April 23, 2010
Quito, Ecuador
It has been a whirlwind week this time around in Ecuador; I’ve been to just about every corner of the country, inspecting property, making new legal, banking, and real estate contacts, and cementing old ones.
In short, it’s been an incredibly productive trip. Most importantly, I picked up on some really valuable immigration leads that I plan on sharing with you soon once I test it out myself… more to follow on that.
Tomorrow I’m leaving for the Dominican Republic where I will spend the weekend prior to heading to the United States for a couple of conferences. Before I head out, though, I wanted to address some specific Ecuador questions to lead off this week’s Q&A:
Peter asks, “Simon, what is the technical situation regarding high speed internet in Ecuador?”
It’s good. Ecuador is very wired. Most places have at least 4MB/s broadband, and it seems like there’s an Internet cafe on every corner. I’ve been making Skype calls all week without any problems. You may run into power outages in some areas, but this is a different issue.
Jai asks, “What about income earning prospects, either an Internet sales business or something for clients outside of Ecuador… or any on the ground opportunities?”
I don’t find Ecuador to be ripe with substantial business opportunities like Panama or Malaysia. There is not much of an emerging middle class, so the domestic market is out.
Moreover, the expat market is still embryonic, and I don’t think that the local labor force has the skill set to be competitive for outsourcing.
Bottom line, Ecuador is a place to plant a residency flag, and possibly a citizenship flag, but not much else.
Mike asks, “Simon, we are a gay couple, 48 & 37. I was wondering if Ecuador is a gay friendly area?”
This isn’t one of the things that I really watch out for, but my impressions are that Ecuador is neither friend nor foe of the gay community. You would probably have better luck in Panama and Brazil, or even Uruguay where the government passed a law recognizing gay marriage a few years ago.
Bob asks, “Simon, what is the tax situation like for expats? And do you plan on publishing a Black Paper with your Ecuadoran contacts?”
Taxes are reasonable in Ecuador. According to my legal contacts here, non-residents are taxed only on their Ecuadoran-sourced income, and the tax rates are progressive in some cases, and a flat 8% in other cases.
Regarding a Black Paper– one of the things that bothers me is that there seems to be so much misinformation online about the Ecuador, usually promoted by groups that have a financial interest in misrepresenting and overselling the country.
It’s disappointing to set people’s expectations in a certain way, only to find out that the country, while wonderful in many respects, is not as advertised.
Black Papers are designed to be a sort of ‘Consumer Reports’ about a country with actionable contacts; so, if there’s substantial interest, I may put together an inexpensive, limited-release Black Paper about Ecuador.
Either that, or just bring you some free interviews with a few of my contacts there if I can get them to agree… this is my preferred solution because it’s a lot less work on my part.
Richard asks, “Simon- great information about Ecuador. Can you tell us what websites you look at for overseas property?”
I know it’s tempting to let Google do the heavy lifting these days, but rest assured, if you find a property website in English, particularly in the top 5 search rankings, you are already paying a premium.
There is no substitute for being on the ground– the farmer who will sell you his land cheap has never seen the Internet in his entire life.
Doug asks, “Simon, can you recommend some Ecuadoran banks that will work with American citizens?”
Most of them work with US citizens; the problem is that the account opening procedures are highly bureaucratic, and most banks require you to be a resident in order to open an account… unless, of course, you know someone.
There are reasons to open a bank account here, though not for planting a financial flag. It’s nice that Ecuador is a dollarized economy paying 7% to 9% on a 1-year CD, but the primary reason for doing so has to do with immigration. More on that later.
Lastly, Rexx asks, “Simon- thank you for Monday’s interview with Mark Nestmann about capital controls. Many of us would love to buy his book ‘The Lifeboat Strategy‘, but the price is a bit of a stretch.”
I think Mark’s book is one of the best actionable expatriation guides out there– he teaches you how to move your assets, and yourself, safely and legitimately overseas, and discusses topics like second passports and overseas structures in significant detail.
Given the value of the information, I’m amazed that he gives it away for $95… but frankly, if $95 is a stretch for you, then you probably won’t get too much out of Mark’s book and I wouldn’t advise you to pick it up.
Instead, I would concentrate your efforts on making money and building assets. Focus on finding opportunities that are in significant demand and short supply, then become an expert in that field.
Examples could be expat headhunting in Asia, small business fundraising, or just being the ‘go to guy’ in a quickly growing market like Peru or Mongolia.
There is no great mystery to making money… you might miss a few times, but once you tap into a niche that you can fill, you’ll start building assets. At that point, once you have money, I guarantee that you’ll get a lot out of Mark’s book.
That’s all for this week, have a great weekend.
