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Ecuador’s Custom Administration: A High-Risk Environment for Businesses
Ecuador’s customs administration is a high-risk environment for businesses, with corruption posing a significant threat to trade and investment. According to the World Bank’s Doing Business 2016 report, dealing with customs procedures in Ecuador is burdensome and irregular payments are common.
Public Procurement: A Haven for Corruption
The public procurement sector is another area of concern, with companies facing a very high risk of corruption when bidding on government contracts. The Bertelsmann Foundation’s Transformation Index 2014 found that corruption is widespread among procurement officials, and funds are often diverted to favored companies or individuals.
Natural Resources: A High-Risk Sector
The natural resources sector is also plagued by corruption, with the lack of transparency in the extractive industries making it difficult for companies to operate. The Natural Resource Governance Institute has highlighted the need for greater transparency in the sector, including the disclosure of environmental impact assessments and budget figures.
Legislation: Poor Enforcement
Ecuador’s anti-corruption legal framework is poorly enforced, with only a small percentage of respondents believing that anti-corruption laws are effective. The country has ratified several international conventions against corruption, but its implementation remains weak.
Civil Society: Underdeveloped and Restricted
Civil society in Ecuador is underdeveloped and restricted, with the government’s monopoly on power excluding any civic participation that is not in line with its approach. Freedom of assembly is protected by law, but not always respected in practice, while freedom of speech and press are severely restricted.
Recommendations for Businesses
Companies operating in Ecuador should exercise caution when dealing with customs authorities, public procurement processes, and the natural resources sector. They should also be aware of the restrictions on civil society and the lack of transparency in certain sectors. To mitigate risks, businesses may want to consider using specialized due diligence tools and engaging with local stakeholders to promote greater transparency and accountability.
Sources
- World Bank: Doing Business 2016
- World Economic Forum: Global Competitiveness Report 2015-2016
- US Department of State: Investment Climate Statement – Ecuador 2015
- Freedom House: Freedom in the World – Ecuador 2015
- Freedom House: Freedom of the Press – Ecuador 2015
- Global Security: ‘Ecuador - Corruption’, 27 June 2015
- US Department of State: Human Rights Practices Report – Ecuador 2014
- World Economic Forum: The Global Enabling Trade Report 2014
- Bertelsmann Foundation: Transformation Index – Ecuador 2014
- Miller Chevalier: Latin America Corruption Survey, June 2012
- Natural Resource Governance Institute: Ecuador Country Profile.