Latin America is experiencing rapid economic growth, attracting foreign investments at an unprecedented rate. Peru, as the fifth largest economy in the region, plays a significant role in this success. However, the country faces a major challenge in terms of inadequate infrastructure. Recognizing this issue, the government is now dedicated to improving the infrastructure sector, presenting a lucrative opportunity for foreign investors and businesses.
Historically, Peru has struggled with infrastructure problems, particularly in terms of limited access to roads leading to major cities. This lack of connectivity has resulted in economic disparities and poverty in disconnected regions. In 2016, the government acknowledged these issues and planned for improvements, pledging over US$33 billion towards infrastructure development. Unfortunately, these plans were delayed due to severe flooding and landslides in 2017, which caused significant damage to roads, homes, and the central railroad.
However, the government is now focused on repairing both the infrastructure and its reputation. In 2018, plans were reintroduced to allocate funds for infrastructure improvements, starting with repairs in the affected cities. The government’s long-term vision includes extensive infrastructure changes, repairs, and preparations for future natural disasters. With the third-worst roadways in Latin America, experts estimate that a total of US$160 billion is needed to bridge the gap between economic advancements and national infrastructure standards.
To address these challenges, a formal plan is being drafted and will be presented to officials. One of the key projects is a US$2 billion road construction that will connect two major highways through Peru’s capital, Lima. Additionally, the government aims to improve the conditions of the widely-used Longitudinal de la Sierra highway. These infrastructure developments will contribute to domestic economic exchange and further drive Peru’s economic success.
Foreign investors have numerous opportunities in Peru’s infrastructure sector. The market is thriving, with government bonds being purchased due to the recent motivation and plans for improvements. In addition to government bonds, investors can consider investing in construction companies, natural resource enterprises, and civil and industrial engineering businesses. The long-term nature of these projects increases the longevity of returns on investments.
Furthermore, Peru is exploring the possibility of partnering with countries in Asia for outsourcing or collaboration to expedite infrastructure development. The government has also implemented tax incentives to attract investors. For instance, companies that invest in or construct public projects, such as road improvements, are exempt from corporate taxes. Additionally, the government is considering further tax breaks, including potential cuts to capital gains taxes.
The construction and infrastructure sectors in Peru are projected to continue growing steadily and create significant economic activity, job opportunities, and revenue. With the support of the government and the promising future prospects, foreign investors and businesses have a guaranteed market in Peru.
To navigate the Peruvian market, Biz Latin Hub offers support in legal, accounting, recruiting, and commercial representation. Their expertise can help investors pave their road to success in Peru. It is important to note that the information provided here is for informational purposes only and may not capture all relevant laws and standards. It is advisable to consult a professional for specific situations, as the regulatory landscape is continually evolving.
