The Business Gateway to South America
REASONS TO INVEST Dollarized and Vibrant Economy
• The incorporation of The United States dollar, as the official currency of Ecuador since 2000, provides security to investors because there is no risk of devaluation. • Ecuador is among the countries with better economic performance, with an inflation of one digit, which is lower than the average for Latin America.
Highly Skilled Workforce • The economy has a skilled workforce and its salary is competitive in relation to its main competitors. Ecuador has become an international leader for the employment and social inclusion of people with disabilities and has an unemployment rate of 4.12%, the lowest of the region. • The Ecuadorian workforce is recognized as highly productive and for its ability to be trained. Experience has allowed its workforce to acquire a unique know-how to manage their production processes, especially in the banana activities, shrimp and floriculture. • The government has increased scholarships for masters and doctoral degrees. 10,000 scholarships were given for higher education until 2014.
Strategic Location and Logistics Hub Most of the trade is carried by sea thus; more than 2,500 ships annually leave Ecuadorian ports. However, a significant fraction of foreign trade is carried by air.
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Ecuador is located on the Northwest Equatorial Line of South America’s Pacific Ocean, being a strategic location within the continent for its shortcut to the Pacific Ocean. This results a great benefit to the shipping companies by optimizing time and resources to manage their loads. This geographical location is rather unique thanks to the proximity to: • The West Coast of United States. • The Panama Canal that allows getting to Europe • Middle East • And the rest of East Asia
Mega diverse environment Nature has been generous to Ecuador. Its climatic conditions facilitate the harvesting of agricultural products throughout the year. It has stable weather conditions with clearly defined rainy and dry seasons. A permanent luminosity enhances the cultivation of all types of fruits, vegetables, flowers and aquaculture products (prawn, tilapia, lobster and others) which have a high demand in the international market and which can also be processed in the country.
New Investments in Infrastructure and Logistic Ecuador bets to continue increasing its competitiveness through investment in infrastructure to connect all production centers, as well as to facilitate the free movement of people and goods. Ecuador aims to own the best infrastructure in the region. There is an ambitious strategy established in the Strategic Plan of Mobilization 2013-2037. The plan defines an investment of USD$118 billion in transportation and USD$11 billion in ports for the next 25 years. It will cover all kinds of infrastructure: road, air, sea, railway, transportation of cargo and passengers. According to the Global Competitiveness Index 2013-2014, Ecuador moved 32 places in the international ranking over the last 7 years, the biggest improvement in the region. Concerning the quality of infrastructure, the country moved 10 places, from 85th to 75th in 2013, taking the 6th place in Latin America, above Brazil, Argentina, Peru and Colombia.
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ECONOMIC INDICATORS Capital
Quito
Area
283,561 km2
Official Language
Spanish
Currency
US Dollar
Life expectancy (2014 est.)
76.15 years
Size of Economy (GDP 2014)
$97.68 billion
Wealth (GDP Per capita 2014, calculated in current dollar terms)
$6,206.99
GDP Growth (2014)
3.40%
Labour force (Sept. 2014)
7.145 million
Unemployment Rate (2014)
4.12%
Population (According to INEC projection 2014)
15,951,404
Literacy Rate (2014 est.)
91.6%
Foreign Direct Investment Net Inflows (BCE 2014)
$773.80 million
Total tax payable by businesses (2014)
Income Tax 22%
Exports
$25,73 billion
Imports
$26,22 billion
PRIORITAZED SECTORS Fresh and Processed Foods
The Ecuadorian food sector has a history that supports its development, quality and variety. It is one of the sectors with greater weight in the Ecuadorian economy for its participation and growth. Investing in the Ecuadorian food industry means an attractive return for the entrepreneur. The ROS (Return on Sales) of the Ecuadorian food sector has become very interesting in the past years, due to the increase in this return.
