They broke the piggy bank and now what… By: Eng. Joyce Ginatta, FIE’s president With the dollar as our currency as part of an economic straighten up, a piggy bank was created, so to say, a collection box called FEIREP which began functioning for oil crisis times. This allowed having certainty on the long term and with an average oil price barrel of approximately US$ 43, it was possible to accumulate US$ 1.300 million. So to speak, both, Alfredo Palacio (former President) and the current government, came in without care or expense. Pitifully, Alfredo Palacio –by a governmental granted decree - modified the FEIREP and afterwards in the current Presidential period eliminated the piggy bank and incorporated it to the General States Budget. The piggy bank was wasted since 2006, and it became more tragic, when the average Ecuadorian oil barrel price in 2007 was US$ 60; while until August 2008, it was of US$ 90, differential which was wasted instead of invested, generating another cross out against our country. If that reserve would have been maintained, more than US$ 4.500 million could have been accumulated, and that good practice would have made possible to confront the great crisis and generate great opportunities. When naming Chile as a reference, we can observe that this country marks a great difference. In that nation the equivalent of our oil is copper, and it‟s historic price was kept in US$ 1.8 per pound. When the price of copper shoots up, Chile creates a piggy bank to save an important differential and cover them of a worlds crisis. This makes Chilean piggy bank nowadays, a fat one with approximately more than US$ 20 thousand million dollars which will be used to balance Chilean finances crisis. This means, that they didn‟t squander, there was no spending “orgy”, on the contrary, there was caution and an additional lesson which marks the difference and strengthen socially the ones who have less. As if the above mentioned wouldn‟t be enough and as part of the auto destruction, we just saw and heard President Chavez insinuate that Ecuador must submit to a new currency imposed by him! What an audacity! Whichever the design and name could be, it will only mean adding more crisis and uncertainty to our already complicated economic system. Venezuela isn‟t precisely an example of prudence and political order and we can see that by remembering that Venezuela doesn‟t pay the Ecuadorian exporters. The Venezuelan importers give their Bolivar‟s in to the Central Bank to be processed and send the remittances to Ecuador. This isn‟t done with the urgency which modern technology generates and nowadays Venezuela owes to Ecuadorian exporters, approximately US$ 180 million. The truth is that it reflects administrative inefficiency or an act of bad faith, typical processes of countries in recession.
! Could you imagine what the supposed currency would represent being in Venezuelan‟s hands! Don‟t you think it is unacceptable that the piggy bank has been broken, but also to be hounded in our production, that the economy is being destabilized and that now they want to suggest officially a Venezuelan colony with a currency imposed by a Colonel who doesn‟t know how to manage its own currency, plus has liquefied the countries pockets and wants to do the same with the Ecuadorian ones? Is this called sovereignty? ! Let’s reconsider and use the virtue of having the dollar to protect people’s pockets and reconstruct the disaster which now belongs to everybody for the benefit of everybody!
Guayaquil, October 2008
Peru: Investment Grade Dr. David Lemor Peru’s Pro Investment President Peru already obtained three investment grades. The first one obtained from DBRS, the second one from Fitch and the third one from Standard & Poors. Recently, we were country number 41 to be admitted in the Investment Committee for the Cooperation and Economic Development Organization (OCDE), with headquarters in Paris. These are signs of good national and foreign investment environment, placing Peru as one of the best and attractive investment destinies of the region. Foreign investors locate Peru as a leader in the “possible Latin American group” in which only 3 or 4 countries of the region stand out, because in their opinion there is an “impossible Latin America”. In the current international economic environment, uncertain as a result of USA‟s crisis, with the economies deceleration and the increase of inflation rates, Peru stands out as a stable, attractive and secure country, fundamental considerations at the moment to take investment decisions. To compensate economy deceleration in many developed countries, the investors turn their eyes to countries such as Peru to re address their capitals which generate the needed development and employment. The oil price increase has also generated a capital investment excess in producer countries, mainly in the Arabic world, which already came to Peru to explore opportunities. Our economic performance stands out from the rest at international level. There are planned at least ten years of accelerated growth. During 2007, the GIP had an increase of near 9%, one of the highest rates of the world. Growth has even accelerated in some of the present year‟s months (13.3% during April and 11.5% for June) and it is planned to keep it over the 7% until 2011, with which a sustained decade of expansion would be added. Private investment has increased in more than 32% in this year‟s second trimester, which is a Historic record.
Investment Opportunities Besides of the evident opportunities in the mining, energetic, agricultural and industrial sectors we have an under sized potential of natural products in the forestall sector and in the productive development which isn‟t centralized. The under structured breach, estimated in more than US$ 23.000 million, is a great opportunity for private investment. In Proinversion (Governmental Agency to Promote Private Investment) we have entrusts from several sectors to grant these important work and services assuring a good maintenance through time. The main projects because its impacts in national economy and regional development is: The “autopista del sol”, which as a whole involves making in double side the road from Pativilca (northern part of Lima) to Sullana (near to Ecuador‟s border), and the”IIRSA Centro” or central road. The Paita, Pisco and Ilo harbors at the coast, will be granted in the next nine months; and the Iquitos, Pucallpa and Yurimaguas located in the jungle; and for the first semester of 2009, a group of six regional airports in the southern part of the country. There will also be granted the construction of a new thermal central for electric generation in Camisea, four new electric transmission lines, and a natural gas pipeline for Chimbote, besides of the construction and operation of a South Andean gas pipeline, for which there are already presented, two private initiatives. In the water and drainage sector, the emergency which was generated by the collectors collapse which flow into the ocean in several sectors of the capital will be resolved by the grant of the concession of waterworks processing in La Taboada and La Chira of 14m3/sec and 8m3/sec, respectively. The concession for the Angostura dam‟s construction and irrigation channels for the MajesSiguas project in Arequipa, will allow the increase of nearly 40.000 hectares for farming areas to the current 95.000 hectares. The inventory of projects, entrusted to Proinversiön, rises nowadays to approximately US$ 5.700 million, form which more than US$ 2.000 million are Hydrocarbons, specifically gas and electricity. The impressive rhythm of Peruvian economy‟s growth has exceeded these necessary sectors plans, but as it usually happens, it has turned into a great opportunity for private investment. The current Peruvian investment boom also responds to a positive result of an active policy of market opening, of FTA negotiations, to assure markets for products and services to be developed in the country. Peruvian exportations have risen from less than US$ 7.000 million in 2002 to more than US$ 33.000 million this year. This means that they have grown more than five times in only six years, and overall they have been diversified. They aren‟t only concentrated in primary products of our natural mining richness. Nowadays, agricultural, industrial, textile, chemical and other products, support more than 50% of the total of exportations and grow by the year. Concerning to Peruvian participation in integration mechanisms which make possible the access to extended markets, we have our famous FTA with USA and the Agreements with Singapore, Thailand, Chile and Canada. In Latin America, Peru with Chile and Mexico are
the only members of APEC (Asia-Pacific Economic Cooperation), to bring together more than 55% of the worlds GIP.
