JAVIER ROBALINO ORELLANA

Ecuador 2020 | ECONOMY | INTERVIEW

One of the largest professional services firms in the region, FERRERE specializes in all areas related to natural resources.

Javier Robalino Orellana
BIOGRAPHY

Javier Robalino Orellana has been a partner at FERRERE in Ecuador and a member of the firm's global executive committee since 2015. He also co-chairs the arbitration practice and acts as managing partner for Ecuador. He earned an LLM degree from Duke University in 2006 and obtained an SJD from Universidad Católica de Quito. He represents many multinational companies in various local and international commercial and investment disputes. He has participated in many cases under CIADI, CNUDMI, CIAC, CCI, and CAM-Santiago rules. He also participates in international public law cases under the WTO, Andean Community of Nations, and the Inter-American Convention on Human Rights rules, among others.

Can you give us some background on the company, along with some of the current investment trends you have noted?

FERRERE is one of the two largest professional services firms in the country and one of the three largest firms in South America, with 1,300 employees in the region and 13 offices throughout Ecuador, Uruguay, Paraguay, and Bolivia. In Ecuador, we currently have more than 75 lawyers and 170 employees in our three offices in Quito, Guayaquil, and Manta. We are active in areas such as hydrocarbons, mining, and different forms of activity related to natural resources. This footprint gives us a great position to measure changes in the investment climate, as we are involved in the development of our clients' activities related to new investments and existing ones. In Ecuador, the changes in the Productive Development Law of 2018 were positive. Various provisions on arbitration and the participation of the private sector were included, which targeted the creation of a more attractive environment for investment. There are more decisive steps to be take; for example, it is necessary to revive bilateral investments agreements, which were all renounced in 2017.

What other changes are still due to further dynamize the economy?

Ecuador must continue on a path of openness and integration, following a clear set of changes. First, Ecuador should continue working to become a full member of the Pacific Alliance, then resume discussions to sign bilateral investments with countries vital for our economy such as the US, Spain, Canada, Australia, and Mexico. Second, Ecuador must develop an international arbitration law that strengthens the recognition and enforcement of foreign awards, which would help our country generate a greater integration of Ecuador in the international arbitration system. Third, our country needs to see a much more holistic simplification of the tax regime, especially regarding the reduction and subsequent elimination of the tax on the exit of foreign currency (ISD). Despite its name, ISD also acts as a tax on the entry of capital. Since it is expensive to repatriate earnings, investment does not come. Fourth would be to speed up investment processes, including approvals for investments, environmental permits, approval of assignments of state contracts, and others.

What are your views on the mining sector and its future?

We work with existing players in the sector on corporate and mining issues, dealing with topics such as JVs, development of mining projects, and constitutional matters. All Ecuadorians should understand that mining is a key revenue generator in the country, as is the case in Chile or Peru. Mining allows sustained growth to the point of dynamizing the economy in such a way that national per capita income grows substantially. For Ecuador to achieve parity with its neighbors, it is estimated that we need at least a decade of continuous growth. Mining growth in Ecuador requires the attraction and long-term presence of responsible companies that encourage the adequate distribution of mining wealth through responsible mining. If mining continues on a positive track, it is expected to exceed oil investment in the coming years, which will have other effects. First, mining will boost other parallel investments such as infrastructure and construction. Additionally, unlike oil, mining distributes the income much faster among society. Second, large-scale mining takes a longer time to develop, creating a broader and more diverse process. In this sector, there are also changes that are highly needed, including the reopening of the mining cadaster so Ecuador remains attractive. And last but not least, the most important thing is for Ecuador to work on providing legal certainty and full protection to existing investments in order to attract new ones.

How will 2020 shape Ecuador's economy?

Despite the near-zero GDP growth rate expected, 2020 should be a year of consolidation of the current pro investment policies. The government needs to speed them up and implement measures that will pave the way for greater growth in 2021.