Invest In Dominican Republic by In for Investment

There is a country in the world placed in the same way of the sun... â&#x20AC;&#x153;Hay un paIs en el mundoâ&#x20AC;? Poem by Pedro Mir (1 94 9)

FACTS SHEET

FACTS & FIGURES

FORM OF GOVERNMENT

Population (m): 9,927,320 Population growth 1.6 GDP (current US$ m): 51,6 billion GDP growth (annual%): 4.2% GDP per capita (current US$ m): 18,245 GNI per capita (current US$ m): 5,030 Exchange rate (av) Ps: US$ 36.87 Real GDP growth rate: 7.8% Real domestic demand growth: 8.1 Inflation (annual%): 6.3 Current-account balance (% of GDP): -6.5 FDI inflows (% of GDP): 4.2 Currency: 1 peso (Ps) = 100 centavos; Average exchange rates in 2010: Ps36.9: US$1 / Ps48.9: €1

Land area: 48,511 sq km Cities: Population in ‘000 Santo Domingo (capital) & metropolitan area: 2,731 Santiago: 908 Puerto Plata: 313 San Pedro de Macorís: 302 Language: Spanish Time: 4 hours behind GMT Ethnic groups: Mixed: 73% European: 16% African Origin: 11% Literacy: 87% Work force: 60.2% services 15.5% industry (manufacturing) 11.5% construction 11.3% agriculture 1.5% mining Climate: Subtropical Driest month, March, 19 mm average rainfall; wettest month, June, 185 mm average rainfall Measures: Metric system, tarea: 6.4 tareas=1 acre / 15.9 tareas=1 ha

Representative democracy Head of state: On May 16th 2008 Leonel Fernández was elected for a third term as president. The executive: The president has executive power, appoints a cabinet and holds office for four years. National legislature: Bicameral Congress, with both houses directly elected; the Senate (the upper house) has 32 members, one for each province and one for the national district; the Chamber of Deputies (the lower house), has 183 members, and is elected every four years. Legal system: There are local justices covering 72 municipalities and 18 municipal districts; each province acts as a judicial district; the highest court is the 15-member upper house, which is appointed by the national council of magistrates National elections: The last presidential election was held on May 16th 2008; the last legislative and municipal elections were held on May 16th 2010; the next presidential, legislative and municipal elections are due on May 16th 2016. Main political organisations: Government and allies: Partido de la Liberación Dominicana (PLD); Partido Reformista Social Cristiano (PRSC). Opposition: Partido Revolucionario Dominicano (PRD)

REAL GDP GROWTH

ORIGIN oF GDP 7.8%

AGRICULTURE 2010 2011

5.3%

5.5% INDUSTRY 2010 2011

3.5% 2008

2009

2010

2.5 4.2

2011*

SERVICES

(*) Estimate Source: International Monetary Fund (IMF) World Economic Outlook October 2010

2010 2011

risk assessment

4.8 4.8

Source: Economist Intelligence Unit

Overview - February 1st 2011 Sovereign Risk

Currency Risk

Banking Sector Risk

Political Risk

Economic Structure Risk

Country Risk

Source: Economist Intelligence Unit

PUBLIC DEBT (% OF GDP) 2007

20.3% 25.3%

2008

FOREIGN CURRENCY GOVERNMENT BOND RATINGS

2009

28.5%

2010

29.0%

Standard & Poor’s

B/POSITIVE/B

Moody’s rating

(*) Estimate

Moody’s outlook

STABLE

Source: International Monetary Fund (IMF) World Economic Outlook October 2010

BUSINESS ENVIRONMENT • Strong macro-economic and political stability • Abundant, well qualified workforce • Excellent telecommunications infrastructure

2011

• Risk-free Free Zone operations • Attractive Taxation and financial incentives • Increasing labor productivity • Strategic geographical position

25.5% *

INFLATION 10.6%

2008 2009

• Highly developed banking and insurance systems

Sources: U.S Department of State, Central Bank of the Dominican Republic, World Bank, The Economist Intelligence Unit.

3.5 3.0

1.4%

2010

6.3%

2011

6.1% *

(*) Estimate Source: International Monetary Fund (IMF) World Economic Outlook October 2010

EDITORIAL

elcome to Invest In, the first multimedia platform devoted to investing in emerging economies. This investment atlas has been designed to help you explore the richness and potential of the largest economy and the number one tourist destination in the Caribbean basin: the Dominican Republic. The Business Guide provides analysis, testimonials, interviews and roundtables involving over 80 personalities from the business, economic, social and government sectors of the country. International and local organizations as well as domestic and foreign private investors offer us their expertise to shape this portrait of the Dominican economy, culture and lifestyle. The Dominican Republic has a vibrant investor-friendly economy integrated into the global marketplace through free-trade agreements with some of the world’s largest economies. This country is a tourism paradise. It has glorious natural beauty, gorgeous beaches, Caribbean flavor and a unique way of life. But mostly, it has aspirations. Its main important ambition is to become a developed country in 2030 by bringing wealth, low-cost energy, technology and development to all. We would like to thank Dominican government officials for their support and willingness to share information in the areas of interest to international investors. Our respect and gratitude also go to the members of our editorial board, as well as to all the analysts, economists, businesspeople and sponsors who have made it possible to display the rainbow of investment opportunities that the Dominican Republic offers today.

Multilateral organizations have acknowledged this country’s strong economic performance and the solid technical, economic and monetary support that has helped the government overcome the banking crisis of 2003 and achieve a macroeconomic stability that has been essential for attracting major outside resources. The DR’s excellent business climate is showcased here through the testimony of major investors analyzing the challenges, opportunities and variety of the country´s investment scenario. The Dominican Republic of the 21st century continues to overflow with the wealth of sugar, rum, palm trees, coffee, organic cocoa, mango, coconut, pineapple and rum. But in this country, the sweetness of the Caribbean is now complemented by state-of-the-art infrastructure, technology, industrial development, local talent and a determination to be a place that shines not just because of its location, at the heart of the Caribbean. The Dominican Republic is more than just an investment destination or an excellent tropical producer. It is not only beautiful but competitive as well, not only enjoyable but profitable, not only evocative but livable. It is a welcoming nation, a country of contrasts, landscapes and colors, with friendly and easygoing people. Its human capital is one of the main reasons why more than 4.1 million tourists feel at home here and almost always want to return. Welcome to the birthplace of the Americas and the place that we hope will soon become your next business destination. We truly hope you enjoy the contents of Invest In Dominican Republic as much as we have enjoyed learning in depth about this piece of paradise.

Elena Marin Editor Invest In

EDITORIAL BOARD Invest In Advisory Board Consultants

Acknowledgments

Editor Editorial supervisors Editorial support Proofreader Creative Director Page Layout Produced by Production Manager Printed at e-version

Elena Marin Sally Chew and Mauri Small Laure Degois, Lorena Cabrera Ilana Benady Marian Muñoz In Design In for Investment Corp Monica Concellón Vanguard Grafic www.invest-indr.com

Kevin Manning

Antoni Gutierrez Rubí Dr. Harold J. Raveche Dr. Franklin Lithgow Eddy Martinez Manzueta Alexi Fernandez Ana Pombo Rose Donald Rowland Enrique de Marchena Jal Hamad Jose Alfredo Rizek

Business development Financial advisor Institutional Communication Legal affaires Online applications & e-business development Corporate governance

Elena Viyella de Paliza

President of InterQuimica, S.A., a chemical importer and distributor, Monte Rio Power Corp. and Indescorp, S.A. She is a Member of the Board of the Inter-American Dialogue and past President of the Dominican Business Council, the Dominican Stock Exchange, the Dominican Manufacturers Association and the National Agribusiness Board.

Ventura Serra

An expert on tourism and hotel management, he is the VP of Operations in the DR & Cuba of Occidental Hotels and the General Manager of Embajador Hotel in Santo Domingo. Awarded the Orden del Mérito Civil by the Spanish government for his role in the development of tourism in the Caribbean and the DR.

Ambassador Isaac Tsai and the Government of Taiwan, Franklin Lithgow Peña, Campos de Moya, Lola Noriega, Antonieta Mendoza, Sofia Perazzo, William Phellan, Paola Rainieri, Alejandra de la Paz, Rodrigo Melo, Cristobal Paulino, Minister Manuel Garcia Arevalo, Marta Ors Arranz, Juan Guiliani Cury, Fernando Sanchez Albavera, Jorge Esteva, Magdalena Lisardo, Anibal Taveras, Sylvia Marley, Serena and Neil Balford, Alicia Paulino, Danilo del Rosario, José del Castillo, Maria Waleska, Gerty Valerio. Editor’s Pictures, Thiago de Cunha © 2011 by In For Investment Corporation. All rights reserved. Invest In Publications & Invest In The Business Guide are registered trademarks of exclusive property of In for Investment Corporation. All the authors of Invest In DR cede and transfer to In For Investment Corporation their Intellectual Property and Authorship Rights. Doing Business in the DR 201 and A new Engagement © The International Bank for Reconstruction and Development / The World Bank, 1810 H Street, NW, Washington, DC, 20433 USA IMF Economic Support © The International Monetary Fund, 700 19th Street, N.W., Washington, DC. 20431 USA

Reproduction without consent is prohibited. No part of this work may be reproduced, distributed, transferred, modified, adapted or used in any form or by any means, without the previous written authorization from In For Investment Corporation. Invest In is not responsible for the information and opinions chosen and shared by the authors, nor will accept any responsibilities for the possible caused consequences to the natural or legal persons who act or stop acting as a result of some information contained in this publication, without a previous professional consultation.

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Special Thanks

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Tels: (507) 340-3420 / 21 Fax: (507) 340-3422 www.inforinvestment.com www.invest-indr.com

Board member and former two-term President of the Dominican-American Chamber of Commerce (AMCHAM). A veteran natural resource development and energy specialist, he spent over 36 years in Latin America prior to his arrival in the DR as Director of the Smith Enron Cogeneration LP in 1998. He recently retired from AES Dominicana and is now dedicated to The Dream Project foundation.

Marta Fernandez Marzal

Freddy Ginebra

Former Communication & Corporate Social Responsibility Director of Basic Energy Group and Dean of School of Mk & Master level professor at PUCMM and UNIBE. She presides over the Committee of AMCHSM on CRS and is one of the foremost advocates of CSR in the DR.

Founder of Casa de Teatro, the cultural epicenter of Santo Domingo where music and the arts come together, Freddy is considered the guiding force of Dominican art & culture. A renowned producer, scriptwriter, novelist and showman with extensive advertising experience, he presides over the Santo Domingo Tourism Cluster and heads the Cumbre/Nazca Saatchi & Saatchi advertising agency.

Jose Alfredo Rizek

Andres Van Der Horst

Darys Estrella Mordan

Alfonso Rodriguez Villalba

Eduardo Valcarcel Bodega

An international consultant in telecommunications, market regulation, judicial reform and governance. He is partner in the law firm of Medina and Rizek, the Honorary Advisor to the Government in telecommunications, former Executive Director of INDOTEL and a lawyer, mediator and referee in the DR.

With extensive business acumen, this Secretary of State was honored by the World Economic Forum as a Young Global Leader. Founder and Director of the National Competitiveness Council since 2002 and member of the USDR Free Trade Agreement DR-CAFTA negotiating team, he represents the DR’s efforts to sharpen its competitive edge, having coordinated several of the country’s annual development plans. Executive Vice President of the Dominican Stock Exchange and winner of the World Economic Forum’s 2008 Young Global Leader Award, among other honors. She forged her career on Wall Street in New York, where she was part of the Goldman Sachs team and co-founded the Association Dominicans on Wall Street (DOWS).

Industrial engineer and CSR expert, he is the Sales &Sustainable Director of Biogen Ltd Corp, private consultant for Renewable Energy and Climate Change, and former advisor of the Dominican National Council on Climate & Clean Development Mechanism, the National Commission of Energy and the Ministry of Environment & Natural Resources. An expert in marketing and communications, He is current VP of Communications of Orange Dominicana and former Director of Corporate Communications at the Vicini Group. His professional experience includes Marketing Director of Claro & Codetel, former Corporate Communications Director of Verizon in the DR and former Creative Director of DR J.Walter Thompson.

SUMMARY

A strategic vision for the DR Manuel Labrado IDB Representative in the Dominican Republic

Doing business in the DR Ary Naim, IFC Country Representative in the Dominican Republic

INVEST IN THE DR 1 2

Dr. Leonel Fernández Reyna President of the Dominican Republic Branding the Dominican Republic Eddy Martínez Manzueta Secretary of State Executive Director CEI-RD A land of opportunities Gustavo A. Cisneros President & Chairman Cisneros Group of Companies Welcome home Oscar de la Renta Fashion Designer My host country Pepin Corripio President Grupo Corripio

ECONOMY 9

Macroeconomy Betting on sustainable development Juan Temistocles Montas Minister of Economy, Planning and Development Growth, global integration and equality Rolando Guzman, Pareto Consulting Froup A new engagement Roby Senderowitsch World Bank Representative in the Dominican Republic IMF Economy support Alejandro Santos International Monetary Fund (IMF) Chief of DR Mission

FDI Incentives for foreign investments in DR and Central America Ramon Ortega, Tax & Legal Services Regional Managing Partner PWC Interamericas FDI in the DR historical overview Marco de la Rosa, Former President of AES Dominicana & ASIEX President of AES Panama Diversity of opportunities for foreign Investment Franklin Lithgow Peña FDI Director at CEI-RD FDI in the DR Kevin P. Manning, FDI & Energy Consultant Former President of AMCHAM-DR

The largest investment Aaron Regent CEO Barrick Gold

DR financial strength Jim Meek Senior VP & General Manager ScotiaBank Dominicana

The Dominican Republic always Pepe Hidalgo Executive President of Globalia Corporation Open Sky Dave Barger JetBlue President and CEO

34 Cyberpark, ecosystem of innovation,

IT and progress Eddy Martinez Manzueta S.E Trade & Investment President of the Board of Directors CyberPark

37 Technological development

at the heart of the Caribbean Jean Marc Harion President Orange Dominicana

39 R&D in the DR = UNI3

Dr. Harold J. Raveche Founder of Innovation Strategies International Former President of Stevens Institute of Technology

40 Dominican competitiveness

47 EPA: Revving Up Trade with Europe Jose Antonio Alvarez Alonso Jr. President of the Dominican Republic Spanish Chamber of Commerce, Industry and Tourism

a comprehensive legal analysis Jose Alfredo Rizek Managing Partner, Medina & Rizek Abogados Fabiola Medina Garnes Partner, Medina & Rizek Abogados

54 Public-Private partnerships in the DR

Trade & investment opportunities Flavio Dario Espinal Squire Sanders & Dempsey, Former Dominican Ambassador to the U.S.

45 DR CAFTA:

Essential for FDI & business growth Alejandro Peña Prieto Partner, Squire Sanders & Dempsey Former President of AMCHAM-DR

46 EPA public perspective

Cesar R. Dargam Espaillat Vice Minister of Foreign Affairs, Economic Matters & International Negotiations

The Dominican insurance market Eng. Ernesto Izquierdo President Seguros Universal TELECOMMUNICATIONS

Telecommunications in the DR: A success story Jose Alfredo Rizek Partner Medina & Rizek Abogados

Real time connectivity to the world Rodolfo Garcia President, Latin America, Terremark Worldwide Inc.

Telecommunications and competitiveness in the DR Oscar Peña President of CLARO in the DR

Innovation and modernity President Orange Dominicana

51 Dominican Republic tax regime

INTERNATIONAL RELATIONS

44 DR-CAFTA:

49 FDI in the DR,

53 Protection of intellectual property

international alliances Carlos Morales Troncoso Minister of External Affaires

The Dominican Stock Exchange Darys Estrella Mordan CEO of the Dominican Stock Exchange

LEGAL FRAMEWORK

moving forward Andres van der Horst Alvarez Executive Director of the National Competitiveness Council and Secretary of State

43 Expanding trade &

in the DR: a look towards the future Mary Fernandez Partner, Headrick Rizik Alvarez & Fernandez Marcos Peña Rodriguez Partner, Jiménez Cruz Peña FINANCE

INFRASTRUCTURE

57 Banking & Monetary policy

National infrastucture overview Marco Cruz Caribbean Director Odebrecht

60 The Dominican banking sector

Road infrastructure Armin Garcia President & CEO Boulevard Turistico del Atlantico, S.A.

62 Corporate & investment banking

World class infrastructure Andrew O´Brian General Director Aerodom

Hector Valdez Albizu Governor of the Central Bank as catalyst for development Bernardo Fuentes Managing Partner Economi-k Máximo Vidal City Country Officer

64 New financial services

Mark Silverman President of Banco del Progreso

Port infrastructure and development Teddy Heinsen President of ET Heinsen & Dominican Shipping Association

108 Invest in Samana

The new face of Santo Domingo Lisandro Macarrulla President Sans Souci

111 Business tourism in Santo Domingo

TOURISM & ENVIRONMENT

113 Environmental protection &

Tourism paradise Francisco Javier García, Minister of Tourism Challenges & opportunities Haydee Kuret de Rainieri Former President of ASONAHORES & VP Hospitality & Human Resources of Grupo Puntacana A growing tourist destination Enrique de Marchena Former President CHTA Managing Partner DMK Lawyers

Juan Bancalari Brugal President Puerto Bahia & Dominican Real Estate Association Ventura Serra Senior VP Operations DR & Cuba

capital investment in the DR Juan Mejia Environmental Policies & Management specialized Lawyer, DMK

114 Responsible tourism

Adriana Cisneros de Griffin Vice Chairman and Director of Strategy, Cisneros Group of Companies Chief Executive Officer, Tropicalia President, Fundación Cisneros

117 Cruise destination

Sharon Mei Sans Souci Commercial Director

Investing in tourism Pablo Piñero Founder & President of Grupo Piñero

119 Yachting

The origins of luxury Alfonso Paniagua President Costasur Dominicana, Casa de Campo

121 The DR as a premier

The Punta Cana dream Frank Rainieri President & CEO of Grupo Puntacana

102 Luxury upgrade

Luis Emilio Velutini President & Founder Velutini Group

106 Puerto Plata Round Table

Giannfranco Fini, Yacht Club Manager Marina Casa de Campo Caribbean golf destination Efren Garcia Estrada Director of The Cap Cana Championship 2008 – 2010 CINEMA

123 The ultimate film destination in the Caribbean Marco Herrera Executive Director Funglode

124 Film industry in the DR: Shooting for the stars Jasbinder Singh Mann Indomina Group Co-Chairman and CEO

126 Dominican cinema

Arturo Rodriguez Fernandez Film critic, scriptwriter, playwright and writer (In Memoriam) EXPORTS

129 Exporting excellence

Eddy Martinez Manzueta Executive Director CEI-RD and Secretary of State

130 Sugar in the Dominican Economy César Heredia President of UNAZUCAR

132 Dominican rum conquers the world Alberto Nogueira, GM Barcelo Ron

134 Best Cacao?

Hector José Rizek Executive VP Rizek Cacao

136 The history of Dominican tobacco

Hendrik Kelner General Manager, Tabadom Holding Inc. INDUSTRY

139 Dominican Industry overview

Circe Almanzar Melgen Executive Vice-President of the Dominican Republic Association of Industries (AIRD)

140 The Future of the Dominican Industry Elena Viyella de Paliza President of Interquimica Dominicana

143 Construction Industry

Julissa Baez Executive Director of ADOCEM

144 A new investment opportunity

Diogenes Aybar Vice Minister of Higher Education, Science & Technology CEO & President Aybar Ecotechnologies

146 Free trade zones

Luisa Fernandez Executive Director of National Free Trade Zone Council ENERGY

149 Energy sector in perspective Tito Sanjurjo CEO of EGE Haina

150 The electricity sector on the recovery path Celso Marranzini Vicepresident CEED

152 Invest in renewable energy

Alfonso Rodriguez Villalba Renewable Energy Consultant

154 Energy Independence is Garbage Timothy K. Judge President of EcoAssessment, LLC, Sleepy Hollow, NY, Assistant Professor of Environmental Studies, Ramapo College, New Jersey CSR

157 Invest in education

Kevin P. Manning FDI & Energy Consultant Former President of AMCHAM-DR

158 More than just a trend

Marta Fernandez Marzal President & CEO of CSR Consulting SRL President of AMCHAMDR’s CSR Committee & CSR Consulting

160 Sur Futuro Foundation

and social responsibility Melba Segura de Grullón President of the Sur Futuro Foundation DOMINICAN CULTURE

163 The first city, the perfect destination Freddy Ginebra Owner of Casa Teatro

165 Musical heritage of the Americas Dario Tejeda Director of the Institute of Caribbean Studies (INEC)

167 The Dominican art of cooking

Esperanza Lithgow Dominican Chef Master of the Ministry of Tourism DIRECTORY DOMINICAN EMBASSIES CEI-RD BUSINESS ASSOCIATIONS SANTO DOMINGO HOTELS TOP RATED GOLF COURSES

have been fortunate to serve my nation as President of the Dominican Republic for three non-consecutive terms and to witness first hand our country’s remarkable development over the last 50 years. Half a century ago, the Dominican Republic was a despotic, isolated and closed society. Today it is a democratic country, fully integrated into the international community and the global marketplace. We are the largest open economy in the Caribbean and a secure and strategic investment destination.

The Dominican Republic of the 21st century is a nation of solid laws and institutions. We respect private property and have set up institutional mechanisms for conflict resolution. Our laws treat domestic and foreign investors equally and allow 100% profit repatriation. Our free trade agreements with the United States and with the E.U allow us to become a springboard for investment and export. Your venture in the DR would not only support Dominican demand but also become your bridge to some of the world´s largest markets.

Dr. Leonel Fernández Reyna President of the Dominican Republic

1 Dr. Leonel Fernández Reyna President of the Dominican Republic

2 Branding the Dominican Republic Eddy Martínez Manzueta Secretary of State Executive Director CEI-RD 3 A land of opportunities Gustavo A. Cisneros President & Chairman Cisneros Group of Companies 4 Welcome home Oscar de la Renta Fashion Designer 5 My host country Pepin Corripio President Grupo Corripio

A robust, solid and safe banking sector makes the Dominican Republic a conducive environment for business. We overcame in record time one of the most profound economic downturns in the nation’s history, when our financial system collapsed in 2003. The aftermath compelled us to implement a banking sector regulation, supervision and observation process that has proven effective enough to save us from the 2008 global financial meltdown. Even amidst the worst economic crisis the world has faced in 80 years, the Dominican economy remained steady. Since 2004 our GDP has more than doubled, increasing from just over US$ 22.6 billion to almost US$ 51.7 billion in 2010. In 2009 our GDP grew 3.5%, less than our usual annual growth but still the highest in Latin America. Due to efficient fiscal and monetary coordination, a strong currency and exchange and tax policies guaranteeing macroeconomic stability, GDP growth reached 7.8% in 2010, one of the best rates in the region. Analysts believe this is the decade of Latin America. Our economy is ranked ninth among the 34 Latin American nations and is the fastest growing. We are also the top regional FDI destination, with US$11 billion accumulated over the last five years, but above all we are a nation of great human capital, always looking to progress and make dreams become successful realities.

During my time in office we have implemented policies to improve the well-being of our people and ensure growth and stability. We have been committed to bringing our technology and our infrastructure up to world-class levels, and upgrading our energy sector to serve the nation’s development process. We have reduced our country’s poverty levels, promoting inclusive policies to enable the entire Dominican population to take advantage of the country´s modernization. We have diversified our economy, combining labor-intensive activities with a capital-driven model, in which a strong technological component is helping build a better-educated population. We have expanded our bilateral and multilateral relations, strengthening our role in the international community and ensuring that our views on global challenges and threats are heard. We have an important role to play in our region, assisting our neighboring countries’ development, and in particular making sure that democracy and justice, equality and transparency are restored in Haiti and its reconstruction process is successful. We rely on our political stability to implement our commitment to become a fully industrialized nation by 2030. To reach this substantial goal, we have embarked on a consultation process with business, civil society and the entire political sector to ratify an operational model that, regardless of the political party in power, leads the Dominican Republic to full development. As current President of the Dominican Republic I have been invited to introduce the first edition of Invest In, where you will be able to take a close look at what shapes our nation’s business environment. The private sector testimonials are proof of excellent investment climate, and I predict they will help you with networking and decision-making, and give you a richer understanding of our country. Besides emphasizing my government’s tremendous commitment towards investor security and transparency, I must also mention that I hope to inspire you and engage you in the challenge of contributing to our development. Thank you in advance for considering the Dominican Republic as a partner. Joining with us to raise awareness of our nation´s potential will smooth the way toward progress, equality and opportunities for all.

he Dominican Republic of the 21st century is a democratic nation that has consolidated its open economy, international influence, political stability and its position as the top consumer market of the Caribbean with major opportunities for tourism, agro-industry, exports and technological development. With record economic growth over the past 8 years, an FDI success story, significant strides in bilateral and multilateral relations, free-trade agreements with main world markets, and a sustained and growing number of tourists, the Dominican Republic is a regional leader in several economic areas. Nevertheless we are still one of the world’s best kept secrets. In our efforts to attract investment and promote our country, we must recognize that our achievements have gone relatively unnoticed and could be greatly maximized. For this reason we must create a solid and robust country brand that projects our nation and consolidates its image at a global level. We are referred to by different names around the planet: DR, RD, Dominicana, Rep Dom. And there is often a distorted image of what we really are and what our country stands for. Buyers of our products do not know its country of origin; visitors tend to believe we are a small island and people often do not know that our island is shared between two nations. We must consolidate our brand with all the positive aspects of our nation: biodiversity, excellent products such as rum, coffee, organic banana, avocado and premium cigars. And we must highlight the multiple investment opportunities arising from our excellent infrastructure, fiscal incentives, industrial and free trade parks, while placing at the forefront our biggest treasure: our people. A country branding strategy links us all together and promotes joint efforts from the public, private, academic and social sectors, public opinion leaders and the citizens of this country. They will work together towards the same goal in order to coordinate and better channel our policies, initiatives and energy towards the collective Dominican interest. The global perception of a destination, whether for leisure or investment, is an added value with direct influence on its social and economic development, and

Branding the Dominican Republic Going way beyond the image of ¨beach and sun,” the Dominican Republic now competes in the global marketplace as a premium investment, export and manufacturing destination, while becoming an active player on the international scene In an attempt to consolidate its great value at the regional, continental and global

feel at home in the Dominican Republic. I share a warm bond with this land and its hard-working, cheerful and friendly people, and I deeply appreciate their drive to prosper and live in freedom.

My family and I, as well as the entire Cisneros Group of Companies have an uncompromising commitment, both corporate and social, to this beloved country, which has become a shining example of hospitality for the entire world. As an individual, I treasure the tranquility of the country, the tolerance and kindness of its people, and the breathtaking beauty of its land and beaches.

levels, the Dominican Republic is at work on a major nation-branding campaign

directly helps the sense of belonging to a city, a region or a nation. It is said that ¨perception is reality,” but I believe that one of our greatest challenges is to ¨create perception from reality.” Our country branding project will affect millions of decision-makers, important players in the global economy, consumers, tourists, entrepreneurs and investors. It will promote our country on the global scene and give us the mechanisms to project our reality to the world. It will bring more value to our production and exports and it will generate wealth and opportunities. In the era of communications, the Dominican Republic needs a country brand that boosts its global recognition and links our citizens together against fierce international competition. During uncertain economic times such as these, since the 2008 financial collapse, investors tend to move by impulse. Now is the time for a positive perception of a particular destination to be maximized. In 2010, the global leaders of the Nation Brand Index were, in this order, the United States, Germany, France, UK, Japan, Canada, Italy, Switzerland, Australia and Sweden. In Latin America, countries like Argentina, Brazil, Costa Rica, Colombia, Peru and Chile have displayed a series of actions to consolidate their brands that have resulted in positive effects on tourism, investment, export volume, international relations and national pride. The Dominican Republic lives in a period of great challenges and opportunities. We are admired for many things that we do

Eddy Martinez Manzueta Secretary of State Executive Director CEI-RD not necessarily take into account to project our image. The leadership of President Fernandez, our democratic strength, our macroeconomic stability and sustained growth even amid the worst international financial crisis the world has seen since 1929. Other positive attributes of our nation are the quality of our products; of our people, showing great friendship and solidarity for instance during the Haitian earthquake; our famous artists, Oscar de la Renta, Juan Luis Guerra and Zoe Saldaña. We have high-end seaside developments such as Punta Cana, Casa de Campo and Cap Cana. We have produced A class companies with high-quality products that have worldwide recognition. Our country brand is directly related to the success of the international investments we host. Powerful investments in tourism, real estate, infrastructure, telecommunication, mining, banking and industry demostrate that the DR investment brand is solid enough to generate trust in current and future investors. We welcome them all to join our project and help us consolidate our already strong image.

Gustavo A. Cisneros President & Chairman Cisneros Group of Companies

As an international investor I rate highly its stability, its democratic way of life, and the wisdom of its leaders, headed by President Leonel Fernández, who pursue a modern development model based on the close cooperation between public and private sectors. Since our arrival my family was enchanted by this land, and adopted it as a place where we can rest and renew our energy. From the beginning we also sought collaboration with the community and local and national authorities to contribute to the common good. We invest in the communities where we become involved to support their socioeconomic progress, so that they too participate in the successful development of the country and its citizenry. For instance, the Canadian multinational Barrick Gold, a company of which I am a director and that currently works at full capacity in the Sánchez Ramírez province representing the largest investment in DR’s history, with an initial budget of nearly US$3 billion, is on track with an extensive social responsibility strategy. Our Cisneros Found ation actively supports its education initiatives in neighboring communities. Furthermore, the project will not only create thousands of jobs but will also have a favorable environmental impact on the area.

A land of opportunities Head of one of the world’s largest privately-owned entertainment, media, telecommunications and consumer organizations has chosen the Dominican Republic as his country of residence and host of his new project, Tropicalia Mr. Cisneros’ long-term commitment to the DR raises the country’s investment profile and seeks to enhance the nation´s full social development

At the same time, the Cisneros Group has undertaken a project devoted to high-end sustainable tourism, Tropicalia, which proposes responsible development in the eastern region of the Dominican Republic with a planned investment of US$2 billion. The project includes a comprehensive sustainability strategy and seeks to create shared value, both for business and society. The overarching component of this strategy is education. All major educational programs designed and implemented by the Cisneros Foundation are having a powerful and beneficial impact in the country. Canal cl@se, the first educational TV channel in Latin America, signed an agreement with the Ministry of Education and Wind Telecom, and currently broadcasts to hundreds of schools in the DR. Our online training program for primary school teachers, known as AME, has trained over 1,800 teachers through partnerships with the Ministry of Education, the Armed Forces Vocational Schools, the PuntaCana Foundation, Odebrecht and Barrick Gold. And last but not least, our artin-education platform, Piensa en Arte/Think Art, trains educators to use works of art as a means to develop their students’ crucial problem-solving skills. In partnership with Centro Leon, Piensa en arte/Think Art has reached thousands of Dominican educators. Our commitment to the DR is long-term and based on our firm belief in the country’s potential to become an attractive and competitive destination for responsible tourism, as well as the opportunities that exist in the telecommunications, agriculture and financial services sectors, among others. We’re moving forward under the guidance of a strategy that links business and social responsibility, an approach that I recommend to all investors who want to creatively participate in the common progress of the DR and its people. The challenges ahead are significant but also manageable. The DR is in good shape to overcome obstacles that could prove more demanding to many of its regional partners. Institutional and economic stability is a fundamental advantage. The country’s civic and business leaders share a common purpose, and the Dominican people are industrious and democratic. The business community understands the importance of an economic growth geared toward social progress, and all sectors welcome foreign investors and foreign visitors with open arms. For all these reasons, I think of the DR as a country of truly excellent opportunities. Photo: Timothy Greenfield-Sanders

y status in the United States and in the world of fashion puts me in a unique position to serve as a spokesman for my own country, the Dominican Republic. I love being able to talk about it to friends, investors and government officials from so many different backgrounds and in so many parts of the world.

I don’t think I need to say much about the country’s natural beauty, which is well known. What also sets the DR apart from so many of its Caribbean neighbors is that we have a democratic government and that it is a nation owned by its own people, not by foreigners, which is a great advantage for investors. The DR also has robust industry and agriculture, state-of-the-art technology and a way of life that encourages visitors to stick around. Although I have been living abroad for many years, the DR is my true home, the place where I was born and raised in humble surroundings among a family of seven children. I lived here until I was 18 years old and then moved first to Madrid and later to New York City, where I have been based for more than two decades. Since it was in Spain where I first made friends as an adult, going back home for a long time meant going back to Spain. But I finally realized at the personal level that I wanted to spend more time in my own country, which was also closer to my NY headquarters. In matters of business, I always follow my instincts. I fell in love when I discovered Punta Cana, and so I invested there and now spend long stretches of time in the area. It’s an investment of passion, although it has proven to be a very lucrative one as well. A few years ago, an American company wanted to invest in our resort in Punta Cana and shared with me a vision of what they hoped to achieve. Because it was not in line with our views on density and biodiversity, we turned them down. Money has never been my leitmotiv. There are many things that I do in my work that are directly inspired and influenced by my roots in the DR. No one can be reduced to the place he comes from, but it is undeniable that the DR has had an effect on the way I see fashion, do business and live my life. My sense of color, for example, comes from the extraordinary color scheme of my country.

The Dominican environment also helps me look at the bright side of the things. But I have to admit that the country has some distance to go in terms of simplifying procedures for foreign investors. We also need to be careful about visitors who may be coming to our country for the wrong reasons. The DR’s image is always linked to Haiti, since we share the same island, and this perception is sometimes difficult to overcome. Haiti and the DR are not the same. The poverty and corruption and the utter lack of infrastructure existing there make it an entirely different setting. The response from the DR and the international community to the recent earthquake in Haiti gives me a glimmer of hope for the future of our neighboring country. The world needs to stand behind the Haitian population and the reconstruction process in a way that does not negatively affect the DR. Ours is still a developing country, and we have our own needs. Latin America’s development has relied strongly on the international community and we will continue to need that support if we are to solve our island’s problems while preserving our distinct civilizations. The DR is not just a tourist destination that happens to share the island of Hispaniola with Haiti. We are a great country with a beautiful landscape, our own music and other traditions, strong political institutions and a sound economic and business environment.

If you want to succeed as an investor in the DR, you need to be committed to our nation. Anything you invest in now can be a seed that puts down roots later by creating jobs and improving the national quality of life. Indeed, our greatest asset is our population. This is why I encourage you not just to read about my country, but also to visit and to take a look at its excellent investment opportunities.

My host country

You are welcome anytime.

of the largest Dominican business conglomerates,

We discuss the country’s challenges with the leader of one a friend and adviser to President Leonel Fernandez With 45 companies and more than 10,000 employees, the Corripio Group is one of the business icons of the Dominican Republic, founded by a family of Spanish immigrants in the early 20th century

he Dominican Republic has an excellent business and entrepreneurial environment; a vibrant and productive private sector that is completely integrated into the 21st century global economy and a stable goverment headed by President Leonel Fernandez.

Oscar de la Renta Fashion Designer

Welcome home Top fashion designer Oscar de la Renta is one of the world’s best-known Dominicans, who has dominated the fashion scene since the 1970s, inspiring the world with the bright colors of the Caribbean Chairman of the board of directors of Grupo Puntacana, where Mr. de la Renta spends long seasons, he is proud to present the countrys attractions wherever he goes, becoming the Dominican Republic’s most faithful informal ambassador

Pepin Corripio President Grupo Corripio

Dominicans are a tolerant and extremely welcoming people. Culturally, this nation is a melting pot that historically welcomed and provided opportunities to immigrants such as my family. Living proof of this hospitality is the fact that the country has become in recent years one of the largest regional recipients of FDI. I owe a lot to this country and I am optimistic about its vast natural and human resources. On the economic side, tourism, agriculture, agro industry and free trade zones are major sources of wealth. Food is, of course, especially important for social security, and the natural resources of this country should not be wasted. The FAO estimates that the DR is capable of producing 80% of domestic food requirements, potentially reaching 14 million people. But we can do better. In order to improve selfsufficiency, the agricultural sector needs to strengthen its stimulus programs. It is hard to compete in pricing with agricultural products from markets with which the DR has free trade agreements, and we have to take into consideration the

currency exchange factor when we import products. A full 75% of our resources leave the country instead of nourishing the land, being nurtured by the sun, benefiting from our workforce and feeding society. It will be vital to increase the Dominican production capacity, provide additional resources to tourism, agro industry and livestock development, reduce public debt as much as possible and invest in the country’s environmental richness and social development. Our economic growth should not be maintained through unsustainable debt. As happens in private corporations, there is bound to be a budget deficit when a country´s rate of economic productivity falls behind its debt. This becomes an expense that the company or the country can´t absorb and pay itself according to its own activity rate, which is extremely dangerous. From my own experience, caution is vital in order to manage a business. We can try to foresee market fluctuations, weak points and mistakes that can induce a company or an economy to fail, but we will never know exactly when they will be productive and when they will not. We must be ready to face the worst case scenario, because every weak point of a business manifests itself quite quickly. As happens in private companies, economies must adapt to any long-term mistakes by making adjustments in the short and medium term. If you don’t keep your eyes open, you won’t see that you’re headed towards a wall until you crash right into it. The necessary elements for a positive development of the Dominican economy are improvements in the tourism industry, increased production capacity and inflow of FDI. The development of the electrical sector remains an important task, since it is the economic activity that most affects the integral development of the country. It is estimated that many people engage in corruption, as happens in many parts of the world and we need to join efforts to abolish this disease, which affects not just the economy but society as a whole. A country is a rich country when its population looks for legitimate profit motives, and the non-legitimate profit motive is very damaging to a society.

