eco center of the world

EC O - C E N T ER OF T H E WOR L DA SM A RT I N V ESTM EN T OP T ION

www.mcpec.gob.ec

ECUADORa smart investment option

Nathalie Cely SuárezCoordinating Minister for Production, Employment, and Competitiveness

Av. La Coruña N25-58 y San Ignacio, 4to piso.(593 2) 3815600Quito

www.mcpec.gob.ec

Printed by: NOCIÓN

Quito, February 2011First edition

Introduction

Ethiconomy, the aim of all National Government Policies

The productive transformation is marching on

What and why are we transforming?

National Program of Support to Investors

Ecuador in numbers

Productive post - transformation

Strategic Sectors

Content13

14

24

28

36

40

50

56

“Today, making its way strongly throughout the world, but

above all in Latin America, is the understanding that the

alliance between strong, efficient, active, and transparent

States, and the private sector, responsible, and committed

with the well-being of society, constitutes the basis for

productive, economic, harmonic, holistic development; the

ethiconomy- ethics and economics- the ethiconomy that

puts the human being as its centre and reason for being. And

remember, that the human being is not just another factor in

production, it is in itself the reason for production”.

Speech given by the Constitutional President of the Republic of Ecuador, Rafael Correa Delgado, during the inauguration of the World Business Forum Latinoamérica AILA 2010 - Guayaquil, November 30th , 2010.

Econ. Rafael Correa Delgado,Constitutional President of Ecuador.

NATIONAL GOVERNMENT OF THE REPUBLIC OF ECUADOR

Nathalie Cely SuárezCoordinating Minister for Production, Employment, and Competitiveness

Presentation When I think about investment, the first thing that

comes to mind is the word association. The meaning is

getting together to share responsibilities and benefits.

I welcome you to Ecuador, to all those investors who think it

is possible to grow together and have the courage to risk their

capital so that thousands of Ecuadorean citizens can make

their quality of life better, and at the same time let you know

that your cooperation will be greatly appreciated.

Ecuador is not a land of speculation and profits. It is the

country of the ethical economy. It is a Nation with dignity,

which treats its citizens and investors with respect.

Our main judiciary tool is the Code of Production, through

which the rules are set and clearly defined for the Ecuadorean

State and for the investor under the precept that there is no

better development than the one that allows all to grow.

I present to you this Ecuador, the Country of Intelligent

Investment, where we all are building a future in which the

central axis of development will always will be the Human

Being.

13

“For private investment to happen, there must be good

roads, electrical power, efficient sea and air ports, trailblazer

telephone service, quality education and healthcare, on-line

government with minimal paperwork. This is precisely what

we are doing; this is called systemic competitiveness. We also

have an inventory of perfectly identified projects for which

we will give guidance and support to any investor that wants

to come to Ecuador.”

Introduction

Econ. Rafael Correa Delgado,Constitutional President of Ecuador.

NATIONAL GOVERNMENT OF THE REPUBLIC OF ECUADOR

14 15

Ethiconomy, the aim of all National Government Policies.

There is an adding up of elements which, handled responsibly, allowsmaking

public policy based on Ethical Economics (Ethiconomy). But policy-making

is more than a Government’s decision, it is a nationwide behavior, one that

acknowledges the sum of its national values: human, natural, geographic,

historic, and takes on the duty of nurturing them. As expected,

a beneficial association will follow between the people

involved in responsible production towards the Human Being

and their growth, and secondly, with Nature, in a synergy

geared towards humane and sustainable development.

16 17

Ecuador is located in North Western South America and parallel 0º, an exceptional geo-strategic position (the

Seaport of Manta is the closest to Asian sea ports from this part of the world.)

It is at the centre of the Americas, and therefore a central access point to markets such as Brazil, Chile, Argentina,

Colombia, Peru, México, the United States, and Canada.

Thanks to its closeness to the Panama Canal, (Ecuador or MANTA) it is an important access point to the European

and Mid-East markets.

FROM TO DISTANCE

Quito Buenos Aires 4,353 km

Quito Canberra 13,689 km

Quito México City 3,130 km

Quito Doha 13,968 km

Quito Hong Kong 17,193 km

Quito Londres 9,218 km

Quito Madrid 8,741 km

Quito New York 4,575 km

Quito Riyad 13,533 km

Quito Rio de Janeiro 4,570 km

Ciudad de México

Río de Janeiro

Buenos Aires

Nueva York

Quito

Londres

Madrid

Riyad

Doha

Camberra

Honk Kong


The origin of the word Ecuador is “equalizer, the one who sets

equilibrium.” It is a country crossed by the Equator line and the

Andes, both of which boost its geographical advantages. Thanks to this

connexion, the country has four

different worlds in one.

