ECUADOR BUSINESS AND INVESTMENT OPPORTUNITIES IN ECUADOR ECUADOR

ECUADOR: BUSINESS AND INVESTMENT OPPORTUNITIES IN ECUADOR

ECUADOR The center of great opportunities Capital: Quito Business Languages: Spanish (official) & English Area: 283, 561 sq Km Time Zone: GMT -5 hours Currency: US Dollar Population: 17. 3 M approx. (14. 5 M in 2010 Census) Real GDP: USD 72, 048 M (2019 BCE-ECB) Nominal GDP: USD 107, 436 M (2019 BCE-ECB) M = million

26 Trade Offices in 22 countries NORTH AMERICA Canada Toronto • United States Los Angeles, Miami, New York • Mexico City CENTRAL AMERICA Guatemala SOUTH AMERICA 7 Zonal Offices Tulcan, Guayaquil, Quito, Ambato, Cuenca, Machala, Manta Argentina Buenos Aires • Brazil Sao Paulo • Colombia Bogota • Chile Santiago • Peru Lima EUROPE Germany Hamburg • Spain Madrid • France Paris • The Netherlands Rotterdam • Italy Milan • Russia Moscow • United Kingdom London • Sweden Stockholm ASIA China Beijing, Shanghai Guangzhou • South Korea Seoul • India Mumbai • Japan Tokyo • Turkey Ankara

Economic indicators FDI Average growth: 37% from 2009 to 2019 REAL GDP 72, 048 M - 2019 UNEMPLOYMENT INDEX AVERAGE GDP GROWTH 2009 -2018 3. 8% - December 2019 ANNUAL INFLATION RATE -0. 07%, among the lowest in the region – December 2019 GDP PER CAPITA USD 4, 172 - 2019 VAT: 12% Latin America and the Caribbean Ecuador

Strategic and Competitive Infrastructure • One of the best infrastructures in the region: roads, ports, airports Out of 17 Latin-American and Caribbean countries, Ecuador’s position is: Airport infrastructure • • • 4 international airports 10 cross-border airports 8 national airports Load carrying capacity: 246 miles of TM Passenger transport capacity: 10 M per year 2 Port infrastructure • • 4 Ports New deepwater port in Posorja with an investment of USD 1, 200 M Quality roads 3 Quality of air transport infrastructure 4 Quality of port infrastructure Road infrastructure • • 10, 132 km new road network Second place in the region in quality roads

ECUADOR’S EXPORTABLE OFFER AND BUSINESS OPPORTUNITIES

Ecuador Trade Balance 2019 (USD Million) Oil exports Exports Non Oil exports (Shrimps, banana, roses, canned tuna, cocoa beans, etc) Total Exports Total Imports Trade Balance Source: Central Bank of Ecuador 8, 679 (39%) 13, 650 (61%) 22, 329 (capital goods, technological goods, others) 21, 509 820

ECUADORIAN EXPORTS TO TURKEY IN 2019 HS CODE PRODUCT 0803901190 FRESH BANANA 4421999000 2019 FOB % 230, 720, 530 95, 55% BALSA WOOD (IMBUIA, VIROLA) 4, 917, 370 2, 04% 2101110000 COFFEE EXTRACTS, ESSENCES AND CONCENTRATES 1, 342, 090 0, 56% 9606301000 TAGUA BUTTONS 1, 239, 340 0, 51% 4407220000 GRINDED WOODS FROM TROPICAL VIROLA, IMBUIA AND BALSA 1, 102, 510 0, 46% 0803901110 ORGANIC FRESH BANANA 832. 210 0, 34% 2007999210 BANANA PUREE 396. 400 0, 16% 0803101000 FRESH PLANTAIN 293. 930 0, 12% 0803901200 BABY BANANA ORITO (MUSA ACUMINATA) 150. 310 0, 06% 5505100000 SYNTHETIC FIBER WASTE - SYNTHETIC FIBER 125. 960 0, 05% 3908109000 OTHERS (PINEAPPLES, FISH MEAL, HATS, ROSES, ETC. ) 353. 610 0, 15% 241. 474. 260 100, 00% TOTAL Source: Central Bank of Ecuador

