OTHER WAYS TO GROW
Ecuador’s spending policy under the previous administration was a boon for construction companies, which were awarded project upon project. However, given the current austerity measures, both construction companies and providers alike are shifting their priorities. The private sector is set to be the driver of the economy and far more efficient infrastructure projects are being sought using the PPP model. Jorge Baigorri, CEO of Holcim Ecuador, commented for TBY that, “The construction sector in general is not seeing much growth at the moment; however, we expect business to pick up as the private sector becomes more active in the economy and more foreign investment enters the country. There are talks of developing new ports, railways, roads, and even the mining industry, which requires a great deal of infrastructure; therefore, we are confident our industry will continue to grow.”
On top of that, the lack of public investment is making building materials companies look outward to regional markets, especially given the deepening of relations with members from the Pacific Alliance bloc, which Ecuador is set to join.
Regarding the real estate market, developers are creating new products to lure international investors. Given Ecuador’s dollarized economy, real estate investments offer a safe option compared to other Latam countries, some of which have suffered from currency devaluation. Speaking of the advantages of Ecuador’s real estate investment options, Pablo Campana, President of Campana Organization and a former minister of production, trade and investments, told TBY: “The most attractive factor of Ecuador is its dollarized economy, making the country free of currency risk. Second, the returns on each project are much more interesting than in other countries, and third, the initial investment capital to start a project is much lower than in other countries, mainly because of the cost of land and materials. A 45,000-sqm building with the same characteristics and quality in Ecuador costs USD55 million.”
For the first time in our Ecuador series, we include an interview with a balsa wood producer: INMAIA. Its General Manager, Vicente Izquierdo Aguilera, told TBY about high-level plans for Ecuador to become the world’s largest exporter of balsa wood, used for the construction of wind mills, fast trains floors, planes, and even recording studios, given the material’s low thermal conductivity, low density, and high resistance to compression, flexion, and traction.