The Galápagos Archipelago, one of

the biggest living laboratories in the

world.

The Pacific Coast, where world-

renowned quality products are grown,

amongst others bananas, cacao, and

shrimp.

The Andes, with its different climates,

favours the growth of exceptional

products, like our national icon,

flowers.

The Amazon Region, the world’s

most mega diverse zone per square

kilometre.

The Values of EcuadorHigh-Value Strategic and Geographical Position

18 19

Ecuador has the most sophisticated access to telecommunications

services. It is connected with the optic fibre net managed by Wholesale

Services.

The net guarantees redundancy in accordance with international

standards. Ecuador also connects to America II cabling through the

Maya, Arcos, Emergia, and Global Crossing (forTransnexa) networks.

Fiber optics is in all cities of the country as an indispensable production

tool for technology-based innovationgrowth.

Ecuador’s Investment in infrastructure has been the largest in

Latin America these last four years. 70% of the roads are in excellent

condition. Ecuador has four public seaports, seventeen private ones,

and four international airports.Airports Council International listed

Guayaquil’sas one of the best in Latin America, and Quito is building

a leading international airport.

Leading/state of theart telecommunications infrastructure.

Lead Logistic Systems

Nature is kind and generous with Ecuador, giving it stable weather conditions. Planning crops and harvests

become an easy task. There are two moderate seasons: rainy and dry.

Sunlight, being on the Equator line, is the source

for the stunning variety of fruits, vegetables, and

animal species.

Our eternally snow-capped mountains are the

source of water for the country and as the treasure

this resource is, the State protects it as an aid for

production.

The quality of Ecuadorian products is not due to

genetic accidents. They are a direct result of its

extraordinary geography, which gives extraordinary

advantages for production.

Our diverse climate regionsallow for extensive opportunities.


20 21

• Ourtenacity

• Ourtalents

• Ourinventiveness

• Ourwill

• Honestpeople

• Hard-workingpeople

• Peoplewithambition

• Peoplefullofhope.

The Ecuador we dreamof is inspired by:

Ecuador is a countrywith:

Ecuador is being built on:

• A unique land,with a unique climate, and the

largest biological mega diversity per square

metre in the world.

• Aprivilegedgeographicallocation.Weareatthe

centre of the world. We are the link between two

hemispheres. We are the door to Asia.

Ecuador is promoting an education transformation as the basis of bettering

talent, professionalism, and workers’ training and education. Our workforce

is young and ever growing and goes hand-in-hand with our policy of extending

quality employment and a supportive salary system.

R&D investment in science and

technology is at the root of achieving

permanent quality innovation.

Great Human Resources


22 23

• Because it is the responsibility of us and the

worldto fight climate change.

• Because it is the responsibility of Ecuador to

protect this biosphere reservation and the non-

contacted indigenous people who inhabit it.

• Because it is possible to achieve social

development, the preservation of nature, and

the use of renewable energy.

WHY?

• ProductiveTransformation

• Value-addedproductsandservices

• Innovation in processes, technology, and the

chain of production

• R&D

• Sustainableenvironmentalpractices

Ecuador is an enterprise that pursues:

The Yasuní-ITT Project is an example of the path

Ecuador has chosen to pursue. It is one of the

planet’s exceptionally innovative projects which

combines the economic interest of petroleum

and the decision to preserve the extraordinary

environment of the country.

Yasuní is the name of our national park, which

has been declared as a Biosphere Reservation by

UNESCO. ITT are the initials of three very important

petroleum deposits: Ishpingo, Tambococha,

Tiputini.

Ecuador’s proposal: if the international community

gives financial support to continue with this project,

then our country commits to leave underground

846 million barrels of crude oil (20% of its reserves).

Today we are building the Ecuador of our hopes and dreams.


24 25

The productive transformationis marching on

In the last three years, Ecuador has been living an unprecedented pro-

cess. It has decided to take the future in its own hands. A productive re-

volution is in process in our country, just like the long-term one that allowed

countries with more growth and better performance to be where they are now.

