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U.S. Department of State
Ecuador Country Commercial Guide
Office of the Coordinator for Business Affairs
COUNTRY COMMERCIAL GUIDE
ECUADOR
1995-1996
Prepared by the U.S. Embassy
Quito, Ecuador
TABLE OF CONTENTS
Chapter
I. Executive Summary
II. Economic Trends and Outlook
A. Major Trends and Outlook
B. Principal Growth Sectors
C. Government Role in the Economy
D. Balance of Payments Situation
E. Infrastructure Situation
III. Political Environment
A. Relationship with the United States
B. Major Political Issues Affecting Business Climate
C. Ecuador's Political System
IV. Marketing U.S. Products and Services
A. Distribution and Sales Channels
B. Use of Agents and Distributors
C. Franchising
D. Direct Marketing
E. Joint Ventures and Licensing
F. Steps to Establishing an Office
G. Selling Factors and Techniques
H. Advertising and Trade Promotion
I. Product Pricing
J. Sales Service and Customer Support
K. Selling to the Government
L. Protecting Your Product from IPR Infringement
M. Need for a Local Attorney
V. Leading Sectors for U.S. Exports and Investment
VI. Trade Regulations and Standards
A. Trade Barriers
B. Customs Valuation
C. Import Licenses
D. Export Controls
E. Import/Export Documentation
F. Temporary Entry
G. Labeling and Marking Requirements
H. Prohibited Imports
I. Standards
J. Free Trade Zones
K. Warehouses
L. Special Import Provisions
M. Membership in Free Trade Arrangements
VII. Investment Climate
A1. Openness to Foreign Investment
A2. Conversion and Transfer Policies
A3. Expropriation and Compensation
A4. Dispute Settlement
A5. Performance Requirements and Incentives
A6. Right to Private Ownership and Establishment
A7. Protection of Property Rights
A8. Regulatory System: Laws and Procedures
A9. Efficient Capital Markets and Portfolio Investments
A10. Political Violence
B. Bilateral Investment Agreements
C. OPIC and Other Investment Insurance Programs
D. Labor
E. Foreign Trade Zones and Free Ports
F. Capital Outflow Policy
G. Foreign Direct Investment Statistics
H. Major Foreign Investors
VIII. Trade and Project Financing
A. Banking System
B. Foreign Exchange Controls Affecting Trade
C. Financing Availability
D. How to Finance Exports/Methods of Payment
E. Types of Available Export Financing and Insurance
F. Project Financing
G. Correspondents With U.S. Banks
IX. Business Travel
A. Business Customs
B. Travel Advisory and Visas
C. Holidays
D. Business Infrastructure
X. Appendices
A. Country Data
B. Domestic Economy
C. Trade
D. Investment
E. U.S. and Country Contacts
F. Market Research
G. Trade Event Schedule
CHAPTER I: EXECUTIVE SUMMARY
This Country Commercial Guide (CCG) presents a comprehensive look at
Ecuador's commercial environment through economic, political and market
analyses.
The Country Commercial Guides were established by recommendation of the
Trade Promotion Coordinating Committee (TPCC), a multi-agency task force
to consolidate various reporting documents prepared for the U.S.
business community. Country Commercial Guides are prepared annually at
U.S. Embassies through the combined efforts of several U.S. government
agencies.
Ecuador's 12 million inhabitants with a per capita income over USD 1,500
like American products and often prefer them to national and European
brands, making the United States Ecuador's leading supplier. In 1994,
the U.S. exported nearly USD 1.2 billion worth of goods and services to
Ecuador, or 25 percent of Ecuador's total imports. Japan, Colombia,
Brazil, and Germany together supplied 35 percent of the Ecuadorian
import market.
Ecuador's GDP grew by 4 percent in 1994, but growth will slow in 1995
due to the economic impact of the border conflict with Peru.
Petroleum, agricultural, and seafood production, primarily for export
markets, contribute a quarter of Ecuador's GDP. The largely state-
operated petroleum sector remains extremely important, accounting for
approximately one third of both export earnings and public sector
revenue. Petroleum legislation reforms in 1993 have opened
opportunities for U.S. firms to participate in major projects in the oil
sector, including expanded participation in oil development and the
petroleum pipeline expansion project. Ecuador, the world's largest
exporter of bananas and a major producer of shrimp, is diversifying its
agricultural exports. Changes in the agricultural industry have created
opportunities in the areas of food processing and packaging. Renewed
interest in upgrading and building new power-generation plants has
opened doors for U.S. energy-generation equipment and service providers.
The manufacturing sector is growing by nearly 5 percent annually, as it
becomes more export-oriented to take advantage of regional economic
integration.
The reformist economic policies of the administration of President Sixto
Duran-Ballen have resulted in a reduction of inflation, a balanced
budget, smaller public sector expenditures, improvements in tax and
customs collection, the privatization of some public sector holdings,
and further trade liberalization. These policies are expected to be
continued by the new administration which will be selected during the
1996 presidential elections, providing a basis for Ecuador to enjoy
sustainable economic growth. The economic reforms and commercial bank
debt settlement were partly financed by the 1994 stand-by arrangement
with IMF which opened up the doors to World Bank and Interamerican
Development Bank lending.
Comprised of three distinct regions, tropical coastal lowlands, the
mountainous sierra, and rain forest of the Oriente, as well as the
Galapagos Islands, Ecuador offers unique marketing opportunities.
Located in the Sierra region, the national capital, Quito, with a
population of a million and a half, is the center for decision making on
government procurement and policy, the oil industry, and trade with
Colombia. Guayaquil, Ecuador's largest city and major port, with a
population of some two million, is the center for banking, agroexport,
and manufacturing activity. In order to be successful in the Ecuadorian
market, U.S. firms must evaluate business opportunities in both of these
two distinct cities.
Many U.S. firms find that selling into the Ecuadorian market is
profitable, with fewer competitors, a general preference for U.S.
brands, and many niche markets. Consumers are knowledgeable about U.S.
products due to the U.S. television programs which are viewed by
Ecuadorians daily on cable television. As a major importer, with a
limited, but growing, manufacturing base, Ecuador will continue to seek
suppliers of consumer, agricultural and industrial products and
services. The leading sectors which have the greatest potential for non-
agricultural U.S. goods and services are telecommunications, electric
power generation, food processing and packaging equipment, and safety
and security equipment. Wheat, cotton, rice, corn, soybean meal,
oilseeds, and processed foods are the leading prospects for the
agricultural sector. U.S. firms are encouraged to evaluate the
potential of their products and services in Ecuador.
Country Commercial Guides are available on the National Trade Data Bank
on CD-ROM or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate Country Commercial Guides via
the Internet, please use the following world wide web address:
WWW.STAT-USA.GOV. CCGS can also be ordered in hard copy or on diskette
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS.
CHAPTER II: ECONOMIC TRENDS AND OUTLOOK
A. MAJOR TRENDS AND OUTLOOK
Introduction and Summary
Ecuador is a small country of less than 12 million inhabitants located
on the equator in South America. The economy generates a gross domestic
product (GDP) of USD 17 billion and provides formal sector jobs for a
million people. With 271,000 square kilometers, Ecuador is the size of
the state of Colorado and contains dramatic geographical and biological
diversity. The country consists of three distinct regions: the
tropical lowlands of the Pacific coast, the mountains and valleys of the
Andean Sierra, and the Amazonian rain forest of the Oriente, plus the
Galapagos Islands.
Until the 1970's, Ecuador was an agrarian country dependent on commodity
exports. Boom periods were linked to high world prices for coastal
products, such as cacao, bananas, and shrimp. From 1972 onwards oil
development in the Amazon basin fueled a decade of rapid growth,
averaging 9 percent annually, that expanded public services, state
enterprises, infrastructure, and import-substitution manufacturing.
When oil prices fell, Ecuador failed to adjust by reducing inefficient
state involvement in the economy. Consequently the 1980's were a decade
of stagnation under the burdens of debt, inflation, incomplete
adjustment measures, and volatile international oil prices. The
economic challenge of the 1990's has been to restore sustainable growth
through the implementation of comprehensive market-oriented structural
reforms.
Today, petroleum production and agricultural exports continue to form
the pillars of the Ecuadorian economy. The largely state-operated
petroleum sector remains extremely important, accounting for about one
third of both export earnings and public sector revenue. Ecuador is the
world's largest exporter of bananas and a major producer of shrimp,
which together account for a third of the country's exports. Ecuador's
farmers also produce a variety of domestic consumption crops. Industry
is largely oriented to producing for the domestic market, but regional
economic integration is creating more export opportunities for
manufacturers. The services sector provides some modern infrastructure
and a significant tourism industry.
Since 1992, President Sixto Duran-Ballen has implemented some
macroeconomic and structural reforms to modernize the state and lay a
basis for sustainable economic expansion. Public finances have been put
on a firmer foundation through budget, tax, customs, and fuel pricing
reforms. During 1994, Ecuador concluded agreements with the IMF and its
foreign bank creditors that reopened the country to international
capital flows. Trade has been substantially liberalized since 1991 and
Ecuador has concluded negotiations for joining the World Trade
Organization.
The austerity measures of the first half of the Duran-Ballen
administration began to pay off with the realization of 4 percent GDP
growth for 1994. By the end of last year, business confidence in a
broad-based economic expansion was high. In spite of the prospect for a
stand-still in oil sector growth pending the completion of a second
pipeline and increasing European restrictions on Ecuadorian banana
exports, recovery in domestic demand, growth in imports of capital goods
and inputs, a strong recovery in construction, and expanding exports of
manufactured goods indicated that the country was poised for growth of
up to 5 percent in 1995.
The outbreak of fighting with Peru in a remote disputed border region in
late January 1995 set back Ecuador's economic prospects. By raising
interest rates, the government was able to avoid a currency crisis, but
this policy imposed high short term costs to both the financial and real
sectors of the economy. The government has encountered political
opposition to its efforts to balance the 1995 budget in the wake of
increased military expenditures. Imports of military items have
worsened the outlook for a current account balance already under
pressure by the resumption of debt service payments. A definitive
resolution of the border dispute is necessary to avoid a potentially
expensive arms race or even the possible resumption of hostilities.
Over the longer term, unless the border dispute is resolved, resulting
uncertainties may have a negative affect on needed foreign investment.
The Duran-Ballen administration renewed its structural reform and
privatization efforts in 1994, but progress has been slow. New laws on
financial institutions and agrarian development improved the investment
climate in those sectors, but reforms of the telecommunications and
electricity sector still languish in Congress. Although the future of
the oil sector depends on construction of a second pipeline, there is
political opposition to private participation in the project.
Intellectual property reforms are pending with Congress, where the
government parties do not enjoy a working majority and must negotiate
with opposition parties to enact legislation. The public sector remains
inefficient, and more privatization is needed in the telecommunications,
electricity, and petroleum sectors. It will probably remain for the
next administration that takes power after the 1996 elections to achieve
substantial additional progress towards economic modernization.
Economic Growth
The growth rate for real gross domestic product (GDP) increased to 4
percent in 1994, following a year of slow growth (2 percent) in 1993 in
the aftermath of the 1992 macroeconomic stabilization program and
declining export prices. The petroleum sector was once again the major
contributor to GDP expansion, with real growth of 12 percent in 1994.
After a decline in 1993, the agriculture and fishing sector expanded by
1.6 percent in 1994, with some improvement in banana production and an
outstanding year for coffee and domestic food crops balancing a decline
in the fisheries sector. Manufacturing grew by 4.7 percent in 1994, led
by an expansion in vehicle assembly. Construction mounted a strong
recovery, registering 5.3 percent growth after several years of
contraction. The service sectors, led by the financial industry, grew
by 2.2 percent, although government services fell by another 3.3
percent.
On the demand side, the continuing decline in government consumption
accelerated to 3.8 percent in 1994. Private consumption grew by 3.7
percent, resulting in an overall consumption share of GDP to 77 percent.
The growth rate for private gross fixed capital formation improved to
5.4 percent, while public investment recovered, rising 5.4 percent in
1994 after a 11.3 percent drop in 1993. Overall, investment spending
grew by 5.4 percent and continued to account for 20 percent of GDP.
Foreign savings, through a wider current account deficit, financed
nearly a quarter of investment in 1993 and 1994.
Although the government had hoped for 4-5 percent growth in 1995, the
economic impact of the border conflict with Peru will likely restrict
1995 GDP growth to the 2.5-3.5 percent range. Oil production cannot
expand until pipeline capacity is increased, while the finance, tourism,
and construction sectors were casualties of the conflict. Uncertainty
over border negotiations, the government's ability to manage the
conflict's fiscal impact, prospects for continued market reforms, and
the May 1996 presidential elections could limit Ecuador's ability to
achieve robust growth in 1996.
Inflation and Employment
The Duran-Ballen administration set reducing inflation to single digits
by 1996 as a top economic objective. After jumping 60 percent in 1992,
the rise in urban consumer prices eased to 31 percent in 1993 and 25
percent in 1994, thanks to relative exchange rate stability and tight
fiscal policy. In the aftermath of the border conflict, the government
revised its inflation target for 1995 from 17 percent to 21 percent. As
of mid-1995, annual inflation was running at 22 percent. The CPI does
not account for rises in high end real estate prices and company equity
values, which have absorbed some of the influx of capital from abroad.
Open urban unemployment fell to 7.1 percent by late 1994, but 2 out of 5
urban workers still must rely on marginal jobs in the informal sector
(unregulated enterprises employing less than 5 people). Wages have been
rising in terms of buying power since 1992, but have yet to fully regain
the ground lost since 1986.
Fiscal Policy
In order to avoid unfinanceable budget deficits, the Ecuadorian
government has had to squeeze public sector spending and periodically
resort to revenue measures. The 1992 budget law curtailed earmarking of
revenue and gave the Finance Minister the power to impound appropriated
funds. The public payroll has been reduced by 37,000 employees over the
last three years, although the savings has gone to salary increases. In
1994 total public sector spending fell to 24.4 percent of GDP (USD 4.04
billion), down from nearly 28 percent of GDP in 1992. Of that, 6.9
percent of GDP went to capital projects, down 0.5 points from 1993.
Central government spending on education, health and welfare fell 0.6
points to 4.2 percent of GDP in 1994. The open military budget of 1.8
percent of GDP was supplemented by direct allocations of petroleum
revenue and profits from military-owned companies.
The consolidated public sector depends on crude oil exports and domestic
petroleum product sales for 30 percent of its revenue. Major increases
in fuel prices in September 1992, January 1994, and October 1994 were
key to maintaining the fiscal balance. Since February 1994, most fuel
prices have been adjusted monthly to reflect world prices and exchange
rates, and to compensate for budget shortfalls in the event of falling
export crude prices. Taxes and customs duties generate income equal to
7.4 percent of GDP. Implementation of reforms in the 1993 Internal
Revenue Law and 1994 Customs Law, including criminal penalties for tax
evasion, should eventually increase revenue from non-petroleum sources.
Although the 1994 economic program projected a fiscal deficit of 0.5
percent of GDP, lower spending levels resulted in a surplus of 0.4
percent of GDP for 1994. In 1995, the government had planned to run
another surplus, but the cost of the border conflict, publicly estimated
at USD 360 million, plus slower economic growth, widened the fiscal gap.
In June 1995, the government announced further budget cuts and the
elimination of most remaining fuel subsidies in an effort to close the
1995 fiscal gap. Major increases in electricity and telephone rates may
be necessary if Congress fails to raise sufficient revenue to limit the
size of the deficit. A small fiscal deficit on the order of 1 percent
of GDP is likely in 1995.
Monetary and Exchange Policy
Since late 1992, the Central Bank has regulated the money supply and
exchange markets through a weekly auction of its own bonds and secondary
market interventions. Controls on interest rates were lifted in 1992.
The 1992 Monetary Regime Law inhibited inflationary deficit financing by
restricting the Central Bank's ability to extend credit to the
government and state enterprises.
Given its tight fiscal policies, the government has tolerated higher
monetary expansion triggered in part by capital inflows. Nevertheless,
M1 (currency and demand deposits) expansion in 1994 fell to 35.7
percent, 14 percentage points below 1993 money growth. M2 (M1 plus
savings instruments) continued to boom, increasing 4 points to reach 58
percent in 1994. Government deposits in the Central Bank only increased
by 34 percent in 1994.
Domestic interest rates remain high in inflation-adjusted terms. Bank
90-day deposit rates reached a low point in April 1994, averaging 27
percent, then climbed back to 41 percent by December. Capital inflows
attracted by high real interest rates have enabled the government to use
a strong currency in its fight against inflation. The value of the
dollar in sucre terms increased by 11.6 percent in 1994, 13.8 points
below the rise in local consumer prices. The Central Bank has managed
the float through occasional interventions in the market to prevent
large fluctuations in either direction that would fuel inflation or hurt
export competitiveness. The policy became explicit in December 1994
when the Central Bank announced monthly exchange targets for 1995 based
on an annual devaluation of 12 percent against the U.S. dollar.
The government economic authorities responded to the outbreak of border
fighting with Peru in late January 1995 by sharply increasing overnight
interest rates to stop runs on sucre bank deposits and from the sucre to
the dollar. Although the policy provoked short-term hardship in both
the financial and real sectors of the economy, the government was able
to preserve its foreign reserves, while maintaining its exchange rate
band with only a 3 percent adjustment. By June 1995, interest rates had
returned to pre-conflict levels, with 90-day deposits averaging 35
percent, 10-15 points above expected inflation. The Central Bank
projects a sucre/dollar exchange rate of 2640-2740 at the end of 1995.
Relations with International Financial Institutions
After failing to close an agreement with the International Monetary Fund
(IMF) in mid-1993, the government carried out a second round of economic
adjustment measures in early 1994 and concluded a two year USD 184
million stand-by arrangement with the IMF in March 1994. The IMF
agreement opened the door for World Bank and Interamerican Development
Bank (IDB) program lending to finance economic reforms. Multilateral
financing contributed to covering the up front costs of the commercial
debt settlement that was finalized in February 1995. In spite of the
economic shock of the border conflict, the Ecuadorian government is
committed to fulfilling a modified version of its macroeconomic program
through mid-1996.
B. PRINCIPAL GROWTH SECTORS
Petroleum and Mining
Under the constitution, all subsurface resources are property of the
state. Petroleum is the basis for Ecuador's external economy, with
average daily production of 378,395 barrels per day in 1994 accounting
for 10.2 percent of GDP, 35.1 percent of export earnings, and 30 of
public sector revenues. Total crude production for 1994 was 138.1
million barrels, up 10.1 percent since 1993. Exports of 86.4 million
barrels of crude and 10.5 million barrels of refined products earned USD
1,305 million, up only 4.1 percent over 1993. The price of Ecuadorian
light crude improved from below USD 10 per barrel in late 1993 to an
average of USD 13.68 in 1994 and stood at USD 15.68 in May 1995. In
1994 the government introduced a market-related pricing system for
domestic fuel sales and opened up wholesale marketing to private sector
competition.
Ecuador currently produces 390,000 barrels per day of crude oil, mostly
from fields in the Amazon basin operated by Petroecuador, the state oil
company. Of remaining proven reserves of 21 billion barrels, 3.5
billion can be extracted using current methods and 11.8 billion could be
extracted using advanced technology. Private service contractors have
brought new fields on line and production is projected to increase
further with the introduction of enhanced recovery and the development
of blocks awarded in the seventh licensing round in 1994 under the new
production sharing contract arrangement. In June 1995, the government
announced an eighth licensing round for nine blocks in the Amazonian
Oriente. Oil producers in the Oriente rely on the Trans-Ecuadorian Oil
Pipeline, with a capacity of 325,000 barrels per day to move crude to
the oil port at Esmeraldas. Due to the capacity limits of the pipeline,
the volume of crude evacuation by private contractors is being rationed
and export volume will not increase in 1995. To address this problem
and move future increases in crude production, the government is in the
process of awarding a USD 600 million build-operate-transfer concession
to expand pipeline capacity to 450,000 barrels per day. In the future,
sharing revenues with foreign investor, the lower quality of the heavy
crude in the newer fields, and increased spending on environmental
protection should leave proportionally less income for the state.
