Ecuador’s pro-business government has slashed duties on more than 660 products in an effort to bolster business. The news bodes well for the Ecuador economy and investment in the country, as it seeks to overcome the effects of the global pandemic.
The tariff reform, established under an executive decree issued by President Guillermo Lasso in early July and coming into force this month, will see duties eliminated or significantly reduced to cut costs for companies involved in agriculture, technology, and manufacturing, including the car making industry.
Lasso came to power earlier this year promising a new dawn for business and investment in the country, and these latest reforms are a sign of his commitment to providing a more commerce-friendly environment in the South American country.
See also: How to Form a Company in Ecuador?
According to local reports, the reform slashes more than $180 million in annual duties and is expected to provide financial relief to more than 6,000 companies, which collectively employ over 560,000 workers (all figures in USD).
“[The reforms] help us to continue to attract investment, boost the Ecuador economy and make the country an attractive destination for businesses,” Carmen Sanchez, president of the Official Spanish Chamber of Commerce and Industry of Quito, was reported saying by EFE.
According to Julio José Prado, the country’s minister for production and foreign commerce, the tariff reform will see duties on 590 of the 667 products entirely eliminated, while 30 more will see duties cut to 5%. A further 20 will see duties reduced to 10%, while the rest will be reduced to between 15% and 25%.
Among the goods affected, approximately 71% represent materials for industry, 19% cover machinery and equipment for agro industry, while 10% apply to consumer goods. Examples include digital cameras and video cameras seeing duties slashed from 25% to 5%, while communications equipment and computers will be duty-free.
The automobile industry, meanwhile, has estimated that the new measures will reduce overall costs by approximately 13%, following years of demands for government action to allow the sector to be more competitive with the likes of neighboring Colombia.
Ecuador economy and investment look to bounce back
Ecuador’s economy contracted 7.8% in 2020 due to the turmoil of the global health crisis, and has been predicted to witness 3.5% growth this year, as the economy reactivates.
The new tariff reform looks to amplify that resurgence by boosting key industries and significantly cutting costs for some important raw materials, as well as high-value consumer goods.
The reform is just one of a range of steps being taken to boost the Ecuador economy and investment. Other measures include a procedures efficiency policy that seeks to cut red tape by removing 1,862 products from the list of those requiring control documents prior to importation.
Meanwhile, a number of investment contracts worth more than $79.3 million have been approved in the areas of biotechnology, agribusiness, manufacturing and renewable energy, in order to promote growth in those sectors.
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