We, the Ecuadorean people, have made a remarkable natio-

nal commitment to transformation: a structural change of

the productive matrix and a change in business culture.

Human progress is our motivation and has given brighter co-

lours to our horizon.

The Government, working side-by-side with the private sec-

tor, has made the Agenda for Productive Transformation,

which determines economic policy and efficiently trans-

forms the productive matrix.

26 27

2006Rafael Correa Elected President

Political Project endorsed by the Ecuadorean People

2007-2008 Elections

Absolute majority in the Constitutional Assembly

2008 Vote

Ecuadoreans approve the new Constitution via elections.

Principles for the new vision of the country.

Bases for policies, actions, and necessary regulations to

implement this new vision/outlook:

• Reform/upgrade of the State

• Planning and leadership as axes for

organization of the publicsector.

• Economic Policies new focus.

• nnovative models for natural resources management.

2010Re election of President Rafael Correa

Reform/transform of the public sector

Change of the energy matrix

Change of the productive matrix

There are many reasons that make us believe, every day, of a different

country, where people do not give up their dreams, but instead work to make

them come true. The word ‘impossible’ is just a bad memory,

and good initiatives have now the space to make themselves

stronger.

New programmes have emerged to foster

productive transformation and for growth of the

micro, small, and mid-size businesses.

Ramiro Diez, writer and journalist.

The productive transformationis marching on

For more info on entrepreneurial development programmes, visit:

www.infoproduce.gob.ecwww.mcpec.gob.ecor call 1800PRODUCE or (593 2) 3815 600 7763823

28 29


The eyes of Ecuador are wide-open, looking into the future.

“We are building an economy that has as its purpose and end, Human

Beings and their good living. We seek balance for all, but acknowledge

that there is economic diversity, that public patrimony must

be recovered, and that the State has to undergo an effective

transformation”.

“We favour taking the leap from a primary scheme of exploiting

and exporting raw materials and primary products, to another

which privileges diversified and eco-efficient production as well

as those services based on knowledge and biodiversity”.

Plan Nacional del Buen Vivir, 2009-2013

National Plan for Well-Living, 2009-2013

30 31

• National access to aggregate value generated by all processes of

transformation and production, through incentives for companies opening

their capital structure, and for specific programmes of economic inclusion,

especially for those sectors traditionally left out.

• Maximiseinvestmentininfrastructureforproduction.

• Reduce procedure costs in business operations: eliminate red tape and

promote a public culture of good quality service and electronic government.

• CoordinateworkbetweentheMinistriesinvolvedinsocialmattersandlink

efforts to better education and quality health care.

This strategy is an important effort of all the

Government towards better energy efficiency,

productive sustainability with the environment,

and production inclusion of ancestral groups

and for men and women alike.

4

5

Democratize the accumulationof wealth from production.

Provide support for systemiccompetitiveness and production.


A Five-Step Strategy

• Production including goods and services abounding in innovation,

knowledge, and high added value.

• Encourageproductswithdynamiccomparativeadvantageswhichgenerate

quality employment and protect the environment.

• Efficientandreasonableuseofnaturalresources.

• Fostertheaccesstotechnology,innovation,training,andassistance.

• Intheagriculturalfieldbothproductivityandqualityshallbeimproved.

• NourishmentSovereigntyandaccess toqualityandhealthy foodshallbe

guaranteed.

• All encompassing development policy for micro, small, and mid-size

companies, through instruments like entrepreneurial start-up capital, risk

capital, technical assistance, technological transfer, and boosting of their

export offer and its promotion.

• Incorporateasmanypeopleaspossibleintotheformallabourmarketwith

honourable salaries.

• Stimulateproductiongrowthwithlesseruseofenergyperunitproduced.

1

2

3

Transformation to a Specialized Matrix.

Improvement and guaranteeof quality production.

Contribute to the structural change which helps reduce inter- and other sector production gaps.

32 33

The government has a policy for general growth, and is also working on boosting human, natural, and

technological resources to achieve a high technology, services, and applied knowledge economy. To

this end, it has special incentives in the following areas:

• Renewablenaturalresources

• Hightechnologyindustry

• Tourism

• Renewableenergy

• Logisticsservices.

Priority Areas

To see the complete list of prioritized areas, entrepreneurial development programs

and key sectors for the strategic substitution of imports, visit:

www.infoproduce.gob.ecwww.mcpec.gob.ecor call 1800PRODUCE or (593 2) 3815 600 7763823

Renewablenatural resources.

