Special Report The Ecuador Report EXPLOSIVE PROFITS Ecuador is opening up its natural wealth to investors , IN-DEPTH SECTOR ANALYSIS Mining - Oil - Agriculture - Real Estate ENERGY & MINING SPOTLIGHT TRADE SPOTLIGHT ECONOMY SPOTLIGHT We talk to Carlos Pérez , Minister Minister of Production, Foreign We interview the Minister of of Energy and Non-Renewable Trade, Investment & Fisheries, Economy and Finance, Richard Resources Iván Ontaneda, discusses Martínez LatAm INVESTOR Ecuador’s13 Q4 2019 growth plans COUNTRY REPORT | ECUADOR Ecuador CAPITAL CURRENCY CONTINENT OFFICIAL POPULATION Quito US Dollar South LANGUAGE 17.37 m America Spanish COLOMBIA Politics Global Rankings PRESIDENT EXECUTIVE BRANCH Lenin The current Head of QUITO 86 114 123 Moreno Government is Lenin Moreno. ECUADOR s s s s LEGISLATIVE BRANCH ene A unicameral Congress of 137 members that are elected v orruption for a four-year term by proportional representation. C The President also has the power to convene an executive cabinet to draft legislation, though this can ompetiti PERU C be overruled by sucient votes from Congress. Ease of Doing Busine JUDICIARY BRANCH The judicial branch of government is headed by a 21-member National Court of Justice in Quito, while the Constitutional Court interprets the constitution with regards to individual rights. The last elections were held on April 2017 and the next are due in 2021. Main Trading Partners Exports Imports US VIETNAM PERU US CHINA COLOMBIA 31.5% 7.6% 6.7% 22.8% 15.4% 8.7% CHILE PANAMA 6.5% 6.4% PANAMA 4.9% BRAZIL RUSSIA 4.4% OTHER 4.4% OTHER PERU 34.4% CHINA 38.1% 4% 4.2% Petroleum, shrimp, bananas, cut flowers, Industrial materials, fuels and lubricants, cacao, coee, wood, fish nondurable consumer goods LatAm INVESTOR 14 Q4 2019 INFLATION GDP (PPP) GDP GROWTH GDP PER CAPITA (PPP) 0.3% $108 bn 0.2% $6,198 2019 est National Tax Rates GDP Composition CORPORATE AGRICULTURE 22% 6.7% PERSONAL INCOME INDUSTRY 35% 32.9% SALES SERVICES 12% 59.9% GDP per Capita Growth (Annual %) Foreign Direct Investment, Net Flows (% of GDP) 6 4 2 0 -2 -4 -6 -8 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Sources: World Bank, Transparency International, World Economic Forum, BCRP LatAm INVESTOR 15 Q4 2019 COUNTRY REPORT | ECUADOR THE UK VIEW: HM Ambassador to Ecuador, Katherine Ward, explains why the bilateral relationship is back with a bang… ATAM INVESTOR: In May 2017 a new president was Earlier this year, the Ecuadorian Explain how the UK’s elected. And even though Lenin Moreno government decided to put an end relationship with was from the same political party, his to the Assange issue. That led to the attitude towards the Assange issue and first visit of a UK minister to Ecuador LEcuador has changed recently? the type of relationship he wanted with in eight years, when Minister for Trade the UK was completely different than Policy George Hollingbery MP came to AMBASSADOR WARD: When that of his predecessor Rafael Correa. sign the Andean Continuity Agreement I arrived in January 2017 the relationship So, we shifted our policy and began to in Quito. In July, Sir Alan Duncan, then was not positive. Ecuador’s previous engage Ecuador on issues where there Foreign Office Minister responsible government granted asylum to Julian was a clear interest for the UK. for the Americas, came to Ecuador Assange, which allowed him to breach to formally relaunch the bilateral bail conditions in the UK and flee British In autumn 2017, Ecuador’s then Trade relationship, sign a joint cooperation law by remaining in the Ecuadorian Minister, Pablo Campana, included the declaration and meet the President. Embassy in London. It caused a serious UK in his first overseas visit, leading to So the bilateral relationship now is diplomatic incident between the UK the first ministerial meeting between extremely good and very friendly. and Ecuador, with some describing our Ecuador and Great Britain for several relations as ‘in the freezer’. As a result, years. Ecuador’s First Lady also paid LAI: Will trade and investment there were no ministerial visits from a private visit to the UK that included between the two countries either country, with our brief meetings some official meetings on gender grow? in international fora merely confirming issues, and we invited President our disagreement on the Assange issue. Moreno to be the keynote speaker at By the time I arrived in Quito, British the Global Disability Summit we held in AW: In 2016 Ecuador joined the EU cooperation on most other agendas London in summer 2018. Trade Agreement with Colombia and had also mostly ground to a halt. Peru. That led to a 143% increase in British exports to Ecuador in 2017. So, it was vital that we signed a continuity agreement that ensured the same terms of trade would exist after Brexit. We are pleased that is now in place with