Content 13 Introduction 14 Ethiconomy, the aim of all National Government Policies 24 The productive transformation is marching onECUADORa smart investment option 28 What and why are we transforming?Nathalie Cely SuárezCoordinating Minister for Production, Employment, and Competitiveness 36 National Program of Support to InvestorsAv. La Coruña N25-58 y San Ignacio, 4to piso.(593 2) 3815600 40 Ecuador in numbersQuitowww.mcpec.gob.ec 50 Productive post - transformationPrinted by: NOCIÓN 56 Strategic SectorsQuito, February 2011First edition
“Today, making its way strongly throughout the world, butabove all in Latin America, is the understanding that thealliance between strong, efficient, active, and transparentStates, and the private sector, responsible, and committedwith the well-being of society, constitutes the basis forproductive, economic, harmonic, holistic development; theethiconomy- ethics and economics- the ethiconomy thatputs the human being as its centre and reason for being. Andremember, that the human being is not just another factor inproduction, it is in itself the reason for production”.Speech given by the Constitutional President of the Republic of Ecuador, RafaelCorrea Delgado, during the inauguration of the World Business Forum LatinoaméricaAILA 2010 - Guayaquil, November 30th , 2010.Econ. Rafael Correa Delgado,Constitutional President of Ecuador. NATIONAL GOVERNMENT OF THE REPUBLIC OF ECUADOR
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. Nathalie Cely Suárez Coordinating Minister for Production, Employment, and Competitiveness
13Introduction “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.” Econ. Rafael Correa Delgado, Constitutional President of Ecuador. NATIONAL GOVERNMENT OF THE REPUBLIC OF ECUADOR
Ethiconomy, the aim of all National Government Policies.14 15 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.
Ethiconomy, the aim of all National Government Policies. The Values of Ecuador 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.) High-Value Strategic and It is at the centre of the Americas, and therefore a central access point to markets such as Brazil, Chile, Argentina, Geographical Position Colombia, Peru, México, the United States, and Canada.16 17 The origin of the word Ecuador is “equalizer, the one who sets equilibrium.” It is a country crossed by the Equator line and the Thanks to its closeness to the Panama Canal, (Ecuador or MANTA) it is an important access point to the European Andes, both of which boost its geographical advantages. Thanks to this and Mid-East markets. connexion, the country has four different worlds in one. The Galápagos Archipelago, one of Londres the biggest living laboratories in the Nueva York world. Madrid Riyad Honk Kong Ciudad de México The Pacific Coast, where world- Doha renowned quality products are grown, amongst others bananas, cacao, and Quito shrimp. The Andes, with its different climates, Río de Janeiro Camberra favours the growth of exceptional Buenos Aires products, like our national icon, flowers. FROM TO DISTANCE The Amazon Region, the world’s Quito Buenos Aires 4,353 km most mega diverse zone per square Quito Canberra 13,689 km kilometre. 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
Ethiconomy, the aim of all National Government Policies. Leading/state of the art telecommunications infrastructure. Ecuador hasthe mostsophisticatedaccesstotelecommunications Our diverse climate regions services. It is connected with the optic fibre net managed by Wholesale allow for extensive opportunities. Services. Nature is kind and generous with Ecuador, giving it stable weather conditions. Planning crops and harvests18 19 become an easy task. There are two moderate seasons: rainy and dry. The net guarantees redundancy in accordance with international standards. Ecuador also connects to America II cabling through the Sunlight, being on the Equator line, is the source Maya, Arcos, Emergia, and Global Crossing (forTransnexa) networks. for the stunning variety of fruits, vegetables, and Fiber optics is in all cities of the country as an indispensable production animal species. tool for technology-based innovationgrowth. 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 Lead Logistic Systems production. Ecuador’s Investment in infrastructure has been the largest in Latin America these last four years. 70% of the roads are in excellent The quality of Ecuadorian products is not due to condition. Ecuador has four public seaports, seventeen private ones, genetic accidents. They are a direct result of its and four international airports.Airports Council International listed extraordinary geography, which gives extraordinary Guayaquil’sas one of the best in Latin America, and Quito is building advantages for production. a leading international airport.