Renewable energy.Petrochemical.

Pharmaceuticalsand chemicals.

Tourism.

Freshand processed food.

Sustainable agroforestrychain and its products.

Logisticsservices.

High technologyindustry.

Metalworking.

Primarysector

IndustrialSector

Tertiarysector

New production matrix:Knowledge intensive, green, and energy efficient.

WE WANT A HIGH TECHNOLOGY, APPLIED KNOWLEDGE,AND SERVICES-BASED ECONOMY.

Technology and applied knowledge cross axis.

• The most mega-diverse, compact,country in the world

make it a unique “green” tourist destination.

• Produces high quality agricultural products on a year-

round basis.

• Richinrenewableandnonrenewablenaturalresources.

• Ithasahighlytrainedandqualifiedhumancapital.

• To help boost production and competitiveness, the

government has invested record amounts of money in the

transportation infrastructure of the country.

• Ecuador has clear rules and incentives for national and

foreign investment in production.

Ecuador has a high potential because:

Ecuador: an intelligent investmentEcuador has immense investment potential in different

areas as well as the Andean regions highest investment in

infrastructure for production in the last three years.

It welcomes both private and public investments that comply

with the four business ethics: responsibility towards workers,

the State, the environment, and society.

7 strategic reasons:

• AMegadiversecountryfortourism

• Growingandstableeconomy

• Strategiclocationandlogisticalhub

• Humantalent

• AccesstoworldandAndeanmarket

• Protectionandincentivestoinvestors

• Dollarizedeconomy


34 35

Preferential tariffs for most of the products exported to the

United States of America.

An agreement with the European Union for preferential tariff

access.

Latin American and the Caribbean Basin countries partici-

pate in this group, which acts as an integration pillar to aid

in the growth of commerce, especially for small and mid-size

businesses.

Andean Trade Promotion and Drug Eradication Act, ATPDEA

General System of Preferences Plus(GSP Plus)

Bolívar Alternativefor the Americas (ALBA)

Nationaland Regional Integration

Mechanism under which there are vast commercial opportu-

nities because of anextended consumer market.

Promotes a beneficial environment for export-oriented pro-

ductive investment by lowering stipulated tariffs.

Made up by Colombia, Ecuador, Perú, and Bolivia, the CAN

has a duty free zone for goods and services trade. It is an in-

tegration system that helps make valuable relationships with

Ecuador’s regional commercial partners.

Latin American IntegrationAssociation (ALADI)

Preferred Tariffs Structure

Andean Community of Nations (CAN)


36 37


A system which identifies, promotes, attracts, supports, and broadens the scope for local and foreign

investmentfor the transformation of Ecuador’s production matrix. InvestEcuador helps investors through an

investment manager of the MCPEC(Ministerio Coordinador de la Producción y Competitividad) to coordinate

with Ministries and institutions from the Production, Employment, and Competitiveness Council in the

following areas:

• Market Intelligence: In cooperation with private and public

entities, it identifies business opportunities within the

Ecuadorean star economic areas, chosen because of their

growth prospects, export capability, or aid in substituting

imports for Ecuador.

• Investment Marketing: Develops promotion campaigns, in

alliance with the country’s foreign affairs services, so that

investors may know about the investment potential in key

segments of Ecuador´s economy.

• Service to Investors: While in the processes of pre-investment,

follow up, and re-investment, there is a support team that

answers questions that might arise.

• Investment and Export Promotion Institute: Of the Foreign

Affairs Ministry, it is responsible for promoting Ecuador

abroad.

• More information on the Foreign Affairs Ministry web site.

www.mmrree.gob.ec

More information:

www.investecuador.ecCamilo Pinzón

[email protected]

38 39To achieve business growth, the Production Council

has support tools:

• CREECUADOR

Program to access product diversification

opportunities.

www.creecuador.ec

Cristina Coronel

[email protected]

• EMPRENDECUADOR

National Assistance System for

Entrepreneurship.

www.empredecuador.ec

Andrés Zurita

[email protected]

• INNOVA ECUADOR

Programme for Promoting Innovation

www.innovaecuador.ec

María José Borja

[email protected]

• INFOPRODUCE

Business productive growth information

system.

www.infoproduce.gob.ec

Phone.: 1800 - PRODUCE

• CEDET

www.cedet.ec

Esteban Vega

[email protected]

MCPEC related Programs National Productive Development Agencies

Ministries ascribed to the Council for Production Development

• Ministry of Agriculture

• Ministry of Industry and Productivity

• Ministry of Foreign Relations

• Ministry of Tourism

• Ministry of Transportation and Public Works

• Ministry of Labour Relations

• National Financial Corporation

• National Customs Service

• National Training and Professional Formación

• Ecuadorean Intellectual Property Institute

• National Secretary Office for Higher Education,

Science, Technology and Innovation

• National Institute for Public Procurement.