Since Ecuador's oil concessions are largely located in the ecologically
fragile Amazon rain forest, developments in the sector are of keen
interest to the international environmental community. The government
incorporated environmental criteria and requirements into the Seventh
Round licensing process.
Ecuador has extensive, but underdeveloped, gold and other mining
potential. In 1994, gold production increased to some 10 metric tons
valued at over USD 100 million, of which 90 percent was produced by the
informal sector. The value of recorded gold and silver exports
increased 8.4 percent to USD 66.3 million in 1994, with the rest being
sold on the black market. The mining sector only grew by 1 percent in
1994, accounting for 0.6 percent of GDP.
Agriculture and Fishing
Ecuador is largely an agricultural country blessed with an abundance of
rich, well-watered land and a mild climate. The peasant and commercial
farmers of the Sierra raise grains, vegetables, and livestock for
domestic consumption, while developing the agroexport potential of
intensive cut flower and winter vegetable production. The coastal
lowlands produce bananas, shrimp, coffee, cocoa, rice, and some fruits
for export. The 1994 Agrarian Development Law has improved the security
of rural property rights, a necessary condition for increased
investment. Agriculture contributed 10.8 percent of Ecuador's GDP in
1994 and increased by 2.6 percent in real terms over 1993.
Ecuador is the world's leading banana producer, exporting nearly 2.9
million metric tons worth USD 650 million in 1994. However, growers
must absorb the impact of the black sigatoka fungus and the loss of
income to holders of import licenses under the European Union's
restrictive banana quota regime. Although exports were even stronger in
the first half of 1995, a new country quota system could reduce
Ecuador's volume of banana sales to Europe this year. A boom in world
coffee prices resulted in a 240 percent increase in raw and processed
coffee export earnings in 1994, generating USD 398 million. Coffee
revenue is expected to be lower in 1995. Cut flower production in the
rural Sierra continued to expand rapidly, with exports worth USD 55
million. An antidumping suit in the U.S. against Ecuadorian rose
producers was dismissed in March 1995. Other "non-traditional" crops
have yet to become significant export earners. Although much of the
country suffered from drought in early 1995, exports of nearly USD 19
million worth of rice and corn in 1994 signaled improved efficiency in
the basic food production sector.
The sea fishing and aquaculture sectors declined by another 3.3 percent
in real terms during 1994 to constitute 2 percent of GDP. Shrimp
farming, fresh tuna, and other fishing accounted for 16.5 percent of
1994 exports and experienced a recovery in earnings. High world prices,
enabled shrimp farmers to generate USD 539 million in export earnings,
up 14.5 percent over 1993, even though the premature death of many pond
shrimp due to disease or pollution related to the "Taura Syndrome"
resulted in a 4 percent decline in export volume. The export value of
fresh and frozen fish, including tuna, jumped 28 percent to USD 70
million. During the first quarter of 1995, both shrimp and tuna
continued the upward trend in export values. The fishing sector is
likely to be hurt by the ending of diesel fuel subsidies in 1995.
Manufacturing, Construction and Utilities
Ecuador's industries have traditionally been divided among processors of
primary exports (oil derivatives, cacao, coffee, fish) and producers for
the domestic consumer market (food products, automobiles, textiles,
pharmaceuticals). Manufacturers have successfully adjusted to the
dramatic reduction in import duties since 1991, the creation of a free
trade area with Colombia and Venezuela, and some real appreciation of
the currency. For example, the import-sensitive textile industry
declined from 1990 to 1992, but expanded by 4.7 percent in 1994 as
exports increased by 31 percent. The important food processing sector
grew by 3 percent in 1994, thanks to big jumps in exports of processed
coffee and canned tuna. The machinery/transport sector increased its
real output by 8.1 percent in 1994, with the continuing boom in
automobile exports to Colombia, raising metal manufactures exports
another 30.5 percent by value. Production of wood and mineral products
expanded by 4.6 and 9.0 percent respectively.
As a whole, the non-oil manufacturing sector grew by 4.7 percent in 1994
and accounted for 21 percent of GDP. Manufactures made up 14.8 percent
of exports in 1994 as earnings increasing by 25 percent to nearly USD
550 million. Although manufactured exports continued to grow in early
1995, the industrial sector has suffered from the prohibitive interest
rates, depression in domestic demand, and increased uncertainty
resulting from the conflict with Peru, together with the impact on
competitiveness of the ongoing real appreciation of the sucre.
After four years of contraction, the 1994 economic recovery finally
enabled construction activity to grow by 5.3 percent, in spite of
continued budget constraints on public sector projects. However,
prospects for another good year for construction in 1995 were aborted by
the border conflict. The sector ground to a halt in February and March
1995 due to the suspension of government payments and the complete lack
of financing and was only beginning to recover as of mid-1995. The
public utility sector (electricity, gas, and water) grew by 3.1 percent
in 1994.
Services
The private and public services sectors expanded by 2.2 percent in 1994
to contribute 45 percent of GDP. With its natural, scenic and cultural
attractions, Ecuador earns an estimated USD 200 million annually in
foreign exchange from tourism and the hotel and restaurant sector grew
by 3.1 percent in 1994. Foreign cancellations due to the border
conflict may hurt the sector for the rest of 1995. Commerce, the
largest service sector, grew by 2.1 percent. The communications sector
again registered strong growth, expanding by 7.5 percent thanks to
ongoing infrastructure projects. Transportation increased by 3.2
percent in spite of the introduction of market-based pricing of fuels.
Financial services grew by 7.8 percent as the banking industry easily
weathered the collapse of Banco de los Andes in mid-1994. The liquidity
crisis created by the border conflict in February cut financial
institution profits by around USD 20 million, but did not result in any
bank failures.
C. GOVERNMENT ROLE IN THE ECONOMY
The Ecuadorian economy is largely owned and managed by the private
sector, but the state has long played a significant economic role,
including excessive bureaucratic regulation, unproductive subsidies, and
state ownership of "strategic" economic assets. Total public sector
expenditure is below 30 percent of GDP. About one third of the formal
sector work force is employed by the central government. In recent
years, there have been tentative moves towards modernizing the state by
reducing its role as a player in and controller of the economy, while
strengthening its ability to effectively finance and deliver needed
social services and enforce the economic rules of the game.
Structural Reform and Privatization
Ecuador has been slow to embrace the market-oriented economic reforms
taking place elsewhere in Latin America. Progress was made on trade
liberalization and monetary policy reforms in the early 1990's. The
current administration successfully stabilized public finance, thanks to
reforms to the budget, tax, customs, and fuel pricing systems. However,
the fundamental structural changes needed to improve the investment
climate and long term growth have proven more difficult to achieve.
Despite uneven relations with Congress, where the government is in the
minority, there have been some legislative successes. The 1993
Hydrocarbons Law allowed more private participation in the oil
industry. The 1993 Capital Markets law provided a mechanism for
privatizing shares in private companies held by state financial
institutions and some state holdings in commercial enterprises have been
sold. During 1994, the president nullified hundreds of regulations
interfering with the operation of the free market and appointed an
activist team to rejuvenate the Modernization Council (CONAM). The 1994
Financial Institutions Law opened up the banking system, while the
Agrarian Development Law liberalized the markets for land and
agricultural products.
In other areas, the government has been less successful. The 1993
Modernization of the State Law only allows private sector participation
in "strategic" sectors on a concession basis and generally relegates
privatization to a last resort. There have been no proposals to
privatize the large complex of companies owned by the military.
Legislation to allow the partial privatization of the telecommunications
and electricity sectors has languished in Congress for the past year,
although the telecommunications bill may be passed before August 1995.
Proposals to allow private pension funds have met stiff opposition from
the Social Security Institute. The effort to overhaul the deteriorating
educational system to enable Ecuadorians to compete in the global
economy, is still in the discussion stage. Further progress may have to
await the next administration following the 1996 elections.
Industrial Policies
The corporate tax rate is 25 percent on net income, with a minimum tax
based on 1 percent of gross assets. The government is interested in
negotiating a double taxation agreement with the United States. The
Ecuadorian government has largely abandoned earlier industrial promotion
policies characterized by tax breaks, subsidized credit, and protection
from foreign competition. There are still some tax incentives for
investment in fishing industry and the agrarian law creates incentives
for agroindustry investment. A temporary export subsidy for banana and
shrimp producers was eliminated in June 1995. Free trade zones and
"maquila" procedures allow companies to import goods duty-free for
processing and re-export.
D. BALANCE OF PAYMENTS SITUATION
Trade and the Current Account
Ecuador's current account deficit in 1994 expanded to USD 797 million or
4.8 percent of GDP, due to rising imports. After stagnating in 1993,
Ecuadorian exports in 1994 rose 21 percent to USD 3,717 million, led by
agroexports to world markets and sales of manufactures within the
region. However, the economic recovery led imports to increase by 32
percent on a balance of payments basis to USD 3,272 million. The strong
sucre helped consumer goods imports experience a second year of 50
percent growth. In contrast to the previous year, the 1994 import boom
included industrial and agricultural inputs and capital goods as well.
The import boom caused Ecuador's trade surplus to shrink to USD 445
million. Meanwhile, the services deficit shrank to USD 1,387 million
due to increased services receipts.
The United States is both the primary market for Ecuadorian exports and
the key supplier of Ecuador's import needs. According to Central Bank
data, Americans purchased 41 percent of Ecuador's exports in 1994, worth
USD 1,576 million, up 12 percent from 1993. (U.S. Department of Commerce
data put 1993 Ecuadorian exports to the U.S. at USD 1,727 million.)
Most Ecuadorian products enjoy duty-free access to the U.S. market under
the Andean Trade Preferences Act (ATPA) or the Generalized System of
Preferences (GSP). Ecuador's main exports to U.S. include crude oil,
shrimp, bananas, coffee, cocoa, fish, gold, and cut flowers. According
to Ecuadorian data, purchases from the U.S. grew by 12 percent to USD
922 million on a CIF basis in 1994, but dropped to 25 percent of total
CIF imports from 32 percent in 1993. (According to U.S. data, in 1994
Ecuador imported USD 1,196 million worth of U.S. goods on a FAS basis.)
Major American sales to Ecuador included construction equipment and
vehicle parts, paper products, computer equipment, plastics, heavy
construction equipment, automobiles and trucks, pesticides and
fertilizers, printing machinery, telecommunications equipment, pumps,
processed foods, and refrigeration equipment.
The diversification of Ecuador's markets was reflected in export growth
of 41 percent to the European Union and 35 percent to Colombia and Peru
in 1994. Ecuador also became less dependent on U.S. suppliers, with
Japan, Colombia, Brazil, and Germany increasing their combined share of
the Ecuadorian market from 26 percent in 1993 to 35 percent in 1994.
Ecuador has free trade agreements with Colombia, Venezuela, and Chile.
In January 1995, Ecuador instituted a common external tariff system with
Colombia and Venezuela. Ecuador has concluded negotiations for entry
into the World Trade Organization (WTO) and should complete its
accession in 1995.
In 1995 Ecuadorian exports are projected to increase by over 10 percent,
due to higher petroleum prices and continued growth in manufactured
exports to Colombia, even though crude export volume will stagnate until
the oil pipeline is expanded and banana sales to Europe may be further
restricted. Balance of payments figures for the first quarter of 1995
suggest that, due to the border conflict, Ecuador imported an additional
USD 230 million in military items and lost access to the growing
Peruvian market. As a result, Ecuador suffered its first three month
trade deficit since 1987, an ill omen for the rest of 1995.
Capital Account and Foreign Reserves
Ecuador's capital account surplus grew to USD 388 million in 1994. Since
late 1992, Ecuadorian flight capital has been coming back home to take
advantage of high interest rates. Direct investment, now redefined to
include investments by oil exploration and development contractors, grew
13 percent to USD 571 million, while external lending to the Ecuadorian
private sector (the principal form of flight capital repatriation)
increased by 155 percent to USD 1,240 million. The resumption of
interest payments on the foreign debt during 1994 reduced the use of
debt arrears to finance current account deficits; arrearages should
disappear entirely in 1995. A net inflow of capital amounting to USD
1,255 million in 1994 contributed to a real appreciation of the sucre,
making imports more competitive and putting Ecuadorian exporters in a
squeeze between rising sucre costs and stagnant sucre earnings.
During 1995, Ecuador will rely on inflows of new funds from multilateral
development banks, but will probably suffer reduced capital inflows due
to the border conflict and aftermath of the Mexico crisis. Over the
longer term, Ecuador will need to buy-down its debt stock and greatly
increase foreign investment flows to maintain a healthy balance of
payments situation.
Ecuador's net foreign exchange reserves at the end of 1994 stood at USD
1,712 million, enough to cover 4 months of imports and up from USD 1,254
million the previous year. Although the reserves were drawn down in
early 1995 to finance the debt settlement and pay for military imports,
the reserve position had returned to USD 1.7 billion by the end of April
and the government plans to increase reserves to USD 1.8 billion by the
end of the year.
External Debt
Due to excessive borrowing during the oil boom of the 1970's, weak
economic performance in the 1980's, and the accumulation of arrears
since 1987, the total external public debt stock reached USD 13,758
million or over 80 percent of annual GDP by the end of 1994. Of that,
USD 3,317 million corresponded to interest arrears, not counting
interest on past-due interest. Scheduled debt service payments
(principal and interest on both public and private debt) for 1994
amounted to USD 3,172 million or 70 percent of the value of the
country's goods and services, over a quarter of which was financed by
running arrears.
In February 1995 the Ecuadorian government and its commercial bank
creditors completed a Brady-type restructuring of USD 4.45 billion in
principal and USD 2.8 billion in past-due interest owed to foreign banks
and secondary market investors in bank paper. In the settlement,
creditors exchanged 58 percent of debt principal for bonds carrying a 45
percent discount, reducing the stock of principal to USD 3.3 billion.
The remainder was exchanged for full value (par) bonds carrying fixed
interest rates of up to 5 percent. Creditors also received zero-coupon
30-year U.S. Treasury Bonds to guarantee payment of principal.
Multilateral lenders financed the purchase of the collateral bonds.
Ecuador will pay past-due interest (PDI) in full, although the amount
was recalculated at favorable rates, and interest payments on PDI will
be partially capitalized for the first 6 years. Annual service payments
on the government's commercial debt will run about USD 277 million or
1.7 percent of GDP through the year 2000, after which service costs will
rise.
Ecuador is largely current on official bilateral and multilateral debt
of about USD 1.2 billion. Under five previous agreements with the Paris
Club (official bilateral creditors) Ecuador rescheduled debt
obligations, contracted before 1983, that fell due through 1992. In
June 1994, the Paris Club agreed to a sixth rescheduling covering USD
205 million in debt service payments falling due in 1994.
E. INFRASTRUCTURE SITUATION
Transportation
The two international airports in Quito and Guayaquil are serviced by
several major carriers, including American and Continental and several
U.S. air cargo companies. Ecuador's Saeta and Tame airlines also
provide connections within the country and abroad. Increasing passenger
and cargo congestion will require expansion of current airport
facilities or possibly the construction of new airports within the next
five years.
The containerized port of Guayaquil handles most of the country's
imports and exports. The port is fully utilized, with ship turn arounds
typically taking five days. The main oil terminal is located at
Esmeraldas on the north coast. On the central coast, Manta handles much
of Ecuador's cacao and coffee exports and is currently utilized under
capacity. Machala's Puerto Bolivar on the south coast is the major
banana port. Modernization of customs procedures and privatization of
cargo services should help improve the efficiency of Ecuador's ports.
Ecuador has an extensive system of all-weather roads linking all
populated parts of the country. While there are projects for expanding
the road system in sparsely populated regions, maintenance and widening
of existing roadways is of greater urgency. Subsidized urban,
intercity, and rural bus service is available throughout the country.
Trucking companies move almost all of the in-country freight. Goods
must still be moved to national carriers when crossing the border with
other members of the Andean Pact. The railroad system has been largely
inoperative for the past decade and will probably not be rehabilitated.
Telecommunications and Electric Power
Telecommunications services are provided by EMETEL, the state-owned
telephone company. Domestic and international direct dialing is
available. The government is attempting to end the practice of
subsidizing domestic service with high international calling rates.
Service continues to be rather poor and there are still only about 4
telephones per 100 people. Obtaining new telephone lines is expensive
and time-consuming. Two private concessions providing cellular
telephone services began operating in 1994. Long distance call-back
services are widely used. Legislation is pending to allow private
companies to purchase a share of EMETEL and provide telephone services
on a concession basis.
Ecuador has an available electricity generating capacity of about 1700
megawatts. Hydroelectric power plants operated by the state-owned
INECEL utility, including the 900 megawatt Paute project, account for
over half of installed capacity and supply three quarters of the
country's current needs. Supplemental thermal power is often required
during the dry season, particularly in drought years. The government
has reduced the practice of making electricity available at highly
subsidized rates. Several distribution companies owned jointly by
INECEL and local municipalities transmit power to consumers. One
private firm, EMELEC, provides distribution and back-up generating
services in Guayaquil. Pending reform legislation would facilitate the
construction of additional generation capacity by the private sector and
distribution company shares may be privatized. Although there are no
plans to sell assets, private companies may be brought in to run
existing generating plants.
There is currently no market for natural gas in Ecuador, although that
could change if gas fields in the Gulf of Guayaquil and the Oriente are
developed. Highly-subsidized liquified petroleum gas (LPG) is the most
common cooking fuel.
Water and Irrigation
Ecuador's surface and subsurface water resources were nationalized by
the Water Law of 1972. Urban water supplies are provided by
municipality-owned water utilities. The central government heavily
subsidizes water and sewer system development through the Ecuadorian
Sanitary Works Institute (IEOS). The Hydrological Resources Institute
(INERHI) is responsible for water management and irrigation projects and
must approve all transfers of water rights. Several large scale highly-
subsidized flood control and irrigation schemes are run by regional
bodies such as the CEDEGE in the Guayas basin, the CRM in Manabi, and
the CREA and PREDESUR in the southern part of the country.
CHAPTER III: POLITICAL ENVIRONMENT
A. RELATIONSHIP WITH THE UNITED STATES
Ecuador and the United States enjoy an excellent relationship based on
shared democratic values and economic interests. President Sixto Duran-
Ballen tops a lengthy list of Ecuadorian government and business leaders
who have been educated in the U.S. Since Ecuador led the way for Latin
America's return to democracy in 1979, the U.S. has supported Ecuadorian
efforts to strengthen the country's democratic institutions and improve
governance.
As one of the four guarantor nations of the Rio Protocol of 1942 between
Ecuador and Peru, the United States is playing a mediating role in the
border conflict between those two nations.
Ecuador is a transit country for cocaine smuggling and money laundering
by criminal organizations based in Colombia and Peru, but has so far
avoided large-scale drug-related violence and corruption. With
assistance from the U.S., the Ecuadorian government participates in the
international campaign against drug trafficking. The U.S. has provided
Ecuador with alternative trade opportunities under the Andean Trade
Preferences Act.
The U.S. is Ecuador's largest trading partner, providing the major
market for its top exports and serving as the major foreign supplier of
both consumer and capital goods. American oil companies have been
leading players in the development of Ecuador's petroleum industry.
Ecuador's economic reforms are helping to further expand trade and
investment ties and have received strong support from the United States.
Increasing Ecuadorian concern for the environment and U.S. interest in
preserving the country's tremendous biodiversity form an area for
bilateral cooperation.
B. MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE
The border dispute with Peru and the government's continuing economic
stabilization, economic modernization, and constitutional reform efforts
are the major political issues affecting the Ecuadorian business
climate. A definitive resolution of the border dispute is necessary to
avoid a potentially expensive arms race or even the possible resumption
of hostilities.
