Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Corruption continues to negatively affect Peru’s investment climate. Transparency International ranked Peru 94th out of 180 countries in its 2020 Corruption Perceptions Index. In 2016, Brazilian company Odebrecht admitted it paid $29 million in bribes in Peru, leading to investigations involving high-level officials of the last four Peruvian administrations and halting progress on major infrastructure projects. Due to fear of even the appearance of corruption or favoritism, GOP procurement officials currently tend to be more cautious and slower in the decision-making process for government tenders and purchases.
One of the main challenges expressed to the U.S. Embassy in Lima by the private sector is Peru’s cumbersome and inefficient government procurement processes. The Embassy continues to work with the GOP to encourage government contracting procedures that are in accordance with international procurement standards. One persistent challenge is Peru’s use of a government-to-government procurement mechanism that restricts the ability of U.S. companies to directly compete in certain infrastructure tenders. Other challenges include the reluctance of some government officials to make final contracting decisions for fear of oversight investigations and legal liabilities and the tendency to base awards on lowest cost rather than overall greatest value. Further detail can be found in the Selling Products and Services Section.
Business owners often find it difficult to resolve disputes with the government, so we highly recommend including an arbitration clause in commercial agreements. In 2004, the Peruvian government established commercial courts to rule on business disputes. With specialized judges, these courts have reportedly reduced the amount of time to resolve a case. However, except for the commercial courts, the judicial system is often extremely slow to hear cases and issue decisions. Court rulings and the degree of enforcement are often inconsistent and unpredictable. Allegations of political corruption and outside interference in the judicial system are common. Frequent use of the appellate processes as a delay tactic leads to the belief among foreign investors that contracts can be difficult to enforce in Peru. Firms operating in Peru also note difficulties in securing legal solutions to commercial disputes or enforcing arbitration awards. Social conflicts adversely affect the extractives sector in Peru, which accounts for over 10% of Peru’s GDP.