The web for Investment Supporthas agencies

located in:

• APRIM (Investment Promotion Agency in

Manabí)

www.investmanabi.com

Daniel Carofilis

[email protected]

• INVEC – Cuenca

www.invec.ec

Xavier Patiño

[email protected]

• INVIERTE EN QUITO

www.quito.gob.ec

María José Villavicencio

[email protected]

Investment Promotion Agencies

40 41

Annual average% change in *

GDPper capita

ConsumerPrice

GDP

1961-70

1971-80

1981-90

1991-2000

2001-04

2005-10**

5.3

5.6

1.2

3.2

2.0

4.5

2.7

3.3

-0.9

1.5

0.6

2.7

18.5

27.6

173.0

45.2

8.2

6.0

Belize

Honduras

GuyanaVenezuela

Colombia

Peru

Bolivia

Brazil

Chile

Paraguay

UruguayArgentina

Surinam

French Guyana

Guatemala

El Salvador

Costa Rica

Panama

Ecuador

POPULATION, MILLIONS.GDP ANNUAL AVERAGE % INCREASE 2009

Nicaragua

Mexico

GDP per capita

Non-petroleum real GDP. 2000=100

Source: World Bank, ECLAC (Economic Commision forLatin America and the Caribbean)*Includes the Caribbean**Projected

Source: Central Bank of Ecuador

ArgentinaUruguay

PerúParaguay

República DominicanaPanamá

BrasilBolivia

ColombiaCuba

Costa RicaEcuador

GuatemalaChile

HondurasNicaraguaVenezuela

SalvadorMéxico

Haití

8.10%8.56%

6.88%6.15%5.84%

8.63%4.63%

4.39%3.85%3.65%

3.33%3.19%

2.98%2.81%2.63%

2.05%1.97%

1.24%0.96%

0.06%

7.00%6.00%5.00% 9.00%8.00%4.00%3.00%2.00%1.00%0.00%

160

170

150

140

130

120

110

100

90

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

Promedio 3.89 %

*Projection 2010

➜ Ecuador is one of the countries with the highest

growth in South America, just behind Perú.

➜ Solid growth of the non-petroleum sector over 10

years, which generates bigger investment oppor-

tunities in different productive sectors.

Annual average% change in *

GDPper capita

ConsumerPrice

GDP

1961-70

1971-80

1981-90

1991-2000

2001-04

2005-10**

5.3

5.6

1.2

3.2

2.0

4.5

2.7

3.3

-0.9

1.5

0.6

2.7

18.5

27.6

173.0

45.2

8.2

6.0

Belize

Honduras

GuyanaVenezuela

Colombia

Peru

Bolivia

Brazil

Chile

Paraguay

UruguayArgentina

Surinam

French Guyana

Guatemala

El Salvador

Costa Rica

Panama

Ecuador

POPULATION, MILLIONS.GDP ANNUAL AVERAGE % INCREASE 2009

Nicaragua

Mexico

➜ Ecuador has the best cacao, an

excellent high altitude coffee,

the most consumed banana

throughout the world, and the

most beautiful flowers. This is

good, but not enough. There

is enormous potential for high

quality and value added products.

in numbers

Non-petroleum GDPannual growth rate (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2.98

5.90

3.903.46

3.84

7.04

5.054.53.95

8.03

0.91

Even with the world financial crisis, average growth in 2009 was 4,30%

SOURCE: BCE

Highest ratein the last 17 years

42 43

Commerce: quarterly growth on an annualized basis(excluding petroleum refinement)

I

10,00

8,00

6,00

4,00

2,00

0,00

-2,00

-4,00

-6,00

II III

2008 2009 2010

IV I II III I II IIIIV

5,5%

8,5% 8,9%

3,5%

-3,8%

8,8% growth in the first, second, and third trimesters of 2010 compared to 2009.