Economic reform should improve trade and investment opportunities in
coming years. However, such reform has come with political costs.
Fiscal austerity temporarily slowed growth and increased unemployment,
while price liberalization increased short-term inflation. Many
Ecuadorians do not understand why the country must repay its foreign
creditors. Import-substitution industries are seeking relief from the
increasing foreign competition. Public sector unions and some elements
in the military oppose privatization of state companies. Indigenous
peasants fear free market agrarian policies may pose a threat to their
economic and cultural survival. The fact that 24 percent of votes cast
in the May 1994 congressional elections were blank or spoiled suggests
that some voters are dissatisfied with current political options.
These concerns have prompted some members of Congress to oppose the
modernization program by blocking needed constitutional reform and
removing cabinet ministers from office. Nevertheless, the general
consensus among the elite on the need for economic modernization should
guarantee that whoever wins the mid-1996 presidential election will
continue on the reform path. Over the longer run, only economic success
can convince average Ecuadorians that their living standards will
improve and prevent a shift back to state intervention in the economy
that could result in some deterioration in the business climate.
C. ECUADOR'S POLITICAL SYSTEM
Following two decades of political instability and reformist military
rule, civilian government was reinstituted in Ecuador in 1979. Since
then the country has enjoyed four consecutive free elections and
peaceful transfers of power. A pattern has emerged in which
administrations of the center-left alternate with those of the center-
right as the electorate searches for a way to make necessary economic
changes at minimal social cost. Although Ecuador's political elite is
divided along regional, ideological, and personal lines, a strong desire
for consensus often leads to compromise that has resulted in an
evolutionary, if frustrating, reform process. Meanwhile, Ecuador's
essential conservatism has provided a high degree of social stability,
especially compared with neighboring Colombia and Peru.
Elections for president and congress are scheduled for May 1996. A run-
off election will be held if no presidential candidate wins a majority
of the vote. The next president will take office on August 10, 1996.
The Ecuadorian constitution grants wide powers to an executive president
who serves a four-year term with no immediate reelection. The
unicameral Congress is elected every two years by party list. Although
it has little control over the public sector budget, Congress can block
the executive's legislative initiatives and has the power to remove
cabinet ministers from office. Party rivalries make it difficult to
pass legislation, particularly in election years.
A wide variety of independent agencies and state-owned companies receive
limited oversight from either the government or Congress. The Ecuadorian
armed forces are partly self-funded through a network of military-owned
enterprises and a dedicated share of petroleum revenues. The military
respects civilian authority, but enjoys a degree of autonomy over its
own affairs. In remote areas of the country, the military often
provides the only government presence. The National Police is under the
jurisdiction of the Ministry of Government. The judiciary is
independent but the legal system suffers from politicization and from
inefficient and non-transparent procedures. Provincial and municipal
governments are locally elected, but are dependent on the central
government for funding.
The Social Christian Party (PSC) is the country's largest political
grouping, having won 26 percent of the valid vote in the May 1994 mid-
term elections. Former president and PSC stalwart Leon Febres Cordero
is the popular mayor of Guayaquil, Ecuador's largest city, and the PSC
controls several other local governments as well. PSC leader Jaime
Nebot placed second in the 1992 presidential election and is the front
runner for 1996. The party dominates the coast and has a strong
national organization. Ideologically, the PSC is a pro-business party
with a strong populist streak. Although the party supports economic
liberalization, in many cases it also favors subsidies to business and
broad-focus social programs. Febres Cordero's 1984-1988 administration
failed to follow through on promises of economic reform, but the Social
Christians in Congress have generally supported modernization
initiatives.
President Sixto Duran-Ballen, an American-educated architect who
previously served as Minister of Public Works and mayor of Quito, is
devoted to development projects, but is restrained by his fiscal
conservatism. He was elected on a pledge to increase the efficiency and
reduce the size of the Ecuadorian state. Vice President Alberto Dahik's
Conservative Party and supporters of Duran-Ballen took only 9 percent of
the 1994 vote. The Sierra-based Conservatives constitute Ecuador's
oldest political party and espouse an economic agenda based on free
market ideology, but are unlikely to offer a serious presidential
candidate in 1996. However, Ricardo Noboa, a former Social Christian
congressman from Guayaquil who is running for president as an
independent, is a strong supporter of private sector and anti-corruption
initiatives.
Democratic Left (ID) and Popular Democracy (DP) are Ecuador's Sierra-
based center-left parties. Together they won 18.5 percent of the 1994
vote. During the 1988-1992 administration of Rodrigo Borja, the social
democratic ID defended a broad economic role for the state, but failed
to improve public services or state enterprise efficiency. The ID has
one of Ecuador's strongest national organizations, but has recently lost
electoral ground. Since the 1981-1984 presidency of Osvaldo Hurtado,
the Christian Democratic DP has been moving toward the pragmatic center.
Banker and former DP Quito mayor Rodrigo Paz is the most discussed
possible center-left candidate for the presidency, but must increase his
support on the coast in order to win. Retired army general and former
defense minister Jose Gallardo has announced his presidential candidacy
and may seek center-left support.
Populist leaders Abdala Bucaram, a former Guayaquil mayor, and Frank
Vargas, a former air force general, are mounting presidential campaigns
based on charismatic personalities, nationalistic slogans, attacks on
the wealthy, and promises of state assistance to the poor. Although
Bucaram was a presidential contender in 1988, his Ecuadorian Roldosista
Party (PRE) has suffered in recent years from scandals involving its
poor administration of Guayaquil. Still, the PRE received 17 percent of
the 1994 vote. Famous for leading a 1986 rebellion against the military
high command, Frank Vargas now heads the left-populist Ecuadorian
Popular Revolutionary Alliance (APRE) and was the surprise winner of the
1994 congressional election in the Quito area, gaining 6.5 percent of
the vote nationally.
The Popular Democratic Movement (MPD), a party with Maoist communist
roots, is the leading force on the far left, having increased its vote
to 9 percent in 1994. In alliance with public sector unions such as the
UNE teachers union and the Social Security Institute workers, MPD
leaders, such as Juan Jose Castello and Jaime Hurtado, militantly oppose
the government's modernization program, particularly privatization of
state companies. The MPD also supports demands for indigenous community
autonomy by the CONAIE peasant movement led by Luis Macas. The MPD has
drifted away from a commitment to social revolution, but is still
hostile to private business. The old Socialist Party (PSE) and other
left-wing parties only won 5 percent of the 1994 vote. There are no
active guerrilla organizations and, in the past, subversive groups
enjoyed no popular support and posed little threat to the country's
security.
CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES
A. DISTRIBUTION AND SALES CHANNELS
A local agent or representative is necessary in order to sell
successfully in Ecuador and is legally required for sales to the
government. Ecuadorian buyers prefer to purchase directly from the
manufacturer. For sales of machinery and equipment, a key factor is the
availability of parts and service from the local distributor or agent.
Quito and Guayaquil are the major distribution centers for imported
products. Cuenca and Ambato are the third and fourth largest centers
respectively. The majority of distributors cover the whole country and
use their own sales forces. Many have branches and warehouses in the
major cities.
Options for distribution in Ecuador include:
Distributors
These are commonly medium- to large-sized firms representing foreign
companies and importing large quantities of products for wholesale
distribution. Firms maintain large stocks and place orders for direct
delivery to customers.
Commissioned Agents
These are usually specialized firms or individuals who take orders in
Ecuador for foreign goods by means of a well-trained and experienced
sales force. The agents are paid a commission by the U.S. company
filling these orders. Occasionally, agents may import goods with their
own funds for resale.
Direct Importers
Direct importers are generally large manufacturing companies and
government agencies purchasing equipment or materials for their own use.
Purchases are normally made directly from the manufacturer.
B. USE OF AGENTS AND DISTRIBUTORS
The Principal Agent Relationship
U.S. exporters should be aware that under Ecuadorian law, Ecuadorian
agents and representatives enjoy considerable legal protection, as
described below, which can make it very costly to terminate such a
relationship. Therefore, experts recommend that U.S. companies appoint
a non-exclusive representative who is not covered by this legislation.
The principal agent relationship is governed by Supreme Decree 1032-A,
Official Register 245, of December 28, 1976, effective December 31,
1976. This law is entitled "Law on Protection for Representatives,
Agents and Dealers of Foreign Corporations in Ecuador." Foreign
noncorporate or private individual principals are also subject to the
provisions of Decree 1032-A. Under this law, a principal may not
unilaterally modify, terminate, or refuse to renew an agency or
distributorship agreement, except for a judicially determined "just
cause."
A just cause under which a principal may validly terminate a
representational agreement is limited to (1) a failure by the agent to
discharge his/her legal or contractual obligations; (2) any act or
omission by the agent that substantially and adversely affects the
principal's interest in the promotion, marketing, or distribution of
his/her merchandise or services; (3) the agent's insolvency or
bankruptcy; and (4) termination of the business.
A principal may be held liable to compensate the agent if the contract
is unjustly terminated. The amount of damages shall be assessed by a
court in the jurisdiction of the agent's principal place of business
according to (1) the value of items purchased and expenses incurred by
the agent in setting up and operating the business; (2) value of the
agent's unsalable inventories and stock; and (3) value of the business
goodwill promoted by the agent, to be determined in consideration of the
following: (a) duration of the relationship, (b) actual volume of
sales by the agent vis-a-vis the principal's business, (c) amount of
Ecuador's market share acquired by the agent's efforts, and (d) any
other equitable factor available to determine the actual amount of
damages suffered by the agent because the agreement was unjustly
terminated.
All controversies between a principal and his/her agent ar decided by
the local Ecuadorian courts having jurisdiction over the agent. The
Civil and Commercial Code apply for matters not covered by Supreme
Decree 1032-A.
Finding a Partner
American firms have many options, including the use of the Commercial
Section of the American Embassy through various of its services, local
lawyers and consultants and banks.
C. FRANCHISING
Franchising is not widely used in Ecuador. In Ecuador, a franchise is
governed by the Commercial Code as it is considered as a private
negotiation between two or more private entities acting for the same
purpose. The Commercial Code basically indicates that the commissioned
merchant or agent is obligated directly and personally for his/her own
franchise as if the business were entirely theirs. The principal and
the agent are totally independent even with respect to legal action,
except for the rights and obligations as indicated by their mutual
commission contract and the Civil and Commercial Codes. If the business
was started under the name of the principal, the rights and obligations
will be determined by the Civil Code. The commissioned agent can accept
or refuse these duties. If he refuses, he will remain obligated for
any responsibility pertinent to the damages and prejudices. The
commissioned agent is prohibited from representing a similar, opposing
negotiation, without the express consent of the interested parties. The
Commercial Code regulates payment of commission and its corresponding
privileges, transfer and/or assignment of same, as well as all claims of
the commissioned agents.
D. DIRECT MARKETING
Direct marketing is used on a very limited basis, mainly on television
where products are advertized for sale and telephone contact points are
named in multiple countries in Latin America. A local company stocks
products and fills orders, which are often delivered to the home.
E. JOINT VENTURES AND LICENSING
Joint Ventures
Two or more parties may enter into a contract to carry out a particular
business activity. No obligation exists to record this contract in the
Mercantile Register. According to the provisions of the Companies Law,
a joint venture may be considered as an association or a participation
account.
Under the Companies Law, a business entity may give others (associates)
the right to participate in its business, but the rights are limited to
obtaining information on the funds contributed, the profits made, or
losses incurred. Associates are not liable to third parties. If the
business enters bankruptcy, they are liable only for their share of the
investment. All other matters are regulated by the terms of the
contract of association.
In Ecuador this type of joint venture occurs primarily when foreign
corporations are contracted as associates to carry out specific projects
with government entities. It is normal for foreign corporations
entering into this type of agreement to set up branches.
Licenses
In Ecuador, licenses are governed by the Commercial Code, (refer to the
Section IV.C. on Franchising).
F. STEPS TO ESTABLISHING AN OFFICE
The procedure for establishing an office is usually entrusted to local
lawyers and professional advisers. Costs vary depending on the size of
the company's capital share. In general, setting up a branch is easier,
although this should not be the overriding consideration in deciding
which type of entity should be used. Foreigners may own 100 percent of
an Ecuadorian enterprise in most sectors.
Accounting regulations are governed by the Superintendency of Companies.
They vary in some respects from generally accepted accounting
principles. However, the "true and fair view" concept is applicable.
Foreign investors starting up a business in Ecuador prefer corporations
and branches. Other forms are limited liability, partnerships, and
mixed economy companies. Corporations, branches and limited liability
companies are registered with and controlled by the Superintendency of
Banks and governed by the Companies Law. All businesses must have a
head office and legal representative domiciled in Ecuador.
Corporations
Corporations are the most flexible form of entity, allowing a mixture of
foreign and local capital. Private limited companies are useful as
closed companies, but have disadvantages regarding the sale and transfer
of capital, and are not usually advantageous to the foreign investor.
The corporation offers the same major advantages to investors as the
corporate form does in other countries, including (1) the limitation of
shareholders' liability to the amount invested; (2) shareholders are
free to negotiate their stock without restrictions; (3) corporations
are represented by managers who may be discharged at any time; and (4)
continuity of the business as an on going concern is assured regardless
of death or changes in management or ownership.
Formation of a Corporation: The formation of corporations and their
operations are governed by the Companies Law. Ecuador does not have
different legal entities for private or governmental corporations. The
formation of mixed economy corporations with the government as a
shareholder is allowed under the terms of the Companies Law.
A corporation must be created with a contract, which must contain:
1) Location and date of the contract.
2) Statement of the shareholders' wish to form the company.
3) Name and activity to be performed.
4) Capital amount, both subscribed and paid-in, and the terms for
the payment of capital subscribed, if payment is to be made in
installments.
5) Number of shares, type and par value.
6) Subscribed and paid-in capital broken down by shareholder.
7) Any capital contributions in kind and their appraisals.
8) Management of the company, powers and limitations of the legal
representative and duration in that position.
9) Procedures for assignment of legal representatives.
10) Procedures for assignment of the "comisario" (a legally-required
auditor to report on accounting, management of the Company and legal
compliance by the legal representatives) and attorneys and the terms of
such positions.
11) Procedures for calling shareholders' meetings.
12) Rules for the distribution of profits.
13) Conditions for the dissolution of the company.
The documents that must accompany the contract or deed of incorporation
are the company's by-laws (or articles of association), appraisals of
in-kind contributions, deposit slips of the cash contributions and other
documents that prove the payment of certain taxes.
Corporations must have at least one stockholder. Companies with
governmental sector stockholders on non-profit organizations are allowed
to have only two shareholders. Stockholders may be individuals,
corporations or partnerships. Corporations's founders are not required
to remain physically in Ecuador. A third person, usually an attorney,
may perform the incorporation process on their behalf.
The corporation's name must contain reference to the kind of entity,
such as "compañia anonima" or "C.A." or "S.A.". The company's name must
not be similar to that of an existing company. To guaranty
proprietorship of the name, it should be registered with the Commerce
Division of the Ministry of Industry and Commerce (MICIP). The
company's operations are regulated by the by-laws and the Companies'
Law, but may be revised by the company at any time.
The estimated total formation costs depend on the type and the
complexity of the business being formed, but may range from USD 1,000 to
USD 5,000. It takes approximately two months to form a company.
Capital of a Corporation: The capital must be included in the by-laws
and its amount results from multiplying the shares by their par value.
Capital may consist of (1) authorized capital, that is, as stated in the
by-laws; (2) subscribed capital which the stockholders are required to
pay in; or (3) paid-in capital.
The minimum capital requirement for corporations is 5 million sucres and
must be denominated in the national currency. Unpaid, subscribed
capital may be paid within two years from the date of incorporation.
Contributions may also be made in goods, as long as they relate to the
company's operations. Such goods must be valued by expert appraisers
and the appraisal will be part of the deed of incorporation.
Companies must file an annual return with the Superintendency of
Companies containing the financial statements and other relevant
information, as well as the reports of the legal representative, the
corporate comptroller and the external auditors. Companies controlled
by the Superintendency of Banks are obligated to publish their June and
December financial statements in a local newspaper.
Branches
To establish a branch in Ecuador a foreign company must provide (1)
proof that the company has been legally established in its country of
origin; (2) proof that according to the laws of its country of origin,
the company can establish branches and has the ability to negotiate
abroad; (3) permanent legal representative in Ecuador; and (4) assigned
capital of no less than 50 million sucres.
The documentation should be presented to the Superintendency of
Companies, along with a certification issued by the Ecuadorian Consul
nearest the foreign company's head office certifying the establishment
and legality of the company in its country of origin and that it is
authorized to do business abroad. A certified bank deposit of the
capital paid must also be presented. If the legal representative is a
foreign citizen, he or she should obtain a resident visa. Other
procedures for establishing corporations apply when establishing a
branch in Ecuador.
Limited Liability Companies
This type of corporate form closely resembles a limited partnership, and
is suitable for that type of operation. A limited liability company is
characterized by (1) having 3 or more members, not to exceed 15; (2) the
members have limited liability for the corporate obligations up to the
amount of their individual contribution; (3) foreign corporations are
excluded from membership; (4) the capital cannot be less than 2 million
sucres and at least 50 percent of the capital must be paid in at the
time of formation and the remainder within one year; and (5) a legal
reserve must be set by transfer of 5 percent of annual profits until the
reserve equals 20 percent of capital.
Partnerships
Partnerships may be organized in two different forms: as a company with
a collective name in which all of the partners are jointly and
separately liable for all actions taken by any partner in the firm's
name, and a silent partnership, which has general partners and limited
partners. Among other legal differences between these partnership
forms, limited partners are liable, silent partners are not part of the
firm's name and they do not participate in management.
To form a partnership, the by-laws should state (1) the name,
nationality and domicile of the partners; (2) the number of payments
made and future payments; (3) the form of payments made and future
payments; (3) the time period for which the company will function; (4)
how the administration will be organized and fiscal control established,
if any. A draft copy of the by-laws must be presented to a judge who
orders its publication in a newspaper in the company's country of
origin. Later the judge will order the registration of the by-laws in
the Mercantile Registry and in the Property Registry if there are
property taxes.
Mixed Economy Company
Another type of firm is the "mixed economy" company in which both
private and public capital are used. The public sector funds may come
from the state, municipal, provincial governments and judicial
representatives of both the public or parastatal sectors.
The laws imposed on corporations are generally applied to this type of
company. When the public sector investment exceeds 50 percent of
capital in the company, one of the directors of this sector acts as
president. The private shareholders may acquire a public sector
investment and the company would continue to function as a corporation.
G. SELLING FACTORS AND TECHNIQUES
The Ecuadorian market is relatively small and U.S. exporters should take
this into consideration when setting sales targets for distributors and
agents. Most U.S. products do not require any changes to be readily
acceptable. Price competitiveness is a very important sales factor.
U.S. firms selling high tech products must provide training and
maintenance support to their distributors and agents. Local
distributors expect their foreign suppliers to underwrite sales
promotion, support and training. Sales materials should be in Spanish.
H. ADVERTISING AND TRADE PROMOTION
Advertising
The advertising market and the media in Ecuador are centered in Quito,
Guayaquil and Cuenca. The principal means of advertising in Ecuador is
through newspapers, of which there are 5 with nationwide circulation.
Major newspapers with their national circulation figures are as follows:
Quito: El Comercio, 70,000 and weekends 130,000
Ultimas Noticias, 35,000
HOY, 15,000 and weekends 20,000
La Hora, 25,000
Guayaquil: El Universo, 140,000 and weekends 220,000
Expreso, 20,000 and weekends 25,000
El Telegrafo, 35,000 and weekends 45,000
Extra, 150,000 and weekends 135,000
La Razon 15,000
Cuenca: El Mercurio, 12,000
All of these include large amounts of advertising as well as economic
and commercial news. However, El Comercio and El Universo are favored
by the business community.
