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Dec 9, 2012 (4 years and 9 months ago)

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ECUADOR

A smart investment option

Video

INDEX

1.
Ecuador
´
s

Facts

2.
Ecuadorian

Economy

3.
Ecuador
´
s

Incentives
for

investments


ECUADOR:

Ecuador

ECUADOR

High
-
value Strategic and Geographical
Position

History:
Divided in four stages:

-

Inca

-

Colonization

-

Independence

-

Republican

Stages have marked the government structure and created new public
policies for steps towards democracy and equality.


Location:
Western South America, bordering the Pacific Ocean at the
Equator, between Colombia and Perú.

Ecuador lies between latitudes
2
°
N and 5
°
S, and longitudes:
75
°

and
92
°

W.


Area:
109.483 square miles (283.561 square kilometers)


Population:
15,007.343 (July 2011 est.) Growth rate: 1.4%


Capital:
Quito


ECUADOR

Fast Facts

ECUADOR

Geography:
Crossed by the Equator line and
The Andes Mountains, both of which boost
its geographical advantages:


Four different worlds in one:


The Galápagos Islands
, one of the biggest
laboratories in the world.

The Coast
, where world renowned quality
products are grown, amongst others
bananas, cacao, tuna and shrimp.

The Andes
, with its different climates
favours the growth of exceptional products,
like our national icon: roses

The Amazon
,one of the world
´
s most mega
diverse zone per square kilometer.


Climate:
12 hours of direct equatorial
daylight 365 days a year. Climate in the
regions varies because of location.

Economically active
population (2011)

6.647.203 MM

Minimum wage + benefits:

(anual)

US $4.770

Density

(2010)

139.4/sq mi

Cost of Imports/ Exports

by container

US $1.432

/ US $1.455

Currency

US $ (USD)

Cost of family
´
s basic
needs (monthly) (To Sept.
2012

US $594,06

GDP (2012)

$73.231 MM

Active interest rate

8.17 ~ 9.43%

GDP per cápita
(anual)

US $5.040

Income Tax

23%

Time zone

-
5 GMT

V.A.T.

12%

ECUADOR

Interesting facts

Trade Ecuador
-

Israel


3,514


3,240


6,146


3,931


3,747


8,139


3,252


33,166


51,955


36,264


29,804


44,371


30,395


24,125


(27,879)


(45,752)


(28,386)


(24,772)


(39,282)


(20,823)


(19,639)

(60,000)
(40,000)
(20,000)
-
20,000
40,000
60,000
2006
2007
2008
2009
2010
2011
2012 - Ago
Trade Ecuador
-

Israel

(Thousands US
)

Exports FOB
Imports CIF
Trade Balance FOB
Soure: Banco Central del Ecuador

Source: Banco Central del Ecuador

Main exports products



Exports

to

Israel (2011)

Tariff

Tariff description


Thousands
of US FOB

% Share

160420

Other prepared or preserved fish


3,461

42.52%

200891

Palm hearts


1,281

15.74%

200980

Juice of any other fruit or vegetable


836

10.27%

200899

Other fruits prepared or preserved, whether or not containing added sugar
or other sweetening


532

6.53%

170490

Other

sugar

confectionery

not

containing

cocoa


441

5.42%

160414

Tuna, skipjack and bonito prepared or preserved


203

2.49%

200799

Other jams, fruits, marmalades, fruit pureé or paste


199

2.44%

847130

Portable automatic data processing machines


192

2.35%

071080

Other vegetables


173

2.13%

060311

Roses


142

1.74%

Soure: Banco Central del Ecuador

Main imports products



Imports

from Israel

(2011)


Tariff


Tariff Description


Thousands

of US
CIF


%

Share


842481

Agricultural

or horticultural


3,356

11.04%

380891

Insecticides


2,275

7.49%

380892

Fungicides


1,759

5.79%

320619

Other

p
igments

and preparations based on titanium dioxide


1,658

5.45%

380893

Herbicides


1,641

5.40%

392010

Other

plates, sheets, films, foil, and strip of polymers of ethylene


1,608

5.29%

283421

Nitrites

of potassium


1,123

3.70%

851762

Machines

for the recption, conversion and transmission or regeneration of
voice, images or other data (telephones, including celll phones)


