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  • 1. A 21st Century Country ParadigmHankuk University of Foreign Studies Seoul, Korea April 13, 2011
  • 2. Ecuador, South America Area 284,561 Km2 Population 14.7 million Labor force 4.5 million GDP (nominal) 2010 USD$64.119 billion (est.) Economic Growth 3.6 % 2010 Per capita GDP US$4,928 (nominal) Ecuador: Posición Geográfica Estratégica • Panama canal • 3,5 hours flight time to the USA. • Direct flight and sea connections with Europe • Closest port between Asia and South America
  • 3. An ethical economy An ethical management of our economy is at the center of our Hoja para Texto Información development. country Área cuadros to bolster extenso Our government has decided othe rights of our society and the información environment, through innovative, clear regulations that encourage efficient business operations, while ensuring respect for nature, our workers and our society as a whole.
  • 4. the human being is notjust another factor in production, it is in itself the reason for production
  • 5. Necessary reform of the State Actions ResultsConstituent Assembly Modern institutional frameworkTax amendments Área cuadros Fiscal stability o informaciónElimination of extreme Fair labor relationsoutsourcing Incentives and a clear frameworkProduction Code for investment
  • 6. Development model and the role of the State The Production Code sets out a new, modern legal framework, encouraging private investment. The code specifically highlights the Governments model for economic development and transformation of our production matrix Monetary policy based on dollarization. Área cuadros o información General incentives for private investment to make our country more competitive. Plus additional Incentives in specific sector with high potential to serve internal and external markets and to shift in productive matrix from the export of primary products to that of added value products. To consult list of sectors go to www.mcpec.gob.ec
  • 7. Protection for Private Investment Legal Investment Safeincentives Agreed contracts investment arbitration Área cuadros o información Production and Investment Code allows for the protection of private investment with all these instruments.
  • 8. An intelligent investment 7 Strategic reasons1. Mega-diverse country and tourism Korea2. Growing and stable economy3. Strategic location and logistic axis Área cuadros4. Human talent5. Access to Andean o informaciónand world’s markets..6. Protection and Incentivesfor the investor.7. Dollarized economy.
  • 9. ECUADOR: Why invest in Ecuador? The most megadiverse compact1 country of the world, rich and diverse culture and unique tourist attractions
  • 10. Hoja para Texto Información Área cuadros extenso o informaciónThe eco-centre of the world: the most compact an mega diverse per m2
  • 11. The eco-centre of the world : multiple peoples of different cultures live in peace
  • 12. The Constitution of Ecuador is the first one that recognizes the nature’s rights (pacha mama: mother Earth)
  • 13. Where the world is at your hand
  • 14. Galápagos Archipiélago
  • 15. Sangay National Park Cuenca and Quito: Cultural World Heritage
  • 16. Ecuador International Living´s Top 1 country to Retire in 2010In terms of cost of real state, special benefits, cost of living, culture, health, infrastructure, safety/stability and weather. Source: International Living magazine
  • 17. ECUADOR: Why invest in Ecuador?2 A growing, sound and stable economy
  • 18. GDP GROWTH GDP Annual Growth rate (%) 8.82 7.24 5.74 4.76 4.754.15 3.73 3.43 3.27 2.04 0.362000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* *Provisional data Source: BCE
  • 19. NON OIL GDP GROWTH Non-Petroleum GDP Annual Growth Rate (%) 8.03 7.04 5.90 5.05 4.60 3.90 3.95 3.84 3.462.98 0.912000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Provisional data Source: BCE
