Strategic geographic location
According to the investment guide of PROEcuador, a Vice Ministry attached to the Ministry of Production, Foreign Trade and Investments, Ecuador is strategically located in the north of South America, on the Pacific Ocean coast and is well used for its good port infrastructure. In addition, it shares borders with Colombia to the north and Peru to the south.
It is significant to note that this nation, which has 81 microclimates, is located in one of the most productive agricultural areas on the planet, as it has stable climatic conditions with well-defined wet and dry seasons. Additionally, Ecuador has the highest concentration of rivers per square kilometer on the planet.
According to the government agency, the country's port system is made up of seven state ports and ten private docks, specialized in general cargo and oil. Among the most important are:
- Port of Guayaquil that thanks to its advanced technology moves more than 20 containers per hour.
- Port of Manta: It has a draft of 12 meters where ships of great length and capacity, such as post-Panamax ships, can dock.
- Port of Esmeraldas: It is a crucial point and of great benefit for foreign trade due to its proximity to the Panama Canal.
- Puerto Bolívar: Strategically located in the province with the highest banana production in the country called El Oro.
It is important to note that, thanks to low logistics costs, Ecuador becomes a very advantageous distribution platform within the region, with a significant volume of commercial traffic. In addition, the geographical location of the country facilitates access to the markets of Colombia, Peru, Bolivia and Chile in South America.
Clear rules for investment
Undoubtedly one of the most attractive aspects of the country is the clarity regarding investment, which has been reflected in its Constitution. Here, private investment in the economy is promoted, guaranteeing freedom to companies and making the State responsible for stimulating free competition and competitive markets.
The protection of private property is also established and the fulfillment of the agreed contracts is guaranteed. Likewise, national and foreign investors, belonging to the private sector, are allowed to participate through concessions or the privatization of state companies, in the construction and management of public works such as highways, ports and in the supply of basic services such as water. drinking water, electricity and telecommunications, which are currently managed by the State. Any investor who wants to execute a project with the Government must make a minimum investment of US $250,000 during the first year.
In order to promote foreign investment in its territory, several incentives were designed to investors, including:
- Income Tax with the lowest and most profitable rates in the region.
- A decrease of 10 points in the Income Tax rate when making investments in productive assets in the country.
- The exoneration of the payment of the minimum advance of the Income Tax for up to 5 years, for the new companies that are constituted in the country.
- Exemption from the payment of Foreign Currency Outflow Tax (ISD), for the payment of external credits, with a term greater than 12 months and with the rate authorized by the Central Bank of Ecuador.
- Implementation of an additional 100% deduction for the calculation of income tax, regarding the depreciation of machinery used in cleaner production and the implementation of renewable energy systems such as solar or wind.
Trade Agreements and CAN
As a titular member of the Andean Community (CAN), accompanied by Peru, Colombia and Bolivia, they have managed to strengthen economic integration, achieving, for example, the eradication of tariffs among member countries and the creation of a free trade area. In turn, CAN provides multiple benefits for investors, including lower operating costs.
The CAN also signed a cooperation agreement with Mercosur, gaining four new associate members: Argentina, Brazil, Paraguay and Uruguay. Taking into account the economic policies that excluded competition since its formation, the CAN represents great opportunities for foreign investors.
In the same way, the nation has other agreements in force, such as:
- Multiparty trade agreement with the EU
- Partial Scope Renegotiation Agreement No. 29 between the Republic of Ecuador and the United Mexican States (AAA.R29 Mexico).
- Economic Complementation Agreement No. 46 signed between the Republic of Cuba and the Republic of Ecuador.
- Economic Complementation Agreement Chile - Ecuador (ACE Nº65).
- Partial Scope Agreement of Economic Complementation between Ecuador and Guatemala (AAP.A25TM Nº42).
- Partial Scope Agreement for Economic Complementation, to be signed between the Republic of Ecuador and the Republic of El Salvador AAP.A25TM 46 EL SALVADOR.
With this interconnection, Ecuador has established cooperation frameworks to strengthen trade and investment between members to facilitate trade in goods, services, public purchases and investments between the signatories.
Free trade zone
With the publication of the Organic Code of Production, Trade and Investment eleven years ago, the Ecuadorian government created the Special Economic Development Zones or ZEDEs. These areas are focused on industrial diversification, technology transfer, employment and foreign exchange generation, as well as the general promotion of export projects.
These zones are subject to trade, taxes and special financial regulations. Some of the benefits granted to the entities include the exemption from tariffs on imported goods entering these zones, exchange controls and special labor regulations, as well as 20 years of tax exemptions.
In this way, the areas authorized by the States are:
- Eloy Alfaro, located in Manta, Manabí, specialized in the industrial and logistics sector.
- Yachay, located in Urcuquí, Imbabura. Dedicated to the technological, industrial and logistics area.
- Posorja, located in Posorja, Guayaquil, Guayas. Focused on logistics.
- Del Litoral, located Guayaquil, Guayas. Focused on the technological and industrial area.
- Quito, located Tababela, Quito, Pichincha. Expert in the Industrial and Logistics sector.
Covered under a VAT and export tariff exception regime, the maquila system allows the export of products from Ecuador with final added value incorporated in the country. These special conditions will be granted only when the production of said goods is exclusively for export. The system guarantees these favorable conditions in the long term, together with a policy of repatriation of profits and all foreign investment.
In addition, some special labor regulations are applicable to companies that operate under the Maquila system. Ecuadorian companies often lease their excess capacity and carry out assembly operations following the guidance and specifications of foreign companies.
Wide range of investment opportunities
According to what was published on the Government page, the Ecuadorian economy stands out among the countries with the best economic performance in Latin America, having an annual growth rate of 7% in GDP and with a dollarized economy.
This nation has great diversity thanks to its more than 18,000 species of plants and more than 700 species of freshwater fish. This represents a profitable investment opportunity in sectors with potential technological applications, including the biotechnological industry, based on the country's biodiversity.
The multiplicity of microclimates, permanent solar luminosity, fertility of the land throughout four natural regions, and access to the Andean belt of minerals, are some of the factors that make Ecuador a propitious place to carry out any type of productive and commercial activity.
Recent investments in the country show the confidence of foreign investors and the great opportunities that Ecuador offers.