Stimulated by a favourable external environment and the government’s commitments to political and economic stability, Peru’s economy has recorded since 2002 the fastest growth in South America. Foreign direct investment inflows have started to rise since 2005 and reached a record level of USD 5.4 billion in 2007, an increase of more than 50% compared to 2006. As a result, the country’s inward stock surged to USD 24.7 billion in 2007. With 47% of total foreign direct investment, Spain and the United States are the major foreign investors. Among different sectors, telecommunications attracted 28% of total foreign investment, followed by mining (20%), manufacturing (18%) and the financial sector (16%). Since 2006, a number of large Peruvian companies have begun to invest abroad.

Alongside dynamic economic growth, foreign direct investment inflows have been rising since 2005 and reached USD 5.4 billion in 2007, an increase of more than 50% compared to 2006. Foreign investment has played a growing role in Peru’s recent development by stimulating its exports, providing new job opportunities and improving the quality of services and infrastructure. Peru pursues active international investment diplomacy and has become member of a number of regional and bilateral agreements.

Based on the Policy Framework for Investment, the analysis of Peru’s investment policy and investment promotion and facilitation shows that the country has made considerable progress in establishing an open and transparent investment regime. This is also reflected in a limited number of restrictions on foreign investment which Peru notified as exceptions to national treatment and the measures reported for transparency under the OECD Declaration on International Investment and Multinational Enterprises. Peru’s investment incentives are applied on a sectoral or territorial basis irrespective of investors’ national or foreign origin. Through its national policies and commitments in recent international agreements, in particular the Trade Promotion Agreement, signed with the United States, Peru has put a solid basis in support of human and labour rights and the environment and to promote responsible business conduct.

Foreign enterprises and Peruvian enterprises owned in whole or in part by foreign nationals are not authorised to acquire directly or indirectly land or water (including mines, forest land or energy resources) located within 50 kilometres of the Peruvian border. Exceptions may be authorised by Supreme Decree approved by the Council of Ministers in the case of expressly declared public necessity.

This annex presents Peru’s FDI regulatory restrictiveness index, based on the OECD methodology (see Box), and its comparison with other OECD and non-OECD countries.