My father was born in 1908 and worked from the day he came to the DR in 1921 until the last day of this life in 2004, and this is the example that I have followed. Work rejuvenates us, keeps the brain active and boosts mental and physical vitality. I started working at the age of 15, when my parents made the decision to place me temporarily in charge of our family’s company. Work has been a passion and an engine for me, and I hope to be able to follow my father’s example working full-speed until my last day in this world. What I have learned while doing business is that triumph is reserved for those who are capable of surpassing the obstacles along the way. The basic qualities needed for success are education, perseverance and work. I put perseverance over intelligence because it is a way to accelerate success. Perseverance has characterized our company’s continuous investment in the DR, where we have established for almost three generations now a vertically integrated and diversified business model. Perseverance is also the basis of any good investment and one of the most important qualities you need to succeed in this country. Dominicans are so flexible that they may sometimes appear ambiguous about doing business, but let me assure you that I know from experience that showing perseverance and making long-term investments in the Dominican Republic will bear great fruit. When you reach my age you understand you have experienced moments of bonanza and times of shortage. I strongly believe that economic crises are a direct consequence of the mismanagement of abundance.

In periods of scarcity, austerity is a must, while times of abundance encourage greed. Humans appreciate what they have materially achieved more than what they are as human beings.

Now we talk about austerity amid abundance. Two years after the world economic system collapsed, it’s time to confess that we all need to take responsibility for what happened.

When someone has more than he thinks he is worth, he becomes capable of selling himself. This is the original seed of the current economic recession and a large part of the illness of our society.

It takes intelligence and ability to determine the right solution to a problem. Out of every 10 formulas, 9 are wrong, and this is the reason why insight, foresight and commitment to choosing the right solution are vital.

Nowadays economists base their recommendations on the modern theories without considering that it was the Old Testament that provided the first economic theories, and they are still valid today: Seven years of “fat” are generally followed by 7 years of “famine.” In life, everything is cyclical. Wealth accumulation is more disparate and more concentrated than ever before. Corporations encouraged larger and larger production capacity but since most of the population was not enriched at the same speed, products couldn’t be sold and the economy was incapable of growing. The middle class needed more purchasing power. The result of this was a social income gap even larger than before. Supply and demand couldn´t be satisfied because consumers had not gained enough wealth to purchase. I am reminded of André Gide’s novel “The Counterfeiters” in which the first shipwreck survivors to board the lifeboats cut off the hands of the people still in the sea. They were mortgaged with credit cards, encouraged to buy vehicles and second homes and provided with the illusion of having. The idea of making a fortune out of giving nothing was invented, a constant during recent decades that has further induced a collapse of the system. Neither governments nor businessmen admit to their tendency to consolidate during good economic times, but that is the period when crisis is induced. The companies that suffered the most from the economic crisis were the ones who did not set aside any funds as protection against such a possibility.

Bankruptcy is business’ first vocation, and it is only avoided when owners or administrators prevent it. It happens the same way with a national economy. The current economic recession must help us to understand that we have lost sight of the economic basics. If we are able to grasp this, we will be better able to accept the current situation and more equipped to prevent it from happening again—through the joint efforts of business, government, civil society and the media. The DR is a country of great political stability, but the current situation in Haiti is among several factors that threatens it. Haiti being a nation without natural or energy resources, so far reconstruction proposals from the international community have been inadequate. The world and the media need to help raise awareness on the subject so that the situation improves in the short and medium term. Ever since I edited the La Salle school newsletter as a young man, I have felt strongly about the importance of journalism. I believe that plurality, liberalism and objective journalism are vital to modern societies and this is why I have invested heavily in the development of media in the DR. When our family is remembered in the future, I hope it is for having been able to promote freedom of expression as well as education and the cultural, entrepreneurial, social and integral development of the Dominican Republic, my host country.

School Renovation and Maintenance Program, Fundación Tropicalia, by Fer Figheras © Cisneros Foundation

Societies are like trees; they repeatedly shed their bark to get rid of parasites. The Dominican society has a new layer of bark: those among today’s poor who are capable of taking advantage of the new opportunities in Dominican society will study and work hard and eventually become tomorrow´s leaders. We must close the social gaps in order to generate more opportunities for the development of the population. It is important to encourage within society the search for legitimate profit motives.

Macroeconomy Betting on sustainable development Juan Temistocles Montas Minister of Economy, Planning and Development

10 Growth, global integration and equality Rolando Guzman, Pareto Consulting Froup 12 A new engagement Roby Senderowitsch World Bank Representative in the Dominican Republic 14 IMF Economy support Alejandro Santos International Monetary Fund (IMF) Chief of DR Mission 15 A strategic vision for the DR Manuel Labrado IDB Representative in the Dominican Republic 16 Doing business in the DR Ary Naim, IFC Country Representative in the Dominican Republic FDI 18 Incentives for foreign investments in DR and Central America Ramon Ortega, Tax & Legal Services Regional Managing Partner PWC Interamericas 21 FDI in the DR historical overview Marco de la Rosa, Former President of AES Dominicana & ASIEX President of AES Panama 22 Diversity of opportunities for foreign Investment Franklin Lithgow Peña FDI Director at CEI-RD 24 FDI in the DR Kevin P. Manning, FDI & Energy Consultant Former President of AMCHAM-DR 27 The largest investment Aaron Regent CEO Barrick Gold 29 DR financial strength Jim Meek Senior VP & General Manager ScotiaBank Dominicana

31 The Dominican Republic always Pepe Hidalgo Executive President of Globalia Corporation 32 Open Sky Dave Barger JetBlue President and CEO 34 Cyberpark, ecosystem of innovation, IT and progress Eddy Martinez Manzueta S.E Trade & Investment President of the Board of Directors CyberPark

he Dominican Republic intends to transform itself in the next 20 years into a developed nation through sustainable and equitable policies and a high-growth economy. This transformation into a better country requires boosting the per capita income from US$4,550 in 2009 to US$12,500 in 2030, in the framework of a significant reduction in poverty and social inequality and sustainable environmental development.

37 Technological development at the heart of the Caribbean Jean Marc Harion President Orange Dominicana 39 R&D in the DR = UNI3 Dr. Harold J. Raveche Founder of Innovation Strategies International Former President of Stevens Institute of Technology 40 Dominican competitiveness moving forward Andres van der Horst Alvarez Executive Director of the National Competitiveness Council and Secretary of State INTERNATIONAL RELATIONS 43 Expanding trade & international alliances Carlos Morales Troncoso Minister of External Affaires 44 DR-CAFTA: Trade & investment opportunities Flavio Dario Espinal Squire Sanders & Dempsey, Former Dominican Ambassador to the U.S. 45 DR CAFTA: Essential for FDI & business growth Alejandro Peña Prieto Partner, Squire Sanders & Dempsey Former President of AMCHAM-DR

Reaching the threshold income of developed nations is without doubt a challenging task. Congress is currently at work on a 2030 National Development Strategy (NDS) in order to make sure the reforms and agreements needed to propel this transformation process are well underway. One key aspect of this strategy is improving our competitiveness in the global marketplace while taking advantage of domestic market opportunities. The nation has demonstrated it has the essential resources for it: a dynamic private sector (small-, medium- and large-sized enterprises) and a working population with enough drive and capacity to adapt to a rapidly changing environment. The past 40 years have shown that in order to develop in a way that is sustainable economically, socially and environmentally, economic growth is not enough. The DR needs to configure a territorially and socially integrated economy, with certain dynamic economic activities pushing forward the rest of the nation.

Juan Temistocles Montas Minister of Economy, Planning and Development

The NDS is committed to a range of business initiatives targeted at better administration of our resources, both natural and human. Quality and innovation are

Betting on sustainable development Macroeconomic stability is instrumental to the nation’s development

46 EPA public perspective Cesar R. Dargam Espaillat Vice Minister of Foreign Affairs, Economic Matters & International Negotiations

but it is not enough ensure the economy is competitive in the long term

47 EPA: Revving Up Trade with Europe Jose Antonio Alvarez Alonso Jr. President of the Dominican Republic Spanish Chamber of Commerce, Industry and Tourism

economy to a developed country by 2030

Over the last six years the Ministry of Economy, Planning and Development has aimed to strategize in consultation with the DR’s business, social and political spheres in order to move from an emerging

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especially important if we are to be able to generate significant change in productivity levels and value-generating activities. We can take advantage of our highproduction potential in two areas of the economy in particular: 1) longstanding traditional activities, such as tourism and tropical agriculture; and 2) emerging activities, such as renewable energy production, agro-industry, TIC services and culture, value-added manufacturing and sustainable mining. FDI is an essential partner in the process of economic diversification and value-adding. Large economies have the option of expanding their internal market as engine of growth. Although we are the largest economy in the Caribbean, we are still a modestly sized country. So we need to produce globally competitive goods and services for export markets. The NDS also plans to implement strategies aimed at ensuring macroeconomic stability; providing reliable and efficient energy of environmental sustainability; promoting competitiveness and innovation in the framework of cooperation and corporate social responsibility and most importantly, creating sufficient quality employment. Our goal is to be able to guarantee: 1) institutional strengthening and legal security; 2) quality education, health and basic services for the entire population, as a right that is also integral to our development; 3) risk management in both production and consumption areas; and 4) adaptation to climate change. In terms of institutional strengthening and transparency, our government is committed to raising investors’ confidence, aiming to be in the top 30% of the Global Corruption Perception Index, in which we are currently in the top 55%. We were named one of the Top Ten Reformers in the World by the World Bank in 2008 and are adapting to becoming a fully competitive business environment—with NDS certain to help us toward this long-term goal. Certainly there are challenges to achieving our 2030 Vision to make the Dominican Republic a prosperous nation where people can live with ever greater dignity, but the existence of such a clear path toward our future goals raises awareness of what’s to come and concentrates our energy and efforts better than ever before.

here is broad consensus at this point that the DR’s impressive growth is a reflection of the country’s ability to make adjustments in a flexible manner, as a way of adapting to changes in both the local and global economic arenas. During the 1980s, for example, the country was able to move from the ashes of an Import Substitution Strategy (ISI) into a new model based on the export of tourist services and the promotion of Export Processing Zones (free trade zones). This change was not an incidental one, but by and large the result of a deliberate shift in the structure of economic incentives, aimed at developing economic activities based on a more enlightened understanding of our changing world. During the 1990s, the country introduced a new set of structural adjustments, including a fiscal reform, a large-scale tariff reform, a new telecommunications legal framework and updated and more open government programs for attracting Foreign Direct Investment (FDI). These transformations have increasingly attracted foreign capital over the past decade. The inflow of FDI has hovered at around US$1 billion per year since 2000. In per capita terms, the FDI flow to the DR has been above the FDI figures achieved by most of its Central American and Caribbean neighbors. Moreover, compared to most of them, FDI inflow to the Dominican Republic is relatively diversified, both in terms of economic sectors (primarily telecommunications, tourism, manufacturing and real estate) and in terms of its sources of origin (United States, Spain and Canada, among others). A key effect of the 1990s reform was a substantial improvement in the fiscal environment, based on the tax system’s improved ability to finance government activities in an orderly way. By 1984, the tax burden barely surpassed 6% of the DR´s GDP; ten years later, it was above 10%, and in 2008 it was around 16%. What caused this revenue trend? On the one hand, the trend reflects the changes in the tax laws over the years; on the other, it shows considerable improvements in revenue administration.

Some current challenges Nonetheless, the Dominican economy faces several challenges. In social terms, poverty has been very stubborn despite the high growth rate. Although there is no official poverty measure, it is widely accepted that more than 30% of the population lives below the poverty line of US$2 per day, and that around 12% of the population lives under extreme poverty conditions—on less than US$1 per day. There is a disturbing asymmetry here: poverty has increased significantly whenever the economy contracts, but it has decreased slowly when the economy expands. Consequently, a short period of recession could nullify several years of growth. In part, this asymmetry reflects a trend in the labor market, whose capacity for employment generation as a result of GDP growth has declined in recent years. Thus, in the second half of the 1990s, each percentage point of GDP growth generated 0.75% growth in the number of employees, but for the 2000-2006 period, a 1% growth in GDP only boosted the employment rate by about 0.37%.

The general consensus is that this inelasticity of employment with respect to GDP growth is related to recent changes in the composition of the DR’s productive sector. The activities with the highest growth rates—such as telecommunications and financial services—require relatively less labor per unit of production compared to the demands of the agricultural and manufacturing sectors, whose expansion has been much more modest in the last decade. For both social and economic reasons, there is significant demand for an improvement in education. Education coverage is relatively high, as around 95% of the

Rolando Guzman Pareto Consulting Group

Growth, global integration and equality During the past three decades, the per capita GDP of the DR has grown at an annual rate of around 3.4 %, which is considerably above the Latin American countries’ regional average for the same period. What’s more, per capita income has more than doubled in the DR since 1990 These are, undoubtedly remarkable facts, but they are also an invitation to take a closer look at the factors behind the country’s economic performance and to explore the country’s chances for continuing growth in the foreseeable future

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population between the ages of 6 and 13 are now attending school; however, high school attendance is more modest, at around 50% of the population between the ages of 14 and 17, and it lags behind the Latin American regional average. Likewise, higher education coverage is around 30% of the population among younger Dominicans—a significant improvement over earlier rates, but still below the regional average. In addition, educational quality is still insufficient, with considerable limitations on equity, quality and efficiency. Meanwhile, the trade balance during the current decade has been negative, with its deficit fluctuating at around 14% of GDP. This is because in recent years, the country’s foreign competitiveness has faced significant challenges. In particular, important products such as garments and textiles have had new competition in the international marketplace, because the U.S. market has opened up to other countries that were previously under quantitative restrictions. So far, this problem has been offset by a surplus in the balance of services (mainly tourism) and the income provided by a considerable volume of transfers (primarily remittances). Looking ahead, however, it’s clear that new markets need to be found, not just new places to sell Dominican products but new products as well. A move in this direction can already be perceived. For example, the percentage of non-textile exports that goes to the U.S. has declined from about 40% of the total in 2000 to only 22% in 2008. And the value of non traditional exports has tripled during the same period. Deepening this positive trend requires increased productivity and competitiveness. Of course, a key element in the search for productivity is a challenge within: ensuring a reliable energy supply and overcoming a long history of electrical shortages and inefficiencies. Although there have been considerable improvements in that area, there is still a long way to go. The country’s fiscal position is also subject to a range of pressures. The consolidated public sector balance was moderate during the first three years of last decade but expanded considerably despite the context of a financial crisis during 2003-2004. Subsequently, the deficit has declined, but fiscal accounts will face several problems that must be solved.

First among these problems is an increase in public debt compared to the early years of the decade: Non-financial public sector debt rose from 17.4% of GDP in 2000 to about 28% in 2008. This should be added to the internal debt of the Central Bank, which currently amounts to around 10 additional points in GDP. Although those debt levels are not dramatic, they do require a significant dedication of resources toward the payment of interest, and they limit the resources available for public investment. Second, the government needs to spend more, in the medium term, on key social sectors, such as health and education. A reasonable estimation is that in order to satisfy those needs, the government will need to increase its revenues at least 3 percentage points of GDP over the medium term. Compliance with these obligations may require further improvement in the tax collection capacity of the government. At the same time, tax evasion needs to be reduced, even beyond the remarkable achievements in this area during recent years. Of course, the increase in revenues will be accompanied by an improvement in both the quality of public expenditures and in accountability to constituents. In short, current and future conditions seem to carry new risks, and it is clear that adapting to the future will require handling some new tools. Flexibility has been a key distinguishing feature of the Dominican economy. Will this continue to be the case? Let us take a look at the DR’s plans for the following decades. The DR’s agenda for the future The country is currently discussing its National Development Strategy, which when approved, will guide public and private actions between 2011 and 2030. This strategy and its implementation require congressional approval, so the plan’s final form cannot be accurately predicted yet. But it’s clear that certain elements will be included. The proposed strategy begins with the recognition that the market is the best mechanism for boosting productivity and individual effort, but that by itself, the market cannot generate a socially sustainable process of growth. Therefore, the purpose is that market mechanisms be combined with an effective govern-

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ment role as the leveler of opportunity, in a framework that combines efficiency with equity. In particular, what’s called for is a stronger government hand in matters of regulating private activities that is able to overcome market failures. This is to be guaranteed through the use of carefully designed industrial development policies. The national strategy also includes strengthening the DR´s export capacity and expanding the domestic market in order to provide sustainable and stable growth. Export capacity, in turn, must be underpinned by increased production capacity of higher value added goods and services, based increasingly on the use of skilled manpower, technology and innovation. This, of course, requires more investment in human capital—that is, health and education. Attracting FDI must be a high priority, especially those providing technical expertise and managerial skills. There is a broad consensus about the need to strengthen the development of SMEs, which in turn requires the strengthening of productive clusters as a mean of reducing costs, disseminating innovation, sharing risk and exploiting economies of scale through associative processes. Finally, the fight against public & private corruption, strict compliance with tax obligations and the preservation of civil liberties are integral components of the new model. A final word During the past four decades, the Dominican economy has shown a remarkable ability for continuous adaptation. This ability has been crucial for the country’s rapid structural change, which has transformed the country from a rural, agro-dependent society into a vibrant industrial and service economy. Yet, in a continuously changing global environment, the country will need to adapt once again. Will it be successful? Its current basis is solid, and its historical record is good. It seems reasonable to bet that it will.

n the last decade, the government of the Dominican Republic has deepened its commitment to development. Progress has been made on the social front and the performance of the economy has been above average. The Country Partnership Strategy (CPS) is the document that defines the support of the World Bank Group to the country in a four-year period. In its new 2010-2013 CPS with the Dominican Republic, the World Bank Group recognizes this progress and underlines the need for addressing the challenges that could jeopardize continued and rapid progress. Given these challenges, the CPS emphasizes protecting the poor while enhancing competitiveness and strengthening public institutions for performance accountability in the country. The new strategy underlines four main challenges: a difficult fiscal situation worsened by the recent international financial crisis due to a decrease in government revenue and the contraction of aggregate demand; high rates of poverty and inequality with little space for counter-cyclical policies due to the difficult fiscal situation mentioned above; competitiveness challenges mainly due to an inefficient energy sector that increases the price of production; and the negative implications of climate change for the country’s tourism industry. The new strategy also has four strategic objectives aligned with the aforementioned challenges: i) strengthening social cohesion and improving access to and quality of social services; ii) promoting competitiveness in a sustainable and resilient economic environment; iii) enhancing quality of public expenditure and institutional development; and iv) strengthening civil society capacity to build constituencies for reform.

The first objective of the strategy addresses the poverty and inequality challenge by helping to improve the effectiveness of the social protection system to ensure better health and education for poor households. It also addresses the needs of the most vulnerable population, by helping to improve the access to and quality of maternal and child healthcare and the skill level of at-risk and vulnerable youth in order to increase their opportunities in the labor market. This objective also addresses the fiscal situation challenge by choosing the most appropriate financial in-

A new engagement The World Bank financial assistance to the DR has a current loan portfolio of US$308.9 million The 2010-2013 Country Partnership Strategy, developed between the World Bank and the Dominican Government, expands this fruitful cooperation for development and progress

strument for the country. Through a series of annual disbursements the Bank is supporting the government’s policy reforms such as the refocusing of the cash payments to targeted eligible households (Cash Conditional Transfer Program) and the introduction of performance management in the social sectors. In addition, this type of financial operation will help to inject liquidity to aid the country’s economy to bridge its financial gap and finance its deficit at a much lower cost. The second objective of the CPS addresses the competitiveness and the climate change challenges through: i) broadening policy decision information on macro-financial stability and competitiveness; ii) improving the efficiency of the delivery of utility services (water and energy) and reducing costs associated with their production and management; and iii) ensuring that institutional capacity for risk management in specific sectors is strengthened and that risk management is mainstreamed into a planning process. The third objective of the strategy focuses on the fiscal situation, the poverty and inequality, and the competitiveness challenges by addressing the across-the-board need to enhance the quality of public expenditure and to improve the transmission mechanism of public policy: the institutions. This third objective specifically concentrates on: i) improving budget management, thus helping to reduce potential deficits; ii) supporting the introduction of performance-informed budget management to increase accountability and relate in-

Roby Senderowitsch World Bank Representative in the Dominican Republic

puts and budget with policy outcomes; and iii) improving the management capability of municipal government to ensure a more efficient delivery of municipal services. The fourth and last objective aims at strengthening civil society capacity of budget analysis and monitoring as well as strengthening the Congress’ budget oversight capacity. This objective promotes a more participatory approach to policy-making, suggesting that civil society is an important player in development, while their engagement improves the development objective of projects and generates empowerment. The World Bank Group hopes to continue to support the Dominican Republic and we are confident that together we will be able to build a more equal society, with decreased poverty levels and more opportunities for all.

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he IMF Stand-By Arrangement with the Dominican Republic, approved by the IMF Board in early November 2009, is designed to help the country manage the effects of the global financial crisis on the domestic economy and establish the preconditions for robust and sustainable growth in the medium term. Before the crisis, the Dominican Republic was one of the fastest growing economies in Latin America, with an average annual growth rate of well over eight percent in 2006-2007. Economic growth slowed dramatically in late 2008 and early 2009 as the global economic crisis took hold, but the economy recovered at the end of 2009 and the first half of 2010, mostly due to the government’s policies supported by the IMF program. The Dominican Republic’s economic program can be divided in two parts. The first part, during the first half of 2010, was the implementation of a fiscal stimulus package combined with loose monetary policy, similar to the policies implemented in many advanced economies during the crisis. The stimulus focused on increasing government expenditure on high-return investment projects and on strengthening the social safety net, as a way of helping the economy and the population cope with the adverse effects of the global recession of 2009. To help finance this expenditure, about one-half of the program loan from the IMF, amounting to a total of US$1.7 billion, is channeled to the Ministry of Finance to be made available for public spending. This was an innovative feature among IMF programs, which usually restrict financing to support international reserves at the central bank. The program has also helped catalyze critical external financing from the World Bank and the Inter-American Development Bank, as well as other multilateral institutions, for public investment and social projects. The second part of the program, which made possible the short-term accumulation of debt for the fiscal stimulus, is the commitment to a fiscal consolidation in the medium term (mid-2010 through the end of the program in early 2012), to ensure that the government can gradually reduce the debt-to-GDP ratio. To implement this consolidation the program contains a combination of policies on both the revenue and the expenditure sides. On the revenue side these include gradual improvements in tax administration and the rationalization of tax exemptions. On the expenditure side, it includes a reform of

IMF Economic Support

A strategic vision for the DR

The Dominican economy has been subject to close monitoring &

With a consistent and constant support, the Inter-American Development Bank is

strict IMF regulations since the 2003 financial turndown

in the process of approving loans of over US$ 324 million for 2011 to strengthen the Dominican public sector and the development of new programs for the private sector

In the DR, the IMF supports the government’s economic program and unlocks multilateral financing

The bank offers central and local governments, companies and NGOs the possibility of accessing funds and in 2010 over US$ 427 million were disbursed towards development

Alejandro Santos International Monetary Fund (IMF) Chief of DR Mission the electricity sector and gradual elimination of untargeted subsidies, which have made up a disproportionately large part of expenditures in the past. Subsidies may be a good thing from the consumers’ point of view, but they are not the wisest way to spend limited public resources. To subsidize electricity, for example, typically means to help more affluent consumers pay their bills. These consumers can usually do well without the help. What the Fund proposes is that these resources be channeled towards better-targeted social programs aimed at the most vulnerable sectors of Dominican society. The efforts at fiscal consolidation are supported by structural reforms to im-

prove growth. The electricity reform will contribute to this objective by creating a financially self-sustaining sector that eventually ensures the steady supply of electric power in the country at a reasonable price (something that has not happened in the past). Other medium-term reforms in the program concentrate on the financial sector, and include improving banking regulation and supervision as well as the development of domestic capital markets, which will lower borrowing costs and make financing more broadly available. In addition, the program includes a plan to introduce a fully-fledged inflationtargeting framework and the continuation of the Central Bank recapitalization to make the conduct of monetary policy more effective.

IMF Stand-By Arrangement with the Dominican Republic Objectives: First, to safeguard the economic achievements of the last several years by conducting countercyclical policies at the beginning of the program (late 2009 and first half of 2010) to mitigate the effects of the global downturn; and second, to implement policies to ensure fiscal and debt sustainability in the latter part of the program (mid-2010 to early 2012) while embracing an ambitious structural reform agenda. Financing: US$ 1.7 billion (500 percent of quota) Duration: 28 months (November 2009 to February 2012)

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Manuel Labrado Inter American IDB Representative in the Dominican Republic

he Interamerican Development Bank (IDB) is the largest multilateral funding institution in the Americas. Since 2009 it has given loans and grants to governments of over US$ 36.5 billion and US$ 3.5 billion for private sector funding.

Our scope also applies to the Dominican Republic, where we are an essential ally for development. Our intensive support program makes the IDB the first fund lender to the nation, with US$1.978 billion accumulated at the end of 2010. Sovereign guaranteed approvals in the 2009-2013 period range from US$1.445 billion in the base scenario to US$1.9 billion in the high one. This framework, already with the existing portfolio would allow resources to meet the objective of covering some 20% of the country’s external financing.

The DR has had one of the fastest growing economies in Latin America in the past 20 years (6% average growth yearon-year between 1991 and 2008). In the past 20 years growth has been based on export activity, such as tourism and light assembly in export processing zones (primarily, machine maquiladoras), for which the lending market is the US economy. It has significantly reduced its poverty rates (from 43.4% in 2004 to 35.2% in 2008), and has a high degree of political and social stability. However, the global economic crises adversely affected growth in 2009 with significant impacts on the country´s fiscal position and external financing. In response, the Government designed and implemented a countercyclical macroeconomic program in late 2009 aimed at restoring growth and returning to primary fiscal surplus in coming years which will ensure stabilized debt levels. This program is backed by the IMF through a stand-by-agreement. Our actions are aimed at promoting recovery of economic growth in a fiscally stable climate. The IDB strategy with the DR for the 2010-2013 period supports the National Development Strategy and focuses on the following areas (i) public finances, (ii) social protection, (iii) education, (iv) labor mediation, (v) electricity, (vi) transportation, (vii) water and sanitation, (viii) agriculture and (ix) tourism. The state of public finances poses a threat to macroeconomic stability in the short term, due to decreased fiscal revenues and substantial transfers to the electricity sector. The poor quality and high cost of electricity service has negative impacts on business productivity, living standards and public expenditure. Our public finance support

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programs aim to improve fiscal and macroeconomic sustainability, improving tax collection levels and promote the efficiency of the public sector. The biggest gap in social services lies in the quality of education. Our social protection programs aim to improve the quality of primary and middle school education as well as labor market for low income Dominicans and rural areas. Poverty, though reduced in recent years, still affects more than one third of the population. The country has tremendous potential in the agricultural sector and productive clusters work growing tropical fruits & vegetables. Since the increased output is due to an expansion of the area of cultivation rather than improved crop yield, it does indicate productivity problems related to farmers’ lack of access to technological innovation. The country’s competitiveness has been adversely affected by the quality of infrastructure. To resolve long-term fiscal problems and create an environment conducive to economic growth, spending - especially on infrastructure- must become more efficient. Infrastructure services must improve to raise the country’s productivity and support economic recovery. The IDB seeks to improve the quality and management of the road system and of urban transportation in Santo Domingo. The poor quality and high cost of electricity service has negative impacts on business productivity, living standards and public expenditure. To achieve stability in public finances in the short term, transfers to companies in the electricity sector and non-targeted subsidies must be reduced while tax revenues must increase. There are additional weaknesses in water and sanitation service coverage. IDB intervention aims at improving the coverage and management of water and sanitation services in rural and low-income areas, home to about 50% of the country´s population with barely one third of households covered. The DR tourism sector copes with maturation of the ¨sun and sand¨ tourism market in the Caribbean region. IDB interventions support the diversification of the tourism sector, by turning to activities with new potential such as cultural tourism in Santo Domingo and ecotourism. For the 2010-2013 period, with macroeconomic and fiscal support, education and youth empowerment programs, infrastructure, water and sanitation development, transportation, electricity sector and specific actions in two key productive sectors, tourism and agriculture, the IDB contributes to sustainable development and growth in the DR.

he DR is a strategic priority for IFC. Our strategy in the country focuses on strengthening infrastructure, increasing access to finance, improving the business climate and promoting sustainability. We operate with an integrated approach, providing investment products and advisory services and building long-term partnerships with clients and partners that improve access to finance for micro, small, and medium enterprises (MSMEs) and leading companies. Since the Dominican Republic became a member of IFC in 1961, we have invested US$716 million in the country’s private sector, including US$209 million in syndications. Our committed portfolio in the Dominican Republic in fiscal year 2011 was US$232 million in 19 projects. Key sectors in our operations in the Dominican Republic include: - Financial markets, including access to finance for MSMEs and low-income individuals - Infrastructure and transportation - Electric power - General Manufacturing - Telecommunications - Tourism Infrastructure - Health services As the DR makes progress accessing capital markets and increasing liquidity, IFC emphasizes long-tenor financing, which is otherwise difficult for most private sector companies to obtain, and an innovative approach to financing. Our investment products include loans and intermediary services, equity, risk management products, trade finance, and syndicated loans. Our advisory services focus on maximizing development impact and introducing best practices in corporate governance, as well as in social and environmental standards. IFC is committed to helping address some of the Dominican Republic’s needs and challenges. For example, in May last year IFC signed its first energy efficiency financing program in the Caribbean with Banco BHD in Santo Domingo. IFC’s $20 million financing launched Banco BHD’s innovative new program, to help Dominican firms implement cleaner production projects, decrease their energy costs and consumption, and reduce greenhouse gas emissions.

Doing business in the DR The Latin American and Caribbean region accounts for the largest share of IFC commitments globally – 24 percent in fiscal year 2010 – with more than $3 billion for our own account in 133 new projects in the region’s private sector IFC, the private sector arm of the World Bank Group, is in the business of creating opportunity and improving lives. As the largest global development institution focused on the private sector in developing countries, IFC is a long term partner to the DR

ECONOMY OVERVIEW Topic Rankings Starting a Business Dealing with Construction Permits Registering Property Getting Credit Protecting Investors

Procedures (number) Time (days) Cost (% of income per capita) Min. capital (% of income per capita) Procedures (number) Time (days) Cost (% of income per capita) Procedures (number) Time (days) Cost (% of property value) Strength of legal rights index (0-10) Depth of credit information index (0-6) Public registry coverage (% of adults) Private bureau coverage (% of adults) Extent of disclosure index (0-10) Extent of director liability index (0-10) Ease of shareholder suits index (0-10) Strength of investor protection index (0-10)

8 19 19.2 62.6 17 214 126.7 7 60 3.7 3 6 28.5 47.3 5 4 8 5.7

Paying Taxes Payments Trading Across Borders Enforcing Contracts Closing a Business

(number per year) Time (hours per year) Profit tax (%) Labor tax and contributions (%) Other taxes (%) Total tax rate (% profit) Documents to export (number) Time to export (days) Cost to export (US$ per container) Documents to import (number) Time to import (days) Cost to import (US$ per container) Procedures (number) Time (days) Cost (% of claim) Recovery rate (cents on the dollar) Time (years) Cost (% of estate)

9 324 20.5 18.3 1.8 40.7 6 9 916 7 10 1150 34 460 40.9 9.1 3.5 38

Source: Doing Business 2011

Since the 2010 Doing Business Report, the Dominican Republic has continued to make strides in the following areas: • Protecting Investors: The Dominican Republic is one of about 30 countries that allow shareholders access to any corporate document before the trial. Without access to evidence, it is more difficult for minority investors to prove that directors have been managing the company’s affairs improperly.

The country´s electricity costs are among the highest in the region. With IFC’s support, BHD is financing energy efficiency projects in the industrial and tourism sectors which will help generate savings, increase companies’ competitiveness and grow awareness for climate change-related business opportunities. In addition to financing, IFC is also providing advisory services to help Banco BHD create a new energy efficiency unit that will develop a project pipeline, conduct energy audits for clients and identify new energy efficiency investments. Also in the energy sector, IFC provided $5 million in quasi equity to Linea Clave International S.A., a natural gas distribution company, to help reduce the Dominican Republic’s dependence on oil-based energy fuels, and diversify the country’s energy mix. The investment supports the Dominican government’s goal of generating at least 50 percent of the country’s energy from natural gas by April 2011. It also helps the country foster competitiveness through cleaner production, decreasing energy consumption and costs, and reducing greenhouse-gas emissions. Governments in the Caribbean, as elsewhere, have been picking up the pace of improvements to business regulation to empower local entrepreneurs. They have been paying attention to the quality of business regulation to make their economies more competitive and to support greater job creation by local firms.

Ary Naim IFC Country Representative in the Dominican Republic

• Paying Taxes: Dominican Republic introduced online tax filing and payment systems. Since 2004, the Dominican Republic has reduced the number of separate tax payments a year by 65 and reduced compliance time by 156 hours. The country continues to work to further reduce the administrative burden for firms. • Trading Across Borders: Elimination of unnecessary documentation was popular in Latin America and the Caribbean making trade between countries easier. The Dominican Republic was among the countries that eliminated notarization requirements.

The Dominican Republic is a good example. Over the years, the country has enacted significant regulatory reforms to create more opportunities for local businesses. According to Doing Business 2010, one in a series of annual reports published by IFC and the World Bank, the country strengthened investor protections with a new company law—making it the runner-up global reformer in protecting investors last year. The Dominican Republic’s rank in 2012 is 108 out of 183 economies on the scale of ease of doing business.

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Providing objective measures of business regulations for local firms in 183 economies, Doing Business analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and closing a business. It does not measure all aspects of the business environment that matter to firms and investors but its findings have stimulated policy debates in more than 80 economies and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.

ECONOMY OVERVIEW Topic Rankings

DB 2011 Rank

DB 2010 Rank

Change in Rank

Starting a Business

137

105

-32

Dealing with Construction Permits

Registering Property

114

113

-1

Getting Credit

-3

Protecting Investors

-2

Paying Taxes

-8

Trading Across Borders

No change 1

Enforcing Contracts

Closing a Business

145

146

1 Source: Doing Business 2011

STARTING A BUSINESS Indicator

Dominican Republic

Latin America & Caribbean

OECD

Procedures (number)

9.3

5.6

Time (days)

56.7

13.8

Cost (% of income per capita)

19.2

36.2

5.3

Paid-in Min. Capital (% of income per capita)

62.6

4.6

15.3

Time to complete

Associated Costs

1 day

DOP 4747

10 days

DOP 971

1 day

No Change

Nº Procedure 1 Check company name and purchase it on-line 2 Arrange for the publication of the company name in the monthly publication of the National Office of Industrial Property (Oficina Nacional de la Propiedad Industrial) * 3 Open a bank account, deposit the minimum capital and obtain a certificate of deposit * 4 Payment of Incorporation tax

(simultaneous with previous procedure)

1 day

(simultaneous with previous procedure)

of the Capital

5 Register the company in the Chamber of Commerce and obtain the identification number (RNC) on-line

5 days

DOP 8,800

6 File for the National Taxpayers Registry at the Internal Revenue Service (DGII) and apply for fiscal receipts

2 days

No Change

* 7 Register local employees with the Department of Labor * 8 Register employees at the main social security office (Consejo Nacional de Seguridad Social, CNSS)

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2 days (simultaneous with previous procedure)

1 day (simultaneous with previous procedure)

DOP 250 No Change

Source: Doing Business 2011

The countries in the region have evolved by focusing on macroeconomic drivers and criteria such as fiscal balance, efforts in Law clarity, foreign exchange stability, inflation control, financial reforms and central bank independence, as well as by opening their markets to the world economy. The world financial crisis that eroded in 2008 the United States, Europe and Asia had minimum side effect in the region. This might be attributed to the robust financial system and the safeguards implemented by the banking sector on the recommendations of the IMF in the Dominican Republic after the banking crisis in 2003 and the measures taken by the System of Central America Integration (SICA, which includes Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica) to get financial support from the Central American Economic Integration Bank to the region. Trade policy and legal reform changes have been propelled in recent years by the need to adjust the legal and institutional framework to the requirements of commercial agreements.

Panama

P2 P P - P

P2 P P P P

- - P - P

- - - N/A -

- - - - -

Tourism Industry Incentives P2 P P P P

- - - - -

P P P N/A P

- - - - -

Agricultural Export Incentive -

Incentives for foreign investments in the Dominican Republic and Central America

International Services Law * Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

- - - - -

P P P N/A P

- - - - -

P P P P P

- - - - -

- - - N/A -

P P P - P

- - - - -

- P P - -

P P P N/A -

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

- P P P P

- - - N/A P

- - - - P

- - - - -

P P P P P

- - - - P

- P P P -

- - - N/A -

- - - - -

P - - - -

- - - - -

- - - N/A -

- - - - -

P P P P P

- - - - -

P P P P P

P P P P

Development of National Industry and Export Incentive P -

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others Border Development Incentives

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others Movie Studios Incentives

Temporary Import Law (benefit also included in the Maquila Law) * Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others Reforestation Incentive

Incentives for the Development of Renewable Energy * Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

Dominican Republic

Nicaragua

P1 P2 P P P P P N/A P P

Dominican Republic

Honduras

Encouragement and Development of the Export and Maquila Activities * Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

- P - - -

P P P P P

- P P - -

- - - - -

P P -

- - - - -

P P P P P

- - - - -

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

- - - - -

- - - N/A -

- - - - -

- - - N/A -

- - - - -

- - - N/A -

- - - - -

P P P P P

Exploration and Explotation of fuel incentives * Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

- - - - -

- P - N/A -

N/A= Non Applicable (1) For the companies of the “Gran Area Metropolitana Ampliada” (GAMA ) a fee of 6% of its profit will be paid in the first 8 years and 15% on the foremost 6 years (2) For the rest of the countries of the region income tax is exempt by 100%

Investment in the Latin American and Caribbean region seems at its highest in history, with the DR an outstanding performer in FDI attraction The DR has liberalized its trade regulations selectively through preferential agreements, and according to the WTO, disparities remain in the incentives framework

All of these factors indicate that “the region is a better place to invest than before,” as the former president of the IDB

Panama

Ramon Ortega Tax & Legal Services Regional Managing Partner PWC Interamericas

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

Nicaragua

Customs Law

Honduras

• Free trade zone regimes. • Tourism incentive laws. • Incentives in development zones. • Commercial and trade agreements among countries (CAFTA, TLC, etc.) • Special commercial activities.

