ECUADORIAN STRATEGIC SECTORS

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INVESTMENT

OPORTUNITIES

ECUADOR

INVESTMENT

LAWS

AND

REGULATIONS

INVESTMENT LAWS AND REGULATIONS

Constitutional Principles

Promote a new trade and investment regime between States on the basis of justice, solidarity, complementarily (…) Deny the possibility that dispute resolution with foreign companies becomes a conflict between Governments.

Production, Commerce and Investments Act

Establishes a legal regime which all foreign and domestic commerce agents must abide.

same rights and obligations as national investors.

Transfers.

Investors have the right to transfer overseas the complete or partial amounts gained through their commercial activities, if and when all fiscal obligations are met.

Rule of Law.

Possibility of subscribing investment contracts which can lead to international arbitration.

Taxation Stability.

Long term applicable taxes when a new investment is presented.

Rule of Law.

Possibility of subscribing investment contracts which can lead to international arbitration.

No Seizures.

Investments shall no be seized, expropriated or nationalized, directly or indirectly, with the exception of those cases which respond to public interest and only when the required legal procedures have been taken into account (…) non discrimination as well as fair and equal treatment must be observed.

Financing.

Liberty to access the national financial system and stock market in order to obtain the necessary resources for the short, medium and long term development of investment projects.

INVESTMENT PROTECTION

1.

Foreign investors and investments will benefit from protection under the rule of law.

2.

They shall receive the same legal treatment as

Ecuadorian investors within the national territory.

3. Investors rights are recognized.

4. Investment Contracts can be signed.

INVESTMENT PROTECTION

INVESTORS

RIGHTS

To produce and commercialize all licit goods and services.

To access to all administrative procedures in order to control speculative behaviors.

To import and export goods

To transfer overseas all dividends obtained periodically.

INVESTMENT PROTECTION

Arbitral Clauses may be enacted in order to resolve controversies between the State and the private investor.

MECHANISM:

ADMIN.

VENUE

AMICABLE

SOLUTION

60 DAYS

MEDIATION

3

MONTHS

ARBITRATION

RULE OF

LAW

FINAL

SOLUTION IS

INSTATED AND

ENFORCED

TAXATION

MATTERS ARE

NOT ADMISIBLE

APPLICATION OF INCENTIVES

(GENERAL, BY SECTOR & SPECIFIC)

GENERAL

• Gradual corporate income tax reduction

(from 25 to 22%)

New enterprises receive a 5 year tax cut.

No tax applicable for foreign money transfers.

Expenditure tax cuts on all investments for productivity, innovation and eco - efficiency.

ZEDES:

• Additional 5% tax reduction

• Exemption of VAT for imported goods

• Exemption of ISD payment of credits and for purchase of raw materials, production goods and services.

• Fiscal credit for VAT paid on purchase of raw materials, production goods and services

Tax Incentives Application

Sectors

d. Production of fresh, freezed or industrialized goods. e. Forest industry, Agro-forest chain & its products f. Metal mechanics; d. Petrochemicals; e. Pharmaceutical; f. Tourism; g. Renewable Energies; h. Logistical Services; i. Biotechnologies and software; j. Defined areas for import substitution.

Tax Incentives Application

SPECIFIC

In addition to “general” and “sector” incentives: all

investments undergone in under developed areas shall receive a 100% tax deduction

on all new workers for a 5 year time frame.

SPECIAL ECONOMICAL

DEVELOPMENT AREAS (ZEDES)

Geographical areas within the national territory which take into consideration infrastructure conditions, the environment and electricity, water and telecommunications access.

Shall be designated for:

1.- Technological transfer and innovation;

2- Diversify the industrial production frame.

3.- Logistical services.

SPECIAL ECONOMICAL

DEVELOPMENT AREAS (ZEDES)

Source for public, private and mixed capital investments.

Amount of the investment

• in accordance to the projects undertaken.

Projects aligned with the national strategy for productive transformation.

Impact of technological transfer on local and regional production. Increments on add value exports in prioritized areas.

THE MAJOR TRANSFORMATIONS IN

INVESTMENT REQUIRED FOR ECUADOR

The main objective of the Government of

Economist Rafael Correa is to build infrastructure works to attend the demands of 14 million Ecuadorians, to exploit strategic areas in the country to generate resources that will benefit the entire population, as well as the acquisition of resources that will allow developing these and other works.

To achieve this objective we have

The National Plan for Good Living

which seeks the development of

Ecuador, through effective planning processes, with particular emphasis on execution and integral management of strategic sectors.

Ecuador offers a stable regulatory framework.

The Ecuadorian

Government has as priority in public and private, national and foreign sectors.

The new legal framework includes:

National Assembly, Constitution, Public Companies

Law, Public Procurement Law, Production Code,

Planning and Public Finance Code, Mining Law,

New Hydrocarbon Law

ECUADOR STRATEGIC

SECTORS

Objectives:

ACHIEVE self sufficiency in electric generation, by-Products refining, access to information technology, and management of water resources.

TO BE PRODUCTIVE, with quality in electric services and telecommunications; extraction of hydrocarbons and minerals, and water resource development.

TO BE INCLUSIVE, in the provision of public services accessible to all people.

Goals:

Develop infrastructure, Employment generation, Technology transfer,

Consolidating investments in strategic sectors, improving systemic competitiveness

Chinese Companies Investment in Ecuador

Oil & Mining

TONGLING Acquired two projects in 652 miners

Cooper MM USD to the

Canadian company ECSA.

