The spread of the coronavirus throughout China (and the rest of the globe), has led to reductions in the export of Ecuadorian goods to the Chinese market.
On Tuesday, the Government met with representatives of the productive, logistic and commercial sectors of the country to review the impact that this disease has on internal and external trade.
“We have seen a decrease in the sale of all products that go to China. There is low demand in banana, shrimp and cocoa,” said Iván Ontaneda, the Minister of Production.
Eduardo Egas, Executive President of CORPEI (a private, non-profit agency aimed at providing services that promote productive competitiveness), said that the export sector not only feels the lower demand for products and the lack of payments, but also the shortage of frequencies and the absence of containers—which makes freight more expensive.
Supporting that claim, Richard Salazar, administrator of the Banana Marketing and Export Association, confirmed the lack of containers due to the problems in China. Salazar said that shipping companies are instituting surcharges of $1,200 to $,1500 per container. According to a preliminary calculation, the sector could lose $600,000 per week in these additional charges.
José Antonio Camposano, President of the National Chamber of Aquaculture, indicated that despite the fact that there are signs of recovery in China, crustacean orders have declined. He added that in other markets, such as the European Union and the United States, a decrease in economic activity and delays due to the coronavirus are also beginning to impact the sector.
Minister Ontaneda said that one of the other problems facing the commercial and export sector is the lack of liquidity due to the delay in payments by importing companies in China (and other important destinations of Ecuadorian products). This is causing delays in the payments of the production chains in the country.
To reduce the impact of this on Ecuador’s economy, the Government has opened up lines of credit through public banks to immediately generate loans supporting the productive and export sectors—specifically in production, pre-shipment and post-shipment lines.
According to Ontaneda, the National Financial Corporation is analyzing offering $1 million credit lines that can be approved in five days. In order for the commercial sector to recover liquidity, the possibility of immediately implementing the drawback (automatic tax refund) for the export sector was also raised.
A meeting with the Ministry of Economy and Finance is expected next week to review these proposals.