Biotechnology and Applied Software Ecuador is one of the 17 regions with the highest mega diversity in the world which, if investigated scientifically, it could be a source of endless discovery of new biological agents, organisms and substances with medical, food and industrial applications. On the other hand, the domestic consumer market of Ecuador is increasingly demanding products and services of advanced biotechnology, as the emerging and growth of leading economies, mainly in terms of their welfare and purchasing power. This business environment is highly favorable to a foreign investment, allied to a transfer of science and technology, to a country with thirst for knowledge and development. This becomes a unique opportunity to participate in a social, financial and ethically sustainable industry.
Tourism The top reasons to invest in tourism are: Steady growth of tourist arrivals; Existence of a growing global tourism demand; Supply diversity and excellent relation quality vs. price; Stable economy; Low construction costs, land value and labor costs attractive; State commitment through public investment oriented to a sustainable tourism development: investments in road system roads, electricity, efficient ports and airports, cutting-edge phone systems, education and health services, in line with minimum paperwork steps for a systemic competitiveness.
Logistics Services Ecuador is emerging as an attractive country for the logistics activity, especially for its strategic location in relation to Asian markets and the high infrastructure investment in recent years. Ecuador has invested more than U.S. $ 8,000 million in more than 9,000 km of roads and bridges in the past 7 years (Ministry of Transport and Public Works).
Sustainable Agroforestry Chain and their processed products The industry opportunities are reflected in the continuous growth in the consumption of forest products due to the following: preference for furniture made of wood and the increased demand for furniture worldwide; Ecuador has the geographic conditions for the faster growth of forest species due to the twelve hours light per day that has throughout the year; forestry experience; availability of suitable land; industrial facilities and infrastructure; and strategic market location. 5
INCENTIVES General Incentives: What are they?
• Reduction of 10 points of the Income Tax for investing the profits in productive assets. • Modification of the calculation base for the advanced payment of Income Tax, for employment generation and purchase of productive assets. • Additional deductions for payments of the dignified wage, for Income Tax. • Payment deferment of the Income Tax up to 5 years, for opening the stock equity of the company to employees. • Exemption of the advanced payment of Income Tax for 5 years for new investments by new companies (after December 29th of 2010). • Monthly payments up to 2 years, on generated taxes over US$10,000, for imports of Capital Goods. • Exemption of the ISD (Capital Outflow Tax) on the re-payment of interest of foreign loans.
Who can apply?
Incentives for Prioritized Sectors:
Specific Incentives
Income Tax
Medium Size Companies An additional 100% deduction (double) on expenses incurred for:
No payment of Income Tax for 5 years, strating when income is generated, for: New investments in Prioritized Sectors or Import Substitution (18 sectors as a whole)
Who can apply? • New company (Constituted after December 29th of 2010) • New investment outside the urban perimeter of Quito and Guayaquil • New investment in: Prioritized Sectors, or Import Substitution. 6
• Technical training , research and innovation • Market and competitive studies • Expenditure related to commercial promotion, travel and hotel, for opening new markets.
Environmental An additional 100% deduction (double) on expenses incurred for: Depreciation for purchasing machinery and equipment for cleaner production and the implementation of renewable energy systems (solar, aeolic or similar), or for the mitigation of environmental impact.
Deprived Areas An additional 100% deduction (double) on expenses incurred for: Salaries, wages, and social benefits for new employment generation in impoverished zones (outside Quito and Guayaquil), for 5 years.
Other Incentives Currency Outflow Tax (ISD) • Exemption of payment of ISD for dividends paid by companies established in Ecuador to companies established abroad or to non-residents of Ecuador abroad (except tax havens) – Art. 18 Ley de Fomento Ambiental. • Exemption of payment of ISD of imports for goods to special regimens to be exported– Executive Decree SRI Nro. 1180.
COMEX Resolutions • Resolution 82: New investments with investment contracts with the government will have tariffs reduction on imported capital goods, not produced in the country (Art. 1).
Executive Decrees • Nro. 1283: Government incentive of 40% discount on jet fuel prices for 3 years, to the first airline to open a new air route. 7
The Business Gateway to South America
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