The Government has reasons not to consider the drop in Foreign Direct Investment in 2021 as a failure of its management.
The Minister of Production, Foreign Trade, Investments and Fisheries, Julius Joseph Pradoassured that the strategy of investment attraction the government it is on the right track, although the effects are not yet being felt in the economy.
According to the official, during the first 10 months of management, the foundations were laid to get out of the bad practices of the last 15 years.
The lowering of the Foreign Direct Investment (FDI) during 2021 you have your explanations; and are detailed in the answers to an interview with Diario La hora.
Q: Is the fall of the Foreign Direct Investment (FDI) in Ecuador during 2021, as this newspaper published in a note from last March 11, 2022?
The drop is real until the third quarter because we still do not have closed information for the entire year. Colombia received almost $7.1 billion, Peru reached $4.6 billion and Ecuador it stayed at $493 million.
Now, what we cannot say is that this fall represents a failure of the foreign investment policy the government current.
First, because it is information up to the third quarter of last year. In the best of cases, it takes only a quarter since we started the Government. A very short period to be able to analyze a real effect of the policy of investment attraction or to mark a trend and say that Ecuador has become riskier than before.
Second, because Colombia and Peru had a drop from 50% to 90% in the FDI during 2020; While Ecuador, in that same year, had an increase until it reached more than $1,000 million thanks to a specific project (mining). In 2021, we return to the normal level of Foreign direct investment that the country has had.
Q: During the last months of 2021 there were announcements of millions in new investment contracts. Shouldn’t that be reflected in the figures for Foreign direct investment?
It is true that we managed to close last year, until December 2021, with the highest level of signing of investment contracts in the history of Ecuador. We’ve never had $2.2 billion in those contracts before. This beats any other recent period in the last decade since that figure was created.
However, that $2.2 billion does not immediately go into the economy, because it depends on the deadlines agreed with the investors, ranging from one to 10 years. Furthermore, it is not only Foreign direct investmentbut also local investment.
Through a investment contract, the State grants the company tax stability benefits in the long term; that the conditions will not change in exchange for you making your investment in a prioritized manner during the coming years.
Q: Do you think that the readings are wrong that Ecuador continues to be risky for investments?
We are trying to change, in just 10 months of government, a reality of 15 years in Ecuador. Everything we’re seeing right now, even in numbers, is a lag behind what we’ve had in the past.
We are looking for more commercial agreements; trying to sign Bilateral Investment Treaties (BITs); we have returned to ICSID. In addition, we project a friendly and friendly speech with foreign investment, from President Lasso to the last member of the cabinet.
Q: Are those elements enough or what are investors really looking for?
We know that it is not enough. That is, a investor who comes to Ecuador she doesn’t marry only him government shift, but expects to stay for 10, 15, 20 and even 50 years.
Several things are needed. For example, a stable macroeconomic environment, healthy public finances where there is no risk of de-dollarizing.
Let’s not forget that the night before the election, everyone thought that the next day we were going to de-dollarize. President Lasso won and we have not spoken once about that possibility. That’s stability. legal security.
In the macro environment we have passed a tax and fiscal law that puts the economy in order. We are trying to pass a investment law. This law has three very strong elements: reforms in the capital market (stock market), reforms in the Public-Private Partnerships (PPP) and reforms in free zones. These elements should make it possible to have a framework, a legal security that has not existed before in Ecuador to prop up the dollar and attract more investments all types.
Q: Does the government have an alternative plan in case the Investment Law is not approved?
If it is the case that the investment law is rejected, archived or mutilated, we will have to continue advancing from the Executive, without the support of the Assembly.
There are some goals we have for employment, investment attractioneconomic growth, which will surely be affected.
That is not going to stop us in any way. With laws or without laws, we have managed to sign a significant number of investment contracts that do not depend on Assembly. Also a number of projects public-private partnerships totaling $30 billion.
We will also continue to do two things. On the one hand, commercial opening; and on the other, the local and international events called Ecuador Open for Business. In other words, an entire investment promotion strategy that does not depend on what one politician or another decides.
Q: In the case of investment contracts, do you aim to exceed the figures for 2021?
Before, the process until the form of a investment contract could easily last more than a year and a half. Last year we reviewed 63 investment contracts and we got them out in less than six months. At this very moment, we are reviewing 200 investment contracts that could add up to more than $4,000 million to be signed in 2022. 55% of those contracts are from international companies. (JS)
En los últimos 15 años, el promedio de la Inversión Extranjera Directa (IED) en Ecuador ha sido del 0,7% del PIB. En la región, el porcentaje promedio es del 2,2% del PIB.
La figura de los contratos de inversión aplica para cualquier proyecto nacional o extranjero de $1 millón o más.