Television is the second most important advertising media. There are 5
Ecuadorian TV networks, 2 cable TV networks showing programs from the
U.S. and Europe and a number of local stations in the larger cities.
There are an estimated 1 million sets and 6.4 million viewers.
A third advertising medium is radio. There are approximately 375 radio
stations, including medium wave, short wave and FM, broadcasting to
approximately 8 million daily listeners. There are an estimated 6.5
million radio sets in Ecuador.
Movie theaters are also an important means of advertising, especially
for consumer goods. Most theaters show 15 minutes of advertisements
before each feature.
Trade Promotion
There is one trade exposition center in Quito and one in Guayaquil. In
Quito the Centro de Exposiciones Quito holds around 15 shows each year.
In Guayaquil, the International Fair of Ecuador is organized by Ferias
S.A. every two years. For further information please contact:
Centro de Exposiciones Quito
Avs. Amazonas y Atahualpa, Quito, Ecuador
Tel: 593-2-454-428, 453-129; Fax: 593-2-449-846
Contact: Hector Estrella, Manager
Ferias S.A.
P.O. Box 8951, Guayaquil, Ecuador
Tel: 593-4-290-682, 290-920, 290-011; Fax: 593-4-290-080
Contact: Miguel Orellana, Manager
The Commercial Service has offices in Quito and Guayaquil and provides a
full range of trade promotion services for U.S. exporters. Please
contact: Janice Corbett, Commercial Attache, U.S. Embassy Quito, Tel:
593-2-562-890, Fax: 593-2-504-550 and Manfred Sheets, Commercial
Officer, U.S. Consulate General, Guayaquil, Ecuador, Tel: 593-4-323-
570, Fax: 593-4-324-558 for details.
I. PRODUCT PRICING
With the exception of pharmaceuticals, no imported products are subject
to price controls. As elsewhere, distributors establish prices based on
market factors.
J. SALES SERVICE AND CUSTOMER SUPPORT
Very few products are sold in Ecuador with warranties. However, it is
extremely important that U.S. companies exporting products to Ecuador
which require maintenance and spare parts ensure that their Ecuadorian
distributor provides both.
K. SELLING TO THE GOVERNMENT
Government procurement of goods, equipment, and services is regulated by
the Public Contracting Law 95 issued in August 1990. However, the
military is not required to use this law for its purchases. Foreign
bidders in both cases must be legally represented in Ecuador and
associated with an Ecuadorian company in order to bid.
Procurement by public invitation involves various steps. The government
agency usually inserts announcements in newspapers and trade journals
inviting potential suppliers to present bids for specific types of
equipment or services desired. Bid documents containing detailed
information must be purchased by the interested party. The cost of
these documents varies with the size of the project involved.
Guarantees required on invitations for bids and calls for tenders are
specified in the Public Contracting Law. The bids must be filed in
Spanish, using the format specified by the inviting agency, and be
delivered to the contracting agency in person.
Government procurement practices do not usually discriminate against
U.S. or other foreign suppliers. However, bidding for government
contracts can be cumbersome and competitors from other countries do not
operate under the restrictions of the U.S. Foreign Corrupt Practices
Act. The government's requirement for a bank-issued guarantee to ensure
execution of the contract presents a problem for some bidders.
Shipments to Ecuadorian government agencies no longer have to be made
via Ecuadorian flag vessels or airlines.
L. PROTECTING YOUR PRODUCT FROM IPR INFRINGEMENT
Ecuador offers some protection for intellectual property rights under
Andean Pact legislation and is in the process of adhering to the
intellectual property provisions of the World Trade Organization. The
Ecuadorian Congress is considering the ratification and implementation
of legislation for a bilateral IPR agreement with the United States
based on the IPR provisions of the North American Free Trade Agreement.
For further information on IPR protection, see Chapter VIII.A7.
M. NEED FOR A LOCAL ATTORNEY
A local attorney or a professional adviser is imperative when setting up
a business in Ecuador or in collection matters and trade complaints.
The Commercial Service office in Ecuador has lists of lawyers for Quito
and Guayaquil.
CHAPTER V: LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
A. BEST PROSPECTS FOR NON-AGRICULTURAL GOODS AND SERVICES
1. Rank of Sector: 1
Name of Sector: Telecommunications Equipment
ITA Industry Code: TEL
NARRATIVE: The Ecuadorian market for telecommunications equipment is
supplied almost entirely by imports. In 1994 the telecommunications
market totalled an estimated USD 92 million. Imports were estimated at
USD 83 million with U.S. imports accounting for 44 percent of the import
market.
The prospects for the entire industry will change dramatically once the
telecommunications reform bill is approved by Congress and privatization
of the state telephone company occurs. U.S. telephone operators will
have excellent opportunities to participate in the privatization
process. Major investments are expected in public telephony and rural
telecommunications. The market size is expected to grow substantially
over the 1996-2000 period. The U.S. is well positioned in the growing
areas of cellular and cable TV equipment, satellite and value-added
services including trunking, paging, data transmission, and personal
communications. The U.S. has also potential to increase market share in
basic switching and transmission equipment. U.S. equipment faces strong
competition from Japanese and European counterparts who have
traditionally dominated the telecommunications market in Ecuador.
DATA TABLE (Millions of USD): 1994 1995 1996
A. Total Market Size 92.0 110.4 139.0
B. Total Local Production 9.2 11.0 12.1
C. Total Exports 0 0 0
D. Total Imports 82.8 99.4 124.2
E. Imports from the U.S. 36.1 44.0 55.0
The above statistics are unofficial estimates.
2. Rank of Sector: 2
Name of Sector: Electric Power
ITA Industry Code: ELP
NARRATIVE: In order to meet the projected 5-6 percent annual increase
in electricity demand, Ecuador should add as much as 540 MW in new
hydroelectric generation, as well as 390 MW in thermal generation. The
potential import value for this equipment is estimated at as much as USD
1.3 billion. There will be an increased demand for hydro and thermal
generation equipment, including gas and steam turbines and small diesel
generation units for back-up systems due to shortages in electric power.
Although major steps have been taken to restructure the sector, a new
electrification reform law, which would turn to the private sector the
generation and distribution activities, is still pending before the
Ecuadorian Congress. The government will maintain control over power
transmission. Once the law is approved, the market for large scale
power generation projects will change from the state-owned
electrification institute to private investor groups and power companies
interested in expanding into the Ecuadorian market. The new generation
plants are generally expected to be provided on a build-operate-transfer
concession basis. The U.S. market share has been low in the past.
German, Japanese, French and Italian suppliers have dominated the market
both for hydro and thermal generation. However, the outlook is
substantially more attractive for U.S. firms as the government moves to
private sector generation. The U.S. is competitive in thermal
generation whereas the European suppliers provide most switchgear.
DATA TABLE (Millions of USD): 1994 1995 1996
A. Total Market Size 45.1 54.0 64.8
B. Total Local Production 0.0 0.0 0.0
C. Total Exports 0.0 0.0 0.0
D. Total Imports 45.1 54.06 4.8
E. Imports from the U.S. 25.0 30.0 36.0
The above statistics are unofficial estimates.
3. Rank of Sector: 3
Name of Sector: Security and Safety Equipment
ITA Industry Code: SEC
NARRATIVE: It is estimated that there will be a 30 percent increase in
imports of technologically-advanced security and safety equipment to
Ecuador in 1995. Residential land automotive alarms, anti-theft vehicle
tracing devices, industrial security equipment for the oil industry and
electronic surveillance equipment are considered best prospect products
in this industry.
Local production of safety clothes, gloves, shoes and safety boxes is
very limited. There have been reports of kidnapings throughout Ecuador.
Since the local police is not adequately prepared to handle such cases,
anti-kidnapping tracing devices will also be in demand. Increasing auto
theft will also lead to greater need for tracing devices.
DATA TABLE (Millions of USD): 1994 1995 1996
A. Total Market Size 13.1 16.8 21.6
B. Total Local Production 1.0 1.1 1.2
C. Total Exports 0.0 0.0 0.0
D. Total Imports 12.1 15.7 20.4
E. Imports from the U.S. 2.4 3.2 4.3
The above statistics are unofficial estimates.
4. Rank of Sector: 4
Name of Sector: Food Processing and Packaging Equipment
ITA Industry Code: FPP
NARRATIVE: An aggressive promotion of non-traditional agricultural
products has created the need for an ongoing upgrade of the food
processing and packaging equipment to meet the demand for quality and
attractiveness of products offered both for export and domestic sales.
All food processing and packaging equipment is imported. U.S. products
are well regarded. Principal competitors are Germany and Italy. Most
promising subsectors are small processing plants for fruits and
vegetables, meat, as well as packaging and labeling equipment.
DATA TABLE (USD Millions): 1994 1995 1996
A. Total Market Size 110.2 123.4 138.2
B. Total Local Production 44.1 49.4 55.3
C. Total Exports 0.130 0.136 0.143
D. Total Imports 66.0 73.92 82.8
E. Imports from the U.S. 15.2 16.7 18.4
The above statistics are unofficial estimates.
B. BEST PROSPECTS FOR AGRICULTURAL PRODUCTS
1. Rank: NA
Name of Sector: Wheat
PS&D Code: 0411000
NARRATIVE: Almost all of the wheat consumed in Ecuador is imported.
This market, which was exclusively supplied by the U.S. during 1982-91,
now is shared with Germany, France, Australia, Argentina, and Canada.
The import outlook for U.S. wheat is somewhat improved for the current
marketing year since the new Common External Tariff of the Andean Pact
Region narrows the price gap between the U.S. wheat and the subsidized
wheat from other countries. The availability of the GSM-102 Credit
Guarantee Program may create additional U.S. sales opportunities.
DATA TABLE (Thousand Metric Tons): 1994 1995 1996
A. Total Market Size 395 400 405
B. Total local production 20 20 18
C. Total Exports (legal and illegal) 90 90 90
D. Total Imports 512 488 455
E. Total Imports from U.S. 162 184 160
The above statistics are unofficial estimates.
2. Rank: NA
Name of Sector: Cotton
PS&D Code: 2631000
NARRATIVE: As Ecuador's textile industry has focused in developing
export markets, cotton imports have increased in the past two or three
years. This situation has been encouraged by the decreased local cotton
production, and by the decreased cotton production in Colombia and Peru.
There are good opportunities for cotton sales in the coming year due to
reduced supplies from other exporters.
DATA TABLE (Thousand Bales): 1/ 1994 1995 1996
A. Total Market Size 78 80 82
B. Total local production 19 12 10
C. Total Exports 0 0 0
D. Total Imports 60 75 80
E. Total Imports from U.S. 35 60 70
1/ 480-pounds net weight bales.
The above statistics are unofficial estimates.
3. Rank: NA
Name of Sector: Milled Rice
PS&D Code: 0422110
NARRATIVE: Ecuador has been self sufficient in rice for the last seven
years. However, as a result of the regional liberalization of the
economy, and the free market under the Andean Pact, a large part of the
rice crop is being exported to Colombia, where rice is higher priced.
The resulting shortfall in domestic supply, along with the unfavorable
weather conditions in early 1995, will likely result in imports of
150,000 tons during the next year. This is one of the best prospects
for U.S. agricultural sales.
DATA TABLE (Thousand Metric Tons): 1994 1995 1996
A. Total Market Size 360 365 365
B. Total local production 455 504 424
C. Total Exports 100 120 150
D. Total Imports 0 3 100
E. Total Imports from U.S. 0 0 50
The above statistics are unofficial estimates.
4. Rank: NA
Name of Sector: Yellow Corn
PS&D Code: 0440000
NARRATIVE: The domestic demand of yellow corn as an input for feed has
increased consistently during the last decade along with the expansion
of the poultry and shrimp industries. Due to exports to Colombia, and
the unfavorable weather conditions during the crop season, Ecuador will
need to import about 150,000 ton between late 1995 and early 1996.
DATA TABLE (Thousand Metric Tons): 1994 1995 1996
A. Total Market Size 390 410 415
B. Total local production 520 480 520
C. Total Exports 100 160 170
D. Total Imports 35 50 100
E. Total Imports from U.S. 10 50 100
The above statistics are unofficial estimates.
5. Rank: NA
Name of Sector: Soybean Meal
PS&D Code: 0813100
NARRATIVE: Domestic demand of soybean meal as a source of protein for
the feed industry has increased during the last decade. Although the
import needs may not be as great as in past years due to an expected
good crop, there are still opportunities for exports of U.S. soybean
meal to Ecuador.
DATA TABLE (Thousand Metric Tons): 1994 1995 1996
A. Total Market Size 103 120 123
B. Total local production 84 106 108
C. Total Exports 0 0 0
D. Total Imports 21 16 14
E. Total Imports from U.S. 0 0 9
The above statistics are unofficial estimates.
6. Rank: NA
Name of Sector: Oilseeds Soybean
PS&D Code: 2222000
NARRATIVE: Ecuador's production and trade in of oilseeds and products
has grown dramatically since the government liberalized its foreign
trade policy and eliminated price control for cooking oils. The
prospects for this market depends on the prices of U.S. soybeans
relative those of Argentina and Bolivian origin. The vegetable cooking
oil sector will continue importing soybeans to help compensate for the
increase in demand for both blended cooking oil and premium soybean oil.
DATA TABLE (Thousand Metric Tons): 1994 1995 1996
A. Total Market Size 116 145 149
B. Total local production 110 130 135
C. Total Exports 10 13 13
D. Total Imports 12 25 25
E. Total Imports from U.S. 0 3 5
The above statistics are unofficial estimates.
7. Rank: NA
Name of Sector: Consumer-Ready Food Products
PS&D Code: NA
NARRATIVE: The opening of the Ecuadorian economy to foreign imports
since 1990, has resulted a sharp increase in imports of consumer-ready
food products. Most (perhaps 90 percent) of these products are of U.S.
origin. Ecuador primarily imports U.S. fresh and processed fruit &
vegetables, dairy products, snack foods, poultry, and red meats. There
are great possibilities for market expansion for breakfast cereals,
fruit & vegetable juices, tree nuts, and wine and beer.
DATA TABLE (Millions of USD) 1994 1995 1996
A. Total Market Size 1/ 22.0 26.0 28.0
B. Total local production 3.0 4.0 4.5
C. Total Exports 1.5 1.8 1.9
D. Total Imports 20.7 23.8 25.0
E. Total Imports from U.S. 18.6 21.2 23.0
1/ Consumption by medium to high level income.
The above statistics are unofficial estimates.
C. SIGNIFICANT COMMERCIAL INVESTMENT OPPORTUNITIES
Trans-Ecuadorian Oil Pipeline Expansion
Petroecuador, the state petroleum corporation, has called for bids for
the construction and operation of an expanded Trans-Ecuadorian petroleum
pipeline. This is the biggest project in Ecuador's history and is
expected to cost between USD 500-600 million. The new pipeline will run
parallel to the existing pipeline for some 300 miles from Ecuador's
Amazon basin over the Andes to the Pacific port of Esmeraldas. The
second pipeline will have a capacity of 125,000 barrels per day. The
winner to be announced in August 1995 will be awarded a concession
contract in which it will have to finance, build, and operate the
pipeline for a specific period of time. The project is estimated to
take 24-36 months to complete.
Key Contact: Petroecuador
Alpallana y 6 de Diciembre, Edif. El Rocio
Quito, Ecuador
Tel: 593-2-547-160; Fax: 593-2-567-275
Contact: Dr. Federico Vintimilla, Executive President, or
Ing. Pedro Merizalde
New Airports for Quito and Guayaquil
The Ecuadorian Government, through CONAM, the National Modernization
Council and the Civil Aviation Directorate, plan to construct two new
airports, one for Quito and another for Guayaquil, under a concession
regime with a foreign private consortia. The consortia would finance,
build and operate the airports for a fixed period of time. The project
is expected to cost USD 460 million. An international call for bids is
expected to be announced in late 1995.
Key Contact: CONAM - Consejo Nacional de Modernizacion
Av. Patria y Juan Leon Mera, Quito, Ecuador
Tel: 593-2-509-432; Fax: 593-2-509-437
Contact: Dr. Patricio Pena, Executive Director, or
Pablo de La Torre
DAC - Direccion de Aviacion Civil
Buenos Aires 149 y 10 de Agosto, Quito, Ecuador
Tel: 593-2-223-179; Fax: 593-2-563-995
Contact: Gral. Hernan Quiroz, Director, or
Ing. Jose Baquero, Airport Division
La Libertad Refinery Expansion
Petroecuador, the state petroleum company, through its subsidiary
Petroindustrial, plans to expand the La Libertad refinery through a 15
year build-operate-transfer concession. The project is located on the
Santa Elena Peninsula in Guayas Province. The refinery capacity will be
increased from 46,000 barrels per day (bpd) to 57,700 bpd. The project
is estimated at US 400 million. The call for bids is expected to be
issued in late 1995.
Key Contact: Petroindustrial
Alpallana y Whimper, Edf. Maria Victoria
Quito, Ecuador
Tel: 593-2-527-977; Fax: 593-2-500-689
Contact: Ing. Benjamin Valle, Manager
San Francisco Hydroelectric Project
To increase the country's power capacity, INECEL, the state power
company, plans to build a 254 MW hydroelectric project on a build-
operation-transfer concession. San Francisco will interconnect with the
existing 230 MW Agoyan hydroelectric plant located in Tungurahua
Province. Engineering and environmental studies have been completed.
Estimated cost of the project is USD 222 million. Bids are due October
4, 1995.
Key Contact: INECEL - Instituto Ecuatoriano de Electrificacion
Av. 6 de Diciembre y Orellana
Quito, Ecuador
Tel: 593-2-221-123; Fax: 593-2-503-762
Contact: Ing. Ivan Rodriguez, General Manager
Telephone Privatization and Expansion Program
Ecuador's telecommunications sector remains in the hands of the state
telephone company, EMETEL. The Ecuadorian Congress is expected to
approve a telecommunications reform bill in 1995 which would allow for
the sale of 35 percent of Emetel's shares to two prequalified
international operators. Recent demand estimates suggest the need to
more than triple the current network of 609,000 lines to 2.2 million
lines by year 2000 with an estimated investment of over USD 1 billion.
Key Contact: EMETEL - Empresa Nacional de Telecomunicaciones
Av. Colon y 6 de Diciembre, Quito, Ecuador
Tel: 593-2-568-588; Fax: 593-2-568-000
Contact: Ing. Sergio Flores, Executive President
CONAM - Consejo Nacional de Modernizacion
Av. Patria y Juan Leon Mera, Quito, Ecuador
Tel: 593-2-509-433; Fax: 593-2-509-437
Contact: Kurt Freund, President Telecommunications Commission,
or Guillermo Sosa
Natural Gas Recovery Project
Petroecuador, the state petroleum corporation, through its subsidiary
Petroindustrial, will call for bids for the recovery of natural gas from
three groups of wells in eastern Ecuador. Petroindustrial will contract
the project on a build-operate-transfer basis for a 10-year term.
Estimated cost is USD 40 million. The prequalification tender will be
issued in late 1995.
Key Contact: Petroindustrial
Alpallana y Whimper, Edf. Maria Victoria, Quito, Ecuador
Tel: 593-2-527-977; Fax: 593-2-500-689
Contact: Ing. Benjamin Valle, Manager
Agricultural Investment Opportunities
Molinos El Condor plans to build a new wheat mill and grain storage
facilities (silos) in Manta. The wheat milling facilities will have a
capacity of 120 metric tons per day, while the silos a storage capacity
of 9,000 metric tons ( tree months of milling). A local group of
investors is reportedly seeking to import a new sugar mill to help meet
local demand. There will be opportunities for U.S. businesses to supply
plant and equipment for these projects.
CHAPTER VI: TRADE REGULATIONS AND STANDARDS
A. TRADE BARRIERS
Ecuador is relative open to U.S. exports and direct investment. The
old, highly protectionist tariff system, a product of the import-
substitution model adopted in the 1960's, was replaced in 1991 with a
simplified structure that lowered most tariff duties and fees to 5 to 20
percent of import value. The Duran Ballen government has taken a number
of important steps to further liberalize trade and investment policy.