El Salvador

The main incentives aimed at attracting foreign investment in the region include:

Guatemala

* Income Tax * Value Added Tax/ Transfer Tax * Customs Tax * Excise Tax * Others

El Salvador

Free Trade Zone

Guatemala

Comparison Reviewed Costa Rica

• Multilateral Agreements - World Trade Organization (WTO) • Customs Union - Central American Customs Union (CACM) • Free Trade Agreements - Caribbean Community (CARICOM). - CARIFORUM - European Community. - DR - CAFTA. - Colombia - Northern Triangle (Colombia- El Salvador, Guatemala and Honduras). - Panama - Central America. - Chile - Central America. - Honduras –Taiwan. • Association Agreements - Central America- European Union.

said when referring to Latin America as a whole. Conditions have improved significantly, and despite certain challenges, there are many opportunities for the region to excel, thanks to the many available incentives both legal and structural, as well as a young, fast-growing and better-educated and skilled workforce.

Costa Rica

he region encompassing Central America and the Dominican Republic has come to the forefront of the global stage in recent years, primarily resulting from the fact that it is interconnected through various organizations and free trade agreements, making the region perfectly positioned to attract foreign investment. In this regard, the most important agreements with a connection to the region include:

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These incentives may vary depending on the type of regulations or laws that have been implemented, and may consist of: • Profit/income-based: reduction in tax rates, income tax exemptions, exemptions or reductions of dividend remittance taxes, etc. • Capital investment-based: expense deductibility in construction, machinery, equipment, technology, etc.

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• Sales-based: reduction or exemption in excise taxes, sales tax exemption. • Value-added based: reduction or exemption in value added tax. • Based on other particular expenses: other expense deductibility. • Import/export-based: reduction or exemption of tariffs on imports/exports of goods for manufacturing or transformation of goods, etc.

The main incentives available in the region are outlined in the attached table. The key benefits attributed to these incentives laws to increase Foreign Direct Investment (FDI), are: • Local job creation. • Development of targeted locations within the region. • Development of targeted industries. • Technology and knowledge transfer to the population.

Despite of all these developments, FDI’s in the region have decreased. The United Nations Economic Commission for Latin America and the Caribbean (ECLAC or CEPAL in Spanish) concluded that the FDI shrank by 42% vs. 2008 as a result of the international macroeconomic crisis. In the Dominican Republic the FDI decreased 27%, compared to an average 34% reduction in Central America. However the ECLAC announced that it expects the region’s FDI to increase 40 to 50% during 2010.

quarter of a century ago the Dominican Association of International Investors was born to channel long-term FDI, add value to the nation´s development, promote equitable judicial treatment for international investors and become their voice in the national arena.

FDI (In millions US$) 2006 2007 2008 2009

Relative difference 2008-2009

Costa Rica Dominican Republic Guatemala Honduras Nicaragua Panamá El Salvador

1,496 1,528 592 669 287 2,498 241

1,896 1,563 745 928 382 1,777 1,508

2,021 2,971 754 900 626 2,402 784

1,323 2,158 566 500 434 1,773 431

-34.6 % -27.4 % -24.9 % -44.4 % -30.7 % -26.2 % -45.1 %

Average

1,115

1,079

1,531

1,086

-30.7 %

Each of these goals commits the association to creating wealth and safeguarding the welfare of the Dominican Republic by fostering the creation of an optimal institutional environment for investment.

Source: CEPAL: Foreign direct Investment in Latin America and the Caribbean, 2009

Because FDI’s represent a significant amount of the Gross Domestic Product (GDP) for the countries of Central America and the Caribbean, growth rates are highly correlated with the movements of FDI’s in these economies.

FDI % of the gdp (In millions US$) 2006 2007 2008 2009

Costa Rica Dominican Republic Guatemala Honduras Nicaragua Panamá El Salvador

“It might be impractical to quantify how much of a toll these incentives have on the governments’ cash flow since no real measure has been developed to calculate this and the tax and customs authorities” as expressed by Juan Hernández Tax Director of the IRS

Relative difference 2008-2009

6.5 % 4.3 % 2.0 % 6.1 % 5.4 % 14.6 % 1.3 %

7.2 % 3.8 % 2.2 % 7.5 % 6.7 % 9.0 % 7.4 %

10.3 % 6.5 % 1.9 % 6.3 % 9.8 % 10.4 % 3.5 %

6.8 % 4.6 % 1.5 % 3.6 % 6.9 % 7.5 % 2.0 %

-33.8 % -29.1 % -24.2 % -42.7 % -29.6 % -28.0 % -43.7 %

5.6 %

6.1%

6.4%

4.3%

-32.9 %

Average

Marco de la Rosa Former President of AES Dominicana & ASIEX President of AES Panama

Source: CEPAL: Statistical yearbook for Latin America and the Caribbean, 2009

The effects of these incentives have made several industries stand strong in adverse times such as the tourism industry.

INFLUENCE ON GDP 50,000

Clearly, the Dominican Republic has been an outstanding performer in terms of FDI’s both by attracting it as well as preventing the slowdown of its inflows. The incentive laws enacted by the democratic governments following the Trujillo dictatorship in the late 1960’s, 70’s & 80’s laid the groundwork and paved the way for the strong tourism, as well as solid industrial and financial sectors. Specifically, this legislation includes Law 299 for Industrial Development, Law 409 for Agro-industrial Development, Law 153 for Tourism and its subsequent modifications and new additions, Laws 174 and 292 for financial sector development and more recently the Monetary and Financial Law 183-02, are clear examples of initiatives and incentives towards FDI promotion. The objective of these incentives including tax grants aim at the transfer of technology and technical knowhow, while being cognizant of the fact that investment incentives based on tax exemptions alone may not be sufficient to achieve this. FDI requires other conditions, such as a strong judicial system, a strong educational system with an emphasis on technology, physical security and macroeconomic stability.

The vision of the founding members, Central Romana Corporation, Codetel, Falconbridge, Alcoa, Citibank and other prestigious companies in the national and international marketplace created ASIEX, today the DR’s main investment forum with 46 member companies. In 1985 international investment was done by contract in the complex and discriminatory environment towards international companies that characterized the Latin American continent. In truth, this investment climate was encouraged

7,0 % 6,0 %

40,000

5,0 % 30,000

4,0 %

20,000

3,0 % 2,0 %

10,000

1,0 %

2006

2007

FDI

GDP

2008

% OF GDP

2006

FDI GDP % OF GDP

0,0 %

2009

2007

1,528 35,660 4.3%

1,563 41,013 3.8%

2008

2009

2,971 45,523 6.5%

2,158 46,661 4.6%

FDI in the DR historical overview On its 25th anniversary, the Dominican Association of International Investors

FDI by sector (US$ m; Jan-Sep)

highlights the most important achievements on FDI in the DR

3,000 2,500

With a forecast of over US$10 billion in the next five years,

2,000

the DR is positioning itself as the largest recipient of FDI in the Americas

1,500 1,000 500 0

2008 Tourism

Mining

2009 Retail & Industry

Real Estate

2010 Telecom

Electricity

Other

Source: Central Bank of Domincan Republic

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not only by nationalist fundamentalism but also by the favoritism that some investors tried to secure. ASIEX set out to contribute to the creation of an attractive and fair investment destination where equal treatment prevailed, with a legal framework ensuring, among other safeguards, capital and benefit repatriation with no restrictions. It took us ten years to change this scenario and finally in 1995 Law 16-95 on International Investment replaced the old Law 8-61. Before the new law was enacted, FDI in the DR barely reached US$ 200 million per year. After 1995, when the current legislation was approved, this annual rate increased to the US$2 billion we see today. Between 1995 and 2009, the total international investment flow into the DR has reached US$18.5 billion. In the first semester of 2010 alone, FDI reached US$650 million. Our estimates predict than in the next five years more than US$10 billion of international investment will pour into the Dominican economy, helping to preserve the macroeconomic stability and growth rate of the national economy at a faster pace than in the region’s other domestic economies. These achievements wouldn´t be possible if we didn´t have a public administration committed to making the DR an optimum destination for international investment. Despite the evident accomplishments, it is relevant and necessary to constantly remind all the economic, political and social players involved of the importance of guaranteeing investment security, fulfilling the agreements made between parties and respecting acquired rights in their entirety, not only in regards to international investment but also in every other aspect of institutional and business life. It is important to keep on contributing to the development and improvement of the DR´s investment climate and its macroeconomic stability. These two parameters have to be constantly pursued and must be a day-to-day goal for a common cause: making the DR the world´s best FDI destination, where international investors feel at home and contribute to the global development of the Dominican nation.

he DR is a fertile and bio-diverse country with a diversified economy that offers unusual advantages compared to other economies in the region. With a population of over 9 million, it is the largest internal market in the Caribbean and its geo-strategic location and privileged access to the large consumer markets of Latin America and North America, combined with its proactive focus on investment, has made this country an international benchmark when it comes to foreign direct investment (FDI). The country has a solid judicial system and political, social and economic stability, and it has a diversified economy that provides a wide range of possibilities for investment and exports. Tourism, agricultural, agroindustrial and industrial products and services, and communications and information technology sector service are among the broad range of assets sustaining the nation’s economic riches.

In the past few years, the DR has succeeded in attracting a growing influx of FDI, reflecting confidence in our business climate and our country’s competitive conditions, sustained by investment promotion laws. With free trade agreements with the United States (DRCAFTA) and the European Union (EPA) as well as with the Caribbean Economic Community (CARICOM), the other five countries with preferential agreements are Mexico, Chile, Morocco, Jordan and Israel, while negotiations are under way with Canada, Mexico and Panama. Therefore, the DR has preferential access to 875 million consumers and offers a perfect triangulation for companies wishing to export tax-free to the main world markets, with “near shore” and “just-in-time” strategies, supported by an excellent world-class infrastructure in telecommunications, ports, airports and roads. During the 2005-2010 period, FDI reached a level of US$11.7 billion, an annual average of US$1.9 billion, doubling the figure recorded during the previous five-year period. It is estimated that FDI will grow by approximately US$2.4 billion by the end of 2011 in the telecommunications, tourism, mining and infrastructure sectors. FDI has been a crucial factor in explaining the DR’s recent economic trends, characterized by a high rise in GDP, with growth rates in the range of 9.3% (2005), 10.7% (2006), 8.5% (2007), 5.8% (2008), 3.5% (2009), 7.8% (2010). These combined with economic stability, low inflation and exchange rate stability have generated employment and positioned the country well ahead in the region when it comes to FDI.

The country’s FDI positive performance is due to a combination of internal and external factors related to the level of confidence generated by the current government in the aftermath of the 2003 economic crisis; strategies aimed at improving the country’s image; initiatives focused on improving FDI attractiveness; and the great dynamism shown by the world economy until the recent financial and economic crisis. FDI flows and projects have been important for the country’s macro-economic stability, and a base has now been established for more balanced economic development. Meanwhile, investment projects that show positive results in terms of wealth and employment creation and new economic diversification opportunities are being maintained and attracted. In order to ease the process of investment in the country, we have created an Investment Cabinet for Strategic Projects, and the CEI-RD office helps channel all of these investment initiatives, providing support and backing for the necessary administrative processes. Other benefits that can be directly attributed to the increased FDI flows are improvements in international competitiveness and the country’s productive transformation, which have both helped create and improve jobs and upgrade telecommunications infrastructure, ports, airports and roads, all of which are central to the continuing development of tourism and agro-industry.

FDI has also propelled a major transfer of technical and management knowledge because of administrative and productive practices applied by the multinational companies with a presence in the country. In turn, this has boosted internal competition and the efficiency and quality of local services offered by trans-national companies and mixed investment consortia, in addition to accelerating the country’s diversification and international insertion process, so that the DR now exports over 2,800 products to more than 100 countries, mainly the United States, the European Union countries, some Asian countries and the Latin American region.

Vision for the Future The DR is resolved to act with a permanent attitude of innovation. The time has come to break with traditional paradigms and adopt the new models now governing commercial interchanges in international markets, positioning the DR as the ideal center for business and strategic localization and a crucial point for accessing key markets in North America, Latin America and Europe. Our objective is to attract an annual FDI flow of US$10.78 billion and create 350,000 direct jobs by 2020, in greater value-added sectors that contribute to the country’s productive and technological base. Agro-industry The sustained development of crops in a controlled environment and the importance of agro-technology for highquality vegetable production are key for the DR. One of the country’s most pressing needs is to take advantage of the remarkable developments in biotechnology and agro-technology worldwide to modernize Dominican agro-industry.

Franklin Lithgow Peña FDI Director at CEI-RD

Diversity of opportunities for foreign investment One of six countries in the world that has ratified free trade agreements with the United States and the European Union, the DR has achieved record growth in terms of FDI attraction FDI flows and projects have been key to the country’s macro-economic stability and a base has been established for a more balanced economic development

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Tourism More than 4.1 million visitors came to the DR in 2010, making it the number one destination in the Caribbean. With over 65,000 high-end rooms, the tourism sector aims to diversify and promote more ecotourism and sports, history and medical tourism, in order to maximize the privileged position the DR has within the region. Renewable Energy Electricity generation and in particular its distribution is one of the main challenges for the DR. Law 57-07 creates the National Energy Commission and offers attractive incentives for alternative and renewable energy. ICT – BPO and Software Development Information & Communication Technology and software development are among the largest growth sectors in the Dominican economy. In addition to the country’s proximity to the United States, a skilled labor force, modern infrastructure and favorable economic policies constitute an ideal environment for this genre of business opportunities. Manufacturing Industrial Free Trade Zones are a successful economic model. They can be particularly useful for companies making value-added products for the US, Canada, EU and Latin American countries.

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Investment opportunities/ Sectorial incentives

International Investment Incentives are regulated by Law 16-95 From November 20, 1995 and its Aplication regulation Nº.214-04 from March 11, 2004

• Law 16-95 International investment • Law 84-99 Export incentives • Law 8-90 Free Trade Zones • Law 397-01 Industrial competitiveness • Law 57-07 Incentives for renewable energy development • Law 158-01 Tourism development • Law 56-07 Textiles as national priority

• National treatment for international investors • Free access to international currency • 100% capital & benefit repatriation • Technological transfer on investment • Free fund convertibility • Investment protection • Founding member of the OMC

Foreign Direct Investment (2000-2009) In millions of US$ 2,884.7

3,000 2,000 1,000 0

952.9

2000

1,079.1

2001

916.8

2002

2,158

1,579

1,528.3 1.122.8 909

613

2003

2004

2005

2006

2007

2008

2009

Accumulated FDI per country of origin (2000-2009) In millions of US$ 5,000

4,277.7

4,000 3,000

2,010.9

2,000

1,883.7

1,390.8 812.2

769.8

606.6

257.2

225.1

122.7

United Kingdom

France

Netherlands

Virgin Islands

Panama

Italy

1,000 0

United States

Spain

Canada

Mexico

FDI per economic sector (2000-2009) In millions of US$ 3,000

2,381.1

2,204.4 1,906.5

2,000

1,885.5 1,402,3

1,222.5

1,000 0 Real Estate

Tourism

Telecom

Trade & Industry

Mining

Electricity

789.2

743.9

Free Trade Zones

Finance

545

Transportation

Source: Central Bank of the Dominican Republic

Medical Devices The DR is the largest development, manufacturing and distribution center of medical devices and disposable materials in the region, with an excellent track record with the US FDA and government health agencies in the EU and Japan. Electronic and Electrical Devices The Dominican Republic offers a competitive and cost-effective operational platform for the development of elec-

tronic manufacturing. Investment opportunities are excellent for companies looking for trained, skilled and costeffective manpower. Textiles The DR is the largest Caribbean textile exporter to the US. With 25 years of experience in manufacturing, vertical integration and assembly, this sector employs approximately 80,000 workers.

he Dominican economy continues to be one of the best performing economies in Latin America.” So responded Alejandro Santos, the chief of the International Monetary Fund (IMF) mission to the Dominican Republic about the state of the economy and its prospects for the immediate future. For the second time in this decade, the IMF is lending its support to the DR through a Stand-By Agreement hoping to stimulate domestic demand by an “expansive fiscal position and flexible monetary policy.” “The implementation of the program has been successful, managing to mitigate the effects of the international crisis in the Dominican economy,” said IMF delegation chief Alejandro Santos, referring to the Dominican Republic support program. In fact, the 2009 growth rate was an impressive 3.5% while in 2010 the figure reached up to 7.8%. “We expect the country’s economy to grow between 5.5 to 6 percent this year, with the Central Bank’s inflation goal from 5 to 6%, and the consolidated public sector’s deficit of around 3% of the GDP.” Once again, the economy of the DR is demonstrating a stunning ability to withstand the negative impact of external forces. Foreign direct investments surged upward at US$2.9 billion in 2008, remained strong in 2009 at US$2.2 billion and decreased to US$1.6 billion in 2010. Investments in mining and real estate development led the way with strong support from telecommunications and retail trade. Significant mining investments are leveling off as projects approach operational status. Significant GDP growth in agriculture and telecommunications, however, has been offset by the temporary suspension of ferronickel exports and a drop in textile shipments from free-trade zones. Remittances, which exceeded US$3 billion in each year from 2007 to 2009, decreased by a mere 1.5% in 2010 to US$2,994 million, according to the Central Bank, reflecting a trend throughout Latin America. However, the Central Bank has been successful in maintaining a stable exchange rate while keeping inflation in the single digits. The DR has for some time now benefited from its proximity to major consumer markets, along with competitive air and marine transportation services for reaching those markets and a telecommunications hub that is the best in Latin America. In order to further improve exports, attract foreign investments and encourage local manufacturing for import substitution, the Dominican government during the current decade began to develop multiple trade agreements

FDI in the DR DR is demonstrating a stunning ability to withstand the negative impact of external forces According to ECLAC, the country is the leading recipient of FDI in the Caribbean

for the elimination of trade barriers and the reduction of tariffs, the most recent and significant being the Dominican RepublicCentral American Free Trade Agreement (DR-CAFTA) and the Economic Partnership Agreement (EPA) with the European Union. The EPA, now in the process of being implemented, provides the country with duty-free access to European Union countries and facilitates investment and professional and technical interchange between signatories. DR-CAFTA offers strong investment protection and opportunities including a program to induce investment by non-signatory countries through low DR component requirements (35% for shoe manufacturers, for example) in order to qualify for duty-free exports to United States markets. DR-CAFTA provides ample protection for up to 20 years before completely eliminating duties on food imports, the best such terms among trade treaties with the U.S. at the time. Meanwhile, the agriculture sector is establishing the country as a powerhouse in organic agricultural products, which generate more than US$200 million for the DR each year, and has expanded the production of traditional and non-traditional products in greenhouse farming. Several farming zones are using European technology to take advantage of ideal “micro-climates” (these higher elevations apparently benefit from cool breezes after sunset) to produce specialized crops in rich soil. New product packing techniques and controls to meet sanitary requirements support these increased exports. At the same time, the U.S. Agency for International Development (USAID) has put in place a five-year program, supported by the National Competitiveness Council and the Inter-American Development Bank, offering market, logistical, technological and financial advisors to help small farm proprietors and agroempresas to increase sales and become more competitive. Recent events in Haiti will put pressure on the Dominican agricultural sector to provide more produce for export above the estimated US$1 billion currently crossing the border (in both registered and unregistered exports), and should also re-

Kevin P. Manning FDI & Energy Consultant Former President of AMCHAM-DR sult in increased investment in the Dominican sector. However, a study commissioned by the Center for Exports and Investments (CEI-RD) indicates that many problems need to be resolved before trade can reach its full potential. Manufacturing areas of the country that are outside free-trade zones have not been aggressive about seizing new export opportunities under the trade agreements, although some recent interest has been observed. The development of this commerce would benefit from the establishment of pro-export government incentive programs and policies, as well as from promised reforms of the electrical sector. After years of increasing politicization of that sector, the government is introducing changes in leadership and practices in order to improve efficiency and lower electricity tariffs. This should impact the viability of the manufacturing process quite favorably. The supply of power to the energy intensive mining sector, however, will first have to be negotiated without disturbing the supply to the national grid. Until these reforms have been implemented, the trade incentives in place are more skewed towards importation than exportation. Opportunities in the DR abound, and the ably staffed Center for Export and Investment (CEI-RD) stands by to facilitate local and foreign investment. The implementation of the Law for the Defense of Competition (Law 42-08) would be a major step forward in achieving the conditions necessary to compete globally.

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he world-class Pueblo Viejo project, located in the Sanchez Ramirez province of the Dominican Republic, represents one of Barrick Gold’s most significant investments. It is among the world’s largest undeveloped gold deposits. The project is a joint venture between Barrick (60% interest) and Goldcorp (40% interest). It represents the largest foreign investment in the history of the Dominican Republic, with a pre-production capital budget between US$3.6-3.8 billion.

Pueblo Viejo has proven and probable gold reserves of about 23.7 million ounces (100% basis). The mine is expected to produce more than one million ounces of gold per year in its first full five years of operation. The project is on track to begin producing in mid 2012 and mine life is expected to be at least 25 years. Pueblo Viejo will create thousands of local jobs and contribute to socioeconomic development in the Dominican Republic, while addressing historic environmental impacts of a previous mining operation on the site. Cleaning up this environmental legacy is a key priority for Barrick and the government. Construction spending, operating costs and corporate and personal income taxes from mine employment will be a major contributor to the Dominican economy. We are already engaged in workforce training in nearby communities, with over 2,200 participants to date. A key priority at Pueblo Viejo is the localization of the project’s workforce. Technical training programs are enabling nonskilled local residents to work as skilled laborers (e.g. carpenters, electricians) during the construction phase and later as mine operators. The project also has a “buy local” policy, purchasing from local and national Dominican suppliers wherever possible.

Aaron Regent CEO Barrick Gold

The largest investment Gold prices are expected to remain strong, supported by a range of micro and macro-economic factors, including sovereign debt concerns, low real interest rates, rapidly growing demand from emerging markets and a lack of new gold supply With an investment of between US$3.6-3.8 billion, the largest in the country’s history, the Pueblo Viejo mine will allow the Dominican Republic to participate in today’s global gold market

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In addition to economic benefits associated with mining, we are making significant social investments that help to increase the productivity of local farmers, improve health, nutrition and education, and support the creation of small businesses. Infrastructure, such as roads and bridges, will also be improved in association with the project. These social investments aim to increase personal income levels and improve quality of life in the communities surrounding the mine, while supporting national development. Barrick has also been supporting a collaborative approach to community development. Pueblo Viejo is facilitating community consultations and working with municipal governments and local partners to create municipal development plans. In January 2009, an agreement to implement sustainable development plans was signed between the project operators and four municipalities in the Monseñor Nouel and Sánchez Ramírez provinces. The mining project is also working to raise academic standards at primary and secondary schools and to improve adult literacy in the project’s social impact areas. We are partnering with the Ministry of Education and several NGOs on these initiatives. The company’s adult literacy program has attracted hundreds of participants and programs at local schools have drawn strong support from teachers and principals. At Pueblo Viejo, an environmental cleanup is underway to remediate historic impacts of a former mining operation at the site. Considerable progress is evident; environmental remediation in the mine development area is progressing well. The new mine will operate under a stringent environmental management system and will seek ISO 14000 certification. Pueblo Viejo is expected to be a significant contributor to the economy of the Dominican Republic over its 25-year plus mine life. The project is also contributing to the social development of the region in ways that will be sustainable long after the mine closes. At Barrick, we believe the Dominican Republic is an excellent country to invest in, and we look forward to working in partnership with the government and local communities on the development and operation of Pueblo Viejo.

cotiabank has been in the Dominican Republic for 91 years closely following both Puerto Rico and Jamaica, where we have been involved for over a century. It is obvious that when we go into a country, we go there to stay. Although the decision to work in the DR was made long before my time, I have participated in our most significant expansion since 2003, a process still being consolidated every day. Scotiabank is a stable bank and quite loyal to the DR, where we see important potential. When it became my responsibility to supervise the Caribbean region in 2000, the bank had been growing steadily, but I saw that working with the Central Bank might double our portfolio. Until then we had been opening about three new branches every year, but by acquiring the operations of T&T Republic Bank, we were able to grow much more quickly.

Jim Meek Senior VP & General Manager ScotiaBank Dominicana

During the 2003 crisis, interest rates went wild, but the Central Bank is stable and strong and is, in fact, one of the major reasons for the DR’s success compared to other countries. We’ve suffered a lot, but the policies established by the Central Bank after 2003 gave the DR the steadiness that it enjoys today. Yes, there have been rough times, but we have survived, and now, at yet another defining moment for the world economy, the DR has demonstrated its capacity to overcome a very difficult situation with the economic recession of its main trading partner, the United States. When we look at how well our country eased us through a world financial crisis that many other countries barely survived, I cannot cease to admire the professionalism and abilities of our central bankers, not to mention their commitment to doing the right thing. The reason we survived the crisis so well is because both the Central Bank and the Superintendent of Banks have been so prudent. Consumers, the financial institutions, the banks and the financial sector as a whole are much stronger. As we ponder this and look to expand the country and attract more foreign investment, it’s important to emphasize the tremendous efforts the Dominican Republic has made to overcome the financial turndown. It was a complex scenario and a major learning experience for the private and the public sector, and we have taken valuable lessons from it all. The DR monetary board is very strong; professionalism is at an optimum level; and international best practices have been broadly applied in the financial sector.

DR financial strength Scotiabank is one of the world´s top 10 ten financial institutions. With 18.6 million clients in 50 countries, Scotiabank has been present in the Caribbean basin for over 90 years. Since 1920, Scotiabank has served the Dominican market and is now the country’s 4th largest financial institution in terms of assets Jim Meek has been serving the company over 45 years, and has solid international experience in the Caribbean and beyond: Jamaica, Puerto Rico, British Virgin Islands, Peru or and El Salvador. Mr. Meek sits on the boards of several of Scotiabank’s international subsidiaries

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There is a real sense of survival in this country, not only among corporations or from the government, but from the people´s point of view. Because Dominicans have seen many troubled times, when things get rough they get through it. Consumers and commercial and corporate customers alike supported keeping interest rates stable. Dominicans are prepared for constantly changing rates, and there is a sense of loyalty and pride that permits them to overcome difficulties with a positive approach. I have worked in eight different countries over 45 years and probably lived in 25 different cities, and what has most astonished me is the Dominicans’ willingness to do almost anything to learn, to succeed and to get ahead. Dominicans’ commitment to their work is like few I have ever seen. It is primarily this great Dominican attitude that is behind our decision to install our work center and processing operation in the DR, serving Puerto Rico, the Virgin Islands and Haiti, among other countries. These projects are a testimony to the work ethic of people here; their pride in our bank is second to none. As well, in the DR, labor costs are much lower than in any other country nearby. It is a testimony to the potential of the country is that Dominican entrepreneurs invest locally. During the 2003 crisis, it was unbelievable to see how the people came together and how local investors came through, not looking at ROIs but at what the outcome might be if they didn´t help. This country’s natural resources and its diversity and potential are tremendous, but the population itself and local investors’ commitment to the country are its real strength. To see how they are willing to invest even under the worst imaginable conditions was really an eye opener for me. In the near future, I think you’ll see more bankers coming into the DR looking at investments, and I expect to see some foreign banks among them. As the world economic environment stabilizes, we will see more concentration in the Dominican financial marketplace. The more local banks are able to integrate global practices and professionalize the system, the more international players will be interested in investing. I strongly suggest international investors come find local partners in the DR to get good advice in your favor and to help you understand this country’s potential, whether in natural resources or business. With the right infrastructure, any project in the DR involving agriculture, mining, tourism, manufacturing or distribution can be a base to supply countries all over the Caribbean and Central America.

am someone who loves the Dominican Republic, both personally and professionally. I fell for this country over 20 years ago, when Globalia – known at the time as Halcón Viajes and Air Europa – started selling Caribbean vacations in the Spanish market. We were the first company to open the Caribbean skies to Spain and in the 1990s we promoted vacations so successfully that we changed the habits of Spanish tourists, who started to consider the Caribbean a prime destination. We started with one flight to Puerto Plata in 1987 and today we have daily flights to Santo Domingo and almost daily to Punta Cana and Puerto Plata. As far as I’m concerned, the Caribbean of the 1980s, reserved until then for the Spanish, was Cuba, Cancún and especially the Dominican Republic. Since the

Pepe Hidalgo Executive President of Globalia Corporation

1980s I have travelled to this island very often, about a dozen or more times a year. Sometimes I come on business, but always for sheer personal pleasure. I feel good here. I like the Dominican weather, the Dominican character, the emerald green sea and the white sand beaches. But my love affair with the Dominican Republic is also for professional reasons. It is a very lively country, full of business activity, which has been growing at an impressive rate for several years. It’s also a country with great social, political and economic stability, and therefore a good place for investment. Globalia, the company I have the honor of heading, has 25,000 employees and a 4 billion turnover, moves two million tourist packages and 17 million travelers per year, and has always firmly supported the country from the very first day. We’ve brought thousands of passengers over since then. If there is anything I can really feel proud of, it is having contributed to the DR’s development through tourism, employment and promotion of this country, where we have more than 4,000 employees and where we have invested around US$4 billion. Our airline Air Europa links Las Américas and Punta Cana airports with our hub in Barajas, in Madrid, where we board passengers from all over Europe arriving on our connecting flights. We’re proud to note that the spirit of Curro, the star of our first advertising campaign that encouraged Spaniards to come to

The Dominican Republic always With 4.1 million visitors per year, the DR is the leading Caribbean destination and the second most popular market for many Spanish leisure groups, which have invested here since the 1980s. Spanish companies own a major share of hotels in the DR and the main Spanish operators account for over 60% of the high-end rooms Founder of the first Spanish private airline, Air Europa, and president of the Globalia holding, the largest Spanish vacation group, Mr. Hidalgo has invested heavily in the Dominican hotel industry and is now venturing into real estate development

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the Caribbean, has also spread to Italy, France and Great Britain, and generally across the whole of Europe. With thousands of passengers each year from Spain, France, England and Italy, thanks to Air Europa, our tour operator Travelplan and the Halcón and Ecuador Travel Agencies, going to the Dominican Republic on vacation is a popular choice that is affordable for everyone. We’ve already brought over half a million of visitors in the last few years on thousands of vacation packages and as we have proven time and time again, the Dominican Republic has never let us down. Over the years, Globalia has installed its own Be Live hotels on Dominican beaches. We now have five luxury resorts offering more than 4,000 rooms. We are extending our investment and working on very high-level developments in the most exclusive parts of the island, where we have just invested some 68 million in three tourist complexes which add a new shared rental model for luxury apartments, supporting our hotels with 500 new rooms. At the same time we have launched some innovative industrial projects. Globasol is involved in the construction of a biodiesel plant to supply clean and affordable power that ensures sustainable growth and helps alleviate the country’s energy deficit, while providing quality jobs in both the agro industry and energy sectors. It hasn’t all been a bed of roses. Not all businesses have prospered as one would have liked; the international financial crisis has slowed down returns on investment. The international air industry is going through difficult times, but at the same time the cruise industry is beginning to thrive. The Caribbean is still a highly regarded tourist destination and the Dominican Republic is actively improving its infrastructure. The Government understands that the development of the Dominican tourism and property sector is a priority for the country, and even at times of economic uncertainty there is growth in tourism investment. This country is the leading tourist destination in the Caribbean, but it is also my second home – a place where I have found great opportunities, good allies and wonderful friends, and where I plan to go on investing and contributing, as much as I can, to its full development.

hen we first launched service to the Dominican Republic in 2004, our decision was a natural investment: the connection between our cultures, our people, and our experiences was a clear match. Today, with more than 27 daily flights from Puerto Plata, Punta Cana, La Romana, Santiago and the capital city of Santo Domingo, we have not only confirmed our expectations but clearly surpassed them. As the largest airline in the Dominican Republic, we are proud to serve the Dominican people every day, providing customers with our award-winning JetBlue Experience -- complete with the most legroom in coach, a first-checked bag free, unlimited snacks and drinks, and free in-flight entertainment on personal seatback TVs. Our airline has worked diligently to not only provide air service to the Dominican Republic, but truly integrate the Dominican culture into our company. We currently have five ticket offices on the island to facilitate cash transactions for our customers that prefer this method of payment. For the past several months, at the request of many customers, we have carried Presidente Beer on JetBlue flights. Our in-flight crewmembers who frequently work on flights to the island have even learned to make “café con leche” at the request of our Dominican customers. The strong partnership forged with the Dominican Republic has led to many opportunities to work with the Tourism Department to promote the destination. The pristine beaches, wide array of excellent hotels and the culture of service make the Dominican Republic an ideal vacation spot. We have worked with the Ministry of Tourism to actively promote the island to the U.S. market, with a particular focus on the New York, Boston, Florida and Puerto Rico markets. This promotion, coupled with attractive airfare and increased frequency, has helped grow the number of visitors to the Dominican Republic. Growing in a challenging economy is not without its difficulties, but there will always be peaks and valleys. Any company can be profitable when the economy is strong, but solid companies that are built to withstand slower times will be much stronger in the long term. JetBlue re-

mains committed to the Dominican Republic and the communities we serve for many years to come. JetBlue has found the airport infrastructure to be very accommodating throughout the country and we look forward to further investments, including road and runway enhancements, additional navigational aids and improved facilities that will support aviation in the future and will allow us to grow, together with the local economy. Tourism, the largest component of the economy in the Dominican Republic, has been critical to JetBlue’s growth and bodes well for the future. Further investment in recreational facilities, including hotel rooms and maritime ports, will also help to further the tourism base. JetBlue’s growth has been carefully measured over the years and this will continue to be our approach in the future. The Caribbean and Latin America have been very important in JetBlue’s first decade and we’re excited about what lays ahead. In 2011, twenty-five percent of our capacity was dedicated to destinations in these markets. Our airline is growing, and we plan to invest in further activity in the future. Based on our support today from the Dominican people, our business plan is to continue to add activity to support the traveling public, whether you’re on vacation, traveling for business, or visiting friends and family. Thank you for your business.

Dave Barger JetBlue President and CEO

Open sky Recession and rising oil prices affect the global airline industry and result in reduced and more expensive air traffic. The Dominican tourism industry is now the strongest in the Caribbean and connections are crucial Ten years after it took to the skies, the first U.S. startup airline is the leading carrier in volume to the DR . With 20 daily flights, up to 30 in summertime and four destinations, it transports 1.5 million travelers a year to the Dominican Republic

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Cyberpark, ecosystem of innovation, IT and progress The DR sets a trend in the Caribbean on advanced IT technological development and related education with its first technological free-trade zone Eddy Martinez Manzueta Secretary of State Trade & Investment President of the Board of Directors CyberPark

anto Domingo´s CyberPark, a joint initiative of the Dominican Republic and overseas business and academia, is a new hi-tech free-trade zone geared to production and export. It clearly demonstrates the DR’s capacity to transform itself into a world-class technological development and training center. The Cyber Park is the DR’s flagship for efforts to find new ways to diversify the Dominican economy and spur economic development. It is based on the vision of President Leonel Fernandez that the DR needs to move quickly forward to modernize, strengthen international connections and diversify the economy in the direction of new high-value-added, highimpact activities. This vision for the country’s future is combined with hopes for becoming the

region’s technological center and the most advanced hi-tech production area in Latin America and the Caribbean. Located five minutes from Las Américas International Airport and the Port of Caucedo, the Cyber Park is home to the Caribbean Network Access Point (NAP), which provides the best international connectivity in the region. The Cyber Park is a new model for economic growth, a hi-tech park and an academic center of excellence, all in one. Over 20 companies currently manufacture a range of products there, including high-precision metal tools plastic components, injection and micro-electronic molds and solar panels. And a range of firms from the United States, India and Spain provide programming for information and software technologies, staffed by Dominicans trained right there at the CyberPark.

Cyber Park projects in the area of education and training include the Technological Institute of the Americas (ITLA-JAD), which provides high-level technical courses in software, information technologies, mechatronics and multimedia (animation, gaming and modeling, and simulation) as well as a range of languages. Sophisticated laboratories and workshops are available too, in addition to student resources such as a library, computers and audiovisual equipment. The Stevens Institute of Technology International (SITI) offers masters and doctorate programs at the Cyber Park of the same quality as those enjoyed by Stevens students back in the U.S. state of New Jersey, with programs currently underway in technological engineering and manufacturing engineering. Its Contact Center Institute of the Americas (CCI) features management-level and agent/representative training for the call center industry.