-4,3%

-0,58%

4,6%

8,8%

SOURCE: CENTRAL BANK OF ECUADOR

-0.6%

8,7%

in numbers

Total and non-oil GrossDomestic Product

I

-2,00

6,00

5,00

4,00

3,00

2,00

1,00

0,00

-1,00

II III

2009 2010

PETROLEUM ADDED VALUE GDP

I II IIIIV

3.00 2.81

-0.32

0.47

-1.24-0.54

0.59

2.65

4.40

2.71

4.934.26

0.620.51


Economy Growth. The crisis decline stops in 2010.The non-petroleum sector grows about 5% in the third trimester of 2010 compared to 2009.

Manufacturing: annual growth per uarter(excluding petroleum refinement)

I

10,00

8,00

6,00

4,00

2,00

0,00

-2,00

-4,00

II III

2008 2009 2010

IV I II III I II IIIIV

8,88% 8,88% 8,5%

8% growth in the first, second, and third trimesters of 2010 compared to 2009.

6,4%

0,67%

-1,3%-2,9% -2,5%

3,1%

7,0%8,0%


Taxable profits / sales


SECTOR 2004 2005 2006 2007 2008 2009

ABGHEFDKI

Agriculture, livestock, hunting, and silviculture (forestry) 2,03%2,03% 2,38% 2,65% 2,96% 2,87% 2,88%Fishing 1,48%1,48% 1,79% 1,67% 2,63% 6,40% 3,67%

Wholesale and retail business 2,50%2,50% 2,77% 2,99% 3,36% 3,97% 3,96%Hotels and restaurants 2,98%2,98% 3,54% 4,10% 4,75% 5,34% 5,35%

Electricity, gas, and water supply 6,60%6,60% 8,76% 7,51% 10,31% 18,75% 5,91%Construction 4,74%4,74% 4,88% 5,05% 5,68% 6,08% 6,75%

Manufacturing 5,54%5,54% 6,22% 6,60% 6,80% 6,56% 7,99%Real state, business, and rent activities 5,43%5,43% 5,92% 6,81% 8,03% 8,51% 8,88%

Transportation, storage, and communications 7,50% 6,46% 5,91% 10,16% 12,30% 11,72%

44 45

Change/variation in fixed assets

3,500

3,000

2,500

2,000

1,500

1,000

500

02006 2007 20082005 2009

1,704

SOURCE: IRS

2,235

2,8063,119

2,946

Productive investment measured by asset increase, grows in record levels 2007-2008

Jan-Nov2008

Jan-Nov2009

Jan-Nov2010

Jan-Nov2008

Jan-Nov2009

Jan-Nov2010

Jan-Nov2008

Jan-Nov2009

Jan-Nov2010

17,610,046

12,346,828 15,624,458

Total Exports (thousands $)2008 - 2010

Petroleum and non-petroleum exports(FOB thousands)

Traditional and Non-traditional exports(FOB thousands)

SOURCE:CENTRAL BANK OF ECUADOR

Tradicionales No Tradicionales

2,658

,396

3,629

,002

3,078

,588

3,131

,533

3,311

,625

3,667

,601

11,32

2,648

6,287

,398

6,136

,707

6,210

,122

8,645

,232

6,979

,226

PetroleumExports

Non-PetroleumExports

Export sector also reactivates.Total exports grow 27.58% from Jan-Oct 2008-2010

in numbers

Volume of sales

0

14

12

10

8

6

4

2

0

10-10 20

Volume of sales

% salesvariation

% employment variation

40 50 6030

Good performance of the economy leads to recovery in employment

Hotels andrestaurants

Communityactivities

TransportationManufacturing

Financial intermediation

Commerce

Education

46 47

in numbers

There are more qualified workersthanks to the national training system

600,00

500,00

400,00

300,00

200,00

100,00

14%

12%

10%

8%

6%

4%

2%

0%

1.9%

5.7%

8.9%

7.7%

12.1%

SOURCE CNCF (NATIONAL COUNCIL FOR TRAINING AND PROFESSIONAL INSTRUCTION)

Number of trained people % PEA

2006 2007 2008 2009 2010

2010 record: 557,675 trained workers.

