Ecuador is in the last places ranking Ibero-America on the number of free zones and companies within these special territories, as well as the number of jobs created in these zones, according to the latest report from the Free Zone Association of America. Although this report comes from 2018, the numbers reveal an obvious reality: despite the fact that economic logic dictates that with more free zones there are more companies and also more jobs, Ecuador is far below average.
According to the report he published Ministry of Production and Foreign Trade, in Latin America – including the entire Latin American region and Spain – there are 630 free zones and special economic development zones; of these, 485 are with multiple companies and 245 with one company. 10,738 companies and almost a million jobs were opened in them.
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Dominican Republic is at the head of the best positioned countries, with 215 free zones, of which 71 with multiple companies and 144 with one company. 665 companies were located in them and 165,724 jobs were created. It is in second place in terms of the number of free zones Colombia with 112 free zones, with 932 companies and 69,494 jobs. In contrast, Ecuador had eight free zones in 2018 (several of which do not exist now) and created 4,023 jobs in just 28 companies located in this type of space.
So, according to the data, Ecuador is the eighth worst country in terms of the number of free zones, the second worst in terms of the number of companies and the fourth in terms of job openings. Ecuador exceeds only Cuba (1), Curaçao (2), Aruba (2), Paraguay (2), Chile (2), Puerto Rico (3), Peru (4), Bolivia (7) and Spain in the number of zones (7) . However, the number of companies is surpassed only by Haiti, which had 16 companies at the time of the report’s cut-off date. Only Curaçao, Peru and Paraguay created fewer jobs than Ecuador under this system.
The The figures were revealed by the Ministry of Production and Foreign Trade, just at the moment when the Constitutional Court is about to decide, on Thursday the 8th at 10 a.m., the decree on free zones, after the death of the cross. This decree is intended to encourage the creation of more free zones in the country. They must start from a private, public or mixed initiative. Last Tuesday, the court dealt with the first sent regulation of the law, the one related to strengthening family finances (tax reduction).
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Meanwhile, Minister Julio José Prado revealed that Ecuador is one of the countries that received, on average, the lowest foreign direct investment (FDI) in the last eleven years (2011 to 2021).
Ecuador’s foreign direct investment (FDI) performance is below the Latin American average of 2.7% over those eleven years.
According to Prado, in Ecuador the Zedes system (special zones of economic development) It did not work as it should, because the law was politically designed. He explained that in 2010, the minister on duty decided on the creation. This is how areas such as Pacific Refinery and Yachay emerged. What is important about the decree on the law is that free zones are not created on the table, but on the initiative of the private sector.
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It is also emphasized that there is no possibility of tax fraud, because these new areas, in the regulation, must be new companies. For Ecuador, that would mean in between 5 billion dollars and 7 billion dollars of new exports. Greater export capacity, greater investment that would otherwise not have reached the country, will create more jobs, which will ultimately benefit Ecuadorians.
The minister also commented that the current moment is suitable for the promotion of free zones, since we now have trade agreements, so better use of export capacities, lowering of tariffs and the creation of free zones affect the export economic model, both agro-exports and services (software, call centeramong others).
New ‘amicus curiae’
For the second regulation of the law that the Government presented as an economic emergency to the Constitutional Court, which deals with investments and free zones, Nov. amicus curiae.
Thus, on Thursday, in addition to the executive power, lawyers, trade union representatives, trade unions, and academics, interested in the topic presented by these texts, will participate in the discussion.. Among them, the Ecuadorian Confederation of Free Trade Union Organizations (Ceosl), Legal Clinics of the University of San Francisco, Bolívar Figueroa Martínez, Francisco Briones (SRI), Jorge Washington Sosa Meza, Association of Cocoa Exporters, Chamber of Aquaculture. Until last week, a amicus curiae by Virgilio Hernandez.
On behalf of the government, the Minister of Production, Julio José Prado, and the Minister of Finance, Pablo Arosemena, were invited to explain the decree.
Source: Eluniverso
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