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1.2 million sq. meters of land for a full-scale advanced technology park for industrial and office users to host software and telecom-based operations and an industrial area for hi-tech manufacturing

At the Cyber Park, a series of multi-tenant buildings house technology-based manufacturing and services companies, drawing Foreign Direct Investment (FDI) as well as local investment. And from time to time, the Cyber Park forms alliances with or sub-contracts to other companies in order to provide services of the required level of excellence. Currently more than 500 such jobs have been created through the Cyber Park by several companies that are already based there or are in the process of establishing themselves in the area. This work includes manufacturing of high-precision parts, injection molding, production of solar panels, and software and IT solutions development. Over the next few months, 2,000 additional jobs will be created, with considerable benefits in the form of increased sales and exports, as well as better salaries. In the area of research and development, the Joint Biopharmaceutical Research

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Center is an applied sciences research center geared at discovering new medicines, molecules and vaccines for fighting disease. The Center also provides services of use to hospitals, domestic and international pharmaceutical companies, clinical trials and analytical services. A Wireless Technologies Innovation Center (WiTIC), currently in the process of establishing itself at the Cyber Park, will specialize in applied sciences research into wireless services and telecommunications, possibly with security applications as well as convergence between broadband and radio-frequency identification (RFID). EMPRENDE, Inc. is an incubation and acceleration center for technologybased companies. It promotes entrepreneurial initiatives for the development of ideas geared toward businesses seeking to benefit from technical assistance and seed capital.

The New Q Investment Fund, a venture capital/private equity firm, invests in technology companies based in the SDCP. The Ángeles Investment Network is for investing in business initiatives launched by Emprende and the SDCP Ecosystem. Academic and business partnerships have also been established with local and international universities, UASD PUCMM, INTEC, UNIBE and MIT, the Silicon Valley Hispanic Chamber of Commerce and the Chile Foundation. The Cyber Park of Santo Domingo is a dynamic and evolving hub of activity that is already exceeding expectations. New institutions and projects are becoming a reality all the time, and new players are joining this transformative community, producing development models that are having a significant impact on the lives of thousands of Dominicans, generating economic development and offering major advantages for foreign investment.

Technological development at the heart of the Caribbean Orange Telecom, with 220 offices and 193 million clients worldwide, has 11 foundations and 10 “Orange Labs,” technological development institutes Opened in 2010, Orange R&D Skill Center is the first Caribbean technological laboratory, located at CyberPark, a technological free trade zone in the heart of the Dominican Republic

Orange Labs are staffed by 3,500 research professionals who develop an average of 350 new patents per year. To date, Orange Labs have obtained over 8,000 patents.

Jean Marc Harion President, Orange Dominicana

n November 29th 2010, Orange R&D Skill Center, the first R&D technological development laboratory, was inaugurated in Santo Domingo by Dominican President Leonel Fernandez Reyna.

The lab is the result of a partnership between the Dominican government and Orange Group, through Orange Dominicana and Research in Motion, the Blackberry manufacturer, ratified at Orange Lab San Francisco, Silicon Valley, in September 2010. Orange installs R&D centers in places where great technological advances are made, locations that bridge continents, since they can better track societal evolution and trends. Centers are located in France, Great Britain, Cairo, Tokyo, Beijing, Amman, Warsaw, San Francisco, Madrid, Barcelona and now Santo Domingo, since the Dominican Republic is where North America, South America and Europe converge.

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The lab has working programs on R&D applications with several goals. The main objective is to become the Orange Group world development center of mobile applications for the Blackberry platform. The group also has labs dedicated to iPhone, Android, Symbian and Windows Phone, and it is thus involved in developing all the leading cell phone operating systems. An application developed by the R&D Skill Center in the DR will be used by Blackberry users in every country where the France Telecom group operates. This will create an environment where app developers may place their work in the domestic or international arena. This symbiotic relationship between educational institutions, the R&D skill center and business incubators will help local talent and boost mobile app development and other technological advances. Knowledge and technology transfer will be crucial. R&D Skill Center will be a bridge between the Orange Lab networks and the DR to share experiences and develop hi-tech projects that contribute to the advancement of the country’s telecom sector. It will work with local companies to develop their own Blackberry applications. Companies that require apps and need to benefit from mobile technologies will be able to purchase new tools designed at Orange R&D Skill Center by industry experts.

Agreements with universities are in place to establish scholarships in R&D Skill Center projects, so that outstanding students can spend time working at the center’s installations and enrich their telecom knowledge. Several themes have been identified in order to maximize the impact of the R&D Skill Center on Dominican society. 1. Education. Research will be based on e-learning and e-education, with mobile devices equipped to offer training and specific courses, to reach large portions of the population that do not have personal computers but do have cell phones. Cell phone penetration in the DR has reached 90% of the population. 2. Health. E-medicine applications like distance diagnosis vital sign monitoring and epidemic or other emergency alerts. 3. E-government. This application, currently under negotiation, would allow Dominicans to access governmental services anytime and anywhere. The applications developed at Orange R&D Skill Center will impact the entire Orange Group at a global scale. This institute will help advance the DR’s technological development, facilitating information transparency and bringing high-end technology to students, youth and Dominican professionals. This initiative will create a well-defined technological ecosystem and will take advantage of ITLA (Technological Institute of the Americas), a company incubator software cluster of CyberPark. Orange begins a new decade building projects that will have a positive impact throughout Dominican society, with technological and social advances benefitting the country’s people and businesses.

R&D in the DR = UNI3 Estimates place R&D Investment levels in the DR at 0.06% of the GDP, one of the lowest in the region To address this need the Dominican Government has engaged the former President of the US-based Stevens Institute of Technology, a globally recognized private university focused on education, research and entrepreneurship

celerate economic growth and industrial competitiveness, as well as improve living conditions for all Dominicans.

Dr. Harold J. Raveche Founder of Innovation Strategies International Former President of Stevens Institute of Technology

he establishment of the ”Universidad Nacional de Investigacion, Ingeneria, e Innovacion” (UNI3) is the transformational investment that benefits all Dominicans.

The strategy to accelerate the economic development, industrial competitiveness and improvements in the quality of life of all Dominican includes the growth of small and medium size enterprises (SME’s) and corporations founded by Dominicans, as well as the capacity to invent technologies in-country that help solve the nation’s problems. This requires a growing talent pool of researchers and techno-entrepreneurs whose work drives the development of new products and services that create employment, attract investment and advance the greater well-being of all Dominicans. How can this innovative talent pool be nurtured and sustained? The establishment of the Universidad National de Investigacion, Ingenieria, e Innovacion, whose research and doctoral programs are focused on national priorities, will develop the high tech talent pool in the DR to ac-

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This strategy has been realized by Brazil, Mexico, India, and countries throughout Asia. Israel, which is smaller than the DR, now has the second largest number of start-up companies quoted on Nasdaq because it designed and implemented an innovation strategy based on national priorities. Singapore, a CityState, is emerging as a world-class economic force through the strategy of investment in R&D and building on its strengths in systems and banking. Japan, Korea and Taiwan chose similar strategic paths about 40 years ago; they have steadily emerged to become key players in the high tech global economy. Over the past several years the DR has experienced many advances in its infrastructure and in foreign investment. The DR now has world-class airports and shipping ports as well as a robust and ever increasing tourism industry. Santo Domingo has a metro to provide low cost transportation and alleviate vehicular congestion. There are new highways and bridges providing vital links to hubs such as Santiago, Punta Cana and Samana. It is now time for the DR to invest in building the capacity of its high tech work force and talent pool of innovators and techno-entrepreneurs through the establishment of UNI3. The academic and R&D strategy for UNI3 is to recruit a world-class faculty that have a record of success in innovation in research and to focus on areas that align with the economic and social priorities of the DR. These include communications and software engineering, manufacturing engineering, green energy and environmental technologies, pharmaceutical and health care products and design. The startup strategy is to begin with a small faculty whose research programs benefit

industry and lead to intellectual property to launch new start up enterprises, establish partnerships with existing companies or be licensed. With a financial commitment from the DR government for infrastructure and seed support for operating expenses, UNI3 can begin to develop the fiscal resources to sustain and grow the country’s first research university. As UNI3 opens, collaboration will be established with Dominican universities and linkages forged with businesses in and beyond the DR. When the approval process to offer master’s and doctoral degrees is completed through the Ministry of Education, Science and Technology, the recruitment of students will commence. The goals and mission of the Parque Cibernetico Santo Domingo (PCSD/CyberPark) as well as its strategic location, make this center of business and industry an ideal location for UNI3. The presence of ITLA in the PCSD provides the longer term opportunity to establish an undergraduate program should ITLA obtain university status in the future. Innovation involves harvesting the benefit of new or improved products, services or processes. Innovation and GDP growth are intimately related. At present, the DR is greatly dependent for employment on outsourcing from multinationals. This is precarious position because it creates short term employment that will move to lower cost manufacturing centers in Asia, India and elsewhere as experienced in the DR’s garment industry. By pursuing the path of technological innovation through the establishment of UNI3, new enterprises will be launched by Dominicans and wealth be created by and for Dominicans. The DR must make an investment of political willpower and resources to launch UNI3. If this strategic investment is made now, the DR will reap large dividends. If the country’s first research university is not established, the economy of the DR will be largely dependent on tourism, and employment from multinational companies seeking incentives and low cost labor. I have great optimism for the DR because of the creativity, resiliency and positive thinking of its people. My hope is that the DR government and friends of the DR will make the financial commitment now to give the great Dominican people the opportunity to become innovators and techno-entrepreneurs by establishing UNI3.

Dominican competitiveness: moving forward

he Dominican Republic has worked hard to increase its competitiveness in recent years, with policies that have included profound business climate reforms and efforts to foster a clusters model. These are among the initiatives in the National Plan for Systemic Competitiveness (NPSC), launched on March 21st 2007 by President Leonel Fernández. NPSC compiled a guide to best practices for all sectors of the Dominican economy in order to enhance their competitiveness at the local, regional and global levels. The coordination and implementation of this Plan is the mission of the National Competitiveness Council (CNC). The NPSC envisions a future for the DR that is based on competitiveness and globalization; strategies for industrial development and export promotion in free-trade zones and nationally; entrepreneurial promotion strategies for SMEs; policy recommendations for productive sectors; innovative technology; strategies to make the public sector and governmental administration competitive through antidumping, anti-monopoly and consumer protection mechanisms; and a scheme to improve not just infrastructure but macroeconomic competitiveness and stability. Since 2007, the CNC has already helped transform Dominican industry and institutions through Competition Law 42-08; the SME’s Law 488-08; and the Industrial Innovation and Competitiveness Law 392-07. These create an institutional and legal framework to develop competitive manufacturing industries and propose programs and policies that encourage the rise of new industries, clusters and industrial districts. Now a new Company Law, 479-08, has replaced the 18th century Commerce Code, introducing a variety of corporate options for operating businesses. These options include limited liability companies, sole proprietorship, partnerships

With the 2015 target of becoming the third most competitive country in the region, the DR competitiveness plan has been established as a national priority and government policy

The Dominican business climate has become much more competitive, thanks to wide-ranging industry legislation reforms, a streamlined company registration process and the foundation of productive clusters, among other measures

and public corporations, among others. In addition to these reforms, CNC has drafted and is lobbying for a bankruptcy bill, which will permit companies to reorganize in order to pay creditors over time and which also includes a liquidation chapter. CNC has also ushered in a process of making it significantly easier to open a new business. Thanks to that initiative, the average time period required to open a company in the DR went from 78 days 78 hours. And firms now have the option to do it all electronically, through the Unified Integral Care System for the Formation of Businesses. Other achievements include improvements in tax efficiency, reducing the time it takes for companies to pay their taxes through the development of electronic payment methods, and major advances in the property registration system, reducing the process from 107 to 60 days. Another substantive improvement is the promotion of a more favorable climate for business associations, through clusters. There are now more than 20 operative clusters in the areas of tourism, agriculture, and manufacturing. A new National Quality System provides businesses and associations with official certifications for above-average quality and environmental sustainability, such as “Blue Flag” and “Green Globe.” Support for innovative and entrepreneurial efforts has also been relevant to the improvement of our country´s competitiveness;

Andres van der Horst Alvarez Executive Director of the National Competitiveness Council and Secretary of State

among the key developments in this area have been the launch of the Dominican Network of Business Incubators (“Dominicana Incuba”) and the strengthening of programs such as PROINCUBE and EMPRENDE. CNC’s key role behind efforts to enhance the Dominican business climate and improve competitiveness has been recognized by international organizations. For instance, the DR was chosen in 2009 as a “Top Reformer” in the World Bank’s Doing Business Report, and as “Secondbest reformer in the category of Protecting Investors” in the 2010 edition.

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he assumption to power of President Leonel Fernandez in 2004 marked an important milestone in the foreign relations of the Dominican Republic, concentrating special attention in the new global economic, social, political and cultural paradigms. Our diplomacy has been active establishing current relations with 137 countries, with 45 embassies and 118 consulates. We have never before had such a presence around the globe, nor been faced so many simultaneous challenges due to constant changes in bilateral and multilateral relations. Some of the most recent relations have been concretized with the establishment of embassies among others in Morocco, South Africa, Qatar, and the United Arab Emirates.

Carlos Morales Troncoso Minister of External Affaires

For our foreign affairs service, there is a clear vision of the role the Dominican Republic shall play in the 21st century international scenario. We have assumed a firm compromise to maintain a foreign policy for the promotion of peace and international security, and the reinforcement of the multilateral and regional decision taking mechanisms. Furthermore, we have identified four areas of special interest: global economy, integration, cooperation and conflict solution.

Expanding trade and international alliances The Dominican Republic has increased trade and expanded its international relations to become an active member of the global community Free trade agreements with the United States and the European Union make the Caribbean nation one of six countries in the world having preferential access to both, allowing investments to reach some of the worldÂ´s largest markets

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Unfortunately, 2010 was marked by a major disaster in our neighbor country Haiti. This earthquake has also served to express and reaffirm the solidarity bonds between the two nations. It has also converted the Dominican Republic in an important ally for the reconstruction process, in a country that needs a lot in several areas including health, infrastructure, industry and energy. However, the social and economic recovery of Haiti will not be possible without the committed support of the international community. On a convulse international economic and financial scenario, the Dominican Republic has been proactive promoting proposals for the regulation of international markets and the fight against speculation. We have also emphasized the discussion on important issues such as climate change, energy and food security. Our permanent mission at the WTO headquarters in Geneva plays a major role in dealing with challenges of globalization and commercial integration. In addition, we have been dynamic in deepening our trade and investment relationship with a wide variety of countries. Up to this date, we have negotiated 5 trade agreements, which grant preferential market access in 49 countries. This framework locates our country in a special position for investors interested in doing business with the United States, European Union, CARICOM, Central America and Panama. The DR-CAFTA has permitted the Dominican Republic a preferential relationship with our main trade partner, and has had a positive effect in the modernization of our customs and other institutional areas. On the other hand, as part of CARIFORUM, we lead this group to be the first ACP region to finalize an Economic Partnership Agreement with the European Union. This consolidated and improved the access of products and services to this important market, and recognized asymmetries providing cooperation for development for the country and the region. Furthermore, we are currently involved in different processes towards promoting investment and diversification of trade by strengthening even more our economic relationship with other countries in South America, and placing important attention in Asia and the Middle East. We are proud to show to the world the Dominican Republic, to permit other countries discover our political and economic stability, positive investment climate, and unique and strategic geographical position.

he Dominican Republic has one of the most open economies in Latin America and the Caribbean and is a partner country in the Free Trade Agreement with Central America and the United States of America, best known as DR-CAFTA, which came into effect on March 1st, 2007, after a thorough and complex harmonization process of its national legislation and regulations with the provisions of the Agreement.The end result for the Dominican Republic has been the expansion and consolidation of preferential access to the U.S. market, strengthening of government institutions, and a commercial dynamic which encourages improvements in competitiveness and investment climate.

The agreement signed by the Dominican Republic with the United States and five Central America countries (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) creates a Free Trade Area compatible with the World Trade Organization (WTO) Agreement and other trade agreements to which the member nations are party. The main objectives of this agreement are: a) the expansion and diversification of trade; b) the elimination of barriers to trade and facilitation of cross-border movement of goods and services; c) the increase in investment opportunities; and d) the establishment of a legal and institutional framework that provide certainty and predictability to the economic agents. DR-CAFTA is the most important trade and investment enhancement agreement signed by the Dominican Republic given the structure of its foreign trade and the nature of its foreign investment portfolio. The United States is by far the main trading partner for the Dominican Republic, source of more than 50% of its imports and market for more than 75% of its exports. In addition, 35% of the cumulative investment inflows to the DR, close to US$4.5 billion for the period 19932007, has come from the United States, which is also the source of over US$1.6 billion in remittances and over one million tourists annually. This is the result of many decades of US-DR commercial relations through unilateral market access preferences such as the U.S. Sugar Program, Caribbean Basin Initiative (CBI), Caribbean Basin Trade Partnership Act (CBTPA), and the Generalized System of Preference (GSP). All parties to the Agreement will be impacted positively, including the United States to whom DRCAFTA region represents the 3rd largest market for its products

in our hemisphere after Mexico and Brazil – a trade relationship of more than US$45 billion, in which the Dominican Republic is the largest partner in Central America and the Caribbean, and the 8th largest in the Western hemisphere. For the Dominican Republic, the Agreement, the result of its policy of integration to the world economy to induce sustainable economic growth and raise the standards of living of its citizens, is expected to bring about substantial benefits from its impact on the supply side, including on consumer price levels, on government institutions, on investment climate, and on industry and business competitiveness, to name a few. Some of the benefits of the Agreement for the DR include: (a) Consolidation and expansion of preferential access to the U.S. market provided under unilateral schemes such as CBI, CBERA, CBTPA and GSP, through an FTA based on reciprocity; (b) Expanded market access for agricultural products; (c) More flexible rules of origin, specially for textile and apparels; (d) Further liberalization of services in the financial, telecommunication, and energy sectors; (e) Institutional strengthening and greater level of transparency; (f) Increase trade and foreign investment as a result of more legal certainty and trade liberalization, both bilaterally with the US and intraregional among Central America and the DR; (g) Increase in the supply of products and reductions in market prices,

with positive effects on competitiveness and innovation; (h) Preferential access to the U.S. market for ethanol produced in the DR-CAFTA region from non-originating inputs –limited to a quota of 7% of total U.S. ethanol consumption. Further, the inclusion of new trade disciplines in the Agreement has had a catalyst effect in the development of market-oriented reforms, encouraging transparency and due process within State institutions. Consequently, the government of the Dominican Republic underwent broad modifications to its regulatory framework with the objective to modernize its norms and procedures, adjusting them to the commitments in the Agreement, while mitigating the impact from the elimination of tariffs and potentiating the benefits.

DR CAFTA: Essential for FDI & business growth The American Chamber of Commerce of the Dominican Republic (AMCHAM DR) is one of the most important forums of the country and was instrumental on DR-CAFTA negotiations FDI into the DR has surged since the ratification of DR-CAFTA

CAFTA is much more than a simple lowering of tariffs. It provides world class protection to investors, and consecrates a clear set of rules for both doing business, and solving conflicts in an efficient and transparent fashion. In effect, DR-CAFTA reduces uncertainty and allows investors to take better calculated risks.

Flavio Dario Espinal Former Dominican Squire Sanders & Dempsey, Ambassador to the U.S.

DR-CAFTA: Trade and investment opportunities Dominican Republic’s Ambassador to the United States from 2004 to 2009. His tenure in Washington, D.C. included the ratification and implementation of DR-CAFTA DR is a regional hub for trade among the U.S., Europe and Asia. Trade agreements with the U.S. and the E.U. provide a new cycle and our challenge is to understand this and capitalize on this new scenario

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Alejandro Peña Prieto Partner Squire Sanders & Dempsey Former President of AMCHAM-DR

or the DR and the countries of Central America, the signing and entry into force of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) represents a historic change in the focus of their political economies. In effect, the Dominican Republic has committed itself to a transformation from a relatively inwardly focused economy to a more outward focus, and seeks to integrate the Dominican economy into global markets and supply chains. This commitment reflects a consensus by local private and public sector leadership that in order for the Dominican Republic to generate the jobs and prosperity towards which all its people aspire, they need better access to global markets and foreign investment. And that is what DR-CAFTA is all about.

As former Secretary of State Colin Powell once remarked, “capital is a coward”, it avoids uncertainty, and it seeks clarity and security. And as we have seen, DR-

As a result, it should come as no surprise that foreign direct investment (FDI) into the Dominican Republic has surged since the signing of DR-CAFTA in 2004. Average FDI in the five years prior to signing was close to US$900 million per year and during the following five years to the agreement, average FDI has doubled to US$1.8 billion per year. At first glance, the impact on trade has been less dramatic. In fact, the Dominican Republic’s trade balance has worsened since entry into force of the trade agreement. A closer analysis, however, shows that most of that deterioration is attributable to circumstances beyond the purview of DR-CAFTA, such as: a) The precipitous drop in demand in the U.S. and global economy for nearly all traded goods as a result of the global financial crisis. b) The expiration in 2005 of the World Trade Organization’s Multi-Fiber Agreement that regulated apparel quotas, and under which the Dominican Republic had a disproportionately large quota in the U.S. market. c) The upward trend in oil prices and other key commodities like grains and fertilizers.

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d) The suspension in 2008 of operations of a major ferronickel mine (Falconbridge Dominicana) due to the global economic situation. As the U.S. and global economies recuperate, we believe that overall trade outlook is very positive for the following reasons: a) Exports overall were increasing until the global downturn in demand in 2008, and indeed nontraditional exports have continued to increase throughout the global downturn. Moreover, the free trade zones, as well as local producers, are diversifying their product offerings, which was one of the explicit goals of the agreement. b) Falconbridge Dominicana (owned by Xstrata) has announced it will restart operations in 2011, bringing back on line a major foreign exchange generator. Even more promising, the Barrick Gold project at Pueblo Viejo is ramping up for production, and will have a significant impact on Dominican exports going forward for decades. c) With the inexorable rise of wage rates (and other costs) in China, and the impact of high energy prices on the cost of transportation, there are many segments of the manufacturing sector currently in Asia that are rethinking their supply chain strategies for products destined for the U.S. market. With the protections for investors provided by DRCAFTA, close geographic proximity to the U.S., and demonstrable advances in transportation infrastructure and trade facilitation procedures, the Dominican Republic is perfectly positioned to pick up some of this production. This will generate more jobs, technology transfer, and exports in the years ahead. DR-CAFTA represents a sovereign commitment to not just the reduction of tariffs and the adoption of a specific set of reforms, but more to an ongoing process of institutional transformation. At the end of the day, are the public and private institutions who that serve as the foundation and enablers for a functional market economy capable of competing in the global marketplace. Customs procedures, government procurement practices, investors’ protections, protection of intellectual property rights, dispute resolution, and much more, all depend on institutions that are focused on facilitating economic growth. That is the challenge, and the promise.

n October 15, 2008, the Dominican Republic signed the Economic Partnership Agreement (EPA), a regional integration agreement between two blocs: the EU (with its 27 member countries) and the CARIFORUM (CARICOM plus the Dominican Republic and The Bahamas). The EPA is intended to strengthen the EU’s links with a Caribbean Common Market, in line with Cotonou Agreement, the EU’s comprehensive partnership agreement with regional blocs of the former European colonies in Africa, the Caribbean and the Pacific. The negotiation of the EPA was a unique experience for the Dominican Republic; being this the first time the country negotiates a trade agreement as part of a block. In consequence, positions had to be defined at the country level, discussed for consesus at the regional level within the CARIFORUM, and finally negotiated with the European counterpart. The positive outcome was a partnership that went beyond trade, and most important, recognized the economic asymmetry in favor of the CARIFORUM States. These negotiations were the most balanced and democratic bilateral negotiations ever held between countries at different levels of development. Over five years (2002 to 2007), 15 rounds of negotiations took place, including four Heads of State and Government meetings, eight CARIFORUM Councils of Ministers and broad-based consultations with private sector organizations. The EPA is of vital importance to the DR, a milestone in foreign trade relations that involves a free trade agreement with one of the world’s main consumer markets. It consolidates a framework for European investment in the country, encompasses environmental and social issues, and includes government purchasing and regulatory protection for intellectual property rights. As for investment, the EPA authorizes mutual National Treatment (NT) and Most Favored Nation Treatment (MFN). Each country retains the right to regulate investments but commits to transparency and greater guarantees for foreign investments, which will mean enhanced security for the investor. The agreement also establishes specific commitments on respecting labor regulations and the environment. The EPA guarantees and extends the Dominican export tariff preferences that have been in place since 1989 in the Lomé IV Convention and the Cotonou Agreement.

EPA public perspective

he objective of the EC-CARIFORM Economic Partnership Agreement (EPA) is to promote trade and business opportunities among the Caribbean Community (CARICOM) nations, the Dominican Republic and the 27 countries of the European Union (UE)—the largest commercial bloc in the world, with a population of more than 450 million people.

The EU is the Dominican Republic’s second-largest trade partner and the free trade agreement entered into effect in 2008 and has enlarged the nation’s exports attracting European investors and tourists

The EPA is consolidating and increasing European access to Dominican exports. It also provides the DR with technical assistance through non-reimbursable cooperation and development funds. In effect since 2008, the EPA opens the door to a closer and deeper commercial connection between the DR and the rest of the Caribbean, especially with our nearest neighbor, Haiti. That means this agreement will be the judicial basis for formulating and enhancing commercial relations between the two countries sharing the island of Hispaniola.

After its ratification, the DR became part of the 6 countries in the world having preferential access market to both the US and the EU markets It also extends preferential treatment for Dominican products on the CARICOM market and the potential for an integrated market with other countries not considered in the FTR signed between the Dominican Republic and CARICOM in 2001, thus consolidating the regional commercial and political links that President Fernandez has formed since his first term of office (1996 -2000). Thanks to the Economic Association Agreement with the EU, 98% of export products in the Caribbean region are tariff exempt, while 52% of EU export goods enjoy the same treatment within CARIFORUM. We also gained greater access for our key export products, including sugar, rum, cigars, bananas, organic cacao and tropical fruit. For the first time, Dominican sugar received a quota of 30,000 metric tons until September 2009 and is eligible for enhanced access to the European market. Rules of origin have been made more flexible to ease the fulfillment of national exporters, as in the case of cigars. In the textile sector, raw material of origin can be accumulated from any ACP country and the world. The EPA also protects Dominican markets through a gradual easing of tariffs for CARIFORUM and a 25-year limit for sensitive products on a long list of exempt products facing competition from Europe or Caribbean countries. Most tariff-exempt products will gradually receive more favorable treatment compared to DR-CAFTA and only 12% of tariff lines are subject to the same treatment as DR-CAFTA. There is broad protection for the agricultural and industrial sectors. The exclusion list includes industrial goods and establishes a protection mechanism via quotas on sensitive products like milk and rice.

Cesar R. Dargam Espaillat Vice Minister of Foreign Affairs, Economic Matters & International Negotiations

Jose Antonio Alvarez Alonso Jr. President of the Dominican Republic Spanish Chamber of Commerce, Industry and Tourism

The EPA also includes a commitment to eliminate export subsidies on European agricultural products subject to the lifting of tariffs, and safeguards for food security may be established. The EPA also provides for cooperation and technical assistance to improve export capacity, including greater access for Dominican agricultural exports; to implement quality standards in agricultural production; to promote private investment and to strengthen technical, scientific and institutional skills at a regional level. The EPA takes the partnership of the CARIFORUM and the European Union to a new level, and faces several challenges. It creates a new framework not only for trade, but going beyond to political dialogue and development. It is necessary to strengthen the regional integration process within the CARIFORUM, including the reform of its governance structure. At the same time, it constitutes a space with great opportunities to deepen the bilateral relatioship between the Dominican Republic and Haiti.

EPA: Revving Up Trade with Europe Dominican export companies have free trade access to the E.U. and preferential access to the rest of the region. The EPA agreement brings transparency to market access in manufacturing, mining, agriculture and services Thanks to the EPA agreement and the DR’s privileged position within CARIFORO, the country is well-positioned to become the region’s primary distribution point and business center

The EPA, together with the other agreements in force, consolidates preferential access to 49 countries. This framework, combined with the strategic geographical position and politcal stability, creates an outstanding climate for investment. All of the above give the Dominican Republic an optimistic view of its future.

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The EPA gives preferential treatment to the agricultural and agro-industrial products of the Dominican Republic. Among these, bananas, cacao, tobacco (mainly cigars), rum, and sugar stand out in particular. While the EU has traditionally protected its agricultural market through high tariffs, the EPA offers DR exporters a clear competitive advantage over other countries. Exporters of textile goods also benefit, however, as for the first time the EU concedes access to its market with highly flexible rules of origin, allowing manufactures to avail themselves of cloth from any part of the world for a large number of products. In the past, key Caribbean products were protected vis a vis European trade, especially in the agricultural and industrial sectors, by providing grace periods of 15, 20 or 25 years during which tariffs on European imports were gradually reduced. The idea was to give these sectors time to make the necessary structural adjustments to handle free trade. Despite the serious crisis that has affected the international economic and financial environment, this new commercial relationship with the EU is producing positive results. While world commerce has contracted and DR exports have dropped 12% overall, exports destined for the EU grew almost 7% during 2009. It turns out the EU’s preferential access is working nicely with our exporters’ success at developing niche markets. EPA is guiding the way towards sustainable development that also favors competitiveness. Not only does the DR gain access to a high-end market, but also to financing and technical support of the kind favored in EU agreements. The EPA includes so-called personnel mobility clauses to connect European businesses with the services of Dominican professionals and technicians and has as one of its main objectives promoting competitiveness in tourism and stimulating European investments in the DR. As the EPA begins to bear its first fruits, the next step is using this success as a springboard toward increasing exports to our Caribbean and Central American neighbors, as well as to the United States.

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he Dominican Republic is known for—among other things—an impressive tourist industry, natural beauty, baseball players and topquality export goods: tobacco, rum, beer and sugar. But the country has also been singled out as having among the most open and versatile foreign investment policies, especially when coupled with the versatility of specific incentives and tax advantages in areas that have been designated as key pillars in the economy.

The Dominican government recognizes that foreign investment and technology transfers contribute to the economic growth and social development of the country, through the creation of jobs and increase of productivity. Dominican Law No. 16-95, known as the Foreign Investment Law, recognizes as such any contribution to the capital of a company operating in the country by any foreigner, whether a company or an individual, or even a Dominican national who resides in a foreign country. The law grants a number of benefits, including: • Free convertibility of funds and free access to international currency through local banks and the Central Bank of the DR. • The right to repatriate abroad the total amount of capital invested and dividends declared during each fiscal year. • The right to repatriate obligations resulting from technology service contracts that establish fees and royalties.

Jose Alfredo Rizek Managing Partner, Medina & Rizek Abogados

FDI in the DR, a comprehensive legal analysis Jose Alfredo Rizek Managing Partner, Medina & Rizek Abogados

Dominican Republic tax regime Fabiola Medina Garnes Partner, Medina & Rizek Abogados

Protection of intellectual property in the DR: a look towards the future Mary Fernandez Partner, Headrick Rizik Alvarez & Fernandez

Public-Private partnerships in the DR Marcos Peña Rodriguez Partner, Jiménez Cruz Peña

• An expedited process for acquiring Dominican residency, with the same rights conferred by immigration laws to foreigners residing in the country. The Dominican Republic Export and Investment Center (CEI-RD) coordinates this process on behalf of investors, in order to secure the document in a very short period of time.

FDI in the DR, a comprehensive legal analysis Offering some of the most open and versatile foreign investment policies and tax advantages like full repatriation of capital, the DR is one of the leading FDI attraction countries in the hemisphere This legislation allows the DR to stand out among its international competitors, and includes a number of priority areas where both foreign and domestic investments have special interest

As in many other countries, foreign investment is restricted from certain areas, including the handling of toxic materials, radioactive waste and substances that pose a serious threat to the environment; and trade in products or services related to national security and defense, unless they are specifically approved by the Executive Branch. DR-CAFTA and Foreign Investment The entry into effect of Central AmericaDominican Republic-United States Free Trade Agreement (DR-CAFTA) provides an additional incentive for foreign investors whose country of origin is the United States, Guatemala, Honduras, El Salvador, Nicaragua or Costa Rica. The DRCAFTA provides for: • Non-discriminatory treatment of domestic investors or investors from countries that are not party to the treaty. • Limits on “performance requirements.” • Free transfer of funds related to an investment. • Protection from expropriation that is not in accordance with international law. • Permission to fill key management positions with staff of any nationality. • Access to a Dispute Resolution Procedure between the investor and the government. Other Investment Incentives Laws The DR has identified a number of priority areas where both foreign and domestic investment should be directed. These sectors of the economy offer specific incentives to further entice investors, allowing the DR to stand out among its international competitors. Through the 1990s and into the 21st century, these policies have shaped some of the most dynamic sectors of the Dominican economy, attracting billions of dollars, creating true engines of growth for the country. One of these pioneering policies was Law No. 8-90 of Industrial Free Trade Zones, which regulates the authorization, approval and installation of such zones in the DR. Since its inception, all investments have benefited from a 100% exemption on income and value added taxes, as well as tariffs. A successful free trade zone policy has allowed for the establishment of over 500 new companies, and direct employment of over 200,000 people.

Tourism development is favored by Law No. 158-01, which also grants a 100% tax exemption to individuals or companies that invest, promote, or develp tourism projects in any of the country’s underdeveloped regions. A similar exemption is granted to companies establishing operations near the Dominican-Haitian border, in order to promote economic development in that particular area. In line with international policies for promoting clean and efficient energy, the DR enacted Law No. 57-07 on Renewable Energies, hoping to foster business opportunities in one of the country’s most crucial areas of need. The law’s policies include a 100% exoneration of import duties on equipment and machinery to be used for the production of renewable energies; complete income tax exemption for 10 years; and a range of smaller but important incentives. Finally, the local industry has also been favored with its particular regime through the enactment of Law No. 39207 on Competitiveness and Industrial Innovation. This legislation seeks to encourage, through tax reductions, the investment in research, development and innovation of local industries, in order to update and modernize the national infrastructure. In parallel, it also favors the creation of industrial parks as a more efficient tool for achieving economies of scale in the production of certain goods. Incorporating a Company in the Dominican Republic On December 2008, the DR introduced a major overhaul in the legal framework regulating the incorporation of commercial entities, meeting a demand that for years was addressed by the private sector, with corporate structures following the old rules of the Commercial Code. Now, four corporate vehicles are available for businesses seeking to incorporate: the corporation (“sociedad anónima”); the partnership (“sociedad colectiva”); the limited partnership (“sociedad en comandita”); and the limited liability company (LLC) (“sociedad de responsabilidad limitada”). Corporations are primarily considered for larger enterprises and investments, and they are classified as either private or public, depending on how they are funded and whether they are administered directly by shareholders or through stock or bond public offerings.

Foreign and national investors can also incorporate a business through an informal joint venture (“sociedad en participación”), which does not need to be registered. This type of entity does not need to be affirmed in writing, and its existence can be proven through testimony or other means.

The law presumes, until otherwise proven, that all personal work relationships are governed by a labor contract that does not need to be contained in a signed document. The existence of a labor contract— or its modifications—can be proven by whatever means are available.

National and foreign companies have the same rights and obligations as locally formed entities, with certain exceptions, but both need to be registered in the Commercial Registry and in the National Registry of Taxpayers.

The Code provides for a maximum 44hour work week. Each worker is entitled to a consecutive 36-hour rest period that can be negotiated with the employer according to the specific needs of the business. The salary must be paid in cash, whether by the hour, by the day, by the week, every 15-day period, or monthly. In no case shall salaries be paid for periods longer than one month.

Limited liability companies (LLC’s) are a hybrid between a partnership and a corporation. They resemble partnerships in that they are based on the personal cooperation of members rather than on mere capital investment, and because of the fact that their shares are not freely transferable and do not constitute negotiable securities. Another option is the sole owner limited liability enterprise (EIRL, by its Spanish initials). These entities belong to a single individual, but are separated from any personal assets. The capital contribution is determined by the owner, according to the value of the assets contributed to the company. EIRL’s may appoint a manager. The ownership of an EIRL can be transferred, and there is no need for a comptroller to report on its finances or its asset management. Labor Law As an active member of the International Labor Organization (ILO), the DR enjoys modern labor legislation, including protection against all forms of discrimination and policies that encourage a collaborative approach to labor relations between workers and entrepreneurs. The Labor Code, in effect since 1992, regulates private and certain public employment, incorporating very streamlined procedures for both administrative and judicial resolution of conflicts.

he Dominican Republic’s tax system has been subject to several reforms over the years in order to improve its efficiency and prevent evasion. The Tax Administration is comprised of the Internal Revenues General Directorate (DGII) and the Customs General Directorate (DGA). The DGII is now a decentralized institution with an independent identity and patrimony, overseen by the Ministry of Treasury by means of Law No. 227-06. It is responsible for formulating all tax policies and establishing standards for collection.

There are five main taxes: income tax, applied to individuals and companies, single-owner businesses, and undivided inherited estates; taxes on assets; the value added tax or ITBIS; Capital Gains Tax; and Real Property or Real Estate Tax. The only other taxes are those applied to vehicle ownership and an excise tax on certain goods and services.

So-called fringe benefits include Social Security, Christmas Salary, vacations and profit-sharing. These usually represent between 20 and 34 percent of annual salary. After one year of continuous employment, a worker earns the right to a 14-day vacation period, increased to 16 days after 5 years of uninterrupted employment. Labor contracts can be terminated by either party without invoking any cause, subject to certain indemnities; but it can also be terminated by either party with cause (dismissal), without the need to indemnify, provided either the employer or employee can provide proof of fault. Such contracts can also be terminated through mutual consent.

The corporate income tax rate in the DR is 25%, while the personal income bracket ranges from 10% to a maximum of 25% for individuals whose yearly income exceeds US$30,000. Those who do not account for approximately US$10,000 a year are exempt, although that threshold is annually adjusted according to inflation.