Record in investment for infrastructure during the Government of the Production Revolution

3,000

2,500

2,000

1,500

1,000

500

* NUMBERS IN USD MILLIONSSOURCE: MINISTRY OF TRANSPORTATION AND PUBLIC WORKS (MTOP)MADE BY THE MINISTRY OF PRODUCTION COORDINATION, EMPLOYMENT, AND COMPETITIVENESS (MCPEC)

2000 - 2006 2007-2010

1,506

2,950

➜ Solid economic and production policies made it possible to successfully face the world financial crisis.

• The world’s financial crisis hit Ecuador triple fold: reduced exports, lowered petroleum prices, and

loweredimmigrant remittances.

• Measures taken were effective: assign more investment and public credit towards production, increase

public investment in infrastructure, and protect the trade balance.

• Anti-cyclical policies adopted to obtain triple effect: maintain dollarization, equalize the trade balance,

and above all, protect employment.

Ecuador: unemployment rate, 2007-2010Source: National Statistics and Census Institute

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

7.1%

6.1%

6.9% 7.1%

7.3%

6.4%

8.6%

8.3%

9.1%

7.9%

9.1%

7.7%7.4%

6.1%

SEP 07 DEC 07 MAR 08 JUN 08 SEP 08 DEC 08 MAR 09 JUN 09 SEP 09 DEC 10 MAR 10 JUN 10 SEP 10 DEC 10

➜ Unemployment rate gradually declines.

Non-petroleum annual growth in Latin America2007 - 2010

Fuente: Instituto Nacional de Estadísticas y Censos (INEC)

ArgentinaPerúPanamáUruguayBrasilRepública DominicanaEcuadorBoliviaVenezuelaChileColombiaCosta RicaMéxicoEl SalvadorNicaragua

10.1%8.0%7.1%6.8%6.4%6.2%4.5%4.1%3.6%3.5%2.5%2.0%1.0%0.5%0.4%

Countries Annual growth

SOURCE: ECONOMIC COMMISION FOR LATIN AMERICAMADE BY THE MINISTRY OF PRODUCTION COORDINATION, EMPLOYMENT, AND COMPETITIVENESS (MCPEC)

➜ The responsibility of confronting the worst economic crisis in 80 years was based on harmonic effort

between private and public sectors and a conscientious execution of anti-cyclic policies which allowed for

a quick recovery.

48 49

Additional deduction for investing in machinery and equipment that generate cleaner production.

Extra deductions from income tax, for expenditure and investments in the following items: Technical training, improving the company's productivity, international promotion of the company and its products within the limits established in the law.

Exemption on IT retention for interest paid on foreign loans, as long as they do not come from tax havens.

Deferral of Income Tax for companies that open their capital structure to their workers.

Anticipated IT payment deferral for the first five years.

A further reduction of 5 percentage points on Corporate IncomeTax, for managers and operators of ZEDE.

Modifying the coefficient for calculating anticipatedIT payments for distributors and commercialization operations.

Anticipated IT payment exemption for agroforestry, silviculture, and software, for as long as the activity does not generate taxable income.

Permanent VAT exemption for Managers and Operators of ZEDE.

Tariffs exemptions for imports for ZEDE.

Tax credit for local supply and raw material purchases for Managers and Operators of ZEDE.

Foster cleaner production.

Foster investment.

Reduction of Cost of Credit.

Foster opening of capital structure.

Foster investment.

Foster investment.

Sector benefit.

Sector benefit.

Foster investment.

Foster investment.

Foster investment.

All / environment.

Mid-size businesses.

Financial system.

All.

All.

ZEDE.

Fuel.

Software, Silviculture.

ZEDE

ZEDE

ZEDE

IT

IT

IT

IT and its anticipated payment

IT

IT

IT

IT

VAT

TARIFFS

VAT

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

YES

INCENTIVE SECTOR(OBJECTIVE OF THE POLICY)

TAXESAFFECTED

CODE OFPRODUCTION

OBJECTIVE

Reduction from 25% to 22% of the CorpoateIncome Tax (IT)rate: Over 3 years.

Deductions for creating new employment.

Reduction of 10 percentage points in the rate of income tax on amounts reinvested in capital equipment, irrigation equipment, vegetable material, and agricultural supplies.

Accelerated depreciation, on request, of goods with a useful life of no less than 5 years.

Stability of incentives for investment contracts up to 15 years with a one time renewal.

Exemption from Currency Outflow Tax (ISD) to pay foreign loans with a term of over one year.

