JULIO JOSÉ PRADO

Ecuador 2022 | INDUSTRY | VIP INTERVIEW

TBY talks to Julio José Prado, Minister of Production, Foreign Trade, Investments and Fisheries of Ecuador, about raising awareness of opportunities in the country.

How does Ecuador plan to bring Ecuador to the world and more of the world to Ecuador?

From the first day of the new government, we have sent a clear message: we foresee more Ecuador in the world and more of the world in Ecuador. President Guillermo Lasso, by Executive Decree, declared the investments promotion policy a priority through good regulatory practices and measures of simplification, efficiency and transparency in administrative processes. On this basis, our government envisions a strengthened business climate in Ecuador. Locally, we pursue a competitiveness improvement agenda in accord with the newly drafted National Development Plan (NDP) 2021-2025. Consequently, our Vice-Ministry of Export and Investment Promotion (Pro Ecuador) promotes the best business opportunities available with an investment projects portfolio in key productive sectors of the economy. According with the guidelines of the NDP, we work with all Government authorities and local officials, as well as private associations and chambers of commerce to select the most attractive investment projects that can capture the interest of foreign investors. With our 24 Commercial Offices in North America, Asia, Europe and Latin America promoting both our renewed business climate and the strengthened portfolio of projects, in international events like the Ecuador open for Business Forum 2021 and other events around the world. Equally important, we are working on Public-Private Partnership PPP schemes for the development of sustainable infrastructure and to provide public utility services that allow for private participation (financing or management), and to share the risk in a contractual relationship in the long-term. Also worth noting are the economic issues addressed by the NDP 2021-2025, which include entrepreneurship, foreign trade, investment, financial modernization, tourism, production, sustainability and agile taxation. One of the primary objectives of our economic policy is to promote an economic system with clear rules facilitating foreign trade, tourism, investment attraction and a modernized financial system. The specific policies for this purpose are:

  • Foreign trade: Ecuador is strengthening trade ties with the world that allow freer trade and management efficiency by deepening our trade agreements, and our social and scientific cooperation as we have already done with more than a dozen countries.
  • Investments first: Ecuador is promoting an appropriate business environment to attract new investments, public-private partnerships to boost productivity and increasing job opportunities. A more active participation of foreign companies is important to this Government in many of the sectors that are of interest to foreign firms as well.
  • Tourism: Ecuador seeks to promote sustainable tourism destinations in an efficient way to the Galápagos, Coast, Highlands, and Amazonian regions and in both urban and rural areas.
  • Financial modernization: Ecuador shall integrate its financial system into the greater global system with the creation of new sources of financing and lines of credit for productive sectors. Chinese financiers have and will always be welcome to serve its customers as a financial arm of strategic projects.

What incentives or differentiating factors does Ecuador have to offer for potential investors?

With a resilient democracy, Ecuador resembles a safe haven in the region these days. Thanks to a rapid and carefully-planned vaccination program, over fifty percent of the population is immunized, economic recovery is at the hearth of the productive sectors throughout the country. Friendly tax regimes, with one of the lowest income and value-added taxes in the region, sectors enjoy tax holidays and credits. Inflation is at historic lows, which allows for medium and long-term planning. Certainly, a differentiating factor for foreign investor is our currency. By investing in a dollarized economy, foreign firms and multinationals can take their capital investments safely and profit or reinvest in a win-win transaction. Aside from the geographical and logistic advantages of being at the equator, our local workforce is another key production factor in their ability to provide quality goods and services consistently. Not only that, we offer potential national and foreign investors, the possibility to enter into an Investment Contract with Ecuador to secure certain tax incentives such as income tax holiday for up to twelve years, depending on the investment location, in addition to foreign outflow tax exemptions. Six Special Economic Development Zones established near ports and international airports, have attracted businesses dedicated to service and technological sectors, mainly due to the young workforce produced by neighboring universities, such as Escuela Politécnica del Litoral ESPOL and Yachay Tech. As part of the Andean Community, regional supply chains are being consolidated for further market efficiencies and expand local market base.

What actions are being taken to improve the investment climate in the country?