Ethiconomy, the aim of all National Government Policies. Great Human Resources The Ecuador we dream of is inspired by: Ecuador is being built on: Ecuador is promoting an education transformation as the basis of bettering • Our tenacity • A unique land,with a unique climate, and the talent, professionalism, and workers’ training and education. Our workforce • Our talents largest biological mega diversity per square is young and ever growing and goes hand-in-hand with our policy of extending • Our inventiveness metre in the world.20 quality employment and a supportive salary system. 21 • Our will • A privileged geographical location. We are at the centre of the world. We are the link between two R&D investment in science and hemispheres. We are the door to Asia. technology is at the root of achieving permanent quality innovation. Ecuador is a countrywith: • Honest people • Hard-working people • People with ambition • People full of hope.
Ethiconomy, the aim of all National Government Policies. Ecuador is an enterprise that pursues: • Productive Transformation • Value-added products and services • Innovation in processes, technology, and the 22 chain of production 23 • R & D • Sustainable environmental practices Today we are building the Ecuador of our hopes and dreams. 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 WHY? has been declared as a Biosphere Reservation by • Because it is the responsibility of us and the UNESCO. ITT are the initials of three very important worldto fight climate change. petroleum deposits: Ishpingo, Tambococha, • Because it is the responsibility of Ecuador to Tiputini. protect this biosphere reservation and the non- contacted indigenous people who inhabit it. Ecuador’s proposal: if the international community • Because it is possible to achieve social gives financial support to continue with this project, development, the preservation of nature, and then our country commits to leave underground the use of renewable energy. 846 million barrels of crude oil (20% of its reserves).
The productive transformation is marching on24 25 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.
The productive transformation is marching on 2006 Rafael Correa Elected President Political Project endorsed by the Ecuadorean People26 27 2007-2008 Elections Absolute majority in the Constitutional Assembly 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 2008 Vote them come true. The word ‘impossible’ is just a bad memory, Ecuadoreans approve the new Constitution via elections. and good initiatives have now the space to make themselves Principles for the new vision of the country. stronger. Bases for policies, actions, and necessary regulations to Ramiro Diez, writer and journalist. implement this new vision/outlook: • Reform/upgrade of the State • Planning and leadership as axes for New programmes have emerged to foster organization of the publicsector. productive transformation and for growth of the • Economic Policies new focus. micro, small, and mid-size businesses. • nnovative models for natural resources management. 2010 For more info on entrepreneurial development programmes, visit: Re election of President Rafael Correa www.infoproduce.gob.ec Reform/transform of the public sector www.mcpec.gob.ec Change of the energy matrix or call 1800PRODUCE or (593 2) 3815 600 Change of the productive matrix 7763823
What and why are we transforming?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
What and why are we transforming? A Five-Step Strategy 1 430 Transformation to a Specialized Matrix. Democratize the accumulation 31 • Production including goods and services abounding in innovation, of wealth from production. knowledge, and high added value. • National access to aggregate value generated by all processes of • Encourage products with dynamic comparative advantages whichgenerate transformation and production, through incentives for companies opening quality employment and protect the environment. their capital structure, and for specific programmes of economic inclusion, • Efficient and reasonable use of natural resources. especially for those sectors traditionally left out. 2 5 Improvement and guarantee of quality production. Provide support for systemic competitiveness and production. • Foster the access to technology, innovation, training, and assistance. • Maximise investment in infrastructure for production. • In the agricultural field both productivity and quality shall be improved. • Reduce procedure costs in business operations: eliminate red tape and • Nourishment Sovereignty and access to quality and healthy food shall be promote a public culture of good quality service and electronic government. guaranteed. • Coordinate work between the Ministries involved in social matters and link efforts to better education and quality health care. 3 Contribute to the structural change which helps reduce inter- and other sector production gaps. • All encompassing development policy for micro, small, and mid-size This strategy is an important effort of all the companies, through instruments like entrepreneurial start-up capital, risk Government towards better energy efficiency, capital, technical assistance, technological transfer, and boosting of their productive sustainability with the environment, export offer and its promotion. and production inclusion of ancestral groups • Incorporate as many people as possible into the formallabour market with and for men and women alike. honourable salaries. • Stimulate production growth with lesser use of energy per unit produced.
