Guayaquil, Latin America’s New Hidden City!
October 10, 2012 1 Comment
Known mainly for its prehistoric inhabitants, the Galapagos Islands located off the coast of Ecuador has always overshadowed its bustling port-of-call, the City of Guayaquil. To attract some of the 450,000 annual tourist that bypass the city on their way to the Galapagos Islands, Guayaquil’s long term Mayor, Jaime Nebot, has been busy rebuilding his city hoping to convince some of these visitors to stay a night or two longer. New roads, malls, conference facilities, and two ambitious proposals to modernize their port facilities to world class standards has started to turn heads. For investors who dig deep into the numbers, they may be pleasantly surprised to find a growing middle class grounded on socialist beliefs but ready and able to respond to international business demands.
In mid-September of 2012, Guayaquil’s mayor and his entourage presented their case to investor groups in New York City. Mayor Nebot openly solicited multi-nationals to consider a manufacturing presence at their new proposed 670 acre port facility located in Posorja, about 100km south of Guayaquil. According to Nebot, early tenants could expect a generous dosage of municipal cooperation and a 10-year tax exemption that would begin on the first day of full operations.
Nebot’s primary goal is to create good-paying jobs for his newly indebted growing middle class who during the commodity-price bonanza era were lavished with both housing and consumer credit. Nebot would prefer companies offering sustainable manufacturing jobs that participate in the value chain of products that move through his ports. Instead of just exporting raw materials to the rest of the world, Nebot wants some of his export products to be partially assembled in Guayaquil first.
Guayaquil’s population of 3 million inhabitants generate 20% of Ecuador’s GDP, and yet, its port facilities handle 70% of the country’s trade activities. The disparity in these percentages suggests that the city has also been a long-time, pass-through port for the country’s rich oil industry with a daily production of 300,000 barrels. With good reason Nebot is focused on capturing a portion of the potential economic activities related to both oil and tourism that have been bypassing his city for years without leaving meaningful contributions. If Nebot has his way, Guayaquil will one day represent a greater slice of the country’s GDP by becoming a preferred destination center for business tourism and a major logistics operation for companies servicing the many Latin American regions. His proposed state-of-the-art port facilities, access to cheap energy sources, and future plans for a second airport with multiple runways located about 10 miles from the city in Dualar, will undoubtedly meet the needs of global companies.
Nebot has enjoyed unprecedented political stability, having been one of two mayors for the past twenty years. His likable demeanor and sincere passion to make Guayaquil the ‘Big Apple of the south’ has won him the trust and respect from his constituents. His long-term working relationships with managers of a prominent development bank in Latin America (CAF) has also proven useful. By depositing the city’s tax revenues in CAF’s vaults, Nebot has gained access to low interest loans for up to 5 times the amount of the original deposits. He has further leveraged CAF loans into public-private-partnerships and cooperative bonds to fund numerous infrastructure-related projects and public works in preparation for what he hopes will soon become a bustling center for business tourism. At the event CAF’s President and CEO, Enrique Garcia, praised Mayor Nebot’s achievements naming Guayaquil as one of CAF’s most successful development investments.
Nebot is known to run a tight ship. He employs fewer public employees than 12 years ago and invests 85% of his tax revenues into infrastructure and other public works. The replacement of open flea market areas with modern malls, improved roadways and bridges, a new fleet of hybrid public buses, enhanced water systems, and diverse cultural centers are only some of the projects completed in recent years to attract a wider variety of tourist to the city.
Despite its new shine as a potential global center, Guayaquil offers yet another set of attractive benefits to foreign investors. First, the city is on the same time zone as New York City with the exception of one hour during daylight savings time and second, the seasons are inverted, hence New York’s winter months occur during summertime in Guayaquil.
A recent merger between two prominent airlines called LanTam Group currently offers daily non-stop service from New York City to Guayaquil and in the not too distant future will offer four more flights so business travelers can arrive early and leave late from either destination. Best of all, travelers can leave without having to exchange currency, since Ecuador uses the same dollar that circulates in the United States.
After careful planning and meticulous strategizing, Guayaquil’s ambitious mayor and his capable team have truly prepared their city to become an extension of New York City. Company CEO’s who answer his call early can probably expect to negotiate more favorable terms. As for investors seeking higher returns from lucrative Latin American markets, perhaps, this new passage between New York City and Guayaquil is the perfect starting point for the adventurous capitalist.