LatinFinance - March/April 2015 - Supplement - 19

ECUADOR
to build up markets and we don't want
to see producers lose this over shortterm problems," he says.
Implementation of a mechanism,
announced on February 9, allows
companies to recover taxes and other
costs associated with exports. The
amounts will range from 2% to 5%,
depending on the product and the
destination. Companies exporting
bananas to Russia, for example, will be
eligible to receive a drawback equal to
4% of the value of the shipment. The
government calculates that the action
will cost around $250 million.
A much more controversial measure
involved targeted tariffs on imports
from Colombia and Peru to compensate
for the depreciation of currencies in
both countries. The move, announced
January 5, slapped an additional 7%
tax on products from Peru and 21% on
goods from Colombia.
The Andean Community (CAN) that
Ecuador forms with Bolivia, Colombia,
and Peru, immediately protested,
prompting President Rafael Correa to
say on February 11 that Ecuador might
consider leaving the group. The Quito
Chamber of Commerce called on the
government in mid-February to drop any
notion of withdrawing from the CAN.
"It would be a huge mistake for us to
leave the CAN, isolating Ecuador from
its neighbors," Blasco Peñaherrera, the
chamber's president, said in a statement.
While on February 27, the Ecuadorian
government announced it would lift
the tariffs on Colombian and Peruvian
goods, it said it was working on a new
overall policy that would apply to all
imports.
Adding value
The trade ministry is designing a
three-tiered strategy for next year,
when Ecuadorian authorities expect
the international climate to be more
favorable. The short-term plan focuses
on creating new niches and recapturing
lost market share on agro-exports
ranging from meat and dairy to tropical
fruits and rice. The government is
working with farmers to establish
volumes to guarantee sustainable
production to meet export targets.

RIVADENEIRA: Ecuador is a natural
biotech lab

Minister González says the goal goes
beyond farming to expand value-added
production. "Ecuador needs to become
a food-processing center and not just a
food-producing country," he says.
The model is cacao, from which
chocolate is made. Ecuador is in the
process of transforming from an
exporter of cacao beans and paste to a
chocolate producer. A local company,
República del Cacao, has partnered with
France's Groupe Soparind Bongrain, to
market Ecuadorian chocolate. European
chocolatiers state on their packaging
that they use Ecuador-sourced cacao.
Ecuador's medium-term strategy is
based on transforming basic industries
using the country's quickly-expanding

energy supply. The government
has invested heavily in constructing
hydroelectric plants and plans to double
electricity-generating supply by the end
of next year. Authorities are betting that
cheap, reliable power can
turn the country into a local
hub for appliance production
and heavy industries,
such as steel and copper
refining. The industries
and productivity ministry
announced that Italian
appliance manufacturers,
who visited the country in
February, are keen on setting
up production facilities
in Ecuador to supply the
Andean region.
The country also hopes to
attract investment to develop
the country's fossil fuels in
the production of agrochemicals and plastics. In
this case, Ecuador is in a race
with neighboring Peru to
install the first petrochemical
plant on the southern Pacific
coast. Peru has been talking
about using its natural gas
for petrochemicals since
2008, but has taken no
concrete steps so far.
Maybe even more ambitious is
taking advantage of the country's
biodiversity to become a center for
biotechnology research and production.
The government has sponsored the
construction of a new high-tech
park, Yachay, and established Ikiam
Amazonian University to focus
on careers in biotechnology and
bioproduction. Ecuador is home to more
than 25,000 plant species, including
8,000 with known medicinal properties.
"Ecuador is one of the best natural
laboratories for the development of
biotechnology used in commercial
applications in food, industry, and
pharmaceuticals, because we are one
of the most biological diverse countries
in the world," says Rivadeneira. "New
species of flora and fauna are discovered
here almost daily, allowing for new
research and the creation of new
products." LF

March/April 2015 - A Supplement to LatinFinance 19
LatinFinance - March/April 2015 - Supplement

Table of Contents for the Digital Edition of LatinFinance - March/April 2015 - Supplement
