Export Promotion Estrategy2014 Regional Workshop in Latin America and The CaribeanJune - 2014

Export-oriented SMEs Development

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C o n t e n t s

I.Understanding Ecua-dorian framework

II.A short view of KSP recommendations

III.The Ecuadorian Agenda

IV.Conclusions

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U n d e r s t a n d i n g E c u a d o r i a n f r a m e w o r k

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I. Understanding Ecuadorian framework

▶ 18% primary (including oil).

▶ 13% Industry (including refin-ery).

▶ 65% services (including trad-ing services -50%-).

▶ The economic structure has not changed substantially.

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

20130%

20%

40%

60%

80%

100%

Gross National Product: composition

Primary Industry Services others

perc

enta

ge

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I. Understanding Ecuadorian framework

▶Ecuador's econ-omy depends on speculative and volatile interna-tional market conditions.

▶A dollarized economy also depends on net foreign currency entrance. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

(1)

-9,000

-6,000

-3,000

0

3,000

6,000

9,000

Net Exports: oil and non-oil net exports(US$ millions)

Oil Non Oil Net Exports

US

$ M

illi

on

s

(1) January - August 2013Fuente: Central Bank of Ecuador

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I. Understanding Ecuadorian framework

▶ It is important to develop production of goods and services in the areas of higher demand and greater innovation and knowl-edge to improve productivity and development conditions.

2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 20120%

20%

40%

60%

80%

100%

58% 54% 54%63% 61% 61% 57%

7% 8% 8% 9% 8% 9% 8%

23% 24% 26%21% 20% 23%

24%

11% 11% 11% 12% 12% 12% 12%

12% 11% 11% 8% 9% 9% 10%

46% 45% 47% 46% 47% 45% 47%

18% 17% 17% 16% 15% 17% 17%

17% 15% 15% 16% 17% 16% 16%

Technological composition of Non-Oil Exports and Imports

Primary Resource-based manufacturing Low TechnologyAverage Technology High Technology Others

perc

enta

ge

Non-Oil Exports Non-Oil Imports

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I. Ecuadorian framework for export promotion

▶ In conclusion:

▷ The challenges in export promotion are related with macroe-conomic stability.

▷ A dollarized economy also depends on net foreign currency entrance.

▷ Our exports grow less rapidly than the growth of world de-mand.

▷ Our imports grow faster than the growth of domestic de-mand.

▷ Doing different and better: added value, innovation are the keys for a sustainable production.

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A s h o r t v i e w o f K S P r e c o m m e n -d a t i o n s

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II. A short view of KSP recommendations

▶ Recommendations: Prioritizing Strategic Sectors▷ Short-term perspective.

▶ Fresh and processed foods.

▶ Grain mill products.

▶ Animal/vegetable oils & fats.

▶ Dairy products and other food products.

▶ Apparel & footwear and wood products.

▷ Mid-term export promotion.

▶ Metal products.

▶ Tanks & containers of metal.

▶ Basic iron and steel and other general purpose machinery.

▶ Promoting petro-chemical (especially plastic & synthetic rubber) and bio-chemicals (fertilizers & nitrogen compounds, and soap, cleaning & cosmetic preparations).

▷ Long-run, developing.

▶ sectors of relatively high technology contents, including technology (hardware).

▶ Motors and bio-medicine.

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II. A short view of KSP recommendations

▶ Recommendations ▷ A. Framework for Industrial and Trade Policies: specific incen-

tive measures and assistance programs need to be reviewed on a regular basis to monitor their effectiveness in achieving the policy objectives.

▷ B. Priority Sectors for Industrial and Trade Policies: Selection of priority sectors reflects resource constraint faced by Ecuador.

▶ B-1. Two Sets of Priority Sectors: Code and Agenda.

▶ B-2. Classification of Priority Sectors: Import substitution or export promotion?

▶ B-3. Development Plans for Each Priority Sector: concrete and re-sult-oriented roadmap tailored to each sector (goals, resource mo-bilization, supportive measures…).

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II. A short view of KSP recommendations

▶ Recommendations ▷ C. The Sectoral Council for Production and the COMEX: SEN-

PLADES must be involved in the stage of formulation of the policies concerned.

▷ D. Private Investment: devise other ways and means to mobilize and channel domestic savings to the priority sectors.

▷ E. Tariff rates and the Policy Objectives: review tariffs in con-formity with the policy objective for the product.

▷ F. Export Financing and Insurance: public banks might consider offering export financing services of the latter type, especially for priority sectors and the MSMEs with preferential conditions.

▷ G. Measures Supporting MSMEs: need to be focused on, and consistently applied to, the MSMEs that prove to have desirable performances (for example, performance-based renewal and in-crease of financial supports).

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T h e e c u a d o r i a n a g e n d a

I.National Plan for Good Living 2013-2017

II.Interinstitutional Committee for change of the productive matrix

III.Strategy to Trans-form the Productive Structure

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III. The Ecuadorian Agenda

▶ National Plan for Good Living 2013-2017.

