Project Brief INVESTMENT CLiMATE | WORLD BANK GROUP 90698 Improving the Business Environment for Tourism in Peru Project At A Glance Expected Results and Country/Region PERU/ Impacts LATIN AMERICA AND THE CARIBBEAN • Reduction in the time, requirements, PRODUCT INDUSTRY-SPECIFIC INVESTMENT CLIMATE/ and steps needed to obtain licenses AGRIBUSINESS and permits for tourism businesses. Tourism is a major revenue source for Peru, but the sector • Compliance cost savings of $1.9 struggles to keep up with rising demand. This project aims to million for entrepreneurs. improve the investment climate for tourism in Cusco, Peru by implementing information technology systems, reengineering processes, training officials, and improving coordination between relevant entities. This will help streamline procedures related to opening and operating tourism businesses. Context Tourism represents the second-largest source of foreign exchange in Peru. In 2013, the number of international visitors grew 12 percent over the previous year, attracting 3 million visitors who spent nearly $4 billion. Peru, with Cusco as a key attraction, has become one of the most popular destinations in South America. IN PartNersHip WitH SWITZERlAND World Bank Group However, as the volume of tourists continues to grow, the different government agencies because of overlapping private sector is struggling to provide the infrastructure jurisdictions. needed to meet increasing demand. Both the private • Standardizing the steps and processes that sector and the Peruvian government are seeking entrepreneurs need to take when opening and to improve tourism infrastructure (including hotels, operating their businesses. restaurants, entertainment facilities, and so on) and • Proposing and implementing a reform plan. expand the sector’s impact on the local economy. • Improving communication among participating public Excessive or inadequate bureaucratic procedures have sector institutions. been stifling the operation of businesses. The lack of • Helping involved agencies effectively communicate coordination between different entities, numerous steps with the private sector about regulatory issues and in permit approvals, inadequately trained staff, and requirements that will increase transparency and insufficient information technology tools all generate high predictability in the business environment. transaction costs for entrepreneurs operating in the formal tourism sector. This promotes the informal development • Providing advisory services to the municipalities of and operation of businesses, which ultimately hinders the Cusco and Urubamba, the regional government of government’s efforts to protect cultural heritage sites as Cusco, the ministries of foreign exchange, tourism, tourism assets. culture, and environment. © Tony Wasserman Our Role Investment climate teams of the World Bank Group are implementing a two-year pilot project to improve procedures for opening and operating tourism-related businesses, particularly smaller enterprises such as lodging establishments, restaurants, and travel agencies. The objectives of the project include: • Identifying key licenses, permits, and inspections in the tourism sector that could be simplified or TRAMIFACIL, a network that is made up of more than 25 eliminated. Currently, duplicative processes exist across public and private institutions to promote a better business climate and reduce bureaucratic barriers, has made great strides in improving the investment climate in Peru. This pilot project is expected to be replicated in other regions “The Regional Chamber of Tourism of Cusco of Peru as well as Latin American and Caribbean countries. is committed to support all efforts for the To ensure sustainability, the project will continue to engage successful implementation of this project and to public sector actors to scale up or replicate best practices. watch over its sustainability so that we don’t go back to old procedures but promote continuous The International Finance Corporation (IFC) of the World Bank Group was recognized for its efforts to enhance the improvement in benefit of our region.” tourism sector with an award from the Peruvian Chamber BORIs GÓMEZ of Tourism as the leading institution in support of tourism Previous President, the Regional Chamber of Tourism of Cusco in 2013. Contact Ursula Blotte | Associate Operations Officer | Investment Climate Email: UBlotte@ifc.org | TEL: +51-1-611-2531 | www.wbginvestmentclimate.org