1,085

3.57%

842490

Parts of mechanical appliances for projecting,

dispersing or spraying
liquids or powders


1,006

3.31%

901890

Other

instruments, appliances and parts in medical, surgical, dental


912

3.00%

ECUADOR:

49,915

51,008

54,250

54,810

56,603

61,121

4.40%

2.19%

6.36%

1.03%

3.27%

7.98%

0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2006
2007
2008
2009
2010
2011
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Millons US

Real GDP

PIB real
Tasa de Variación t/t-4
Real GDP

Variation

rate


Source: Banco Central del Ecuador

Stable economy growth

Source: World Bank Data Bank, Referencial data

Rate

of GDP
growth

-

2011

(
percentages
)

1.5

1.5

2.7

2.7

3.6

3.8

3.9

3.9

4.2

4.2

4.2

4.3

4.5

4.5

4.7

5.1

5.6

5.7

5.9

6

6.9

7.8

8.9

10.6

0
2
4
6
8
10
12
El Salvador
Jamaica
Brazil
Cuba
Honduras
Paraguay
Mexico
Guatemala
Venezuela
Costa Rica
Central America (9 countries)
Latin America and Caribbean
Dominican Republic
Suriname
Nicaragua
Bolivia
Haiti
Uruguay
Colombia
Chile
Peru
Ecuador
Argentina
Panama

The growth rate achieved by the
country in 2011 ranks third in
Latin America. Also, Ecuador
register an annual economic
growth of 4.8% at the first
quarter of 2012.

Source
: INEC

9.80

8.50

7.00

6.60

6.50

5.30

5.10

4.70

4.50

Colombia
EE.UU.
Perú
Chile
Venezuela
Uruguay
Ecuador
Brasil
Mexico
dic-11
dic-11
dic-11
dic-11
dic-11
dic-11
dic-11
dic-11
dic-11
Unemployment rate

(December 2011)

Percentages

Source: Banco Central del Ecuador

Millons

US

Non
-
oil Exports

Non
-
oil exports by product, 2011

Product

US$ in millions
(FOB)

Participation

Bananas

2,712

28.92%

Shrimp

1,424

15.18%

Canned fish

1,067

11.38%

Natural flowers

823

8.77%

Cacao and its derivate products

707

7.54%

Vegetable oil and its extracts

457

4.87%

Tuna and fish

356

3.80%

Coffee and its derivate products

313

3.34%

Leather, plastic & rubber
manufactures

262

2.79%

Chemicals & pharmaceutical products

249

2.66%

Juice and juice extracts

199

2.12%

Total

9,379

100%

2011 non
-
oil exports

Country

In millions FOB $

United States

2,036

Colombia

1,020

Venezuela

755

Russia

698

Italy

580

Germany

491

Spain

416

Holland

349

Chile

325

Peru

313

Other

countries

2,397

Total

9,381

22%

11%

8%

7%

6%

5%

4%

4%

4%

3%

26%

Main Export
Markets (2011)

United States
Colombia
Venezuela
Russia
Italy
Germany
Spain
Holland
Chile
Other

countries

Source: Central Bank of Ecuador

Government Debt

Ecuador

has

a

very

low

debt
-
to
-
GDP

ratio

reaching

22
.
1
%

on

Jul
-
12
.

External

debt

represents

13
.
7
%

while

the

remaining

8
.
4
%

corresponds

to

domestic

debt
.

Source: Ministry of Finance

86.3

66.6

57.2

51.1

44.6


39.3


32.4


30.5


25.3


19.7


23.0


22.1


22.1

69.0

53.4

46.0

40.4

33.9


29.4


24.5


23.4


18.6


14.2


15.0


15.2


13.7

17.3

13.2

11.2

10.6

10.7


10.0


7.9


7.1


6.7


5.5


8.0


6.8

8.4

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012 Jul
Public Debt as % of GDP

Total Debt
External Debt
Internal Debt
Government Efficiency

Latin
-
America 2011


Regional Comparison 2011

Scale 1 to 10, from 1 “not efficient” to 10 “totally efficient”

Source: Latinobarómetro 2011

Latinobarómetro

places

Ecuador

as

one

of

the

most

efficient

states

in

Latin

America

(
18

countries)
.


