to pay commissions or fees to third parties in connection with sales to the government. For example, a company in Peru can purchase products from a company in the U.S. and then pay a third-party fee to resell them to the Peruvian government. There are no Peruvian restrictions on commissions or mark-ups on sales to the government by either agents or distributors, and the rates vary depending on product, client, and competition.
Government agencies must announce tender notices for all major purchases in their official publications, and at times, in the main local newspapers as well. Peru is not a signatory to the WTO Agreement on Government Procurement, however, the PTPA includes a chapter on Government Procurement (Contratacion Pública). In spite of the PTPA’s stipulations, selling to government agencies remains problematic. In 2007, the Peruvian government passed the Government Procurement Law (Legislative Decree No. 1017 (LD 1017)), which regulates public tenders for major purchases of goods, supplies, and works by government agencies. However, the Armed Forces and National Police have continuously favored government-to-government (G2G) procurements (i.e., purchases by a Peruvian government agency from a foreign government entity or government-owned company) in lieu of open tenders. In July 2012, the Government Procurement Supervisory Agency (OSCE) stated that G2G procurement does not fall under the jurisdiction of Peru’s government procurement law. This ruling is further substantiated in an article within the 2013 Budget Law. Use of G2G procurements expanded to other Peruvian entities in 2018 and 2019, including the Reconstruction Authority and Ministry of Health.
Finance
Since the market reforms of the early 1990s, the private sector has implemented nearly all major projects, though sometimes through a PPP with the government. Foreign companies have undertaken large projects with financing obtained in their countries of registration, from multilateral development banks and/or local lenders. In recent years, due to the Central Bank limit on the amount that Peruvian pension funds can invest abroad, there has been intense local competition for lending, interest rates have fallen below those in New York and London for creditworthy companies, and local banks have increased their sophistication. The number of projects totally or partly locally-financed has grown since 1999. The three major banks involved in this area are Banco de Credito del Peru, Banco BBVA-Continental, and Citibank. Some projects, such as the Camisea natural gas pipeline, have been partly financed by multilateral development banks, including the IDB, World Bank, and Andean Finance Corporation (CAF). Some projects have been structured with simultaneous or subsequent financing from the local capital market (e.g., corporate bonds).
A wide variety of sources of project financing are available in Peru, both from U.S. and international organizations. The U.S. International Development Finance Corporation (DFC), Export-Import Bank of the U.S. (EXIM Bank), and the U.S. Trade and Development Agency (USTDA) have all been involved in private sector projects in Peru. The International Finance Corporation (IFC-World Bank Group), the Multi-Lateral Investment Guaranty Agency (MIGA), the World Bank, and the Inter-American Development Bank are all active players in project finance in Peru.
U.S. International Development Finance Corporation (DFC)
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 U.S. Agency for International Development. 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.
Prior to establishment of the DFC, there was an OPIC agreement between Peru and the U.S. that, from 2010 until 2014, supported solar power plants, consumer lending, operation and expansion of retail stores, microfinance, installation/operation of stereotactic radiosurgery equipment, consulting services, export services, import-export logistical services, and portfolio expansion of SME, micro-credit, and consumer loans, all in the form of commitments totaling over $21 million. Peru is a member of the Multilateral Investment Guarantee Agency.
Export-Import Bank of the U.S. (EXIM Bank)
The Export-Import Bank of the U.S. (EXIM Bank) offers loans and loan guarantees to U.S. exporters of goods, services, and foreign purchasers. EXIM Bank also provides credit insurance to U.S. businesses against non-payment by foreign buyers in the case of political or commercial risk, with a focus on short-term risk. The DFC offers medium- to long-term financing and political risk insurance.
About Export Credit Insurance
- Protects U.S. exporter from catastrophic losses due to nonpayment
- Allows U.S. exporter to pursue new markets
- Eases the burden of credit risk management
- Allows for use of accounts receivable as an asset
- Lowers borrowing costs
- Frees up working capital and accelerates cash flow
Length
- Short term (less than 1 year)
- Medium-term (1-7 years)
Amount
- For medium-term, less than $25 million
Coverage
- Short-term (up to 95% for most products and up to 98% for bulk agriculture)
- Medium-term (up to 85% of contract)
In April 2020, EXIM Bank approved four new, time-limited emergency measures in response to the COVID-19 pandemic. The measures temporarily expanded the types of financing EXIM Bank could provide as part of the U.S. government’s efforts to address and mitigate the economic crisis. The emergency measures were in place for one year from May 1, 2020. Further information may be found at: https://www.exim.gov/coronavirus-response.
Contact Us
Jorge Prado, Commercial Specialist Specialist – U.S. Commercial Service Lima, Peru – Email Jorge Prado.
Jorge Prado is an International Business Advisor at the U.S. Commercial Service. Prior to joining the U.S. Department of Commerce, Jorge was a Foreign Trade Expert for nine years with responsibility for the Technical Export and Tubular Products divisions at Ferrostaal GmbH in Germany. At Ferrostaal, Jorge oversaw product promotion, market development, and commercial strategy in the Middle East, North Africa, and South America. Jorge holds a Master’s degree in Business Administration and Economics from the Charles de Gaulle University in France.
