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Investment Opportunities in Ecuador
On account of the liberalization policies of the 1990’s, Ecuador is relatively open to exports and direct investment. Attractive investment opportunities exist in Ecuador’s petroleum, mining, agriculture, and manufacturing sectors – particularly supply of equipment and services to the country’s increasing number of domestic manufacturers and its underdeveloped, but expanding, telecommunications and utility industries.
Petroleum and mining investments stimulated by investment friendly laws recently passed by the Ecuadorian Congress are likely to make up the bulk of new foreign investment in Ecuador in coming years. Until now, significant new investment in the petroleum sector has lagged due to delays in expanding an existing oil pipeline and delays in the construction of a much needed second pipeline across the Andes mountains. A build-operate-own concession granted to five foreign oil companies in early 1999 will accelerate construction of the second pipeline, which when completed will permit a significant increase in Ecuadorian oil production.
It is important to note that three quarters of Ecuador’s crude production comes from oil fields in the fragile Amazon basin. Despite the environmental criteria and requirements that have been incorporated into the petroleum licensing process by the Ecuadorian government, construction of the pipeline and development of new oil fields will draw heavy attention from the international environmental community.
Ecuador’s mineral wealth is second only to its oil wealth. Until now, mining has been relatively scarce in Ecuador because most mining potential resides in the ecologically sensitive and remote Amazon rainforest. For better or for worse, new mining laws have opened the door for foreign companies to mine large swaths of the country, even in the delicate Amazon. To date the mining operations have attracted less attention from environmentalists than petroleum development, however, this is likely to change when the environmental community becomes fully aware of the extent of current mining concessions and extraction plans.
Though Ecuador’s agricultural sector is its oldest and most developed sector, opportunity for investment, especially in the nascent cut flower market, still exists. The country’s abundance of rich land and coast, and its varied geography and mild climate, make it ideal for the production of many agricultural and seafood products.
As an importer with a limited but growing manufacturing base, Ecuador will continue to seek suppliers of consumer, agricultural, and industrial products and services. According to the International Trade Administration of the United States Department of Commerce, the sectors offering the greatest potential for non-agricultural goods and services are telecommunications, electric power generation, water resources equipment, construction, and safety and security equipment. Wheat, cotton, rice, corn, soybean meal, and processed foods are the leading export prospects for the agricultural sector.
Economic modernization and liberalization are central goals of Ecuador’s current Administration. Therefore, the Government is working hard to attract investment from abroad and is more willing than ever to work with foreign and domestic corporations to reach mutually beneficial arrangements.
For more information on Ecuadorian modernization and liberalization initiatives, trade regulations, and other matters related to doing business in Ecuador, please consult our list of business links.