ECUADORIAN IMPORTS FROM TURKEY IN 2019 HS CODE PRODUCT 2019 CIF % 7305900000 THE OTHER CIRCULAR SECTION PIPES WITH AN EXTERNAL DIAMETER GREATER THAN 406. 4 MM. OF IRON OR STEEL 7, 381, 170 10, 87% 8702109090 OTHER DIESEL VEHICLES FOR THE TRANSPORT OF A MAXIMUM OF 16 PEOPLE WITH PLUNGER ENGINE 4, 949, 890 7, 43% 8474900000 MACHINERY PARTS FOR CLASSIFYING, CRUSHING OR MIXING MINERAL MATTER 3, 744, 900 5, 48% 7228700020 INDUSTRIAL PARTS 2, 742, 570 4, 30% 4803009000 OTHER TOILET PAPERS, TOWELS, NAPKINS AND THE LIKE 2, 118, 880 3, 34% 5501301000 ACRYLIC OR MODACRYLIC CABLES OBTAINED BY WET EXTRUSION 2, 115, 980 3, 45% 7228700090 INDUSTRIAL PARTS 1, 846, 020 2, 93% 7216210000 IRON OR STEEL L-PROFILES 1, 607, 130 2, 51% 2835260000 OTHER CALCIUM PHOSPHATES 1, 440, 130 2, 15% 8418500090 THE OTHER FURNITURE FOR CONSERVATION AND EXHIBITION OF PRODUCTS 1, 257, 670 2, 00% OTHERS 35, 618, 440 55, 53% TOTAL: 64, 822, 780 100, 00% Source: Central Bank of Ecuador

ECUADOR’S INVESTMENT CLIMATE AND BUSINESS OPPORTUNITIES

Investment Climate in Ecuador Project “One-Stop Business Establishment Center (VUI)” Public policy making, and the establishment of the Strategic Committee for Investments Promotion and Attraction Access to investment arbitration Opening up to new markets, and commercial agreements (including those to avoid double taxation)

Ecuador is open to the world AGREEMENTS IN AN INITIAL STAGE OF NEGOTIATION CURRENT AGREEMENTS Cartagena Agreement (CAN), UE, EFTA, MERCOSUR, Mexico, Guatemala, Chile, Cuba, Nicaragua, El Salvador, United Kingdom Pacific Alliance, Costa Rica, India, Guatemala, Honduras, Panama TREATIES TO AVOID DOUBLE TAXATION 20 countries Germany, Argentina, Belarus, Belgium, Brazil, Canada, Chile, China, South Korea, Spain, France, Italy, Mexico, Qatar, Romania, Russia, Singapore, Switzerland, Uruguay, Andean Community (Bolivia, Colombia, Peru)

Why invest in Ecuador? TYPE OF INCENTIVES FOR INVESTMENT Investment Attraction as a State Policy, through Executive Decree No. 252 Legal frame for promoting new investment General Incentives Organic Code For Production, Trade And Investment. OCPTI Incentives for Prioritized Sectors Incentives for Economically Depressed Zones Organic Law For Productive Development Organic Law of Incentives for Public -Private Partnerships Incentives for Special Economic Development Zones (SEDZ) 5 Incentives for PPP

Summary of Incentives for New Investments Tax Exemption Years Sectors Location IT 12 Prioritized (OCPTI) Outside the urban areas of UIO & GYE IT 8 Prioritized (OCPTI) Urban area of UIO & GYE IT 15 Industrial, agro industrial and agro associative Border Cantons IT 15 New Productive Investment Manabi and Esmeraldas To be implemented until May 2021 IT 20 Tourism Manabi and Esmeraldas To be implemented until May 2021 IT 10 Industrial, logistics, tourism and technology/innovation Inside Special Economic Development Zones 10 additional years of reduction of 10 IT points FCO Contract validity New Productive Investment Nationwide Applies to amounts declared in the investment contract Observation

