LatinFinance - March/April 2015 - Supplement - 11

Foreign direct investment

The welcome mat
Investment has primarily been a local thing. Now Ecuador hopes to attract FDI by making
its economy friendlier to international investors. First up: Food, metals, and mining

Foreign direct investment has been
hovering below 1% of Ecuador's $95
billion GDP, reaching $703 million in
2013, according to the latest ﬁgures
from The UN Economic Commission for
Latin America and the Caribbean. That
was less than every South American
economy except Paraguay.
Nonetheless, it represented year on
year growth, and was the highest level
since 2008.
Santiago Mosquera, head of research
at Quito-based Analytica Investments,
says the numbers leave room for
growth. "There is potential in a number
of sectors, but it requires taking care
of other issues," he says. "We need to
improve the business climate."
Industries and Productivity Minister
Ramiro González says President Rafael
Correa's government is already working
to reduce red tape and create a more
favorable investment climate.
For example, he says, the country's
import substitution plan, which was
implemented full throttle in 2014, has
created new opportunities for nascent
local industries - and foreign investors
interested in producing in Ecuador. The
legislation restricts imports deemed
harmful, opening the door for local
industries and reducing the deﬁcit.
"The private sector responded and
the biggest changes have been in food
products, followed by metal-mechanics
for car parts, and the oil and power
sector," González says. "This policy has
made Ecuador ripe for investment."
He also highlights a new trade
promotion agreement that Ecuador

EU HOPES: Industries and Productivity
Minister Ramiro González expects growth
in European manufacturing investment

reached last July with the European
Union. Thanks to quality standards
now on par with the EU, González
says, Ecuadorian products can be
exported with ease to
member countries. The
minister predicts a jump in
European investments in
local manufacturing in the
next two years.
In fact, the government
is upbeat about a
number of changes in
the manufacturing sector
last year. Already, he says,
foreign buyers are scouting
established Ecuadorian
companies, "which is
important but not really
what we want. We believe
this will be followed by
new investments," says
González.
The big investments
in the last year were
clustered in food and
beverage, cement and
mining businesses.
Mexican bottling company
Arca Continental, Latin
America's second largest
Coca-Cola bottler,
purchased the majority
of shares in Ecuador's Tonicorp for
approximately $400 million last August.
Tonicorp produces a wide range of dairy
products, beverages, and plastics. Its
website lists sales of $309 million and
proﬁts of $18 million in 2012, the last
year with full data available.

March/April 2015 - A Supplement to LatinFinance 11
LatinFinance - March/April 2015 - Supplement

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