Private Initiative: mechanism for investment promotions However, it‟s not enough having economic activities with interesting potentials, opportunities to invest or expanded markets, if the environment isn‟t favorable and secure for private investment, as well as its incentive. There must be an easy participation of the private sector in infra structure and public services participation, and also in productive activities. Therefore we have added to our legislation, the possibility to present “Private Initiatives” over assets or public services. Private initiatives are an opportunity which identifies a businessman or private company and develops it under a profile and presents it before Proinversión. In the case of the regional initiative projects, it is made in the region itself. After evaluating the proposal and having a favorable opinion of the respective sector, it is accepted having previously studied the project‟s technical specifications and costs. The private initiative shouldn‟t require any co financing or Estates guarantee, meaning that it should be supported by them, but in any special Estate session it could have an asset with the right to use a road route, the authorization to construct a harbor or railroad and this doesn‟t require for the Estate to invest with the private in/or its construction and operation. With these characteristics, if the interest for the initiative is declared, it is published and during ninety days, other people or companies can be part of a price competition about the project. If after the mentioned 90 days nobody else is interested, it is awarded to the presenter. If other people would be interested and the presenter wouldn‟t qualify in the bidding, the last mentioned has the possibility to level the winning offer in the bidding opening date and the right to match in a maximum period of 15 days. This is a mechanism of great interest in the private sector to present initiatives. Security for Direct Foreign Investment (IED) Foreign investment can be developed in a free way in Peru, in the same condition as national investment and doesn‟t have to hold to the required performances. Private property is guaranteed and respected. In addition, Peruvian regulations have special rules which guarantee no change in the rules of game. We offer the investor the option to subscribe agreements of legal and tax stability in periods of around 10 years, or for the length which the work takes, to a maximum of 60 years. This upward curve of economies global growth, couldn‟t last forever, and it can be seen nowadays in countries which suffer severe financial crisis and drag others with them, which decelerate or even decrease their growth. Without doubt, nowadays investors and financing banks turn to be selective when deciding their money‟s destiny. And the countries which offer the best conditions and securities are the ones to receive the investment flow which are essential to pay attention to the necessity to increase competitiveness, generate work posts, reduce poverty and improve life quality of the population.
An example to be followed Dr. Franklin López Buenaño For many years and in opinion of several observers, Louisiana State has been called a “banana republic”. A couple of examples confirm these adjectives. Edwin Edwards was five times its Governor and nowadays he is in jail for peculation. Deputy William Jefferson and close members of his family have been involved in illicit enrichment. Since Louisiana‟s main income source is oil, the income was “adjusted” to the expenditures, increasing the oil price to the exact point in which the budget had a balance as the Constitution demands. But very often, the oil income didn‟t reach the predicted prices, so there wasn‟t any other choice as to get into debt to cover the deficit. The amount of the above mentioned debt, reached to almost four thousand million dollars. This is a similar situation of the Ecuadorian external debt with the private sector. But Hurricane Katrina came along, and as everything is for the best, the inhabitants woke up from their lethargy, and demanded from their leaders, deep changes in the political and economic areas. Political changes The political elite (old timers), renewed their frames. A young man with Hindu origins, called Bobby Jindal, (Republican) became Governor and with him, a group of young reformers with great mysticism, which are characteristics for real changes, proposed a legislative agenda, trying to reduce corruption, improve education and turn Louisiana into a friendly Estate for businesses. The anti corruption law, establishes an investigation and accusation commission, but gives it the power to lead the accused through the law and be taken before the justice courts, it prohibits the assignation of public contracts to legislator‟s close family and public functionaries, besides of hardening penalties; it forbids giving presents to anybody related to the above mentioned, and limits to ten dollars the restaurant expenses which a legislator or public functionary may have. It is a pity that legislators haven‟t understood people‟s desires for change, and decided to “triple their salary” Very soon voices of protest were heard, Emails went back and forth, phone calls to the media were done, etc. Thousands and thousands showed their anger. They began to pick up signatures to revoke the mandate, including Jindal‟s if he didn‟t veto those measures. The legislators learned their lesson. Changes in Economy To avoid this situation to happen again, a commission of three economists was created chosen by the Louisiana‟s State largest Universities, which would estimate oil‟s price and check that the income evaluation would adjust to “reality”. In base to this real calculation, public expenses would be made. If the income predictions would be lower than the ones
made, a part of the surplus would be designated to pay the foreign debt and the other part for a savings fund to protect economic bad periods of time. The lately oil high prices, have overflowed the fiscal treasury. Currently Louisiana‟s State has a fund of more than two thousand million dollars, after having reduced the debt to the half. In fact, this surplus exists in spite of reducing the income tax to 2% for the ones which earn less than US$ 12.500 per year, and to 6% for those who earn more than US$ 25.000. This is possible for the many deductibles for family burden, and expenses for education, health, mortgage and housing, etc. The taxes for food and medicine expenses were also eliminated. It is expected to continue with the tax reductions if prosperity continues. Nevertheless, the most important thing is the change in attitude of the principle political leaders. For many years there was emphasized about limiting and regulating the business activity. Bureaucratic agencies, milled around. ! To make flower arrangements a license from the flower bureau was needed! The Legislature, under the Governor‟s orders has begun a program of elimination and simplifies these bureaucratic agencies. All this happens because the regulator system awarded favors to legislators, public functionaries and businessmen which with the excuse of demanding quality protected the competition. Of course some of these reforms have tripped over with the legislators and bureaucratic interests, to whom the budget power has been significantly reduced to avoid for them to get local projects (for the legislator‟s case). All the above mentioned measures are assigned to turn Louisiana into a friendly State towards private businesses. It is understood that to achieve employment it‟s necessary to have businesses and therefore investment is needed, and to have investment, there must exist an incorrupt and incorruptible legal system. There is also needed a simple and inexpensive tax system, plus a regulation frame without favors. This is a simple way to reduce poverty, desperation which drives to delinquency. Educational Reforms There is to emphasize that Louisiana was the second to last State referring to education (before Mississippi). School desertion was atrocious. Teacher‟s salaries were under the national average. It was an educational system controlled by unafraid unions in front of the disaster. If Louisiana‟s wishes were to go on and progress it had not only to attack corruption or make it friendly, but it had to change its educational system because without it, everything else would have been insufficient. Then, what should be done? In USA, people know for real that the best way to solve problems is to entrust them to private initiative. Various models had begun in other States and the best thing to do was copy them. Among them were the educational bonds practiced in Wisconsin and Sweden. The school granted to private businesses or Universities and also the creation of charter schools or a contract between the Estate and the school. Since none of the above mentioned models is mutually exclusive, the best way was to combine them. The charter system consists in a contract, of approximately five years, between the school managers and the public sector (in Louisiana there is an Educational Superintendence). The contract specifies the objectives to be accomplished and the means by which they can count to obtain them. That‟s how a school can concentrate in science, another one in sports, another one in arts, another in humanities, etc. The students will follow the designed pen