Ecuador, but ratification will take a few months. Both governments are working hard to ensure that there will not be any disruption to trade when the UK leaves the EU. On the investment side, one of the sectors with the most potential is mining. We are part of a diplomatic group of mining countries that works LatAm INVESTOR 16 Q4 2019 with mining companies and the mining area of common interest is human fortunate to have an excellent British chamber to try to help them resolve rights. Both the UK and Ecuador want Chamber of Commerce here. issues holding the industry back. We to fight gender inequality. In Ecuador, are also working to improve conditions like in much of Latin America, there is a In Ecuador the regional differences for British investors in Ecuador. For problem with violence against women between the coast and the highlands example, we have started negotiations and girls, so we are working with them are very marked so the chamber has on a double taxation agreement, with to reduce that. two separate branches, one in Quito a tentative agenda already arranged. and one in Guayaquil. They support Ecuador is also keen to have a new Environment is another area of strong each other, share branding and have bilateral investment treaty with the cooperation. We are using British equal status; however, each tends UK, so we should see the investment technology to run an environmental to operate in their own sphere of climate continue to improve in coming education programme with Ecuador’s influence. Depending on where a new years. Science Museum and the Darwin UK company will be focused, they can Foundation, to enable Ecuadorian work with the relevant branch of the The change with this new government children, many who have never been chamber. is more radical than people give it to the Galapagos, to see and learn credit for. Indeed, I believe history will about the islands via virtual reality. We be kinder to Moreno’s government than are backing Galapagos Conservation CONTENTS his current poll numbers suggest. The Trust’s work to identify where plastics Ecuador Snapshot 14 IMF deal would have been unthinkable that arrive in the Galapagos come under the previous government. In from. Meanwhile Ichthion, a British The UK View 16 2018 FDI rose by 127% to a historic company started by an Ecuadorian Oil ad Gas 19 high. A batch of ambitious economic student in the UK, received a £600,000 Energy & Mining Spotlight 22 reforms is due in the autumn, covering innovation grant from the British everything from labour law to the tax government to develop solutions to Gold Rush 24 regime. If approved, the reforms could remove and recycle plastics from rivers. Brave New World 30 help transform the economy. Coupled The Embassy is supporting Ichthion in Trade Spotlight 34 with the anti-corruption measures its bid to introduce this technology in taken by this government - which are Ecuador. Feed the World 36 beginning to be felt in the corruption Economic Spotlight 40 perception index - we are seeing a Does the UK need to beef LAI: Legal Certainty 42 steady improvement in the business up its diplomatic presence in environment. Final Word 44 Ecuador? The Ecuador View 46 LAI: How is the British Embassy AW: We’ve managed to do quite a in Quito making the most of lot with a small footprint, as many USEFUL CONTACTS the improved relationship? of the initiatives I mentioned above are delivered by collaborating with Ecuador Trade Office, London AW: We have a small team here, so we partners. But I hope we will be able Juan Carlos Yépez Tel: +44 (0) 203 078 8040 have to prioritise our resources. One of to secure more staff to pursue the [email protected] the really positive developments with opportunities the relaunched bilateral this government is the fight against relationship presents. British Chamber, Quito Diego Gordon corruption. Before she was given the [email protected] role, we invited the new Prosecutor For trade, our team from the +593 2 2250883 General to the UK to see our anti- Department for International Trade can British Chamber of Commerce corruption methods and we will act as a point of contact for your readers Guayaquil continue to support her work. We have when they come to Ecuador, providing Cira Villacresses [email protected] also been helping Ecuador combat contacts and local knowledge to help Tel: +593 4 3703870 narcotics and organised crime. Another UK companies succeed. We are also LatAm INVESTOR 17 Q4 2019 COUNTRY REPORT | ECUADOR Ecuador Opens Up its Oil Industry to International Investors The Opec member needs foreign firms to help it capitalise on its oil wealth before new energy sources render it redundant… ore than a century ago, instability meant its oil policies would the oil price is high, both Ecuador and legendary Ecuadorian swing, pendulum-like, from ‘investor the companies benefit.