Saturday, January 4, 2014

Ecuador’s minimum monthly salary will increase from $318 to $340 in 2014, a 6.8 percent increase.

In a year-end interview, President Rafael Correa said he intends to make streamlining government paperwork a priority for 2014. Although the original intent was to reduce the steps and time required to establish and operate a business, Correa said that red tape needs to be cut back in all interactions between the government and its citizens.

A pilot project beginning in March in several cities, including Cuenca, will be the first step in the red tape-cutting effort.

Correa first announced his bureaucracy reducing plan in August when he presented a graphic at a news conference contrasting the time required to open a business in Ecuador, Chile and Uruguay. While it took an average of 56 days to start a business in Ecuador, he said, the process could be completed in three days in Chile and seven days in Uruguay.

“This is outrageous and needs to change,” Correa said. “We need to get beyond the mentality of a bureaucracy that wants to control everything and that puts up unnecessary obstacles for citizens who want to invest in their country. We need to see how other countries do this and follow their good examples.”

Correa also said he wants to reduce the current requirement that new business applicants need to show they have $800 in the bank to qualify. “This is silly. Obviously, they will need a lot more than this when they start to operate a business but there’s no reason they should have $800 when they apply for a license,” he said. “I think $100 is fine.”

He said that he has asked Ecuador’s minister of production Richard Espinosa to develop streamlined rules for new businesses and to work with the national assembly to develop laws to implement the changes.

Promerica negotiating to buy Produbanco

Promerica Financial Corp., the operator of Nicaragua’s biggest bank, said it is negotiating to acquire control of Ecuador’s third-largest publicly traded lender, Banco de la Produccion, SA, which operates under the name Produbanco.

Promerica said in a statement today it’s seeking approval from Ecuador’s antitrust regulator to buy a majority stake in the Quito-based bank. Closely held Promerica already owns a lender in Ecuador and has operations in Costa Rica, theDominican Republic, El Salvador, Guatemala and Panama.

The deal would be the first sale of an Ecuadorean bank to foreign investors since President Rafael Correa tightened regulations to force local lenders to divest noncore units in 2012 and raised taxes this year on banks to help fund government anti-poverty programs. Nongovernmental banks’ net profit through November was 21 percent lower than in the same period of 2012, according to the most recent data from Ecuador’s bank superintendency, known as SBS.

Government increases the basic salary by 6.8%

Ecuador’s minimum monthly salary will increase from $318 to $340 in 2014, a 6.8 percent increase. It is the smallest increase since 2007, a result, the government says, of a slowing economy and low inflation. By contrast, Colombia just increased its basic wage by 4.5 percent and Peru is considering leaving its basic wage unchanged.

The minium raise is not only important to low income workers, but is used as the basis for social service payments and legal penalties, among other things.

"The Latin American economy is not growing at the rates of previous years,” says Ecuadorian government economist Fabian Aguirre. “We have to increase the wage with caution. I think that is an appropriate amount given the circumstances.”
Photo caption: President Rafeal Correa

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