The Lasso Administration has started conversations with trade partners such as USA, Mexico and the Pacific Alliance, Panamá, India, Russia, China, South Korea, Japan, and other important trade partners. FDI inflows, historically concentrated in extractive activities, has evolved towards productive transformation sectors over the years. Today, Ecuador offers opportunities in all phases of the value chain, from the development and maintenance of seaports, first-class highways and logistics services to take our products from the countryside and the sea to a world that demands healthier food, intermediate and final value-added products, to investments in business services to firms that require innovative and technological solutions of all kinds, particularly in the last challenging years of the Covid-19 pandemic. Admittedly, the food, energy, and tourism sectors also represent a great opportunity that is already being explored by several large companies in the sector. According to our records, no less than 400 companies have shown interest in investing in Ecuador since we took office last May 2021. Both private sector firms and state-owned enterprises constantly look to Ecuador in the LAC region. Decisively, rejoining the International Centre for Settlement for Investment Disputes signals our attitude towards investors. Finally, our National Development Plan 2021-2025 in Ecuador has been articulated with the Sustainable Development Goals (SDGs) as a platform to propel Ecuador well into the 21st century for the generations to come. We envision an Ecuador where entrepreneurs can take advantage of our rich natural resources sustainably and our human resource capable of producing quality products and providing the services demanded by both the developing and developed world. This kind of vision should allow Ecuador to be part of the global value chains by 2030.

What major panelists will be in attendance and who should we look out for?

President Lasso will kick start the Forum on the 18th of November welcoming attendees at the venue and in our live-stream followed by Mauricio Claver-Carone, President of the Interamerican Development Bank IBD, our strategic partner. The vision of the next four years will be outlined in these first panels of Ecuador is Open for Business Forum 2021, so you do not want to miss what is in store for participants. Local and foreign investors are constantly looking to partner with the Government and develop their own initiatives, so the presentation by Roberto Salas, Presidential Advisor for Investments and Public-Private Partnerships is a must if you want to learn how far we have come to structure PPP models along with words from Richard Cabello, Advisory Services in PPPs at the International Finance Corporation. Beyond the success stories of the likes such as DP World, Lunding Gold, Schlumberger, participants will learn about our efforts to accomplish Sustainable Development Goals in our panel dubbed The Influence of Gender Equality in Generating Impact Investments. Investments do have an impact in gender equality, particularly in the developing regions where women often are the head of households. Another must see panel is on innovation and technology. As you know skilled labor is critical for investment projects, where human resource is the best and only asset for the success of the project, our panel titled Closing Technological Gaps through Innovation and Investment for the Future will showcase what local and foreign firms are supplying to the globalized world post Covid-19. Whether offline or online, look for the local experts in your field of interest who will participate in the Forum. If you need guidance in the process, our Investment Promotion Agency – Pro Ecuador, can link you with the right people at the table.

Who is the ideal investor in the eyes of the Lasso administration?

The pandemic has presented different challenges to countries in a variety of ways. Although the risk leads to a very important reflection when investing, it also presents other opportunities. Some of the most profitable companies in the world were established during some economic or other kind of crisis. The Ecuadorian economy has shown signs of improvement thanks to President Lasso´s propelling policies towards an export-oriented economy, not only in the next 4 years of this government but in the long term. Therefore, in many ways, the challenges posed by the pandemic in Ecuador pose an opportunity for visionary entrepreneurs and decision-makers to seed and generate income. Certainly, we are always excited to see the attitude of the private sector, from SMEs to MNEs, eager to explore our opportunities and invest. The firms that have demonstrated their desire to work hard are the ones we can trust. In the past, some investors have withdrawn their investments due to lack of confidence or lack of a clear vision that work was not going to be carried out as agreed. Today the government of Ecuador knows that inspiring confidence in investors is fundamental to the economic praxis of our National Development Plan. Firms willing to invest in their human talent base, their own research and development, and reinvest in their core know-how will eventually spill over and create backward and forward linkages that benefit local and regional value chains. Admittedly, commodities may have been the magnet for certain initial investments. However, those who have stayed for good have seen plenty of rewards when the Ecuadorian people sees their brands and name as synonymous of quality and trust. Opportunities await those willing to give Ecuador a chance to show that strength comes from diversity. Finally, I invite everyone to learn more about the business and investment opportunities at your fingertips through our information portal at Ecuador Open for Business – Más Ecuador en el mundo, más mundo en el Ecuador.