The Investment Law project, which arrived Tuesday night at the Assembly for its treatment, propose everything a chapter on free zones, which will be established for a period of 20 renewable years, as often as necessary. Free zones may be proposed by the public sector, decentralized autonomous governments and the private sector. As for the private sector, it can be done with a view to a model multi-company as single-company.
To understand how the free zones (ZF) will work, in simple words, the Vice Minister of Exports and Investments, Lorena Konanz, explained that an investment company buys a piece of land, possibly near ports, which facilitates the logistics issue. The site is the initiative of the investor, where he visualizes that some type of industrial process, services and logistics could be successful. This administrator can, in turn, allow the participation of other companies in the process. ZF companies can buy Ecuadorian products, without VAT, industrialize them and then export them competitively, thanks to the series of incentives that these zones benefit from.
After 20 years, the Government can renew your operating license so that you can continue working. Regarding the types of ZF, he indicated that in general they can be multi-company, but exceptionally they could be single-company, as long as it is about a sector that does not exist in the country. And he gave the example of the vaccine factory that it is being considered to be built by Sinovac.
It is that the law creates “Other customs destinations” that would be the free zones (ZF) and the Special Economic Development Zones (ZEDE) are maintained. Both are in charge of the Strategic Committee for the Promotion and Attraction of Investments (Cepai), which will also be controlled by customs. The zones will be authorized by the Government. These zones are “a customs destination, within a delimited space of the territory, for new investments to settle.”
Although the existence of free zones is a widespread concept at the regional level, in Ecuador it is not yet in its first steps of diffusion. According to the law, theThe goods entered there, as well as the services provided in them, will be considered outside the national customs territory, with regard to customs duties, taxes and surcharges.
Companies that invest in free zones would have several incentives: exemption from income tax for ten years and after that a reduction of 10 points of it. They are also exempt from ISD and the payment of tariffs.
Among the objectives detailed in the law is promoting employment, competitiveness, attracting investment, facilitating foreign trade, integrating Ecuador into global value chains through re-expedition, export or re-export to third countries. Also, generate technology transfer, increase tourism development and promote comprehensive health development. It could also be a tool to promote agro-associative economic development in which indigenous, Afro-Ecuadorian, montuvian organizations, among others, participate.
Lorena Konanz recalled that in Ecuador there was a free zone law that is no longer in force and that it never generated results, since it did not attract investment. The main reason was that in the previous model it was the State that decided where these free zones would be and the activity to promote.
He explained that currently there are Special Economic Development Zones (ZEDE) and that in Ecuador they have had a relative development and are the Espol, DP World and Contecon zones. These can be maintained or can migrate, if they wish to be free zones.
Regarding possible free zones that are on the government’s radar, Konanz said that it is still early to know; however, he knows that there are many international companies that are looking at the region and that they could choose Ecuador to settle. He explained, for example, that in Colombia there are 120 free zones, focused on textiles, fashion, ambulance manufacturing, among other products.
Konanz spoke on the day of the presentation of the law on the development of tourism and health issues. This Wednesday he expressed that these types of issues could work, for example, starting with the construction of hospitals and tourist areas to which foreign clients can reach: health tourism can be done, as in Colombia exists with respect to the ophthalmological branch , commented. He clarifies that Ecuadorian consumers will not benefit from these exemptions, otherwise it would be unfair competition for local companies.
The law It already generates expectation in the business sector. Holbach Muñeton, representative of the country’s tourism sector, considered that the Investment Law is positive. He estimated that new brands may come in the tourism field, which is positive. He commented that one should not lose sight of the fact that this work that the authorities are already doing should be accompanied by incentives, by promotion, so that there is more demand to come and visit Ecuador. He explained that the investor takes into account several parameters when investing in a country and, in addition to the issue of legislation, he takes into account legal certainty, growth projections, governance, among others.
In any case, regarding the free zones, Muñeton said that he sees potential, for example, on the Spondylus Route, perhaps the casino market that can seduce Chinese consumers. He considered that everything must be concatenated with a short, medium and long term plan.
He did not miss the opportunity to indicate that just as various incentives are provided to foreign investors, the local company must also be supported and his specific request was that credits be provided through CFN, which should be at 15 years and at 3 years. %. He pointed out that his sector at this moment in which the pandemic has decreased in intensity is illiquid, but it is solvent.
Meanwhile, Miguel Ángel González, president of the Ecuadorian Business Committee (CEE), commented that the position of his union is that the law has a clear north: attract investment and generate employment. “The objectives set out as support for this project are similar to those promoted and promoted by the Ecuadorian Business Committee, a particular that we see with absolute optimism.” In any case, he said that they are analyzing the bill to propose improvements on the details and that all productive sectors can take advantage of it. (I)
Source: Eluniverso
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