sum to fulfill the contract. Of course each school must carry out a minimum schooling program (arithmetic, reading, writing, etc. A charter school is financed with educational bonds (schools budget depends on the number of students). Since the fiscal prosperity is high, the educational bonds also allow children assist to private schools. The bonds amount has been sufficiently high to allow a good increase in teacher‟s salary and in less proportion for the schools administrators. It‟s important to notice that if the school doesn‟t demonstrate obtaining the proposed goals, the Educational Superintendence, would revoke the contract. The fear for failure also stimulates success. Under this method other schools have appeared under Estates and private Universities sponsorships. The University of New Orleans has five schools in charge; Tulane has three. There are schools which emphasize in Languages, even one Vietnamese; there are also others, specialized in science and arts. The results of the reforms are incredible. In two years Louisiana‟s students have remarkably improved in their national exams. They still haven‟t reached the national average, but aren‟t any more within the last ones. The reasons for improvement are clear. The options diversity is essential for the students to apply in areas in which they will perform in a better way. Parents participate actively in choosing the school. The ones which fulfill more their aspirations have more reception. Competence has achieved that even traditional schools (not the charters) improve their performances. Conclusions and Lessons The contrast is evident between Ecuador‟s proposed changes and the ones made in Louisiana. While here we insist to study in depth the political-economic system faults and it is pretended to have more government for the solution, over there what is looked for is to limit the public bureaucrats and functionaries power. Here the dreams are with a XXI century socialism which isn‟t anything else than a recycled and failed Estate owned company, and over there recipes with good results have been applied. While market here is evil and private initiative is suffocated, over there measures such as competition and liberty to choose are applied measures. Of course the Estate has its part by financing education without being administrators. While here investment is scared away in Louisiana it‟s attractive to invest. While here the oil income are thrown away, over there they are destined to construct an encouraging future. Let‟s hope that a disaster such as Katrina wouldn‟t be the one to wake us up from the socialist nightmare.
Freedom Agenda Marcel Granier Radio Caracas Television, Venezuela On September 23rd I was invited to attend a “Freedom Agenda Lunch” at the UNO, with the participation of figures such as Vytauta Landsberg (Lithuania), Alexander Kozulin (Byelorussia) Zainab Hawa Bangura (Sierra Leona), Natan Sharansky (Israel), Gameela Ismail (Egypt), Ausama Monajed (Syria), Omar Pernet Hernandez (Cuba), Venerable U. Kovida (Burma), Sang Hak Park (North Korea), Lodi Gyari (sent by the Dalai Lama), Xu Wenli (China) and Gary Kasparov (Russia) Many of these names aren‟t known in Venezuela, but each one of them has had an outstanding participation for the fight for Freedom confronting repressive regimes in their respective countries. The purpose of this meeting was: “Share ideas to promote Freedom in an efficient way and make the pertinent recommendations to defeat tyrannies”. It comes to my mind, that in the Venezuelan case, the invitation should have been extended to millions of Venezuelans, from left or right wing, chavistas or anti chavistas (referring to President Chavez), poor, rich or middle class which are fighting for ten years now in an active and democratic way to save our country‟s Democracy. The Venezuelan democratic spirits, of all social conditions have been the only ones to put a stop to the totalitarian intentions of the current President. It has been the Venezuelan love for Freedom and peace which have maintained in Venezuela, spaces for plurality in a constant and increasing atmosphere of threatening to Expression Freedom, in an atmosphere with lack of Freedom Expression. It has been more than ten years in which Venezuelans have proved with really admirable courage and perseverance, all the ways to reject the totalitarian regime which is pretended to impose. We have been voting in numerous occasions and in spite of having an organism in charge of the transparency in the voting processes, repeatedly we have been able to see the discrimination to respond to Governments interests. We have repeatedly marched, we have protested, denounced and looked for uncountable ways and democratic mechanisms to make our rights be worth and decide to live in freedom. Along the way, many have auto nominated themselves as the regime‟s opponents but have acted thinking first in their interests and in Venezuela secondly, betraying the democratic cause and becoming accomplices of the governmental censure. The majority have been moving forward in an active tireless fight but without violence to defend our Democracy.
Radio Caracas Television, was until May 27th 2007, the first Venezuelan TV channel, both because of age as for audience preference and wasn‟t able to act for those democratic spirits. A social Media as RCTV which for more than 53 years had the Venezuelan‟s trust, and their programs were seen everyday in their homes, couldn‟t betray their Social Responsibility in front of the challenge which represents Democracies recuperation, Estates Freedom and Estates Rights which unites the great majority of Venezuelans. But we aren‟t the only ones, many private Venezuelan Media –radio stations, newspapers, and regional TV Stations, and only one remaining open TV Station, Globovision- have refused to auto censorship as RCTV did. We have been exposed to the presidential fury for allowing ourselves to practice the Plurality Principle and give spaces to protest and dissidence voices. As a consequence, we have been chased, threatened, we have been defamed and very often, social communicators have been attempted on our lives. RCTV suffered the snatch of its open signal, a part of its installations, and the entire transmission net. There are journalists which have been taken prisoner without the proper processes. Many of them have been wounded or murdered while carrying out their tasks or as a consequence of them, because the incitement for violence towards the free Media is constantly coming from the National Government. But in spite of all the above mentioned, the Venezuelan journalists, reporters and cameramen in the great majority, continue defending the right to inform and express an opinion with serenity, courageously and resistance. Students apparently indifferent until May 27th 2007, came out to the streets the following day, to protest against the close down of RCTV and since then have been politically active. The past December 2 nd together with diverse political parties‟ representatives, and of civil organizations with different ideological ideals, defended the Venezuelan, saying NO to the Presidents intentions to assure his perpetuation in the government through a constitutional reform, forcing him to recognize their victory after failing in his intentions. Venezuelan women for around nine years have kept a tight rein to the Education Law reform intention, which pretends to appropriate the educational system and pass it to an ideological project which the majority of Venezuelans refuse All Venezuelans should have been invited to this event because each one of them from any position they are, have done, continue doing and will keep doing whatever takes to defend Democracy and Freedom. In spite of all the above mentioned, repression continues in Venezuela, nourished by the Government‟s desperation in front of the possibility each time closer to loose governors and mayoralties in the next November‟s elections. For the President and his narrow intimate circle of friends and business partners, everybody who disagrees is “in favor of a coup”. Each one who criticizes is a “traitor”. Each one who dares to denounce is an “enemy” or a “lackey” of imperialism. A serious example of what we are saying was the painful expulsion of Mr. José Miguel Vivanco, Director for the Americas of the NGO only few days ago.
