Ecuador: Investing

FDI in Figures

Ecuador is open to FDI in most sectors. However, sectors considered strategic reseve the right to be managed by state-owned or -controlled companies. These sectors include energy, telecommunications, non-renewable natural resources, transportation, hydrocarbon refining, water, biodiversity, and genetic patrimony. As such, FDI inflows remain very low compared to other countries in the region. According to UNCTAD’s World Investment Report 2022, FDI inflows decreased to USD 621 million in 2021. However, there was an overall rise in the value of greenfield investments during the same period (which totalled USD 720 million). Nearly 80 per cent of foreign investment is in the oil sector, so the country is heavy reliant on this sector and, therefore, it strongly influences FDI. In 2021, the stock of FDI increased to USD 21,3 billion. Nevertheless, access to businesses in Ecuador continues to be a challenge: labour regulations are very complex and government policies tend to be very interventionist, especially in the oil sector.

According to the Economist Business Environment, Ecuador ranks 71 out of the 82 countries reviewed for their investment climate. Ecuador's key strengths are the country's significant mineral, oil and gas potential; a diverse climate that allows for a wide range of crops; marine resources; low inflationary risk due to fully dollarised economy, free trade zones, relaxed labour laws also allow the companies to hire workers temporarily, and great tourism potential. However, some of the country's weaknesses include the fact that the economy is heavily oil-dependent, a large informal sector and low-skilled workforce, state interventionism, and low levels of domestic and foreign private investment. Ecuador is working towards opening up to the world and further attract foreign investment. In order to reach its goals, the country passed the Productive Promotion and Attraction of Foreign Investment Law in 2018. The law includes big tax benefits to new investments in Ecuador and applies to both new companies and previously existing ones. Additionally, it addresses the condonations of interest, charges and fines of outstanding tax obligations and other obligations with different types of authorities. Other than the law, the country set a series of measures to attract FDI, such as the rethinking its Bilateral Investment Treaties and the process to sign a trade agreement with the United States. Ecuador also has public agencies that are responsible for the promotion and facilitation of trade, commerce and investment in the region, including the Ministry of Foreign Trade and Investment and Pro Ecuador, an agency that promotes and provides assistance to foreign investors looking to establish a commercial presence in they country. However, in spite of the government's efforts to attract FDI, the overall investment climate remains uncertain, as economic, commercial, and investment policies are subject to frequent change. Recently, China has become the largest investing country in Ecuador. However, in terms of region, investment from Latin American countries takes the lion's share. The Chinese oil company CNPC has invested over USD 10 billion in a refinery construction project (Rafinería del Pacífico) and expressed interest in downstream projects. The Canadian company Lundin Gold Inc. is in the process of developing the Fruta del Norte gold mine in southeast Ecuador. The underground gold mine - which is expected to operate for 15 years - will be Ecuador’s largest, and is predicted to eventually have an annual production of approximately 340,000 ounces of gold.

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Latest Update: September 2023