Category: Ecuador for Investors

7 Negatives to Life in Ecuador

This week on the Insider’s Newsletter I covered 7 big negatives to life in Ecuador…

I love living in Ecuador but it’s not all peachy like you’ve probably read elsewhere…

Many ask, “If Ecuador’s so great, why hasn’t prices shot up already like they did in Costa Rica?” The short answer is that it’s a little further away and not as discovered, but there are other reasons some choose NOT to invest in Ecuador.

7. Prices of consumer goods: It’s true that housing, food, transport and medical costs are all significantly cheaper in Ecuador than in the US/Europe. BUT costs of consumer goods like digital cameras, computers and brand-name clothes are often around double that of the States thanks to the import taxes imposed by the government.

6. Lack of expat community: 90% of the people who write me say they’re looking for cheap property near things to do. Well, the coast of Ecuador is, uh, rural, so in many areas there aren’t many “social” things to do (But Manta is an exception, the coast’s largest city with plenty to do.)

5. Lack of public golf courses: All the golf courses I know of in Ecuador are private, meaning you have to know someone (or do someone a sexual favor) just to get on the green. This could change shortly though. If there is a new public course available I’m unaware of please write me.

4. Price of air tickets from the US: The cheapest ticket I’ve ever found was $250 one way from Miami to Quito. Roundtrip the cheapest out there start around $350/400. Other Latin destinations closer to home usually can be a little cheaper than that these days.

3. Can’t drive there, or bring used cars: As mentioned a few weeks ago, its difficult to bring used cars to Ecuador and you can’t simply drive them down (no road connects North and South America).

2. Left-leaning president: The current president Rafael Correa is left-leaning but he’s studied Economy in Europe and is not nearly as extremist as Chavez. Since he’s came to office with the exception of a few blips, business has hummed along as usual but things have gotten a bit more orderly and for the first time people feel like they have to pay taxes (annoying the country’s rich). Ecuador can’t close itself, it needs the outside world, foreign investment and tourism. And besides, the Ecuadorian people are capitalists, through and through, and are a small, peaceful bunch who generally like foreigners (you’re probably taller than most of them).

1. Cloudy coast: Most of the Ecuador coast is overcast most of the year. Though, there are a few areas that get more sun. For instance, on the southern coast the sunny season with sapphire blue water is from January to early April, the rest of the year is mostly overcast. But I like it though cause I burn easy.

Ecuador’s food, culture, people, weather, and business opps are amazing, but it’s helpful to have someone tell you a few of the negatives before you invest on that flight down.

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The Dollar Crash, Effects on Ecuador

I’m ticked, like most Americans as I continue to watch the dollar drop in value. With the dollar at or near all-time lows against many foreign currencies, like the Euro, I thought I’d mention the effects I’ve seen in Ecuador.

Ecuador is one of the few countries in the world that actually uses the dollar as it’s official currency. In Latin America, only El Salvador and Panama also use the dollar.

This means that as the dollar drops, and the rest of the world gets more expensive for Americans on a fixed, dollar pension…their only options will be to stay at home (what I think the American government wants) or choose to live in one of the few other countries with the dollar, like Ecuador.

This is a BIG deal and makes Ecuador a very attractive both short and long term investment, as well as an interesting, warm, relatively-nearby place to retire for many Americans.

For example, in 2006 I lived in Colombia, then the dollar traded at around 1-2500 Colombian Pesos, now a dollar is worth 1811 pesos, a 28% drop in value. When I visited Brazil in 2006 the Real was trading around 2.15 to the dollar, now it’s at 1.57 to the greenback, a 27% drop.

And if the world’s rich realize the dollar is a losing investment, and dump it, the dollar will be worth even less, as I saw on a recent trip to Hong Kong where many of the rich I met who before held dollars now hold their savings in Chinese Yuan. It’s well-documented the Yuan is undervalued yet continues to gain in value against the dollar at a steady, government-regulated pace (it’s gained 4.5% over the last year against the dollar according to xe.com).

Buy Yuan. Invest in Ecuador. Interesting.

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Difficult to Bring Computers to Ecuador?

Ecuador passed a law recently saying there will be no import tariff taxes on computers. For personal use you would not pay anything, but if you bring several down at once they may hit you with a 12% local tax charge.

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How to Start an Importing Business in Ecuador

First, you would need to get a “RUC” which is a local tax ID number and then get registered in Customs “las Aduanas” as an importer.

You can do both with one of the many agents with offices near the airport often in less than a month.

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Can I Bring a Plane to Ecuador?

Importing a boat or plane is similar to the procedures of importing a car.

Used cars are not permitted to enter Ecuador. New cars that cost over $80,000 are considered luxury items and will be taxes often for 100% of the estimated value. The same is applied to boats and planes.

If you can prove that the car, boat, or plane is for pure personal transportation purposes only you may not have to pay import taxes and fees. Best to check with a customs official BEFORE attempting this one.

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