Importers and exporters are now able to purchase foreign exchange on the
free market without restrictions. In January 1993, restrictive import
licensing for agricultural products, inputs and machinery were
eliminated. On the export side, levies on agricultural commodities were
abandoned in December 1993 and official port charges were reduced by 25
percent in January 1994.
In spite of the dramatic liberalization in Ecuadorian trade policies,
some residual non-tariff and customs procedure barriers exist that
impact on U.S. exporters. A 1976 law prevents U.S. and other foreign
suppliers from terminating existing exclusive distributorship
arrangements without paying compensation. A sanitary registration is
required on imported processed foods, cosmetics, as well as some other
consumption goods, which have had the effect of blocking the entry of
some imports from the U.S. Agricultural commodities have been subjected
to prior authorization requirements. Imports of several categories of
used goods are prohibited. Ecuador has adopted the Andean Pact price
band system for about 90 agricultural products, particularly poultry,
wheat, corn, milk and rice which may affect U.S. sales. Under the terms
of Ecuador's accession to the World Trade Organization (WTO), most non-
tariff barriers are to be phased out over the next few years.
B. CUSTOMS VALUATION
Ecuadorian customs procedures can be difficult, but generally are not
used to discriminate against U.S. products. A new Customs Service Law
was enacted in March 1994, together with a service privatization
provision in the December 1993 tax reform law, should facilitate the
creation of a modern, and less corrupt, customs system.
Ecuador's tariff schedule is based on the Harmonized System of
Nomenclature. Consistent with the Andean Pact common external tariff,
the current tariff range is 0-20 percent; the highest duty, 37 percent,
is levied on automobile imports to protect the local assembly industry.
Most consumer goods imports pay 20 percent, while intermediate goods are
usually imported at the 10 or 15 percent rates. Raw materials and
capital goods generally pay 0 or 5 percent. Ecuador has negotiated
exceptions under the Andean common tariff that allow for lower duties
for certain capital goods and industrial inputs. The new agrarian law
provides for duty-free import of agricultural inputs and equipment.
In addition to import duties, all imports are also subject to a 1
percent service fee and a 10 percent value added tax. These charges are
based on the CIF value of the merchandise.
In the past, the requirement that government customs officials
physically inspect all incoming merchandise to determining duties led to
long processing delays and opportunities for corruption. Since October
1994, imports over USD 3,000 have been be appraised for value, quantity,
quality and weight at the port of origin by one of three official
international verification companies. The Ecuadorian importer must
request the inspection service from a verifier and pay 50 percent of the
inspection fee of a minimum of USD 180 and a maximum of 1 percent of the
FOB value of the goods. The foreign supplier provides the verifier with
commercial documentation, including bill of lading or airway bill, and
commercial invoice. Once the verification is made, the verifier issues
an inspection certificate to the Ecuadorian importer and the importer
pays the remaining 50 percent of the inspection fees.
The following imports are exempt from verification:
Imports below USD 3,000
Works of art, arms and defense material
Newspapers, books, magazines and other printed material
Traveler's personal effects
Parcel post
Donations to the public sector
Imports by diplomatic missions
Imports by the public sector financed by international loans
The three companies contracted by the Ecuadorian Government to conduct
inspections are:
Bureau Veritas International (French)
Av. Republica e Irlanda, Edf. Torres Siglo XXI
or Hungria 324 y Mariana de Jesus, Quito, Ecuador
Tel: 593-2-244-278, 222-825, 252-872; Fax: 593-2-560-629
Contact: Ing. Ernesto Recalde, General Manager
Societe Generale de Surveillance S.A. (SGS) (Swiss)
Av. Republica 888 y Suecia, Quito, Ecuador
Tel: 593-2-252-279, 252-296; Fax: 593-2-251-342, 467-938
Contact: Peter Kolla, General Manager
Cotecna Inspection S.A. (Swiss)
Av. Naciones Unidas 1014 y Amazonas, 9 Floor, Quito, Ecuador
Tel: 593-2-462-366, 462-371, 469-606; Fax: 593-2-468-657, 468-658
Contact: Roger Sleeman, General Manager
Importers must register with the Central Bank of Ecuador and obtain
import license numbers. Import licenses are obtained from the Exchange
Department of the Central Bank before incoming goods are shipped from
the port of origin. In most cases, the import permit serves as an
accounting record rather than a prior authorization. Even so, the
process may take from three days to a week. The license is granted for
180 days and may be renewed for the same period of time if requested
before the expiration of the first 180 days.
D. EXPORT CONTROLS
The Government of Ecuador prohibits the export of artistic, cultural,
archeological and historical products that are part of the national
patrimony, as well as endangered species of wildlife and flora.
Products pertaining to the national patrimony may be exported on a
temporary basis for exhibition purposes when authorized by the National
Patrimony Institute. Endangered wildlife and flora species may be
exported for scientific and educational purposes when authorized by the
Ecuadorian Forestry and Wildlife Institute (INEFAN).
Narcotics and psychotropic substances need authorization from the
National Council of Narcotic Control (CONSEP) before they can be
exported. The export of radioactive minerals is subject to control by
the
Atomic Energy Commission.
Certain basic consumption products and raw materials may be subject to
export restrictions and quotas. Such products may not be exported in
amounts exceeding those authorized by the Central Bank. Cocoa and
subproducts are subject to minimum price indexes. There is a minimum
reference price that banana exporters must pay growers. Such prices are
set by the Ministries of Industry, Agriculture and Finance.
E. IMPORT/EXPORT DOCUMENTATION
Importing into Ecuador requires an import license issued by the Central
Bank. The following documentation is required to obtain an import
permit: the commercial invoice, the import number assigned by the
Central Bank, and the income tax registry number.
Upon arrival of the merchandise, the importer presents the import
license, the commercial invoice, the inspection certificate, the bill of
lading and the self-liquidated customs declaration in the same customs
office where the merchandise is located. Customs verifies the validity
of the declaration and authorizes payment of duties, which may be made
in any private bank. Upon payment, the merchandise may be withdrawn
from customs. This process takes two working days.
Partial or incomplete shipments must be declared and a bond must be
deposited to cover the unused foreign currency authorized by the import
license. The process in customs can be lengthy, though one week is
normal. The use of a specialized customs agent is highly recommended in
order to expedite the process.
U.S. companies should take into account that if the customs authorities
find any documents out of order, rectifying the situation can be time-
consuming, resulting in delays. Because prices on the invoice must be
the same as those on the import license, U.S. exporters that have
increased their prices after the granting of the import license may
experience delays in obtaining letters of credit while the importer
rectifies the documents with the Central Bank.
Exports from Ecuador require an export license issued by the Central
Bank. The following documentation is required to obtain an export
license: the export number assigned by the Central Bank, the ID card
and the income tax registry number. The issuance of an export license
takes five working days.
To export, the Central Bank approves the export form (formulario unico
de exportacion) which is next presented at Customs together with the
commercial invoice and the certificate of origin for appraisal. The
exporter will then present the export form at the Central Bank to
liquidate the dollar value of the merchandise.
F. TEMPORARY ENTRY
Ecuador allows temporary entry of items under the "maquila" (in-bond
processing) regime, for demonstration or fairs, for duty free zones and
for special projects for up to 180 days. In the case of special
projects, the period of time may be extended by presenting an extension
request to the Ministry of Finance every 6 months. During this period,
the obligation to pay taxes and duties is suspended, subject to the
condition that the commodities be reexported. Commodities may also be
nationalized after paying the corresponding taxes and fees.
For maquila operations the equipment needed for assembly operations can
also be imported free of duties, although a bond has to be deposited.
No import permits from the Central Bank is required. Special labor
regulations apply to companies operating under this system.
Before shipment of the goods for temporary entry, a request specifying
the arrival date, purpose, flight number, period of time to remain in
Ecuador and departure date must be presented to the Customs Director .
The pertaining authorization will then be sent to the requestor for
presentation when the goods arrive.
Although import duties are waived, a bank guarantee or insurance for 120
percent of the import duties should be presented to Customs. This bond
will be returned once the merchandise is repatriated. There is a
customs control tax, which is paid based on the CIF value of the
merchandise. Once the merchandise enters the warehouse for re-
exportation, no storage fee is paid for up to 12 days.
Transit
Customs law requires an "in transit" declaration for the transit of
foreign commodities through Ecuadorian territory. This declaration must
state the period required for the operation and that the person signing
the declaration and the carrier are jointly responsible for the payment
of duties, taxes, and guarantees on the commodities if they do not
arrive in their entirety at destination. The customs house receiving
the incoming merchandise will verify the contents of this document.
G. LABELING AND MARKING REQUIREMENTS
This area is changing very rapidly. All requirements are stipulated by
the Instituto Ecuatoriano de Normalizacion (INEN - National Standards
Institute), Baquerizo Moreno 454 y 6 de Diciembre, Quito, Ecuador, Fax:
593-2-567-815; Tel: 593-2-528-556; Contact: Felipe Urresta, Director.
Exporters can also contact their Ecuadorian importers to determine
current regulations.
H. PROHIBITED IMPORTS
Items which are currently not allowed to be imported include:
Used clothing
Used tires
Used shoes
Used vehicles over one year old
Used vehicles over 5 tons over five years old
Certain pesticides
Certain epoxides and esters
Reptile hides
Worked ivory and articles of ivory
Prior authorization from several ministries is still required for a
number of goods including:
Processed foods
Cosmetics
Ampoules, syringes
Certain agricultural commodities
Electric generating sets
Bodies for vehicles
Armored vehicles
TrailersBalloons and dirigibles
Helicopters, airplanes
Ships
Under the terms of Ecuador's accession to the World Trade Organization,
import bans and prior authorization requirements that constitute
unreasonable barriers to trade are to be liberalized.
I. STANDARDS
The standards requirements are changing along with labeling and marking
requirements. The Ecuadorian National Standards Institute (INEN) sets
standards, while the "Izquieta Perez" National Hygiene Institute
conducts tests on consumer products that are required to obtain a
sanitary registration by the Ministry of Health. Exporters are advised
to contact INEN or their importers to determine correct regulations.
J. FREE TRADE ZONES
A Free Trade Zone law was passed in 1991 that provides for (1) the
import of raw materials and machinery free of duty and tax; the export
of finished and semi-processed goods, raw materials without duty and
tax; and tax exemption for all business transactions and contracts which
take place in the zone.
A free trade zone has been established in Esmeraldas Province, which can
be contacted at:
Zona Franca de Esmeraldas
Av. Jaime Roldos Aguilera, Esmeraldas, Ecuador
Tel: 593-6-714-500
K. WAREHOUSES
Customs and storage facilities are generally not adequate for the volume
of cargo handled. Customs warehouses are small, and it is not uncommon
for cargo to be stored in open-air patios. Security is generally not a
major concern in Quito, but problems in this areas are common in
Guayaquil. It is recommended that merchandise be insured. Independent
bonded warehouses (almacenes generales de deposito) are available for
storage of imports at an additional cost. These warehouses generally
provide good facilities and security.
L. SPECIAL IMPORT PROVISIONS
Not applicable.
M. MEMBERSHIP IN FREE TRADE ARRANGEMENTS
The Ecuadorian government has been pursuing trade liberalization
agreements on both regional and global levels. Ecuador is a member of
the Andean Pact along with Colombia, Bolivia, Venezuela and Peru and is
a full participant in the Cartagena Accords of the Pact. A common
external tariff with Colombia and Venezuela went into effect on January
1, 1995. Ecuador also has bilateral free trade agreements with Chile,
Colombia, and Venezuela. The bilateral free trade agreement with
Colombia that went into effect in October 1992 helped generate a 44
percent increase in trade between the two countries in 1993. The
Ecuadorian government has also expressed an interest in joining a
Mexico-Colombia-Venezuela or "G-3" trade accord. On the global level,
Ecuador applied to join the General Treaty on Tariffs and Trade (GATT)
in September 1992 and has finished negotiations with its major trade
partners on the terms of accession to the GATT's successor body, the
World Trade Organization (WTO).
CHAPTER VII: INVESTMENT CLIMATE
A1. OPENNESS TO FOREIGN INVESTMENT
The Ecuadorian government welcomes foreign investment, and the trend in
recent years has been toward substantial liberalization in investment
regulations. As a member of the Andean Pact, Ecuador's foreign
investment policy is governed largely by Decisions 291 and 292 of 1991.
Implementing regulations issued in January 1993 further liberalized the
investment regime.
Under the current regulations, foreign investors are accorded the same
rights of entry as Ecuadorian private investors. Foreign investment
with up to 100 percent equity is allowed without previous authorization
or screening in virtually all sectors of the Ecuadorian economy which
are open to domestic private investment. Remittances of 100 percent of
profits and capital are permitted. Foreign investors must register the
level of their investments with the Central Bank for statistical
purposes.
No prior authorization is required for technology contracts including
licensees or franchises. There is no limit on the amount of royalties
which may be remitted. All technology contracts be registered with the
Ministry of Industries.
There is no discrimination against foreign investors at the time the
investment is made. There are no longer limitations on foreign equity in
the financial sector, no prior authorization requirements for foreign
companies investing in public services, or discriminatory tax treatment
for foreign investors. Foreign investors may participate in government
financed research programs. Visa and residence requirements do not
inhibit foreign investment.
Although the 1993 Modernization of the State Law expanded the scope for
private sector participation, foreign investors, and often domestic
investors as well, still operate with limitations in certain sectors of
the economy:
Petroleum: All subsurface resources belong to the state. Foreign oil
companies previously engaged in exploration and development activities
under risk-service contracts with Petroecuador, the state oil company.
Under the 1993 Hydrocarbons Law, future investments in the oil sector
will be made using production-sharing contracts that give private
investors the right to share in finds. A second oil pipeline will be
built under a build-operate-transfer arrangement with a private
consortium. Private companies, including foreign ones, can now
participate in domestic fuel distribution, refining and transport
activities.
Mining: Under the 1991 Mining Law, the mining sector is fully open
to foreign investment, with individual concession arrangements to be
worked out with the Ministry of Energy and Mines. The Mining Law
prohibits foreign investors from obtaining mining rights in zones
adjacent to international boundaries, without permission of the
President and approval of the Armed Forces.
Fishing: The fishing law restricts foreign investment in domestic
fishing operations to 49 percent of equity, with exceptions permitted
with appeal to the National Fishery Development Council.
Electricity: Article 46 of the constitution reserves electric power
generation for the state, with delegation of activities to the private
sector on an exceptional basis. The current Electrification Law allows
INECEL, the state electric utility, to enter into service contracts with
private sector entities to provide such services. The largest
electricity distribution company, which serves the city of Guayaquil, is
in private hands, and the government is negotiating a long term power
purchase agreement with a private supplier. New electricity legislation
pending before Congress would open up the sector to more private sector
investment, including foreign, in power generation and distribution.
Telecommunications: Article 46 of the constitution also reserves
basic telecommunications for the state, but the Telecommunications Law
notes that private companies can be authorized to establish or exploit
telecommunications installations. Two private groups with foreign
participation were granted concessions in 1993 to develop cellular
telephone systems, while satellite, trunking, and paging services are
also in private hands. Congress is considering a telecommunications
bill to sell a minority stake in EMETEL, the state telephone company, to
a private management group, whether domestic or foreign.
Media: The 1995 Radio and Television Law limits foreign companies
from owning more than 25 percent equity in broadcast stations and
requires broadcast concession to be held by Ecuadorians.
Strategic Sectors: Article 46 of the Ecuadorian constitution
reserves for the public sector other "strategic enterprises" determined
by individual law. These are understood to include only national
security industries, in which the military often acts as a joint venture
partner with private industry.
Several industrial development laws providing tax incentives to invest
outside of Quito and Guayaquil expired at the end of 1994, and the
government does not intend to renew them. The Agrarian Development Law
provides a 50 percent income tax credit for investment in industrial
transformation of agricultural products outside Quito and Guayaquil.
A2. CONVERSION AND TRANSFER POLICIES
Foreign investors are free to remit 100 percent of net profits through
the free exchange market without restriction. They may also repatriate
the proceeds of liquidation of their investment through the free
exchange market. Foreign investors can use the free exchange market to
convert their inward investment flows. There is no rationing of foreign
exchange, as the exchange market operates through commercial banks at
freely determined rates.
There are no limitations on outflows of funds for profit remittances,
debt service, capital gains, returns on intellectual property, or
imported inputs.
A3. EXPROPRIATION AND COMPENSATION
Expropriation is provided for in Ecuadorian law with appropriate
compensation. In infrequent cases of expropriations, the individual has
the right to petition a judge to establish the appropriate price for
expropriated holdings. The Agrarian Development Law restricts the
grounds for expropriation of agricultural land and makes land case
subject to regular courts. The extent to which investors and lenders
receive prompt, adequate and effective compensation is largely related
to the particular judicial process underway. However, the treatment is
identical legally for both foreign and domestic investors. Under
Ecuador's bilateral investment treaty with the United States,
expropriation can only be carried out for a public purpose, in a
nondiscriminatory manner, and upon payment of prompt, adequate and
effective compensation.
A4. DISPUTE SETTLEMENT
A cumbersome legal system and complex land reform legislation can make
it somewhat difficult to enforce property and concession rights in the
agriculture and mining sectors. A number of foreign and local investors
have had agricultural land seized by squatter groups over the years. In
the past, squatter claims in the agriculture sector were often legally
recognized by agrarian reform authorities, with only minimal, if any,
compensation being paid. The current agrarian law makes legalization of
such seizures much more difficult and guarantees cash payment of the
market value of expropriated property. Some local and foreign mining
companies have had their concessions occupied by informal miners, who
have subsequently negotiated for a share of the respective concessions.
In the petroleum sector, a major U.S. investor has had to engage in
extensive tax, labor, and environmental disputes related to the closure
of its operations in Ecuador. Oil companies operating in Ecuador can
have difficulties resolving contract issues with the state oil company.
The new petroleum production sharing contract provides for binding
international arbitration.
There have been cases in which foreign company officials have been
prevented by the courts from leaving Ecuador due to pending claims
against the company. Ecuadorians involved in business disputes can
sometimes arrange for their opponents, including foreigners, to be
jailed pending resolution of the dispute.
Finally, a major U.S. investor in the electricity sector in Guayaquil
had his investment "intervened" by the government for four years, an
action which impeded the remittance of profits and which was not
provided for in the terms of the company's valid concession contract.
Although decisions of an arbitration panel, convened by the two parties,
were not implemented, the issue was resolved in 1993 when the U.S. owner
sold his shares to a group of non-U.S. investors. To date, the new
owners have been unable to negotiate a new contract with the government
or lift the intervention.
The new U.S.-Ecuadorian bilateral investment treaty provides for
international arbitration of future disputes at the investor's option.
Although Ecuador joined the International Center for the Settlement of
Investment Disputes (ICSID), congressional ratification may be necessary
to make that membership effective.
A5. PERFORMANCE REQUIREMENTS AND INCENTIVES
There are no performance requirements associated with foreign investment
in Ecuador. Nor are there any requirements that investors localize
equity ownership by transferring shares to Ecuadorians over time. Under
the 1993 investment regulations, any previous commitments under prior
Andean Pact decisions to localize ownership are no longer binding.
A6. RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
All foreign and domestic private entities can own business enterprises
and engage in almost all forms of business activity. Private entities
can compete freely with the public sector in most areas. While the
constitution still provides for a monopoly for the public sector in the
areas of telecommunications, electricity, and other "strategic" sectors,
it also provides that such rights may be derogated to the private sector
by subsequent legislation or executive decree. Foreign and private
firms enjoy equal access in bidding for purchase of state-owned firms or
long-term concession contracts.
A7. PROTECTION OF PROPERTY RIGHTS
For the most part, Ecuadorian law provides adequate protection for
property rights, but as noted above, it can be difficult to gain
effective protection via the legal system due in part to problems of
transparency.