But Venezuelans have learned many things during these years of obscurantism and over all, to keep away from confrontations. We are aware that the only way we have ahead of us is democracy, but we also know that it isn‟t enough to vote but defend our vote. We have to participate in many fronts, without giving in our wish to defeat and keep our Democracy, our future, our country. The only thing which can oppose the abuse of power of a militarist, totalitarian, corrupt and repressive regime, is the citizens will without giving in who wish to live in Freedom and Democracy. For the ones who worldwide fight for democracy, have to confront a new challenge because the autocrats learned to “legitimize” themselves. That challenge is to defend the principle of Power Division, The Estate of Right and Human Rights form the totalitarian intentions of regimes who were elected in a democratic way. In his book, “Cinco Escritos Morales” (Five Moral Writings), Umberto Eco tells us in a chapter “The Eternal Fascism” the following: We have to pay attention for the sense of these words (liberty-dictatorship) never to be forgotten. The new fascism is still around us, sometimes with a civil suit. It would be very convenient for the next dictator to appear to the scene of the world and say! I wish to reopen Auschwitz or want the black shirts to return, or march solemnly through the Italian grounds! Pitifully, life isn‟t that easy. The Ur fascism (as Eco calls it) could return easily with an innocent appearance. Our duty is to unmask it and point with our finger to each one of the new ways, each day and around the world.
OIL: Investment to increase production René G. Ortiz Former General OPEC Secretary Since 2000, the Energy International Forum, with headquarters in Riyadh, Saudi Arabia, picked up the clamor of the oil consumer countries, for those countries that are gifted with hydrocarbon resources –pertaining or not to the OPEC- accept and/or investments to increase production capacity, because of the fact that world‟s economic development goes jointed - without question- with energy consume, mainly oil and natural gas. Some of the countries which are gifted with those immense oil fields, on the other hand, suggest the need to introduce security measures which guarantee the recovery of the considerable investments which those countries are doomed to satisfy the worlds increasing oil demand which according to the estimates should be around 110 million barrels per day for 2015, and that future oil consume had to come from the countries which aren‟t gifted with these hydrocarbon resources. At the same time the Persian Gulf countries which also produced oil, also argued about the uselessness of attacking with gigantic investments, if the world was embarked in an ecologist movement controlled by an anti oil slogan. The collection of these historic performances, are to locate the current situation which have driven the oil prices over $150 per barrel apart from the basic limits of the oil market. In fact, the world in the current times, has made enormous investments in the OPEC countries, in countries which aren‟t OPEC members and in other countries which join as new non OPEC oil producers, such as the ones which are located at the Caspian Sea, in the zone of Occidental Africa and lately in Brazil who is already receiving more than 30 years of scientific investigation and technological development for hydrocarbon activities at the sea and deep waters. The last one has had success and at the time is the third country with biggest oil reserves and with the highest production in Latin America after Venezuela and Mexico. Then, the world is sufficiently supplied with oil, carrying out the available increase of hydrocarbons in two key parameters which are: reserves and production. It is so that all the big fuss coming from European, Asian and North American information centers, asking OPEC producers to increase production to slow down the 2007 prices, weren‟t sustained in market and industry foundations. In fact, after the meeting held last summer in Japan, with the Secretaries of Treasury of the G8 (group of the 8 richest countries around the world), the transparent information about the destiny of the funds injection made by the European and North American Central Banks, in front of the critic Real Estate industry, reveals that any oil price level above the “break even” between 75 and 80 dollars per barrel, was only “bubble”. Since July 14th 2008 “the oil price bubble” has burst and collapsed the prices to the point of levels fewer than 90 dollars for the WTI and about three or four dollars less per barrel of the raw Brent oil purchased with the WTI.
The worlds financial crisis –which has been swept away because of the European and North American Real Estate industry crisis- jointed with the reduction of the world‟s economy growth rate, are the real market foundations which clearly explain the reasons why the oil prices will maintain a tendency to a drop in prices, and several investment banks have dared to say that for 2009 the oil price will stand around 50 dollars per barrel. Trying to transfer the weakened economic situation which the world is going through and which in an inexorable way affects Ecuador, it‟s easy to decide an emergent oil policy to make up for the significant collapse of the fiscal oil income which is the result of the price drop. A including emergent policy – because nobody can argue about the blast that the financial crisis will also affect Ecuador – must be oriented to increase the country‟s oil production which includes all the estate, private, mixed or any other combination which facilitates to achieve the country‟s juncture objective.. This means that the government and the international oil companies –which have suffered more than two years of political harassment, of a wear out in their business fame and of an unjustified besiege - have to finish the contract negotiations before October 2008, so that the oil companies can prepare themselves for the investments planning which have to be done in Ecuador from 2009 and further on, of social, economic and contractual basis.