Estimated Investment $2,

000 million USD to 2014.

PETRO ORIENTAL,

operates blocks 14 and

17,has invested since

2006 until 2009 - 200MM

USD.

This company produces 12.812 barrel per day .

Chinese Companies Investment in Ecuador

ANDES

operates

PETROLEUM,

Tarapoa field , has invested since 2006 until 2009 – 392 MM USD.

This company produces

36.025 barrel per day .

SINOPEC (Lease

Petroleum Rigs); and others.

Signed Contract Agreements

With Ecuador

Coca Codo Sinclair

Hydroelectri c.

China Eximbank Financing of USD 1.682 million.

Sinohydro built and equipped by 2000 millio n USD.

Construction and equipment of the

Sopladora

Hydroelectric for 700 million USD.

Construction and equipment of the

Sopladora

Hydroelectric for 700 million USD.

CHINA Strategic partner of

Ecuador

Chinese construction companies Gezhouba and Sinohydro will build two of the largest infrastructure projects in the history of

Ecuador:

Sopladora

and

Coca Codo

Sinclair

. The budgets for the construction of hydroelectric plants are USD 700 million and USD1.700 million for

Sopladora and Coca Codo Sinclair, respectively.

The implementation of these projects will generate savings of $ 3 million per day approximately, supplying the thermal energy.

They will cover 37% of the power and 35% of the energy demand in Ecuador

Why to Invest in Ecuadorian

Projects?

Opportunity for Chinese Companies to develop and execute projects without the requirement to participate in a long bid process, when the offerings include financing on favorable terms.

Growth and profitability for Chinese

Companies.

Chinese Banks need to allocate their economical resources in order to increase their profits and diversify your portfolio.

(CDB, EXIMBANK, BANK OF CHINA, ICBC) support the financing for the Ecuadorian strategic projects.

SINOSURE support.

INVESTMENT PROJECTS IN

ECUADOR

Pacific Refinery

Airport and Port of Manta

Cement Factory

Cocoa Processing Plant

Mine silicon, polysilicon

Solar panels factory, microchips, ceramics.

Glass plant

Milk Processing Plant

Manufactures of metal bridges

Auto assembly plant

Factory of TV's and decoders

Why to Invest in Ecuadorian

Electricity Projects ?

Opportunity for Chinese companies to build infrastructure projects overseas.

Priority projects that allow us to decrease the generation cost.

Significant economic saving to the State by reducing the fuel imports diesel ) and export the fuel refinery .

Change on the energetic matrix through the use of clean technology reducing CO2 emissions.

Minimum risk of electric black out.

Energetic sovereignty.

Why To Invest In Ecuadorian

Water Projects ?

Risk Reduction caused by drought and floods.

To protect the life of the population.

More hectares available for irrigation to be used in the agriculture sector

(alimentary Sovereignty and exportation)

Savings to the State and population through disaster prevention.

Opportunity for Chinese companies to build infrastructure projects overseas.

Why Invest In Ecuadorian Mining

Projects ?

High potential for prospecting

(Unexplored country)

Current concessions represent only

4.31% of the country surface.

96.83% are in exploration phase and

3.17% in exploitation

High Probabilities of success

KINROSS : Most important world wide gold discovery in the last 10 years

Adequate business conditions

Negotiation contracts underway

(KINROSS, ECSA, IMC and IAMGOLD)

Legal framework

New incentives

Guarantees of investment through contracts

Adequate infrastructure and geographic location

Why Invest In Ecuadorian oil projects (Pacific Refinery) ?

Only high conversion refinery of crude oil in South America’s Pacific

Coast.

Strategic location for receiving raw material and world wide distribution.

Ecuadorian Oil by-products captive market.

Highly unsatisfied demand of Oil derivatives in the region.

Placement of total excess of electrical generation in National market.

Highly profitable investment sector.

New Oilfields development (South-

East)

Ecuadorian New Cement

Projects

CHIMBORAZO NL

ISIMANSHI

AMAZONAS

AMAZONAS 0.75

ISIMANSHI 0.5

CHIMBORAZO NEW

LINE

Millions of tons per year

1

Aditional Needs for 2011

1 million tons for:

1.1.600 Km of concrete roads

2.800.000 houses

3.1 electrical power dam

26

!

Ecuadorian New Cement Projects

Share Holders

Private Partner

Social Security

State entity (EPCE)

Employees

Communities

Shares

51%

22%

17%

5%

5%

MANTA MEGA PROJECT

Total Overhaul

Flight Coverage:

Location:

Domestic and International

Manta, Manabí Province

The project consists of developing a modern passenger terminal building with an approximate surface area of 4.466m

2

; with a technical block of 254m

2

6.425m

2 construction; a SCI hangar of 3.780m

2

; and for vehicle parking, runway extension to reach 3700 mts., cargo terminal and training centre.

3700m x 46m FUTURE RUNWAY

DIMENSIONS:

REFERENTIAL

AMOUNT:

US$40.000.000,00

EXECUTION TIME: 18 months

MANTA AIRPORT MEGAPROJECT

The following is required to execute this Mega

Project:

Significant Passenger and Export-Import cargo to and from Asia.

Investors under the strategic alliance figure, capable of complying with domestic and international airline requirements.

Creation of Pilot Training School for Latin

America.

CHARACTERISTICS OF THE STRATEGIC PARTNER

Ample experience in executing development projects for the aviation sector.

Extensively trained in operation and marketing of airports.

Know-how in transfer-airport management (HUB).

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