What and why are we transforming? New production matrix: Ecuador: an intelligent Knowledge intensive, green, and energy efficient. Primary Industrial Tertiary investment sector Sector sector Ecuador has immense investment potential in different Renewable High technology areas as well as the Andean regions highest investment in Tourism.32 natural resources. industry. 33 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, Renewable energy. Petrochemical. the State, the environment, and society. Sustainable agroforestry chain and its products. Pharmaceuticals 7 strategic reasons: and chemicals. • A Mega diverse country for tourism Fresh Logistics and processed food. services. • Growing and stable economy Metalworking. • Strategic location and logistical hub • Human talent Technology and applied knowledge cross axis. • Access to world andAndean market WE WANT A HIGH TECHNOLOGY, APPLIED KNOWLEDGE, • Protection and incentives to investors AND SERVICES-BASED ECONOMY. • Dollarized economy Priority Areas 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 Ecuador has a high potential because: this end, it has special incentives in the following areas: • The most mega-diverse, compact,country in the world • Renewable natural resources make it a unique “green” tourist destination. • High technology industry • Produces high quality agricultural products on a year- • Tourism round basis. • Renewable energy • Rich in renewable and non renewable natural resources. • Logistics services. • It has a highly trained and qualified human capital. • To help boost production and competitiveness, the To see the complete list of prioritized areas, entrepreneurial development programs government has invested record amounts of money in the and key sectors for the strategic substitution of imports, visit: transportation infrastructure of the country. www.infoproduce.gob.ec • Ecuador has clear rules and incentives for national and www.mcpec.gob.ec foreign investment in production. or call 1800PRODUCE or (593 2) 3815 600 7763823
What and why are we transforming? National and Regional Integration34 Latin American Integration Andean Trade Promotion and Drug 35 Association (ALADI) Eradication Act, ATPDEA Mechanism under which there are vast commercial opportu- Preferential tariffs for most of the products exported to the nities because of anextended consumer market. United States of America. Preferred Tariffs Structure General System of Preferences Plus (GSP Plus) Promotes a beneficial environment for export-oriented pro- An agreement with the European Union for preferential tariff ductive investment by lowering stipulated tariffs. access. Andean Community of Nations (CAN) Bolívar Alternative Made up by Colombia, Ecuador, Perú, and Bolivia, the CAN for the Americas (ALBA) has a duty free zone for goods and services trade. It is an in- Latin American and the Caribbean Basin countries partici- tegration system that helps make valuable relationships with pate in this group, which acts as an integration pillar to aid Ecuador’s regional commercial partners. in the growth of commerce, especially for small and mid-size businesses.
