Ecuador: A market on the rise for Indian companies.
By Sandeep Wasnik, Head of Data Research in LatAm Intersect PR
Ecuador is one of the most environmentally diverse countries in the world, due to latitude of the equator makes 0o (Zero Degree) it’s also called the earth “Belly Button”. The geography of Ecuador is quite diverse for a country that only covers a total of 283,560 square kilometers – of which 6,720 square kilometers is made up of water. The current population of the Ecuador is 17.8 Million, which is equivalent to 0.23% of the total world population, where 63.0 % of the population lives in urban region.
Today, Ecuador’s economy is the eighth largest in Latin America, with a gross domestic product (GDP) of $107.44 million (USD) in 2019, and major exporter of Petroleum Oil, Flowers, Bananas and Crustacean, but back in the 18th century, Ecuador become the known for the exporting of “Panama Hats” and was also exporting agricultural products, like cacao, bananas, and flowers. Basically, this Panama Hat is the “Ecuadorian hat” (Toquilla Straw Hat).
In 1835, Spanish vendor named Manuel Alfaro arrived in Montecristi to make his name and decided to take hand-made hats from Ecuador to Panama, where he would have more customers and a greater chance of success. Then, in the 1850s, the California Gold Strike occurred and as more and more travelers were passing through Panama, the Panama hat became increasingly popular.
Currently, the production is crude in Ecuador is nearly 505,000 barrel per day, the state-owned PetroEcuador is responsible for 80 percent of the crude production and remaining 20 percent from private-sector firms including Andes Petroleum and PetroOriental, two joint ventures between Chinese state-owned firms CNPC and Sinopec that together account for about 7 percent of Ecuador’s output.
In 2020 (Jan-Dec), The exportation of Ecuadorian Crude Petroleum recorded $4.99 billion (Exact figure – $4990445689, FOB Value), where Panama recorded top most importing of Crude Petroleum with a value of $2,173.94 million, followed by United States ($1,469.58 million), Chile ($604.09 million), China ($429.37 million), Japan ($151.07 million), India ($92.32 million), Peru ($55.30 million) and the Ivory Coast ($14.78 million). In India, Reliance Industries Limited and Nayara Energy Limited are the two principal refineries importing Ecuadorian Crude Petroleum.
Ecuador offers an attractive business environment that guarantees foreign investors the same rights as Ecuadorian citizens. Ecuador’s National Assembly approved a series of reforms to improve the process of starting a business in Ecuador as a way to stimulate local and foreign investment in the country and reactivate the economy after the Covid-19 pandemic.
In Ecuador, agriculture has traditionally employed a large proportion of the population; particularly, production of tropical specialty crops such as bananas, cacao, and coffee have provided much-needed foreign exchange. Country already has the infrastructure to support the industry, being the largest producer of bananas in the world as well as providing 70% of the world’s fine upper class cocoa beans.
There are also Ecuadorian fruits like mangoes, passion fruit, grapes, pitahaya and avocados having the potential for exportation. Ecuador is also mayor exporter of flowers and buds (HS Code – 0603) value of $8.367 billion, Crustacean (HS Code – 0306) value of $6.502 billion, bananas in the form of fresh or dried (HS Code – 0803) value of $4.185 billion in 2020.
India and Ecuador established official diplomatic relations in 1969, also both countries signed several bilateral agreements on corporation in education sector (2006), agriculture (2008), and economic co-operation (2013). Both countries also signed a Protocol on Joint Economic and Trade Committee (JETCO) in 9th of October, 2015 in New Delhi to strengthen the trade relations between the countries. On 17th May 2017, India-Ecuador (JETCO) first meeting was held and decided to explore the possibility of Trade Agreement through Joint Feasibility Study (JFS), where Terms of Reference for the JFS were approved and signed by both countries on 22nd May 2018. The infographics shows bilateral trade of Ecuador and India of year 2020 (January to December)
Ecuador exports nearly 88 types of products recorded value $171.71 million (Exact figure – $171713343, FOB Value) in 2020 (January to December) to India, the top ten product exportation are Petroleum Crude – $92.32 million followed by Rough Wood – $30.97 million, Cocoa Beans (Whole/Broken-Raw/Roasted) – $19.28 million, Other article of wood – $9.77 million, Wood Sawn – $4.34 million and others.
On the other hand, Ecuador imports nearly 1,223 types of products from India of value $303.94 million (Exact Value $303945359, CIF Values). The top most five product importation are motor cars and other motor vehicles principally designed for the transport of persons – $43.03 million, medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses – $38.20 million, polyacetals – $25.28 million, motorcycles – $15.49 million, unwrought aluminium – $12.67 million are shown.
In year 2000, Ecuador began officially adopted US Dollar as its national currency, by replacing the Ecuadorian Sucre. Only some Ecuadorean minted coins exist for small amounts less than one dollar; these coins have different symbols but are of equivalent value to U.S. coins. Using the US dollar does not imply that the cost of the products is similar as products in US. Today, in Ecuador, there are no currency conversion fees, and withdrawal fees in general are far lower than previously; imported goods such as electronics are significantly more expensive than in the United States, now these differences are not a result when exchange rate shifts.
Ecuadorians represent the highest medicine consumers per capita in South America. The country currently imports $1.067 billion (Exact Value $1067872897, CIF Values) worth of pharmaceutical products from the world. Local companies and multinationals both generate millions of dollars in registered trademark drugs, while the generic medicines are far actually less commonly used; significantly reducing their access to the poor.
The author is the Head of Data Research in LatAm Intersect PR and Latin America Market Expert.