Ecuador offers opportunities in electricity, housing: PowerChina

Source:Global Times Published: 2016/11/7 22:08:39

Editor's Note:

Ahead of President Xi Jinping's two-day visit to Ecuador starting on November 17, Hou Xiaotun (Hou), manager of the Americas Division of State-owned PowerChina International Group, spoke to Global Times reporter Li Xuanmin (GT) in Beijing on Monday, discussing the company's investment in Ecuador and the country's overall business environment.

GT: When did PowerChina enter the Ecuadorian market? And how's the current investment situation there?

Hou: PowerChina has carried out several projects worth $3.5 billion in Ecuador since entering the market in 2009, with investments in sectors like hydroelectric power, housing development and highways. We also have exported construction equipment worth $200 million to Ecuador.

The $2 billion Coca Coda Sinclair hydropower station, which is expected to put into use on November 18 with installed capacity of 1,500 megawatts, is the biggest hydropower station Chinese companies have ever built overseas. It is also the country's largest hydropower project, and will meet 40 percent of the nation's electric energy needs. The project also provides 7,000 jobs locally, according to Ecuador's Vice President Jorge Glas.

GT: Why did PowerChina make inroads into Ecuador? Do you see any opportunities?

Hou: Ecuador has abundant reserves of natural resources, like hydropower resources, fossil fuels and minerals. Yet, the country lacks the key management skills and capital to transform its natural advantages into sources of economic growth.

Ecuador's basic infrastructure is just such an example. Due to its low level of development, Ecuador has huge demand for investment in infrastructure. At the same time, Chinese contractors like PowerChina have accumulated experience in related fields, and they also offer relatively favorable prices to the government. These competitive advantages represent a reason for our investment in Ecuador.

For the Coca Coda Sinclair hydropower project, the Export-Import Bank of China financed 85 percent of the cost through a $1.68 billion loan. The abundant capital pool also backed our projects in the Latin American country.

In addition, Ecuador has an open economy. The Ecuadorian government has pledged to guarantee the rights of foreign investors, and they will enjoy tax incentives as well.

We are also attracted by Ecuador's stable political situation, sound legal environment, inexpensive labor and cheap construction materials.

GT: How about the challenges? Has PowerChina encountered any difficulties?

Hou: It's time-consuming for the local parities, including Ecuadorian land owners and supervision authorities, to recognize and trust Chinese technological standards, as the US standards are more commonly adopted in the infrastructure building area.

Another difficulty is the strong influence of local labor organizations, which might impose another barrier for Chinese investors. So we advise Chinese companies planning to enter the Ecuadorian market to sign collective contracts with local labor unions, as well as set up complete salary, subsidiary and holiday systems to guarantee the rights of local employees.

GT: What do you think of the benefits that Chinese investment can bring to Ecuador?

Hou: Economic cooperation between China and Ecuador brings mutual benefit. The economies of China and Ecuador are mutually complementary.

In the midst of the plunging commodity prices, economic growth in Ecuador, whose financial structure is simple and relies heavily on exports of minerals and fossils, has been sluggish in recent years. At this time, Chinese capital inflows into the region will also provide stimulus and offer more job opportunities.


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