Bank fund

samialqsaimi wrote:

The question is if I put in the bank 100,000$, how much the fund is?

Welcome to the Ecuador forum, Sami.

Your question doesn’t make sense to me, so I’m going to alter it as follows to see if my ensuing response is of assistance...

“How much money does an Expat typically have to invest in a certificate of deposit in Ecuador in order to qualify for a permanent residency visa ?”

The short answer:  $25,000 US

The longer answer:  Slightly more if the investor has dependents.

-- cccmedia

samialqsaimi wrote:

I want to open small business like mini market or tourism office, is it worthy?

It’s not easy to predict that a new business in Ecuador will be “worthy” or “worth it.”

It is highly probable that, in this time of economic and other turbulence in Ecuador, the Ecuadorians would consider it advisable to do business with other Ecuadorians and not Expats, given the choice.

There’s also the language issue.  If you’re less than fluent in Spanish, you’d be at a big disadvantage with the prospective local customer-pool from the start in practically any business.  Unless, of course, you could provide discounts unavailable elsewhere .. with enough language skills to pull it off. 

Outside of Vilcabamba and possibly Cuenca, expecting to do business primarily with Expat customers is not a recipe for success.  You would need to attract business from the locals.

How’s your Spanish ?

cccmedia

Thanks for your reply. In case I deposit 100000$ in bank, how much yearly refund I will get?

samialqsaimi wrote:

Thanks for your reply. In case I deposit 100000$ in bank, how much yearly refund I will get?

Depositing that much money in an Ecuadorian bank is unwise:

1.  Bank deposits in Ecuador are insured only up to about $33,000 US.  Given Ecuador’s current and previous financial problems, you don’t want to take such a risk.

2.  Wiring money out of Ecuador later would subject it to a 5 percent Ecuador tax.  If you kept deposits here at 3 percent interest for two years and then lost 5 percent to the exit tax -- plus wire fees -- you would make a tiny profit, if any.

Note:  A Certificate of Deposit (CD) that is used to establish residency-visa rights must be replaced with a new CD when the CD period expires.  So if you deposit into a 1-year CD or a series of such, you will have to do bank paperwork on a new CD every year.   

Anyway, don’t consider depositing large amounts into an Ecuador bank at this point unless you’re 'on the lam'

cccmedia

Thank you so much Mr cccmedia.

Yes cccmedia is correct you only need to invest in $25,000 and an additional $500 per dependent (for example child or spouse). As for opening a minimart, good-luck with that unless you know Spanish and local customs.

This is a very beautiful and safe country but old thinking in terms of opening a "mini-mart" here won't work. This isn't Chicago or NYC. You have to offer something new that will attract people or businesses to make money here.

Something to consider if you have that amount of free capital is to place the funds in a number of high yield CDs in a select group of A+ rated Cooperatives and live off the investment.

Buisness success here in Ecuador is rarely rated by financial success and as one friend of mine puts it:  The Best way to make a small fortune in Ecuador...is to arrive with a large one!

This is what I’ve observed in my neighborhood with the businesses that are successful and those who shut down after six months and those that are new but will also face a similar fate. A coffee shop, burger joint, mexican restaurant all closed the past six months on the same street that other businesses thrive.

The difference is branding. These places offered nothing new whereas places like Rebel Saloon is very “hip” and attracts the young and the old, it’s very active in promoting its brand. I mean these guys are active on facebook, have a cool website, and offer octopus on a small wood cutting board with a miniature Rambo knife stabbed into it, what’s not to like. They also have friendly and courteous Venezuelans and Colombians working there and are killing it(making money to the OP) even on a Monday.

Wok to Walk is also successful and other places try to emulate them but are doomed to fail because they are essentially nameless, and Ecuadoreans who are willing to spend $8-$9 on a simple dish want to be somewhere with a brand name.

I have my eye on a new craft beer place in my area and they are emulating Bandido brewery near Central market. The first couple of weeks it was packed but that was abnormal and were probably family and friends that the owners invited to give the place a buzz, now the rate of customers seems normal. I give it a 50-50 chance which is pretty darn good for a food and beverage establishment. Why- because they are making a brand for themselves. On the other hand there’s this coffee shop that is basically nameless and while it’s unique with Japanese Bonsai it has no buzz about it and I give them 3 more months, 6 if they are stubborn.