  • 20. Public Investment Evolution/ Nominal GDP 8000 14.00% 12.59% 12.80% 12.09% 7000 12.00% 6000 10.00%USD millions 5000 7.44% 8.00% 6.96% 6.81% 4000 6.00% 4.99% 3000 4.00% 2000 2.00% 1000 0 0.00% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Estimated data as of 2010 Source: BCE Formación bruta de capital fijo Gross fixed capital formation Othersde capital Otros from capital Capital expenses of SPNF/GDP Gastos de Capital del SPNF/ PIB (Eje Derecho)
  • 21. Dynamism of Investment: FBKF/Nominal GDP 16,000,000 30.00% 14,000,000 24.22% 25.00% 12,000,000 21.51% 18.72% 20.00% 10,000,000 16.73% 8,000,000 15.00% 6,000,000 10.00% 4,000,000 5.00% 2,000,000Data in US milions 0 0.00% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Gross fixed capitalcapital fijo Formación bruta de formation Capital expenses of SPNF/GDP Gastos de Capital del SPNF/ PIB (Eje Derecho) Non-financial public sector
  • 22. Solvency: Debt/GDP Since 2002, the ratio between public debt to GDP has been decreasing, placing the DEBT/GDP ratio as favourable compared to the levels of other countries in the region. PERCENTAGE RATIO DEBT/GDP 2007- Ecuador-Public Debt/PIB 2009 30% 65% 25% 4% 23% 20% 23% 19% 15% 34% 25% 27% 61% 14% 11% 19% 17% 11% 8% 22% 7% 7% 5% 8% 6% 10% 3% 2007 2008 2009 2010 ECUADOR PERU COLOMBIA BRASIL CHILE Deuda Pública Interna / PIB Internal Public Debt/GDP Deuda Pública Externa/PIB External Public Debt/GDP Deuda Pública Interna Internal Public Debt Deuda Pública Externa External Public Debt Source: Central Banks of each countrySource: BCE
  • 23. Manufacturing: Annual growth per quarter (Excludes petroleum refinement) Manufacturing: Annual growth per quarter (Excludes petroleum refinement) 10.0% 8.8% 8.8% 8.5% 8.0% 8.0% 6.4% 7.0% 6.0% 4.0% 3.1% 2.0% 0.67% 0.0% -2.0% -1.3% -4.0% -2.9% -2.5% I II III IV I II III IV I II III 2008 2009 2010 8,0% growth in the first, second, and third quarters of 2010 compared with 2009.Source: BCE
  • 24. Manufacturing: Annual growth per quarter (Excludes petroleum refinement) Commerce: Annual growth per quarter (Excludes petroleum refinement) 10.0% 8.5% 8.9% 8.7% 8.8% 8.0% 5.5% 6.0% 4.6% 4.0% 3.5% 2.0% 0.0% -2.0% -0.6% -0.58% -4.0% -3.8% -4.3% -6.0% I II III IV I II III IV I II III 2008 2009 2010 8,8% growth in the first, second, and third quarters of 2010 compared with 2009.Source: BCE
  • 25. Export: sustained 10% growth rates since 2000 Non Oil Exports Index (2000=100)350300250200150100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  • 26. Dynamic private consumer activityEcuador has a vigorous economy, backed by an increase in disposableincome and by credit growth. CFH Average/PIB 2007-2009 65.0% 64.2% 63.8% 63.6% 64.0% 63.0% 62.0% 61.0% 60.2% 60.0% 59.0% 57.9% 58.0% 57.0% 56.0% 55.0% 54.0% ECUADOR PERU COLOMBIA BRASIL CHILE Source: Central Banks of each country
  • 27. Lowest unemployment rate of the Andean Region 13.0 12.0 Nacional National 11.0 11.5 Urbano Urban 10.0 Rural Rural 9.0 9.3 8.6 8.0 7.9 7.8 7.9 7.7% unemployment 7.0 7.3 6.7 6.7 6.3 6.0 6.1 6.4 5.9 6.5 6.2 6.1 5.0 5.1 4.4 5.0 5.2 5.0 4.0 3.7 3.6 3.0 3.2 3.0 2.8 3.0 3.2 2.8 2.0 1.0 0.0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Jun-08 Dec-08 Dec-09 Jun-10 Dec-10 Source: INEC, ENEMDUR 2003-2010 Production: MCDS-SIISE
  • 28. Less leveraged economy: Businesses, households,Government, IFI’s Ecuador offers a solid and solvent economy with low levels of public and private debt. Foreign investment should complement domestic investment, thus reverting the substitution (crowding out) process. Evolution DEP/GDP-Credit/GDP 35% 30% 31% 30% 27% 28% 26% 23% 24% 25% 25% 21% 20% 21% 20% 15% 20% 19% 19% 17% 17% 14% 14% 15% 10% 13% 12% 5% 9% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Deuda Externa Privada / PIB External Private Debt/GDP Crédito/PIB Credit /GDP Source: Superintendence of Banks
