5 definitive factors for private investment

It is important to provide the right conditions to attract and maintain private investment in the local market and promote the reactivation of our economy

Currently, according to the last report published by the Peruvian Central Bank of Reserves (BCRP), during 2021 private investment increased up to 54.9%; however, this year the outlook looks different. This is due to the growing distrust of the business world in the Peruvian market.

According to the metioned report, companies do not consider the act of private investment as beneficial. We add that “investment is a fundamental component of the Peruvian Gross Domestic Product (GDP) because it helps to dynamize the economy. Private investment alone represents almost 80% of gross fixed investment for the last 10 years, according to BCRP figures. In this sense, it is important to provide the appropriate conditions to attract and maintain private investment in the local market and promote the reactivation of our economy”.Undoubtedly, in order for private investment to improve within the legal sector, it is necessary to innovate. One of the aspects to improve is the union of the professionals of this sector with the business community. To this end, our consulting firm is working on the next Legal Forum (XIII edition), where experts will talk about business and legal issues. Some of the ideas that will be mentioned are:

Legal security of the country of investment: with this, the State would show its responsibility to keep contracts and foreign investments in force, with the objective of providing legal guarantees against expropriation, breach of contract and non-transparent conduct of the Government.
Trade openness: trading with other countries and continents allows to grow economically and invest in technology. This can provide more jobs and opportunities for the population, according to the World Bank.
Political risk: if there is political uncertainty, investors will not see the investment clearly, resulting in capital flight from the country.
The country’s trade policies: “these are economic policy instruments that ensure the free trade of goods and services. Tariffs, customs, public purchases, etc. A limitation of protectionism encourages greater foreign investment,” he adds.
Macroeconomic stability of the country: aspects such as inflation, the exchange rate or the deficit or surplus of the country’s reserves are important for investors. With these data, they study whether it is safe to invest without losing large amounts of income.

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