Category: Investor News/Analysis

Is Ecuador the next Venezuela?

I’ve been in a few communal showers, but thankfully never in a prison one.

And so I’ve heard, dropping the soap is “how it starts”.

Similar to that… Ecuador is currently on a predictable path to become another Venezuela.

I for one hope it doesn’t happen, Ecuador now is certainly NOT Venezuela, still very capitalistic, but it’s just history, man.

Like when a country elects a fiery, entertaining ruler who instigates racial prejudices and violence, we know what happens.

Yea, or do we?

Like for the president to kick out the congress, install his own people, intimidate the press, eliminate term limits, install capital controls. On and on it goes until one day you think.. “oh sh*t!”

Like one Venezuelan client of mine said, “Yea, the marches, that’s how it starts, but it doesn’t do a da** thing.”

This week the president just followed the next step in his plan to convert Ecuador into another Venezuela, or Cuba…

Right now, on any amount you try to transfer out of Ecuador over about $1,000, you have to pay a 5% exit tax on the whole amount. And the max you can take out of Ecuador in cash is $10,000 tax free.

Well, the new proposal by the president wants to lower the max on the tax-free cash limit to $1,000. Effectively putting a nice cap on ALL THE MONEY in Ecuador.

Want to take it out? Going to pay that 5% tax.

Among other proposals lost in the wash are what Venezuela already has in place, like putting limits on how much Ecuadorians can spend abroad on their credit cards, etc.

My take, I’ve always been one to say you should never put more than 10% of your total portfolio in Ecuador. Ecuador’s a nice diversification, but that’s it.

Especially now, any money you put in Ecuador better be able to generate you over well over 5% return a year or its simply not worth it.

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The 3 Most Visited Beaches In Ecuador

This week I got an email from a subscriber…“Hey Dom, I’d like to put a business on the beach in Ecuador, and from your experience, what would be the top3 most visited beaches in Ecuador, based on visitors and not whether they are foreigners or nationals?”

ME: Well, I don’t have the exact statistics (I don’t think anyone does!) but from my experience I’d say the mostvisited beaches in Ecuador are…

1. Montanita- Been THE big, new hot spot on the coast for foreign and local tourists alike since 2011.  This place is packed shoulder-to-shoulder on weekends and holidays but has tourists year-round, every day of the week.

2. Salinas- For decades this peninsula has been the go-to beach getaway destination for locals from the nearby city of Guayaquil, and also from the Cuenca area, and since about 2011 been growing in popularity with foreign expats.  The problem is the noticeable lack of beachfront hotels because most of the boardwalk is covered by condo buildings limiting tourism growth.

3a. Atacames/Tonsupa- For decades its been the go-to spot on the coast for locals from Ecuador‘s capital and second largest city (Quito).

3b. Playas- Another up-and-comer, its proximity to the largest city in Ecuador (1 hour from Guayaquil and a new road coming) helps a lot.

3c. Puerto Lopez- Popular with foreign tourists due to the whale watching (July-October) and its proximity for day-trip excursions to “the poor man’s Galapagos” The island of Isla de La Plata.  But its proximity to one of the largest cities on the coast of Ecuador (Manta) as well as Porto Viejo helps a lot to attract locals on the weekends and holidays.

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Real-life earthquake experiences from around Ecuador

 Most say the quake epicenter was near the Ecuador-Colombia border.

They’re wrong.

It actually was a bit further south on the coast as the greater-Esmeraldas area actually didn’t sustain much damage.

Interesting how one town on the coast was barely affected near  a town that just got pounded.

The area most effected was the north central part of the coast from Pedernales-Canoa-Bahia-PortoViejo-Manta which got slammed.Yet interestingly Crucita, also in the area, didn’t sustain much damage.

Just south of Manta towns like Puerto Cayo and Olon shook but didn’t sustain much damage if at all.

The south coast (Salinas-Santa Elena area) escaped largely unscathed.

The highlands and Amazon regions also sustained little to no damage.

Here are actual experiences from around Ecuador:

Here in Quito, Ecuador, as I mentioned before, I felt the quake, but didn’t think much of it at the time, actually I had felt worse in this area.  The wine bottle danced on the table, but didn’t fall,the lights flickered, then everything was back to normal, no damage here.  It wasn’t until people started texting me with the news that I realized it was more serious on the coast.

