Ecuador could have in between $5 billion and $7 billion in exports from free zones and zones with special economic development, which is being promoted through a legal regulation Attracting, promoting investments for productive development.

At least that is the expectation of the Government when observing the behavior of free zones in Latin America. The Minister of Production and Foreign Trade Julio José Prado explained that in the future Ecuador could reach 25% or 30% of exports, as happened in countries like Costa Rica or the Dominican Republic. If we consider that Ecuador currently exports about 22,000 million dollars in non-oil exports, then the figure that could be achieved in free zones would be exactly between 5,000 and 7,000 million dollars.

President Guillermo Lasso signed this decree on Tuesday, May 23, which must be approved by the Constitutional Court. However, there is no deadline for the Court’s action.

Prado has published data for the region on this issue. Thus, it was possible to know that free zones also favored investments, employment and increased exports.

Colombia:

Dominican Republic:

Costa Rica:

Uruguay:

In any case, Prado drew attention to the fact that free zones in themselves are not a silver bullet, as history has shown that they also need to exist a government that is for investments, that ensures economic stability, that creates competitiveness.

In accordance with Alberto Acosta Burneo, editor weekly analysis, the decree is very positive and an important option to increase investment. What is required by the decree is create new jobs, and the way to do that is to promote investment. It also clarifies that free zones are a mechanism for creating territories where there is differentiated treatment in tax and tariff matters in order to make the country more attractive for investors. In this way, the country can become competitive because with the current rules of the game, it is not competitive, so investors from all over the world prefer to invest in other countries. “At the time of the creation of these rules, the country seeks to create the necessary competitiveness, it becomes viable for business to be established for services abroad.”

Such areas, he adds, have given good results in other countries. However, he admits that it needs to be approved by the Court now and that the new Parliament will not repeal it in the future. In addition, he says that the fruits of such a decision will not be short-term, but long-term, because there are several steps that must be followed. Among them, for the Court to approve it, to generate regulation and to generate trust in business entities.

It is not the first time that Ecuador has tried to have free zones or special economic development zones. Although many have failed.

Thus, according to the data of the Ministry of Production and Foreign Trade, nine Zedes were created in Ecuador, but only four are currently in operation.

There are currently three Zedeas of industrial and logistics type located in the port of Guayaquil (2021), Zofraport (2021, in Posorj) and Posorj (2016). In addition, one technological and industrial, the one Coast (2017), which works in Espol. Others that have not had an impact or managed to function sustainably are Progreso, Yachay, Quito and Santa Rosa.

In addition, there are three operating free zones connected to airports. These are:

Within the regulation, more benefits are established for companies participating in new areas.

What are the restrictions for these areas?

There are some prohibitions such as, for example, it applies only to new companies, the transfer of assets is not allowed, the manager, which is Cepai, and the Ministry of Finance are the ones who give approval for the company’s operation in the free zone. Labor rights are guaranteed in accordance with Ecuadorian legislation. In addition, the durability of the previous zones is guaranteed and they are allowed to migrate to the new model if they wish.