Improved legal protection in Peru encourages investment
Since the beginning of the 1990s, Peru has introduced major legal reforms aimed at achieving greater legal protection for the country’s economic agents. The new 1993 Constitution implemented a policy designed to protect investors entering into legal framework contracts (art. 62 of the Political Constitution of Peru) in which the State establishes guarantees and provides certainty for the parties entering into such contracts. Along the same lines, the Peruvian legislative system contemplates Legal Stability Agreements that offer investors special protection in relation to the stability of the country’s tax legislation and the exchange rates applicable to each individual investor (Legislative Decree 662, art. 10).
In the same way, the Constitution guarantees equal conditions for both national and foreign investors (art. 63 of the Political Constitution of Peru) which, in addition to the facilities mentioned above, has resulted in an exponential increase in foreign investment in the country in the last 25 years, from a total of US$3,084 million in direct foreign investment in 1994 (according to CEPAL figures) to a peak in 2012 of US$11,918 million (Proinversión).
Notwithstanding this scenario, Peru is still an emerging economy that must continue to develop its legislation to guarantee and protect its anti-corruption and asset laundering system.
In this spirit, Law 30313 was enacted this year, which states that from now on, only the notaries with jurisdiction in the province in which the purchase of property is to take place may perform the notarial acts required, as opposed to the past, when the sale of property could be executed by any notary public in the country. This measure is aimed at reducing corruption and the forging of documents, while strengthening the real estate business and market. In addition, other laws such as the Anti-Asset Laundering Law and the Financial Intelligence Unit Law also seek to achieve greater transparency in the Peruvian economy by providing mechanisms to prevent corruption and asset laundering.
It can therefore be said that Peru has solid legal foundations that provide protection for both national and foreign investors operating in the country. Nevertheless, in light of the growing sophistication of global investors and given the fact that Peru is still an emerging economy, the country must continue to be proactive in modernizing its legislation and adapting it on an ongoing basis, in order to ensure legal protection in sectors of the economy with the highest demand.
Garrigues Practice in Latin America