Gas and marine sovereignty Dr.Hernán Pérez Loose Coronel & Pérez Lawyers The international press informed some time ago about a credit concession from the financier IDB, to a private Peruvian company, dedicated to exploit gas in the northern outside Peruvian coast. The news seemed to be slightly irrelevant. Since the last two years, Peru has an aggressive policy to encourage private energy investments. The oil gas project called “Camisea”, for example, is an energy project which is anchored in the east Peruvian zone which with an investment of one thousand three hundred million dollars, will assure Peru‟s energy autonomy letting even space for the exportation of liquefied gas. As a matter of fact, they already announced the construction of a gas pipeline which would end at the southern part of Peru. The investment would be of US$ 1.4 billion dollars, and one of the companies to do it, is the Brazilian Odebrecht. The odd part of the news about the IDB credit, is that the above mentioned Peruvian company was two years ago interested in transforming natural gas into energy to be exported to Ecuador. The northern part of Peru has a small demand and Lima‟s zone is to far away. Nowadays, their project is coming to the end and the fact is that they have begun to provide gas to Azuay‟s province, which would be their natural market. As far as we know, the gas exploitation zone of the mentioned company is located south of the parallel which separates Ecuadorian sea from the Peruvian; this means an area in which Peru exerts sovereignty. However, geological structures don‟t know about treaties or parallels. In other words, the exact oil field where nowadays Peru will obtain natural gas (one called “Campo Corvina”), extends to the Ecuadorian side (camp “Albacora”), or the other way around; the Ecuadorian structure is the one to show in Peruvian territory. As we can appreciate, there is an important political difference. Peru had in mind to take advantage of that oil gas camp more than five years ago. However, Ecuador showed a passive attitude, meaning that in front of a same natural resource, the human resources were the ones to mark the difference. For many years, powerful interests such as demagogy and incompetence have conspired against important gas oil fields located at Guayaquil‟s Gulf, for them to be forgotten. Without mentioning the nightmare of the ADA case, currently the only company which has a project in the zone and hasn‟t got any incentives to expand their investments. It had to claim to the Estate before the Ciadi because of an enormous debt. There is another USA company which was awarded in 2005, to work both in the Isla Puna´s outside coast and around Progreso in a gas project. The Armed Forces not only made a favorable report but also considered it appropriate viewing it from a national security angle because of Peru‟s bisection thesis, but that contract never took place. The worst part was that never again a bid for a contract was put out; the simple fact is that the matter never had importance. That
news must have been received with exultation by the Peruvian company and others which work around the zone and which have enriched with Ecuador‟s gas businesses. It is true that we haven‟t got an organism to rule and therefore attract investors for natural gas; but neither Peru nor Colombia has them. However, many years ago one rule was approved and nowadays they have benefits. One of the profits is a bitter experience for Ecuador because we are forced to buy energy from Peru who produced gas taken from a structure which is Peruvian as well as Ecuadorian. President Correa seems to have decided to break this stillness. A few days ago an agreement was subscribed previous to the shaping of an Estate‟s company, jointed between Petroecuador and the Chilean and Venezuelan Estates energy companies to explore and exploit gas from the gulf in a separated way, two blocks away from the coast and in the coast. It is a pity that the country has lost so many valuable years. In fact, Peru is already dealing its end product. The companies, with which Ecuador was going to construct estate companies, weren‟t chosen previously in a bid or competition. Let‟s hope that this situation won‟t be in the future a source for controversies.
This article was written before the Ecuadorian Government officially declared that the Brazilian company, “Odebrecht” wouldn‟t be operating in the country anymore.
Free higher education, productivity and human resources Leopoldo Avellán Morales, Ph.D Ecuador has had a very poor growth in the last decades, which is the result of a low life style level in a great part of its inhabitants. This phenomenon not only has been noticed in the country but also in the whole region and the potential cause is the scarce productivity growth. A recent study of the IDB shows that the country is holding one of the last places of Latin America, referring to periods between 1995-2004 productivity growths. Along with this discouraging result, there must be analyzed the citizens role concerning to their skills and knowledge, because at long term a nation‟s success is according to their abilities and skills, more than the abundance of their natural resources. Since the topic is of great importance, it is strongly discussed, of which the Estates role must be in the process of forming human capital, which is commonly known as education. It‟s evident that in general the educational process not only benefits the individual but the whole society, -producing a positive outsourcing- because the decision of receiving education or not, doesn‟t affect only the individual but the society in which it develops. As an answer to this reality, every estate establishes an obligatory education to a certain point and level, and more than that, making the public education free, knowing that in the educational private market, those which haven‟t got economic resources to pay, will, stay out which of every point of view is undesirable. In spite of this reality, there is a relevant question to be made and it is if there is the need to have free education at all levels, meaning from elementary to University. If the estates resources were infinite, the question would be irrelevant. But if we start with the premise that the resources are limited and therefore each time which is decided to spend a dollar for this activity, it implies not spending in another need –the opportunity cost- we are in front of a classic problem of satisfaction of necessities with limited resources. So, there are studies which demonstrate the effects of public education spending which are bigger while the students are younger. A spent dollar in a small child‟s education has a bigger impact of a spent dollar in an adolescent. And again a spent dollar in an adult‟s education is bigger than the adolescent‟s one. Then, in the same way as an investor with limited resources would choose alternatives of bigger return, the estate must have priority for those activities with bigger positive impacts towards society, which means a bigger social return. Has Ecuador‟s higher education a social return which justifies making it free, in detriment to other social activities which could use those resources? Is free higher education as it is in the constitution‟s project a good economic policy? To answer these questions is difficult because of its ambiguity in this articulated section On one side it‟s said that education is
free, after that, this free education is jointed to academic responsibility and finally, public universities are prohibited to charge any fees to the students. In that case, they promote that the constitutional project will provide free education to university students and therefore will pay nothing for their education. If that‟s the case, the Constitutional project for students to receive free education is being promoted and it‟s logical to expect that a great part of them if not all, wouldn‟t have to pay for their education. If this is so, speaking about Ecuadorian reality, it is simply a bad economic policy for the following reasons: 1. There are other social investment alternatives with greater impact in the same educational areas or others. 2. The benefits of higher education are fundamentally private (it‟s the professional who gets the greatest benefit for his career), and it isn‟t proper to use those public funds for an activity of those characteristics. 3. That type of policy is hard to bear from the fiscal point of view and risks future generation‟s education. 