A friend in Esmeraldas told me her area was fine and that actually the city of Esmeraldas made it largely unscathed.

A friend in Guayaquil said, “I was at home and it really started to shake, I could hear things falling to the floor from other houses, then the power went out for a half hour.  My neighborhood was in tact, a few blocks away one house lost a wall, that;s about it.”

A friend in Cuenca, David from Cuenca Car Share shared that he was sitting at a stop light and he thought the road was vibrating from some construction work.  No visible damage to buildings.

Lillian Asihene in Quito Centro said, “I am in Quito Centro Historico and live on a hill.  I was sitting at my computer and suddenly felt my house slightly shaking and estimated the time to be about thirty seconds.  I sat just wondering when the shaking would stop.  Since I am very familiar with earthquakes after living in Los Angeles, California, for 35 years, I knew exactly what I was experiencing and was not afraid, but did hope that the shaking would stop soon.  In the mean time, I e-mailed my family and friends in the States to let them know that an earthquake had occurred and that I was OK.  I was definitely relieved when the shaking stopped.  My area was spared the damages that occurred on the coast.”

Donald Logan in Olon on the southern coast said… “Nancy and I were in Olon, on the coast.  We were sitting for dinner at Eddies Taqueria, and Eddie had gone out to get shrimp.  When the large chandelier, chairs, and drink cooler began to move around violently, we quickly went to the doorway for an instant then bolted into the open area in front of the restaurant.  We watched the trees, power poles, and their lines swinging wildly as the quake went on.

We had alerted the rest of Eddies family at the same time, and neighbors and friends huddled in the clear for some time.  Power was out in many sectors of the town till midnight, and we watched as many of the residents pushed to higher ground anticipating the possible tsunami.”

A friend in Ayampe on southern coast said… “We were on the beach and felt the sand jump, then we all run for the hills thinking there would be a tsunami, but that was it, no visible damage in area.”

A friend in Puerto Cayo, a town 1 hour south of Manta, said, “all good here, power and internet went out but I’m not seeing any extensive visible damage to buildings.”

Russ in Manta said, “We live live in Manta on the forth floor,  the building.   It is our apartment building and now it is not livable.”

Roger Lewis in Vilcabamba said, “Had a glass or two of wine, taxi home and standing in the kitchen I thought to myself bloody hell that was damn good wine !!!”

Ed OConnor in Cuenca said, “Here in Cuenca, we are on the second floor of our apartment building. We could feel the building shake and things were vibrating. The TV was shaking and I got up to hold it to make sure it didn’t fall over. When I got up I had the sensation that I was drunk and the room was moving. ”

A friend in Cotacachi said, “I was sitting on the couch when for a moment I experienced what was like an underground train going under me and then I thought, “no, I’m in Cotacachi, not London.”  I was in an adobe one floor house and everything was just sort of moving and the ceiling lights were swinging.  We didn’t lose power here, neither people in London, since if you’re leaving there, you can Search Roommates Listed on MoveFlat to find the perfect roommate for you.  I realized it was an earthquake and I’d never experienced one.  I went out onto the porch and saw across the lawns other porch lights swinging and everything was just moving and seemed kind of blurry.”

Patrick Holland in Salinas said, “Minutes before, I had just taken a new medication. So, I felt dizzy. The building did sway a little. It only lasted for a minute, here in Salinas.

Then, I went to the balcony to look at pools and ocean. The pool was in “jacuzzi mode”.

I have since heard that some people have traveled Salinas from end to end, but not too many concerns here.”

Mark in Canoa said, “I’m fine Canoa is a disaster with many buildings completely destroyed.”

Scott in Galapagos at the time, ” Didn’t even feel anything.”

Ecuadorian friends in Chone said, “I was watching TV, and the wall to my room fell over, but the other way from where I was sitting, so all good, kept watching the show a few seconds more until power went out for good.  Not too bad here but roads are bad and the hospital got hit bad too, been without power, water for several days.”

– Read related: Emergency Water Removal and Mold Remediation – Atlanta Water Damage Pro.

The most interesting take I’ve seen online since the shake was from Court at Freedom Bike Rental who were in Canoa at the time.  Check it out here. 

Hasta pronto,

Domenick Buonamici
Quito Airport Suites– a B&B minutes from the new Quito
Guayaquil Airport Suites Mall del Sol- Luxury suites minutes from the airport in Guayaquil across the road from the Mall del Sol.

