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A Special International Report Prepared by
The Washington Times Advertising Department - Published on April 21, 1999
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Advertisers
(1) Bell South
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Investors will have the option of five Free Trade Zones
A new FTZ law As part of the government's plan to promote non-traditional exports, to stimulate foreign investment and the transfer of technology and to increase employment, Congress also gave its support and approved The Reform of FTZs Law in March, 1999. Among the changes was inclusion of tourism, educational services and hospitals in FTZ areas. This addition will allow for the development of re-habilitation clinics, hospitals and schools in the zones and will permit Ecuadorians to enter the zones and make duty-free purchases up to a certain limit once a year. Over 2,500 FTZs are currently in operation around the world, mainly in developing countries, but even the United States has 350 FTZs. Countries have found that these zones create employment, allow the transfer of technology and bring in much needed currency. In Ecuador, the idea is to develop the country by creating FTZs in regions that would benefit from investment, employment and technology transfer, such as Cuenca, Esmeraldas, Manabi and Riobamba.
"FTZs are true motors for the development of the economy," he stated in a letter to Roberto Perujo, President of the Chamber of FTZs in Ecuador. "Without a doubt, the reforms will be the definitive glue for the FTZs and for the rest of the country and consequently will be an important help in the economic development of Ecuador." Perujo explains that the new system provides numerous incentives for foreign investors. Unlike many countries, merchandise made in FTZs can be sold nationally, however it must be treated as imports, according to the proper laws. Another inducement is that companies that establish themselves in a zone are exempt from the one percent financial transaction tax, which is a temporary measure that takes the place of an income tax. American companies, which can not deduct the one percent from their American taxes, will see this as a major bonus. Companies that worry about labor stability will be glad to learn about the special labor laws that allow for the free hiring and firing of employees and outlaw strikes in the zones. Companies that invest in Ecuador will have access to the many markets with which Ecuador has signed bilateral, multilateral and economic cooperation agreements, such as the Andean countries, Argentina, Chile and Brazil. The government is also facilitating the immigration process. The new law directs the Ministry of Foreign Relations to provide special visas for workers, and their family members, who come to Ecuador to work in these zones. Free Trade Zones in Ecuador According to Torrents, certain conditions are needed in order for an FTZ to be successful, including a good location with optimal communications routes and a solid law. Ecuador now has this structural framework. With five FTZs being developed, in Esmeraldas, on the northern, pacific coast; in Cuenca in the southern highlands; in Manabi on the northwestern pacific coast; and Riobamba ZOFRACENE in the central highlands, the country is preparing for the future. ZOFREE, Esmeralda's zone, is already operating, and has created approximately 200 news jobs. Last year it exported 20 million dollars worth of goods. Located right next to the modern seaport, ZOFREE covers 22 hectares. Commercial and industrial zones have been developed with warehouses, electricity, fuel, water, phone lines, training centers and housing projects. Known as the "green province" because of its lush countryside, Esmeraldas is a tourism center, with first class hotels and its own airport. From a business standpoint, the zone is located near the country's largest oil refinery and thermo-electric plant. ZOFRAMA, the Manabi Free Zone, is located on the northwestern Pacific coast of South America. The command area of the free zone is located in the central region of the province and the country. Manabi is less than 20 miles from Manta International Seaport and 210 miles from Quito. The zone has sufficient roads, ports and commercial and air flight infrastructures, as well as basic services and facilities such as electricity, a safe water supply and telecommunication facilities. Currently, ZOFRAMA is offering commercial and industrial locales available for lease or purchase. Another zone with a solid future is ZOFRAC in Cuenca. This small entrepreneurial city has many qualities that attract investors. It's a city with a long artesanial history, seven universities, a good infrastructure, 100 percent potable water, few social problems and many natural resources. The peace with Peru as well as Cuenca's location, a three and a half-hour drive on decent routes to the port of Guayaquil, gives the city a strategic location. Cuenca's Industrial Park has been sold out for a long time. Today, the managers of this thriving zone are dedicating themselves to the creation of a successful FTZ. Luis Orellana, General Manager of ZOFRAC, has already received letters of interest from 14 companies, including textile manufacturers and computer and motorcycle assemblers. The 72,000-hectare park will have almost 55,000 square meters undercover and all the services necessary for the creation of a modern zone. "Cuenca is the capital of southern Ecuador and northern Peru", explains Orellana as he tours the grounds of the massive new zone. "We have very adept workers, a strategic location and a good competitive law." Perujo, who plans to promote Ecuador FTZs through conferences and trade fairs believes that Ecuador needs these zones for its socio-economic development and also to prevent further immigration to the United States. With the full support of the Ecuadorian government and WEPZA, Ecuador is destined to be an interesting, new location for international investors. |
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Table of Contents (1) President Mahuad announces new economic plan |
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President Mahuad has given priority to the new Free Trade Zones (FTZs) law and is reforming the system to make it easier to attract vital foreign investment. "Free Trade Zones carry out fundamental objectives for the development of foreign commerce, the generation of employment and the economic growth of countries," stated the government. Mahuad realizes that reforms will allow FTZs to be successful only if they are implemented along with modern legislative concepts while unnecessary burdens are eliminated.
Juan Torrents Tolosa, President of the World Export Processing Zones Association (WEPZA), is in full support of Ecuador's promotion of FTZs. He visited all of Ecuador's FTZs and also went to Quito to meet with President Jamil Mahuad. During his visit and in follow-up letters, he firmly stated that Ecuador must continue on its path to create FTZs.