Ecuador offers protection for intellectual property rights (IPR) under
Decisions 344, 345, and 351 under the Cartagena Accord of the Andean
Pact. Ecuador is also in the process of adhering to the intellectual
property provisions ("TRIPS") of the World Trade Organization. The
Ecuadorian Congress is considering ratification and implementing
legislation for a bilateral IPR agreement with the United States. The
agreement is based on the IPR provisions of the North American Free
Trade Agreement and would obligate Ecuador to provide the full range of
criminal and administrative relief to right holders. Ecuador has
ratified the Berne Convention for the Protection of Literary and
Artistic Works and the Geneva Phonogram Convention, but not the Paris
Convention for the Protection of Industrial Property. Ecuador has
observer status in the World Intellectual Property Organization (WIPO).
Patents: Decision 344 extends patent protection for 20 years from date
of filing. Patenting of pharmaceutical products is permitted except for
those products on the World Health Organization's list of essential
drugs. Compulsory licensing and working requirements for patents have
been made more limited. In infringement cases, the burden of proof lies
with the alleged infringer. Ecuador's implementing regulations to
Decision 344 provided limited pipeline protection for previously
unpatentable products.
Other Protections: Decision 344 provides protection for industrial
designs, except for those related to clothing, for eight year terms. It
also extends protection to industrial secrets and denomination of
origin. Semiconductor chip layouts are not specifically protected, but
it may be possible to register layouts under the Copyright Law or the
industrial designs provision of Decision 344. Decision 345 provides
protection for development of new plant varieties and biotechnology
products.
Trademarks: Trademark registration is permitted for renewable 10 year
periods. Registration may be cancelled if the mark is not used in the
Andean region for a period of three years. Decision 344 strengthens
protection for well-known trademarks. In the past such marks have on
occasion have been registered by individuals other than their legitimate
owners. Trademarks can be subject to compulsory licensing and a
trademark registration cannot be voluntarily surrendered without consent
of licensees.
Copyrights: Decision 351 supplements the 1976 Copyright Law providing
protection for printed and recorded works for the life of the author
plus 50 years. Computer programs are protected, albeit as a type of
work distinct from literary works. The Copyright Law has been changed
to cover software and satellite signals.
Registration and Enforcement: Patent and trademark registrations are
made with the National Directorate of Industrial Property (DNPI). The
Ministry of Education deals with copyright matters, while the
Superintendent of Telecommunications has jurisdiction over satellite
signals. Efforts to improve the efficiency of the DNPI have led to a
reduction in the backlog for registration of patents and trademarks. In
spite of a 1992 law increasing penalties for copyright infringement,
pirating of recorded material and software programs is common. The
National Police and the Customs Service are responsible for carrying our
IPR enforcement orders. It can be difficult to get court orders
enforced or to secure effective police action.
A8. REGULATORY SYSTEM: LAWS AND PROCEDURES
The regulatory system in Ecuador economy has not been specifically
geared toward fostering competition. There is a fair degree of
industrial concentration and no anti-trust laws. The Superintendent of
Banks regulates financial and insurance institutions, the Superintendent
of Telecommunications regulates broadcasters, while the Superintendent
of Companies regulates all other firms and, via the National Securities
Council, the stock markets.
A9. EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENTS
Ecuadorian capital markets are relatively underdeveloped. Most large
industrial groups are privately held, and are financed largely through
debt. Until recently, activity on the Guayaquil and Quito stock
exchanges was largely limited to trading in short term commercial paper,
bank obligations, and government debt, while most stock transactions
were conducted in the over-the-counter market. The 1993 Capital Markets
Law set up a modern regulatory structure, opened stock market trading to
banks and other firms, and encouraged the development of mutual funds.
The new law, together with sales of government-owned shares in a few
private companies and increasing interest in Ecuador on the part of
emerging market investment funds, has stimulated the development of
Ecuador's equity markets.
Trading volume of equities increased by 91 percent in dollar terms
during 1994 to reach USD 487 million. Most of the stock trades,
however, have involved shares in a handful of banks and companies, with
one corporate restructuring trade in December 1994 accounting for 36
percent of all equity trades for the year. Trading volume of public and
private sector debt instruments amounted to USD 309 million in 1994.
Although the Ecuadorian markets were relatively unaffected by the
Mexican financial crisis of late 1994, the border conflict with Peru
resulted in a fall in share prices and a drop in trading volume.
Additional sales of government holdings, public offerings by major
Ecuadorian firms, and privatization of the Social Security Institute
pension funds are needed to deepen the market.
Bank credit is generally allocated on market terms, though there is some
concentration of domestic credit toward the major economic groups.
Foreign investors are able to borrow competitively on the local market,
in either local currency or dollars. The private sector has access
primarily to short-term bank credit. Financial legislation provides for
the use of inflation-indexed "units of constant value" (UVC) as a means
of facilitating medium-term credit in an inflationary economy. Since
1990, the government has phased out virtually all subsidized credits.
International accounting firms audit the books of most major companies
in Ecuador, including large state-owned entities, under standards
established by the Superintendency of Companies.
A10. POLITICAL VIOLENCE
Ecuador is a functioning democracy that is almost entirely free of the
type of political violence that afflicts many of its neighbors.
Students, labor unions, and indigenous groups regularly stage protests
against government policies that can lead to confrontations with
security forces. The only active guerrilla organization, "Red Sun,"
surrendered to authorities in June 1994. Kidnapings by criminals are
becoming more of a problem. Land disputes can sometimes lead to
violence.
B. BILATERAL INVESTMENT AGREEMENTS
Ecuador has bilateral investment protection agreements in place with
Germany and Switzerland. A bilateral investment treaty signed with the
United States in 1993 guarantees national treatment, unrestricted
remittances and transfers, prompt, adequate and effective compensation
for expropriations, and international arbitration of disputes. The
Ecuadorian Congress ratified the treaty in September 1994 and
implementation is pending an exchange of instruments of ratification.
Similar agreements have been signed with the United Kingdom, China,
Argentina, Chile, Paraguay, and El Salvador. The Ministry of Foreign
Affairs has also completed negotiations for investment agreements with
Spain and France. Negotiations are underway or have been proposed with
Japan, South Korea, Taiwan, Malaysia, Colombia, Peru, Bolivia, Panama,
Costa Rica, Netherlands, Norway, Poland, Romania, Russia, the Czech
Republic, and Canada.
C. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
Ecuador has had an updated investment guarantee agreement with the
Overseas Private Investment Corporation (OPIC) since 1986. Ecuador has
signed and ratified the Multilateral Investment Guarantee Agreement
(MIGA).
D. LABOR
Ecuador's population will reach 11.5 million in 1995. About half live
in urban areas and only 1 million hold formal sector jobs, while 40
percent of the urban population works in the informal sector. A quarter
of the total population are members of rural indigenous communities.
The literacy rate in Spanish is 86 percent. Workers with artisan skills
are relatively abundant at low wages. Minimum compensation levels are
set by the Ministry of Labor according to job and industry and can be
adjusted by Congress. The minimum compensation package averaged USD 134
per month during the first half of 1995.
A weak public university system produces a surplus of semi-qualified
graduates in the professions. Trained financial professionals and
engineers can be difficult to attract and tend to require additional
training to reach international standards. There have been relatively
few high technology investments in Ecuador, though some foreign firms
are conducting agricultural research here. There is little post-
graduate education in Ecuador, and scientists are nearly all foreign-
trained. Upper level Ecuadorian managers have frequently been educated
abroad, most often in the United States. Private sector professional
salaries have been rising in dollar terms in recent years, while
government employees have seen their pay substantially eroded by
inflation.
Cumbersome regulations of the Ministry of Labor apply equally to both
foreign and domestic firms and tend to inhibit investment. The labor
code provides for a 40 hour work week, 15 calendar days of annual paid
vacation, restrictions on child labor, general protections of worker
health and safety, minimum wages and bonuses, maternity leaves and
employer-provided benefits. Companies must distribute at least 15
percent of pre-tax profits to their employees. Some employers rely on
short-term contracts since job tenure rules make it difficult to lay-off
permanent workers.
Labor-management relations are generally adequate. Most workers in the
private and parastatal sectors enjoy the constitutional right to form
trade unions and local law allows for unionization of any company with
more than 30 employees. Less than 10 percent of the urban workforce,
mostly skilled workers in medium to large sized private or state
industries, are officially organized. Private employers are required to
engage in collective bargaining with recognized unions. The labor code
provides for resolution of conflicts through a tripartite arbitration
and conciliation board process. The code also prohibits discrimination
against unions and requires that employers provide space for union
activities.
Except for public servants and workers in some parastatals, workers by
law have the right to strike. Legally striking employees are entitled
to full pay and benefits and may occupy the premises under police
protection, although there are restrictions on solidarity strikes. Most
public sector employees are technically prevented from joining unions,
but most are members of a labor organization and illegal strikes by
public employees are tolerated. Although trade union political
influence has declined in recent years, the Unified Workers Front (FUT)
and other labor groups occasionally attempt to stage national strikes to
protest the modernization process and economic adjustment measures. In
1994 there were no strikes or serious labor problems in any U.S.
subsidiary.
E. FOREIGN TRADE ZONES AND FREE PORTS
Ecuador passed a foreign trade zone law in 1991, which exempts foreign
investments in such zones from any current or future restrictions on
capital repatriations. A foreign trade zone has been legally
constituted in Esmeraldas. A maquila (in-bond processing) law has been
in effect since 1990, but only a few firms in the textile and fish
processing sectors make use of it.
F. CAPITAL OUTFLOW POLICY
Ecuadorians are free to export capital through the free market, and
there are substantial Ecuadorian financial holdings in the United States
and offshore banking centers. A number of Ecuadorian banks have
investments in banks in the U.S. There are no incentives for outward
investment, and no export credit arrangements.
G. FOREIGN DIRECT INVESTMENT STATISTICS
New foreign investment in Ecuador has been concentrated in the
oil sector. Oil exploration produced an increase in the flow of
investment into Ecuador in the late 1980's and the development of oil
finds over the past two years has increased foreign investment inflow
from 1.5 percent of GDP in 1992 to 3.2 percent of GDP in 1994. Direct
foreign investment outside the oil sector have been increasing in recent
years, but remain extremely modest. Registered non-oil investment
inflows only amounted to USD 98 million or 0.6 percent of GDP in 1994.
Over half of registered investments came from "off-shore" locations such
as Panama and the Bahamas and include movements of Ecuadorian-owned
capital that would not normally be considered DFI. The United States
and Switzerland are major sources of capital. In addition to the oil
sector, U.S. and other foreign investors have focused on financial
services, food processing, the chemical and pharmaceutical industries,
and machinery and vehicle manufacturing. Growth in foreign investment
is necessary to finance future current account balance of payment
deficits and is a key goal of the Ecuadorian government's modernization
program. Unfortunately, the recent conflict with Peru has probably
setback investment growth in 1995.
Table: Annual Direct Foreign Investment Flows (Millions of USD)
----------------------------------------------------------------
Sector/Country 1990 1991 1992 1993 1994
----------------------------------------------------------------
Total Inflows 1/ 126 160 178 469 531
Oil 44 75 83 354 -
Non-oil 82 85 95 115 -
Registered Inflows 2/ 60.3 54.9 48.0 91.1 98.3
Agriculture 4.6 2.5 5.3 8.0 4.1
Mining 1.9 0.1 0.6 0.5 0.3
Food Processing 9.4 14.8 8.2 15.9 19.8
Textiles 0.7 1.5 0.4 2.0 4.9
Wood Products 0.4 0.4 1.0 1.1 0.4
Paper Products 3.6 0.7 1.3 0.1 2.3
Chemical/Pharm. 14.4 10.9 8.9 16.9 18.7
Mineral Products 5.9 2.8 4.2 12.8 6.2
Metal Industry 1.2 0.3 0.7 2.4 1.6
Machinery 4.3 4.3 1.6 8.1 7.6
Electricity/Water 0.0 0.3 0.0 0.0 0.0
Construction 0.5 0.2 0.0 0.4 0.0
Commerce 3.2 6.2 5.0 7.3 3.7
Transport/Comm. 0.5 0.7 1.7 1.0 1.3
Financial Services 9.3 8.5 8.9 14.5 26.2
Social Services 0.1 0.8 0.1 0.0 0.7
Registered Inflows 2/ 60.3 54.9 48.0 91.1 98.3
Off-Shore 3/ 20.3 18.3 20.6 34.2 51.7
United States 13.3 10.4 9.1 10.3 20.4
Switzerland 4.4 5.6 3.2 19.7 11.8
Germany 3.7 3.1 1.5 5.0 1.4
Netherlands 1.2 3.4 2.0 4.3 2.6
Britain 4.7 7.1 2.6 2.4 2.2
Canada 1.6 1.3 1.5 1.1 1.4
Venezuela 2.0 1.3 3.4 2.0 0.0
Colombia 0.8 0.9 0.8 1.2 1.7
---------------------------------------------------------------
Notes:
1/ Central Bank balance of payments estimates of investment flow.
There are no statistics available on investment stocks.
2/ Non-oil investments registered with the Central Bank. Only
constitute 50-85 percent of total non-oil investment inflow.
3/ Includes Panama, Bahamas, Bermuda, Cayman Is., Virgin Is.,
Aruba, Netherlands Antilles, Guernsey, and Liechtenstein.
H. MAJOR FOREIGN INVESTORS
The largest foreign investors in Ecuador are petroleum companies engaged
in exploration and production in the Amazon basin, including Maxus
Energy Consortium, Occidental Energy Corporation, ARCO, and Oryx Energy
from the U.S. and Elf Aquitaine from France. There are also several
U.S. oil services firms active in Ecuador. AGIP (Italy) markets
liquified petroleum gas (LPG). Odin Mining (Australia), Newmont Gold
Corp. (U.S.), Gold Fields (South Africa), and RTZ (U.K.) have
investments in the mining sector. Morton (U.S.) produces salt with a
local partner.
American firms active in the manufacturing sector include General
Motors, which holds a minority interest in two automobile assembly
plants, Owens-Illinois (glass containers), Phelps Dodge (copper and
aluminum conductors), Philip Morris (cigarettes), Borden (chemicals),
Texaco (lubricants and steel containers), Eveready Battery (batteries),
and Fuller (paints). General Tire (U.S./Germany) manufactures tires,
Holderbank (Switzerland) produces cement, Akzo (Netherlands) makes
fibers and textiles, and Eternit (Switzerland) fabricates construction
materials.
There are several American companies manufacturing pharmaceuticals in
Ecuador, including Schering Plough, Bristol Myers Squibb, Merck, Upjohn,
American Cyanamid, McKesson, Whitehall, and Sterling Wynthrop. U.S.
firms Colgate Palmolive, Dial and Johnsonwax produce manufacture
toiletries and cleaning products. Grupo Santodomingo (Colombia) owns
the major breweries. Nestle (Switzerland) and Nabisco (U.S.) are
leading food product manufacturers, while a number of other foreign
firms have invested in processing facilities for non-traditional
vegetables and fruits. Continental Grain (U.S.) mills flour and, along
with several other U.S. firms, is a major investor in shrimp farming.
Standard Fruit/Dole (U.S.) is involved in banana marketing. Mobil
(U.S.), Texaco (U.S.) and Shell (U.K.) are investing in wholesale
gasoline distribution. Citibank (U.S.), Lloyd's Bank (U.K.), and
Algemene Bank (Netherlands) have commercial banking operations in
Ecuador.
CHAPTER VIII: TRADE AND PROJECT FINANCING
A. BANKING SYSTEM
The state financial system consists of the Monetary Board which
supervises government monetary, financial, and exchange policies; the
autonomous Central Bank (BCE) which issues currency and manages interest
and exchange rates; the Bank of the State (BEDE) which manages municipal
and provincial project financing; the National Development Bank (BNF)
which provides agricultural credit; the Ecuadorian Housing Bank (BEV);
and the National Finance Corporation (CFN) which finances private sector
development projects. The Superintendency of Banks regulates private
banking, financial and insurance firms. The Superintendency of
Companies regulates private corporations and implements decisions of the
National Securities Council regarding capital markets.
There are 35 private banks operating in Ecuador with combined assets of
over USD 8.2 billion as of the end of 1994, a considerable number of the
size of the economy. The four largest banks by assets plus contingents
are Filanbanco (USD 1,368 million), Banco del Pacifico (USD 1,159
million), Banco de Pichincha (USD 781 million), and Banco Continental
(USD 626 million). There are also 74 financial companies (many of which
are bank subsidiaries or are in the process of becoming banks) with
assets of USD 1.3 billion, plus numerous savings cooperatives and
foreign exchange brokers. Most banks and finance companies are tied to
family business groups which have been reluctant to give up control
through mergers. Large interest rate spreads (averaging 11 points for
90-day terms during 1994) and cost-cutting have allowed banks to
continue to be profitable.
The 1994 Financial Institutions Law created a deregulated universal
banking system. Finance companies may engage in the same operations as
banks, except for taking demand and savings deposits and making loans on
current accounts, but may invest in non-financial enterprises. Banks
may engage in transactions in any currency. The law also institutes
full consolidated financial disclosure requirements and requires early
intervention by an upgraded Superintendency of Banks in the event of
solvency problems. New banks are required to have a capital stock
(technical equity) of about USD 6 million (existing banks must meet this
requirement by 2002). Banks must maintain a 9 percent ratio of
technical equity to weighted assets plus contingents. The reserve
requirement has been unified at 10 percent for all deposits. There is
no deposit insurance, but small depositors become senior creditors in
the event of liquidation.
B. FOREIGN EXCHANGE CONTROLS
Foreign currency is readily available on the free market and there are
no restrictions on the movement of foreign currencies into or out of
Ecuador. Ecuador enjoys a floating market in foreign exchange for all
private sector transactions. There are no fixed intervention rates, but
the Central Bank has announced monthly exchange rate targets through the
end of 1995 that should result in a devaluation for the year of about 17
percent. The former dual exchange system was abolished in 1992 and
private sector exporters are no longer required to surrender foreign
exchange to the Central Bank. Public sector exchange transactions, such
those resulting from exports by the state oil company, are still handled
by the Central Bank, but the spread has been reduced approximately 2
percent.
C. GENERAL FINANCING AVAILABILITY
Financing is a key ingredient in selling to the government and to the
private sector. Local banks offer sucre financing, albeit at high
nominal rates. Dollar financing is also available locally. Commercial
banks serve as primary outlets for financing backed by government
institutions. In particular, the CFN offers long term financing via
private banks for industrial and export development. The Quito and
Guayaquil stock markets have recently developed into forums through
which capital can be raised by offering corporate paper and equity
shares to the public.
D. HOW TO FINANCE EXPORTS/METHODS OF PAYMENT
All private sector imports into Ecuador involve foreign exchange
purchases on the free market. Typical terms of sale are confirmed
letters of credit. Sixty percent of the letters of credit opened are at
90 days sight; the rest are at sight.
E. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE
In addition to normal trade financing available from U.S. and Ecuadorian
private banks, the U.S. Export-Import Bank currently offers loan
guarantees and direct long-term financing of U.S. exports to the
Ecuadorian private sector and provides medium-term (5-7 years) financing
for public sector purchases. Trade financing is also available through
the Andean Financial Corporation (CAF), albeit at rates higher than
those offered by Exim Bank. Exim Bank offers export insurance programs.
F. PROJECT FINANCING
The World Bank and Interamerican Development Bank have recently moved
forward with a number of multimillion dollar sectoral loans to Ecuador.
The CAF and the CFN are potential sources for project financing. Under
a 1984 agreement, the Overseas Private Investment Corporation (OPIC)
offers investment risk insurance and limited financing for projects with
U.S. equity. The World Bank's International Finance Corporation (IFC)
is another source of development capital. The U.S. Trade and
Development Agency (TDA) can finance project studies. The U.S. Agency
for International Development (USAID) is not involved in project
financing in Ecuador.