4. It destroys people‟s incentives to be better. Elementary and secondary schools in Ecuador, have a lack of good teachers, of infra structure and top technology, of specialized programs for talented persons, etc… Ecuadorians are used to see through the media, reports of the deplorable state of public schools, without desks, etc. It‟s not worth having free higher education if the previous stages can‟t be assured in quality as well as a building can‟t be built from the upper part down. Neither excellent professional can be formed if during elementary and secondary schooling, deep failures were detected. Not only in the educational area things have to be seen but the same questions must be applied to other Estates activities concerning to social areas. For example: what is more important, to spend a dollar in higher education or maybe in health or for security? And if the benefits of higher education are more private than social, is it worth to use public funds to obtain benefits which benefits more the individual than to society? But it is important to point out that the problem isn‟t only about how much it is spent but also the quality in the spending. There are researches which show that only 70% of Ecuador‟s teachers have academic training. The World‟s Bank report from 2004 concerning to poverty, mentions that elementary and secondary teachers were absent 25% of the time. When talking about standard exams, the grades were discouraging; 8/20 in Language and 7/20 in Math (Luna2005). Scientific studies made by Hausman and Rodrik (2005) and by Bratsberg and Terrel (2002) reveal the poorness in Ecuadorian education compared to the ones in the rest of the region. Clearly there are expenses of social investments that have bigger return than providing free education of third level. It doesn‟t mean that only students with money can assist to University, because poverty would be perpetuating and increasing inequity. We neither say that the Estate should keep away from higher education. We suggest that instead of having
a free regime, planes of educational credit should be strengthen, as the ones the IECE offers. This is for the students to continue studying even if they havenâ€&#x;t got the money because they would be able to get a special credit for that effect. A measure of this type is not only positive because it maintains the individual incentives to be each day better, but because it assures itâ€&#x;s sustaining through politics time, because nobody can predict that in 5 or 20 years, oil prices will be as high as now and then we could have the current liquidity to pay all these programs. Finally, a measure of this type regulates in a frame of freedom, another problem which our higher education undergoes and has been clearly mentioned by President Correa: The saturation of some university careers. Inside the outline of educational loans, it wouldnâ€&#x;t be rational that students would get into debt in careers in which there is a high unemployment rate or because of an excessive number of professional with unattractive salaries. The high school degree students in their place would look for profitable careers, to allow them to pay their student loan and also be compatible with their professional
Neither big depression nor the end of capitalism Dr. José Piñera President of International Center for Pensions Reform As I opened the magazine The Economist last October, Michael Gorbachev‟s face, the last big chief of communism before its collapse in 89-91, was staring at me. Could it be that the Soviet Union‟s former leader announced the end of capitalism, as other fortunetellers do in the middle of financial storms which strikes the world? On the opposite, Gorbachev aggregates to the delights of free market economies making publicity to the luxurious Louis Vuitton briefcases. It‟s very difficult to find a more potent image to demonstrate the spectacular triumph of democratic capitalism over the communist socialism, and enjoy these days as a “bocatto di cardinale”. It‟s undeniable that the world is living a financial crisis which will have negative repercussions in the economic and employment growth. The causes are several and known. Everything starts with the mortgage bubble‟s burst ( as many others have burst since the tulip one in 1637, which didn‟t hinder Holland‟s emerge as a capitalist potency overall in the following centuries). In the United States that bubble was encouraged by the consecutive governments which didn‟t understand that the dream of having an own house must be accompanied by making an effort of previous savings and payment capacity and the stimulation with low negative interest rates (although we must recognize that Alan Greenspan had to avoid a worlds confidence crisis after the 9/11 attacks of the New York Towers) and with the pernicious action of Freddie Mac and Fannie Mai. All this, added to some very well known bankers irresponsibility, which without having those banks owners and/or active directors, failed going through excessive risks and by buying complex and very little transparent financial instruments. Finally and in great scale, the regulator Estate failed (the financial system has been highly regulated since past centuries) and couldn‟t avoid certain human behavior excesses which the regulation must discourage and as far as possible, avoid it completely. For all these reasons, the mortgage bubble‟s burst turned into a crisis in the worlds banking sector, and got worse because of Secretary Paulson‟s initial incapacity to lead an answer to the mentioned crisis (perhaps the time has come for USA to have real Secretaries of the Treasury instead of multi millionaires from Wall Street) and the destructive answer of the European governments which began to act as if the European Union and their only currency, the Euro, wouldn‟t exist. Ben Bernake, Federal Reserve‟s chief identified since the beginning the key problem (the credit crunch, not the manic depressive stock exchange ups and downs) and, as a great specialist of the Great Depression (his opus magna is Essays on the Great Depression) knows very well that it was worsen by the monetary contraction, as proved by Milton Friedman. It is to notice that for the first time in History, the Federal Bank Reserve, the European Central Bank, England‟s Bank….and even China‟s People Bank coordinated a drop in the rate interests.
However, there is no doubt that USA is already in recession, and its depth has to be seen, as well as the main European countries (among them the PIGS: Portugal, Italy, Greece Land and Spain) and as a result it will strongly reduce the worlds growth rate (although the BRICs will keep on growing: Brazil, Russia, India and China. Once overcome all the financial turbulence, the governments tasks will be in first place “do no harm” (the Hippocratic Mandate) and secondly to maximize the economic systematic flexibility for them to come out of recession as soon as possible. But I bet that this recession won‟t be the Great Recession, neither in depth, nor in extension and consequences. It could be said that during the Great Depression‟s contractile phase, between 1929 and 1933, the product value in USA, had a drop near to 30%. During the same period, unemployment rose from 3% to 25%. It‟s worth to compare the worst North American recession since then, the one between 1973 and 1975, in which USA‟s product, dropped to 3.4% and unemployment rose from 4% to 9% ( Chile had to enclose this recession with a destroyed economy by Allende‟s government and oil prices explosion). Chile is well prepared to confront this crisis, because of their tremendous economic transformation, which was done in the seventies and eighties, the strength and competitiveness of their businesses and the fiscal responsibility taken by the Secretaries of the Treasury in the last years. At last the government has moderated the public expenses expansion and the Central Bank has operated in an excellent way towards the challenges. For 2009 it‟s expected for the Chilean economy to grow more than the world‟s one, although the persistent distortions introduced to the labor market will destroy work sources, many people in general and also important sectorial impacts. The responsible companies which accumulated liquidity in the ample years will have exceptional opportunities to acquire foreign actives (the Luksic, Matte and Angelini, among others which could be the Chilean Buffet and Botin). The stock Exchange market will rise again and the financial system will be strengthened if they learned the lesson from the debt crisis. This crisis will be seen in a lesser degree than the 73-75, 82-84 and 97-98, because we are better prepared than all of the previous mentioned, and we well know how Chile reemerged then. Without doubt, it‟s time to be prudent, but keeping the confidence in the solid foundations of national economy and in our recently proved capacity to rectifying and rebirth. The future tasks for public policies: think twice and redo the world‟s financial regulation in times of the mega banks, globalization and technology of XXI century. And here are the people‟s challenges: to educate responsibility, mitigate greed, never forget that there are cycles and learn from History. And have Capitalism and Free market come to their end? Of course they haven‟t. Even Gorbachev knows it, and better than anybody, Václav Havel explains it. “Even if my heart is at the left side, I always knew that the only economic system which works, is the market. This is the only „natural‟ economy, the one and only with sense, the only one which can drive us to prosperity; because it is the only one to reflect life‟s nature”.