And back to mini-markets, there are so many, and most are not too busy, but they appear to have established relationships with the community and have their loyal customers so they are making a little money. Oki-Doki on the other hand is killing it, and why? Because they developed a brand name and are all over Quito in great locations, and it takes a lot of initial capital to achieve that. To give an example of the power of a brand, there is a teinda or small mini-mart that is across the street from Oki-Doki, and while the lady owner sells stuff cheaper than Oki-Doki, she has no where near the customers.

A project of mine is helping a friend brand his business. He worked in a kitchen on cruise ships for 12 years and learned a lot along the way particularly from a French pastry chef. The guy makes amazing cakes, pastries and Chilean empanadas among other things but he’s stuck in a cycle of driving his gypsy cab and selling his pastries and empanadas to select people he knows. He has no vision whatsoever and doesn’t see his own potential and I attribute that to lack of money as he’s living day to day paying alimony, paying expenses. My point is you need a good plan, $ and you have to actively brand your business and if you're lucky you’ll make good money.

This is all of course my opinion, and through the years I’ve owned and sold a couple of businesses. And the best advice I can give to anyone who doesn’t know what they are doing is to buy an established business even if it’s at a premium provided you are satisfied with getting your money back in X amount of years.
 
This is a topic I'm passionate about and researching. I'm interested in owning a brick and mortar business again as it'll give me something to do when the kids are off to college in the near future. If anyone has their own observations about businesses in Ecuador please do share.

Thanks Mr Vsimple. Your point is clear for me now but I have another type of business may be it works there. For example, open shop to sell ( movies (Pirated) - play station games - computer accessories ) also computer maintenance - printing etc. You think it will work there ?   

Thanks,

You have to visit Ecuador to understand why I think opening a DVD store is a bad idea. Let me give you some insight into my thinking. Before we installed high speed internet in our apartment we bought cheap DVDs that are about $1 each and cheaper if you purchase 4 or more. Some Ecuadoreans that buy DVDs would ask questions and converse with the store owner, presumably about types of movies, recommendations and so on. You will not be able to do that unless you speak Spanish. A solution would be to hire Spanish speaking help for about $350-$400 per month. But do you know how many DVDs you would have to sell just to pay his/her salary? Assuming each DVD including printed paper label and plastic DVD cover costs about $.50, you would need to sell at least 700 DVDs a month to cover his/her salary, what about rent, utilities, etc? You would need to sell a whole lot of DVDs at a time when high speed internet is becoming more available and cheaper making downloading and streaming movies easier than ever.

Come here and emulate successful immigrant businesses but in a niche that you are good at. This is what I’m observing about immigrants who do business here. The Koreans open Asian grocery stores and Korean restaurants, the Chinese specialize in Chinese restaurants, Colombians open Colombian restaurants and grills. These immigrants cater to their own communities as well as Ecuadorean society. Stop thinking along the lines of mini-marts and DVD stores of which the market is saturated and start thinking about what you can offer Ecuador. This is just my perspective, and perhaps you should take Susan_in_Ecuador’s advice and place your funds in CDs until you know the intricacies of the businesses atmosphere here as well as Ecuadorean society.

Thanks so so much.

At Banco Internacional today I noticed that you can get 5-6% on US$100K, depending on the term, from 3 mos to a year. I did not know about the $33,000 limit on insurance or, for that matter, what it is worth at all. I am too chicken to deposit much money in banks here. If it is like in the US, you could just deposit $33K to each of 3 banks. The paperwork in rolling over a CD just means dropping by the bank and signing a form they have ready for you. I was with someone yesterday when they did just that.

I hear-tell that if you withdraw cash you are supposed to declare it when you leave the country and pay that tax on the amount but was told that it is not really enforced (I would not count on that!). I do know someone who accidentally brought in a tiny bit over $10,000 (to buy crafts for his business) and the whole amount was confiscated. He eventually got it back, but not easily nor without help. Thinking about this stuff makes me feel tired. heh heh