  • 29. A healthy financial system The Ecuadorean financial system is a healthy one with robust growth in capital formation and credit allocation. Growth in obligations with the public Growth in obligations with the public and financial system loan portfolio and financial system loan portfolio Year 2007= 100 Year 2000= 100 180600 562 160 155500 479 150 140400300 120200 100 100100 80 - 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2007 2008 2009 2010 OBLIGACIONES CON EL PUBLICO OBLIGATIONS WITH THE PUBLIC CARTERA LOAN PROTFOLIO OBLIGACIONES CON EL PUBLIC OBLIGATIONS WITH THE PUBLICO CARTERA LOAN PROTFOLIO Source: Superintendent of Banks
  • 30. Big opportunities for ethical and responsible investment. Indicator- average 2005-2009 COLOMBIA INDONESIA VIETNAM TURQUIA SUDAFRICA ECUADORInflation, consumer prices(annual %) 5,22 9,27 10,83 9,20 6,76 4,26GDP growth (annual %) 4,37 5,62 7,35 3,20 3,65 4,0Per capita GDP (US$ at currentprices) 4.465,57 1.892,96 823,83 8.222,40 5.617,50 3.540,03Accumulated External debt (%GDI) * 23,6% 30,2% 32,3% 41,2% 15,1% 23,3%Commercial Credit balance ofgoods and services (% of GDP) (2,45) 3,49 (10,03) (4,07) (1,94) 1,93Fixed creation of gross capital (%of GDP) 20,90 26,29 34,73 20,40 20,07 22,99* Relation between total volume of foreign debt and GNI (information from countries as of 2009)Source: World Bank
  • 31. 3 Strategic location
  • 32. ECUADOR Airport Development Area Surface : 70 Has.ECUADOR IS A STRATEGIC LOCATION FOR ASIAN AND MIDDLE EAST INVESTORS:
  • 33. Infrastructure Ecuador: Public Investment, by sector 2007-2010 USD$1,400,000,000 1.398.MM1,200,000,000 1.103 MM1,000,000,000 800,000,000 600,000,000 512 MM 400,000,000 354 MM 200,000,000 - 2007 2008 2009 2010 agricultural Agropecuario Rec. Nat. (Electr) Nat. Res (energy) Comunicaciones Educación Education Road infrastructure infraestructure
  • 34. Connectivity in Ecuador Ground transport infrastructure National Airport International Airport Fuente: MINTUR (Plan de Marketing Internacional) Ship piers (in study)Source: Ecuador´s Ministry of Tourism
  • 35. Great Human4 Talent and Social Indicators
  • 36. Social Investment as GDP % 8.2 8.0 7.3 5.9 4.6 4.6 4.3 4.6 4.74.4 4.5 4.3 3.8 3.9 3.6 2.91995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: MF
  • 37. Education rate 92.8 91.1 56.8 75.8 47.9 32.2 41.8 Children who study without working 20.8 22.8 (%) 2003 2004 2005 2006 2007 2008 2009 2010 Básica Bachillerato jun Superior 85.9 Education rate Indigenous population 44.2 77.9 76.816.1 24.2 19.4 2003 2004 2005 2006 2007 2008 2009 2010 jun5.2 6.6 2003 2004 2005 2006 2007 2008 2009 2010 jun Bachillerato Superior Education rates
  • 38. Decrease in poverty (by income) 70.0 64.4 60.0 Pobreza Poverty 55.2 50.0 49.9 Extrema… Extreme poverty 44.6Incidence per person (%) 42.2 40.0 39.5 37.6 36.7 35.0 35.1 36.0 33.0 32.8 30.0 30.9 26.6 22.7 21.6 20.0 16.9 16.5 15.5 15.7 15.4 14.8 13.1 10.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 2009 Jun-10 2010 Source INEC, ENEMDUR 2001- June 2010 Production: MCDS-SIISE Note: in 2002 the poll sample was only from urban areas
  • 39. Gini Coefficient by income equality 0.59 0.58 0.56 0.54 0.54 0.54 0.51 0.5 0.50 0.49 0.49 0.44 National Urban RuralDec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Jun-08 Dec-08 Dec-09 Jun-10 Dec-10 Inequality reduction
  • 40. 5 Access to Andean and Global Markets
  • 41. Access to Regional and Global Markets• Agreement with MercosurProvides Ecuador with the potential to exportapproximately 4.000 products with no tariffs toBrazil and Argentina.• GSP PLUS – European UnionProvides Ecuador with the potential to exportapproximately 7.800 products with no tariffs.
