The past year hasn’t been especially positive for doing business in Peru. According to the “Doing Business Report 2019” published by the World Bank, Peru lost 10 positions in the overall global Ease of Doing Business ranking and is now only positioned on rank 68 from 190 surveyed economies.
Nevertheless, Peru has made some progress in several key areas of business regulations in the past decade. However, there is still a lot to be done.
What’s the World Bank Doing Business Report?
The Doing Business project, launched in 2002, looks at small and medium-size companies across 190 economies and selected cities and measures the business regulations and their enforcement applying to them. The report measures 10 economic indicators related to:
- Starting a business
- Obtaining construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
The goal of the Doing Business Report is to provide an objective basis for understanding and improving the regulatory environment for business around the world.
Peru’s ranking in the Doing Business Report 2019 explained
This year the Doing Business report could expand its pool of contributors by 24 percent, to 173 contributors located in Lima therefore providing a deeper knowledge across topics in Peru.
Even though in the global ease of doing business ranking Peru lost 10 positions and is in 68th place this year, its overall global ease of doing business score improved from 68.3 to 68.8 over the last year.
In the past year the country carried out two reforms to improve the business climate for domestic small and medium sized businesses:
- Peru made it easier to start a business by reducing the time needed to obtain the municipal license and building safety technical inspection from the district council. Peru performs better than the region in this area. It takes 24.5 days to start a business and costs 10 percent of the income per capita, compared to 28.5 days and 38 percent of the income per capita on average in Latin America and the Caribbean region. Nevertheless, the country finds itself only on position 125 from 190 economies.
- Peru also strengthened the quality control in construction by imposing stricter qualification requirements for professionals in charge of technical inspections. Peru performs well in this area with a score of 13 out of 15 in the building quality control index. Sound regulation of construction helps protect the public from faulty building practices. In addition, obtaining all the necessary permits and authorization to build a warehouse in Peru costs only 1.2 percent of the warehouse value, which is less than the 3.2 percent regional average. Accordingly, the country is positioned on rank 54 from 190 economies in the area of dealing with construction permits.
Other Doing Business areas where Peru performs well are Registering Property, Getting Credit and Protecting Minority Investors.
- Peru is the top performer in the Latin America and the Caribbean region in Registering Property. It takes only 7.5 days for a business to transfer the property title, compared to the 63-day average in the region. Its global rank in this area is 45.
- The country also performs well in Getting Credit with global rank of 32. For Example, Peru scores the maximum possible points on the depth of credit information index. The sharing of credit information helps businesses access credit and obtain lower interest rates, while improving borrower discipline and supporting better bank supervision and credit risk monitoring.
- In Protecting Minority Investors, Peru is ranked 51 globally. The country scores 9 out of 10 in the extent of disclosure index, thanks to strict rules on the transparency of related-party transactions.
However, Peru underperforms in the area of Paying Taxes and is only positioned on place 120. It takes for example more than 30 weeks to complete a corporate income tax audit, compared to less than 22 weeks in the region.
Another area where there is room for improvement is Trading across Borders, where the country is ranked 110 in the world. Completing all border compliance requirement costs importers $700 in Peru, slightly above the regional average of $647.
Doing Business Report 2019 Peru – the numbers
- Overall ease of doing business: global rank 68 from 190 economies (score 68.83)
- Overall ease of doing business: regional rank 6 (after Brazil, Mexico, Chile, Colombia and Costa Rica)
- Starting a business: global rank 125 from 190 economies (score 82.44)
- Dealing with construction permits: global rank 54 from 190 economies (score 73.58)
- Getting electricity: global rank 67 from 190 economies (score 79.02)
- Registering property: global rank 45 from 190 economies (score 74.89)
- Getting credit: global rank 32 from 190 economies (score 75.00)
- Protecting minority investors: global rank 51 from 190 economies (score 63.33)
- Paying taxes: global rank 120 from 190 economies (score 65.37)
- Trading across borders: global rank 110 from 190 economies (score 68.22)
- Enforcing contracts: global rank 70 from 190 economies (score 60.70)
- Resolving insolvency: global rank 88 from 190 economies (score 45.72)
Source: World Bank press release Oct. 31, 2018 and World Bank Doing Business Report 2019