New business-friendly Ecuadorian President Guillermo Lasso has announced ambitious plans to shakeup the Ecuador economy and promote greater investment in key sectors including oil, mining, and tourism, as well as pushing a far-reaching privatization program that will include selling-off the state bank.
Speaking at the Iberoamerican Forum, held in Ecuador’s largest city Guayaquil and attended in person by Pablo Casado, the president of Spain’s Popular Party, and Venezuelan opposition figure Leopoldo López, and virtually by Peruvian presidential candidate Keiko Fujimori and Colombian President Iván Duque, Lasso made commitments to open up the Ecuador economy to more enterprise.
“The government does not create jobs. The one who creates employment is the businessman, the entrepreneur, the citizen, it is the investors. That is the best way to fight poverty,” Lasso said on May 23, the day before he formally took power.
The news will be welcomed by foreign investors interested in company incorporation in Ecuador, with anticipation swirling around how Lasso will support business and the Ecuador economy since his election victory in April.
Speaking at the event, Lasso announced that concessions would be established for three oil refineries, as well as a large logistics centre in the western province of Santa Elena, with the intention of doubling oil production. He also stated that mineral mining presented a great deal of opportunity for investment and would be promoted.
In addition, Lasso announced that the state-run National Corporation of Telecommunications (CNT) would be sold off, on the basis that its two current private competitors are already more efficient. He also said he would be inviting foriegn investment into the country’s highways system, while investments in the tourism sector would be exempted from income tax for 30 years.
Perhaps the biggest announcement was that the country’s state-owned Banco del Pacífico (Bank of the Pacific) will be sold off on the international market. Lasso made a point of saying that he would not allow the financial institution to be bought by Ecuador’s largest bank, Banco Pichincha, in order to avoid it having a monopoly.
A new era of investment for the Ecuador economy
Lasso’s announcement appears to herald a new era of investment for Ecuador, which has undergone something of a political transformation over recent years. Having been led by socialist President Rafael Correa for a decade up to 2017, the country took a more centrist approach under the unpopular 2017 to 2021 presidency of Lenin Moreno.
In a presidential runoff election held in April, Lasso defeated leftist candidate Andrés Arauz with a pro-business and investment platform, leading to considerable speculation about what the Lasso presidency may mean for business in Ecuador.
As these latest announcements make clear, Lasso appears to be taking a bullish approach to opening up the country’s economy, announcing the sell-off of two key state assets ahead of taking power, and committing to promoting major investments in resource exploitation and infrastructure, as well as tourism.
That will likely see greater interest in starting a business in Ecuador among foreign investors, with the following sectors presenting good opportunities.
4 sectors of the Ecuador economy to invest in
The following four sectors of the Ecuador economy present good opportunities for investment, with two bolstered by Lasso’s recent announcements.
1. Agriculture: Ecuador’s agricultural sector is well-developed and increasingly popular among investors, contributing approximately 9% of the country’s gross domestic product (GDP), which stood at 7.4 billion in 2019.
Major products include bananas, coffee, fruits and nuts, plants and trees, fish and seafood, and timber, Meanwhile the country produces approximately 65% of the fine cacao produced globally, with the quality of Ecuadorian cacao making it a highly attractive investment.
2. Tourism: Lasso’s announcement of tax incentives for investors in tourism will come as a major boost to a sector that has suffered badly during the COVID-19 pandemic, having experienced considerable growth over recent years, with annual foreign tourist arrivals more than doubling over the decade up to 2019.
That year saw receipts from foreign tourism hit a historic high of “.29 billion, before the pandemic struck and decimated visitor numbers. While Ecuador’s most famed tourism destination is the Galapagos Islands, the country had seen significant growth in environmental and adventure tourism on the mainland prior to the global health emergency.
3. Tech: The Ecuador economy is home to an evolving tech ecosystem, and a number of tech companies were able to grow during the pandemic. With the world’s increasing move online radically accelerated by the pandemic, companies offering useful tech solutions to daily problems will continue to thrive.
Meanwhile, the proportion of the Ecuadorian population with Internet access has more than doubled over the past decade, amid an exponential rise in Internet penetration, and this trend will only continue to offer increasing opportunities to companies in the tech and online spaces.
4. Mineral resources: As Lasso has made clear, the Ecuador economy offers major opportunities in both oil and gem exploration. The new president’s decision to come out promoting both as investment destinations for foreign capital will be a boon to two sectors the already presented significant opportunities, with mining industry leaders highlighting in late-2020 how Ecuador could become a principal destination for gem mining investment.
Meanwhile, over the past decade Ecuador has generally produced between 500,000 and 550,000 barrels of crude oil per day. Should the country succeed in doubling production, it could enter the top 20 producers in the world.
Biz Latin Hub can help you doing business in Ecuador
At Biz Latin Hub, our experienced team of multilingual company formation experts is equipped to help you establish yourself in the Ecuador economy. With our complete portfolio of back office solutions, including legal, accounting, and recruitment services, we can be your single point of contact for entering and operating in Ecuador, or any of the other 17 countries across Latin America and the Caribbean where we are present.
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