Tariffs and VAT payment facilities on capital assets imports.

Exemption from income tax for 5 years, from the moment taxable income is generated, for new investments made in priority sectors of the economy.

INCENTIVE

All.

All.

All.

All.

All. Investment fostering.

All.

All.

Fresh and Processed food sector, Forestry and Agroforestry chain, Pharmaceutical, Petrochemical, Tourism, Renewable Energy, Logistics Services, Biotechnology and Software, and sectors for the strategic replacement of imports and the fostering of exports.

SECTOR(OBJECTIVE OF THE POLICY)

IT

IT

IT

IT

IT

Currency Outflow Tax

(ISD)

Tariffs and VAT

IT

TAXESAFFECTED

YES

YES

YES

EFFECTIVE

YES

YES

YES

YES

CODE OFPRODUCTION

General tax benefit.

Fostering employment. Normally for a year, and up to 5 years in economically depressed zones.

Foster investment.

Foster investment.

Foster investment.

Foster investment.

Foster investment.

Foster investment.

OBJECTIVE

Scan and download the Code of Production

50 51

Productive post - transformation

The public and private sectors have worked together to

create a Productive Transformation Agenda, which seeks to:

• Make as a national objective the economies

productive improvement through incentives and

programs for specific sectors, and a joint public-

private effort to reduce the structural productivity

gap.

52 53

The Code of Production, the judicial instrument needed

to make the Agenda for Productive Transformation, was

achieved through the collaborative effort of all sectors of

society.

This set of regulations clearly lays down the rules and policies

for investment, development, and incentives so as to achieve

the change in the productive matrixand also to promote

Ecuador’s transformation for the benefit of all involved.

Productive post- transformation

• Transformation tocreateahighvalueadded,knowledge

based, eco-efficient, and green productive matrix

• Democratizetheopportunitiesandaccesstoproduction-

transformation through various programs and incentives

that nurture a real entrepreneurial and owner society.

54 55

Ecuador is a unique country with the world’s highest mega diversity per m2.

We develop and manufacture high quality pharmaceuticals and chemicals to protect our citizens health and satisfy the required needs of patients and doctors.

We can be the world’s most important living biotechnology laboratory thanks to unique biodiversity and our human talent.

We support business that createsvalue added services that protect the environment.

We have favourable conditions for continuous innovation and asset growth (technology, organizational, and facilities).

Ecuador has the potential of being a net exporter of green energy.

We are one of the biggest exporters of shrimp; one of the best producers of canned tuna, we grow the best roses in the world (third place in world export market). We are the foremost exporters of hearts of palm, leaders in broccoli, passion fruit, and balsa wood cultivation.

Renewable Energy(bio- and alternativeenergy).

Tourism.

Fresh andProcessed food.

Metalworking.

Environmental Services.

Pharmaceuticalsand chemicals.

Bio-technology(Biochemical andbiomedicine).

Productive post- transformation

Why not a software and technology exporter? We have young people from Loja that are already exporting the design for high technology processors.

Requires precise knowledge of consumer needs and preferences, segment identification, and development of dealer systems.

Ecuador is a first-class logistic centre with a platform that can connect Asia with this part of the world.

We want to be at the forefront of specialization and training in construction technologies that preserve the environment.

We aim to be a leader in the national market for wood, sub-forestry, and value-added products with international presence and through programs that help all participants.

This sector faces the challenge to generate productive chains of strongbusinesses for quality and competitive production.

A sector modernizing all its processes by making important investments and cost-reductions to compete internationally.

Technology:hardware and software.

Vehicles, railcars,and parts.

Construction.

Plastics andsynthetic rubber.

Textiles and shoes.

Viable chain forAgroforestry andits derived products.

Transportationand logistics.

56 57

Strategic Sectors

The Ministry of Strategic Sectors proposes, coordinates, exe-

cutes, links, supervises, and evaluates inter-sector policies, pro-

jects, plans, and actions that are lead by the Ministries of Non-

renewable Natural Resources, Electricity and Renewable Energy,

Telecommunications,and the National Water Office.

For more information, please visit www.micse.gob.ec

review the Investment Catalog for Strategic Projects.

58

www.mcpec.gob.ec

This publication was made with organic materials that meet the standards required by the Forest Stewardship Council.

www.mcpec.gob.ec

Ecuadora smartinvestment option

eco center of the world

News & Politics