OVERVIEW
Due to its privileged geographical position, the safety offered, a solid legal framework, a favourable performance of the economy – which according to figures of the Economic Commission for Latin America and the Caribbean (ECLAC), is among the best in Latin America – and its modern physical infrastructure and road network, as well as the openness and responsibility of the Government of President Rafael Correa in promoting investment under clear rules; Ecuador welcomes foreign investment in areas that are considered to be of strategic importance to the country’s economy.

A total of USD4.546 million have been invested in the Strategic Sectors between 2007 and 2009: USD3.077 million for Oil and Gas; USD554.60 million for water resources; USD474 million for Electricity and USD441 million for Telecommunications.

Firm and sovereign steps guide us forward. A sample of this is the signing of the contract to finance the hydroelectric project Coca-Codo Sinclair with China’s EXIMBANK for a total of USD1.682.745.000. This will allow us to transform into a reality, the largest infrastructure project in the country that will generate 1.500 MW and energy of 8.600 GW-hour per year to cover 35% of our energy demand. This is a true demonstration of the confidence that foreign investors have in Ecuador.

Ecuador lies on the equatorial line and limits to the north with Colombia, to the south and east with Peru, and to the west with the Pacific Ocean. There are four distinct geographical zones. The first one is the Andes’ highlands, which begins at the northern border with Colombia and ends at the southern border with Peru. The second region is the Coast, a coastal plain between the Andes and the Pacific Ocean. The third one is the Amazon made up by the upper basin of the Amazon River. The fourth one is the Galapagos Islands Archipelago, located 1,000km from
the continent, in the Pacific Ocean.

Ecuador has opened its doors to welcome foreign investment and relations of mutual benefit that will contribute to the country’s development and growth.

WHY INVEST IN ECUADOR?
Ecuador’s growing and stable economy, strategic location and logistical hub, mega diverse biological diversity, great human talent, access to Latin American and global markets, investor protection and incentives, as well as its U.S. Dollar economy, are but some of the strategic reasons to invest in the country.

Furthermore, Ecuador enjoys preferential access to the United States market through the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which provides duty-free access for over 6,000 products. Ecuador also has an Economic Complementation Agreement with MERCOSUR that provides Ecuador with the potential to export approximately 4,000 products with no tariffs to Brazil and Argentina; and the European Union’s GSP PLUS provides Ecuador with the potential to export approximately 7,800 products with no tariffs to E.U. countries.

Public contracting processes are carried out through the National Institute of Public Procurement (INCOP), which articulates, harmonises and controls the execution of projects funded by public resources, through speedy procedures, transparency, efficiency and technologically-updated processes.

INCENTIVES FOR INVESTMENTS
Under a new legal framework known as the Production Code, foreign and domestic investments will be protected through an investment contract as an instrument to protect investors rights and to provide incentives and rules of engagement, such as: exemption from income tax on dividends and profits earned or distributed to companies (except tax havens) or non-residents of Ecuador; income tax exemption for first five years for new investments in strategic productive sectors; 100% additional reduction of labour costs from income taxes for first five years for new Investments in depressed economic development areas; reduction of 10% of income rate if enterprise re-invests in new assets or R&D (Rate of 12%); total exemption of 2% tax on foreign exchange outflows for international financing; additional deduction for income tax of costs of green and eco-efficient assets and machinery (if not mandatory by Authority); zero custom duties for capital goods imports; co-financing of Business Development Programmes to improve productivity and to promote exports; public development credit and risk capital at very competitive rates; exemption from capital gains, profits or income distributed by mutual funds, pension funds and commercial trusts; reduction of income taxes for companies from 25% to 22%; additional deduction for annual net increase in employment; deduction of lease payments for international trade of capital goods; accelerated depreciation (by request) on durable goods; zero tax on electricity produced and sold; among others.

BUSINESS OPPORTUNITIES FOR MALAYSIANS
The Official Visit to Malaysia from November 8 to 11 2010 by the Undersecretary of Trade and Investments of the Ministry of Foreign Affairs, Trade and Integration of Ecuador, Mr. Hector Eguez, and the General Manager of the Port Authority of Manta, Mr. Guillermo Moran; marked the first step in the implementation of a Sister-Port Agreement between the Port Klang Authority and the Port Authority of Manta, which could translate into the establishment of a strategic trade corridor and logistic hubs connecting Malaysia and the ASEAN countries to the South American markets through Ecuador.

In conjunction with the said visit, the Embassy of Ecuador in Malaysia, the Port Klang Authority and the Port Authority of Manta jointly organised the first Seminar on Business Opportunities in Ecuador, which was held on the 10th of November 2010 at the Concorde Hotel in Shah Alam.

This event confirmed the Ecuadorian Government’s desire to strengthen commercial ties with Malaysia, and the good turnout also evidenced the interest of Malaysian investors and businesses to seriously consider the prospect of making the most of the opportunities found in Ecuador.

The above-mentioned Seminar focused on specific opportunities for Malaysian investors in strategic Government projects such as: the components of the Manta-Manaus trade corridor project, which encompasses the development of Manta’s deep sea port (geographically the closest port to Southeast Asia in South America), Manta’s international airport, Special Economic Zones, the Refinery of the Pacific project (planned to become the largest oil refinery in South America) as well as the connecting roads and highways; Electricity Projects (Hydroelectric, Wind Power, Geothermic, Thermal, Transmission, Oil & Gas); Water Projects; Mining Projects; Oil and Gas Projects and Telecommunications Projects. These investment projects were presented with the Ecuadorian Government’s guidelines to present a bid, and the different contracting modes that apply depending on the type of project: Direct financing Government to Government, International Bidding with Financing, Strategic Alliances, Service Contracts, and Auction – Bidding.

Although the Seminar highlighted strategic investment projects in Ecuador, the Embassy and MASSA are planning for a Malaysian Trade Mission to visit Ecuador in 2011, which will include Malaysian businessmen interested in exploring for themselves the possibilities of importing Ecuadorian products to Malaysia, in addition to Malaysian investors. The Ecuadorian Government aspires that pioneering Malaysian businesses will play an intrinsic role in making Ecuador a logistic and trade Gateway to South America for Malaysia, the ASEAN countries and Asia.

For further information, please contact:

Her Excellency Lourdes Puma Puma
AMBASSADOR OF ECUADOR TO MALAYSIA
142-C Jalan Ampang, Wisma Selangor Dredging,
West Block, 10th Floor, 50450 Kuala Lumpur.
Tel : (603) 2163 5094   Fax : (603) 2163 5096
E-mail : embecua@po.jaring.my