Fabiola Medina Garnes Partner, Medina & Rizek Abogados

In order to encourage the Dominican economy’s competitiveness, several fiscal incentive laws have been implemented for the benefit of investors in certain

Dominican Republic tax regime Market driven policies and openness to FDI and free trade have propelled several tax reforms and the modernization of the DR tax administration Fiscal incentive laws have been implemented for the benefit of investors in certain key sectors such as tourism, renewable energy, free trade zones, and industrial activity taking place on the Dominican border with Haiti

key sectors such as tourism, renewable energy, free trade zones, and industrial activity taking place on the Dominican border with Haiti. The DR has recently undergone a radical shift in foreign trade policy. After a long history of protectionism and inaction in trade matters, the country has signed free trade agreements with CARICOM and its Central American neighbors. More recently, the DR entered into the US-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) and an Economic Association Treaty with the European Union, along with the members of CARIFORUM. In order to compensate for the reduction in tariffs under DR-CAFTA and the EPA with the EU, and to increase the competitiveness of the country´s productive sectors, there has been progressive reform of the tax system. This has happened both institutionally—through a reorganization of the Tax Administration itself—and structurally, by modifying policies. These reforms have already shown excellent results, leading the DR to appear as one of the ten principal reformers in the World Bank´s 2008-2009 Doing Business, where it also rose to 13th place in competitiveness rankings. The specific reforms worth highlighting are: the introduction of sworn declarations and payments of taxes online; the elimination of useless, burdensome and expensive-to-collect taxes; the introduction of Simplified Tax-Paying Processes; and a significant reduction in the time needed to retrieve merchandise from customs. The system has been strengthened with the introduction of a so-called fiscal receipt, an official invoice that is mandatory for anyone seeking value-added tax deductions. This reform has greatly contributed to a drop in evasion of Tax on the Transfer of Industrialized Goods and Services (ITBIS). Through bilateral negotiations, the DR has also signed several agreements dealing with with tax-related matters. A first one, signed with Canada, deals with Double Taxation and includes a Tax Sparing clause, through which Canadian companies in the DR pay an income tax of 18% instead of the average 43% generally paid in Canada. Another such agreement worth mentioning is one with the United States involving an exchange of tax information that is intended to prevent tax evasion and fraud.

ealth is no longer that readily found in real estate or other tangible assets; intangible assets are the greatest source of wealth in the modern world. Studies associating economic growth with intellectual property have found that reforms promoting a strong intellectual property system can be directly correlated to an increase in direct foreign investment(*). Consequently, the Dominican Republic has been preparing to reap the benefits of the strong protection of copyrights, trademarks and patents through modernization of the law and relevant institutions, for the benefit of foreigners and Dominicans alike. The property rights section of the recently approved Constitution recognizes intellectual property and goes on to state that it “…recognizes and protects the right to the

Mary Fernandez Partner Headrick Rizik Alvarez & Fernandez

exclusive property, for the term and in the manner determined by law, of the scientific, literary and artistic works, inventions and innovations, denominations of origin, trademarks, trade names and other products of the human intellect.”(**) In an effort to transform the previously anachronistic system for protection of intellectual property that prevailed in the DR, the country has adopted international standards, such as those outlined by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), under the umbrella of the World Trade Organization (WTO); the Free Trade Agreement between the Dominican Republic, Central America, and the United States of America (DR-CAFTA); the Treaty on Patent-Related Cooperation (PCT); the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the purposes of Patent Procedure; the International Convention for the Protection of the New Varieties of Plants (UPOV); the Berne Convention and Universal Copyright Convention. Patents are available for any and all inventions, be they products or procedures, in all fields of technology for 20 years. The Industrial Property Law, No. 20-00, dated May 8th, 2000, as amended, grants a patentee the exclusive right to prevent others from making, using, offering for sale, selling, importing or distributing the patented invention without the patentee’s prior approval. Patents can be sold, li-

Protection of intellectual property in the DR: a look towards the future In order to meet DR-CAFTA compliances & regulations, the DR has modernized its legislation and institutions for protection of copyrights, trademarks and patents for the benefit of foreigners and Dominicans alike

censed, pledged, assigned or transferred. Linkage and data-exclusivity protection is available for pharmaceutical products. A patent application can be made by either a person or a corporate entity. However, patents may only be enforced through civil lawsuits, and the available remedies are monetary compensation and injunctions prohibiting the defendant from engaging in further acts of infringement. Utility models and industrial designs are also covered by the Industrial Property Law. Utility models are granted for 15 years while industrial designs are granted for 5 years, with the possibility of being extended for two additional 5-year periods. Trademarks, meant to cover products or services, may be registered for 10 years; however, registrations may be renewed indefinitely. Trade names, designs, emblems, geographical indications, appellations of origin and collective and certification marks are also protected by the Industrial Property Law. Protection for well-known brands is also recognized. The National Office of Industrial Property (ONAPI) is the administrative agency in charge of granting and/or registering the various rights, and is also responsible for related administrative actions. Any decision by ONAPI may be subject to a judicial appeal, including an appeal to the Supreme Court. Copyright and related rights are protected by the Copyright Law, No. 65-00, as amended. The standardized rights included in the Berne Convention and the Universal Copyright Convention are applicable in the DR as well. The three main principles of the Berne Convention, namely national treatment, automatic protection and independence of protection, are included in Dominican legislation. Authors enjoy copyright ownership during their lifetime and their successors for 70 years following the author’s death. DR-CAFTA includes border measure provisions to protect trademarks and copyright. Both trademarks and copyright may be enforced through civil as well as penal lawsuits. Infringement actions can entail imprisonment and fines.

(*) Lo, Shih-Tse. (2004). “Strengthening Intellectual Property Rights: Experience from the 1986 Taiwanese Patent Reforms”. UCLA, Department of Economics. http:// www.international.ucla.edu/article.asp?parentid=10985. Published May 7, 2004 and accessed on January 9, 2010. (**) Constitution of the Dominican Republic, Article 53, Section 1.

overnments in Latin America are now more aware than ever of the advantages of obtaining private-sector participation in public investment projects, and are increasingly committed to establishing legal and institutional frameworks that are capable of attracting and protecting long-term private investments. The Dominican Republic is certainly within that group. In recent years, the DR has continually sought to involve private capital in developing and financing projects within sectors that were once restricted entirely to the government. This cooperation between the public and private sectors has been achieved through concession contracts. Concessions are currently governed by Law 340-06, which covers the public procurement of services, goods and concessions. The law, which is a direct result of the Central AmericaDominican Republic-United States Free Trade Agreement (DR-CAFTA), specifies along with the Dominican Constitution that concession contracts exceeding a certain amount must be approved by Congress when a fiscal exemption or a transfer of land is awarded to a private investor. This appraisal of the project follows an open public-bidding procedure, and the allocation of risks varies per case. Although no specific law exists on publicprivate partnerships, the DR has been able to develop operational capabilities and maturity through prior experiences. Several such partnerships have resulted in lower-cost and better-quality services: • In the late 1990s, the Dominican government divested the electricity utility into generation, distribution, transmission and hydro power and auctioned 50% of the shares in the two resulting generation companies (Itabo and Haina) to private investors. The three resulting distribution companies (EdeNorte, EdeSur, and EdeEste) went for a combined price of approximately US$641 million. The privatization of the power sector was the first example of public goods and services going to private parties, and the process attracted significant new capital for investments.

• Aeropuertos Dominicanos Siglo XXI, S.A. (Aerodom). A group of local and foreign investors was awarded a 30-year build-operate-transfer (BOT), US$500 million concession agreement, which included a US$350 million syndicated loan facility, to operate six airports in the DR. This concession has greatly benefited the development of the

Dominican tourism industry, increased air traffic capacity, and raised operating efficiency and service levels at the airports, by improving passenger flow and security controls.

in cooperation with the public sector. Additional legislative efforts are underway, in order to promote the enactment of a PPP law, which should boost for to these types of projects.

• The country’s first-ever highway concession, a 30-year agreement, was awarded to Autopistas del Nordeste in 1999 through an international bidding process. The project consisted of the design, construction, operation, and maintenance of a 106-kilometer toll road that connects Santo Domingo with the country’s northeastern peninsula. The impact of this project has been reflected mainly in a reduction of transportation costs, agribusiness growth, the revitalization of neighboring communities, and the creation of a large number of jobs during the construction and operational phases.

In addition, private parties interested in investing in public infrastructure in the DR may also benefit from funding provided by multilateral institutions and non-local sources. Many of these have defined as a priority catalyzing private sector investment in frontier markets and scaling up support for infrastructure projects in developing countries. The Inter-American Development Bank, the Multilateral Guarantee Agency (MIGA) from the World Bank Group, the European Investment Bank (EIB) and the US Export and Import (Ex-Im) Bank have participated in several projects as lenders. This helps reduce exchange-rate and political risks, key factors for ensuring low-cost financing.

• The Boulevard Turístico del Atlántico (BTA) project will be developed by a consortium comprising Colombian and Dominican construction firms. This is a 30-year design-build-finance and operate (DBFO) concession contract, involving a 123-kilometer toll road in the Samaná peninsula in the north of the Dominican Republic, with a total estimated cost of US$178 million. The success of these projects demonstrates the interest of the Dominican government in entering into concessions—or any form of partnership—in order to encourage foreign investments and further private sector participation in the country’s infrastructure. In fact, the recently enacted Constitution promotes the involvement of the private sector in initiatives relating to the provision of public goods or services,

Marcos Peña Rodriguez Partner Jiménez Cruz Peña

Public-Private Partnerships in the DR Although no specific law yet exists on public-private partnerships, the DR has been able to develop operational capabilities and maturity through PPP through concession of contracts while additional legislative efforts are underway in order to promote the enactment of a PPP law

he regulation and supervision of the Dominican financial system is the responsibility of the Financial and Monetary Administration, which is comprised of the Monetary Board as the principal body, the Central Bank and the Superintendency of Banks. The principal function of the Central Bank is to maintain price stability through the implementation of monetary, financial and exchange rate policy. Accordingly, the Superintendency of Banks has the responsibility of monitoring the Financial Intermediaries, for the purpose of guaranteeing the proper application of Monetary and Financial Law No. 183-02 and all the rules, regulations, and provisions enacted by the Monetary Board. Currently, the country has a legal and policy framework based on best international practices and standards, which helped prevent the spread of the global crisis to domestic financial institutions. However, in response to the profound transformations in the global economy and the international financial system as a result of the crisis, the monetary authorities are devoted to strengthening the regulatory framework, incorporating lessons learned from efforts to counter the recent worldwide turbulence.

Banking & Monetary policy Hector Valdez Albizu Governor of the Central Bank

The Dominican banking sector as catalyst for development Bernardo Fuentes Managing Partner Economi-k

Corporate & investment banking MĂĄximo Vidal City Country Officer

New financial services Mark Silverman President of Banco del Progreso

The Dominican Stock Exchange Darys Estrella Mordan CEO of the Dominican Stock Exchange The Dominican insurance market Eng. Ernesto Izquierdo President Seguros Universal

Hector Valdez Albizu Governor of the Central Bank

In the process of safeguarding the proper functioning of the financial system and the economy as a whole, the monetary authorities were faced with extreme and very adverse conditions in 2008 and 2009. External inflationary pressures, as demonstrated by historic international increases in the price of oil and other commodities,

Banking & Monetary policy Since the 2003 financial turndown the DR has tightened its financial regulations, resulting in a robust financial sector that helped prevent the spread of the global crisis to domestic financial institutions The Central Bank recapitalization law will contribute to the development of a public debt market, to foster growth in the Dominican stock market, increasing the efficiency of financial intermediation and, more importantly, ensuring long-term macroeconomic stability

affected the Dominican economy during 2008. Within this context, the Central Bank took steps to reduce liquidity and lessen the impact of the external inflation shock. These provisions included increases in the monetary policy (Overnight) interest rate and the discount (Lombard) rate, changes in the composition and the calculation of the legal reserve requirement, an increase in placements of securities through open market operations and demonetization using international reserves. On the other hand, the intensification of the financial crisis following the bankruptcy of Lehman Brothers led to a credit freeze, affecting international trade and capital flows, and pushing the world into its worst recession in the past eighty years. In this context, there was a slowdown in the growth of the Dominican economy due to its high degree of openness and commercial relationship with the United States. This situation led to a decrease in imports, and therefore, in tax revenues for the Government, which, coupled with the restrictions on access to external financing, precluded the implementation of a countercyclical fiscal policy that would have allowed an increase in government investment to counter the short-term effects of the slowdown in economic activity. In this context, it became necessary to identify additional sources of external financing that would allow the public spending measures established in the 2009 budget to be implemented and to revitalize the economy. For this reason, the President of the Republic, Leonel Fernandez, along with the governmentâ&#x20AC;&#x2122;s economic team, deemed it necessary to sign an agreement with the IMF as a strategic component of the reactivation of the Dominican economy. The current Stand-By Arrangement, which began in November 2009, will run for 28 months and provides the disbursement of Special Drawing Rights (SDRs), equivalent to about US$1.7 billion. On this occasion, about US$450 million will serve as funding for the Government, and the remainder will be devoted to strengthening the Central Bankâ&#x20AC;&#x2122;s international reserves. Approval of this agreement was a key factor in the US$750 million sovereign bond issue in 2010 and the reduction of the Dominican country risk premium. Meanwhile, the Central Bank has established more flexible monetary conditions as of early 2009, with the aim of increasing domestic demand by making available

more credit for the productive sectors and reducing interest rates, in order to reactivate economic activity. These provisions consisted of a combination of monetary policy rate cuts, reductions in legal reserve requirements, and the freeing up of these resources to fund productive sectors (construction, local manufacturing, agriculture and other consumption), specific modifications of prudential standards to benefit micro-, small- and medium-sized businesses and the provision of liquidity, the temporary closure of the issuance of securities by the Central Bank to the public, as well as other administrative measures. Indeed, the weighted average of the lending interest rate in the banking system fell more than 11 percentage points, from 25.17% in January 2009 to 13.62% by December 2010. There have been mortgages at fixed rates up to three years of less than 12%, as well as consumer loans at rates ranging from 8% to 10%. It is important to note that the prompt transmission of the monetary policy measures to the market interest rates was caused mainly by the stability and strength of the Dominican Financial System, especially of the multiple banking sector. Currently, this segment enjoys high capital and solvency levels that exceed the established parameters of the Basil Committee and the prudential standards in the Dominican Republic. For the purpose of reinforcing the operational framework for monetary policy, in 2005 the authorities began working on a transition to a new monetary policy scheme. Later on, this goal was established in Objective #1 of Price Stability in the Central Bank’s 2010-2013 Strategic Plan and in the Stand-By Agreement with the IMF, initiated in November 2009. In this agreement the preparation of an implementation strategy for an Inflation Targeting scheme was included as a structural performance criterion. The Inflation Targeting scheme is a monetary policy reference framework, characterized by the public announcement of official quantitative goals (or ranges) for inflation rates relative to one or more time horizons, with the explicit certainty that low and stable inflation is the principal long term objective. This monetary strategy should not be considered a policy rule, as it does not provide simple instructions and procedures to the central bank that is adopting it. Nevertheless, it confers a considerable level of discretion on the monetary authorities.

In the last 5 years the Central Bank has incorporated the majority of the requirements for this monetary scheme, thus guaranteeing a smooth transition to the new operational framework. To complete this process, a monitoring committee has been designated and technical assistance has been requested from Latin American Central Banks and IMF staff experts. After the easing of monetary policy promoted by the Central Bank starting in January 2009, as evidenced in the historic low interest rate levels prevailing in the financial market, the monetary authorities maintained a policy stance that is consistent with fiscal expansion, and that permited meeting the inflation target of 6%7% for 2010. The institution will continue monitoring the economic growth process as it comes closer to its potential output level, for which it is prepared to adapt its monetary and exchange policy to new economic conditions, for the purpose of countering inflationary pressures and preserving macroeconomic stability. With regard to Central Bank recapitalization, Law No. 167-07 promotes a gradual and definite solution that is financially viable. This law establishes that within ten years the Dominican Government will absorb the cumulative losses of the institution, through the issuance of State Bonds in an amount up to DOP$320 billion, under which the Treasury Ministry would undertake partial emissions in the established ten-year term. The existence of this Recapitalization Law is important from the perspective of the foreign investor. In addition to contributing to the financial restructuring and capital strength of the Central Bank, to the unwinding of the so-called quasi-fiscal deficit, and to the gradual and timely reduction of the institution’s stock of certificates, it will also contribute to the development of a public debt market, to foster growth in our stock market, to increasing the efficiency of financial intermediation and, above all, to the long-term preservation of macroeconomic stability. Additionally, since this Law enables, with the bonds issued, the Central Bank to carry out open market operations as a component of monetary policy, this would be of

great interest to institutional investors who seek long-term instruments with sovereign guarantee at attractive rates of interest. The economic performance of the Dominican economy in 2010, registering a GDP growth rate of 7.8%, surpassed that of 2009 when it grew by 3.5%. This has enabled the economy to reduce its unemployment rate from 14.9% in October 2009 to 14.1% in October 2010. This is equivalent to the creation of 160,208 new jobs. The fastest growing sectors were: Construction (11%), Local Manufacturing (7.7%) and Services (7.3%). Cumulative inflation for the period January to December 2010 was 6.24%, while core inflation stood at 4.17%, well within the range of 6%-7% established in the IMF agreement. With regard to foreign exchange, the Central Bank’s policy measures have enabled the Dominican economy to recover without risking the relative stability of the exchange rate, which depreciated only 3.4% in 2010, despite an adverse external environment. Regarding the external sector, the worldwide recovery of economic activity revitalized international trade between the Dominican Republic and its trading partners, with the exception of Europe, so by year-end 2010 the current account deficit stood at 8.5% of GDP. This external gap was fully funded by disbursements exceeding US$ 2.99 billion and foreign direct investment flows amounting to US$1.63 billion. The Dominican Republic’s legal reliability and the increasing dynamism in the economy have made the country a major recipient of foreign direct investment (FDI). Between 2005 and 2010, the flow of FDI to the economy exceeded US$10.54 billion, of which US$2.87 billion were received in 2008, the worst year of global crisis. In 2009, Dominican Republic ranked third among Latin American countries in foreign investment as a percentage of GDP.

ven at a glance, the Dominican Republic’s main economic indicators since mid-2009 suggest the country has been very successful at dealing with (and overcoming) the many challenges presented by the world economic crisis of 2008. In fact, the DR is among the countries that have most rapidly recovered from the economic slowdown and, according to JP Morgan, ranks among the fastest growing economies in Latin America and the Caribbean in 2010. These positive developments have prompted Moody’s Investors Service to upgrade the DR’s foreign- and local-currency bond ratings to “B1” from “B2” and, at the same time, Standard & Poor’s Ratings Services to revise its outlook on the DR from “stable” to “positive.” One of the key factors contributing to these impressive results was the use of monetary policy to raise interest rates and thus lower internal demand as a way of preserving price stability in the face of weak international conditions in 2008—and then later to aggressively lower interest rates in order to bolster economic growth in the second half of 2009 and in 2010. This strategy would certainly not have been successful without a financial system that was strong and stable enough to deal with such abrupt changes in policy. And yet the DR suffered one of its worst economic crises in history during 2003 and 2004, mainly because of the failure of three of the country’s top banks. So, the question is: How did this happen? How is it that in 2003 the financial system was one of the causes of the crisis and in 2009 it was one of the key factors aiding the country’s recovery? Radical Change, But Gradually In the final months of 2002, the Dominican Congress approved a new monetary and financial law designed to modernize the regulatory framework for the financial system. It is important to note that this law was developed with the intention of establishing only general guidelines for the monetary system. The law was to be accompanied by a series of by-laws aimed at addressing specific issues. The idea was to give the authorities greater flexibility in the execution of monetary policy, as changes could be made to the by-laws without requiring the approval of Congress.

Regrettably, in 2003, when several banks began to have problems, few of the bylaws required in the monetary and financial law had been approved. This generated a significant amount of uncertainty among policymakers and market players. Under these circumstances, in the second half of 2003, the Dominican Government signed an agreement with the International Monetary Fund (IMF). One of the goals of the reform program designed by the Dominican authorities under IMF guidance was to “strengthen confidence in the banking system.” The strategy consisted of four pillars: (1) addressing the problems of banks identified as weak; (2) ensuring strong governance in the banking system, with safeguards against fraud; (3) implementing an improved bank resolution framework; and 4) strengthening prudential regulations and banking supervision.

Although it has not been an easy process, the implementation of this strategy has shaped and transformed the Dominican financial system into what it is today. In fact, practically all of the by-laws required by the Monetary and Financial Law have been approved and implemented. Regulatory guidelines set up in these bylaws include those dealing with: • Foreign exchange operations • Operational risk • Corporate governance • Lending to related parties • Solvency • Asset evaluation • Market risks • Liquidity risks

It is important to note that the advantages of this system were evident in 2008 and 2009 when the monetary authorities approved changes to some of these by-laws that made it easier for financial institutions to lower interest rates and accelerate the growth of the credit portfolio, thus aiding the economic recovery. Solid Enough to Weather Crisis Before looking at the behavior of the Dominican financial system since the crisis of 2003 and 2004, it’s important to point out that the main players are commercial banks. These institutions have 82% of the total assets. Another important aspect that stands out is the fact that the public sector has a relatively minor involvement in the financial system. There is only one public institution and it has 2.3% of the total assets. A third interesting fact about the financial system is the low level of involvement from international banks. Among the commercial banks, only Citibank and Scotiabank are international players and they only have about 9% of the total assets.

Bernardo Fuentes Managing Partner Economi-k

The dominican banking sector as catalyst for development Transformed by the government after the 2003 crisis with strengthened supervisory capacity and regulation, the banking sector has led to a well-capitalized and healthy financial system Loan loss provisions cover more than 100% of past due loans, and while the public sector has a relatively minor involvement in the financial system, more than 80% of the sector’s total assets belong to commercial banks

These important points are worth keeping in mind when considering how key indicators of the financial system have evolved in recent years. In the loan portfolio chart nº1, it’s quite clear how deeply the crisis of 2003-2004 impacted the financial system. The graph shows that past due loans increased to more than 7% of the total loan portfolio in 2003. It also shows, however, that the regulations put in place during those years (in addition to the economic recovery itself, of course) helped bring that level down significantly between 2005 and 2007. It’s remarkable to see that the slowdown of the economy in 2008 and 2009 did not make an impact on this indicator, proving quite unequivocally how important the advances in bank supervision and regulation have been for the system. In 2010, this level went below 2% for the first time since 2001, showing the positive impact of the economic recovery in the financial sector. Another very significant indicator of the health of the financial system is the way that institutions have been able to increase the loan loss provisions in order to cover more than 100% of past due loans. This level of coverage reduces the risk that these loans might affect the overall balance sheet.

1. Past Due loans / total loans (in %) 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0,00

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2. LOAN LOSS PROVISIONS / PAST DUE LOANS (in %) 140,00 120,00 100,00 80,00 60,00 40,00 20,00 0,00

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3. RETURN ON EQUITY (in %) 30,00 25,00 20,00 15,00 10,00 5,00 0,00

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Chart nº3 indicates that the increase in the loan loss provisions (and the corresponding decrease in risk) had a very significant impact on the financial system’s profitability. The graph shows that the return on equity (ROE) was reduced in 2005 and 2006, at a time when financial institutions were increasing their loan loss reserves. We can also see that, although economic activity slowed down significantly in 2009 and thus loan growth was also slow, the financial system was able to remain profitable. Furthermore, in 2010 the ROE grew significantly, as a consequence of the strong economic recovery experienced.

Seven Years Later The recent performance of the DR’s financial sector clearly shows just how important it is for an economy to have a strong and stable financial system. The crisis of 2003-2004 was the worst in decades and this was mainly due to the weakness of some banks and of financial regulation. Nonetheless, the financial system has been transformed by strengthened supervisory capacity and regulation. Thanks to these advancements, the economy was able to successfully navigate a complicated international crisis that severely impacted growth in 2008 and 2009.

n the past ten years, the Dominican Republic has emerged in the international investment community as a country characterized by political and economic stability. White sandy beaches are no longer this countryâ&#x20AC;&#x2122;s only attraction, as massive infrastructure development programs, a steadily growing local economy and a democratic government that welcomes foreign dollars have attracted sophisticated investors from around the globe. As the economy progresses, the number of transactions with foreign investors continues to increase. These range from major investments in industries such as mining, construction, telecommunications, free zone manufacturing, agriculture, biotechnology and software development to mergers and acquisitions of local companies by international investors. Because it is a growing and dynamic economy, corporate and investment banking plays a huge role in its development. The demand for capital and human investment is mainly fueled by the increased need for infrastructure for rural or urban mining, transportation and telecommunications, the globalization of product markets and other uses. Corporate and investment banking comprises all of the banking services that cater to medium to large private entities and governments and are required for their operations. These services are tailored to the needs of the customers, and are also flexible and personalized. Corporate and investment banking in Dominican Republic offers a wide range of products to its clients; whether it is basic services such as local capital markets, foreign exchange, cash management, and international trade services, or more tailored solutions such as project finance, hedging strategies and structured investment alternatives. By providing economic resources to clients to finance expansion projects or for working capital, clients are able to grow their businesses, increase capacity, meet payrolls, and respond to their changing customer needs. Other corporate and investment banking services offered selectively in the Dominican Republic include consulting on mergers and acquisitions and access to international capital markets. The Dominican banking industry is dominated by five local banks and two international banks. The international banks in the country are Scotiabank and Citibank. There are other international players that cover the

market, although they do not have a presence in the country. The total corporate and investment banking market size, in terms of assets in the sector, is estimated at US$6.9 billion as of June 2011. Citi Dominican Republic has channeled more than US$15,260 million to its clients destined for expansion, infrastructure, acquisitions and new developments, and it is the only global investment bank with a presence in Dominican Republic. Corporate and investment banking services in the Dominican Republic provide a number of advantages. They promote competition among all of the financial institutions in the country, resulting in a higher level of service and better choice for investors as well as more competitive terms. In addition, corporate and investment banks are increasingly benefiting from a better trained, specialized labor force, which continues to be one of the most accessible in the world. Finally, investors benefit from accessing local and foreign capital. The sector does face some challenges in the Dominican Republic. One of the most notable is the limited supply of fixed rate local funds available for long-term transactions. This limits the ability of investors to finance in local currency big projects that require a longer repayment term.

By issuing 10-year fixed rate local currency paper in 2010, the Sovereign demonstrates that the market is increasingly trying to push the local rate curve, which should eventually translate into availability of long-term fixed-rate funds in the domestic market. Furthermore, as the local pension fund system continues to develop, there will be even more funds available for longer-term transactions. The Dominican Republic is definitely a fast-growing economy that is sure to overcome the aforementioned challenges. The increase in foreign investment in the past ten years shows that challenges have been overcome and investing opportunities will continue to be attractive for global investors.

MĂĄximo Vidal City Country Officer

Corporate & investment banking The DRâ&#x20AC;&#x2122;s political and economic stability over the last decade has appealed to global investors, resulting in much higher FDI figures in the last decade and more sophisticated Dominican financial instruments As the only global investment bank present in the Dominican marketplace, Citi analyzes the money market situation, pointing out challenges including the limited supply of fixed rate local funds available for long-term transactions

he Dominican banking system offers a uniquely favorable climate compared to many other markets around the world. Banks in the Dominican Republic are extremely well capitalized, exceeding the recommended 10 percent Bank for International Settlements (BIS) standard of Tier 1 capital by 30 percent on average and displaying system-wide credit delinquency ratios approaching world-class levels, of only 3.7 percent and dropping. Dominican financial institutions are fully integrated into global banking systems through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and maintain solid relationships with banks in financial centers around the world. Further, the Dominican banking system is supported by a robust technological infrastructure; debit and credit cards are accepted at over 21,000 points of sale and 1900 ATMs. American Express, Visa and MasterCard have over 1.8 million credit cards and 4.2 million debit cards in circulation. Many factors contribute to the Dominican Republic’s status as a Caribbean oasis in the worldwide financial services sector. For example: • Macro-economic stability. This is due in part to the Central Bank’s commitment to ensure dollar and peso convertibility. Deposit accounts are available in US dollars, euros and pesos, and foreign exchange controls are minimal. • Strong regulatory controls. The Dominican Republic’s Superintendence of Banks focuses on the same enterprise risk management issues that other banks are facing around the world with an emphasis on operational, credit and market risks. The Superintendent’s practices are reviewed with the International Monetary Fund and the World Bank and discussed with regulators from across the Americas and Spain. All key anti-money laundering compliance is monitored without exception. • Transparency. Financial performance data and statistical information is available online and updated monthly. In October 2010, new financial indicators were made available by the Central Bank and the Superintendent of Banks, providing additional data for bank-specific and system-wide analytics. • High-quality, resilient balance sheets in domestic banks. This is due in part to their restructuring and focus since the domestic crisis in 2003.

New financial services The Dominican banking sector has a diversified structure of financial institutions, with well-capitalized banks, fully integrated into global banking systems With a robust technological infrastructure, the use of debit and credit cards is widespread throughout the country

• Development of domestic capital markets with domestic debt issuance. These have been developed in pesos and in US dollars by top local corporations. The Dominican Republic financial services sector provides access to many types of financial institutions, including: • Bancos Multiples (commercial banks). These offer a complete line of transactional, savings and investment products, in both local and foreign currency. • Bancos de Ahorro y Crédito (savings and loan institutions). These offer a slightly more limited product line that does not include checking accounts or deposits and loans in foreign currency. These banks can get funding from financial institutions in both local and foreign currency. • Asociaciones de Ahorro y Préstamo (savings and loan associations). These offer a product line similar to Bancos de Ahorro y Crédito. • Corporaciones de Crédito (credit corporations). These offer certificates of deposit in local currency only; no checking or savings accounts are available. These institutions can get funds from other financial institutions in local currency only. • Agentes de Cambio y Remesadoras (exchange and remittance agents). Under this charter, these institutions’ main activities are foreign exchange and international money transfer. • Cooperativas (co-ops). These institutions are not currently regulated by the Monetary Law and offer a line of products similar to Bancos de Ahorro y Crédito. Banco del Progreso in particular is a mainstay of the Dominican banking system. With almost 40 years of operational experience, the bank has regained momentum

Mark Silverman President of Banco del Progreso following a recapitalization in 2006 with an injection of over US $400 million, and now enjoys formidable growth and profitability. The bank is the fifth largest private bank by total assets in the Dominican Republic. It focuses on building lasting partnerships with our retail customers, small and mid-sized companies and continuously outpaces competitors by consistently exceeding customer expectations. It is also rated one of the best firms to work for in the Dominican Republic. With over 300,000 customers, 56 branches, national coverage and more than 200 experienced business associates, Banco del Progreso is uniquely positioned to effectively serve the financial needs of its consumer, commercial and corporate customers. In addition to offering a full line of financial products, Banco del Progreso draws from considerable expertise in international trade, investment advisory services and a world-class technology platform. It also offers comprehensive online banking. Banco del Progreso also benefits from an exclusive relationship with American Express, whose cardholders enjoy the same highest levels of quality, service and benefits as their counterparts worldwide.

The Dominican Stock Exchange The Dominican bond market has grown rapidly in the last decade, although the national marketplace is mostly controlled by family-owned businesses unaccustomed to market financing With exponential growth in trading volume and financial sector activities, the Dominican Stock exchange offers long-term capital investment where international investors may diversify their portfolio for as little as US$100.00 in dollar issues

Darys Estrella Mordan CEO of the Dominican Stock Exchange

he Dominican Republic Stock Exchange (BVRD) was created in 1988 as a means of diversifying the Dominican financial sector. It was formed by a group of Dominican businessmen and economists with a feasibility study developed by Robert Bishop, VP of the New York Stock Exchange. It is the only stock exchange in the Dominican Republic, basically performing a transaction regulation function. It began operations in 1991 and is considered a cornerstone of both domestic development and the country’s integration into the global economy. Since its inception, the BVRD has been striving to achieve two main objectives: the development of a stock market culture in the country and the institutional development of the BVRD. In the last few years, we

have been adding new drivers to deepen and diversify the types of instruments that will trade in our market as well as integrating ourselves with other exchanges. The Dominican market is still relatively new, and the concept of both an equity and capital market is just gaining recognition. Convincing the main players of the benefits of the capital markets has been a long process. These companies, which are potential issuers, are gaining confidence that capital markets are an alternative way to finance themselves, and investors are coming to realize that investing through the BVRD is an easy, safe and transparent process. There have been many developments in the capital markets in the last 10 years, not just for the BVRD but for the financial market as a whole. In the year 2000, Capital Markets Law 19-00 came into effect, setting new regulations and requiring compliance by all market participants. This, of course, created a more transparent and safe environment for investors. Up until 2006, only about six companies were “listed” with bonds in the BVRD. Today that number has increased to 25, with 24 different issues. Previously, companies were also limited to issuing commercial paper. Today, there is a curve up to ten years. This is a win-win situation for everyone since companies can finance themselves with long-term capital and investors can diversify their portfolio. In addition, previously the minimum investment was RD$700,0000. Today, that amount is only RD$1,000 or US$100.00 for US dollar issues, which has boosted the retail market. The exchange has enjoyed exponential growth in trading volume and financial sector activities. Investors have been impressed with both the professionalism and the phenomenal growth evident in the last few years. More and more companies are realizing the benefits of capital markets. We hope to close 2011 with approximately 25 different issuers with bonds through the BVRD. Many investors have become aware of the returns offered in the DR and their confidence has helped the exchange reach new record trading volume. It is important to note that, under the Dominican Stock Market Law, income from profits generated by fixed income instruments and dividends received from investments are exempted from taxation for local or foreign individuals.

CURRENT OFFERS IN THE DOMINICAN MARKET ISSUERS TYPE OF INSTRUMENT

MINIMUM RATE INVESTMENT

INTEREST PAYMENT

MATURITY DATE

RATING

Asociación La Vega Real de AyP

Corporate Bonds

RD$100.000

9.93% y 10.18% Floating

Monthly

2015/2016

A-(dom)

Banco ADEMI

Corporate Bonds

RD$100.000

10.18% Floating

Monthly

2013

BBB(dom)

Banco ADOPEM

Subordinate Debt

RD$10.000

9.73%/10.01/10.57% Floating

Quarterly

2011,12 & 13

A(dom)

Banco Centroamericano de Integración Economica

Bonds

RD$10.000

12% Fixed

Semi-annual

10/12/14

AAA(dom)

Banco Múltiple León

Subordinate Debt

RD$100.000

10.54%/10.23%/10.18% Floating

Quarterly

2015

BBB+(dom)

Banco Nacional de la Vivienda

Mortgage Letters

RD$100.000

8.68%/9.15%/9.58% Floating

Monthly

2016 & 17

AA-(dom)

Banco Nacional de la Vivienda

Corporate Bonds

RD$10.000

7.82%/9.43% Floating

Quarterly

2014

A/AA-(dom)

Banco Popular Dominicano

Subordinate Debt

RD$1.000.000

8.29% Floating

Monthly

2017

A+/A(dom)

BHD Valores Puesto de Bolsa

Ordinary Bonds

RD$10.000

8.75% - 11% Fixed

Mon/Quart/Sem

2011,12,13

AA-(dom)

Capcana

Corporate Bonds

USD 1.000

9% Fixed

Quarterly

2013

B-(dom)

Cervecería Nacional Dominicana

Corporate Bonds

RD$100.000

9.43% Floating/15% Fixed

Quarterly

2013

A+(dom)

Cervecería Nacional Dominicana

Corporate Bonds

USD 10.000

5.5% Fixed

Quarterly

2015

AA+/A+(dom)

Cervecería Nacional Dominicana

Corporate Bonds

RD$100.000

12% Fixed

Quarterly

2015

AA++/A+(dom)

Compañía de Electricidad de Puerto Plata

Corporate Bonds

USD 5.000

7.75% Fixed

Monthly

20.132.014

A-(dom)

Consorcio Energético Punta Cana Macao

Corporate Bonds

USD 1.000

6.25% / 6.75 / 7% Fixed

Monthly

2015,17

AAA/AA(dom)

Corporación Delta Intur

Corporate Bonds

RD$10.000

11.45%/12.45%/13.45% Floating

Monthly

2012

CCC(dom)

EGE Haina

Corporate Bonds

USD 1.000

7%/8.75%/7.75 Fixed

Monthly

2012,16

A-(dom)

INCA

Ordinary Bonds

RD$10.000

10.19% Floating

Monthly

2015

A(dom)

INCA

Corporate Bonds

USD 1.000

6.5%/6.75 Fixed

Monthly

2011

A(dom)

ITABO

Corporate Bonds

USD 1.000

7.5% Fixed

Monthly

2013

A-(dom)

Motor Crédito

BBB+(dom)

Multiquimica Dominicana

Parallax Valores

Valores Leon

Ordinary Bonds

RD$300.000.000

10.43% Var.10.75%/12.5% Fixed

Quarterly

2012

Corporate Bonds

RD$180.000

10.94% Floating

Quarterly

2014

BBB(dom)

Ordinary Bonds

RD$10.000

8.5% /9.5%/10.5% Fixed

Mon/semi-annual

2011,12 & 13

BBB-(dom)

Corporate Bonds

RD$10.000

10.5/11.25/ 11.5/12/13/13.5% Fixed

Monthly

2013/14/15/16

BBB+(dom)

ORDER OF QUALIFICATION: AAA, AA, A, BBB, BB, B, CCC, CC, CC, D TRANSMITTERS 20 / EMISIONS 24

Since 2007, trading volume has increased exponentially and the secondary market continues to increase every year. In January 2009, the clearing agent Cevaldom implemented delivery versus payment and it is now operating under the highest international standards. The creation of a Pension Fund System has contributed to the development of the markets since these funds increase exponentially every year and today have RD$145 billion under management.