5.3


6.0


5.4


5.3


5.2


4.9

Latin America
Ecuador
Brazil
Colombia
Chile
Peru
INVESTMENT GRADE

ECUADOR:

Vibrant

economy

Stable

and
secure

environment

for

your

investments

Social
cohesion

and
great

human
resources

Rich

and
diverse

environment



¿WHAT DOES IT MEANS TO INVEST WITH VALUES?





NOT PROFITABLE INVESTMENTS IF THEY DO NOT OBSERVE AN ETHIC BEHAVIOR





AND IMPROOVE PEOPLES LIFES:


1.
ETHICS WITH EMPLOYEES


2.

ETHICS WITH ENVIROMENT


3.

ETHICS WITH THE STATE


4.

ETHICS WITH CONSUMERS




7 STRATEGIC REASONS


Country

and

tourism

mega

diverse

Stable

and

Growing

Economy

Strategic

Location

and

Logistics

Hub

Qualified

Human

Resources

Easy

Access

to

Andean

and

World

Market


Protection

and

Incentives

to

Investors


Dollarized

economy




An organic legal norm and specific
regulations for each area.



MCPEC chairs: Production Council which
brings together about 20 public
institutions



MCPEC: Coordinates 6 Ministries and
other public organizations related to
production.



Tax incentives established in the COPCI,
that are already in other legal norms such
as the Internal Tax Regime Law




STABILITY AND PREDICTABILITY



Investment Contracts with
STABILIZATION of the CODE
INCENTIVES renewable up to 15
years




LEGAL SECURITY



National or International
Arbitration



Investment Contract



No confiscation or
nationalization allowed



PROFITABILITY


More than 20 tax and non
-
tax
incentives (cumulative)


Income Tax Exemptions

Exemption of the Tax Advance

Income Tax


Income Tax Deductions

Duty suspension arrangement
(Zedes) Special Economic
Development Zones







FREEDOM TO INVEST


Freedom to invest without
conditions or authorizations of
any kind



National Treatment: no
minimum requirements of % of
domestic investment or joint
ventures



No prior
qualifications

or

authorizations




INTERNATIONAL STANDARDS



Fair and equitable treatment



Full protection and security



Not arbitrary or discriminatory
treatment




Tax Incentives of the Code of Production

General Tax Incentives

Prioritized Sectors Incentives

Depressed Areas and other Particular
Incentives


GENERAL. WHO
SHOULD APPLY?


New companies (before
or after issuance COPCI)
or old companies


Anywhere in the country


In any economic sector,
prioritized or not




GENERAL. What are they?


INCOME TAX
: Reduction of 3
points to the IT Rate (progressive).
In 2013 IT Rate will be 22%.


INCOME TAX
: Reduction of 10
points to the IT Rate for
reinvestment in productive assets


INCOME TAX
: Exemption from
payment of the advance IT for 5
years for any new investment.



INCOME

TAX
:

Some

deductions



GENERAL. What are they?


DUTIES:

Facilities in payment of
taxes on foreign trade


ISD:

Capital and interest on
foreign loans


ISD:
Dividends distributed by
companies
stablished

in Ecuador
to foreign companies or
individuals not resident in
Ecuador
-

No tax havens


VAT EXPORTERS
: Suspension of
payment of ISD in special customs
imports of goods that are
exported




TAX EXEMPTION FOR FIRST 5 YEARS FOR NEW INVESTMENTS MADE IN PRODUCTION IN
PRIORITY SECTORS OF THE ECONOMY

FRESH AND

PROCESSED
FOOD

METAL WORKS

PETROCHEMICAL

STRATEGIC

IMPORT

SUBSTITUTION

AND

EXPORT

-
FOSTERING

SECTORS

ARE

ALSO

BENEFICIARIES

OF

THIS

INCENTIVE
.


