Latin America has become the most attractive and lucrative growing market for Asia Foreign investment and business opportunity in the world. It is also the second most important trade partner with China and Asia. However, a $4.8 trillion economy, US $26 Billion in China’s investment projects and US $261.000 million reached with China´s trade last year. These are numbers that talk from themselves.
Latin America offer one of the most attractive equity investment opportunities. It is given the big Infrastructure investments in Ecuador and Peru, growing energy and mining investments in Mexico, Ecuador and Colombia, Brazil World Cup Soccer 2014 and Olympic Games 2016 and Chile’s stable economy, new companies IPOs and growth.
Ecuador is a medium-sized market for Asia Foreign investment with great potential and the US Dollar as the national currency. The World Bank’s Doing Business Report 2012 has ranked Ecuador as an upper middle-income country.
Leading Sectors for Foreign Investment
The market opportunities in Ecuador are:
- Commercial Sectors
- Petroleum
- Oil and Mining
- Electricity
- Natural resources industry
- Hydroelectric industry
- Plastics Machinery
- Automotive Parts
- Water Resources Equipment
- Orthopedic Equipment
- Telecommunications Equipment
- All technological equipment and the Agricultural Sector
Present Scenario
The Ecuadorian government is currently undertaking a large-scale program to increase opportunities in the area of renewable energies. Compared to this, it will expand the country’s generation capacity by over 60 percent, building 10 large wind and hydroelectric projects. The mining industry is preparing to move from exploration to extraction in the coming years. This will create opportunities for foreign firms to supply machinery, services, or technologies and excel in Asia Foreign investment.
Not only this, the government benefits the economy through a new Production Code that includes a variety of measures such as:
- Investment incentives
- Legal protection for investors
- Clear rules and incentives for national and international investors
Other Measures
Stability and predictability, Legal security, confiscation or nationalisation are not permitted by law. Profitability: with More than 20 tax and non-tax incentives (cumulative), income tax exemption and deductions, and Freedom to invest without conditions. International regulations: Fair and equitable treatment, high level of protection, non-discriminatory or arbitrary treatment.
China and Ecuador have signed several Treaties and Agreements. Also, these treaties guarantee Chinese investments in Ecuador, and offers Chinese companies legal and economic advantages and benefits in Ecuadorian projects. With its application, several Chinese companies have signed public contracts with Ecuadorian public entities. In addition, Chinese products imports have duplicated in the past years (approx. US $200 hundred millions).
Legal Framework
With the actual legal framework for Asia Foreign investment in Latin America, the traditional entry strategy in Ecuador is to first appoint an agent, law firm and stocking distributor. When appointing a local distributor, foreign firms should seek counsel from an Ecuadorian law firms in Asia to ensure appropriate protection as a result. Moreover, the procedure for establishing an office is usually granted to local lawyers. Foreign investors starting up a business in Ecuador most frequently establish local corporations, or local branches of offshore entities. Alternatives include limited liability companies, partnerships, and mixed economy companies (when including government participation).
Another key point, for sales to the government, a local agent or representative is legally required. Moreover, it is also often a practical need when first entering the Ecuadorian market. Above all, bidding for government contracts can be a very good opportunity for foreign firms. But it is always advisable to conduct first due diligence.
Our Law Firm
The Law Firm CORPORACIÓN LEGAL that I represent encourages Asian companies interested in government contracts or in business activities requiring government licensing or approvals. Besides, it also encourages other business and legal aspects in Ecuador and Latin America, to consult with us early for Asia Foreign investment in the procurement process.
CORPORACIÓN LEGAL provides a complete, dynamic, as well as efficient legal sponsorship in the following areas of Law:
- Administrative Law
- Intellectual Property
- Corporate Law
- Stock-exchange Market Law
- Public Procurement Law (Public sector contracts)
- Tax Law; and, at this instant within first, in the Not-renewable Resources Law (Hydrocarbons and Mining)
However, in addition to these specialties, our Legal Firm serves other branches of Law.
Our Office
The company was founded and has its offices in Quito, the capital of Ecuador, and also has an office in Miami, Florida, USA. Further, it has a series of international legal offices correspondents in Latin American countries, coupled with the scope to offer its clients a complete legal service in the region with high quality standards.
We will wait for you in Ecuador and Latin America!
Daniel Lopez Suarez is a Partner and Attorney with Corporación Legal CL Ecuador
