Economic Overview & Business Opportunities
Ecuador, the 74th largest nation in the world, is the Western South American country that shares borders with Columbia, Peru and Pacific Ocean. Ecuador is blessed with its strategic geographical location in the centre of the world – zero latitude from Equatorial line, making it a perfect hub to access Pacific Ocean. Home to a population of around 16 million people, Ecuador’s economy is the eighth largest in Latin America and the 69th largest in the world.
An Overview of Ecuadorian Economy
Ecuador’s economy is based predominantly on exports of oil, bananas, shrimp, gold, as well as other primary agricultural products. The rich natural resources and good climate are the main factors that make Ecuador the world’s largest Banana exporter. On top of Banana export, oil and shrimp are on the list of Ecuador’s top three exports. In Ecuador, exported-oriented fishing and shrimp industry help to generate good revenue for the country.
Ecuador is a member of the Andean Community (CAN), Latin American Integration Association (ALADI), and the WTO. In addition to that, Ecuador has several trade agreements with other countries, namely the bilateral trade agreement with Chile, a partial trade agreement with Guatemala, as well as a commercial cooperation agreement with Venezuela.
On top of the trade agreements, the government of Ecuador has put in the effort to eliminate commercial barriers with the reduced tariffs with Bolivia, Colombia, Peru and Venezuela as well as the good commercial relationship with Mexico, Colombia, and Venezuela. All the trade agreements have portrayed Ecuador as a country that encourages international trade and welcomes foreign investors. The Ecuadorian liberalization policies are the best things since slice bread of its economy, which act as a booster to the investment environment with free trade zones, augmentation of investment incentives as well as financing assistance.
Why Invest in Ecuador?
1. A springboard to neighbouring markets
While you may say there are tonnes of reasons that one should be investing in Ecuador, its strategic location on the map makes the cut. For one, Ecuador’s strategic position at the Northeastern end of South America is perfect for import and export industry. For another, the country acts like a Launchpad that enables foreign investors to access to all markets of Latin America, East Asia, and the west coast of the United States.
2. Government-backed business environment<
The Ecuadorian government is dedicated to promoting investment and ensuring entrepreneurship’s freedom. It has mapped out strategies to protect private property as well as to guarantee the execution of contracts. The Ecuadorian government has also established the law that ensures the equal treatment of local and foreign investors with no discrepancies.
3. Investments Perks
In Ecuador, investors can choose to setup their business through joint ventures or holding companies. There are many investment perks and incentives available in the country, where all benefit investors in many different ways.
- Privileged treatment in Free Zone system
Investors can leverage the tax advantages in the Free Zone system, from exemption from payment of the value-added tax (VAT), tax on profits, customs duties, special consumption tax (ICE), municipal taxes to export fees.
- Free Trade Zones
The Ecuadorian free trade zone grants investors and entrepreneurs the no-tax treatment when they import raw materials and/or export finished or semi-processed goods. In addition to this, it imposes no restrictions on the repatriation of the profits for the companies.
- Ecuador Investor Residency Visa
The investment visa in Ecuador makes the list of investment perks attractive. Any investors with this visa for three or more years can apply the citizenship of Ecuador – a citizenship allows investor to sell his asset and utilise the profit as his wish.Here is the key takeaway of one of its requirements- the investment amount (as of 2018):
The updated unified basic salary of the Ecuadorian worker has led to some modifications in the investment amounts – a requirement of the application of temporary residency as an investor.
- Certificate of deposit for at least 730 days – a value that is equivalent to 70 unified basic salaries, or $27,020.
- Real estate property (the amount of the purchase of the property) that equals to a minimum of 80 unified basic salaries, or $30,880.00
- Company shares that are equivalent to a minimum of 70 unified basic salaries, or $27,020.00USD.
- Agreement, certificate, or a deed (to proof the investment activities in their own business) that equal to at least 70 unified basic salaries, or $27,020.00USD.
Ecuador is indeed a perfect springboard to enter markets in the region, and one of the best investment hotspots to diversify your business portfolio. If you are scouting for an investment spot in South America or you are looking for opportunities to set a foothold in the region, Ecuador is one of the best choices you can make!
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