  • 42. 6Incentives forPrivateInvestment Área cuadros o información
  • 43. General Incentives for investments Reduction from 25% to 22% on the Income Tax (IT)rate: 1% each year from the date the Code will be in force Exemption from the minimum Income Tax calculation for Área cuadros incremental expenses new employment or salary increases, acquisition of new assets for productivity and technology improvements and cleaner production. o información For new companies: exemption from the minimum tax payment for the first 5 years. Exemption from Currency Outflow Tax (ISD)for payments sent overseas to pay foreign loans, with a term of over one year and at a rate not higher than that authorized by the Ecuadorean Central Bank (BCE).
  • 44. General Incentives for investments Additional deductions in the calculation of income tax as mechanisms to encourage improvements in productivity, innovation and eco-efficient production. Benefits for the opening-up of capital, such as the deferment of Income Tax for companies that Área cuadros offer investment options to external parties. o información Those established for special development zones, providing they meet the qualifying criteria.
  • 45. Incentives for New Investment In Priority SectorsTotal exemption from income tax and advance payment thereof, for 5 years,for new investments made in priority sectors of the economy.Fresh and Petrochemical Área cuadros Metalworking Forestry and Tourism sectorprocessed sector sector agroforestry chain,foodstuffsector o información and resulting manufactured products sectors Biotechnology and Logistics RenewablePharmaceutical applied software services Energysector sector sector sector+ STRATEGIC SECTORS FOR EXPORT PROMOTION AND IMPORT SUSTITUTION
  • 46. Incentives for green production For Income Tax calculation purposes, there will be an additional deduction of Área cuadros 100% from the expense of purchasing machinery and equipment for cleaner o información production, and for the implementation of renewable energy systems (solar, Aeolic, or similar), or for the mitigation of environmental impact.
  • 47. Incentives for Investment in Economically DepressedAreas Companies making investments in economically depressed areas may take advantage, for the first 5 years, of the additional 100% deduction on expenditure Área cuadros for new jobs created in the area,.. A “depressed area” will be o información defined by indicators, such as lower human, economic, and social development.
  • 48. Incentives for ZEDE(Special Economic Development Zones) A further reduction of 5 percentage points on Corporate Income Tax, for managers and operators of ZEDE (in Spanish), on a permanent basis (17% TOTAL). If said managers and operators are in a Preferential Sector and it is a new investment, 0% income tax applies for 5 years. Área have a 0% VAT rate. The import of goods will cuadros o información Foreign goods, while they remain in said territory, will not be subject to the payment of tariffs. Managers and operators will have tax credit on the VAT paid on their local purchases of services, supplies and raw materials for their production processes. Exemption from the Currency Outflow Tax (ISD in Spanish) for payments of imports and payments sent overseas to pay off foreign financing.
  • 49. Incentives for private companies that open their capital structure Companies choosing to open up their capital structure and sell shares to their workers, will have the following benefits: Área cuadros oAnticipated payments. información 1. Deferment of 5 years on Income Tax and IT 2. Interest exemption on loans for financing the shares purchase.
