So What About Ecuador?

If you’re thinking about an expat lifestyle and/or retiring abroad and you are on any of the mailing lists of the outfits who make a big business off promises of cheap and easy living abroad, you’ve probably heard about Ecuador.  Or Belize. (I had dinner with a couple just a week ago who moved to Belize to retire and can’t wait to leave and come to Panama.  “The only plus about Belize is that they speak English.  Other than that … and the government is very anti-foreigner.).  Or Portugal. (With the EU in a mess and taxes up the wing wang?  Come on!)  If you’re getting all this stuff on living abroad just take it all with a grain of salt. Realize these folks are in the business of promoting living internationally and selling books (OK, I do sell my book), conferences selling all kinds of “opportunities” to take your money and need I mention 15% “guaranteed” returns.  If you live in Washington, Colorado, Oregon, California or places that have legalized marijuana in one form or another, you’ll understand where these folks are coming from and getting their information.  Jackie Lange of Panama Relocation Tours has put together this great post about Ecuador …

Why I Did Not Move to Ecuador

whynot2-760x300During the Panama Relocation Tours I am often asked why I did not move to Ecuador, Costa Rica, Mexico or many of the other places popular with expats.  I did visit all those countries and more but, in my opinion, Panama was SO MUCH better.

It’s time once again to take off the rose colored glasses.  Learn why I did not move to Ecuador.  You will not read about any of these issues in live overseas or international magazines.  Keep in mind that many of these live overseas organizations have an objective to sell you a conference then sell real estate or other investments so they will paint pretty picture of the country but leave out important details that you need to know to make an intelligent decision about relocating.   At Panama Relocation Tours, there is no hidden agenda to sell real estate or investments.

I enjoy visiting Ecuador but I could not live there because….

For any country close to the equator, you can pick your ideal climate based on the elevation.  The weather does not change much regardless of the time of the year.  The average daytime temperature at sea level is 85-95 degrees.  For every 1,000 feet increase in elevation you can deduct 3-4 degrees.   So, at 3,500 feet (the elevation in Boquete Panama), the average daytime temperature is 75-83.

IT IS TOO COLD!!!!

lady-with-shawl-195x300In Ecuador, the most popular mountain towns are at a much higher elevation so they are too cold for me. Cuenca is at 8,500 feet.  Cotacachi is at 8,000 feet.  Daytime temperatures are in the mid-60s.  Evening temperatures get down to mid-40s.  Add a little wind or after a rain it will feel even colder.  Brrrrr!  When I visit these towns I need long sleeve tops, a sweater, jacket and scarves but I’m still freezing.   It feels like winter is just around the corner.  Most hotels and houses do not have a heater but you really do need one.  A few hotels have a fireplace in the room or they will put a hot water bottle in your bed to warm in up.  Even the locals have to bundle up to stay warm.

Vilcabama is at 5,000 feet so it is a little warmer but after the sun goes down it feels very cold.  And it is a really small town (population of 2500) with a lot of strange people.  Drinking beer and wine seem to be the most popular past time there.

Quito is at 9,350 feet and surrounded by active volcanoes.  It gets quite cold. The air quality is terrible because of fumes from the volcanoes.   And crime is a huge problem in Quito.

ACTIVE VOLCANOES

There are 25 active volcanoes in Ecuador.   They spew ash into the air which causes poor air quality not to mention the threat of lava flows which could destroy property and kill people.  It is common to see people walking around with a mask to prevent breathing the fumes.

HIGH ALTITUDE SICKNESS

Many people experience high altitude sickness at altitudes over 4,000 feet.  This can be as mild as a headache that won’t go away to extreme breathing problems.  Just walking around town can cause you to have shortness of breath.  High altitude sickness can kill you.

te-coca-300x225While in Ecuador, you can buy coco leaves to suck on or drink coco tea to ease the high altitude sickness symptoms.  The leaves of the coca plant contain alkaloids which—when extracted chemically—are the source for cocaine base. However, the amount of coca alkaloid in the raw leaves is small. A cup of coca tea prepared from one gram of coca leaves (the typical contents of a tea bag) contains approximately 4.2 mg of organic coca alkaloid. (In comparison, a line of cocaine contains between 20 and 30 milligrams.) The coca alkaloid content of coca tea is such that the consumption of one cup of coca tea can cause a positive result on a drug test for cocaine.

Some who live in Ecuador need to take daily medication to combat altitude sickness.  All medications can have side effects.

TOO EXPENSIVE!

Rents in “some” areas are affordable.  In Cuenca, you can get a nice 2 bedroom apartment for under $800 in some areas of town.  The price to buy real estate has gone up substantially.  If you eat Ecuadorian meals they are affordable but many restaurants are quite expensive.

vat-taxThe Ecuadorian government puts a huge 43% tax on everything that comes in from a foreign country PLUS they have a whopping 12-14% sales tax on all items (called a VAT tax).  So you are less likely to find items imported from your country and if you do, they will be really expensive.  A good example is a simple cell phone in Panama is $15 to $20.  The exact same phone in Ecuador is $70!   Electronic items like TV, radio, or computers are very expensive.  If you ship them in through Amazon, you still have to pay the 43% tax + 12% tax.