Currently, 12 brokerage firms are active in the country. In order to operate in the market they have to be registered with the Superintendency of Values, the government regulatory body in the DR.

At the moment 25 institutions are listed on the BVRD and a few more are in the process of being approved or issuing their public offering. In 2010, the total volume operated through the BVRD was RD$40,682,092,257.03.

The Dominican Republic’s macroeconomic environment looks positive. The country offers many opportunities in many sectors, including production, electricity, and services. Another advantage of investing in the DR is that foreign investors receive the same treatment as nationals. There are no capital gains controls.

The total volume for the first six months of 2011 (RD $ 51 billions – US $ 1.34) is already 27% higher than the entire volume of 2010. Hopefully by the end of the year the Dominican Stock Exchange will set a record of around RD $ 70,000,000,000.00 negotiated (US $ 2.36 billions).

Many investors look for stability and diversification, coupled with good returns, especially in these uncertain times. Some emerging markets now offer these components, and the Dominican Republic is definitely among them.

The BVRD is also forging electronic links with some other exchanges, such as the Panamanian Stock Exchange, so investors can truly have access to the world markets from Santo Domingo. Other Caribbean

stock exchanges partner to give buyers the possibility of online common trading. We hope to join AMERCA, which is the integration of of all of the exchanges in Central America and the DR – Costa Rica, Panama and El Salvador having already signed MOUs. Once it is up and running, we will be invited to join the Alliance, in which every exchange will have access to the other exchanges. A broker in the DR will be able to offer a Panamanian bond or a Costa Rican equity to local investors and companies will be able to trade their instruments in all the different exchanges. A regional stock exchange will help integrate the Caribbean and Central American economies and provide a great opportunity for all our small markets and everyone involved. This integration will provide investors with much more diversification and liquidity. Companies will be able to be listed in any of the exchanges, which will help the markets to continue to develop. The future is here, and the BVRD is ensuring the Dominican Republic stays right on track with the global economy.

hat are the main factors that have protected the Dominican economy in the current recession, and how has the insurance sector fared? The crisis of 2003 protected us from the global financial crisis, due to the subsequent creation of regulations and the capitalization of the domestic banking sector. The 2008 crisis has not negatively affected the DR’s financial sector. The insurance sector’s sales depend on the automobile, transport and export markets and these have shrunk, in contrast with the property market, which has remained stable. In times of crisis people tend to get more insurance. According to the Superintendent of Insurance, the sector grew by 8% in 2009, which reveals how stable the economy has remained.

Eng. Ernesto Izquierdo President Seguros Universal

In 2002 the new insurance law was created, based on self-regulation, establishing a series of solvency and liquidity margins. The new law has helped strengthen and capitalize the sector, and it experienced a very reasonable rate of growth. Investment guarantees have been extended, as they protect against cross-investments and ensure that the insurer’s investment portfolio is controlled and diversified. The financial sector’s development has favored the insurance sector. Every bank that lends money needs a guarantee that the property is insured. In the tourist sector, Dominican insurance law obliges international investors to sign domestic policies that offer the multinationals quality and equity on a par with that of their country of origin. Recent catastrophes like the Haitian earthquake in January 2010 have demonstrated the need for extra protection against natural disasters in the region. How does this impact the Dominican insurance sector? The DR is exposed to catastrophic phenomena and for this reason it is essential to insure property and infrastructure. The premium for a property in the DR is higher than in other destinations that are not exposed to natural disasters. Until Hurricane David in 1979, people did not believe in insurance. The insurance sector’s response to that disaster was excellent and this encouraged growth in the sector. The first experience of this kind for foreign investors in the country was Hurricane Georges in 1998, at a time when the large international hotel investments were insured with domestic companies. They were paid back in just three months and all the hotels reopened quickly. The speed of

The Dominican insurance market A direct reflection of the strengthening and capitalization of the Dominican financial sector and the higher FDI levels is the maturity of the insurance sector. By law, international investors must obtain domestic policies Prime insurance coverage is a must in the DR due to the country’s direct exposure to natural phenomena, and at times of national emergency the Dominican insurance sector has proven to be highly effective

response was impressive and generated a lot of confidence. At a corporate level there is a lot of awareness and the percentage of insured businesses is very high. Health insurance has grown at an enormous rate, but there is still a lot of room for penetration when it comes to personal insurance. In 1963, Seguros Universal was founded – the first Dominican insurance company. Currently the sector is largely made up of Dominican capital. Why do you think this is the case? Many foreign companies lost interest in the country after the currency devaluation. But the country’s macro-economic stability has brought a sense of calm to investors. There are about 30 insurers in the DR and a lot of market concentration. The more insurers there are, the greater the possibilities for strong competition. This concentration, in one way or another, contributes to market stability and the existence of strong companies that attract investor interest. In many cases the domestic companies act as intermediaries with re-insurers. This value, combined with international certification, provides the sector with confidence and prestige. Do you expect more associations like BHD (a Dominican financial holding company) with MAPFRE (an international insurance group based in Spain), or an association of national insurance consortia with foreign insurance consortia, or do you think that foreign investments will come to the country autonomously? There will be many relationships and possible associations and lots of purchases of domestic companies by external insurers. The best way to interact is through partnerships, whether strategic or share-based, with companies from other countries. The opening up of the market will cultivate interest from foreign companies. The DR is an attractive country because its premium volume is attractive. The current obstacle to life insurance is the tax burden. Sooner or later the Dominican government will have to understand that a fiscal sacrifice is needed in the area of life insurance, so that the domestic insurers can enter this market and compete on equal terms with any country in the world. What are your expectations for the Dominican insurance sector in this new decade? This decade offers plenty of opportunity. The secret lies in innovation, and this is an innovative country.

Telecommunications in the DR: a success story With 17% of the GDP, the telecommunications sector in the DR has become one of the country´s main assets and a magnet for international investors Its rapid internet penetration and 100% teledensity link an impressive telecommunications infrastructure soon to be further developed with a new cable network, in order to secure future capacity for continued growth in bandwidth demand

In the area of foreign direct investment (FDI), the DR has shown continuous growth since 2003. In 2008, the country received US$2.9 billion, more than tripling the amount received in 2004, for an average growth in investment of 20%. Investment in telecommunications represents 10% of total FDI.

Jose Alfredo Rizek Partner, Medina & Rizek Abogados

71 Telecommunications in the DR: A success story Jose Alfredo Rizek Partner Medina & Rizek Abogados 74 Real time connectivity to the world Rodolfo Garcia President, Latin America, Terremark Worldwide Inc. 76 Telecommunications and competitiveness in the DR Oscar Peña President of CLARO in the DR 77 Innovation and modernity President Orange Dominicana

mazing! That is the only word that comes to mind in describing the evolution of the Dominican telecommunications market. The sector has been the most dynamic in the country for over ten years, with sustained growth fueled by significant inflows of foreign investment. This remarkable success is best reflected in the sector’s participation in GDP, a proportion that has increased fivefold from 3.4% in 1998 to over 17% in 2009, setting the DR quite apart from other countries in Latin America in this respect. The DR as a whole has also enjoyed some of the best economic performance in the region. The 2010 GDP surpassed US$53 billion, up from US$33 billion in less than 3 years. During 2010, amid times of international economic woe, the economy grew 7.8%. The country has also enjoyed remarkable macroeconomic stability in the past five years, with an average inflation rate of 6% and average annual depreciation of the peso (DOP) to the US dollar (USD) of just 1%.

The DR enjoys an ideal geographical location for the communications industry. Its position has facilitated the development of a redundant international network, providing connectivity through major submarine cables like ARCOS-1, Antillas-1, Fibralink Jamaica, and most recently, the East-West system. The government continues to actively courting investors to develop new cable networks, in order to secure future capacity for continued growth in bandwidth demand, including a direct link between the Dominican Republic and Haiti. Along these lines, the DR has witnessed the emergence of clusters of Call Centers and Data Centers that are closely linked to the quality of its telecommunications infrastructure and the caliber of its workforce. Market Overview Currently, the market is comprised of: ten operators of long distance services, four mobile operators and, thanks to the use of broadband wireless technologies, four additional providers offering fixed telephony. It will be no surprise if this number continues to grow, along with the number of Broadband Internet access providers, now eight (accessible via DSL, cable modem, WiMax, 3G).

Fixed and Mobile Telephony During the 2004–2011 period, the number of total telephone lines (fixed and mobile) went from 3.4 million to over 9.9 million in the DR, demonstrating explosive growth in the sector. More than a million lines a year have been added over the last five years. This has led to an increase in teledensity from 37.8% in 2004 to 105%. This notable proliferation of telephone services is due to a boom in mobile networks, which increased penetration at an average rate of 21% during the halfdecade. Meanwhile, the number of fixed lines has remained static, at about 11 per 100 inhabitants. In 2004, there were only 2.5 million mobile subscribers in the DR; this number increased to 9.9 million by April 2011. There are four providers serving this market nationally (Claro, Orange, Tricom and Viva); three of them use GSM technology, the other uses CDMA. It’s important to note that the growth in this segment could not have taken place without a fully liberalized market and a robust economy that shows great potential for business development and product offerings. Internet Protocol (IP) telephony is also widely available in the Dominican market, as it receives the same regulatory treatment as traditional telephone service. Initial reports show that there are over 80,000 IP telephone and virtual line accounts. Its potential as a tool for competing in larger markets is undeniable, so additional growth can be expected. Internet Like mobile services, Internet access has experienced rapid and steady growth in the DR. The number of subscribers has almost quadrupled to 650,000 since 2004, and the number of Internet users has jumped from 9.2% to 42.9% during the same timeframe, with over 90% now using a broadband connection, whether through ADSL, cable modem or mobile Internet. This stunning growth has attracted investments in new areas, like the soon to be opened state-of-the-art NAP del Caribe, a DR-based extension of Terremark’s NAP of The Americas in Miami. This facility

will not only serve as a landing station for new undersea cables, but will also foster the creation of ISPs and improve the exchange of Internet traffic through efficient peering arrangements. Paid TV Cable TV came to the DR in the early 1980s in Santo Domingo. Today, this service has expanded through not just coaxial cable networks, but also Hybrid Fiber/ Coax (HFC) architecture, satellite, Multichannel Multipoint Distribution System (MMDS), and fiber. Recently, Claro-Codetel launched an Internet Protocol Television (IPTV) offering to homes and mobile subscribers. CATV is available nationwide and has been traditionally provided by local or regional operators with a high degree of penetration. Legal and Regulatory Framework The success of the Dominican telecommunications sector is primarily owed

to a push for comprehensive reform in the late 1990s that culminated in 1998 with the enactment of the General Telecommunications Law (Law No. 153-98). Through this instrument, the country fully embraced the liberalization of the market, and created a road map for its future expansion. This meant promoting a fair and sustainable competitive regime, improved administration of scarce resources such as radio frequencies, the expansion of the Universal Service concept, and a guarantee of consumer’s’ rights.

ency and dispute-resolution processes, and in 2009 facilitated the successful implementation of number portability for both fixed and mobile services.

In line with agreements with the World Trade Organization, the Dominican telecommunications market operates according to the principles of pricing freedom and mandatory interconnection and has a technology-neutral approach when regulating. Obligations under the Central America-Dominican RepublicUnited States Free Trade Agreement (CAFTA-DR) strengthen the transpar-

This ex-post regulatory approach reduces interference in the business plans of the companies participating in the sector. Operators preserve control over pricing for their services and infrastructure deployment and can freely negotiate interconnection agreements and prices.

COMMUNICATIONS CONTRIBUTION TO GDP (2008) Venezuela

4.85 %

Uruguay

4,41 %

Dominican Republic

15,61 %

Peru

3,50 %

Panama

6,90 %

Mexico

3,50 %

El Salvador

2,77 %

Colombia

3,92 %

Chile

2,22 % 0,00%

05,00 %

10,00%

15,00%

20,00%

The day-to-day regulation and supervision of the telecommunications market is entrusted to the Dominican Institute of Telecommunications (Indotel), formed in 1999, which handles all licensing and rule-making processes and also intervenes to correct market deficiencies and conflicts between operators.

In essence, this means that the marketbased conditions essential for companies’ free entry and exit have been established in the DR, which is obviously quite fundamental for the success of a competitive market. More recently, Indotel has been engaged in a major overhaul of its rules and regulations, in an effort to simplify licensing procedures, make spectrum available for the deployment of new services and technologies, create a more flexible and modern interconnection regime - including the establishment of capacity charges and the possibility of IP interconnection; and the adoption of a technical standard for digital conversion of TV signals.

ince the advent of the Internet, Telecommunications and Information services have become one of the leading business sectors to drive growth for economies around the world. Companies and governments across the globe have been forced to remain on the cutting edge of technological advancements in order to attract and retain customers and investment. In the Dominican Republic, for the last couple of decades the country’s government has made a concerted effort to support the development and growth of competitive telecommunications and information technology sectors in order to help spur growth throughout the nation’s economy.

Rodolfo Garcia President, Latin America, Terremark Worldwide Inc.

Real time connectivity to the world Understanding the importance of information technology as an engine for developing economies, the DR is prioritizing technology development so it can play a role in the global market of IT solutions With one of the best telecom infrastructures in the Caribbean, the country is now positioning itself 15 years ahead of its peers in terms of connectivity with the creation of the NAP of the Americas

Terremark Worldwide Inc. is a U.S based leading global provider of IT infrastructure services delivered on the industry’s most robust and advanced technology platform. Leveraging specialized centers in the United States, Europe and Latin America with access to massive and diverse network connectivity, Terremark delivers government and enterprise customers a comprehensive suite of managed solutions including neutral connectivity, managed hosting, collocation, disaster recovery, security, data storage and cloud computing services. Within Latin America, Terremark operates the Network Access Point (NAP) do Brazil in Sao Paulo and the NAP de las Americas – Colombia in Bogota, which are the largest Internet Exchanges in their respective countries. Terremark’s complete set of services are delivered from purpose-built datacenters like the company’s flagship facility, the Network Access Point (NAP) of the Americas in Miami, FL, and the NAP del Caribe in Santo Domingo. A NAP (Network Access Point) operates like a large international airport allowing the exchange of traffic, packages of information, instead of passengers and freight, at a specialized purposed built neutral facility where telecommunications companies meet at a zero distance. The NAP, because of its sophisticated design and guaranteed continuous operation becomes an ideal location for housing the most critical IT infrastructure of any entity that uses or manages data, be they financial institutions, government, industry, commercial entities, health-related activities, etc. Nowadays it would be rare to find a major sector in any country that doesn’t use data. Terremark’s NAP of the Americas® is one of the most significant Information Technology Infrastructure projects in the world.

The facility was the first purpose-built, carrier-neutral Network Access Point and is the only facility of its kind specifically designed to link Latin America with the rest of the world. The NAP of the Americas is located in downtown Miami, an area that has numerous telecommunications carrier facilities, fiber loops, international cable landings and multiple power grids. The convergence of telecommunications infrastructure is why global carriers, ISPs and other Internet-related businesses, educational institutions, and enterprises have chosen to become Terremark clients. Switching the majority of South America, Central America and the Caribbean’s traffic bound to more than 148 countries in the world, makes the NAP of the Americas the unrivaled gateway to the Americas. Directly connected to the NAP of the Americas in Miami, the NAP del Caribe is the first carrier-neutral Internet Exchange in the Caribbean. Through a unique business model for the operation of Internet Exchanges, TerremarkNap del Caribe leverages the datacenter to act as a vendor-neutral physical and logical interconnection point to create a “virtual marketplace” for telecommunications carriers; IT service providers; and public and private sector enterprises. The NAP del Caribe has become a magnet for attracting a wide array of entities, including private enterprises, public-sector entities and academic institutions that wish to share a common physical and commercial platform. The NAP del Caribe forms the carrier-neutral hub for all major local, regional and international communications networks in the Dominican Republic. The NAP del Caribe is also interconnected optically to the Terremark Network to fully leverage all the massive connectivity already present in Terremark’s global network of Internet Exchanges and Network Aggregation Hubs. NAP del Caribe’s, expansion phase will be housed in the most advanced, custom-designed technology facility in the region featuring service levels of exceeding 99.99% for power and air conditioning services. It will be linked via diverse fiber routes and enjoy state-of-the-art physical and logical security. The facility is being equipped with a next-generation Network Operations Center (NOC), which will be fully staffed with highly skilled local and international IT professionals. It will have an additional level of supervision provided by the NAP of the Americas NOC.

Additionally, the development of the NAP del Caribe in Santo Domingo has generated a number of ancillary benefits to the local and national economy, as NAPs around the globe have historically received a tremendous amount of public, private and academic sector support. The NAPs serve as engines of development and growth, especially in markets that are in the development mode. In the Dominican Republic, the NAP del Caribe is expected to serve as a significant stimulus to the country’s economy by attracting high technology multinational corporations. The NAP del Caribe will serve to enhance the regional and International exchange of Internet traffic in the Caribbean region. Additionally, the NAP del Caribe will trigger technology development in the Dominican Republic to prepare the country to participate in the global market for IT solution services. The deployment of the NAP del Caribe with its business model based on neutrality will also serve as the catalyst for the further development and construction of regional fiber optic systems. The NAP del Caribe will serve as the focal point for these new systems, as they are designed and implemented, with the increase in connectivity serving to promote greater consumer Internet access and support for government e-initiatives. Terremark will contribute its know-how, experience and technology to further develop the NAP del Caribe. It will be modeled after The NAP of the Americas®, one of the largest Internet Exchanges in the world and the first one specifically designed for traffic handoff between continents. The NAP del Caribe second phase will be built to prevent operational interruptions during Category-5 hurricanes and other disasters. Additionally the mechanical and power infrastructures are being designed and built without single points of failures that will allow for best service level commitments in the industry. NAP del Caribe security systems are constructed using best in class technology and procedures to ensure the highest level of physical and logistical security.

The NAP del Caribe is helping the Dominican Republic move the country towards an information economy. The Dominican Republic Government, recognizing that the promotion of technology is vital to the country’s social and economic development, has decided to take a leadership role in the information and knowledge society by providing the NAP del Caribe with priority public services such as electricity, water and security at Cyber Park, home of the NAP del Caribe. Also understanding the benefits that the NAP del Caribe has to offer in the areas of neutrality, security, connectivity and redundancy, the Dominican Republic Government is promoting the migration of the IT infrastructure of its government entities to the NAP del Caribe as part of their future modernization plans in the area of technology. With the migration of their IT infrastructure to the NAP, the Dominican Government is demonstrating its support for this project and is promoting the NAP del Caribe to private and public entities at a national and international level. Through its relationship with Terremark, NAP del Caribe will offer Managed Services such as Cloud Computing, Advance Logical Security, Disaster Recovery and Business Continuity. These services can help local and international companies to build dedicated vertical networks such as Education, Government, and Healthcare Clouds that will contribute to the country’s economic and social development. With the NAP del Caribe, the Dominican Republic will provide foreign companies and interested investors with the most advanced Information Technology and telecommunications platform in Latin America. In addition, the country’s strategic location within the Caribbean makes it an ideal hub for the operations of enterprises and organizations looking to tap into the booming Latin American market.

Telecommunications and competitiveness in the DR

n today’s world, telecommunications is one of the primary foundations of a country’s potential for economic development. The Dominican Republic now enjoys a state-of-the-art telecommunications infrastructure supported by the latest technology available, thanks to the significant investments made by the Compañía Dominicana de Teléfonos over its 80 years of technological leadership in the country. A modern telecommunications network is a key factor in a nation’s economic growth, a vital requirement for the competitive strength required by globalization and emerging markets. Through constant innovation and investment, CLARO, the commercial masterbrand of the company, has been able to provide the infrastructure necessary to strengthen the DR’s position in the world marketplace. Because a well-developed telecommunications network attracts new business investment and facilitates efficient operation of the industrial sectors, it is virtually impossible for an industry to remain competitive without an up-to-date and efficient telecommunications system. In the Dominican Republic, CLARO has played a key role in solving the competitiveness issue, enabling entrepreneurs to concentrate on the core of their businesses. Our company has deployed an extensive underground fiber optic network throughout the country, providing security for business development through high-quality, efficient telecommunications and guaranteeing reliable service thanks to redundancy at the national and international levels. In addition, CLARO has the technological infrastructure (IP/MPLS, HSDPA+, ADSL2+, VDSL, Metro Ethernet and others) to offer high-speed connectivity services throughout the country, allowing companies to operate their global businesses and maintain their Internet presence with services similar to those of developed countries. One case in point is the growth of the Dominican Republic’s financial sector – an industry dependent on a range of online services and processes – which would not have been possible without this robust telecommunications network. Likewise, gov-

A modern telecommunications network constitutes a key factor for a country’s economic growth and the DR enjoys a state-of-the art infrastructure of the highest technological standards The 2006 acquisition of Codetel (Compañía Dominicana de Teléfonos) by the Latin American giant America Movil for over US$ 2.062 billion, tops the sector FDI investments

Innovation and modernity Ten years ago, the global telecom leader chose the DR as its first Latin American venture

Up-to-date Orange Dominicana, the country’s first largest mobile operator, has been partially responsible for the DR’s virtual 100% teledensity

ernment agencies are successfully utilizing these networks to provide services to citizens online, resulting in savings of both time and transportation costs. One of CLARO’s many advantages in the market has been the vision and ability to use its powerful HSPA+ network to continuously provide innovative and latest generation technology, through services like high-speed broadband via mobile networks, video calls, TV on mobile phones and the resources for customers to transmit voice and data over the mobile network in real time, thus setting the technological standard in the market. The Dominican Republic has reached a technological level in fixed-line and mobile networks equivalent to the highest international standards, allowing customers to access services as innovative as Layer 3 Networks for data transport, videoconference and TV through mobile equipment (one of the first countries in Latin America to offer the service) or the cable television service of its fixed-line data network. The DR is also at the forefront of providing navigation services on the Internet platform. The tremendous progress of information and communications technologies in the country has served as a fundamental platform for a large number of companies offering their worldwide services from the Dominican Republic through call centers. And on the domestic front, more than 35 courier companies have emerged in recent years to support the transport and delivery of goods purchased through the telecommunications network. Although the International Telecommunication Union in its “Statistical Profile of the Information Society 2009 Report” stated that “Latin America and the Caribbean lag behind compared to other regions in terms of implementation of the IPTV (TV services over Internet Protocol),” the Dominican Republic has in fact offered the ser-

Oscar Peña President of CLARO in the DR vice by subscription since 2008, with exclusivity in the market and a multimedia software platform that measures up to the most demanding global markets and allows a personalized TV service with unique applications and interaction features, resulting in a superior entertainment and information experience. In the medium- to long-term, CLARO investors will continue to inject large amounts of capital to further develop the telecommunications sector, investments that will translate into the Dominican Republic’s increased competitiveness in the international market. The strength of the DR’s telecommunications sector will allow the country to remain at the forefront of technological advances and to continue developing in order to optimize customer satisfaction, fulfill shareholders´ expectations and fully comply with the country’s strategic objectives in today’s information society. This is the commitment of both CLARO as well as the Dominican Telecommunications Institute (Indotel), which regulates the sector. The Dominican Republic’s advancement in the telecommunications industry represents a competitive opportunity for all sectors of the economy, in particular those that rely on the ultramodern telecommunications offered exclusively by CLARO.

Jean Marc Harion President Orange Dominicana

he Dominican telecommunications industry is among the most advanced in Latin America. Thanks to increasing investment, telecommunications companies saw a growth rate of 69% between 2007 and 2009 and now contribute about 17.5% to the country’s GDP. Orange, a global mobile network operator, arrived in the DR at the end of 2000 and has since become a leading brand, revolutionizing the Dominican market. In 2000 only 10% of the Dominican population used mobile phones; today there is 92% market penetration. In 2010 Orange celebrated its tenth anniversary with more than three million customers and 1,300 employees, and was voted the number one telecommunications company in the DR by Mercado Magazine. The DR is also celebrating a milestone in telecommunications with the achievement of 100% teledensity, and Orange is proud to have played an important role in this success. In just ten years Orange has become known as an innovator, providing new ways of communicating and making life easier for its users. It was the first company to introduce the GSM network, which provides the greatest coverage

and strongest signal in the country – as recognized by a study validated by the Technological Institute of Santo Domingo (INTEC) for the third year running. Orange pioneered text messaging services (SMS), billing by the second, installation of solar panels to power its antennas, loyalty programs, downloading of online music, interactive shops and more, placing itself at the forefront of the new technology available in the Caribbean region. Orange’s investments exceed US$1 billion, totaling approximately US$200 million in the last year. It invests 80% of its budget in its networks and as a result now operates Orange Net 3G+, offering users a speed of 14.4 megabytes per second, the country’s fastest mobile Internet service, as well as the best GSM network. Thanks to Orange Net 3G+, by the end of 2010, 70% of the DR’s population had access to the fastest mobile Internet service in the country. Orange offers programs such as Orange Cinema, Orange Music and Orange Trends (for companies) that grant them exclusive benefits and provide a solid base for Orange’s support for culture, the arts and sports. The company also shows its commitment through social responsibility initiatives. The “Orange is Green” program promotes environmental protection through mobile phone recycling, solar energy use and other activities to reduce CO2 emissions. In 2009 we set up the Orange Foundation to help institutions that support education for special-needs and at-risk children and young people. Orange Dominicana is a branch of the Orange France Telecom group, one of the leading global telecommunications operators. The Orange Group offers communications, mobile, fixed, television and Internet services or business services to

more than 220 million customers worldwide in 220 countries. With 181,000 employees worldwide and €51 billion in revenues in 2009, the group is committed to innovation through 19 research and development centers, employing 4,000 researchers in nine countries. The Orange France Telecom group is the result of the acquisition by France Telecom of the British firm Orange, from which the group adopted its brand and values. Orange was founded in the United Kingdom in 1994, with the aim of becoming the number one option in mobile communications in a complex, technical and confused market. To achieve this, Orange set out to build a strong, refreshing, clear and distinctive identity, focusing on the benefits to its customers and communications that were simple and accessible to all. Innovations like simple monthly plans, transparent bills and direct customer relations services succeeded in changing attitudes toward mobile phones. Thanks to its innovative identity and friendly language, Orange captured the British public’s imagination: in just five years Orange took the lead in the domestic market and in 1999 the company started to expand at the international level. France Telecom’s acquisition of Orange in 2000 and their fusion accelerated the company’s international development, expanding its telecommunications services to the wider European market, Africa and the Caribbean. Today the Orange brand is valued at approximately US$14 billion. Everywhere Orange operates, the brand represents the same values, but tailored to each country’s needs. Thus, Dominicans both at home and abroad consider Orange a Dominican brand. In July 2010, the Orange group launched a new international business expansion plan, “Conquests 2015,” for reaching 300 million customers by the end of 2015, expanding to other markets in the world, and responsible and sustainable management. Orange Dominicana played a leading role in the definition and content of this new plan. In 2010 Orange celebrated ten years in the country with new product lines and services and projects for technological advances, in order to maintain its position as the country’s top telecommunications company, continue its innovative growth and consolidate its position as a leader in the Dominican Republic’s telecommunications industry.

he DR’s economy has been among the fastest growing in the world over the past few years and its infrastructure is now among the most modern and extensive in the Caribbean region. Covering about 48,000 square kilometers – two-thirds of the island of Hispaniola, which it shares with Haiti – the DR has seven international airports, eight seaports capable of hosting deep draft ships, one of the largest road and highway networks in the region proportional to its size, and impressive road infrastructure in both the capital, Santo Domingo, and Santiago, the country’s second city in size and importance, located in the prosperous Cibao region, in the heart of the country. The private sector has played an important role in the construction and modernization of DR´s infrastructure, while the government has been committed to working hand in hand with companies and local and international institutions to obtain results in the short, medium and long term.

Marco Cruz Caribbean Director Odebrecht

79 National infrastucture overview Marco Cruz Caribbean Director Odebrecht 81 Road infrastructure Armin Garcia President & CEO Boulevard Turistico del Atlantico, S.A. 82 World class infrastructure Andrew O´Brian General Director Aerodom 84 Port infrastructure and development Teddy Heinsen President of ET Heinsen & Dominican Shipping Association 87 The new face of Santo Domingo Lisandro Macarrulla President Sans Souci

In early 2008, the President inaugurated the first line of the Santo Domingo Metro, 14 kilometers long and constructed to the highest quality standards and based on state-of-the-art technology. The Metro’s beauty and efficiency are on a part with the most modern systems of its kind worldwide.

National infrastructure overview Infrastructure investment has been a key priority for the Dominican government The country boasts seven international airports, eight seaports for deep draft ships and one of the largest road and highway networks in the region

The Dominican government has issued an international tender for starting a second line for the Metro, to extend service and improve the public transport system in the capital, which has a population of some 2.5 million. The DR is the leading tourist destination in the Caribbean and Central America, with a tourist influx of four million visitors a year and world-class accommodations including 65,000 hotel rooms in tourist areas including La Romana, Bavaro and Punta Cana in the eastern region, Samana in the north east, Puerto Plata and other northern and northeastern regions and along the Atlantic Coast. The country’s road infrastructure links the capital with the rest of the country, with a network made up of the Duarte Highway in the north, the Sanchez Highway in the south and a wide, modern highway in the east. Just two years ago, a new road opened linking Santo Domingo with Samana and with main population centers in the northeast. Thanks to that new thoroughfare, the Dominican Republic now boasts one of the best road networks in the Caribbean region. Another notable addition to the DR’s road system is the Coral Highway, a modern four-lane highway crossing several bridges, on which construction began recently. Some 20,000 vehicles are expected to travel this thoroughfare every day, improving road access between the tourist enclaves of La Romana, Bayahibe, Punta Cana, Bavaro, Cap Cana, Macao and Uvero Alto – where about 60% of the country’s hotel rooms are located. Over the last few years, the face of the Dominican capital has undergone some striking changes, evolving into a true metropolis, with modern road construction projects that will ease vehicular traffic in the National District as well as in the province of Santo Domingo. A prime example is the construction of the Duarte Corridor, which will consist of six overpasses and road interchange systems that will ease transit for over 800,000 vehicles by linking the Duarte Highway with the Manoguayabo Road and Monumental Avenue, John F. Kennedy Avenue with Núñez de Caceres Avenue and Dr. Fernando A. Defillo Street, 27 de Febrero Avenue with Jose Ortega y Gasset Avenue, and Charles de Gaulle Avenue with the San Isidro Highway.

ne of the key elements of competitiveness and a country’s development is transportation networks and connectivity. A well-developed transport and communications infrastructure network is a prerequisite for the efficient functioning of markets and for export growth.

In the Dominican Republic, aside from the core airport facilities that assure tourism arrivals and the port system that brings merchandise in and out of the island, the road infrastructure is what supports the country´s development. One of the DR’s main assets is its tourism industry, concentrated in beach areas and the capital city, Santo Domingo, the first city of the Americas and the nation’s main business center. The main tourism areas of the country located in the east coast (Punta Cana, Uvero Alto) now stretch to the northeast region of the country (Samaná, Nagua, Rio San Juan), and the south (Barahona, Pedernales, Bahía de las Aguilas) is to be developed soon.

The DR Government has not only done an excellent job of stimulating the country’s development through the construction of new highways, hydroelectric plants, road interchange systems, and other infrastructure; it has also prioritized repair work on routes that had been neglected for many years and were in such poor condition that they were endangering the public and limiting transportation from one region to another. One example of this is the repair of the Casabito Road, which has eased road access to the city of Constanza in La Vega province. This project has far-ranging affects on the economy, because the Constanza Valley is the country’s main agricultural region, producing fruit, vegetables and flowers for both the domestic and international markets. In the area of hydroelectric power generation, there are several dams in the DR, including Tavera, the Jiguey-Aguacate complex, Monción, Hatillo, Sabaneta and Sabana Yegua – all built since 1970 with significant investments in several areas of the country. Together, these dams jointly supply 15% of the country’s electricity needs. In 2009 another modern hydroelectric plant went into service in Pinalito,

Constanza and Rio Blanco, in Monseñor Nouel province. Built by Odebrecht, this plant is considered one of the most modern of its kind in the Caribbean region, generating 130 Gwh per year. Two dams are currently being built: Palomino, in the province of San Juan de la Maguana, in the deep south, is in a late stage of construction and expected to go into service in mid-2011, generating 183.7 GWh/year. A country with energy is a country with a future, and building hydroelectric dams like Pinalito and Palomino helps the DR meet its goal of generating clean energy, protecting the environment and conserving the country’s natural resources. While the current administration has done an outstanding job of developing the Dominican economy in terms of transportation and energy infrastructure, technology and education have also played an important role in this modernization process. An important symbol of this was the opening of the Santo Domingo Cybernetic Park, which was conceived as an installation aimed at providing the facilities required by the country’s technology sector and thus positioning the Dominican Republic as a country that is suited to managing complex technologies. The Santo Domingo Cybernetic Park is emblematic of the DR’s commitment to keep pace with global technological developments.

Despite the global economic and international financial crisis, the Dominican Republic was able to avoid the difficulties that arose from a reduction of international credit and a global trade slump. The DR closed 2009 with an economic growth rate of 3.5% — one of the highest in the hemisphere, according to Dominican Republic Central Bank estimates. And prospects are very positive for the Dominican economy over the next few years. 2010 growth was 7.8%, way above the IMF estimates (5-5.5%), which makes 2011 a year of consolidation for many projects as well as an attractive juncture to embark on new investments, such as the second line of the Santo Domingo subway. Clearly, the Dominican Republic is a country where progress is the government’s driving force. The country’s success will always be a role model both for the region and the world at large, as long as the DR remains committed to excellence and efficiency. A country where projects are planned and executed in an efficient, cost-effective and up-to-date way and which always endeavors to meet the needs of the population is a country to believe in and a prime place to invest.

Armin Garcia President & CEO Boulevard Turistico del Atlantico, S.A.

Over a decade ago, the Dominican government decided to interconnect its tourism areas through ¨vial axes¨ or freeways linking the capital city to the east, the northeast and the southern regions, considering that with a sophisticated road network, the country could evolve from its current status as a beach and golf experience into a multidimensional vacation destination with ecotourism as well as historic & cultural dimensions. As a result, tourists could transit the DR by roads that would be modern, safe and excellently maintained. Taking into account that the linear distance between the capital and the east coast is only 180 km, to the northeast no longer than 120 km and to the south 150 km, the average driving time between Santo Domingo and these beautiful tourist areas is just two hours--on well built and maintained roads.

The state has assumed the financial risk of the project between the operation and maintenance phases (traffic risk). The project was financed in the international marketplace with a bond issue in February 2006 of US$162 million for the 144 norm to 20 years at a fixed rate of 9.39%.

To achieve this road infrastructure development challenge, the Dominican government has since granted concessions to some of the axes.

With this success, the Dominican government has granted the project promoters (Odinsa, Grodco and Remix) the authorization to execute the second phase of this important road system. This is the road network that will link users of the Santo Domingo – Cruce Rincon de Molinillos (Samana) highway to their final destinations on the northeast coast. Called Boulevard Turistico del Atlantico or BTA (Atlantic Tourism Boulevard), this new road will stretch 124 km, of which 99 are rehabilitation and 24 new constructions. The promoters are financing 100% of the project’s cost, and the state maintains the traffic risk even during operation and maintenance phases. The project has been financed with the support of four multilateral institutions (the Inter American Development Bank; the European Investment Bank; PROPARCO, which is the subsidiary of the French Development Agency dedicated to financing the private sector; and the CAF). It is the first infrastructure project in the Caribbean in which so many financial institutions are working together to provide funds to the private sector.

The first is the new highway Santo Domingo-Cruce de Rincón Molinillos (Samana), connecting the capital with the northeast coast via a 106km route. It has been developed by Autopistas del Nordeste C por A, its shareholders being the Colombian companies Grupo Odinsa and Grodco and the Dominican Consorcio Remix. The Dominican government has only provided 20% of construction expenses while the developers are covering the remaining 80% plus additional costs (financing and legal structuring, work supervision, hurricane and earthquake insurances, financial expenses), using a combination of its own resources and long-term financing.

Road Infrastructure In the last 10 years the government of the Dominican Republic has stepped up efforts to renovate and improve the nationwide road infrastructure With a relatively long history of offering concessions for private development of public facilities and services, in electricity generation, airports and port

Data collected from: CEI-RD, Central Bank of the Dominican Republic, Ministry of Public Works, CDEEE, EGEHID, Metro de Santo Domingo & Ministry of Tourism, DR1.com

terminals, in 2006 a general law on concessions was introduced to establish a universal set of procedures for concessions including road infrastructure

It was completed in the 27-month timeframe agreed in the concession contract and the highway was opened to public use in June 2008. It is the first such DR road infrastructure project of its kind to be completed within the agreed timing and budget, and it has contributed tremendously to tourism and real estate development in the Samana Peninsula. It has also had positive repercussions for agro industrial development in the east (Monte Plata).