Finally default and confiscation arrived Econ. Roberto Cachanosky Editor in Chief of Economy for Everybody Magazine The Government‟s decision to put the Pension Fund Administrator (AF JP) under the Estates management, eliminate the private retirement system and turn it into an estates regime, is another fraud towards the Argentinean savers. After reading Cristina Fernandez‟s declarations, arguing that the people‟s savings confiscation is to defend the workers and retired, I got to the conclusion that it will be very difficult to exceed the Kirchner‟s record of cynicism. ! It‟s the first time that somebody steals from me and besides it, tells me that she is doing me a favor! Why do I say steal? Because the Estate, taking advantage of its position, is using and keeping our savings to be administrated as they wish, this is, in Estate‟s bonds, in bond deposits, holdings, fiduciary bonds, etc. Therefore, when all these assets go into the estate‟s hands, the bureaucrats keep our savings and give nothing in return, except the promise to defend our retirement. ! A real hypocrisy when we see the amount of money our parents and grandparents earn! And even more hypocrisy when we can see that we weren‟t informed about the Santa Cruz funds and are seriously involved in the Venezuelan flying suitcases. They allege that they take our savings to defend us. Would you trust your savings to somebody with that background? But there is another matter which I think has been unnoticed and hasn‟t been said clearly. This matter consists in some comments which sustain that this measure was taken to avoid the default. I have another vision. With this measure The Estate is defaulting more than 53.000 million pesos in public bonds. And the point is that our money was placed by the AF JP in national government certificates for that amount. However, once the system was stabilized, those bonds pass to Estates hands and we receive nothing in exchange. Therefore, what the Kirchner‟s government is doing is defaulting $53.000 million bonds which belong to us. It‟s taken from us by the force and won‟t have to pay anymore. So, this measure isn‟t to avoid a default, it is a simple fact of default. The Estate will also keep $6.359 at fixed term without giving anything in exchange. This means that if we compare the Kirchner‟s with Duhalde, the last one is Mother Theresa of Calcutta when the deposits were transformed into Persian, but at least he gave something in return. The Kirchner‟s keep directly the $6.359 million, the private savings and upon everything they say it is for our benefit. Altogether, the Kirchner‟s pretend to keep the private savings for the amount of $30.000 million, arguing that they are defending the workers and retired people‟s interests.
If the playpen (corralito) the money pound (corralòn) and the currency change of pesos were lethal for Argentinean Economy, making another confiscation of private savings with only six years of difference, it implies to condemn Argentina, to a deep decadence. Why? Because of the estates precedents which in a systematic way keep people‟s savings and nobody in Argentina will bring their savings and empty them out towards the capital markets. Without savings that are channeled in the market of capitals, there won‟t be financing for investment or consume. Without financing investment there isn‟t a possibility for growth, create new jobs and improve the real income. In other words, we are condemned to misery because of this disdain to property rights. The Kirchner‟s are inflicting a never before seen damage to Argentina. Who can believe in the Kirchner‟s words when they say that they are doing things to defend the workers and retired people, and not because they need money, if we are still waiting the $30.000 million of Chinese investments, the mortgage credits for the ones who rent, the cash payments to Club of Paris which was previously announced with great fanfare and the reopening of the exchange for the holdouts which were announced a couple of weeks before? In few days, we went through the announcement of the cash payment to Club of Paris to the default of $53.000 million as if anything would have happened and above everything, they want to sell the idea of an achieve for the Argentineans. Nothing surprises anymore about this Kirchner‟s era in confiscation matter. They default the debt of Pesos, adjusted by the CER drawing the CIP. Their wish was to confiscate the agricultural producers and couldn‟t do it. Afterwards they went towards people‟s savings in the AF JP. And I want to be clear when saying that the AF JP weren‟t the ones whose money was taken away from but the people which saved were. The crisis with the Kirchner‟s came along and the government finally chose to default part of the public debt and steal the rest of the assets. With so many attacks to private property, what will hinder them to go after people‟s deposits? The Kirchner‟s have made a double. They made a default of part of the debt and confiscated the rest of the savings. The same thing as it happened in 2002, but worse because they give nothing in exchange. Frankly, when I see the stupid things which the Government is doing, I convince myself each time more that the exchange rate at $3.25 is a bargain.
The importance of handling agricultural and chemical Products in a safe way Eng. Juan Carlos Bermdez Technician Assistant of Agripac The use of chemical products in agriculture is a key factor in this area. Nowadays, it‟s an essential tool to obtain better results in food production. This is determined by the Food and Agriculture Organization (FAO). However, it also warns about an inadequate handling of the above mentioned which could cause serious problems. The incorrect usage of chemical products in agriculture, as well as a lack of capacitation, is the main reason for intoxication and the products costs increase in the rural zones. The companies who wish to keep working in the agricultural business, must undergo a series of international regulations, such as the Global Gap, which was mainly designed to offer confidence to the consumer concerning to the production process: minimizing the damaging impact of exploitation toward the environment, reducing the usage of chemical consumables and assuring a responsible way of acting, referring to the workers‟ health and security, as well as the animals well being. In Ecuador, the leader agricultural consumable company, Agripac, has always taken into account, both the human part as well as the environmental. In the last twenty years, has fulfilled a series of projects to improve security and taking care of hundreds of the country‟s farmer‟s health. Field days or technical talks take place in a permanent way in the Ecuadorian fields and allow farmers to capacitate besides of watching that the products are at international standard levels, as it is in Global Gap. Agripac as a company which is dedicated to do formulas, importation, distribution and marketing of agriculture chemicals, has worried of making clients aware about the correct usage which those products must have, before, during and after its application. The Banana Technical Department, for example, has developed a weed control program called MRMBAN (Rational Banana Weed Manage) which has three main objectives (EfficiencyEconomy-Security) Efficiency, because according to the analysis in the fields, the most efficient weed killer is chosen to control all the species of weeds which could be found in the place. Economy, when having a good control there is a reduction of application cycles per year. And Security, which implies training staff concerning to the application in the chemical usage. Other benefits of this and other Agripac‟s programs, is that it contributes with the environment, because the weed killer isn‟t used in an indiscriminate way, but in a precise and appropriate way.