There is talk of increasing the sales tax to 15% on all purchases to help pay for the recent destruction from a massive earthquake along the Ecuadorian coast.

There is also a tax on any money that leaves the country.  If you open a bank account then close it to move the money to another country you will pay a 4-5% penalty for moving the money out of Ecuador.

If you sell a house in Ecuador, you will pay a tax of 10% tax on the total sales price PLUS if you want to move the proceeds out of Ecuador, you will pay an extra 4-5% tax.

Inheritance tax is at 35% after $72,000.  There is no inheritance tax in Panama.

So, why is their sales tax so high?  It is because Ecuador has serious economic problems.

NOT DIVERSIFIED ECONOMY

A huge 65% of the Ecuadorian government income comes from oil exports.  Oil prices are way down so the income of Ecuador is way down.    The poor economy has created high unemployment which has created more crime.  It’s a vicious cycle.

See this article about their economic problems

The average income in Panama is more than TWICE as much as the average income in Ecuador.  Low income leads to other problems like crime which I will discuss below.

Panama has multiple streams of income with no one source exceeding more than 20% of GDP.  Even the Panama Canal is less than 10% of the income in Panama.  This makes for a much more stable economy.

When you are looking for a country to relocate to, the stability of the government and strong economy with low debt should be of major concern.

NO FREEDOM OF SPEECH!

If you say or write anything bad about the Ecuadorian government, you can go to jail.  If anyone questions the government’s decision to put someone in jail, then that person can be sent to jail too.

It’s not just freedom of speech!   There are many other reasons people can lose their freedoms.

Read more about what else can land you in jail in Ecuador

TOO FAR!

If you want your friends and family to visit you in your new country, it better be a short flight and affordable or they will not come!  Panama is less than a 3 hour flight to Miami and about 4.5 hours to Dallas Texas.  Flights are usually less than $600 and often less than $400 round trip.  There are many non-stop flights to Panama from the United States, Canada and Europe.

If I lived in Cuenca Ecuador, it would be a 16-24 hour flight and cost over $1200 with multiple stops to get to the United States.

THE PEOPLE

The people in Ecuador just don’t seem as friendly as the people in Panama.  In Panama when you walk down the street everyone will make eye contact, smile and say Hola or Buenas Dias.

Not so in Ecuador!   In Ecuador it is rare that they make eye contact, smile or say hello.

It is less likely in Ecuador that English is spoken.  You will need to learn more Spanish.

CRIME AND SAFETY

When you fly in to a foreign country, you always have to go through Immigration to get your passport stamped and let them know how long you plan to be in the country.  I was absolutely shocked the first time I flew in to Ecuador. Immigration gives out a pamphlet warning about the crime problems in Ecuador and how to avoid abduction, what to do if you are confronted with armed robbery, pick-pockets, someone snatching your purse, or other crimes.

This is not exactly a nice welcome!

At least 13 U.S. citizens are known to have been victims of kidnapping since 1998. In October 2009, an American citizen was kidnapped in Tulcan and held for ransom. After 21 days, the victim was rescued after an intensive investigation involving Ecuadorian, Colombian, and U.S. law enforcement. In 2012, two Americans were held, one by an indigenous group and later released and one for ransom by a paramilitary group near the Colombian border in Sucumbíos, who later escaped. Two Canadians tourists were also held and assaulted in the Cuyabeno National Park near Lago Agrio and later released.

quitotaxibutton-225x300Taxi cabs are equipped with cameras and a red panic button because security is such huge issues in Ecuador with express kidnappings and robberies. If you find yourself in a cab without a security camera, you’re probably in an unauthorized taxi.  An express kidnapping (“secuestro express”) is where the taxi driver and their accomplice(s) take you to an ATM machine to get cash for them.  These express kidnappings could end with an assault too.

The panic button will notify police but they cannot always respond fast enough.

Every time I go to Ecuador, a tourist or expat living in Ecuador tells me how they were held up at knife or gun point to give up their purse or wallet.  Some have reported being held up for the cash they just got from an ATM machine.   You should not carry back packs around Ecuador.  You could become a target if you look like a tourist with the usual camera around your neck, iPad taking photos or a fanny pack.

IN CONCLUSION

There are many other reasons why I picked Panama over Ecuador or any other country.  In Panama I don’t have any of the problems discussed in this article.  Panama is safer!  The Panama government and economy are stable.  In fact, the Panama economy is the strongest in the entire western hemisphere.

Living in a foreign country is not right for everyone. Before you make the decision to relocate to any country, you really need to spend some time exploring the country (not sitting in a hotel conference room watching slide shows).

Panama Relocation Tours will give you a 5-day all-inclusive boots-on-the-ground tour of Panama so you can visit various areas and discover if Panama would be right for you.

By Jackie Lange