G. CORRESPONDENTS WITH U.S. BANKS
Most Ecuadorian banks maintain correspondent relationships with U.S.
banks. Among the major Ecuadorian banks engaging in international
business are Banco de Pacifico, Filanbanco, Banco del Progreso and Banco
Continental based in Guayaquil and Quito-based Banco de Pichincha and
Banco Popular. In addition, Citibank, Lloyd's Bank, and Holland Union
Bank (BHU) operate branch offices in Ecuador. Several Ecuadorian banks,
including Pacifico, Pichincha, and Popular, have subsidiaries or
agencies in the U.S., while others, such as Filanbanco and Continental,
share common Ecuadorian ownership with banks in located in the U.S.
Some Ecuadorian banks have recently purchased shares in other banks in
the Andean Region.
CHAPTER IX: BUSINESS TRAVEL
A. BUSINESS CUSTOMS
Business customs in Ecuador are similar to those in other Latin American
countries. Ecuadorians are formal when engaged in business relations.
Suits and ties are the norm. Business meetings are conducted in offices
or restaurants, the latter often used in order to get better acquainted
with a potential working partner. Meetings normally start somewhat
after the appointed time. Americans should be punctual. Normal office
hours are 9:00 to 1:00 p.m. and 3:00 to 6:00 p.m. Small talk usually
proceeds discussion of business.
With regard to social courtesies, Ecuadorians are very polite and well
mannered. Superiors are treated in a friendly but respectful way, and
the use of a title (such as doctor, economist or engineer) before the
name is common. Business is conducted in Spanish. Efforts by Americans
to speak Spanish are appreciated. Interpreters are available for
Americans who do not speak Spanish. For invitations to Ecuadorian's
homes, a gift such as flowers is appreciated.
B. TRAVEL ADVISORY AND VISAS
Ecuador is a stable country and has a developing economy. Facilities
for tourism are adequate but vary in quality. Terrorism is not a
concern. Widespread civil disorder is rare, but demonstrations are
common and often degenerate into rock throwing, looting and other random
violence. The most frequent reports of crimes committed against
tourists are robberies and assaults. Thieves are often armed with guns
or knives. Tourists in the resort areas along the coast and in the
cities of Quito and Guayaquil should be especially vigilant around
tourist sites. In Quito, tourists should take special care in the
historic center of the city at the famous landmark known as El Panecillo
and in the public parks. In Guayaquil, tourist areas of particular
concern are historic Las Penas neighborhood and the waterfront promenade
known as El Malecon. Medical care is available but varies in quality.
Doctors and hospitals often expect immediate cash payment for health
services. U.S. medical insurance is not always valid outside the United
States. For additional health information travelers can contact the
Centers for Disease Control's international travelers' hotline (404)
332-4559. Hotel accommodations in the major cities for business
visitors are excellent.
Maritime safety standards on some tour vessels to the Galapagos Islands
are deficient. Travelers have found it useful to verify the credentials
of tour vessels in advance. U.S. citizens have been victims of legal
harassment by business associates. Under a provision of Ecuadorian law
a business dispute that normally would be handled by civil litigation in
the U.S. may be converted into a criminal proceeding. This provision of
law has been used to impose travel prohibitions against resident
Americans and also has led to the arrest of U.S. business people.
A passport and a return/onward ticket are required for a 90-day stay in
Ecuador. Travelers without a visa cannot extend this stay beyond 90
days. For current information concerning entry and customs requirements
for Ecuador, travelers can contact the Ecuadorian Embassy at 2535 15th
Street NW, Washington D.C. 20009, tel (202) 234-7200 or the Ecuadorian
Consulates in Los Angeles, San Diego, San Francisco, Miami, Chicago, New
Orleans, Newark, New York and Houston.
U.S. citizens are subject to the laws of the country in which they are
traveling. Penalties in Ecuador for possession, use and trafficking in
illegal drugs are strict and offenders can expect prolonged pretrial
detention without bail, lengthy jail sentences and fines.
Americans can register and obtain updated information on travel and
security within Ecuador at either the U.S. Embassy in Quito or the U.S.
Consulate General in Guayaquil. The Embassy in Quito is at the corner
of Avenida 12 de Octubre and Avenida Patria (across from the Casa de la
Cultura), telephone (593-2-)562-890/561-749. The Consulate General in
Guayaquil is at 9 de Octubre and Garcia Moreno (near the Hotel Oro
Verde), telephone (593-4) 323-570/327-893. The Consulate General in
Guayaquil has jurisdiction over the Galapagos Islands.
C. HOLIDAYS
Ecuador will celebrate the following holidays during 1995-1996:
National Independence Day August 10
Independence of Guayaquil October 9 (Guayaquil only)
All Souls Day November 2
Independence of Cuenca November 3
Founding of Quito December 6 (Quito only)
Christmas December 25
New Years Day January 1
Carnival February 19-20
Good Friday April 5
Labor Day May 1
Battle of Pichincha May 24
Founding of Guayaquil July 25 (Guayaquil only)
D. BUSINESS INFRASTRUCTURE
There are frequent half hour flights between Quito and Guayaquil (travel
by road between those cities requires 7-8 hours) and less frequent
flights to other main cities. Highways are almost all two lane and can
be hazardous. Driving at night is not recommended. There is a high
incidence of traffic accidents in Ecuador, frequently involving buses.
Bus travel throughout Ecuador can be particularly dangerous, especially
at night, because of the frequency of crime perpetrated against bus
travelers. The loss or theft of a U.S. passport should be reported
immediately to the local police and to the U.S. Embassy or Consulate
General. Useful information on guarding valuables and protecting
personal security while traveling abroad is provided in the Department
of State pamphlet "A Safe Trip Abroad." It is available from the
Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402. Also available from the same address is the
Department of State publication, "Tips for Travelers to Central and
South America".
Spanish is the official language and the norm for both spoken and
written business communications. However, English is often spoken by
the business elite. Telephone service within the country is poor, but
international connections are good, although expensive. There are
cellular telephone services now available in a large portion of the
country. Comfortable modern housing is readily available in Quito and
Guayaquil. Apartments and town houses are more commonly used by
foreigners than free standing houses. There are numerous health hazards
in Ecuador, principally caused by contaminated water and food.
Gastrointestinal problems are frequent. Cholera is present in some
parts of Ecuador. Visitors who follow proper precautions about food and
drink are not usually at risk. Malaria and dengue fever are on the
increase in the coastal area and in the Oriente region. There have been
cases of rabies in Guayaquil and cases of diphtheria in Quito. All
types of food are readily available, but proper preparation is
essential. There is a wide variety of excellent restaurants in the
main cities.
CHAPTER X: APPENDICES
APPENDIX A: Country Data
Population (1995 est.): 11.5 million
Population Growth: 2.2 percent
Religions: Roman Catholic, Protestant
Government: Constitutional Democracy
Languages: Spanish, Quichua
Work Week: Monday-Friday
APPENDIX B: Domestic Economy 1/
1993 1994 2/ 1995 2/ 1996 2/
GDP 3/ 14,311 16,555 18,006 19,134
GDP Real Growth (%) 2.0 4.0 3.0 4.5
GDP Per Capita (US$) 3/ 1,303 1,475 1,570 1,635
Gov. Spending/GDP (%) 4/ 26.5 24.4 27.0 26.0
Public Deficit/GDP (%) 4/ (0.4) 0.4 (1.0) 0.0
Inflation (%) 5/ 31.0 25.4 22.0 15.0
Unemployment (%) 6/ 8.3 7.1 7.5 7.0
Foreign Reserves (year-end) 1,254 1,712 1,812 1,922
Ave. Exch. Rate (Sucres/USD) 1918 2197 2562 2866
Debt Service Ratio (%) 7/ 57.3 69.3 80.0 60.0
Current Account/GDP (%) (4.8) (4.8) (4.1) (4.5)
U.S. Bilateral Assistance 8/ 18.0 16.6 12.7 22.9
APPENDIX C: Trade 9/
1993 1994 2/ 1995 2/ 1996 2/
Merchandise Exports (FOB) 3,062 3,717 4,138 4,500
To U.S. 1,410 1,576 1,755 1,860
Merchandise Imports (FOB) 2,474 3,272 3,672 4,090
Merchandise Imports (CIF) 2,562 3,642 3,940 4,390
From U.S. 824 922 1,000 1,110
Manufactured Imports (CIF) 2,160 3,194 3,455 3,850
From U.S. 707 841 910 1,010
Agricultural Imports (CIF) 128 141 180 200
From U.S. 67 27 40 40
Balance of Payments: 472 458 100 110
Current Account (682) (797) (737) (860)
Trade Account (FOB) 588 445 466 410
Services Account (1,400) (1,387) (1,335) (1,400)
Transfers 130 145 132 130
Capital Account 47 388 837 970
Debt Arrears 1,107 867 0 0
APPENDIX D: Investment 10/
1993 1994 2/ 1995 2/ 1996 2/
Foreign Direct Investment 469 531 590 720
FDI Flow/GDP (%) 3.3 3.2 3.3 3.8
Notes to Appendices A-D
1/ Unless otherwise indicated, all data are from the Central Bank of
Ecuador (BCE), converted to millions of U.S. dollars at the average
annual free market exchange rate.
2/ Data is provisional for 1994. Data for 1995 and 1996 is projected
by U.S. Embassy based on BCE and other public sources.
3/ Due to real exchange rate fluctuations, GDP in dollar terms can be
misleading.
4/ Consolidated public sector expenditures and surplus or deficit
(including quasi-fiscal Central Bank losses) as a percent of GDP.
5/ December-to-December percentage change in the National Statistics
and Census Institute (INEC) urban consumer price index.
6/ Urban formal sector unemployment based on November National
Employment Institute (INEM) surveys. Measured urban formal sector
underemployment averages 7 percent. Urban informal sector employment
stands at 41 percent.
7/ Scheduled amortization and interest payments, including arrears, as
percentage of total exports of goods and services.
8/ U.S. economic and military assistance, including Peace Corps,
obligated by fiscal year. FY 1996 appropriation is likely to be below
requested level.
9/ BCE trade data varies from U.S. Department of Commerce data. Exports
reported on FOB basis; imports on CIF basis. Manufactured goods include
HS Chapters 28-40, 42, 46, and 48-97 less 71. Agricultural goods
include HS Chapters 1-24, including processed foods. Not included are
minerals, wood, and hides/leather. The Trade Account includes balance
of payments adjustments to FOB imports.
10/ Total direct foreign investment flows from BCE balance of payments
statistics, revised to include oil sector investments. See detailed
table in Section VII-G for sector and country of origin data.
APPENDIX E: U.S. and Country Contacts
COUNTRY GOVERNMENT AGENCIES AND CORPORATIONS
Ministerio de Industrias, Comercio, Integracion y Pesca (MICIP)
Av. Amazonas y Eloy Alfaro, Quito, Ecuador
Tel: 593-2-527-988, Fax: 593-2-504-922
(Ministry of Industry, Commerce, Integration and Fishing)
Ministerio de Agricultura y Ganaderia (MAG)
Av. Amazonas y Eloy Alfaro, Quito, Ecuador
Tel: 593-2-554-122, 504-433; Fax: 593-2-564-531
(Ministry of Agriculture and Livestock)
Ministerio de Defensa Nacional
Exposicion 208, Quito, Ecuador
Tel: 593-2-510-975, 512-803; Fax: 593-2-580-431
(Ministry of National Defense)
Ministerio de Obras Publicas (MOP)
Orellana y Juan Leon Mera, esquina, Quito, Ecuador
Tel: 593-2-222-749, 222-750; Fax: 593-2-223-077, 223-076
(Ministry of Public Works)
Ministerio de Salud Publica
Juan Larrea 444 entre Checa y Riofrio, Quito, Ecuador
Tel: 593-2-521-411, 541-383; Fax: 593-2-569-786, 521-811
(Ministry of Public Health)
Consejo Nacional de Modernizacion del Estado (CONAM)
Patria y Juan Leon Mera, Edif. CFN, 9no Piso, Quito, Ecuador
Tel: 593-2-509-432; Fax: 593-2-509-437
(National State Modernization Council)
Banco Central del Ecuador (BCE)
10 de Agosto y Briceno, Quito, Ecuador
Tel: 593-2-583-061; Fax: 593-2-570-016
(Central Bank of Ecuador)
Superintendent de Companias
Roca 660 y Av. Amazonas, Quito, Ecuador
Tel: 593-2-549-573, 541-606; Fax: 593-2-566-685
(Superintendent of Companies)
Direccion General de Aviacion Civil (DAC)
Buenos Aires 149 y 10 de Agosto, Quito, Ecuador
Tel: 593-2-552-188; Fax: 593-2-563-995
(General Directorate of Civil Aviation)
Empresa Municipal de Agua Potable (EMAP)
Av. Mariana de Jesus e Italia, Quito, Ecuador
Tel: 593-2-501-225, 501-226, 501-227; Fax: 593-2-501-388
(Municipal Potable Water Company)
Instituto Ecuatoriano de Obras Sanitarias (IEOS)
Toledo 684 y Lerida, Quito, Ecuador
Tel: 593-2-544-400, 560-340; Fax: 593-2-560-338, 502-828
(Ecuadorian Institute of Sanitary Works)
Instituto Ecuatoriano de Seguridad Social (IESS)
9 de Octubre y Jorge Washington esq., Quito, Ecuador
Tel: 593-2-568-046, 568-055; Fax: 593-2-568-058
(Social Security Institute)
Petroecuador
Alpallana y Av. 6 de Diciembre, Quito, Ecuador
Tel: 593-2-563-060, 560-525; Fax: 593-2-567-031
(Ecuadorian Petroleum Company)
Empresa Estatal de Telecomunicaciones (EMETEL)
Av. 6 de Diciembre y Colon, Edf. Partenon, Quito, Ecuador
Tel: 593-2-568-588; Fax: 593-2-568-000
(Ecuadorian Telecommunications Institute)
Instituto Ecuatoriano de Electrificacion (INECEL)
Av. 6 de Diciembre 2427 y Orellana, Quito, Ecuador
Tel: 593-2-221-083, 221-123; Fax: 593-2-503-762
(Ecuadorian Electrification Institute)
Subsecretaria de Aduanas
Ministerio de Finanzas y Credito Publico
Blvd. 9 de Octubre 200 y Pichincha, Guayaquil, Ecuador
Tel: 593-4-565-100, 561-637; Fax: 593-4-561-197
(Customs Under Secretary)
Autoridad Portuaria de Guayaquil
Puerto Maritimo, Guayaquil, Ecuador
Tel: 593-4-480-459, 485-076, 480-360; Fax: 593-4-483-748
(Port Authority of Guayaquil)
Autoridad Portuaria de Puerto Bolivar
Puerto Bolivar, Ecuador
Tel: 593-7-923-840, 920-864; Fax: 593-7-920-864
(Port Authority of Puerto Bolivar)
Comision de Estudios para el Desarrollo de la Cuenca del
Rio Guayas (CEDEGE)
Malecon 106 y Loja, Guayaquil, Ecuador
Tel: 593-4-300-384, 308-247, 308-531; Fax: 593-4-563-700
(Study Commission of the Rio Guayas Basin)
Centro de Reconversion Economica del Azuay, Canar y
Morona Santiago (CREA)
Av. Mexico entre Unidad Nacional y las Americas
P.O. Box 4933, Cuenca, Ecuador
Tel: 593-7-817-500, 816-212; Fax: 593-7-817-134
(Center for the Economic Development of Azuay, Canar y Morona Santiago)
Centro de Rehabilitacion de Manabi (CRM)
18 de Octubre y Sucre, Portoviejo, Ecuador
Tel: 593-5-651-892, 651-979, 651-894
(Center for the Development of Manabi)
Key contact names are not provided as they are subject to constant
change.
COUNTRY BUSINESS CHAMBERS
Quito
Camara de Industriales de Pichincha
Av. Republica y Amazonas, Edf. de las Camaras, Piso 11, Quito, Ecuador
Tel: 593-2-452-500, 452-730; Fax: 593-2-448-118
Executive President: Ing. Gustavo Pinto
Board President: Roberto Pena Durini
(Chamber of Industries of Pichincha)
Camara de Comercio de Quito
Av. Republica y Amazonas, Edf. de las Camaras, Pisos 5 y 6, Quito,
Ecuador
Tel: 593-2-443-787, 435-844; Fax: 593-2-435-862
President: Andres Perez
(Chamber of Commerce of Quito)
Camara de Comercio Ecuatoriano-Americana
Av. 6 de Diciembre y La Nina, Edf. Multicentro, Piso 4, Quito, Ecuador
Tel: 593-2-507-450, 507-451, 507-459; Fax: 593-2-504-571
President: Ing. Hernan Burbano de Lara
Executive Director: Roque Mino
(Ecuadorian-American Chamber of Commerce)
Camara de Pequenos Industriales de Pichincha
Av. Amazonas y Atahualpa, Centro de Exposiciones, Piso 2, Quito, Ecuador
Tel: 593-2-248-954, 451-621; Fax: 593-2-443-742
President: Ing. Manuel Nieto
(Chamber of Small Industries of Pichincha)
Camara de Mineria del Ecuador
Av. Republica del Salvador 525, Quito, Ecuador
Tel: 593-2-437-786; Fax: 593-2-462-939
President: Ing. Diego Benalcazar
(Chamber of Mines of Ecuador)
Camara de Agricultura de la I Zona
Av. Amazonas 1429 y Colon, Quito, Ecuador
Tel: 593-2-230-195; Fax: 593-2-561-348
President: Alberto Enriquez
(Chamber of Agriculture)
Camara de la Construccion
Juan Pablo Sanz y Calle Inaquito, Quito, Ecuador
Tel: 593-2-432-369, 432-370, 432-773; Fax: 593-2-431-686
President: Ing. Ernesto Martinez
(Chamber of Construction)
Guayaquil
Camara de Industrias de Guayaquil
Blvd. 9 de Octubre 910 y Rumichaca, Guayaquil, Ecuador
Tel: 593-4-562-705; Fax: 593-4-320-924
President: Ing. Alberto Maspons Guzman
(Chamber of Industries of Guayas)
Camara de Comercio de Guayaquil
Av. Olmedo 414 y Boyaca, Guayaquil, Ecuador
Tel: 593-4-323-130; Fax: 593-4-323-478
President: Ing. Luis Trujillo Bustamante
(Chamber of Commerce of Guayaquil)
Camara Ecuatoriano-Americana de Comercio, Guayaquil
Gral. Cordova 812 y V.M. Rendon, Edf. Torres de la Merced, piso 3
Guayaquil, Ecuador
Tel: 593-4-563-177, 563-201, 563-305, 566-481; Fax: 593-4-563-259
President: Norberto Nurenberg
Executive Director: Dra. Maria Teresa Perez
(Ecuadorian-American Chamber of Commerce)
Camara de la Pequena Industria del Guayas
Av. de las Americas 128, frente al Aeropuerto, Guayaquil, Ecuador
Tel: 593-4-281-532, 281-525, 281-526; Fax: 593-4-280-059
President: Ing. Joyce Higgins de Ginatta
(Chamber of Small Industries of Guayas)
Camara de la Construccion Guayaquil
Ciudadela Bolivariana, Centro Com., Bl. No. 6, Guayaquil, Ecuador
Tel: 593-4-281-959, 288-467; Fax: 593-4-285-345
President: Ing. Rodrigo Andrade Rodriguez
(Chamber of the Construction of Guayaquil)
Camara de Agricultura de la II Zona
Escobedo 1210 y Blvd. 9 de Octubre, Piso 2, Guayaquil, Ecuador
Tel: 593-4-322-120, 523-013; Fax: 593-4-322-120
President: Carlos Zevallos Ampuero
(Chamber of Agriculture of the II Zone)
Cuenca
Camara de Comercio de Cuenca
Avs. Federico Malo 1-90 y 12 de Abril, Edf. de las Camaras, Piso 1
Cuenca, Ecuador
Tel: 593-7-827-531, 823-008, 819-303; Fax: 593-7-833-891
President: Enrique Mora Toral
(Chamber of Commerce of Cuenca)
Camara de Industrias de Cuenca
Avs. Federico Malo 1-90 y 12 de Abril, Edf. de las Camaras, Piso 2
Cuenca, Ecuador
Tel: 593-7-830-845, 817-207, 817-212; Fax: 593-7-830-945
President: Ing. Frank Tosi Iniguez
(Chamber of Industries of Cuenca)
Camara de Comercio Ecuatoriano-Americana, Seccional Cuenca
Av. Octavio Chacon 155, Centro Comercial del Parque Industrial,
Piso 2, Of. 302, Cuenca, Ecuador
Tel: 593-7-863-365, 861-873; Fax: 593-7-806-512
President: Eduardo Malo Abad
(Ecuadorian-American Chamber of Commerce)
Camara de la Pequena Industria del Azuay
Av. Octavio Chacon, Centro Comercial del Parque Industrial, Cuenca,
Ecuador
Tel: 593-7-800-949, 861-578; Fax: 593-7-809-553
President: Ing. Fernando Bermeo Coronel
(Chamber of Small Industries of Azuay)
Ambato
Camara de Comercio
Montalvo 630, Ambato, Ecuador
Tel: 593-3-841-906, 829-372; Fax: 593-3-841-906
President: Lic. Patricio Mosquera G.