▷ Released on September, 2013 (With the approval of the Na-tional Planning Council).

▷ Objectives organization:

1. Change in power relationships in order to construct the people’s power.

2. Rights, liberties and capacities for Good Living.

3. Economic and productive transformation based on changing the productive structure.

▷ We will focus on the third block.

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III. The Ecuadorian Agenda

▶ National Plan for Good Living 2013-2017.

▶ SMEs include Popular sector.

▷ Main lines related to develop SMEs export oriented.▶ Objective 8: To consolidate the social and solidary eco-

nomic system, sustainably.

▷ To promote the technical and specialized training for the popular sector.

▷ To set the popular sector preferential terms of access to financing and ease in-terest rates to enterprises and / or expanding their existing production.

▷ To create an information system considering the popular sector production and exports.

▶ Objective 9: To guarantee dignified work in all forms.

▷ To support the development of youth entrepreneurship in areas of funding, training, technology transfer and business management.

▷ To implement projects from incubators, linked to national priorities to promote a culture of entrepreneurship.

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III. The Ecuadorian Agenda

▶ National Plan for Good Living 2013-2017 (PNBV13-17).

▷ Main lines related to develop SMEs export oriented.▶ Objective 10: To promote transformation of the productive

structure.

▷ To establish mechanisms to incorporate MSMEs in production chains of the pri-ority sectors.

▷ To simplify the formalities for MSMEs productive enterprises.

▷ To increase, improve, and diversify exports of goods and services, with the ad-dition of new actors, especially MSMEs and the popular sector.

▷ To promote productive transformation, Ecuadorian job, disaggregation and technology transfer, and avoid unfair competition in trade agreements and in-vestment protection negotiations.

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III. The Ecuadorian Agenda

▷ Interinstitutional Committee for change of the productive matrix.

▶ Vice-presidency (on charge).

▶ Members:

▷ National Secretary of Planning and Development (SENPLADES).

▷ Coordinating Ministry of Production, Employment, and Competitive-ness (MCPEC).

▷ Coordinating Ministry of Strategic Sectors (MICSE).

▷ Coordinating Ministry of Knowledge and Human Talent (MCCTH).

▷ Coordinating Ministry of Economic Policy (MCPE).

▷ Coordinating Ministry of Social Development (MCDS).

▷ National Secretary of Higher Education, Science and Technology (SE-NESCYT).

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III. The Ecuadorian Agenda

▷ Interinstitutional Committee for change of the productive matrix.

▶ Main tasks:

▷ To adopt and operationalize the Strategy to Transform the Productive Structure (under construction).

▷ To develop and articulate policies, plans, programs and projects based on the strategy.

▷ Report to the National Planning Council, progress and fulfillment of the objectives of the strategy.

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III. The Ecuadorian Agenda

▶ Strategy to Transform the Productive Structure (under con-struction).

▷ Objectives related with export promotion: ▶ Increase and diversify exports.

▶ Diversify production and markets.

▶ Increase intensive production in innovation, technology, and knowledge.

▶ Increase value and incorporate the Ecuadorian component in pro-duction.

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III. The Ecuadorian Agenda

▶ Strategy to Transform the Productive Structure (under construc-tion)

▶ Sectoral policies: selected chains:▷ Primary sector, based on natural resources.

▶ Processed coffee, cocoa, fish and dairy products.

▷ Industrial goods.

▶ Petroleum.

▶ Metalworking.

▶ Chemicals and pharmaceutical.

▶ Paper and cardboard.

▶ Plastic and rubber.

▷ Services.

▶ Knowledge and technology.

▶ Tour Operators.

▶ Logistics.

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III. The Ecuadorian Agenda

▶ Strategy to Transform the Productive Structure (under construc-tion).

▷ Economic policies and productive incentives:

▶ Financial facilities for foreign trade: letters of credit and other (from US$ 50.000).

▶ Reducing formalities: three days for an export authorization.

▶ Incentives and private investment: venture capital fund public-private up to US$ 135 million.

▶ Foreign Trade: Commercial management to reduce non-tariff barriers in export markets.

▶ Development and promotion of exportable services sector: tourism, software and other professional services.

▷ Human talent and innovation:

▶ To reform Technical Technical Training Institutes for productive trans-formation.

▶ To promote culture of innovative entrepreneurship

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C o n c l u s i o n s

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IV. Conclusions

▶ The develop of SMEs export oriented are encouraged from National Planning under Economic and productive transfor-mation based on changing the productive structure block.

▶ The Strategy to Transform the Productive Structure is under construction (finished by the end of June, 2014).

▶ Ministries and private sector are now working with the main guidelines of the National Planning (PNBV13-17), and in spe-cific guidelines of the Interinstitutional Committee.

▶ The first steps are given in strengthen the national industry (import substitution).