These examples show how with a low initial investment from the state in the construction phase of main public works, it is possible in the DR to bring major projects to fruition in a way that is both cost efficient and on time, facilitating a substantial upgrade to the traditional public works scheme. A range of new road infrastructure developments will get underway following the completion of the Samana highway model, which will be inaugurating its second phase this year.

ast improvements in the Dominican Republic’s (“DR”) aeronautical infrastructure have boosted the number of visitors to the country, and have helped transform the DR into the Caribbean’s number one tourism destination and positioned the DR as an important business venue. Five of the country’s eight international airports and one domestic-only airport are managed by Aerodom, a DR-based company that has a 30-year concession with the Dominican government. Aerodom was acquired in 2008 by USA-based Advent International Global Private Equity. What drew Advent´s attention to the DR? The aviation industry has grown quickly and steadily in Latin America, especially where airport privatization has presented endless opportunities. Advent International, a leading global private equity company with offices in 17 countries and commercial partnerships in 6 others across four continents and headquarters in Boston, leapt at the opportunity to invest in the DR’s growing aviation market, and in 2008 acquired 100% of the shares of Aeropuertos Dominicanos Siglo XXI (Aerodom). What have Aerodom’s most important achievements been since the concession began? There have been many improvements to Aerodom’s airports, the most important being the refurbishment and reopening of Maria Montez International Airport in Barahona in 2000, the opening of La Isabela (Santo Domingo’s west side International Airport) in February 2006, the construction, and modernization of the new 4 fixed position North Terminal at Las Americas International Airport in Santo Domingo in September 2006, the construction of a completely new international airport in Samaná on the north-east coast in 2006 and the Las Americas taxiway reconstruction in August 2007 and runway reconstruction in February 2009. Another key advance was the completion of a new VIP lounge and general aviation terminal at the Las Americas International Airport in March, 2010. Aerodom’s investments have not been limited to airport infrastructure, however, but also include important “behind the scenes” overhauls in key areas such as technology. CUTE- iMuse check-in systems have been installed and upgraded to support the boarding process by making it faster and more efficient for

World class airports Due to its top-of-the-line aerial infrastructure, the Dominican Republic can become the nerve center of air traffic in the Caribbean Six of the DR’s nine international airports are managed by AERODOM, which has broad investment plans to improve the Las Americas International Airport and build a modern cargo terminal to promote exports

both passengers and airlines. Because meeting the highest standards of airport security is also of great importance to Aerodom, we have invested in modern X-ray screening machines as well as a CCTV system to constantly monitor our faciliation and customer service. It’s worth mentioning as an important achievement that excellent communication and cooperation with authorities and institutions in the sector have made us more competitive and efficient, in turn helping us to attract more business and foreign direct investment. Are the company´s immediate plans going strong? To date we have made significant investments, US$23.5 million, in important major infrastructure projects at the airports. Some of these projects have already developed and opened; for example, a brand new terminal offering facilities for executive aviation (FBO), a new aircraft hangar complex at the International Airport La Isabela, Dr. Joaquín Balaguer and also the runway and taxiway rehabilitation at Maria Montez International Airport in Barahona. We have already started up remodeling and expansion of the Gregorio Luperón International Airport in Puerto Plata. Façade remodeling operations, the overhaul of the airline counter area and of the South terminal of the Las Americas International Airport, Dr. Jose Peña Gómez, are all at a highly advanced stage of development this year.

Andrew O´Brian General Director Aerodom

What would you say are the most interesting opportunities for foreign companies wanting to invest in the airport service industry? Airports offer significant opportunities for business in and around their facilities and act as a stimulus to the economic development of local communities and the country at large. Investors can take advantage not just of aeronautical services themselves but also commercial ventures including retail, food and beverages, car rental, hotels and other spin-off opportunities that often are left unexplored. Along these lines, we are currently assessing the viability of developing an important and strategic cargo HUB at Las Americas International Airport in Santo Domingo that would take advantage of its proximity to the Dubai World Ports managed Caucedo port and free trade zones and also benefit from the area’s privileged location in the Caribbean. Airports throughout the region rely heavily on air and freight flows but generally fail to make the most of this important revenue stream. The Las Americas International Airport is a modern facility, and as such continues to upgrade and add value to the passenger experience by keeping an eye on new opportunities for improvement and investment. In terms of private aviation, VIP facilities are of the utmost importance to business executives and demanding customers. While private aviation is still a niche market with lots of room for development, what improvements are you looking into in this regard?

For this type of passenger, we have fully equipped VIP lounges at Puerto Plata and Samaná and at both of our international airports in Santo Domingo. In addition, we have a Fixed Base Operator, better known in the industry as an “FBO,” which opened its doors last year at Las Americas International Airport. The idea is to boost executive aviation significantly in the DR by introducing superior facilities, safety and efficiency for passengers for this very important sector of the aviation industry. Aerodom’s FBO facility can handle the executive needs of passenger and crew alike and serve both private and business aircraft. Despite being the Caribbean’s largest consumer market, the DR is still far from reaching its maturity in terms of airport arrivals. With more than 4 million visitors per year, there´s still room for growth. What is the contribution of airline infrastructure to help attain higher figures? Our objective in the development of our airport infrastructure is to make the DR an important destination for each and every commercial and charter airline and for general aviation as a whole. We have learned that this business is not just about “selling” airports and their facilities, but also about participating in the promotion and development of destinations in a proactive way. Consequently, in cooperation with the Dominican Ministry of Tourism, the hotel community and local stakeholders, we promote the country’s numerous destinations at international and national

fairs and exhibitions, and this has generated a substantial increase in the number of passengers traveling to the DR. How would you like Aerodom to be recognized? Our goal is to ensure that Aerodom’s airports are safe and offer passengers and other users a seamless and pleasant experience—by providing friendly terminals and uncongested and tranquil spaces with ample services that fulfill their expectations and needs We also hope to portray a sense of place in our facilities, so that when passengers arrive in one of our airports, they know that they are arriving in a Dominican airport. We also strive for the Dominican people to increasingly feel proud of their airports and key gateways to the nation. DR hosted the world´s largest aviation and airline fair, Routes Americas. What impact did that have and how did it help promote the destination? We hosted the Routes Americas annual conference in February 2011 and it was a significant and important event, bringing together about 400 delegates of airport operators, tour operators and regional tourism authorities right here in Santo Domingo. Apart from being an excellent opportunity to promote the Dominican Republic as a destination, it was also a splendid forum used to its full capacity by all the delegates coming from Europe, Canada, the U.S.A., Central America, South America and the Caribbean Region for negotiating the development of new services and to increase the frequency of already existing routes.

Port infrastructure and development DR is ranked first in the Caribbean and second among DR-CAFTA members in terms of global logistics, according to the World Bank 2010 Logistic Index Private sector multimillion dollar investments in several ports in the country have proven to be highly successful and new concessions will be given in the near future

Teddy Heinsen President of ET Heinsen & Dominican Shipping Association

n Latin America, ports are a key determining factor in a country’s commercial and economic development, especially because most countries in the region have access to the sea. Port infrastructure plays a key role in increasing a country’s competitiveness, and there is an everincreasing need to invest in the port sector as a way of improving logistical and macro-economic indicators. The Dominican port system is one of the most dynamic in the Caribbean region, offering great potential for guaranteeing profitability and return on investment in port infrastructure and management. Our country has been building a broad and well-developed physical infrastructure suited to the needs of a society focused on production and marketing of goods and services, putting us in 58th place worldwide, according to the Global Economic Forum’s 2011 Competitiveness Report.

Our road network with more than 5,320 kilometers is one of the best in the region, linking almost all destinations in the country. The fact that our economy ended 2010 with an 7.8% growth in its gross domestic product and that international organizations are considering a real growth of 4.5% of GDP in 2011, is a good sign when deciding to invest in our port system and other aspects of the national economy. It is important to note that the United Nations Conference for Trade and Development has just named the Dominican Republic as the leader in maritime connectivity amongst the DR-CAFTA member countries, as well as recognized a growth of 7 positions in the quality of port infrastructure in the last World Economic Forum report 2011, which reflects the progress achieved in our ports and shipping management, offering the international market the broadest range of options in terms of maritime transport based origins and destinations. These achievements are evidence of our institutional and economic strength, but it’s also important to highlight the World Bank study “Connecting to Compete,” which places our country in 65th place on a list of 155 world economies in terms of logistical performance, as well as in 8th place out of 21 countries studied in Latin America. The expansion of the Panama Canal is a major challenge for the region and especially for our country. Our terminals will have to be prepared to receive ships with greater capacity of load and depth, and more demands will be made on our ports’ services, requiring a higher level of operational and logistics competitiveness.However, a visionary partnership between the Dominican public and private sectors could bring about this growth, with a profound readjustment of our port facilities, which have become an example of safety, productivity, connection, technology and efficiency, for which has required an investment of more than seven hundred million dollars (US$700,000,000) in the last ten years. Our port system consists of 13 Ports, and the following investments have been made there (graph). Other ports where there has been investment in infrastructure, equipment, technology and management are: Manzanillo, San Pedro de Macorís, Azua and Barahona.

PORT SECTOR INVESTMENT IN THE DOMINICAN REPUBLIC 1996-2009 Port

Operator

Type of Concession

Description of investment

Rio Haina

Haina International Terminals (HIT)

State-owned port, private administration and operation concession

Reconstruction of patio, docks, security, dredging, cranes and equipment

Rio Haina

ITABO

Private port

Construction of docks and coal teminal

Santo Domingo

ITSS (Sans Souci Tourism Investment)

State-owned port, private administration and operation concession

Reconstruction of docks, patio and tourist terminals

Caucedo

ZFMC (Caucedo Multimodal Free Trade Zone)

Private port

Construction of deep-water Private port for containers

Caucedo

AES Andrés

Private port

Construction of Private port for Hydrocarbon importation (GNL)

Puerto Plata

SDP

State-owned port with ome services on concession

Security PBIP, Arrimo

Boca Chica

SDP

State-owned port with some services on concession

Security PBIP, Arrimo

La Romana

Central Romana Corporation

Private port

Construction of Tourist dock and reconstruction of sugar dock

Cabo Rojo

Ideal Dominicana / Cementos Andinos

State-owned port, private administration and operation concession

Estimated investment for the period 1996-2009 Source: ANRD (JR)

If we were to show tangible examples of concessions (private investment) in our ports, we can include: a) Rio Haina, which has achieved important certifications like ISPS code, BASC, CT-PAT and will shortly receive the ISO 9001:2008 quality certification, and has received recognition for Best Company in Support of the Export sector, granted by the Dominican Exporters Association (ADOEXPO). b) Caucedo Multimodal, a port with 14.5 meters of draft and an infrastructure capable of being the HUB of the Caribbean port par excellence, with volume handled one million teus per year, which 70% are of transshipment, has been a regional benchmark for maintaining a constant growth over 26% . Includes certifications as CSI, ISPS, Megaport and ISO 28000, among others. c) Santo Domingo, which has obtained the category of mother port for cruises and envisages a wide range of tourist and property services that it hopes will serve as a model for the entire region. d) La Romana: Has also acquired the category of Mother Port for cruises and PBIP or ISPS certification. These port services and infrastructure concessions have shown excellent results. The visionary attitude of the Dominican Port Authority (APORDOM) and its Managing Board has allowed the concessions on our island, to be carried out with high

standards of security, transparency, and peace, providing a major development boost that has undoubtedly opened a new chapter in the history of port and sea development in the Dominican Republic. As an innovation, our country has taken a step forward in successfully and passionately implementing communication technology and information models. Because of this, several of our ports have the latest generation of the NAVIS / ZEBRA system, with which they have systematized all their management systems and created the conditions for sharing sensitive information with clients (lines, agencies, importers, exporters) and government authorities. This data exchange will be especially relevant to the technological development initiatives that the Dominican government through its Customs Department is carrying out by implementing a computerized customs management system (SIGA), which has allowed to automate customs processes and their interactions, and is adjusting its actions to result in the execution of a single point where all stakeholders, public and private, have a single point of access to information and be able to authorize or recommend actions in the process of import, export or transit of cargo clearance, taking this as a common platform. The entry into effect of DR-CAFTA has led to a process of modernization in a range of public institutions, especially our customs services, because it has entailed adopting flexible regulations that recommend the dispatch of goods within 48 hours, and a law (226-06) has been enacted involving a

commitment to fulfilling the dispatches in 24 hours. These initiatives, combined with others of great relevance, have led to recognition from international bodies that affirm that our country has one of the most effective customs systems in the region; and just now the private sector is agreed with the DGA a new bill which will include recommendations from recommendations of the regulatory framework of the WCO and Revised Kyoto Convention and commitments assumed by our country in other free trade agreements. It also includes a renewal project aimed at modernizing the Port Authority. In Dominican Republic ports have adopted flexibility in the services they offer, adding value to their users in a process of continuous improvement, adhering to a strategic approach to trade facilitation, resulting in synergies with other public and private institutions through the creation of common forums or i combining analysis and quality, within which we can highlight the operational committee of the Port of Haina, the Trade Facilitation Committee of the American Chamber of Commerce, the transportation commission and shipping business of the Association of Industries of the Dominican Republic Regulatory Committee of the Directorate General of Customs. It plans to continue investing heavily in refurbishment of existing infrastructure and the creation of others including Maimon Bay in Puerto Plata with US$ 63 million, Caucedo Logistics Center with US$15 million, and New Haina Wharf with over US$20 million.

T Lisandro Macarrulla President of Sans Souci

The new face of Santo Domingo This ancient city of the Americas is prepared to be reborn as a leading tourism & business destination with massive private investment Civil infrastructure, port rehabilitation and real estate development will help the 15th century colonial quarter become a 21st century habitat

he Dominican Republic is a haven for first-class tourism projects at the international level. As a destination, the country features an interesting blend of culture, history and tropical climate which, along with its great natural resources and the hospitality of its people, offers competitive advantages for maintaining the country’s status as a world-class tourism superpower. A country such as the DR with social and economic stability and a privileged geographical location has the perfect combination of factors for ensuring the success of well-planned projects. Indeed, the DR’s hotel complexes and recent advances in tourism and property development have attracted a great deal of attention from investors, based on good value, accessibility and a strong business climate, making this the fastest-growing segment of economic activity in the country. The most recent example of this is Sans Souci, currently the country’s largest private infrastructural project and one that promises to position the city of Santo Domingo as the most complete tourist destination in the Caribbean. With a

budget of more than US$250 million in civil infrastructure and a total investment of approximately US$950 million, to be executed over 10 years and in three phases, Sans Souci is a mixed project that is revolutionizing the seafront of the first European city in the Americas. Founded at the end of the 15th century, Santo Domingo’s Colonial Zone has been declared a Heritage of Humanity site by UNESCO. Its ancient buildings reflect the Spanish architectural styles of the time and evoke memories of the most beautiful cities in Spain. Las Damas street, the oldest street in the New World, and the Columbus Alcázar, built in 1509 as the residence of Viceroy Diego Colón, son of the local Admiral, are among the treasures affirming the city’s invaluable historical and cultural heritage. Today, the city mixes the legacy of its colonial past with a vibrant and contemporary modern culture. It offers a range of culinary, cultural and sports entertainment, and is a major access point to the DR’s famous beaches and exuberant countryside. Despite being an important destination in the Caribbean, the city’s share in the cruise industry has diminished during the past decade. Nonetheless, Santo Domingo’s offerings are widely recognized by visitors and sector operators alike. With the development of its port, Santo Domingo will also become a major destination on Caribbean cruise itineraries. The renovation of the port of Santo Domingo, including dredging works, refurbishment of the Don Diego Terminal and the construction of the San Souci Terminal, represent an investment of over

US$45 million. Thanks to this investment, the port is already receiving over 100,000 passengers a year and aims to increase this to 300,000 in about four years time. In contrast to other large-scale projects in the DR, Sans Souci goes beyond simply building a resort or project development. It is focused on integrating the converted Port of Santo Domingo into the Colonial Zone’s tourism capabilities and the rest of the city in order to develop an attractive destination for high-end cruises and nautical and urban tourism. The plan’s infrastucture development includes rehabilitation of the port—the first phase of this has already been completed— construction of a yachting marina and a new real estate and hotel development on an area covering some 485,000 square meters. An important part of the project’s success is the creation of synergies between the public and private sectors. The project consists of modernizing the surrounding public areas, involving neighboring communities and providing a range of employment and development opportunities. In its first phase, Sans Souci invested in several projects aimed at improving nearby public areas, the most important to date being the remodeling of Plaza Juan Barón on Santo Domingo’s seafront boulevard, the Malecón. This Plaza, which covers 20,000 square meters, was remodeled and handed back to the city of Santo Domingo with a new and quite welcoming urban design, a permanent electricity supply, sanitation facilities, all to be co-managed by the company and the National District Municipal Council. Sans Souci’s development will have a formidable economic impact, not the least in its ability to provide an annual average of 20,400 jobs—reaching peak capacity in 2018 when it will create 31,000 jobs—as well as a 0.6% impact on the GDP. An improvement in the quality of life of the surrounding community has spurred the Dominican government to create a framework for supporting tourism development projects that, like San Souci, have shown their potential for creating and distributing wealth. In addition, part of its institutional dimension, Sans Souci has included several community development objectives and shaped this within a framework of sustainability for the project and its surroundings.

he DR has one of the fastest growing economies in the Caribbean. Over the past two years of economic recession, the country managed to maintain its political and macroeconomic stability and its exceptional conditions for investment and international trade. Domestic and international investors in the DR know they can count on the legal guarantees granted by our free trade agreements with the US and the EU through the respective DR-CAFTA and EPA agreements.

Tourism paradise Francisco Javier García, Minister of Tourism

Challenges & opportunities Haydee Kuret de Rainieri Former President of ASONAHORES & VP Hospitality & Human Resources of Grupo Puntacana

102

106

108

Invest in Samana Juan Bancalari Brugal President Puerto Bahia & Dominican Real Estate Association

111

Business tourism in Santo Domingo Ventura Serra Senior VP Operations DR & Cuba

113

A growing tourist destination Enrique de Marchena Former President CHTA Managing Partner DMK Lawyers Investing in tourism Pablo Piñero Founder & President of Grupo Piñero The origins of luxury Alfonso Paniagua President Costasur Dominicana, Casa de Campo The Punta Cana dream Frank Rainieri President & CEO of Grupo Puntacana Luxury upgrade Luis Emilio Velutini President & Founder Velutini Group Puerto Plata Round Table

114

Environmental protection & capital investment in the DR Juan Mejia Environmental Policies & Management specialized Lawyer, DMK Responsible tourism Adriana Cisneros de Griffin Vice Chairman and Director of Strategy, Cisneros Group of Companies Chief Executive Officer, Tropicalia President, Fundación Cisneros

117

Cruise destination Sharon Mei Sans Souci Commercial Director

119

Yachting Giannfranco Fini, Yacht Club Manager Marina Casa de Campo

121

The DR as a premier Caribbean golf destination Efren Garcia Estrada Director of The Cap Cana Championship 2008 – 2010

The Dominican Republic offers a modern transportation infrastructure, with international airports, three recently renewed airfields, an extensive road network, advanced telecommunications infrastructure and a skilled, qualified and largely bilingual labor force. According to the WTO we are the Caribbean leader in both tourism and large infrastructure facilities. Among its several investment incentives, the country has an International Investment Law that grants equal rights to foreigners, with tax exemptions to retirees who choose to establish residency in the DR. Tourism Law 158-01 provides fiscal exemptions to tourism projects and allows refurbishing and re-equipment of five-year-old projects, ensuring competitiveness and return on investments. Thanks to a confluence of natural beauty, excellent climate and the kindness of the Dominicans, the surplus value of real estate makes the DR an excellent place to invest and get a healthy return, shelter savings and enjoy a second home.

Francisco Javier García Minister of Tourism

Photo: Casa Bonita Tropical Lodge

According to the Central Bank of the Dominican Republic, accumulated FDI from 1993 to 2010 reached US$ 3,300 million. With the addition of US$ 2,622 million in real estate investment in the same time period, since most of the investment has been made in tourist zones, tourism sector FDI accounts for about one-third of the country’s total incoming FDI.

The country is fully capable of attracting international investment, offering a strategic geographic location, in the heart of the North and South American hemispheres, rapid access to Western markets and established industrial free trade zones to take advantage of the lower costs of our ports and international airports. We are the largest worldwide producer of premium cigars, and leading exporter of high-quality organic cacao and bananas.

With an average of 4.01 million tourists arriving annually between 2007 and 2010, tourism is the economic powerhouse of the Dominican Republic and one of the FDI highlights. In 2009 only 63 shovelready projects were approved, totaling

Tourism paradise Tourism is one of the pillars of the Dominican economy, with an estimated 25% of the nation’s GDP For 2010, Central Bank figures show a 3.3% increase in tourism arrivals over 2009, totaling 4,124,543 arrivals and generating almost US$4.24 billion in foreign exchange

US$15,300 million in investment for the next ten years. Out of the 154 approved projects between 2008 and 2010, 72 will be based on the country’s eastern shore, 41 in the southern region, 37 in the northern areas and four in the nation’s central zone. The Dominican Republic has over 65,000 hotel rooms with an average annual occupancy rate of 68.1%. Along with its main tourist destinations (Puerto Plata, Costa Caribe, Punta Cana, Constanza, Samana, Barahona, Montecristi and Bani) the country offers the greatest biodiversity in the Caribbean. Endless beaches, tall mountains, dense jungles, arid deserts and waterfalls coexist in this magic land. A port network and high-end signature golf courses position the DR as a leading Caribbean golf destination. Our vital musical heritage and fine cuisine help make ours a rich, diverse culture that is well worth getting to know. The DR offers investors not only an adequate legal framework to develop projects but also a variety of different regions with unique tourism potential. Our country is more than sun, palm trees and white sand. Santo Domingo, the capital city, combines modern sophistication with the historic resonance of the 15th century and the passion of Latin America. Our city was chosen by the International Bureau of Cultural Capitals as the 2010 American Capital of Culture. The old town or Colonial Zone, a UNESCO World Heritage Site, is the place where the New World began. Old, narrow, wellpreserved cobbled streets lead you among buildings from those early years. Dominican cuisine is another of the country’s attractions, a reflection of the European and African heritage that have permeated our social and cultural DNA. Security, well-being, joy and culture is what the Dominican Republic offers at each of its destinations. We have 22 Tourism Promotion offices worldwide to promote our country and help you choose the DR as an investment destination in the hope that it will soon become your next home. The Dominican Republic is the treasure of the Caribbean. It is a place full of promise for doing business, offering investment security and welcoming new ventures with open arms and the warmth and the joy of the Dominican people.

When you have vision, success is what you can expect. We developed a new business model and adapted it according to the times. We are not going to abandon the all-inclusive model, for instance, although some people think it is obsolete. And we are developing high-end luxury & boutique hotels. Success came because we also invested in complimentary offers, golf courses, parks, tours and activities for the visitors. Tourist demands are changing and we are adapting to their requirements. The tourism industry is developing all over the country—in Samaná, Puerto Plata, Playa Grande, Punta Cana and La Romana—and new areas are popping up as we speak. Which are the main advantages the Dominican Republic has as an investment destination, compared to other islands in the Caribbean & Central America? DR is a consolidated destination: we have security and high quality airports, our communication system is one of the best in the world, we have a democratic government and political stability—what else can you ask for? We have a spectacular geographical localization, beautiful scenery and a very good climate. There’s no other island in the Caribbean where you can find the hotel and restaurant quality you have in such vast environment. Dominicans don’t have the service culture that the Asians do, but we have charming people and this friendly environment has been a key aspect of our success. Tourists like Dominicans; they feel welcomed, taken care of, as if they were at home. What do you think has captivated the interest of foreign investors in the Dominican tourism sector and what are, in your opinion, the main reasons behind this increased interest coming from North American companies?

The industry began with Dominican initiative, combined with early investments from engineers who brought in equipment. The inherent hospitality of the Dominicans made the rest. In the 80´s, we began receiving larger investments mainly from Spanish investors —companies such as Barceló and Melia— since the language and culture always made Spain a natural market for the DR. In recent years, North American hotel chains have discovered the DR and the number chains have multiplied quickly specifically because Americans are inquiring about this country. The DR hotel industry is having a difficult moment but, looking at the figures, I would say that the hotel industry and the tourism industry in general are among the most solid in the world. People say we are fragile, and it is true in a sense, because we depend on climate, on people´s wishes, on many variables. But we are very flexible. Our advantages are larger than our disadvantages. There’s a lot of potential for foreign investment because we have been diversifying the industry. At first, we developed it like a cheap, bargain product while now we are demonstrating that we can continue to offer all-inclusive, lower-priced hotel industry but also offer luxury and boutique hotels, such as Tortuga Bay, Peninsula House and Casa Bonita. For the first time we’re marketing the country as full of cultural opportunities; our capital is a major international city that also happens to be the first city of the Americas. As a visitor, you can spend whatever time you want on the beach and then go see Santo Domingo, visit museums, and attend great concerts and local theater that now also includes international masterpieces.

Do you believe foreign investment will continue growing in coming years, and in which areas do you foresee it? I definitely do believe FDI will grow. We offer sound infrastructure, a developed capital, political stability, and a strong sense of community. We definitely have advantages over other countries and it is up to us to make the best out of it. Many tourism industry staff is fluent in French, German and English, and therefore I believe the success we have had with foreign investors will continue to rise. There are many areas still to be developed. We don’t have duty-free stores outside airports as they do in Barbados, St. Thomas and St. Martin, for instance, and it is important that the country opens up to this trend.

Haydee Kuret de Rainieri Former President of ASONAHORES & VP Hospitality & Human Resources of Grupo Puntacana

Challenges & opportunities “The potential development of the country’s tourism in the next 10 years means creating a market that will double the demand for Dominican products and services, and the creation of 100,000 jobs” “Dominican tourism has always exceeded expectations. We have the potential to double the number of tourists and to do so we need a joint public-private strategy and a new upgraded tourism development plan”

Photo: La Cana golf course at Puntacana Resort

hat have been the key drivers behind the DR tourism success, and what do you consider has made it the top destination in the Caribbean in only three decades? One of the key factors has been currency transparency. The Tourism Incentive Law gave us the opportunity to recuperate faster. In the 1970s we were pioneers in a legislation that was not available elsewhere in the Caribbean or in South America. The facilities proportioned to investors were critical. Although sometimes bureaucracy could slow the process, in general terms, FDI has always been encouraged in the DR.

lthough the Dominican Republic (DR) is part of the second largest island in the Caribbean (after Cuba), with an area of 48,442 km2 and a population of about 9.2 million inhabitants, it is the largest Caribbean tourist destination, with 21% of the total regional arrivals. The DR has over 67,000 hotel rooms and welcomes 4.2 million visitors per year, generating approximately US$4.065 billion annually and employing 200,000 people (direct jobs) in the tourism industry. Real estate in the Dominican Republic is fueling interest among international investors and it is expected that the demand will remain stable despite a slowdown in the global economy. Over the past few years the DR has steadily grown as a “diversified” tourist destination, thanks to its widely varied options – from simple eco-tourism to high-end luxury, along with 23 top-notch golf courses, including designer golf courses designed by renowned experts such as Tom Fazio, Jack Nicklaus, Pete Dye and Robert Trent Jr. The DR also boasts five marinas, including the beautiful marinas at Casa de Campo, and Puerto Bahia, in Samaná; world-class theme parks such as Ocean World in Puerto Plata and Manati Park in Punta Cana, and many other attractions. All these amenities, combined with the Dominican Republic’s abundant natural beauty, make it the perfect place to escape to. This beautiful tropical paradise is also strategically located, with convenient air links to the American and European markets through regular international and regional flights serving its seven international airports. With an ¨open skies¨ policy in the field of air traffic transportation, the DR attracts more and more international carriers to Santo Domingo, its capital and commercial center, a great Caribbean location just over one hour from Miami. Daily flights to New York and other cities in Europe make it ideal for business and leisure investments. Punta Cana International Airport represents the main tourist destination, with 54% of all air traffic to the Dominican Republic, followed by Santo Domingo, Puerto Plata, Samaná, Bayahibe-La Romana and BarahonaPedernales. The Dominican Republic is not only a prime international tourist destination but also attracts investors from around the globe, drawn by the country’s economic, political and social stability, significant tax incentives for domestic and foreign investors, a skilled

technical and professional workforce and a well-developed cable and wireless telecommunications system. FDI has reached record growth since 2004 and the DR has become the prime investment destination of the Caribbean basin. Dominican policymakers work persistently to promote domestic and foreign investment by participating in international forums and maintaining strong international relations in both the private and public sectors. The Dominican government is particularly committed to promoting sustainable tourism that protects and preserves the country’s ecological diversity. The Dominican tourism market still has considerable growth potential. The main factors of competitiveness in tourism investment are its exceptional natural sites: 432 km of white sandy beaches, the Caribbean’s highest mountains, 31 national parks, scientific reserves and 24 ecological reserves. The country is famous for its hospitality, its relatively low crime rate and its abundant human resources at competitive prices. Foreign investors have rights and obligations similar to those of nationals. This means that under Dominican law, foreign investment receives equal treatment with respect to local investment. Dominican legislation accepts the free transfer of profits and repatriation of capital gains. For developers of hotels and other tourism projects, Law 15801 enacted in 2001 currently grants tax exemptions for a period of ten years on income tax, real estate transfer tax, property tax on luxury housing and undeveloped lots, import taxes, and others In order to qualify for these tax exemptions, the hotel or tourism project must meet specific requirements as to its location within Dominican territory and cer-

tain elements of the project’s conceptualization. Nevertheless, these conditions are easily met with the appropriate legal assistance. Recently, the DR has witnessed a number of mega-tourism projects, which as well as representing a major investment in the country but also demonstrate the Dominican Republic’s strength as an essential market for tourism investors. Finally, since the Florida-Caribbean Cruise Association (FCCA) held its annual meeting in Santo Domingo in October 2010, the international cruise industry is showing more interest in the DR and the Dominican Tourism Ministry now anticipates a five per cent growth in this segment of the market, with Carnival Cruises Terminal soon to be under construction in Maimon, Puerto Plata. Bibliography • Dominican Central Bank: http://www.bancentral.gov.do • CEI-RD http: www.cei-rd.gov.do • Ministry for Tourism of the Dominican Republic: www. sectur.gob.do • Florida-Caribbean Cruise Association (FCCA): http://www.f-cca.com/ • Law 158-01 for the Development of Tourism, and modified by the Law 184-02 and Law 318-04 • www.goldenkeymanagement.com

Enrique de Marchena Former President CHTA Managing Partner DMK Lawyers

A growing tourist destination The Dominican Republic, the Caribbean’s top tourism destination, expects record numbers of tourists in 2011 targeting 5 million According to industry figures, tourism supports 250,000 direct and indirect jobs, and tourists spent roughly $4.5 billion in 2010

T Investing in tourism Pablo Piñero was one of the first international investors in the Dominican Republic´s tourism sector The Piñero Group consists of six specialized tourism and real estate companies with more than 10,000 employees. In 2009 it was valued at €1.904 million and it has a trade volume of €534 million

Pablo Piñero Founder & President of Grupo Piñero

he Caribbean is one of the world’s main tourist regions. How is the international crisis affecting tourism and to what extent is it still a top tourist destination? The crisis has made the world poorer and customers’ purchasing power has diminished. The region least affected is the Caribbean because it attracts tourists from Europe, Latin America and North America. It represents 70% of our group’s business volume, where we have great influence and there is a high level of brand awareness. But our performance has been affected by the AH1N1 flu in Mexico as well as by the global financial crisis, which has hit our vital source markets.

Hotel occupancy in the region declined by 61.6% in 2009 and has increased by 7% in the first quarter of 2010. How have you tackled this situation? We’ve had to lower our prices to regain our clientele. Our current occupancy rate is reasonably good but with much lower profitability. The DR was the first international market where your group established operations, in 1995. In the last 15 years it has expanded to operating 10 hotels with 5,019 rooms, three of which are branded as the Don Pablo Collection, your high-end range. In 2008 the Piñero Group launched its first residential development, Playa Nueva Romana. Could you tell us what your total investment in the DR has been and the main motivation for choosing the DR as a destination? Our total investment in the country already exceeds 500 million Euros. My group’s largest investment is in the DR, where we are the country’s first hotel group, with 10 hotels as our property. I love the Dominican Republic and I plan to establish my winter home in the Playa Nueva Romana project this year. It’s a country with spectacular beaches, it’s peaceful and the people are congenial. We will be increasing our investment depending on the global economic recovery and especially depending on the country’s infrastructural progress. What are the main advantages and challenges of the Dominican Republic as a destination compared to the rest of Central America and the Caribbean? The advantages are the quality of the beaches, the hospitality of the Domini-

can people and security. The lack of tourism development of areas where investment could be doubled is due to the infrastructure. Jamaica, a new country when it comes to tourism, has a firstclass primary and secondary road system, and reducing distances and making travel more comfortable makes it easier to transport visitors. Cleanliness and hygiene in the DR need a lot of improvement, despite the progress made in the last few years. Electricity and gasoline are the most expensive in the Caribbean and this increases flight and hotel costs for tourists.

from La Romana International Airport and a half-hour from Las Américas. In Playa Nueva Romana we have six million square meters in a top-tier tourism-residential development where we are offering lots for developers, villas and apartments. Our first phase will be finished in 2011 and consists of a total investment of some US$150 million. The lands were acquired from the State Sugar Council (CEEA) with presidential authorization and from private landowners. It is 100% owned by the Piñero Group and we are applying the same high quality standards here that our group is known for.

You were the first businessman who had faith in Samaná as a destination and also the first hotelier of the region. Gran Bahía Príncipe Cayacoa, five stars, and the Gran Bahía Samana, the Bahía Príncipe Cayo Levantado Don Pablo Collection and the Gran Bahia Principe Portillo in Las Terrenas. El Catey airport and the new highway that links Santo Domingo and Samaná have led to a proliferation of hotels and residential complexes in the region. What are the opportunities and challenges for the region? Our hotels have propelled Samaná’s tourism development. The airport and the new highway are vital, but the access routes to other areas must be repaired in order to consolidate its future. For a long time, the DR has neglected the areas where I’ve invested a great deal, like Portillo, Las Galeras and Cayo Levantado, whose roads are in very poor condition. We would like to expand with four to five or six hotels but we can’t go ahead with this or start a residential tourism development until the region’s infrastructure is improved. We hope to have this in the next four to five years.

The global economic downturn and the real estate bubble in the U.S. have not affected property prices in the DR too much but have slowed down sales of second homes. What is the profile of your buyers? As we’re one hour away from Santo Domingo and offering a European urban environment in every sense of the word, with extensive security, a hospital, school, golf and a gorgeous beach, our project offers great security to both domestic and international investors. In addition to the domestic market, Canada, Russia, Spain and the United States are our main clients. U.S. sales are still a little slow due to the crisis but we are confident they will recover soon.

Even though you are a great promoter and connoisseur of Samaná, your tourism-real estate venture Playa Nueva Romana is located in La Romana, nearer the capital and in an established tourist area that includes Casa de Campo. Why did you choose this location? In La Romana I found a marvelous beach in poor condition. Convinced that with good engineering I could transform it into one of the country’s most beautiful beaches, I’ve invested US$4 million in rehabilitating it.

Do you think the prices of lots, villas and apartments in the DR are competitive with the rest of the region? In Mexico we have a finished golf course and its sales are already at 60% while at Playa Nueva we’re at 25% or 30%. In Mexico the market for second homes has not been affected so much because North Americans are more familiar with the market, it’s an hour nearer and fuel there is cheaper than in the DR. Prices in the DR are 20 or 25% lower, which represents a very good investment opportunity which I am confident will bring it in line with Mexico in a couple of years’ time.

I’ve lived in the country for 15 years, I have a lot of respect for the Dominican authorities and praise their efforts to increase support for investors, and I hope that this measure comes into effect sooner rather than later. At the moment I have executives who are exclusively dedicated to working on coordinating permits and this increases the project’s costs and delays its proper execution. I think that the Ministries of Tourism and Environment should be a single entity with one person responsible for project development, as was the case in Spain in the time of Lopez Rodo, who exercised direct control over the ministries involved in project management and succeeded in launching the most important tourism development plans in the history of Spanish tourism. What are the main opportunities in the DR tourism market? The Dominican tourism market needs to be reorganized. There’s no need to increase the number of beds in Punta Cana, which is currently oversized, but new tourist areas like Pedernales need to be developed. The most interesting investment opportunities apart from tourism and real estate development are those related to tourism, such as agriculture, bottlers and services for hoteliers, construction materials, furniture and even food. How would you define the DR as an investment destination and how would you position your project among all the country’s options? A full 70% of our investments are in the DR. I have a lot of confidence despite all the problems the country might have and I will keep my faith in it wholeheartedly. Our project is of the highest quality and it is an excellent option for a first or second home.

President Fernandez has announced the creation of the much-awaited “One-Stop Shop for Investment.” How does the existing bureaucracy affect investment and project development in the tourism-real estate sector?