National Program of Support to Investors36 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.ec Camilo Pinzón firstname.lastname@example.org
National Program of Support to Investors Investment Promotion Agencies MCPEC related Programs National Productive Development Agencies The web for Investment Supporthas agencies To achieve business growth, the Production Council • CEDET38 39 located in: has support tools: www.cedet.ec Esteban Vega • APRIM (Investment Promotion Agency in • CREECUADOR email@example.com Manabí) Program to access product diversification www.investmanabi.com opportunities. Daniel Carofilis www.creecuador.ec firstname.lastname@example.org Cristina Coronel email@example.com • INVEC – Cuenca Ministries ascribed to the Council for www.invec.ec • EMPRENDECUADOR Production Development Xavier Patiño National Assistance System for firstname.lastname@example.org Entrepreneurship. • Ministry of Agriculture www.empredecuador.ec • Ministry of Industry and Productivity • INVIERTE EN QUITO Andrés Zurita • Ministry of Foreign Relations www.quito.gob.ec email@example.com • Ministry of Tourism María José Villavicencio • Ministry of Transportation and Public Works firstname.lastname@example.org • INNOVA ECUADOR • Ministry of Labour Relations Programme for Promoting Innovation • National Financial Corporation www.innovaecuador.ec • National Customs Service María José Borja • National Training and Professional Formación email@example.com • Ecuadorean Intellectual Property Institute • National Secretary Office for Higher Education, • INFOPRODUCE Science, Technology and Innovation Business productive growth information • National Institute for Public Procurement. system. www.infoproduce.gob.ec Phone.: 1800 - PRODUCE
Mexico Belize Annual average one of the countries with the highest ➜ Ecuador is GDP GDP Consumer Honduras % change in * South America, capita growth in per just behind Perú. Price Guatemala Nicaragua El Salvador Guyana Costa Rica GDP per capita 5.3 Venezuela Surinam in numbers 1961-70 2.7 18.5 Panama Source: World Bank, ECLAC (Economic Commision for French Guyana Colombia 1971-80 5.6 Latin America and the Caribbean) 3.3 27.6 *Includes the Caribbean Mexico Ecuador40 1981-90 **Projected 1.2 -0.9 173.0 41 Belize Non-petroleum GDP 1991-2000 Annual average 3.2 GDP 1.5 GDP 45.2 Consumer Honduras annual growth rate (%) % change in * 2001-04 2.0 per capita 0.6 Price 8.2 Guatemala Nicaragua Peru El Salvador Brazil Guyana Costa Rica 2005-10** 4.5 2.7 6.0 POPULATION, MILLIONS. Venezuela Surinam 8.03 1961-70 5.3 2.7 18.5 Panama GDP ANNUAL AVERAGE % INCREASE 2009 Bolivia Highest rate French Guyana 7.04 in the last 17 years 1971-80 5.6 3.3 27.6 Colombia Paraguay 5.90 1981-90 1.2 -0.9 173.0 Ecuador Chile 5.05 1991-2000 3.2 1.5 45.2 3.90 3.95 4.5 3.84 Uruguay 3.46 2001-04 2.0 0.6 8.2 Peru Argentina Brazil 2.98 2005-10** 4.5 2.7 6.0 POPULATION, MILLIONS. GDP ANNUAL AVERAGE % INCREASE 2009 Bolivia 0.91 ➜ Solid growth of the non-petroleum sector over 10 Paraguay years, which generates bigger investment oppor- Chile 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 tunities in different productive sectors. SOURCE: BCE Uruguay Argentina Even with the world financial crisis, average growth in 2009 was 4,30% Non-petroleum real GDP. 2000=100 Source: Central Bank of Ecuador ➜ Ecuador has the best cacao, an Argentina 8.10% 170 Uruguay excellent high altitude coffee, 8.56% Perú 6.88% 160 the most consumed banana Paraguay 6.15% 150 throughout theDominicana the República world, and 5.84% Panamá 8.63% 140 most beautiful flowers. This is Brasil 4.63% good, but not enough. There Bolivia 4.39% 130 Colombia is enormous potential for high 3.85% Promedio 3.89 % 120 Cuba 3.65% quality and value added products. Costa Rica 3.33% 110 Ecuador 3.19% Guatemala 2.98% 100 Chile 2.81% 90 Honduras 2.63% Nicaragua 2.05% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Venezuela 1.97% Salvador 1.24% México 0.96% *Projection 2010 Haití 0.06% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00%
