Last Thursday, the National Assembly decided to file the draft Organic Law for Investment Attraction, Strengthening of the Securities Market and Digital Transformation that the Executive sent as an urgent economic order.
According to several businessmen, this was a bad decision that harms the generation of projects and jobs.
Daniel Elmir, a businessman in the construction sector, says this is a sign that the Assembly members defend their interests more than those of the country, since the law had interesting things in the aspect of construction in public-private partnerships, which would generate new projects and public works with private money, which in turn would generate employment.
Elmir says that in other countries this type of alliance is very common, to have more agility in public works, but here they confuse privatization with concession, which has already happened -for example- with the port of Posorja.
“What is happening in the country is sad, they do not allow us to advance and fill us with obstacles and what is happening is that businessmen are looking for new countries to invest in, instead of staying in Ecuador because things are very complex. I believe that the Government is going to try to govern by decree and try to straighten out what it can,” says Elmir.
Felipe Rivadeneira, from the Federation of Exporters, comments that it is a lost opportunity and the political blockade so that the Government does not do well has taken its toll on the technical side.
“They were opportunities to do things differently to attract investment and generate employment… Ecuador needs to have different mechanisms to try to achieve two objectives: the first is to shock the world to attract investment and the second, the main one, is to try to provide a solution to the almost seven out of ten Ecuadorians who are unemployed and underemployed,” says Rivadeneira.
He added that he hopes that this type of law will continue to be insisted on, making the Government a ‘mea culpa’ and socializing the projects more to try to reconcile Ecuador at a time when the country cannot be in radical positions.
Rivadeneira feels that what the law proposed on the subject of the modernization of free zones was really important, since it lowered costs throughout the logistics chain. He says it was also important to make public-private partnerships simpler and simpler, so that the State does not spend resources on issues that can easily be delegated to the private sector. He believes that “politics confused the concepts of granting a service with privatization, which is totally out of place.”
Miguel Rossignoli, a businessman in the technology and exchange of goods and services sector, says it must be understood that people continue to leave the country because the level of labor supply in Ecuador is far below what is needed, with a lot of informality and a large number of entrepreneurships not legalized or generated by necessity.
“This project was not only intended to correct these shortcomings that the market has, but it was going to propose capturing investments from international companies with high quality standards and/or with protocols and procedures necessary for the international market. Not only is the issue of generating work and business partnerships with local suppliers lost, which could have improved and, in turn, have a new sector of demand for products… more training… more need to hire staff, who not only will not be hired but will no longer be prepared for a future industry. In other words, we do not open ourselves to the international market with international standards,” explained Rossignoli.
He believes that an immediate setback will be felt: “Socially it is terrible, economically it is staggeringly serious and intellectually we are holding back, we are obstructing ourselves from improvement.” Something that makes it difficult to train the local market to potentially be part of the offer in the future, as happened to countries like Chile, Singapore or as is happening to Vietnam now.
“Our potential channels to make ourselves known to international markets were immediately closed… most of the assembly members who deny the project are not producers, they are not manufacturers, they do not hire labor, they are not entrepreneurs… we are putting people – who have no idea how to produce – to deny a project that seeks to support production. The irony comes from the political and the affectation reaches the social,” says Rossignoli.
Another businessman, Raúl Estrada, from the industrial sector of sea products, believes that those who dedicate themselves to their activity will continue, but we must think that it works under the umbrella of the decisions made by the country’s authorities and all the elements work together, so thinking about the macro, there is a feeling that an option for money to flow within the country and to provoke external interest in the midst of a convulsed world is cut off in a complicated way.
“I ask: would you leave a convulsed place to go to another convulsed place? The answer is no,” points out Estrada, who adds that alternatives are lost for productive capital to come, which is what a country needs to give people work in the midst of the insecure situation in which it is.
The Chamber of Industries and Production of Ecuador issued a statement in which it indicated that “the attraction of national and foreign investment, as well as regulatory and political predictability, are fundamental factors for the collective development of Ecuador” and ‘it is unacceptable” that the project was archived because it contained tools for attracting and deepening investments.
I am an American who loves Ecuador, its multi-culturalism, its Constitution, the beauty of its land, and the spirit of its people. I am both a finance person and a scientist and have been in multiple businesses as Founder and CEO for decades. Some creativity is missing from the conversation. For example, in the States, we have a corporate structure called a “B” Corporation and others called “Social Purpose Corporations”. These structures are similar to larger businesses in so far as taxation goes. However, in their corporate charters, language is added that makes it clear; the interests of shareholders shall have no supremacy over the interests of other stakeholders. While at first blush one might ask “who would invest in such a governance structure for business?” it has come to pass that such organizations are valued by all stakeholders as they recognize the inherent interests the community of parties has in the welfare of the business, its longevity, and its reputation. It turns out that this is a more holistic approach to conducting one’s affairs. Such governance flexibility enables honoring the duty to all stakeholders to reign supreme rather than more egregious behavior that exalts selfishness and greed. There are other structures such as Public Development Corporations that enable local governments to support the entrepreneurial activities of local citizens. If Ecuador’s leadership will be more creative and less rigid in its economic development strategies, much good can be created. Historically, the reliance on “big deals”does not build self-reliance, diversification of economic activity, or social welfare for the broad population. Don’t make the same mistakes that have been done up North. I urge Ecuador’s leadership in the Office of the President and the Assembly to THINK DIFFERENTLY. The rewards can be great for future generations if one embraces new ways of thinking about the common goal of economic prosperity.
What’s president Lasso’s position on this issue? Is he in the loop? Does he even care? Where are his leadership skills? We need to put someone in power who understands economics, capitalism, intrapreneurship and all the benefits thereof. I understand the separation of powers between the executive and the Legislative but that separation While being respected, it requires leadership from the executive To have a government that actually accomplishes things for the benefit of the community, and then includes improved economy and increased employment opportunities.