Regarding mining in particular, we are responsible for helping mining companies and investment groups looking to navigate through a weakly regulated sector. In Ecuador, mining regulations have caused international uncertainty due to rapidly changing laws and shifting investment conditions and incentives for foreign companies. The plan is to increase mining's contribution to GDP from 1.4% to 4% during the first stage, and then to 12%. Our value increases by being the local partner with the know-how. We have designed an investment protection scheme around the most solid elements of regulation to withstand any possible shake up of the legal framework while considering the risk associated with investing in Ecuador and advising best practices for investments. We are working with our clients to design a social and legal risk management program for long-term operations. We need to look at the mining industry long term, as it takes over 12 years of investment without any returns to explore and prepare operations for projects. We need to create an instrument that would secure 15 years of incentives or conditions at the time of the contract's signing. If any further incentives are negotiated within that time, the company might benefit from it, but if there are any new taxes levied or restricting regulations put in place, it will not affect the already signed project. This instrument can be extremely effective in attracting potential investment.
Mar. 9, 2020
Partner, Sempértegui Abogados
Director & Partner, Sempértegui Abogados
The law firm was established over 25 years ago as a boutique niche firm by the Sempértegui family and has since grown to eight partners. We mostly deal with the energy and public sectors, providing fiscal, investment, and legal counseling. Our exceptional growth in complicated economic times can be attributed to staying true to our specific areas of expertise and relying on our network of partner law firms for everything outside of our expertise. We also have a public-private partnership advisory practice; a conflict resolution, mediation and litigation area; and a civil and corporate law practice in which we deal with contract law and the legal aspects of our clients' business relations. In the energy area, we mostly deal with navigating through the regulatory framework of opening and operating renewable or alternative energy businesses. We have established our position in the industry by having one of our founding partners, Leonardo Sempértegui Vallejo, serve as General Legal Counsel at OPEC. We are also members of the UN Global Compact board in Ecuador and lead the round table committed to the achievement of the UN's SDGs relating to the advancement of sustainable energy practices and regulations. We are positioned to advise all 51 companies that signed up for the national pact to achieve this goal.
Marcelo Marín Sevilla
Ecuador approved its antitrust law in 2011. The law empowers the regulator to impose sanctions on businesspeople who engage in illegal behavior when it comes to competition, market, and consumers. A market study that was later carried out found that no antitrust law firms existed in the private sector offering professional services in market analysis or market competition, which led us to establish Procompetencia in 2012. Our client portfolio has grown significantly over the years. We have clients from sectors such as textiles, food and beverage, editorial, construction, hospitals, pharma, and commercial real estate, among many others. We have grown an average of 19.7% over the last seven years, and Procompetencia is now one of the leading legal and economic firms in Ecuador. We have a team of highly trained experts with solid experience in consulting and litigating complex cases, which ensures we provide a diligent process with 99% efficiency. We then included other services in legal areas such as mergers and acquisitions, banking and insurance, taxation, telecommunications, e-commerce, intellectual property, and PPPs, among others. Notably, we are planning to open offices in Paraguay in 2020 and in Bolivia in 2022.
Prófitas was founded in 2004 by a group of social scientists and businesspeople out of an awareness of the extent to which politics directly impacted the economy of countries such as Ecuador. We are experts in managing political risk, our core activity. We began publishing analyses and reports to improve business decision making in the face of political uncertainty. Later, we started providing political risk-management support to individual companies in order to help them deal with political and social challenges. Our clients are local or foreign corporations that do or plan to do business in Ecuador. The two biggest concerns of investors looking to invest in Ecuador are political instability and weak governments unable to implement consistent programs or achieve their goals. While this environment presents risks, it also provides opportunities. It is important to have a broad view and an open mind and not fear such factors, but instead realize and understand that those risks are constant, and adapt strategies accordingly. In 2020, we will grow our portfolio of international investors and institutions who hold Ecuadorian debt or equity assets and understand the need to gather local political insight to make better investment decisions. Political risk in the region is on the rise, and such situations tend to generate significant swings in asset prices. Therefore, it is crucial for investors to remain ahead of the curve.
Audit Partner, Moore Ecuador
In the past few years, we have brought in new partners to handle strategic matters when it comes to soft landing of companies. At Moore Ecuador, we have adopted a globally relevant strategy. We saw significant growth in 2019 after associating with three new partners in Quito, working in the legal, tax, and corporate departments. We have added a consulting partner in human resources, dealing with matters such as staff retention, profiles, and staff satisfaction. We actually have seven partners that are boosting the presence of our brand across the country. We are aiming to provide a 360-degree service. In Ecuador, auditors or consultants cannot provide another service aside from what they are supposed to do; however, we do provide a complete perspective to the client in terms of legal and tax consulting. The government has put in place a framework to provide foreign investors with incentives but the main reforms are still underway. Those reforms include the consolidation of a proper legal framework with safety, certainty, and clear rules. These moves will help attract investments. I can compare us with other countries in the region whose economic policies have rarely changed. Details change, but the essence does not, despite the political inclination of each administration. Ecuador, as a country, needs to move onto a model where we can provide a lot more safety and clarity to investors.
General Manager – Tax, BDO Ecuador
BDO has been in Ecuador for more than 40 years, offering its services throughout the country for both local companies and foreign firms. We have four business segments: auditing, tax and legal, outsourcing, and consulting. Our clients come from all sectors of the economy. We help them on a daily basis in different areas. There have been a number of tax reforms in Ecuador, and each one of them offer an opportunity to see how companies can tax advantage of new laws, so they can pay the most effective, and lowest, tax rate according to the tax regime. It is a challenge for any operator in the country to keep up with all the changes in the tax regime. Our job is to provide the best service in this regard. In every single reform to boost the economy, Ecuador includes certain changes in the taxation system; however, an overall simplification is needed, as well as more legal certainty. Ecuador wants and needs more private investments, and efficient tax regulation is key to that. Ecuador has put in place models that generate advantages for investors. There are new incentives in basic industries, prioritized sectors, PPPs, micro and small businesses. New regulations have been passed to provide a more attractive tax environment and more are underway. Still, the main challenge is to create legal certainty in the long term.