(Chamber of Commerce)
Camara de Industrias de Tungurahua
Montalvo No. 630, Ambato, Ecuador
Tel: 593-3-820-003; Fax: 593-3-829-655
President: Carlos Erazo Sanchez
Executive Director: Ing. Luis Salcedo Lucio
(Chamber of Industries of Ambato)
Camara de Comercio Ecuatoriano-Americana
Av. Cevallos y Montalvo, Piso 3, Of. 301, Ambato, Ecuador
Tel: 593-3-821-073; Fax: 593-3-821-073
President: Arq. Fernando Callejas
Executive Director: Lcdo. Vicente Villafuerte Vasco
(Ecuadorian-American Chamber of Commerce)
Camara de la Pequena Industria de Tungurahua
Rocafuerte y Castillo, Casilla 486, Ambato, Ecuador
Tel: 593-3-822-493; Fax: 593-3-829-370
President: Econ. Victor Hugo Moya
(Chamber of Small Industries of Tungurahua)
Manta
Camara Ecuatoriano-Americana de Comercio, Manta
Avenida 2 entre 13 y 12, Bco. del Pichincha, Piso 3, Manta, Ecuador
Tel: 593-5-627-386, 627-770; Fax: 593-5-627-386
President: Freddy Platon
(Ecuadorian-American Chamber of Commerce)
Camara de Industriales de Manta
Avenida 2 y Calle 12, Edf. Banco de Pichincha, Piso 6, Manta, Ecuador
Tel: 593-5-621-214; Fax: 593-5-621-214
President: Ing. Galo Palacios
(Chamber of Industries of Manta)
Camara de Comercio de Manta
Av. Segunda 10-47 entre 10 y 11, Manta, Ecuador
Tel: 593-5-621-306, 626-527; Fax: 593-5-613-553
President: Horacio Cantos Aliatis
(Chamber of Commerce of Manta)
Machala
Camara de Comercio de Machala
Rocafuerte y Buenavista, Edf. Camara de Comercio, Piso 1
Casilla 825, Machala, Ecuador
Tel: 593-7-930-640, 930-435; Fax: 593-7-930-640
President: Numa Ramirez Bejarano
(Chamber of Commerce of Machala)
Camara Ecuatoriano-Americana de Comercio, Machala
Rocafuerte y Buenavista, Edf. Camara de Comercio
Casilla 834, Machala, Ecuador
Tel: 593-7-930-640, 930-435; Fax: 593-7-930-640
President: Numa Ramirez Bejarano
(Ecuadorian-American Chamber of Commerce)
COUNTRY TRADE AND INDUSTRY ASSOCIATIONS
Quito
Asociacion Nacional de Empresarios (ANDE)
Avs. Amazonas 1429 y Colon, Edf. Espana, Piso 6, Of. 67, Quito, Ecuador
Tel: 593-2-238-507, 550-879; Fax: 593-2-509-806
President: Dr. Antonio Teran Salazar
(National Association of Entrepreneurs)
Asociacion Ecuatoriana Automotriz del Interior (AEADI)
Av. Colon 535 y 6 de Diciembre, Edif. Cristobal Colon, Piso 6, Quito,
Ecuador
Tel: 593-2-509-473, 527-912; Fax: 593-2-527-110
President: Francisco Ponce
(Automotive Association)
Asociacion de Bancos Privados del Ecuador
Av. República de El Salvador 890 y Suecia, Edf. Delta, Piso 7, Quito,
Ecuador
Tel: 593-2-466-670, 466-671, 466-672; Fax: 593-2-466-701, 466-702
President: Ing. Alvaro Guerrero Ferber
(Private Banks Association)
Asociacion de Companias Consultoras del Ecuador (ACCE)
Av. Republica de El Salvador 890 y Suecia, Edf. Delta, Piso 4, Quito,
Ecuador
Tel: 593-2-465-047, 465-048; Fax: 593-2-465-047
President: Ing. Eduardo Villarreal
(Consulting Companies Association)
Asociacion de Industriales Graficos de Pichincha
Av. Amazonas y Republica, Edf. de las Camaras, Piso 8, Quito, Ecuador
Tel: 593-2-452-912; Fax: 593-2-456-664
President: Javier Bucheli Moreano
(Graphic Industry Association)
Asociacion Ecuatoriana de Industriales de la Madera (AIMA)
Av. Republica y Amazonas, Edf. de las Camaras, Piso 7, Quito, Ecuador
Tel: 593-2-454-391, 454-386; Fax: 593-2-439-560
President: Arq. Nicanor Fabara
(Wood Industry Association)
Asociacion de Industriales Textiles del Ecuador
Av. Republica y Amazonas, Edf. de las Camaras, Piso 8, Quito, Ecuador
Tel: 593-2-249-434, 451-286, 451-350; Fax: 593-2-445-159
President: Ing. Marcelo Pinto
(Textile Industry Association)
Asociacion Hotelera del Ecuador
Av. America 5378 y Diguja, Quito, Ecuador
Tel: 593-2-453-942; Fax: 593-2-453-942
President: Jean Pierre Magnenat
(Hotel Association of Ecuador)
Asociacion Ecuatoriana de Industriales
e Importadores de Productos Farmaceuticos (ASOPROFAR)
Av. Republica El Salvador y Portugal, Edf. Gabriela No. 3, Piso 1, of.
101
P.O. Box 17-07-8842, Quito, Ecuador
Tel: 593-2-469-139; Fax: 593-2-454-212
Executive President: Econ. Julio Camacho
(Pharmaceutical Industry and Suppliers Association)
Asociacion Nacional de Metalmecanicos del Ecuador (ASOMETAL)
Av. Republica 1331 y Alemania, Edf. Alvarez Garcia, Piso 2, Quito,
Ecuador
Tel: 593-2-445-826; Fax: 593-2-445-826
President: Augusto Celin Pazos
(National Metalmechanics Association)
Colegio de Ingenieros Electricos y Electronicos de Pichincha (CIEEPI)
Av. Amazonas 477 y Roca, Edf. Banco de los Andes, Piso 3, of. 311
Quito, Ecuador
Tel: 593-2-564-332; Fax: 593-2-502-216
President: Ing. Armando Vinueza
(Electric and Electronic Engineers Association)
Asociacion de Industriales Molineros de la Sierra
Av. 6 de Diciembre 3470 e Ignacio Bossano, Quito, Ecuador
Tel: 593-2-465-597, 465-598, 465-599; Fax: 593-2-464-754
President: Carlos Ponce Martinez
(Highland Millers Associates)
Cuenca
Asociacion Automotriz del Austro
c/o Importadora Terreros Serranos S.A.,
Av. Espana 800 y Barcelona, Cuenca, Ecuador
Tel: 593-7-800-444; Fax: 593-7-860-091
President: Mario Terreros
(Automotive Association)
COUNTRY MARKET RESEARCH FIRMS
BDO Stern C. Ltda.
Av. Amazonas 540 y Carrion, Edf. Londres, Piso 6, Quito, Ecuador
Tel: 593-2-566-916, 552-271, 566-915; Fax: 593-2-504-477
President: Rolf Stern
Deloitte & Touche C. Ltda.
Av. Amazonas 3617 y Juan Pablo Sanz, Edf. Xerox, Piso 7, Quito, Ecuador
Tel: 593-2-246-095, 251-319; Fax: 593-2-435-807
Manager: Frederick H.M. Brown
Price Waterhouse del Ecuador C. Ltda.
Av. 12 de Octubre 394 y Pasaje Jimenez, Quito, Ecuador
Tel: 593-2-562-288, 565-162; Fax: 593-2-567-096, 565-174
General Manager: Ramiro Chiriboga
COUNTRY COMMERCIAL BANKS
For information on the local banks please contact the Economic Section
at U.S. Embassy, Unit 5306, APO AA 34039-3420, Tel: 593-2-562-890,
Fax: 593-2-560-660.
Quito
Banco Citibank N.A.
Juan Leon Mera 130 y Av. Patria, Quito, Ecuador
Tel: 593-2-563-300, 563-258; Fax: 593-2-566-895, 566-893
General Manager: Eric Mayer
Banco del Pichincha C.A.
Av. 10 de Agosto y Bogota, esquina, Quito, Ecuador
Tel: 593-2-551-088, 509-190; Fax: 593-2-509-234, 509-235
General Manager & Executive Vice President: Antonio Acosta
Banco Popular
Av. Amazonas 3535 y Juan Pablo Sanz, Quito, Ecuador
Tel: 593-2-444-700, 444-793; Fax: 593-2-436-306, 444-794
General Manager & Executive President: Econ. Nicolas Landes
Guayaquil
Banco del Pacifico
Fco. de P. Ycaza 200 y Pichincha, Guayaquil, Ecuador
Tel: 593-4-566-010, 563-744 ext. 2135/2133; Fax: 593-4-325-266
President: Marcel Laniado de Wing
Filanbanco S.A.
Blvd. 9 de Octubre 203 y Pichincha, Guayaquil, Ecuador
Tel: 593-4-322-780; Fax: 593-4-326-916
Vice President: Roberto Isaias Dassum
MULTILATERAL DEVELOPMENT BANKS
Banco Mundial (World Bank)
Juan Leon Mera 130 y Av. Patria, Quito, Ecuador
Tel: 593-2-566-861, 506-572; Fax: 593-2-566-862
Resident Representative: Econ. John Panzer
Banco Interamericano de Desarrollo (Interamerican Development Bank)
Av. Amazonas 477 y Roca, Edf. Bco. de los Andes, Piso 9, Quito, Ecuador
Tel: 593-2-562-141; Fax: 593-2-564-660
Country Representative: Ronald Brousseau
Multilateral Development Bank Operations
U.S. Department of Commerce
14th and Constitution, NW, Room 1107, Washington, DC 20007
Tel: 202-482-3399; Fax: 202-482-5179
Director: Brenda Ebeling
U.S. EMBASSY TRADE PERSONNEL
Quito
Janice A. Corbett, Commercial Attache
Commercial Service
U.S. Embassy, Unit 5334, APO AA 34039-3420
Tel: 593-2-562-890; Fax: 593-2-504-550
Paul Simons, Economic Counselor
Economic Section
U.S. Embassy, Unit 5306, APO AA 34039-3420
Tel: 593-2-562-890; Fax: 593-2-560-660
Daryl Brehm, Agricultural Attache
Foreign Agricultural Service
U.S. Embassy, Unit 5336, APO AA 34039-3420
Tel: 593-2-529-088; Fax: 593-2-506-283
Guayaquil
Manfred Sheets, Commercial Advisor
Commercial Service
U.S. Consulate General, Unit 5350, APO AA 34039-3420
Tel: 593-4-323-570; Fax: 593-4-324-558
WASHINGTON-BASED USG CONTACTS
U.S. Department of Commerce
Desk Officer for Ecuador
14th St. and Constitution Ave., Room HCHB 3204, Washington, DC 20230
Tel: (202) 482-0057; Fax: (202) 482-4726
Office of Inter-American Affairs
U.S. Department of Commerce
14th St. and Constitution Ave., Room 3023, Washington, DC 20230
Tel: (202) 482-1647; Fax: (202) 482-4726
Trade Promotion Coordinating Committee
Trade Information Center
U.S. Department of Commerce, Washington, DC 20007
Tel: 1-800-USA-TRADE
U.S. Department of Agriculture
Foreign Agricultural Service,
Trade Assistance and Promotion Office, Washington, DC 20250
Tel: 202-720-7420
Department of State
2201 C. Street, N.W., Washington, DC 20520
U.S. Export-Import Bank
811 Vermont Ave., N.W., Washington, D.C. 20571
Tel: (202) 565-3946; Fax: (202) 563-3380
U.S.-BASED COUNTRY CONTACTS
Embassy of Ecuador
Commercial Counselor
2535 15th St., N.W., Washington, DC 20009
Tel: (202) 234-7200; Fax: (202) 667-3482
Ecuadorian Government Trade Office
Ecuadorian Consulate General
800 Second Ave., Suite 501, New York, NY 10017
Tel: (212) 808-0170; Fax: (212) 808-0188
U.S. BASED MULTIPLIERS RELEVANT FOR ECUADOR
The Ecuadorian-American Chamber of Commerce of Greater Miami
1390 Brickell Av., Suite 220
P.O. Box 144917, Miami, FL 33131
Tel: (305) 539-0010; Fax: (305) 635-3604
The Ecuadorian-American Chamber of Commerce of Houston
4100 Westheimer, Suite 200, Houston, TX 77027-4427
Tel: (713) 877-8534; Fax: (713) 960-1052
Ecuadorian-American Chamber of Commerce of Los Angeles
701 N. Alvarado St., Los Angeles, CA 90026
Tel: (213) 484-9434, 484-9426, 484-9457; Fax: (213) 484-0680
Ecuadorian-American Chamber of Commerce of Atlanta
5685 Lake Placid Drive, Suite 200, Atlanta, GA 30342
Tel: (404) 303-7027; Fax: (404) 303-0115
Ecuadorian-American Association Inc.
150 Nassau Street, New York, NY 10038
Tel: (212) 233-7776; Fax: (212) 233-7779
KEY AGRICULTURAL BUSINESS CONTACTS
ECUAGRAN (Wheat Importers Association)
Ave. 6 de Diciembre 3470 y Bosano, Quito, Ecuador
Tel: 593-2-465-625, 457-863; Fax: 593-2-464-754
General Manager: Mr. Patricio Hidalgo
INDUSTRIAL MOLINERA (wheat importer)
El Oro 109 y la Ria
P.O. Box 644, Guayaquil, Ecuador
Tel: 593-4-442-060; Fax: 593-4-445-576, 444-151
General Manager: Eng. Jacinto Alvear
GRUPO COMERCIAL FIGALLO CIA. LTDA. (wheat and wheat flour importer)
Cdla. Simon Bolivar, Manzana No. 5, Villa 99, Guayaquil, Ecuador
TEL: 593-4-286-217; Fax: 593-4-288-212, 284-169
President: Carlo Figallo
AFABA (National Association of Feed Meal Compounders)
Av. Colon y Reina Victoria, Edif. Banco de Guayaquil, Suite 803, Quito
Tel: 593-2-566-662, Fax: 593-2-566-663
Technical Manager: Mr. Jose Orellana
CORPCOM (Agricultural Commodity Trade) (rice and corn)
Lizardo Garcia 301 y Velez
P.O.Box 09-01-0660, Guayaquil, Ecuador
Tel: 593-4-454-429, 364-276; Fax: 593-4-454-234
President: Eng. Jimmy Caicedo C.
APROGRACE (National Assoc. of Cooking Oil Producers)
Jaboneria Nacional, Francisco de Marcos 102 y Eloy Alfaro
P.O.Box 189, Guayaquil, Ecuador
Tel: 593-4-417-025; Fax: 593-4-414-507, 418-278
President: Dr. Ernesto Noboa B.
ASOCIACION DE INDUSTRIALES
TEXTILES DEL ECUADOR/AITE (cotton importers)
Av. Republica y Amazonas, Edif. Las Camaras, 8th floor
P.O. Box 17-01-2893, Quito, Ecuador
Tel: 593-2-249-434; Fax: 593-2-445-159
General Manager: Mr. Antonio Jose Cobo
SUPERMAXI (ready food products)
Av. Los Pinos y Eloy Alfaro
P.O.Box 17-11-04910, Quito, Ecuador
TEL: 593-2-401-140, 401-100; Fax: 593-2-402-499
Import Manager: Ms. Angela Duenas
IMPORTADORA EL ROSADO (ready food products)
9 de Octubre 729 y Boyaca
P.O.Box 534, Guayaquil, Ecuador
Tel: 593-4-322-555, 322-000; Fax: 593-4-328-196, 382-465
General Manager: Johnny Czarninski
APPENDIX F: Market Research
List of Commercial Service Reports
A. Industry Sector Analysis (ISA) 1995
1. Automotive Parts (AUT) February 95
2. Switching Equipment (TEL) June 95
3. Consumer Goods August 95
4. Food Packaging Equip (FFP) September 95
5. Pollution Control Equip (POL) September 95
B. Industry Sector Analysis (ISA) 1996
1. Fruit and Vegetable Processing Equipment (FPP)
2. Safety and Security Equipment (SEC)
3. Electric Generation Equipment (ELP)
4. Telecommunications Equipment (TEL)
5. Pre-Paid Health Care Services (MED)
Commercial Service reports are available from the National Trade Data
Bank, Economics and Statistics Administration, Office of Business
Analysis, Room 4885, HCHB, Washington, DC 20230.
List of USDA/FAS Commodity Reports and Market Briefs
1. Grain and Feed Annual Report (January each year)
2. Oilseeds and Products Annual Report (April each year)
3. Coffee Annual Report (May each Year)
4. Coffee Semiannual Report (November each year)
5. Cocoa Annual Report (September each year)
6. Sugar Annual report (April each year)
7. Annual Marketing Plan Information Report (July each year)
8. Agricultural Situation Report (September each year)
9. Foreign Buyer List Annual Report (March each year)
10. Foreign Agriculture Article (Every other year)
11. Market Briefs already done: Dairy Products Report, Cereals Report
12. Market Briefs to be done in the near future: Red Meats and Poultry
Meat Report, Fresh Fruits and Vegetables Research, and Dried Fruits
Research
FAS performs alert or voluntary reports on agricultural commodities
when significant developments occur. Background and current data are
filed and kept up-to-date as a key resource for the reporting function.
APPENDIX G: Trade Event Schedule
A. U.S. Government Events:
February 13-15, 1996 California Farm Equipment Show and
International Exposition
(International Buyer Program)
Tulare, CA
February 16-19, 1996 American International Toy Fair
(International Buyer Program)
New York, NY
May 20-24, 1996 WasteExpo
(International Buyer Program)
Las Vegas, NV
September 9-12, 1996 MINExpo
(International Buyer Program)
Las Vegas, NV
September 1996 New Products USA Multi-State Catalog Exhibition
(ID 96000437)
Guayaquil, Ecuador
B. Post Initiated Project (PIP) Events:
June 1996 Expo Visit USA 1996, Quito, Ecuador
C. Local Events:
February 20-25, 1996 Expo Equipos
Centro de Exposiciones Quito, Quito, Ecuador
October 1996 COMPU '96
Centro de Exposiciones Quito, Quito, Ecuador
Please note that Trade Events schedule may change. Firms should consult
the Export Promotion Calendar on the NTDB or contact the post for the
latest information.
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