en-USes-PE
BACKGROUND

As stated in the document "2015 -2017 Multiannual Macroeconomic Framework" developed by the Ministry of Economy and Finance – MEF, it is projected that Peruvian economy will grow on average 6.2% between 2014-2017. The gradual recovery of the global economy (especially in economies like the US and the Eurozone), along with increased traditional exports related to the launch of operations of major mining projects, as well as the commissioning of large infrastructure projects under the Public Private Partnership model and the recovery economic agents’ expectations, will help to achieve this projected growth. Therefore, the Peruvian economy will be positioned as one of the fastest growing economies in the world, and with a base of diversified growth. For its part, the design of fiscal policy will be based on the new macro framework of taxation, referred to in the Law to Strengthen Fiscal Responsibility and Transparency (LFRTF for its acronym in Spanish). In particular, an economic balance of the nonfinancial public sector (NFPS) in 2014 and a structural deficit of 1% of GDP from 2015 are contemplated until the new administration develops a new Statement on Macro Fiscal Policy. In this context, public debt will maintain a downward trend in the forecast horizon of this Multiannual Macroeconomic Framework – MMM for its acronym in Spanish, reaching a 17.5% of GDP in 2017, while net debt will be below 3% of GDP in 2017, one of the best records in the world. Meanwhile, the non-financial expenditure of the Central Government will be increased by approximately S/. 50 billion Peruvian Nuevos Soles (PEN) between 2013 and 2017 and public investment to a level equivalent to 7.1% of GDP in 2017. This significant increase in public spending will be directed mainly to: (i) reducing social gaps, (ii) improve public security, (iii) reducing gaps in infrastructure and public services through co-financing of projects of Public Private Partnerships; and (iv) continuing the implementation of wage policies within the framework of Government reform. Finally, regarding external accounts, the current account deficit will be gradually reduced by 2017, and will continue to be funded by long-term capitals as a result of higher Foreign Direct Investment flows.

However, the current macroeconomic environment poses certain risks both from the external front (sharp slowdown in China, accelerated withdrawal of monetary stimulus in the US, contagion among emerging countries, etc.) and from the internal front (ei. Nino Environmental Phenomenon). In this regard, section 6 of "sensitivity analysis of the projections" simulates the potential impact they could have on Peruvian economy, scenarios such as: (i) sharp slowdown in China and its impact on the terms of trade; (ii) accelerated withdrawal of US monetary stimulus and increased perception of risk in emerging countries; and (iii) El Nino Phenomenon of similar a magnitude as in 1997-1998.

The current management of the Ministry of Economy and Finance - MEF, has as fiscal policy guidelines the improvement of productivity and competitiveness of our economy, among others. The challenge of the country is to remain as the fastest growing economy in the region and with the major reduction of poverty and inequality. The challenge is also to ensure that the country continues to grow at sustained rates above 6% for at least the next 15 years. This imposes a number of important public policy challenges, which involve the adoption of measures to increase competitiveness and productivity by: i) Substantial improvement of human capital; ii) reducing the gap in infrastructure through Public Private Partnerships; iii) administrative simplification to encourage investment and facilitate the formalization and business development; iv) promoting science, technology and innovation of information; v) diversifying product supply based on a strategy of higher added value, by promoting quality, new tools for productive development and promotion of free competition and internationalization, vi) greater financial deepening and development of capital markets; and vii) design and implement actions for environmental sustainability. 

 
Competitiveness Situation in the Country

The Global Competitiveness Report (GCR) 2013-2014 of the World Economic Forum (WEF) concluded that in spite of the robust economic growth of previous years in Latin America's low productivity rates are maintained and, therefore, a general stagnation of competitiveness in the region is observed. In the last global competitiveness ranking, Peru is on the 61st position of a total of 148 countries. If the evolution of this ranking in the past five years is analyzed, we can see that Peru has been scaling-up positions in competitiveness (17 positions), although still ranks below Chile, Mexico and Panama. Even though Peru has advanced 17 positions in the last five years, registering significant improvements in the pillars of infrastructure, macroeconomic environment and financial market development; according to the WEF there is some level of exhaustion in these sources of profit. Consequently, there are still challenges that Peru must face, especially with regard to institutionalism, human capital development, business facilitation and technology and innovation.
It is important to remark that in the Government, there are four factors that adversely affect the perception of Peru as an attractive place for investments, which are:

  • Poor regulation and supervision,
  • Deficient management of administrative procedures,
  • Inefficiencies in the management of commercial litigation processes, and
  • Inexistence of tools and skills for territory management.
 

In that sense, it must be mentioned that in the component (ii) Deficient management of Administrative Procedures, a good indicator of the business climate is the number of procedures, requirements, time and cost it takes to start a business, operate and, if so, conclude its operations. Additionally, there are many cases in which the revenue generated by procedures becomes part of the institutional budget of public institutions, creating perverse incentives to maximize the number of taxation procedures to the administered. A poor design and management of administrative procedures brings high costs, long delays, functionaries’ discretion, unnecessary requirements, long queues and corruption risks. That is why the Government should concentrate its efforts on improving and optimizing the regulation and management of administrative procedures taking into account the effects on investment decisions instead of favoring the view of the functioning of the state machinery and the financing of their activities.

In this regard, it is of vital importance, the identification of those procedures that impede and/or delay investment and raise its reform, which will improve the business climate in the country for the Doing Business Ranking of the World Bank.
 

Diagnosis of the current situation of tourism procedures

For the analysis of the procedures of the “Single Window of Tourism (VUT for its acronym in Spanish)” we considered entities whose administrative procedures were linked to services provided by the following Tourism Services Providers: i.) Hotels, hostels and lodges (Hospitality), ii) restaurants and iii) travel agencies.
In that sense, it was determined that the entities involved in the first stage would be the Ministry of Foreign Trade and Tourism (MINCETUR), the National Service of Protected Natural Areas (SERNANP), the Ministry of Culture and the Municipalities of the districts with more investment in tourism services, located in the department of Lima: Municipalities of San Isidro, San Borja, Miraflores and Lima; and in the department of Cusco: Municipalities of Cusco and Urubamba.
It is worth noting that the local governments mentioned in the previous paragraph, have been chosen preliminarily, and during the implementation of the VUT it is expected the incorporation of all the local governments in the country, so that VUT achieves a national scope.


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