ZEDE-QUITO PROJECT - Zede Quito

EXECUTIVE SUMMARY ZEDE-QUITO PROJECT

Quito’s Special Economic Development Zone (ZEDE‐QUITO) project, is led by the Airport and customs – free zone public services enterprise, also known as EPMSA, which aims to seek the effective use of 205.01 hectares strategically located next to the Mariscal Sucre International Airport (Lot No. 1, of the airport property), as a space to develop activities oriented towards the internationalization of products and services; additionally, it seeks to strengthen the business fabric of the Metropolitan District of Quito and position itself as a multimodal reference logistics center in the country and the region.

ZEDE-QUITO was established as the first Special Economic Development Zone of the capital of Ecuador, on July 5, 2018 by Resolution No. CSEP-2018-0002; likewise, this space was empowered to function as an industrial and logistic space.

ZEDE-QUITO looks towards the installation of:  Manufacturing and logistics units, research and innovation centers, offices and laboratories; to operate under the special regime of a ZEDE. companies can access to tax and tariff benefits, in order to promote exports, replace imports and generate quality employment.

Image No. 2: Development of the ZEDE-QUITO Project

In this space, it is visioned to promote knowledge-intensive productive projects, with the purpose of attracting national and international companies that empower ZEDE-QUITO.

The development of the ZEDE-QUITO project will contribute to the generation of employment, the strengthening of the competitiveness of the Metropolitan District of Quito and its industrial, logistics, and I. T. companies.

Image No. 1: ZEDE-QUITO
Image No. 2: Development of the ZEDE-QUITO Project

1. Studies

Technical, economic and legal studies have given viability to the project. A brief description of each study is listed underneath.

  • Environmental Baseline (2016)

This study contemplated the elaboration of the Environmental and Social Base Line for the 207.95 ha.  to know the current state of the area where the ZEDE project will be developed. The study contemplated the analysis of the following components: physical, social, biological and the compilation of secondary information from the archaeological studies of the area.

  • Mass Plan and Pre-design of Basic Infrastructure for the Special Economic Development Zone (ZEDE) Project of the Quito Mariscal Sucre International Airport (2017).

This study determined the development of the project in four phases, also stablished a referential budget for the construction stage, and presented an environmental treatment for its land and basic infrastructures pre-designs (Roads, mobility, internal transportation, electricity). The pre-programming plan contains:

  • Urban Proposal
  • Landscape Proposal
  • Urban Image
  • Public space
  • Mobility system
  • Urban connectivity
  • General proposal of basic infrastructure networks.

 

  • ZEDE-QUITO Strategic Plan (2017)

The purpose of the study was to define the use of space through a project profile, analysis of the national and international market, analysis of possible leading industries and 6 business cases of potential operators and the business case of the administrator.

  • Update of Studies (2022)

The studies described above are being updated in their pertinent part, and the associative model is being defined with the consulting company COMERX – SPINGARN, which will culminate in December 2022.

2. Technical and Economic Proposal of the project

Technical studies
• 34 ha. Of construction space (of the entire industrial complex of 205 hectares); developed in 4 phases, • Space for future projection, for possible future developments. • Required spaces: Reception area (where shops can be established), restricted or filter area, ZEDE area (where the industrial, logistics warehouses and offices will be established.
Financial Studies
The rental prices that ZEDE - QUITO could offer would be highly attractive and competitive. The establishment of 236 companies is expected. The main source of income is through the determination of the rental fee per M2. In addition to other forms of income for: Administration fee, internet services, cloud, food, parking, advertising, mechanics, etc. Discount rate of 11.3% under the CAPM methodology (Capital Asset Pricing Model ) OPEX: $431.728.449 CAPEX: $340.982.189,79 PAYBACK: 30 years VNA: $12.082.850,20 The ZEDE-QUITO project, as a whole, in the minimum viable scenario, presents an IRR Internal Rate of Return of 13.31%, which, under its technical interpretation, would guarantee its financial viability.
Legal Studies
•Proposed associative model: Strategic Alliance. • Objective: Financing, design, construction and administration of the ZEDE QUITO project.

3. ZEDE-QUITO Objectives

a) Attraction of new investments

b) Substitution of imports and increase of exports

c) Industrial diversification

d) Strengthen the airport with logistics services

e) Generate quality employment

 

4. ZEDE – QUITO Benefits

ZEDE – QUITO will provide benefits to those who carry out their economic activity in this space. These benefits will not only be associated to the tax and tariff aspect but also to ones that contribute to the economic boost of the city and region.

General Benefits

  1. a) Increase of international trade in goods and services
  2. b) Multimodal connectivity
  3. c) Proximity to the airport
  4. d) Urban logistics
  5. e) Air traffic growth

National Benefits

  1. a) Reduction of three percentage points (3%) on the Income Tax rate for up to 15 years for the development of new investments [1]of the stablished societies[2].
  2. b) Exception from payments made abroad by ZEDE administrators and operators for goods and services related to their authorized activity.
  3. c) ZEDE administrators and operators will enjoy a tax credit for the VAT paid on the purchase of raw materials, inputs and services from the national territory.
  4. d) Exemption from taxes and foreign trade payment, for both administrators and operators.

[1] New investments. – According to literal b) of article 13 of the COPCI, it is the flow of resources destined to increase the capital stock of the economy, through an effective investment in productive assets that allows expanding future productive capacity, generating a higher level of production of goods and services, or generate new sources of work

[2] Societies. – In accordance with article 98 of the LRTI, it includes the legal person; de facto society; the commercial trust and the independent or autonomous patrimonies endowed or not with legal personality, except those constituted by the State Institutions as long as the beneficiaries are said institutions; the consortium of companies, the holding company that consolidates its financial statements with its subsidiaries or affiliates; the investment fund or any entity that, although devoid of legal personality, constitutes an economic unit or a patrimony independent from those of its members

5. Types of ZEDE-QUITO users

 ZEDE has three types of users:

  1. Administrator: It is the private, public or mixed, national or foreign legal person in charge of the operational management of the ZEDE space. In the case of ZEDE-QUITO, the administrator will also be in charge of the construction of the space.
  2. Operators: Companies or people that provide industrial and logistic services established on the ZEDE space.
  3. Services Providers: Any natural or corporate entity, national or foreign, who wishes to provide support services to operators established in the Special Economic Development Zone.

This user does not enjoy the exclusive tariff benefits of the ZEDE. However, they can access to tax benefits for new investments.

The industries prioritized in ZEDE-QUITO are:

  • Agroindustry
  • Floriculture
  • Pharmaceutical
  • Logistics

It is important to mention that despite not having the technological typology approved, this type of industry can enter ZEDE-QUITO as service providers.

Being part of this project, and benefit from its strategical location, next to the Mariscal Sucre International Airport, is a great opportunity to increase logistic and industrial competitiveness and explore electronic commerce, IT and innovation segments.

ZEDE-QUITO PROJECT