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Investment in Quito comprises 25% of Ecuador’s Foreign Direct Investment

by | Oct 28, 2023

Investment in Quito offers six factors that make it one of the most attractive Ecuadorian cities for Foreign Direct Investment (FDI).

Quito attracts, on average, 25% of Ecuador’s Foreign Direct Investment (FDI), equivalent to USD 200 million per year.

This positions Quito as one of the cities with the greatest attraction of resources from abroad, above Guayaquil.

This is outlined in the 2023 Investment Guide, produced by the Quito Chamber of Commerce (CCQ) and the Development Secretariat of the Municipality of the capital.

For Francisco González, coordinator of the Quito Opportunities Center project, the capital, like the rest of the country, can potentially attract more resources from abroad.

Advantages of investment in Quito

According to the 2023 Investment Guide, Quito can attract more capital due to six advantageous factors:

International Airport

Being the capital of Ecuador, Quito has an international airport that is essential for the growth of business through foreign trade.

In 2022, more than 239,000 tons of merchandise were exported through the Mariscal Sucre International Airport in Quito, and more than 47,000 tons of products were imported.

In the ten years of operation of the air terminal, nearly 2.3 million metric tons of cargo have been moved. More than 97.5% corresponds to international cargo, explains Corporación Quiport, which operates the airport

Infrastructure

The city also has a road system that allows merchandise transfer to the rest of the country, which translates into greater economic dynamism.

In addition, it is expected that this year, the Quito Metro will begin operating, which will cover 22.6 kilometers.

“The project for infrastructure investment in Quito will be the backbone of the city’s future integrated transportation system, which will shorten distances,” which means saving time and money, explains the World Bank.

The city is also attractive for business because it has convention centers and large hotels for holding national and international meetings, conferences, and congresses.

Institutions

Another advantage of investment in Quito is that, being the capital, businesses have greater access to public institutions to obtain permits and comply with procedures.

There is greater access to financial institutions and offices of international organizations that support small businesses, such as the Inter-American Development Bank (IDB) and the Latin American Development Bank CAF.

Professionals

Many of the country’s universities and institutes are located in Quito.

Ecuador has 71 registered and accredited higher education institutions, 32% in the capital.

The presence of universities and institutes means greater access to education, which translates into prepared professionals. For this reason, 37% of the Economically Active Population (EAP) of Quito has higher education. The figure is above the national average, which reaches 20%.

In addition, 6% of the city’s EAP have a postgraduate degree. That’s four percentage points above the national average, which is 2%.

Business environment

The country has nearly 850,000 business establishments, according to the Business and Commercial Establishments Directory of the National Institute of Statistics and Censuses (INEC).

About 186,000 of them, or what is equal to 22%, are in Quito.

If analyzed by size, there are 16,572 large and medium-sized companies in Ecuador, which is equivalent to 2% of the entire business sector.

The reality of the capital is different; 4,424 or 27% of its companies are large or medium-sized, which means that, at least, they register sales of USD 2 million per year and have at least 100 workers.

Sectors related to commerce, other service activities, scientific and technical professional activities, manufacturing industries, and transportation and storage comprise approximately 73% of the total companies domiciled in Quito.

Tourist destination

The international airport and geographical location make Quito one of the main tourist destinations in Ecuador, which means income from accommodations, entertainment, and commerce, among other activities.

In total, 15 passenger airlines connect Quito directly with 14 international destinations and eight destinations within Ecuador, making the capital the most connected city in the country by air.

The city has one of the main tourist attractions in the country: the Middle of the World.

Tourists visit Quito to appreciate its historic center, which earned the city recognition as the First Cultural Heritage of Humanity. In 2022, 531,097 national and foreign tourists visited the capital, according to Quito Turismo.

The foreign citizens who visit Quito the most come from the United States, Colombia, Spain, Peru, and Canada.

Paperwork and red tape

The city also has particular pending challenges that affect Foreign Direct Investment in Quito

One of them is the excessive paperwork in some processes, says the coordinator of the Quito Opportunities Center project.

The World Bank agrees with this, stating that a person needs to complete 11 procedures that take 48.5 days to open a company in Quito.

Among them is the Single Metropolitan License for the Exercise of Economic Activities (LUAE).

On the other hand, in Santiago de Chile, it takes four days to establish a company.

González adds that the arrival of investment in Quito is also threatened by a degree of uncertainty.

In some instances, the return on investment in Quito for businessmen is lower due to the country risk, which has increased and makes the cost of credit obtained abroad more expensive, González concludes.

Investment in Quito is a viable opportunity

Despite its challenges, Quito, Ecuador, presents a viable opportunity for foreign direct investment due to its strategic location and a government committed to fostering a favorable business climate.

Situated in the heart of South America, Quito serves as a gateway to a market of over 100 million consumers in the Andean region, making it a pivotal hub for trade and commerce.

Ecuador’s government has implemented a series of economic reforms, offering incentives and legal protections for foreign investors, which include tax breaks, simplified regulations, and bilateral investment treaties with several countries.

Quito, Ecuador, offers investors access to a modern international airport, highly functional infrastructure, institutional stability, an educated workforce, and a vibrant environment for conducting business.

 

 

Contact LATAM FDI to discuss your foreign direct investment plans in Latin America.

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