  • 50. Infrastructure´s investment opportunitiesEspacio para texto y título Espacio para texto y título
  • 51. Manta´s Inter-continental Logistic Platform
  • 52. ECUADOR Airport Development Area Surface : 70 Has.MANTA iNTER-CONTINENTAL LOGISTIC PLATFORM: MULTI MODAL OPERATION: PORT, AIRPOT, FLUVIAL, TRANSPORT
  • 53. Seaport development of Manta: Gateway and transhipment port • Natural depth of 12 mt. • Container and general cargo transit • Half a million containers per year potential • Entryway to the two-ocean axis, Pacific-Atlantic • Entry to cruise liners
  • 54. Manta’s intercontinental and multi-mode logistics platform Short and mid-distance air/maritime (cabotage) /land transportation Long distance air and maritime transportation to Asia Short and mid-distance air/land and river transportation to Manaos, BrazilLogistics platform bindslogistics infrastructures inthe same geographical spot:Deep water portInternational airportZEDE (Special EconomicDevelopment Zone) Short and mid-distance air, maritime (cabotage) , land transportation to Peru
  • 55. Manta: an efficient cargo and passenger connexion with Asia Beijing SeoulShanghaiHong Kong Manta Tahiti
  • 56. Continent: American – South AmericaCountry: EcuadorBogotáProvince: 500 NM ManabíPanamáGeographic 600 NM 0°57’ Latitude SouthMéxicoLocation: 1600 NMGuayaquil: 190 kms 43’ Longitude West 80°Lima 700 NMQuito:Climate: 400 kms Tropical dryChile 2000 NMCuenca : (average): 446 kms s. n. mAltitudeAires 6 m.It’s the closest687 kms with Colombia westernBuenosNorth border: point to Asia from the 2376 NMSao Paolo South America. m.Rain: coast of 2406 m. 210 NMSouth border : 466 kms with PerúAverage Temperature: 26° C in winter 7 days, 24 hours air operation MANTA 24° C in summerIt’s 25 miles from the international traffic route.It’s 56 miles from the Equator.It’s 24 hours from the Panama Canal.No visa required. MANTA
  • 57. 100 METERS OF FISHING BERTH TERM: 1 YEAR 10 acres OF STORAGE 225 METERS OF INTERNATIONAL BERTH YARDS TERM: 1 YEAR TERM: 1 YEAREXTENSION Operational Capacity :110 METERS OF INTERNATIONAL BERTH 2 200 mil TEUS/añoTERM: 1 YEAR 4 acres OF STORAGE EXTENSION YARDS 110 METERS OF INTERNATIONAL BERTH 2 TERM: 1 YEAR TERM: 1 YEAR Operational Capacity : Área cuadros 50.000 TEUS/yearDREDGING o información 310 METERS OF CONTAINER BERTH TERM: 1.5 YEARSTERM :1 YEAR LEVEL: -14 M. LEVEL: – 14 M . 550 METERS OF BREAKWATER TERM: 1 YEAR DEVELOPMENT STAGE 1: 2011 – 2013 Total estimated investment (infrastructure and equipment): 162 MILLION DOLLARS
  • 58. PORT – AIRPORT INTEGRATED SYSTEM There is a fast way connecting the Port with the Airport in 6 minutes, making it a great comparative advantage with the region.PORT 8 km AIRPORT PORT – AIRPORT CONNECTION
  • 59. Airport Development Area Surface : 70 Has.EXCELLENT CLIMATIC CONDITIONS 99% OF THE YEAR
  • 60. MANTA: AIRPORT ADVANTAGES Airport at sea level; Easy instrumental procedures, obstacle free; Alternative Airports at less than 25 minutes (SALINAS and GUAYAQUIL); Airport with quality services and standard operations for customers according to airline; Shortest distance to Asia Manta- Tahiti- Asia Route in process Pilot training school for Latin America
  • 61. Freeways
  • 62. 2012:delegation toprivate sectorof US.5.520millionHighways
  • 63. Tourism
  • 64. Ecuador tourist routesSource: Ecuador´s Ministry of Transportation and Public Infrastructure. Source: Tourism Marketing Plan of Ecuador. Ministry of Tourism
  • 65. A Paradigm for the 21st CenturyThank ThankYou!!! You!!! Embassy of Ecuador in the Republic of Korea EcuadorKoreaEmbassy@gmail.com

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