PHARMACEUTICALS

RENEWABLE

ENERGY

LOGISTICS
SERVICES

BIOTECHNOLOGY

AND APPLIED SOFTWARE

FORESTRY AND
AGROFORESTRY
CHAIN, AND
RESULTING
MANUFACTURED
PRODUCTS


TOURISM

TAX EXEMPTION FOR FIRST 5 YEARS FOR NEW INVESTMENTS MADE IN IMPORT SUBSTITUTION
AND EXPORT FOSTERING SECTORS

MANUFACTURE OF
CHEMICAL
SUBSTANCES

MANUFACTURE OF

SOAPS, DETERGENTS,

PERFUMES AND

TOILETRIES


MANUFACTURE OF
PESTICIDES AND
OTHER CHEMICAL
PRODUCTS FOR
AGRICULTURAL USE


MANUFACTURE OF

CERAMIC PRODUCTS


MANUFACTURE OF
RADIO RECEIVERS,
TELEVISION, CELL
PHONES AND
RELATED
PRODUCTS

MANUFACTURE OF

CLOTHING AND
OTHER TEXTILE
GOODS

MANUFACTURE OF
APPLIANCES FOR
DOMESTIC USE

MANUFACTURE OF
LEATHER GOODS AND
FOOTWEAR

MANUFACTURE OF

OTHER CHEMICAL
PRODUCTS

General Requirements


1.
New company

2.
New investment

3.
Outside Quito and Guayaquil

4.
Priorized sectors of the
economy or import
substitution and export
fostering sectors (18 in total)

Have an additional deduction
100% (double) on expenses
incurred for:


Expenses of training


Expenses for improving
productivity


Expenditure related to
international promotion of the
company and its products (up to
50% of such expenditure)




For Income Tax calculation
purposes, there will be an
additional
deduction of 100% from the
expense

of purchasing machinery
and equipment

for cleaner
production and for the
implementation of renewable energy
systems (solar, aeolic, or similar), or
for the mitigation of environmental
impact.




-

Companies making investments in
economically depressed areas may take
advantage for the
first 5 years
-
since the
benefits are generated
-

of the additional
100%
deduction on expenditure for new
jobs created in the area.


-

A “depressed area” will be defined by
indicators such as
lower human,
economic and social development.
Normally, a depressed area is located
outside Quito and Guayaquil.





There are no preliminary ratings
by the tax authority or by the
MCPEC or by the Technical
Secretariat of the Sectorial
Council of Production




No previous evaluations




Tax payers have to make their
tax declaration as usual




Technological Innovation


Logistics Development


Productive Diversification


Further reduction of
5 POINTS ON INCOME TAX RATE



¿New investment?


0% income tax applies for 5 years.



The import of goods will have a 0% VAT rate.




Foreign goods, while they remain in said territory, will have
no tariff payments.



Managers and operators will have tax credit on the VAT paid
on their local purchases of services, supplies, and raw
materials for their production processes.



Exemption from the Currency Outflow Tax (ISD in Spanish)
for payment of imports and payments sent overseas to pay
foreign financing.

PRIORITIZED

AREAS

P
roduction

D
iversification

Strategic
Industries

Generation of
value added

Selective

import
substitution

Improved
export

supply

biofuels

mariculture

forestry

mining

refinery

petrochemiCAL

S
hipyards

S
iderurgy


C
ocoa

V
ehicle assemblers

oil

cafe

fuels

energy

Traditional products
with quality

OBJETIVES

EXAMPLES



Purpose
: establish the treatment
of investment under code
production and other provisions
that are crucial for the activity


Optional:
not an obligation to
sign contract to access to the
incentives

Minimum investment:

US$
250,000 first year


Can be requested at any time

15 years renewable for another
15



PROCESS OF CONTRACT INVESTMENT
FIRM

Estimated time (depending on the
complexity of the project): 1 to 2
months



SIGNATURE REQUEST


30 DAYS EVALUATION


THECNICAL SECRETARIAT REPORT TO
THE SCP (SECTORIAL COUNCIL OF
PRODUCTION)


SCP AUTHORIZATION


SIGNATURE OF CONTRACT


SUPERVISION STAGE

Incentives

Agreed
arbitration

Investment
contracts

Safe and
profitable
investment

All these instruments of
Ecuadorian Law work together to
protect private foreign and
national investment

Our ministry welcomes you!

Santiago León

E
-
mail:
sleon@mcpec.gob.ec

Phone: (593) 2 381 5600