World Report

Stability and liberalisation have combined with natural beauty to create a supremely attractive investor destination

he vibrant flavour of the Dominican Republic, now being discovered by British tourists in their thousands, is backed by a strong and relatively diversified economy, an established democracy and a solid legal system.
During the 1990s, a programme of economic reform and liberalisation transformed the Dominican Republic into one of the Caribbean’s most progressive states. President Hipolito Mejia has steered a steady course since his election in 2000. In the capital, Santo Domingo, signs of affluence are everywhere. His priority now is to extend this wealth to the island’s poorer communities.

Luis González Fabra, executive director of the presidency’s information and press department, says there are five key areas to address, namely health, education, housing, food and the environment. So far, more houses have been built and more classrooms opened than at any time before and, after many years, the country has achieved food security.
With its proximity to the US – Miami is just 2.5 hours away – the country is looking to draw more foreign investment. “We offer the security of a working democracy where you have freedom of speech and peace, labour stability and a fully independent judiciary,” he says.

The Dominican Republic’s free trade zones have already lured hundreds of new businesses exporting advanced products such as electronics, telecommunications and biotechnology primarily to the US market. The zones – which allow companies to import equipment tax free and then export at least 80 per cent of output – have generated more than 250,000 jobs.
The first dedicated technology park – the Cyberpark of Santo Domingo – has been set up and there are plans for more. The country’s main exports, however, are still commodities such as sugar, coffee, tobacco and minerals. This export success has fuelled enviable growth rates through much of the past decade.

José Lois Malkun, secretary of state for finance, says the government has also been working hard to improve transparency, reduce bureaucracy and make life even more comfortable for investors. Financial reforms have promoted macroeconomic stability, one of the main attractions for foreign companies. The country has a well developed banking and financial services sector, as well as good communication links.
He says his country enjoys political stability, a legal framework and incentives. “We have a foreign investment law that allows you to repatriate your capital, you are free to do whatever you want and you get fiscal exemptions for a certain period of time,” he adds.

Investor confidence was highlighted in 2001 with the successful launch of the country’s first sovereign bond issue worth $500 million in 2001, just days after the tragic events of September 11th in the US. This international endorsement recognises how far the Dominican Republic has come in recent years.
Tourism, already the biggest source of foreign exchange earnings, is the next major thrust of the government’s business strategy. It accounts for roughly 10 per cent of gross domestic product and supports around 50,000 jobs. A land of beaches, sunshine and natural beauty, the Dominican Republic attracts more than 120,000 British visitors every year.
Rosalinda Thomas, president of the Camara Britanica de Comercio de la Republic Dominicana (Dominican-British Chamber of Commerce), says tourism also presents opportunities on the business side. Currently, the main UK imports include whisky and other alcoholic beverages, energy and automobile products and machinery. “British participation in the Dominican Republic is growing year after year,” she says.