in numbers Total and non-oil Gross Commerce: quarterly growth on an annualized basis Domestic Product (excluding petroleum refinement) 6,00 10,00 8,9% 4.93 8,5% 8,7% 8,8% 5,00 4.40 4.26 8,00 4,00 5,5% 3.00 2.81 6,00 3,00 2.65 2.71 3,5% 4,6% 4,0042 2,00 43 2,00 1,00 0.59 0.51 0.47 0.62 0,00 0,00 -0.6% -0,58% -2,00 -1,00 -0.32 -0.54 -4,00 -1.24 -3,8% -2,00 -6,00 -4,3% I II III IV I II III I II III IV I II III IV I II III 2009 2010 2008 2009 2010 PETROLEUM ADDED VALUE GDP 8,8% growth in the first, second, and third trimesters of 2010 compared to 2009. Economy Growth. The crisis decline stops in 2010. SOURCE: CENTRAL BANK OF ECUADOR The non-petroleum sector grows about 5% in the third trimester of 2010 compared to 2009. SOURCE: CENTRAL BANK OF ECUADOR Manufacturing: annual growth per uarter (excluding petroleum refinement) 10,00 8,88% 8,88% Taxable profits / sales 8,5% 8,0% 8,00 6,4% 7,0% SECTOR 2004 2005 2006 2007 2008 2009 6,00 I Transportation, storage, and communications 7,50% 6,46% 5,91% 10,16% 12,30% 11,72% 4,00 3,1% K Real state, business, and rent activities 5,43% 5,92% 6,81% 8,03% 8,51% 8,88% 2,00 D Manufacturing 5,54% 6,22% 6,60% 6,80% 6,56% 7,99% 0,67% F Construction 4,74% 4,88% 5,05% 5,68% 6,08% 6,75% 0,00 E Electricity, gas, and water supply 6,60% 8,76% 7,51% 10,31% 18,75% 5,91% -2,00 -1,3% H Hotels and restaurants 2,98% 3,54% 4,10% 4,75% 5,34% 5,35% -2,9% -2,5% G Wholesale and retail business 2,50% 2,77% 2,99% 3,36% 3,97% 3,96% -4,00 B Fishing 1,48% 1,79% 1,67% 2,63% 6,40% 3,67% A Agriculture, livestock, hunting, and silviculture (forestry) 2,03% 2,38% 2,65% 2,96% 2,87% 2,88% I II III IV I II III IV I II III SOURCE: CENTRAL BANK OF ECUADOR 2008 2009 2010 8% growth in the first, second, and third trimesters of 2010 compared to 2009. SOURCE: CENTRAL BANK OF ECUADOR
in numbers Change/variation in fixed assets Total Exports (thousands $) Petroleum and non-petroleum exports 2008 - 2010 (FOB thousands) 3,500 3,119 3,000 2,806 48 ,6 22 2,500 ,344 2,235 45 11 2 2,946 23 5, 6 2,000 22 8 64 2 39 17,610,046 1,704 7 12 9, 8, 70 7, 15,624,458 97 0, 6, 28 21 6, 13 1,500 6, 6, 12,346,828 6, 1,000 500 Jan-Nov Jan-Nov Jan-Nov Jan-Nov Jan-Nov Jan-Nov 2008 2009 2010 2008 2009 2010 0 2005 2006 2007 2008 2009 Petroleum Non-Petroleum Exports Exports Productive investment measured by asset increase, grows in record levels 2007-2008 SOURCE: IRS Traditional and Non-traditional exports (FOB thousands) 1 2 5 60 00 62 6 3 8 7, 9, 1, 39 53 58 Volume of sales 66 62 31 8, 1, 8, 3, 3, 3, 65 13 07 Financial intermediation 2, 3, 3, 14 12 10 Hotels and Manufacturing Jan-Nov Jan-Nov Jan-Nov 8 Transportation 2008 2009 2010 restaurants % sales Commerce 6 Tradicionales No Tradicionales variation 4 Community Education Export sector also reactivates. activities Total exports grow 27.58% from Jan-Oct 2008-2010 2 SOURCE:CENTRAL BANK OF ECUADOR 0 -10 0 10 20 30 40 50 60 % employment variation Volume of sales Good performance of the economy leads to recovery in employment