PLANES, TRAINS, AND AUTOMOBILES

Ecuador 2019 | ECONOMY | INTERVIEW

Ambitious plans to trim the public sector, boost PPP projects, and reach out to foreign investors are already paying off since President Moreno took office.

Pablo Campana Sáenz
BIOGRAPHY
Pablo Campana Sáenz had an extensive career in the private sector before his appointment as Minister of Production, Foreign Trade & Investments in May 2017. Following a cabinet reorganization in mid-2018, he is now also responsible for the former ministries of industry and aquaculture & fisheries. He held various positions with the Nobis Consortium and was CEO of Pronobis, the real estate development division. Prior to Nobis, he served in executive roles at the Ecuadorian Bottling Company and Valdez Sugar. Campana has a degree in international business from Universidad del Pacífico and an MBA from IDE Business School. Prior to entering business career, he was a professional tennis player, representing Ecuador at the 1996 Olympics in Atlanta.

A new law to improve productivity, attract investment, boost employment, and bring fiscal stability was approved by the assembly in August. What are your expectations for it?

The main objective of our administration and this new legislation is to enhance the dialog between the public and private sectors. In the previous administration, there was a big distance between the public and private sectors, as well as between the Ecuadorian government and our strategic partners such as the Pacific Alliance, the US, South Korea, and Japan. We are refreshing the image of Ecuador and strengthening Ecuador's relationship with other countries, while at the same time strengthening relations between the public and private sectors at home. The new law provides a solid legal framework with international arbitration, in addition to tax incentives, ranging from eight up to 20 years of zero income tax in certain sectors and provinces. This has eliminated earlier obstacles for investment while opening new doors. For example, we eliminated the outflow tax for new investments and the windfall tax for the mining sector, and are offering participation contracts for hydrocarbons instead of service contracts, which will open our economy and entice large oil companies around the world to invest here. Furthermore, we reduced the tax for the transfer of shares from 25 or 35% to a maximum of 10%, which has made us extremely competitive in the region. We also changed the regulations with regard to countries considered tax havens, which are also now welcome to invest here. We eliminated the legal responsibility that used to fall on the shareholder or management of a company, measures that led to more transparency, and if there is a problem with the administration of a company, the responsibility falls on the company and not on the last beneficiary of that company. This transparency, in combination with adequate international arbitration, is the new foundation of our investment climate.

In 2018, you assumed responsibility for the ministries of Industry and Aquaculture and Fisheries. How do you envision integrating these entities with your own?

The president decided to review the size of the public sector in a bid to better align responsibilities. From 40 ministers, we are now down to 20, significantly reducing the size of the government, which encourages us to become more efficient and lean. That includes transferring tasks to the private sector and encouraging more private investment in general. Still, the success of every executive, minister, or CEO depends on the team, which is our main focus right now. Bringing together the ministries of industry and foreign trade presents us with a unique opportunity to better align our public policies. Merging the two entities will better support our local industries to start exporting and build a broader export portfolio, which in turn should bring a more favorable trade balance. For the productive sector, we need to improve competitiveness, which means we will better assess the strength of our provinces and establish PPP models to encourage investment, rather than developing with public funds. Our mission is to create a state policy for production. Our neighboring countries Chile and Peru have managed to do so and increase their GDP growth as a result.

You have deepened bilateral relations with the UAE, and Dubai-based DP World has invested in a multipurpose deepwater port in Posorja. Could you elaborate on this?

One of our objectives when we started the new administration was to visit 20 countries in the first year. Thus far, we have visited 29 cities, including two trips to the UAE. We have excellent bilateral relations, which are resulting in large-scale investment projects. For the Posorja project, USD1.2 billion has been committed, and construction is on track. The ministry is a firm believer that infrastructure, ports, airports, railways, and roads are one of the key enablers of economic growth, and we invite international investors to participate in these projects.