Exonerated Sectors from Income Tax (IT) BASICS INDUSTRIES

Other Tax Incentives: Tax Reduction and Exemptions Income Tax (IR) Reduction • 10% Income Tax Reduction for reinvestment of profits in priority programs: sport, culture, science, technology, etc • 10% Income Tax Reduction for reinvestment of profits in priority programs: • Income tax on profits from the sale of shares is 10% (previously 35%) sport, culture, science, technology, etc. Refund and exemption of Currency Outflow Tax (ISD) Exemption for reinvestment of profits Refund on purchases of inputs, capital goods for export • • VAT refund and exemption • VAT Refund on materials used for Social Housing projects • VAT refundfor onconstruction materials used for Social Housing projects • VAT Exemption services • VAT Exemption for Construction Services 0% VAT on product imports of: • • Raw materials and inputs for the agricultural sector, agricultural fishing Spare parts and tractors for use, farming, agricultural fishing Led lamps, electric vehicles for public transport and charging Solar panels and water treatment plants 35% 10%

Investment Contracts SCOPE: Contract: Provides stability on the tax incentives of the OCPTI and Organic Law For Productive Development It is optional: To access the tax incentives, it is not necessary to sign the Investment Contract Economic Sector: All productive sectors, prioritized sectors, basic industries, strategic sectors and commercial activities that generate added value Duration: Up to 15 years, renewable for the initial period approved Requirements: Aimed at investments of more than USD 1 million, that generate new jobs, and investments in the first year of USD 250, 000. BENEFITS: In addition to the stability of the incentives of the OCPTI and Organic Law For Productive Development, the investor can request: ü Reduction of tariffs for imported capital goods ü Currency Outflow Tax (ISD) Exemption for payments made abroad for capital goods and imported raw materials, and for dividends distributed to national or foreign companies domiciled in Ecuador ü National and International Arbitration

Special Economic Development Zones - ZEDE Types: ü Transfer and disaggregation of technology and innovation ü Industrial diversification ü Logistic services ü 0% Income tax and its advance for 10 years, and reduction of 10 points for an ü Tourism equal period; 2 Yachay Eloy Alfaro BENEFITS: 1 5 Quito ü 0% Currency Outflow Tax (ISD) for machinery and raw materials imports; ü 0% tariff on imported goods; ü 0% VAT on machinery and raw material imports; ü VAT tax credit on national purchases of machinery and raw materials; 4 Litoral-ESPOL Posorja 3 ü Requirements for administrators and operators are simplified; ü Redefinition of a SEDZ (ZEDE) declared space; ü Administrators and operators can be related parties for logistics and tourism SEDZ (ZEDE); ü Validity of 20 years, authority may set a longer term.

Public-Private Partnerships (PPP) TYPES: § New build (construction, equipment, operation and BENEFITS maintenance) § § § Existing public works (rehabilitation or improvement, ü 10 year exemption of Income Tax from the first year of operation and maintenance) ü Exoneration of the Foreign Currency Outflow Tax (5%) on imports, financing and Construction and commercialization of real estate projects, dividend payments. affordable housing ü Exemption from import duties related to the project. Development of productive, research and development ü VAT (IVA) exemption on imports related to the project. activities. ü Stability on the essential aspects of investment development and applicable incentives. ü Possibility of access to national or international arbitration in the case of controversies.

Investor Visa Temporary residence authorization granted by the Ecuadorian State to foreigners who make investments in goods or economic resources of legal origin to carry out productive and commercial activities, legal representation, proxies and administrative positions. This type of visa does not have time limits for staying abroad and will allow its holder multiple admissions to the country. It is issued through the Diplomatic Missions or Consular Offices of Ecuador abroad and in the Zonal Coordinations in Ecuador. Who is it for? To all foreign citizens who make investments in goods or economic resources of legal origin to carry out productive and commercial activities, legal representation, attorneysin-fact and administrative positions with the intention of establishing themselves to carry out licit investor activities with a regular immigration status. Online procedure https: //consuladovirtual. go b. ec/web/guest/visas

Investment Projects Portfolio https: //sites. google. com/view/inversiones-ec/ingl%C 3%A 9 s/investment-catalog

Registration as Foreign Supplier for participating in Public Tenders https: //portal. compraspublicas. gob. ec/sercop/ Please refer to the file “Ecuador´s Unified Procurement System of Medicines and Strategic Health Goods” ( guideline for registration prcess from page 21 -31). https: //we. tl/t-h. AEone. Raf. J

Thank You oceankara@produccion. gob. ec Cristóbal Albán, Commercial Counsellor Commercial Office of Ecuador - PRO ECUADOR EMBASSY OF ECUADOR TO TURKEY Kazım Özalp, Kelebek Sk. No: 23, 06700 Çankaya/Ankara