Ecuador: 74.1% of investments come from national capital

The company Vaschlabs signed an investment contract for US$1.2 million with the Ministry of Production.

The objective of the Ecuadorian firm is to install new production lines in the province of Imbabura. In the first quarter of 2022, Ecuador approved 27 investment contracts.

The 74.1% corresponds to the national capital and 25.9% to mixed capital (national and foreign).

The total amount reached US$420 million, according to the latest data from the Ministry. Thus, in the first three months of 2022, there was an 86% increase in local investment compared to the same period of 2021.

David Velasco, manager of Vaschlabs, pointed out that, after the pandemic, the company saw the need to open two new production lines. One of disinfectant chemicals for hospital use and the other of textiles for medical use; for example, the clothing used inside operating rooms.

Since the company was born in 2019, it has been dedicated to commercializing pediatric, ophthalmological products and vitamin supplements.

The investment contract signed by Vaschlabs has a 12-year term. However, the production plant in the Antonio Ante canton, known as Atuntaqui, in Imbabura, should be installed and in operation by June 2023.

Velasco explained that these new production lines would generate direct employment for 20 local people in the first phase. These will be added to the 12 employees already working for the company. It will also create dozens of indirect jobs.

The company chose Atuntaqui because it has a skilled textile labor force. In addition, residents will have the option of learning about and specializing in the manufacture of other types of garments.

STABILITY AND INCENTIVES

A company commits to making new investments by signing investment contracts, and the State provides legal certainty.

It applies to any sector of the economy. What is sought is that there is more production in Ecuador and that this will generate employment, explained Marco Moya, Undersecretary of Investment of the Ministry of Production.

This contract is executed through a public deed, which contains the terms of the agreement, i.e., investment amounts, terms, and more. In addition, it grants tax incentives and access to national or international arbitration.

The tax incentives granted by the country to new investments are a five-point reduction in the income tax rate, exemption from foreign exchange tax (ISD) for importing raw materials and capital goods for the execution of the investment, and exemption from foreign trade taxes.

These benefits and incentives apply for the duration of the contract and must not exceed the amount of the contract, explained Andrea Moya, an expert in investment contracts of the firm Corral Rosales.

The agriculture, livestock, forestry and fishing, manufacturing, transportation, and storage sectors represent 91% of the investment contracts approved in the first quarter of 2022.

The Minister of Production, Julio José Prado, stated in a radio interview that local investment is going well but that foreign direct investment has not reached the expected levels and that a replacement to the investment law rejected by the Assembly is being considered.

With information from El Comercio