HEALTHY COMPETITION

Ecuador 2013 | INDUSTRY | INTERVIEW

TBY talks to Richard Espinosa, Coordinating Minister of Production, Employment, & Competitiveness, on Ecuador's changing production matrix for future national development.

Richard Espinosa
BIOGRAPHY
Richard Espinosa holds a Bachelor’s degree in Business Administration from the University of San Francisco de Quito. His numerous roles prior to becoming Coordinating Minister of Production , Employment and Competitiveness include stints at the Coordinating Ministry of Social Development (MCDS), the Ministry of Labor Relations (MRL), and the National Technical Secretariat of Human Resources Development (SENRES).

What are the Ministry's future perspectives and its role in the government's efforts to change Ecuador's production matrix?

The change in the production matrix, as stated by President Correa, is one of the top government priorities. Several ministries in addition to ours, such as the Ministry of Agriculture and Fishing, the Ministry of Transport and Public Works, and the Ministry of Tourism, are also involved in the operational committee. Our Ministry is in charge of coordinating and boosting synergy between all the teams involved in the national effort to change the national production matrix. Our main objective is to increase productivity levels, diversify production, products, and markets, generate further value-added for our exports, and increase the range of exportable products. Overall, we want to become a country that exports products with value-added, strengthening Ecuador's profile in international markets. Today, Ecuador exports a large amount of non-renewable energy products, and we need to diversify our export portfolio in order to reduce dependence on oil exports and increase our industrial profile in terms of exports. I would like to add that the country has already been engaged in such efforts and activities for the past six years, a period of time in which Ecuador has completely changed for the better. For example, we have adopted a new Code of Production, which gives us a better and clearer regulatory framework for investors, and introduced tax reforms to attract both domestic and foreign investment. Along with that, we provide many types of support to entrepreneurs. We have renewed over 90% of the national highway network, thereby contributing to the development of the logistics sector. In this regard, Ecuador is the leading exporter in segments such as bananas, shrimp, flowers, and cocoa, and our products are regarded as being of the highest quality. However, we know that we must improve upon certain technical issues to increase productivity per hectare.

Additionally, we have improved airport facilities and we have started as many as eight different hydroelectric plant projects, worth $8 billion, which will fully make Ecuador energy sufficient, as well as the cleanest energy producer in the world by 2018, the year in which we expect these projects to be completed. Ecuador has also achieved a great level of political stability, which has diversely contributed to national development. We are growing at a faster rate than the regional average, and Ecuador currently enjoys its historically lowest unemployment rate, which is also one of the lowest in the region, too. The country has also improved both the quantity and quality of employment. Another one of our main goals is to increase the Ecuadorean component of productivity. In other words, we want to manufacture more products in our country and strengthen the “made in Ecuador" brand. For example, we have noticed increased interest in manufacturing companies within the car assembly and components industry to invest in Ecuador. It is important to note that the public sector should be the engine boosting all these efforts; however, the private sector also plays a part in order to achieve common goals and drive development from an industrial point of view. In other words, the private sector knows how to market and commercialize the products the country produces, while the public sector provides regulation and incentives. It is all about creating synergy. In that regard, we have already had successful experiences such as the cardboard production plant in Guayaquil, which has an expected $130 million investment plan for 2013; it recycles material to make cardboard boxes, for banana exports, for example. This plant had imported 60% of the cardboard before we started exploiting synergies between the public and private sector, and we have now reduced that figure to 45%. Ecuador has to take further steps to become self-sufficient in as many areas as possible, and reduce the import of products that we are large producers of, such as rice, coffee, and quinoa. Ecuador is a unique country in terms of geography and biodiversity—visitors can travel from the high mountains to the coast in just half an hour by plane, and enjoy the great biodiversity of our small, but compact, country. Ecuador has completely changed its image over the past few years, the best proof of which is the rising number of senior officials visiting our country to express interest in investing here. Ecuador is clearly on the right path to achieving further growth and development, and I have no doubt that the above-mentioned efforts will lead us to a better and promising future for our country.

How can international trade agreements contribute toward increasing the country's competitiveness?

The more trade agreements we have, the better. In respect of the agreement with the EU, I can say that we have advanced negotiations considerably. We are very hopeful of reaching a common agreement in the near future. This agreement should open the doors of Ecuador to many European companies, and vice-versa; we should see an increasing presence of Ecuadorean products on EU shelves that are even more competitive. For example, we have unique fruits and agricultural products found only in Ecuador, and perhaps Colombia, which spells huge potential for the near future. Biodiversity is one of our main competitive advantages, and that is something we have to further exploit from an industrial perspective.

“The change in the production matrix, as stated by President Correa, is one of the top government priorities."

What are your main priorities as a Minister for the short to medium term?

First of all, and as President Correa has already stated, we need to consolidate the process I mentioned before and the work achieved over the past six years; we have four years ahead of us, and it will be a good period of time in which to make a notable change and contribution to the country. Ecuador today enjoys the best economic and social conditions yet seen, and we have to take advantage of this ideal situation to achieve more and become less economically dependent on oil.

What economic sectors hold the greatest potential for the further development of Ecuador?

Ecuador and Latin America are achieving a great and positive transformation, quite unique in history, and investors already have their eyes on the region. I believe that Ecuador is leading this developmental process and that we offer the best conditions for investors.