 

For more updates on the earthquake situation from the ground, please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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Updates on road closings, openings in Ecuador due to earthquake

“Dude, why is that wine bottle dancing on the table.” A Canadian friend said as we were hanging out in the lobby of my hotel near the Quito airport.

The quake was just powerful enough to be felt but that’s about it in Quito.  The bottle danced but didn’t fall over.

The lights flickered, then came back on.

And that was it.

A little tremor, I thought, and back to business as usual glad I wasn’t going to have to work without electricity (it really sucks when you have a hotel, and its so rare the power goes out here I don’t even have a generator).

I had felt earthquakes before, in southern California and other small ones since i had moved to Quito 3 years ago, but this one, while mild and no biggie so I thought, felt different.

It lasted a little longer than normal (like 20 seconds) and felt kind of “wavy” like we were riding gentle ocean waves.  The other quakes i have felt were more 1-3 second jolts making the windows snap (but not crack).

Anyway, my area (Quito) didn’t have any visible effects, but obviously the central Ecuador coast has been hit hard as I’m sure you’ve seen in the news.

Here’s an update on the road situation nationwide:

Over the last few days the highways connecting the highlands to the coast from Aloag-Santo Domingo and Latacunga-Mana have been closed due to landslides.  As of today, APR 19 they are both open, but before traveling them inquire to be sure.

The road Chillanes-Bucay is still closed.

The road connecting El Carmen – Flavio Alfaro is now partially open (one lane only).

The outlet road connecting El Matal to Jama is closed.

Other roads closed within the past 24 hrs that now report to be at least partially open for transit:

Highways connecting San Vicente-Jama-Pedernales, Puerto Cayo-Jipijapa, PortoViejo-Crucita.

The roads connecting Guayaquil to Cuenca were unaffected, assume if not listed here the roads nationwide are in fact OPEN.

Overall: I’d say trying to navigate the central coastal Ecuador realty from Pedernales-Bahia-Chone-Portoviejo for now is best avoided if possible, at best long traffic wait times are probable and at worst the roads may be re-closed deemed un-passable on a moments notice.

For more updates on the earthquake situation from the ground, please sign up for my Ecuador Insiders newsletter, revealing everything you need to know BEFORE you invest in Ecuador. Unsubscribe at any time:

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3 Things NOT To Bring To Ecuador For Resale

2 checked bags (with items that wouldn’t cause problems entering Ecuador)= $1000 profit.

I’m confident you can do that, because I just did. On my first try.

At least I paid for my plane ticket.

This week I finished selling the last of the products I brought to Ecuador for resale in November.

I made money on everything, although some items fetched less than I was hoping.

And some items took A LOT longer than I expected to sell.  But within 2 months of posting I did in fact sell everything.

Of course, I learned a lot, as my clients were 100% Ecuadorians.

Here are 3 things (or groups of things) I learned the hard way to not bring back for resale on my next go:  

1. GPS equipment.  Through my online research the margins looked really good and the machines themselves were small so I thought this was a no-brainer.  I was wrong, very difficult to sell GPS stuff in Ecuador to Ecuadorians.  There just isnt much demand for it.  I did sell what I brought but in the end on a device that costed me $89 I made like only $10.  I expected much more and I had it posted at $170 for a while but it didn’t move.

2.  Small items with high margins and low dollar amounts.  For instance, I brought back a package of certain quality fake eye lashes I bought in the states for $1 and thought to sell here at the market price around $10.  The fact is, selling online, sure the margin looks good, what is that?  1000% profit.  Low investment, low volume and low weight in bag.  That’s what i thought.  Problem was when selling online everyone expects you to send it to them or meet them and do the transaction.  For a few bucks its just not worth the time, plus, I ended up selling at $4 making $3.  I would not bring these types of items again.

3.  Unknown brands in Ecuador.  Lately, I’ve been a Lenovo computer guy.  I love ’em.  Although they are quite popular in the States, I knew they weren’t well known in Ecuador.  Anyway I brought one back and it was VERY hard to sell for a profit!  i did eventually sell it but for little profit.  I would not bring back anything in the future with an unknown brand locally.  In Ecuador, in my opinion the best known brands for lap tops are Apple, HP, Toshiba and then Dell.

Now its your turn!

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