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Ecuador advances on an uphill road to obtain foreign investment

Ecuador advances on an uphill road to obtain foreign investment in the midst of the international expectation of the Government of William Lasso and under the watchful eye of social and environmental organizations, opposed to privatization and damage to nature, respectively.

In its almost eight months in power, the Government has knocked on several doors to show the country as an attractive destination for investment, and in November it presented a project portfolio of up to US$30 billion at the “Ecuador Open for Business” conference. for his four years of administration.

clear rules

According to data from the Central Bank, Foreign Direct Investment (FDI) from January to September 2021 fell to US$493 million compared to US$985.9 million for the same period in 2020, which investment expert Cristina Viteri attributes mainly to uncertainty of the electoral process last year.

To this, the economist Alberto Acosta Burneo adds that, in previous years, the growth of investment was tied to the development of large-scale mining projects, a sector that he believes will contribute again as there are eleven initiatives in advanced stages that “will involve large amounts ”.

In December, the Government announced the achievement of some US$ 2,000 million in investment intentions, only that the 2021 statistics do not record them because they have not been finalized, according to official sources.

“We have oil, minerals, clean energy, possibilities for development in telecommunications, in the field of infrastructure,” Lasso said the day before (Tuesday) in the radio program “Let’s meet for citizenship,” organized by the Ministry of Communication.

There he recalled that the Ecuadorian Gross Domestic Product (GDP) “ended up growing 4.1%” in 2021, when the expectation when he came to power (May 24) was 2.5%, and argued that “Ecuador has the potential to point to growth even greater” thanks to all those sectors.

A lawyer and expert in dispute resolution, Viteri believes that the country’s return to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1966 (ICSID) is among the “good steps” of the Government in search of investment.

However, “there is much to do,” he warned, because “although there have been positive actions, it is still necessary to wait a while to see if it has attracted the attention of investors.”

Among the pending issues, underlines Acosta Burneo for his part, that of offering “legal certainty and building competitiveness, since one of the problems for foreign investment is that Ecuador is an expensive country.”

And, although the largest investments are in sectors linked to natural resources, the Government must promote the investment environment in a general way, according to this last expert, who sees great potential in alternative sectors such as agro-exports and agribusiness.

Favorable weather?

For Viteri, the current is a “favorable climate” for investment because in recent months the country has greatly improved country risk, and “reforms are being carried out with the purpose of attracting investment” on an uphill path in the future. that Lasso must generate trust, offer legal certainty and conscientious management of natural resources.

And although it has given “signs of calm and of being a friendly government for investors”, Acosta Burneo recalls that for investment to flourish, more than “pretty speeches”, legal and economic certainties are required, something that “is not achieved by overnight.”

“The environment for investment has improved from the area of ​​expectation: it is a government that is going to do everything possible to try to promote investment, but it has to specify the different actions that generate institutionality” since governments last four years and investors think long term, he said.

peaceful atmosphere

With the data for the first nine months of 2021 in hand, the political challenge for the Government is very great as some of its investment hopes collide head-on with the opposition of environmental movements and other social groups that demand respect for nature and heritage. public.

“We do not believe in responsible mining. No exploitation of non-renewable resources can be responsible neither with the present nor with the future population”, complained Alexandra Almeida, from Acción Ecológica, who criticized that the Ecuadorian governments see in “extractivism” the way out of their fiscal crises.

Lasso, who is seeking public-private partnerships for projects, is also facing opposition from social groups who fear possible privatization of public infrastructure, and who have threatened to take to the streets to prevent it.

While the Government insists on dialogue: “We can develop the country, but a fundamental element is required: peace and tranquility. We have to lower the level of conflict in Ecuador, change the culture of hatred for that of dialogue, the search for agreements and understandings,” says Lasso.

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