Doing business in Ecuador is both easy and safe. In the last six years, the country has been undergoing an unprecedented process of change and development. The Ecuadorian Government, along with the private sector has developed the Agenda for Productive Transformation based on fairness and efficiency, which will transform the production matrix and lead towards sustainable development of the country. During this process, Ecuador is continually improving its business environment by taking public policy decisions based on ethical economics.
Additionally, not only has macroeconomic stability been maintained after the adoption of the US dollar as the national currency, but record levels of public and private investments have led to a growth of the GDP in 2011 which reached 7, 8%, the third highest growth rate in Latin America, while growth between 2000 and 2011 was 5, 45% on average, also one of the highest in the region. The World Bank (Doing Business Report 2012) has ranked Ecuador as an upper middle income country with a GNI of US $4.140 in 2012.
Some of the biggest projects in the history of Ecuador have been initiated in the last years, such as the construction of the biggest hydroelectric plant in the country and some of the best roads and airports in the region, giving investors an excellent infrastructure to facilitate the development of trade and tourism.
Strategic Geographical Location
Ecuador is blessed by nature and is strategically located to the North East of South America, Parallel 0, offering to trade an exceptional position, being in good distance to important markets such as Brazil, Chile, Argentina, Colombia, Peru, Mexico, United States of America and Canada. One of its main ports, the Port of Manta is the closest point to Asian harbours from South America.
The country itself has four natural regions, Coast, Andes (Highlands), Amazon and the famous Galapagos Islands. Each one of them with different climate and geographic conditions, allowing growth of an incredible variety of products and creating natural attractions for the tourist sector. Besides, the Galapagos Islands offer their natural beauty to the world and positions Ecuador firmly on the world tourism map.
Its geographical location on the Equator and its topography also implies great amount of sunlight, water and a rich soil which results in some of the best agricultural quality products in the world, most of which can be produced all year round given the little change in climate between seasons. It also means it is the most mega-diverse country per square metre in the world, making it a unique destination for research and tourism, among others
Rich in renewable and non-renewable resources
Ecuador has not only been blessed with great agricultural production, but has also some of the greatest renewable and non-renewable resources in the region. It is one of the greatest oil producers in Latin America and has significant gas reserves. Its mining sector is only starting to be developed with huge potential for several products such as copper, gold or iron, among others.
Renewable resources such as sunlight, water, wind, among many other resources are also widely available making the country a perfect spot for investment in the development of renewable energies, for example.
Highly trained and qualified human capital
Ecuadorians are the main asset of the country and the government is promoting an educational transformation to take advantage of its human resources. The young national skilled labour force is growing steadily and the country is investing heavily in the development of science and technology to be able to generate innovation. As an important example, the government is developing “Yachay, the City of Knowledge”, a ground breaking multi million project with the goal of developing specific sectors such as information and communication technologies, nanoscience and nanotechnology, renewable energies and climate change, as well as petrochemicals in an integrated city to be constructed in the northern part of Ecuador (www.yachay.ec).
Clear rules and incentives
Ecuador offers clear rules and incentives for national and international investors. The main legal framework is the recently implemented Code of Production (it can be downloaded in English at http://www.produccion.gob.ec/biblioteca/), which has the following main characteristics:
- Stability and predictability: Investment contracts with stabilized incentives from the Production Code (renewable for 15 years), as well as special deductions from income tax for 15 years.
- Legal security: National and international arbitration is taken into account, investment contracts are possible, while confiscation or nationalisation are not permitted by law.
- Profitability: More than 20 tax and non-tax incentives (cumulative), income tax exemption and deductions as well as exemptions from advance payment of taxes.
- Freedom to invest: Freedom to invest without conditions or authorizations of any kind, national treatment: no minimum requirements in national investment or joint ventures participation (%), without studies or previous authorizations.
- International regulations: Fair and equitable treatment, high level of protection, non-discriminatory or arbitrary treatment.
Great infrastructure and large regional market
Ecuador boasts nowadays a solid infrastructure network with excellent roads, new airports, four public seaports, as well as a state of the art telecommunications system, connected with optic fibre net and one of the highest internet speeds in the region.
It can also be proud of having one of the best connectivity systems, allowing easy access to ports and airports from nearly anywhere in the country. Ecuador is also part of an important regional markets such as CAN (The Andean Community), ALADI (Latin American Integration Association) or ALBA (Bolivarian Alliance for the Americas) and has trade preferences such as the ATPDEA, (Andean Trade Promotion and Drug Eradication) for the United States of America or the GSP Plus for Europe, enabling it to export thousands of products without paying any tariffs.
The Ecuadorian Government has a wide range of incentives in a large number of sectors. However, the Ecuadorian Government has special encouragement programs for the following sectors:
- Tourism – Ecuador is a unique country with the world´s highest mega diversity per square metre and with huge potential for tourism development, having been chosen by “Lonely Planet” as the best Latin American destination in 2013 and the fourth best destination in the world.
- Renewable energy (bio and alternative energy) – Ecuador supports businesses that create value added services that protect the environment. It has huge potential to become a net exporter of green energies.
- High technology industries – An existing network of highly skilled professionals ready to be used in the development of high technology industries.
- Logistics services – Ecuador is a first class logistics centre with a platform that can easily connect Asia with Latin America.
Additionally, other sectors with great potential are:
- Fresh and processed food – Ecuador is the biggest exporter of bananas, palm hearts, fine and flavour cocoa and one of the greatest exporters of tuna, prawns, balsa wood, broccoli, passion fruit and roses. It has great potential for the development of agribusinesses in a great number of products.
- Pharmaceuticals and chemicals – Ecuador is already a manufacturer of high quality pharmaceuticals and chemicals with great interest in expansion and investment in research and development in this sector.
- Metalworking – Ecuador has the right conditions (technological, organizational and facilities) for continuous innovation and asset growth.
- Plastics and synthetic rubber – There is a developed sector that needs investment to generate productive chains.
- Textiles and shoes – A long standing competitive sector ready to modernize its processes by receiving investments and reducing costs.
- Vehicles, railcars and parts – An existing industry in expansion ready for additional investments.
- Construction – Being the fastest growing sector in the economy, Ecuador is looking to specialize in construction technologies that preserve the environment.
- Viable chain for agroforestry and derived products – Ecuador has the potential and aims to be the leader in the international market for wood, sub-forestry, and value-added products with international presence.