Latin America Advisor 2022-03-03 – Inter-American Dialogue

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

March 1, 2022

Will Ecuador’s Business Reforms Attract Investment?

Ecuadorean President Guillermo Lasso is seeking to attract more investment to the country with a package of business-friendly reforms. // File Photo: Ecuadorean Government.

Q

Hoping to draw more foreign investment into the country, Ecuadorean President Guillermo Lasso recently proposed a package of business-friendly legislation to the National Assembly. The measures would create free-trade zones for companies in key sectors, where they would be tax-exempt for 10 years. The package is part of Lasso’s efforts to attract $30 billion in private investment and provide incentives to boost formal employment in the Andean nation. As the president’s party does not hold a majority in the legislature, how likely are the reforms to pass? What would be the consequences for Ecuador’s economy if they don’t? Are the tax exemptions and other incentives enough to attract the amount of investment that Lasso seeks? Would the targeted investments boost formal and high-paying job creation significantly, and what industries would find the incentives the most appealing?

A

Ramiro Crespo, president and CEO of Analytica Securities: “Much of the bill in theory should be relatively uncontroversial because of its technical nature. Ecuador’s National Assembly is, however, struggling amid an internal dispute over leadership and has an obstructionist track record that puts up real hurdles for the bill to pass. The fast-track bill has at least been admitted into the legislature, and the clock is ticking, because it will go into effect automatically if the assembly fails to review it within 30 days, as had previously happened with Lasso’s tax bill, perhaps the most likely positive scenario. The administration has pinned a fair amount of hope on the bill to obtain investment in public-private partnerships that have had only limited success in the past. It has also designed the future free trade zones on models in Colombia and the Dominican Republic. If it fails to pass…”

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