Soon to be home to 30 million people, Peru is one of the 17 ‘megadiverse’ countries. Peru has a truly amazing cultural heritage, exhibiting many traditions infused with history and beautiful scenery. Peru also has great business opportunities for entrepreneurs of all backgrounds. Following years of political turbulence and economic difficulties at the end of the 20th century, Peru has managed to improve corruption and stabilize unrest, providing optimism in an economy with a bright future. In addition to knowing Spanish and networking before you go, it will be valuable to build yourself an arsenal of location independent digital skill sets.
Check out our 10 reasons why you should become an entrepreneur in Peru.
Low Costs of Living
Renting property and transport costs may not seem like your biggest concern while on a business trip or venture, but simple expenditures can easily add up and eat away at your budget. Peru bears very little expenses, which really help cut down costs and keep trips feasible. In fact, it is possible to get apartments for only $500 a month in the most expensive of Peruvian districts, such as Miraflores in Lima, showing how comfort doesn’t always mean costly. Taxis are also very cheap here in Peru, with an average ‘1km journey costing a mere $1.50’ (Numbeo, 2013).
Raw materials play a major part in Peru’s economy, driven by exports of minerals such as gold and copper. Peru is the leading producer of silver and ranks among the ‘largest producers of gold, zinc and lead’. The country also leads in exports of agriculture such as alpaca fibre and organic coffee (CIA World Factbook, 2013). Peru’s large production of these essential resources have kept the economy relatively stable through the most difficult times, including the global financial crisis of 2008 (Elliot R. Morss, 2010). Access to the vast amount of raw materials of the country is one of the greatest benefits of doing business in Peru, with many resources that can be obtained and utilised at a cheaper cost.
Strong Trade Links
Gone are the days of Peru’s concrete-solid protectionism. Peru has created many trade agreements over the past few years, including with China, the United States, and more recently; the EU. This grants many opportunities for entrepreneurs interested in exporting to and importing from countries involved in Peru’s many partnerships. This also creates many opportunities to outsource goods from Peru (Foreign Trade Information System, 2013).
Fast Economic Growth
Peru has had excellent economic performance over the last few years. Except for a brief but strong stumble in late 2008 (Trading Economies, 2012), Peru has managed to maintain high growth levels that demonstrate a great future for the economy. Increases in Macroeconomic stability, foreign reserves and debt reduction have allowed Peru to grow at a swift pace.
Peru’s fast growth is likely to lead on to a rise in consumer income and demand in later years, creating superb opportunities for entrepreneurs.
Greatly Valued Business Relationships
Peruvians place a strong emphasis on building relationships (Communicaid, 2008). In Peru, family always comes before business. Thus, you need to become familiar with your business associates before any deals are made. This can be very important when doing business abroad, as trustworthy relationships are vital in ensuring that you don’t get the short end of the stick in a business deal. It also gives you time to identify the type of person with whom you may be engaging in business, helping to safeguard you from any bad relationships.
Government Seeking International Trade
Foreign Direct Investment and Domestic Investment is highly encouraged by the Peruvian Government.
Peru has implemented various FDI zones with laxer regulation. This has created a range of opportunities for foreign companies and entrepreneurs to minimize costs and grants them more freedom in their economic activities.
FDI has soared from 7.4 billion to over $20 billion in the last 20 years courtesy of US, UK and Spanish investors, hinting at the success and viability of investment in Peru. (Forbes, 2011).
Stable and Reliable Currency
According to the Association of Banks, the Peruvian Nuevo Sol has been a stable currency compared to regional currencies and to the Euro (Dracon Partners Team, 2010). This will aid entrepreneurs by reducing uncertainty; a stable currency is safe and important for instilling confidence in the market for increased productivity, which results in higher economic growth.
Peru Is Still Relatively Undiscovered
Peru is well on its way to having a well-established economy. However, it’s important to remember that it has only been in the last two decades that entrepreneurship has been formally recognised and amplified. Entrepreneurs are no longer kept at bay, with factors such as monetary instability and basic material shortages becoming things of the past. Additionally, Peru is still full of opportunities, where it has not yet been taken by storm by multinational companies (I’m looking at you China).
Increasing Internet Usage
The internet has become home to millions of small and large businesses in many developed countries such as the U.K (The Telegraph, 2013). Although still relatively unpopular in Peru, internet usage is expected to increase by over 50% in the next few years (World Bank). Huge opportunities for online companies will follow, such as online shopping, email, and many other useful utilities. You can prepare yourself by developing your own location independent digital skill sets.
Ease of Doing Business
Let us remember that before we can enter a market, we must literally be able to enter. Peru now ranks at the 2nd easiest place to do business in Latin America, according to its Doing Business profile by The World Bank, which considers factors such as Paying Taxes, Getting Credit, and most importantly, starting a business. Peru owes this to its ability to protect investors, which stands at 13th best in the world. It also costs less to secure property rights in Peru than in the average OECD country.
Although Peru still has many issues to deal with such as lingering corruption and social issues, the country has been through the worst of times and is surging on its way to becoming a strong economy. Great opportunities for business ventures lie within as well as the alpacas, so seize the opportunity!