Ecuador: Business environment at a glance. Check it out:
(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW
FROM THE ECONOMIST INTELLIGENCE UNIT
Policy towards private enterprise and competition
2006-07: Red tape, regulatory opacity, institutional politicisation and powerful vested interests distort the business climate. Attempts to modernise the state oil company, Petroecuador, and hire private managers for utilities are pursued only haltingly.
2008-10: Some progress on liberalising price controls in utilities and transport, but inefficiencies remain in Petroecuador.
Policy towards foreign investment
2006-07: Ambivalent attitude towards foreign direct investment (FDI). Disputes will sour the climate in the oil industry. Official policy is open, but FDI outside the oil industry will be slow to arrive.
2008-10: In the absence of a free-trade agreement (FTA) with the US, foreign investment inflows slow.
Foreign trade and exchange controls
2006-07: Efforts to revive FTA negotiations with the US are likely to fail, and trade preferences under the Andean Trade-Promotion and Drug-Eradication Act (ATPDEA) will expire. There will be few restrictions on foreign-exchange transactions.
2008-10: Exporters find it difficult to compete in US markets. Lingering doubts over sustainability of dollarisation, amid sluggish reform.
Taxes
2006-07: Complex, unwieldy tax system subject to frequent tinkering in the absence of wholesale reform. Some selective corporate tax increases to pay for one-off expenditurecommitments.
2008-10: Political opposition to reform will mean that, although the government should be able to push through improvements to compliance, attempts to raise rates or broaden the tax base may founder.
Financing
2006-07: Lending to the private sector increases from a low base. Rising interest rates amid tighter global liquidity complicate financing.
2008-10: Banks to strengthen balance sheets to meet Basel II standards. Medium- and long-term financing remains scarce.
The labour market
2006-07: Moves to reform labour laws, to guarantee the rights of workers to form unions and reduce the minimum number of workers required to form a union.
2008-10: Persistent scarcity of skilled labour aggravated by emigration.
Infrastructure
2006-07: Work on airport improvements and some hydroelectric projects will continue, but utilities services remain costly.
2008-10: Concessions to the private sector in areas such as airports and roads will encourage investment.
Copyright 2006 Economist Intelligence Unit
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