Counting on producers such as Mr. Boanerges Pereira, Euclides Palacios and Ing. Bolivar Prieto in El Oro Province, receiving lectures about the secure usage of chemicals in agriculture plus calibrations of equipment used by Agripac at ground level and by air, allowed to obtain the Global Gap certification for their farms. Inside the Technical Banana Department of Agripac, there have been implemented programs to learn how to deal with the prevention of diseases such as Black Sigatoka, which contributes for the product to work efficiently and reduces the number of applications per year. Besides all the above mentioned, Agripac works with friendly products for the environment, promoting in this way practices which reduce to the minimum the possible risks towards health and ecosystem assuring efficient usage. Ing. Eduardo Martillo, Manager of the Department, says that the international consumers, specially the Europeans, have established clear regulations, because they want to make sure that besides of having healthy fruit they want to avoid environmental pollution. “All these regulations are synonymous of progress and are useful to improve our life quality”, quotes Martillo. When realizing that the agricultural chemicals will be used in great amounts around the whole world in the next years, it‟s worth to emphasize the strategic work such as the ones Agripac does, which links the business development with the clients, specifically with production, having in mind the safety of the place of work, this is, people‟s health and respect to environment. When working with delicate products such as chemicals, regulations must be followed to give safety and security in their usage.
The need of a guideline to make eco-efficient shopping Ing. Josè Javier Guarderas General Manager Sambito, Soluciones Ambientales Totales firstname.lastname@example.org I start writing where my first published article in the previous MIPYMES edition ended. How to do to adopt new practices, new habits which make our buying or consume decisions more eco-efficient? What to do to reduce CO2 emission, the main responsible gas for global warming? The first answer has to do with “what to do”. What to do? Next you‟ll find a list with nine recommendations. Adopting these little routines will help to make the difference. Each one of them –by itself- turns a normal day into a green one. We have proved that having an environmental awareness, act in favor of nature well being and work in an eco efficient way has economic benefits. As we say in SAMBITO, it‟s “double green”. You don‟t recycle? Recycle now. Think twice before throwing anything into the garbage. 85% of the thrown things into the garbage can be used again. Besides, it is proved that if we reduce the world‟s garbage production in a 10%, we would emit 1.200 pounds less of CO2. Think and then act…Don‟t throw your money into the garbage. Do you search with Google? Change to www.ecoogler.com which works the same, except that each time using the other alternative, one leaf will be donated to reforest. Of course when I say to donate a leaf, it‟s a symbolic way to say we are supportive….But for each million donated leafs a donation of trees will be done for an international association. Change a bulb with hot light into a fluorescent one. You don‟t need to change all bulbs at the same time. Do it monthly or each 3 months. The important thing is that at least you change one bulb. When replacing a normal bulb into a compact fluorescent it saves 150 pounds of CO2 yearly emission. Drive less and exercise more. Walk, use a compact bike, and share your car with friends or co workers (car pool), use public transportation. These procedures will also save gas. Use less hot water when taking a bath, shaving or doing the laundry. This will not only save energy, buy your money too. When you use hot water in a better way, an average of 300 pounds of CO2 can diminish its effects. Have you ever heard that a man‟s achievement has to do with a written book, a born child and a planted tree? Plant a tree. It doesn‟t care where. In the neighborhood parks, in your garden, in a plant pot, or in the program Friend Tree from the Guayas jurisdiction. The price of a tree is around $7. Did you know that a simple tree can absorb almost 1 Ton of CO2 in a tree‟s lifetime besides of giving oxygen to 14 people? For more information visit http://amigoarbol.org/.
Turn off all the electric equipment that isn’t used. Even if you have other electric equipments connected into one extension, turn the equipments off. Did you know that the connected equipments, even turned off, consume energy? Turn the switches off. That action will allow saving around 3.000 pounds CO2 per year. It‟s also a savings in your economy. Print less. You‟ll reduce paper costs. From 10 printed papers, only one is read. Before printing a document ask yourself, if is it vital to have a copy in paper? Consume more green (and not necessarily salads). For example in Brussels, the local authorities have considered to extend to 40 or 50 products the ecological label for 2015, because right now there are 26. “The consumers are the most powerful agents for economy‟s change”, quoted Paul Skehan from the European Retail Round Table. That‟s why, in SAMBITO we decided to compile products, services and eco efficient brands which are in the Ecuadorian market in a document called “SAMBITO Purchasing Guide” and can also be found in a free way at www.sambito.com A research reveals that 70% and 80% of the environmental impacts are derived from transportation, the elaboration of food and drinks and the ecological effect from homes. The “SAMBITO” Purchasing Guide” will be an important tool for eco efficient decisions to be taken at the time of the purchase, in a responsible way, besides of economy savings and to promote a sustained production….at home or at work. By the way, this first “2008 SAMBITO Purchasing Guide” is a living tool, which will be published each year. If you owe a brand, products or services which fulfill the Guide‟s criteria and isn‟t inserted in it, don‟t hesitate contacting us at email@example.com.
“QIWA”: Dresses in leather the most demanding markets “QIWA” is the first PYMES franchise store of nine strategic associates: Curtesa, Cuerotex, Litagmode, Calzado Italia, Calzado Fernàndez, Calzado Pieralli, Calzado HAZ from Azuay province, plus Buestàn from Quito and Calital from Guayaquil. It synthesizes the joint effort, the strategic vision and innovation capacity to accede to markets with quality products.
“QIWA” is the result of technical assistance given through an agreement subscribed between USAID‟s Productive Chain Project and the anchor business called Curtesa plus eight PYMES, which involves the active participation in national and international markets, especially from USA, through channels for the development of marketing, the creation of a franchise store and the improvement in technical production to allow having quality products. The Productive Chain Project is working jointed with Curtesa, especially in areas such as marketing and production in Azuay‟s Province. “In marketing, we have been supporting the development of an analysis of national and international markets for QIWA, in a study of international or foreign clients, in the creation of a Web Site for retail and wholesale markets, in the creation of the franchise QIWA brand, in the new designs catalog of leather articles. We have also worked on the brand design of QIWA products, in the design of the franchise store and its model which we hope will be of great success”, said Santiago Sedaca, Director of the Productive Chain Project.
The objective of these activities is the implementation of a Marketing System for leather articles of local production in national and foreign markets, which would allow the participation and consolidation of Azuay‟s Leather businesses and the rest of the countries‟ markets. The inauguration of QIWA store, located in the city of Cuenca, is an important step in the process. The activities in the production area are to be started. Their objective will be to improve the tanning process and leather treatment for the manufacture of bags, and technical assistance for footwear manufacture through a crust system, which will allow to increase production and better leather treatment, quoted Sedaca. The opening of this new franchise will contribute to generate employment trough the PYMES productivity increase and the fact of having access to markets such as USA, Spain, Colombia, Peru and Chile. QIWA‟s inauguration is the first of a series of franchises which hopefully will expand to other countries such as Peru and Colombia.