Peru - Construction Equipment / Infrastructure Peru - Construction Equipment
Peru’s economy continues to grow driven by sound fiscal and monetary policies and a government that is supportive of business and international trade. Corruption stemming from the Odebrecht scandal has been addressed by the Vizcarra administration through anti-corruption reforms, although it remains a concern. Despite the resulting political instability, the construction sector outperformed expectations, growing at 2.2% through the end of 2017. According to Peru’s Central Bank, construction growth is forecasted to reach 9.5% by the end of 2019. Strengthening institutions as well as reducing economic informality and inequality are some of the top priorities on the Peruvian government’s agenda, particularly as it aims to secure OECD membership by Peru’s Bicentennial in 2021.
In 2017, the coastal El Niño phenomenon caused flooding and landslides which led to widescale damage concentrated in northern Peru. A nearly USD 8 billion reconstruction effort is currently underway. The coastal El Niño caused a $3.1 billion loss (1.8% of GDP) in damages to houses, crops, roads and bridges affecting more than a million people. The government responded by setting up a Reconstruction Authority within the Prime Minister’s office, aiming to spend the aforementioned USD 8 billion in infrastructure projects over the course of 2017 to 2020, mainly in Peru’s northern regions. The Reconstruction Authority estimated that approximately 3,500 infrastructure projects would begin in 2018, including the construction of 37,600 homes. In order to close the housing gap of 389,745, an estimated 39,000 homes would need to be built annually. The program budget allocates USD 6.1 billion for reconstruction, USD 1.7 billion for disaster prevention and urban development, and USD 138.6 million on institutional strengthening. While the Reconstruction Authority has transferred funds to finance these projects, critics note that the project schedules are farther behind than intended.
In order to cover Peru’s general infrastructure needs by 2025, Peru would need to invest close to $160 billion, involving an annual investment of 8.3% of GDP for nine consecutive years. In almost every area of the country there is pent-up demand for both public and private infrastructure in a broad range of areas, such as roads, telecommunications, ports, airports, water and sewage, health and education, and energy.
Public-Private Partnerships (PPPs) legislative decree continue to incentivize private sector involvement with public construction projects and facilitate private investment through the creation, development, improvement, operation, and maintenance of public infrastructure. The Works for Taxes law (Obras por Impuestos) complements the PPP legislative decree since private companies may finance and implement public projects chosen by regional and local governments, and subsequently deduct a percentage of investment amount from its income tax.
| 2016 | 2017 | 2018 | 2019 (Estimated) | |
| Total Local Production | N/A | N/A | N/A | N/A |
| Total Exports | 103.5 | 107.9 | 112.9 | 115.6 |
| Total Imports | 2,449.6 | 2,556.3 | 2,676.4 | 2,740.6 |
| Imports from the U.S. | 507 | 541.9 | 567.4 | 581.0 |
| Total Market Size | 2,345.2 | 2,448.4 | 2,563.5 | 2,625.0 |
Total Market Size = (Total Local Production + Imports) - Exports
Data Sources: Global Trade Atlas
Leading Sub-Sectors
The figures below represent each product’s share of Peru’s 2016 total imports in this sector.
| HTS Code | Description | % |
| 842952 | Mech Shovels Excavators Etc. W 360 Degree Sprstruc | 18.6 |
| 842951 | Mech Front-End Shovel Loaders, Self-Propelled | 15.4 |
| 843149 | Parts And Attachments Nesoi For Derricks Etc. | 13.1 |
| 847490 | Parts Of Mach For Sorting Etc. Earth Stone Ores Etc. | 8.4 |
| 847420 | Crushing/Grinding Mach For Earth Stone Mnerl Subs | 5.8 |
| 843049 | Boring Or Sinking Mach Nesoi, Not Self-Propelled | 4.7 |
| 843041 | Boring Or Sinking Machinery, Nesoi, Self-Propelled | 4.3 |
| 842959 | Mech Shovels, Excavators And Shovel Loaders Nesoi | 4.1 |
| 842911 | Bulldozers And Angeldozers, Self-Prop, Track Lay | 3.9 |
| 843139 | Pts For Lifting, Handling, Loading/Unloading Mach Nesoi | 3.2 |
Peru’s government announced it wants to increase private investment in infrastructure from the current 4.5% of GDP to 6% by 2021. With this increased funding comes a host of new opportunities for the Peruvian construction industry. Construction companies import modern construction equipment such as mixers, cranes, excavators, dump trucks and other equipment, which led to drastically reduced construction times. Growth in the construction sector in 2018 is a result of high demand across several transportation infrastructure areas. The Reconstruction Authority was scheduled to initiate projects on the rehabilitation of over 540 bridges, 6,000 kilometers of national roads, 30,900 kilometers of rural roads and 45,000 kilometers of irrigation canals affected by the floods and mudslides during the early months of 2017, although many projects were not yet ready for public tender. Additionally, a reform package for the health sector, introduced in late 2013, was launched to include rehabilitation, construction, and equipment of 206 primary care centers, construction of 170 provincial hospitals, construction of 23 regional hospitals and construction of 13 national hospitals. To address the infrastructure gap for the education sector, the government has plans to build high performance schools and execute projects associated with the 2019 Pan American Games. In terms of housing, the Ministry of Housing, Construction and Sanitation (MVCS) estimates that the total housing deficit in Peru is around 2 million homes. In addition to construction of 500,000 new homes, the country needs to renovate another 1.5 million to close the housing infrastructure gap. All public housing programs are overseen by the MVCS.
Peru’s thriving construction sector provides a wide variety of investment opportunities. There exists a $120 Billion infrastructure gap with the National Infrastructure Plan prioritizing $30 billion in projects such as:
- Peru Drinking Water Supply: $1.8 Billion
- Expansion of the Jorge Chavez Int’l Airport, currently in the stage of contractual execution, for $1.5 Billion
- The Metro Line 2 for $3.3 Billion. The Metro Line 3 is in the formulation stage and will represent an investment of $3.7 Billion
- Peripheral road ring for Lima-Callao, in the structuring phase, for $2 Billion
- $6 Billion in deals with the Reconstruction Authority for infrastructure, including housing, (waste)water projects, hospitals, schools, roads, and bridges.
- ProInversion looking to attract investment in 51 PPP projects valued at over $9.2 Billion over the period of 2019-2022, website shown below.
As previously mentioned, Peru suffered heavy rains, landslides and floods during the 2017 coastal El Niño phenomenon. The storms and flooding destroyed infrastructure and crops and left many citizens homeless. In response to the disaster, the Peruvian government established a Reconstruction Authority to lead and implement a comprehensive plan to replace, rebuild, and construct quality public infrastructure. The health, education, and housing sectors will receive most the reconstruction funding and all sectors will have a disaster risk management focus. The total reconstruction investment amounts to PEN 25.6 billion (~ USD 7.5 billion) of which 77% will target infrastructure, 21% for prevention, and 2% to capacity building activities for implementing units.
Key Industry Events
Excon 2019 – International tradeshow related to the construction sector.
October 9-13, 2019, Lima, Peru
Web Resources
Business Monitor International Research
Ministerio de Vivienda, Construccion y Saneamiento
National Institute of Statistics and Informatics— INEI (Spanish)
Obras por Impuestos
ProInversión
CAPECO
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