Adding value needed to break South American nation’s cycle of poverty
The new Ecuador ambassador has arrived with a plan: to ask Korean companies and officials to have vision and realize that Ecuador is not the same country that it was many years ago.
“We are building an infrastructure for Ecuador that will help us get out of this circle of poverty,” Nicolas Trujillo told The Korea Herald during his first interview with the Korean press.
The first thing on his plate is to stimulate Ecuadorian agricultural exports to South Korea.
“We believe both countries have highly complimentary economies,” he said.
Trujillo noted that Ecuador has the ability to produce 8 times more food than it consumes, yet many of the products Korea purchases from Ecuador come from other countries.
“We can provide higher quality items at lower cost,” he said.
For trade to flourish, Ecuador is looking to set up a complimentary trade development agreement with Korea in the near future.
As it stands now, Ecuadorian roses are not imported from the source but through a third party such as Russia, China or Holland.
“One of my objectives is to create more direct connections between exporters in Ecuador that can meet and fulfill the need that Korea currently has, or we can identify and develop products that Korea may not be aware of, like Ecuador has excellent passion fruit,” he said.
Another product Ecuador is looking to export here is its shrimp.
Korea imports large amounts of shrimp from Southeast Asia due to the logistical costs.
The No. 2 shrimp supplier to the world understands this and Trujillo has a plan.
He believes the ships that are already carrying Korean exports to Latin America can also pick up Ecuadorian products such as shrimp and bananas to deliver to Korean shores.
Ecuador Ambassador Nicolas Trujillo (Yoav Cerralbo/The Korea Herald)
“We can more than compete on the cost basis but what we need to do is create awareness with the importers,” he said. “Once they are exposed to the quality, consistency, pricing structure and availability year-round of Ecuadorian products, we will then have an incredible opportunity to help reduce that tremendous trade deficit that Korea has with Ecuador.”
While bilateral trade has grown to almost $900 million, the trade deficit of $700 million worries Ecuador.
Ecuador has provided over a $1 billion of contracts to Korean engineering, construction and oil refinery development companies throughout the years.
“We believe that Ecuador has been a very supportive economic partner towards the development of Korean sales in Ecuador,” Trujillo said. “Hence my No. 1 goal is to create an environment where we can reciprocate that behavior by Ecuador and allow us the opportunity to show our products and compete on a fair basis within this market.”
Pulitzer Prize-winning American journalist Thomas Friedman, who has written extensively on foreign affairs, said in his book “The Lexus and the Olive Tree” that there are two kinds of people, leaders and followers.
“We are of the mindset that if you create an environment that helps motivate the type of behavior we are trying to motivate, then eventually investors will overlook Ecuador’s past challenges and move forward,” Trujillo said.
Ecuador has the most stable government it has had in a long time. It has its lowest debt to gross domestic product ratio of the last decade.
Its new economic policies of reducing the income tax rate by three points over the next three years are part of the aggressive stance to attract foreign direct investment that will add to the value of products that are currently produced in Ecuador.
“We’re setting up free trade zones where the government will not charge any value added tax, plus we will build any infrastructure a company needs to operate effectively,” Trujillo said.
Ecuador’s biggest investment project right now is to build refineries. Currently, Ecuador ships its heavy crude to import diesel. There are only two locations in the Americas where large amounts of heavy crude can be refined, Venezuela and New Orleans.
Another giant project is the renovation of Manta Airport, a $1.4 billion project that will connect it with waterways into Brazil making this ancient city a hub for Asian products entering into Latin America.
“We are not asking Korea to guarantee loans to build hotels; we are asking them to help us build strategic activities that power industry and generate growth. We are asking them to come to Ecuador and invest in value added businesses,” he said.
On its part, Ecuador is working on building a better logistics system.
“We need vision and support not only from President Lee (Myung-bak), who has committed his support to Ecuador, but also from the institutions that can execute that vision,” he said.
By Yoav Cerralbo (email@example.com