There is potential for building up to five hotels in our project, just one hour’s drive from Santo Domingo, five minutes

itting water or sand may be the golfer’s ultimate nightmare, but I can assure you that there are worse ways to spend your time than fishing your ball out of the warm Caribbean waters or pitching out of the fine white sand at our Casa de Campo resort, which was recently voted the World’s Leading Golf Resort at the 2010 World Travel Awards. I am aware that there are many golfing havens dotted around the Caribbean, but I have no hesitation in stating that none boast the hospitality, facilities and kudos of Casa de Campo. For a start, our “Teeth of Dog” course was designed by one of the world’s greatest course architects, the legendary Pete Dye, back in 1971. As its numerous awards testify, it is a true classic of golf course design,

Alfonso Paniagua President Costasur Dominicana, Casa de Campo

snaking up our country’s spectacular southeast coast and drawing inspiration from its beautiful surroundings, as acknowledged by Dye himself when he said: “I designed eleven of the holes, God the other seven.” But this is just one of the many attractions we have on offer at Casa de Campo, which has seen steady, harmonious development over a period of nearly four decades. In fact, Casa de Campo can lay claim to being the Dominican Republic’s original all-inclusive vacation complex, having grown out of the accommodation that Gulf & Western built for its employees in the sugar plantations of La Romana, once home to the world’s single largest sugar producing mill. Inaugurated in 1974, the resort served as a model for the development of the Dominican Republic’s tourism infrastructure, an early precursor of the ecotourism concept that has sought to preserve the evergreen natural splendor of our country. The ongoing development of Casa de Campo was subsequently assisted by groundbreaking legislation, which enabled the creation of a free trade zone and persuaded the private investors of Central Romana Corporation to take over the complex in the mid-1980s. Casa de Campo has since become the Dominican Republic’s byword for luxury: an exclusive 15,000-acre resort that has constantly expanded and reinvented itself to cater to the ever-changing needs of tourists and property owners. We now have 90 holes of Pete Dye-designed golf on five 18-hole courses, as well as a luxury hotel that recently joined The Lead-

Casa Kimball by Rangr Studio

The origins of luxury Casa de Campo is the Dominican Republic’s byword for luxury: an exclusive resort that has expanded and reinvented itself to cater to the ever-changing needs of tourists and property owners A market leader in every respect, this 15,000-acre paradise on earth has been voted the World’s Leading Golf Resort and its hotel has also recently become one of the Leading Hotels of the World

ing Hotels of the World, fabulous dining at over 20 restaurants, exclusive shops, our own private beaches, and a recently opened marina and yacht club with 223 berths for boats of all sizes. Other activities on offer include horse riding (the resort has its own equestrian center and polo fields), tennis, windsurfing, shooting and of course fishing (both deep sea and fresh water). Those looking for something slightly less active can relax at the ecofriendly spa treatment center, or enjoy a performance at the open-air 5,000-seat amphitheater at Altos de Chavón, which is a re-creation of a 16th-century Mediterranean village and one of my very favorite places in the resort. The village, which is perched on a bluff overlooking the Río Chavón and has stunning views of the river and Caribbean Sea beyond, has become one of the most important cultural centers in the Dominican Republic, with its art and sculpture galleries, museums, craft stores and artists studios, not to mention the stunning amphitheater, which has hosted performances by renowned international artists such as Carlos Santana, Andrea Bocelli, Placido Domingo and Sting. Of course, one of the main reasons for the continuing vitality of the area is the proximity of the resort’s own La Romana Airport (code: LRM), which is just 8 minutes from check-in. The airport has recently been upgraded into a truly international hub and we are now a short 90-minute hop from Miami and just over 3 hours from New York. We are also a 90-minute drive from the Dominican Republic’s capital city of Santo Domingo – the oldest city in the new world. If this serves to whet your appetite, the good news is that there are many possibilities to create your dream home among the rolling hills, swaying palm trees and bougainvillea of Casa de Campo. Thousands of Dominican and international buyers have already acquired properties in the community, attracted not only by the tranquility, security and family-oriented lifestyle on offer, but also by guaranteed returns on their investment. Residential opportunities abound in the form of traditional yet fully equipped villas and apartments, designed in harmony with their natural surroundings, and home sites where you can let your imagination run wild. But don’t take my word for it: come visit Casa de Campo for a taste of the sweet life in the Caribbean’s most prestigious and complete resort.

rupo Puntacana recently celebrated its 40th anniversary. In these four decades, the company has established itself as a pioneer in the development of tourism in the Dominican Republic. What would you say have been the key factors of its success? And what have been its biggest challenges throughout the years? My motto is passion, perseverance and hard work. We had the perseverance to start our business in a country where there were only 922 hotel rooms and nobody was very fond of the tourism industry. In Punta Cana, we saw opportunities that others could not. We decided to make sure that even if it took longer than more traditional ventures, the benefits from every point of view were also going to be bigger.

Frank Rainieri President & CEO of Grupo Puntacana

It took a lot of hard work. Being pioneers in such a situation means you are the one who opens the roads. This was a time when neither the Dominican government at that moment nor the public actually believed that tourism was a possibility in the DR. First we had to find out who our markets would be. At the beginning, we thought that because the proximity to the US North American tourists would be our natural market. But it wasn´t so, because they had certain standards and expectations about comfort, so venturing into rough and somewhat inaccessible places was not of very much interest. After three years of wasted effort in that direction, we turned our attention to the European travel market and found them to be much more receptive, especially Italians and Germans. Punta Cana back then was an unknown destination, and so visiting it required a spirit of adventure and an interest in unpolished accommodations. We took the negatives and turned them into positives by, for instance, turning the hardship of unpaved roads and mosquitoes into an adventure: ¨Come discover the pristine beauty of an isolated place you’ve never heard of!” I always have said that the bigger the challenge, the bigger the returns. Business people always look at the bottom line, and they aren’t usually prepared to wait. Of course, going to a country in the process of development presents challenges but also such great satisfaction— that’s the passion part—and therefore better returns on the long run.

Las Arenas Villa, Arrecife, Puntacana

The Punta Cana dream

As the pioneer of the development of the DR’s largest tourism hub, Mr. Rainieri and his associates are also responsible for the world’s first private international airport, the country’s largest in passenger’s volume and catalyst for the area´s development His views on the tourism industry provide an invaluable insight for investors on the past and the future developments of the country´s leading economic sector

Visiting a Caribbean island is always a pleasure. If you can combine business with pleasure that provides enormous added value. But we’ve also been able to provide social and environmental responsibility as another benefit of traveling or investing. Creating 10, 100 or 1,000 jobs in the DR is not the same as doing that in a developed country because in the DR people have no other options. Investing in the DR means combining personal satisfaction and the possibility of helping people with sound investment and high returns. I have always believed that if we can provide our people with a decent salary, education, and housing, they will become more involved in their work, rather than just collecting a paycheck at the end of the month. Thousands of our employees now speak English, French, and German, and many of them have even traveled to Europe at the invitation of Punta Cana guests. The experiences have opened their minds to different societies and civilizations and given them opportunities that they never thought they were going to have in their lives—and meanwhile the economy is being transformed. My mother was a very sociably responsible person and was the president of a foundation that back in the 60’s did some important work. My children have learned the satisfaction of being socially responsible as well, and my vision is fully shared by my associates Oscar de la Renta, Julio Iglesias and Ted Kheel. The Punta Cana airport started out simply as a requirement for developing the project and has now become the largest revenue source for Grupo Puntacana. Our airport was another pioneering effort. We were the first private international airport in the world. People thought we were crazy, and for a couple of decades it looked like we were. But we saw from the beginning that while Punta Cana had a tremendous amount of beach land and was a truly amazing place, there was no way it could be developed without an airport. We had the perseverance to wait 12 years before we saw our first dividends. At that time, people didn’t understand what a private airport was, because there was no other. People in the government even wanted to take over at one point. But we saw the possibilities and we were right. Ten years later there were 5,000 hotel rooms in the Punta Cana area and today, 40 years later, there are about 36,000 rooms—thanks to the airport.

state-of-the-art, the best in the Caribbean. Not to mention year-round warmth just three hours away from New York City and the fact that people here are so friendly. If you choose to visit the DR or even to live here, it’s because the quality of life is so high: You can hire someone to take care of your children, fly out when you need to and enjoy excellent water and telecommunications. In such a beautiful place, what else do you need? Then there is the tax situation: What you pay in Miami—just two hours away— doesn’t compare to what you pay in the DR. Plus, in Miami, getting to the beach means driving a half hour and spending another half hour to park your car. In Punta Cana, you can drive a go-cart to the beach. With 65,000 hotel rooms, 15,000 residential units and 25 golf courses, the DR is an increasingly attractive destination for foreign investment in tourism. As a leader in the industry, what do you suggest potential investors look for? And what do you consider is the limit for DR´s development? The opportunities are tremendous, small, big, and medium. And there is already so much confidence in the DR that many people are taking the opportunities that come along. But the good thing about the Dominican Republic is that there is still so much to be done; we are a country in development. We have over ten million people, which is a big market, the largest open economy in the Caribbean region, and we also have trade agreements with United States, Europe, and Central America. The Dominican Republic has a stable government, currency and a democratic system. We have a good legal system, improving every day, another fact that adds value to any investment. It only takes 28 minutes to get through the Punta Cana International Airport when you arrive: that’s customs, immigration and luggage. Our design reflects the feeling of the area, with a thatched roof and wide-open spaces. How do you like to describe the Punta Cana area nowadays? How did you know that this once inaccessible area could become one of the top tourism destinations in the world, and in what direction do you expect thing to grow in coming years? I always tell people the story of my wedding night. After we left the party, I stopped the car and I told my wife that I had a mistress. I let 20 seconds pass and then I told her that it was Punta Cana. You see, from day one I

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knew it was a very special place, with a lot of privacy and a family-oriented ambience where people could enjoy nature. That’s why we have always protected nature carefully, prohibiting construction higher than the height of the coconut tree, for instance, and making sure that all the golf courses we build are environmentally friendly. There are so many possibilities for the future. Let’s start by saying that we are the best connected international airport in the Caribbean, so you can fly anywhere. If you’re an international company holding a conference, for instance, you can fly people directly into Punta Cana from Paris, Moscow, London and New York. Then there is the infrastructure: water, energy and communications are

We only have four million tourists per year, and I believe we should have ten million. There is only one Caribbean in the world, after all. And the DR is closer to the United States than both South America and Europe. People need to get away when there’s a hard winter, and with the kind of security and government stability the DR provides, I believe the country can position itself in the way that Spain, France and Italy did at one point. We need to work hard to get more and more tourists. We can definitely compete with China and India. They may have a lot of cheap labor for building things, but no one can build the clear blue waters, white sand and coconut trees of the Caribbean. And people will always be looking for those things, tomorrow and forever.

Luxury upgrade The DR is positioning itself as a new luxury destination in the Caribbean. Since the advent of Casa de Campo and Punta Cana more than 30 years ago, high-end resorts, signature golf courses and boutique hotels are drawing a new map of luxury in a tourism environment previously dominated by the all-inclusive resorts A financial and real estate specialist gives us his insights into how the financial crisis has impacted the Dominican Republic, where he is now expanding luxury tourism and high-end shopping

ourism is considered the engine of growth in the DR. More than 4 million visitors a year make the country the leading tourist destination in the Caribbean. What made you choose the DR as an investment destination and why invest in the tourism, shopping and real estate sectors? My family business roots are in the financial and real estate sectors and shopping mall development. My investments in the DR are linked to my areas of expertise and previous ventures in my homeland, Venezuela. In the 1990s, when mutual funds could not invest in real estate, I created the first real estate investment trust. In 1993 it became the first publicly traded real estate company in Venezuela. At the end of the decade JP Morgan introduced me to Sam Zell, the most influential expert on sophisticated real estate development, a visionary and a global economic guru. Due to the Venezuelan growth problems we decided to expand internationally. I was lucky to be invited by Maria Eugenia Mosquera, the Dominican ambassador of investment promotion, who introduced me to the President. I felt great confidence from the very first day.

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Luis Emilio Velutini President & Founder Velutini Group We conducted several market studies and we saw many similarities between the Venezuelan and the Dominican markets, along with many cultural and human ties. There was a lack of shopping malls in the DR and we saw a great opportunity since in almost every country, 65% of women, at every socioeconomic level, are concerned about brand names while this is the case with only 10 to 15% of males. In the DR this figure is up to 85% of females and 70% of males. Since they were no top-ranked brands or big-scale shopping centers, we created Blue Mall. What has this country meant for you? The Dominican Republic is my first investment outside Venezuela. The DR has large international and Venezuelan investments. In 1993 I started a company from scratch and I ended up with 3,000 direct employees. The loyalty and commitment of the thousands of families that depend on your structure and organization can only be maintained by looking for development alternatives. It was very hard for me to come from another country and do the same things here that I did in Venezuela. Today, having 500 direct employees in the DR, strategic partners and great friends

means a lot to me. This country is not only an attractive investment destination but a place full of friendly people who welcome you with open arms. Our managed projects account for investments of a couple of hundred million. Blue Mall in Santo Domingo, with international flagship brands, will have an iconic building – 14 floors of 1500 square meters each; seven of them will be a high-end boutique hotel and above them the most luxurious offices in the country. In Santo Domingo we have also created two buildings of 14 apartment floors, a real estate development in Cap Cana and another Blue Mall in Punta Cana. From the DR we have further expanded to other Caribbean islands; in Saint Martin we are building another Blue Mall and luxury residences, and expanding the port and its commercial area. What do you consider the DR’s main competitive advantages and its leading business opportunities? The Dominican Republic has economic and political stability. Both majority political parties propose continuity on the same ideological path. Its currency is stable and it has balanced budgetary management.

The global recession has touched most of the Caribbean markets but it has not had a direct negative impact on the healthy and well-structured Dominican financial system. With more than 4 million tourist arrivals per year the Dominican tourism market is mature. Frank Rainieri had a vision of building a private airport, and 30 years later it is the most important private airport in the world with two million visitors per year. Punta Cana has a stable inflow of high-level visitors, which from an investor’s perspective is very attractive. Infrastructure facilities are impressive and it is a solid and consolidated tourist destination. Its population is growing and will soon become a weekend getaway destination, filled with all-inclusive resorts and offering a recreational lifestyle for those seeking security, tranquility and comfort by the sea. Punta Cana has amazing beaches and a spectacular airport with multiple daily flights to major destinations in the United States and Latin America. The quality of life is excellent, the infrastructure, golf courses, marinas and everything that retirees and young people are looking for, since it also has high-level schools and a university. Currently about 90% of the tourists who visit Punta Cana are foreigners and 10% are Dominican, but once the Coral Highway is finished, the distance to Santo Domingo will be reduced to only two hours, and the area will become a popular weekend getaway for Dominicans. How would you evaluate the Dominican investment climate? As a public company developing projects in several countries, we have always been convinced that having a local partner for every market we enter is the key to success. In our case, Miguel Vargas Maldonado in Blue Mall Santo Domingo, and Frank Rainieri, with Oscar de la Renta and Julio Iglesias at PuntaCana Group are 50% partners with us on Blue Mall Punta Cana. The Hazoury family, owners of Cap Cana, are other Dominican entrepreneurs we partner with. They embarked on a titanic project, a futuristic city by the sea, Cap Cana, with a marina where we are developing two real estate projects. What is the development potential of the Dominican tourism sector? Hurricanes, earthquakes and health problems will occur from time to time but they are cyclical and isolated. Invest-

ments are made over the long term and problems are only momentary troubles that we need to overcome. The Dominican Republic is a destination on the map of the Caribbean, in the heart of the Americas, and it has the capacity to be a destination unto itself. People here are outstanding, they have a great service culture, and they devote their complete attention to you, worry about your wellbeing as tourists and want you to feel at home. The location of the country can´t be better, in the middle of the Caribbean: sun, beach and sand. The most important aspect of the DR is its people. With these great attractions, the place and the people, if the right strategies are implemented, the country has infinite potential. The Dominican tourism industry, previously based on all-inclusive hotels, is now trending toward luxury tourism. Real estate developments, signature golf courses, five-star & boutique hotels appeal to the same sophisticated customers your group targets, in both real estate and shopping malls. President Fernandez has called Blue Mall a symbol of modernity and progress. How do you think it is helping position the DR as a new Caribbean shopping destination? Blue Mall brings to the Dominican Republic a shopping facility like none ever seen before in the Caribbean, developed after the Shanghai and Dubai models. It is a modern, high-end location with the latest technology and professional 24/7 security, including lighted parking facilities. Blue Mall is truly a milestone in the history Dominican tourism. We have put the DR on the world´s luxury map. Cartier, Vuitton, Ferragamo and Carolina Herrera now include the DR on their websites as a prime shopping location. We found out that in Punta Cana 95% of the tourists were not happy with the existing shopping facilities, although they were otherwise fully satisfied with the destination. To meet this unsatisfied need we created Blue Mall Punta Cana at the heart of the country’s prime tourism destination. Our venture is just the beginning. Soon other developers will follow and the longstanding practice of having to shop in the United States will change. At the same time a whole industry of local crafts and ¨Made in Dominicana¨ products will be able to thrive.

You have helped bring luxury brands such as Cartier and Louis Vuitton into the Dominican Republic, repositioning the destination at a global level. What kind of investments might the Dominican government make to further enhance the country’s broad appeal to tourists? The Dominican government must develop a free trade zone to generate permanent jobs through duty-free shopping, like you have in France or Spain. A sales tax deduction will attract more tourism and more investment. Sun, beach and shopping is a high-return formula used by Barbados and St. Martin, and also helps cruise industry development. For developers, in several countries there are debt equity conversion programs or swaps, in which we can acquire debt on the international marketplace and transform it into investment with a beneficial discount rate. This financial scheme also offers several tax protection and quality advantages and will encourage many international investors to choose the DR as a potential investment destination. Which measures do you consider necessary for the positive development of Dominican real estate and where do you think new players may find investment opportunities? The Dominican Republic is a well-established destination for real estate and has the advantage of solid infrastructure. We need to continue generating demand. Incentives boost development and that generates more demand, population, consumption, work and integrated development. It is a country with a small external debt, but if it is traded on the international marketplace it then becomes investment. Some analysts say it is inflationary but I believe every investment is inflationary because when you generate consumer demand you must then control inflation. Investment attracts further investment and stimulates development. The real estate sector lacks investment incentives for land acquisition. In Punta Cana there is a lack of primary services – a shortage of hospitals and basic services since the area has a full-time population of 150,000 and over two million tourists per year. We need a diagnostic center, medical consulting rooms, pediatricians, ophthalmologists, dentists and such, to cater the needs of tourists and residents.

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Housing for workers is a great business opportunity; and two - to three -room apartments at an average cost of US$ 85,000 are needed. In real estate tourism your group has ventures in Puerto Marina Cap Cana, the first artificial urbanized island of the Dominican Republic, and will soon launch luxury residences in the capital city. As a consultant and financial specialist, how would you evaluate the effects of the U.S. subprime mortgages on the Dominican real estate sector’s lack of funding, its price positioning and its international competitiveness? The global recession resulting from the sub-primes reduced the DR’s second home investment market. When we seized the opportunity to buy the island at the Cap Cana marina we saw it as an opportunity in a location where the infrastructure was unparalleled: the largest inland marina located in an impressive development, with miles of roads, electrical, water sanitation infrastructure, amazing signature golf courses. Cap Cana is a development that was accelerating like an F-16, with enthusiastic investments. The scale of development was so intense when the crisis occurred that it complicated its management and almost paralyzed the works in progress.

Cap Cana development is now being finished piece by piece, developers are finishing projects and initiating new ventures, and it is in this tailored approach that the resort has now begun to achieve positive results. Cap Cana needs population. The number of units delivered is growing and this automatically generates demand, stimulates consumption and boosts growth. The broader a project is, the bigger the risk of falling into a recession. The most common mistake investors make is to create in times of growth, because crises come up is when their projects are finished and failure occurs. Our group always invests during recession in order to be implemented and operative when growth comes back. We were born in a recession and we have already survived several. Each one of them strengthens us even more and helps us profit more from each opportunity. Luxury real estate was a great bubble and pricing went sky-high around the world: in Europe, 20,000 to 30,000 Euros per square meter, and in the United States, up to 50,000 US$.. After the subprime collapse, the entire world lost value. Currently there is a value adjustment process, so it is the right time to make a good investment decision. The global recession has brought problems to several real estate projects that due to lack of financing or buyers have been obliged to freeze projects and/or lower pricing. How does this scenario affect new projects such as yours that are in the heart of large developments and also impact the sector in general?

Cap Cana was oversized with millions of dollars in infrastructure. The destination can´t fail because everything is done. Once the world economic real estate market recovers, its re-launch will be exponential. Some assets have been sold and its assets have been restructured, and project investors are either finishing or starting real estate developments. The value of a property adjusts in about one to one-and-a-half years after a recession, so it is still a time of adjustment and re-investment. The only sure bet against inflation and currency devaluation is real estate. How do you think the Haitian situation may negatively affect the tourism industry in terms of the perception of the DR compared to its Caribbean peers? At the very beginning the Haitian reconstruction did economically benefit the DR because all the investment in infrastructure, finance, sanitation and food supply relied on Dominican resources. In the medium term, when Haiti further develops, the DR will face a lack of manpower and new investors. In your experience, what is the perception of the DR in the international capital markets and how would you compare it with the rest of the Caribbean? The DR has an incipient capital market. It is necessary to incentivize domestic companies to become public and come to agreements with international stock exchanges. Both demand and facilities need to be created. The Dominican banking system is small for large companies because it has certain limitations; banks can´t lend more than a multiple of their reserved assets, and this means that large investments can´t be financed even with the support of the entire banking system. Bank syndication exists but it is not enough to finance the needs of the country. New instruments are needed; pension funds must acquire long-term loans, and housing for the low- and medium-income class may be one of the engines of economic and social growth. What is still needed to position the DR on the world´s luxury map? The DR is very well-known for its highend tourism projects. Budgetary restrictions due to the global recession have made it difficult to continue media exposure and it is important to maintain an international promotional campaign to raise awareness of the upgrading of the Dominican tourism industry.

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Puerto Plata Round Table Christopher Columbus discovered a natural port on the north shore of the island in the early 1490s. Puerto Plata became an important trade enclave between Europe and the New World with the first fort in the Americas, Fort San Felipe Today Puerto Plata is the largest city in the northern part of the country and the entire region and its coastal towns offer a varied choice hoice of beach vacations, ecotourism and extreme sports

ow has Puerto Plata evolved since the 1970s, when it was such a prime destination?

Roberto Casoni: Puerto Plata was the government’s first development project aimed at attracting international tourists, and now has over 12,000 hotel rooms. Puerto Plata Province was originally chosen because of a vibrant international culture dating back to the 19th century, when foreigners came to work in the port. Puerto Plata became very well known as a destination, thanks to its port and the combination of beach and city tourism. But its businesses and infrastructure did not keep pace with the rapid growth, and the destination became less attractive. The area’s infrastructure has been updated in the past few years, the number of real estate projects has increased, and although the number of visitors has decreased, we hope it will continue increasing next year. Now we need to create a different model, which doesn’t treat the resort as a final destination but instead sees each trip as an experience. If you are just looking for a nice beach there are many places in the Dominican Republic.

However, if you are a real traveler and you want to feel the country, the place that has it all is Puerto Plata. This concept gave birth to an association of all the tourism groups in the area. Together we raise awareness of the fact that tourism is a service chain that starts when the tourist arrives at the airport, and in which taxi drivers, guides and city center residents are all participants. We are trying to create a business-hotel-community link, so that the destination experience is of the highest quality. Hotel rates also need to be coordinated. The excessive competition between hotels generates a slope of prices. The problem is that when a four-star hotel sells at the price of a two-star, the maximum service they can provide is that of a three-star level. Jose Natalio Redondo: Solutions have to come from the community, the main pillar of tourism development. We have established a mechanism for preparing restoration projects and positioning the destination. At the local level, we are restoring self-esteem. At an international level, we are working to reach the most attractive source markets, especially the East Coast of the United States, which is connected to the Puerto Plata International Airport with daily flights. We have one of the top ten world beaches for water, wind and sailing sports, Cabarete, which also has great nightlife. What have Puerto Plata’s biggest improvements as a tourist destination been since the 1980s and 1990s? Roberto Casoni: The city’s infrastructure has been modernized. The government invested a great deal to give the city a facelift: building a decent seafront boulevard and a main avenue, and the municipal authorities are promoting cleanliness. Puerto Plata as

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a destination includes everything that is an hour to an hour and a half away from the airport. La Isabela, Playa Grande and Santiago de los Caballeros are part of the product. The slogan that the country “has it all” is especially apt here, because it is such a synthesis of what the Dominican Republic as a whole has to offer. There is history, rural culture, music and fine dining. The DR is the world’s largest producer of premium cigars and the largest rum factory in the Caribbean, Brugal, is in Puerto Plata. We also have golf, coffee, cacao and tobacco plantations, as well as livestock. And the mountain range protects the area from hurricanes. How can Puerto Plata be rejuvenated? Roberto Casoni: We want Puerto Plata to be like the French or the Italian Riviera, with a series of small towns to visit. We need a better transportation system to connect the tourist areas of Cofresi, Puerto Plata, Sosua and Cabarete, as well as improved infrastructure for cruise ships, underground telephone and electrical cables, hotel renovations, etc... Do you think that apartment hotels have contributed to the development of the Puerto Plata destination? Juan Perdomo: In the 1980s, there were just a few all-inclusive hotels. In the 1990s, this form of tourism really became popular and has helped the Dominican economy a great deal because it uses locally grown foods, but on the other hand, the all-inclusive kills the life in the towns. Now, thanks to the Internet, apartment tourism is booming. The market is the sum of smaller markets. When a tourism destination is complete, there are all-inclusive hotels and these attract higher-level establishments. For investors, what are the highlights of Puerto Plata as a destination? Juan Perdomo: The Dominican people, who are very friendly, the nice beaches, the water sports and night dining in Cabarete, the diving and clear water beaches of Sosua. Puerto Plata has a lot to offer: Victorian architecture in the city, the fort, the cable car to the top of mountain Isabel de Torres mountain, nice beaches, excellent restaurants, night life, Ocean World, casinos, etc... One goal is to try to move establishments up from two to three stars. Virtually the only ones who have managed this are apartments. Roberto Casoni: A big milestone will be when regular flights surpass charter flights. Aerodom is the airport operator for Puerto Plata, Santo Domingo and Samana, and they are making great progress promoting the destination.

Worldwide, there’s a lot of emphasis on responsible tourism. Is your brand geared in that direction? Jose Natalio Redondo: Of course. Involving the city and the surrounding towns as part of the destination project is part of our social responsibility. Roberto Casoni: The destination also has to be environmentally sustainable. Playa Dorada and Costa Dorada among others have blue flag certification, as well as Bayahibe (La Romana) and Cosón (Samana). What are the conditions for property ownership in the area, and how does this influence the type of visitor who comes? Juan Perdomo: The North American market wants apartments, the European sector prefers houses and not necessarily by the sea; they can be in the mountains. Over the past decade, most investors in the area were North Americans, some 7075%. During the next decade, I foresee that Europeans will be taking their place. Jose Natalio Redondo: One of the main development points for the original Puerto Plata as a destination was as a retirement destination. The fact that we are one hour’s flight from Miami and four hours from New York, with daily flights to Chicago, is a good advantage as well. Roberto Casoni: Our strengths are the beaches at Sosua, Puerto Plata, and Cabarete, the ease of traveling around, the countryside and the landscape. Our topography, like that of Samana, which has hills and mountains, is a very interesting model for Europeans looking for sea views. Our model needs to be appropriately sized, without huge commercial centers that are going to compete with the city, but more historical, with small Victorian houses, perfect for small boutiques. How have property prices been performing? Juan Perdomo: Prices have increased a lot since this tourist destination started 30 years ago. However, prices are still very low compared to other Caribbean destinations. For example, one can buy a very nice beachfront condo for about US$200 per square foot, equivalent to US$2,150 per square meter. There are still residen-

tial lots in decent neighborhoods from US$25,000 and up. Due to the worldwide recession prices have come down making it a buyer’s market. The first seafront housing project was sold at US$1,000 per square meter. The average price is now US$ 2,000. Land prices have multiplied an average of eight-fold and beachfront almost ten-fold. Jose Natalio Redondo: If we compare it with Punta Cana, their infrastructure is enviable in terms of golf courses and marinas, which we don’t have here. Here there is a better property offer compared to other parts of the country. The same product here is much cheaper than in Punta Cana or Samana because here there are many towns while in Punta Cana you have either hotels or residential complexes. For people who want to invest in this area, what guarantee is there that property will rise in value, compared to other parts of the country? Juan Perdomo: People who invest in the Dominican Republic can get title insurance through Stewart Title, Chicago Title and Commonwealth. There is a new system to register properties in this country, which has made the ownership of it very safe. A lot foreign hotel chains and developers have established here and are very successful, expanding their operations throughout the whole country. Foreigners have the same real estate ownership rights as Dominicans. Roberto Casoni: In order to develop a project, you need to make a two-year temporary investment, seek facilities, buy the land, obtain permits, find investors and get started. But when growth returns, you won’t be able to do all that in two months: it will take you two or three years when there is a tourist flow to equal hotel capacity. The quickest business is buying a rundown hotel and remodeling it, because the permits have already been secured and remodeling offers interesting tax incentives.

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amana is one of the Dominican Republic’s best kept secrets. This region is located on the coast of the Atlantic Ocean in the northeastern part of the country, and it is known for its mountains and pristine water beaches, Samana is one of the most beautiful areas of the Dominican Republic, yet remains one of the least known.

Samana tourism industry has not yet exploited the full potential because since up to recently the region was quite isolated. The peninsula was a 4-5 hour drive by car or bus from Santo Domingo along a country road and lacked an international airport. In 2006 the opening of the new Samana el Catey International Airport and the 2008 highway from Santo Domingo make it bound to become one of major tourist destinations in the Dominican Republic. It halved the driving time from 4 hours to 1.5 hours as it is a straight 120 kilometres (75 miles), from just east of Santo Domingo´s airport. The reconstruction of the port at Santa Barbara de Semaná, the capital city, has enlarged the international recognition of the destination. Samana was discovered on January 12, 1493 by Christopher Columbus. It is said that this was the first instance of violent opposition to the Spanish conquistadors in the Americas. It was described by Columbus as “the fairest land on the face of the earth,” and it is considered by Dominicans and visitors alike as the prettiest part of the island of Hispaniola. In the 19th century, Samaná was still an island, separated from the mainland by a narrow waterway. The result is a diversity of distinctive flora and fauna found nowhere else in the country. It has impressive tropical forests, mountains, coconut groves, hundreds of cozy alcove beaches with turquoise crystal clear waters, waterfalls, national parks and a protected bay that is one of the breeding places of the humpback whale. And thousands of them come to the coast from January to April. Samana is a destination for nature lovers and adventurers. It is also a romantic getaway, with small hotels and developments with nice quiet places. The exuberance of the area, the variety of natural attractions makes it the preferred choice of those seeking an active vacation. Clear water and fabulous coral reefs make of

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the region a paradise for divers and snorkelers. Surf, kite-surf and horseback riding are among the activities that can be practiced in the region. Samana has a distinct European flavor since the village of Las Terrenas which has profited from a vast European population. There are 4,000 European permanent residents (2,000 of whom are French), and a strong tourist flow predominantly French, Italian, and German. It is a lively town home to many small shops, boutiques, restaurants and cafés. Tourism has only recently come to the region and as a result there is a wealth of opportunities for positive development. There is a significant amount of tourist developments throughout the Peninsula, but it is still a place that preserves its authenticity as low density destination and in which investment opportunities abound. With much of the Caribbean now well-developed, the region’s pristine beaches and sparsely-populated, mountainous terrain resplendent with an abundance of tropical vegetation are not only a welcome change, but are all that remain of the true magic of the tropical Caribbean. The advent of luxury tourism has flourish in the area with the creation of The Peninsula House, a magnificent 9 room hotel located on a hill in Playa Coson. With several high-end projects developed in different parts of the region,

like Puerto Bahia, in the southern part of the Peninsula, high-end second residences are available for investors and still there is still much room for new development. Up to recently Samana was off the sailing path because of the lack of docking facilities although it is an optimum sailing environment for its trade winds and the lack of big waves. In Puerto Bahia we have enhanced the unique sailing conditions of the region with a state of the art marina from where we go to over 100 desert islands, mangroves, caves with Taino vestiges, visit Cayo Levantado, a precious island with unforgettable beaches, practice marlin fishing and whale watching.

Juan Bancalari Brugal President Puerto Bahia & Dominican Real Estate Association

Invest in Samana Major infrastructure investments have helped the resurgence of the Samana Peninsula as the DR’s newest tourism development hub Isolated for over 100 years, this low-density destination of small villages, hotels and developments offers excellent conditions for sailing, adventure and romantic travel

anto Domingo, the capital and largest city of the Dominican Republic, is among the most modern and quickly growing tourist destinations in the region. Its strategic location near the United States, Canada, Central America and the Caribbean coast of South America favors the city with international air connections, and maritime trans-Atlantic routes link it with Europe and the rest of the world. The capital’s success as a commercial destination for travelers of all kinds is also thanks to the DR’s dynamic economy. The country enjoys low inflation and foreign exchange stability. The Dominican economy achieved a 7.8% record growth in 2010 and the IMF forecasts over 5.5% for 2011.

Ventura Serra Senior VP Operations DR & Cuba

The country’s six main airports are active centers of international air traffic, offering hundreds of flights a day that connect the DR with cities in Europe, the US, and Central and South America. During the winter season of 2009-2010, more than 1,000 flights landed at Dominican airports every week from all around the world. About 70% of the nation’s 64,000 guest rooms are generally occupied by foreigners. During 2008-09, the Tourism Promotion Council approved new investments of over US$17 billion. According to Mr. Franklin Lithgow, Investment Director of the CEI-RD, during 2009-10, approved investments totaled approximately US$10 billion. According to ECLAC, the Dominican Republic has become one of the most attractive investment destinations in the Caribbean, receiving 37% of the US$5 billion of the region´s total investment. The DR’s competitive advantages as a business destination come from the privileged access that companies have to global and regional consumer markets through a long list of international agreements, including the Central American Integration System, Economic Partnership Agreement with the EU (EPA) and the U.S.-Dominican Repub-

Business tourism in Santo Domingo Photo: The Colonial Zone of Santo Domingo

The capital of the Dominican Republic is the largest trade hub in the country, which has also moved forward with the times and evolved into a pleasant business environment Along with a high-end hotel industry, business centers and office space are multiplying while commercial & shopping malls of the highest level, Acropolis, and Blue Mall, open their doors to attract tourists and business visitors

lic-Central America Free Trade Agreement (DR-CAFTA). These connections serve 826 million consumers throughout the world, including tourists coming to the DR who find a well trained local labor force that is recognized for high productivity at low cost; extensive natural resources; a large network of industrial free zones parks with approximately 600 companies operating taxfree and with special customs treatment; and an advanced telecommunications system that is ideal for call centers and data entry operations. This is not to mention the country’s strategic location in the Caribbean and its ample network of shipping and distribution channels, connected through 12 modern DR ports. The city of Santo Domingo has 18 hotels with approximately 3,061 rooms. These include a range of 4- and 5-star products of international brands with recognition such as the one I proudly direct, Occidental, along with Hilton, Melia, Sofitel, Renaissance, Hotel Premiere & Resorts, Intercontinental and Holiday Inn. All these chains offer highquality service, modern facilities and stateof-the-art technology, generally including WI-FI, high speed internet, fax and printing services. Hotel properties within the city of Santo Domingo also offer banquet halls for all types of events and conference and seminar rooms capable of hosting anywhere from 200 to 2,500 participants. The city offers a great variety of restaurants and gastronomic experiences: You can stay within the business district, visit a café in the Colonial Zone or enjoy your meal by the ocean. Cuisines range from traditional Dominican dishes to Italian, Mediterranean, Tex-Mex, Seafood, Japanese or fusion. Hotels play a major role by offering not just hospitality and fine dining but also access to knowledgeable staff with the training to provide guidance for business and leisure travelers alike. The country has a number of reputable universities and colleges that offer Tourism & Hospitality Diplomas as well as MBA programs that provide the industry with reliable professional staff. The National Institute for Technical and Professional Education (INFOTEP), a national non-profit that is funded by 1% of all employees’ salaries, offers training in a range of areas, including hotel maintenance, food and beverage preparation, cooking and baking. Some companies, such as Occidental Hotels & Resorts, also have hotel service training courses throughout the year to help management and staff keep up with the ever-changing expectations of our clients.

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Environmental protection & capital investment in the DR An island nation with abundant natural beauty and a strategic geographical location, the Dominican Republic, in the heart of the Caribbean, has become a prime destination for capital investment a comprehensive environmental protection policy based on international application principles and the regulation of activities impacting the environment.

Juan Mejia Environmental Policies & Management specialized Lawyer, DMK

he Dominican Republic is the most biodiverse country in the Caribbean. Covering an area of 48,670 square km, with a coastline extending 1,575 km, the DR encompasses a variety of endemic ecosystems located within the National System of Protected Areas, which is regulated by the law for protected areas (202-04) and occupies 24% of the country’s territory. Likewise, 67% of the national territory is earmarked for forestry, with woodland coverage equivalent to 27%.

Photo: Wales at the Samana bay

Environmental concerns in the DR over the effects of climate change in the Caribbean have made the country aware of the need to ensure environmental preservation as an integral part of its national development. The country is party to international agreements on: biodiversity, climate change, desertification, endangered species, hazardous wastes, marine dumping, marine life conservation, ozone layer protection, ship pollution, and wetlands. In the past, Dominican environmental legislation was not well integrated and consisted of a myriad of regulatory institutions. Since 2000, the country has relied on a General Law Governing the Environment and Natural Resources (64-00) which has allowed the implementation of

Law 64-00 creates the Ministry of the Environment and Natural Resources as the governing body for environmental management with the authority to issue technical regulations, and to supervise and enforce compliance with the law. In addition, it establishes a system of permits for activities that may affect the environment and which must rely on an environmental permit or license before being developed. Among the main regulated activities are mining, industries, energy, tourism, infrastructure and urban development. The law uses international application instruments for environmental management such as environmental impact assessment, permits and licenses, audits, public consultancy and incentives, thus establishing a common language to guarantee the application of standardized and recognized procedures and requirements when processing permits. The legislation of the Dominican Republic relies on incentive laws for strategic sectors influencing the environment, such as tourism investment, forestry development, renewable energies, alternative fuels and free-trade industrial zones, among others. And the General Law Governing the Environment and Natural Resources (64-00) is not an exception. It establishes a series of incentives and benefits for investments guaranteeing environmental protection and for companies adopting environmental management systems based on the ISO 14000 norms. In addition, the Executive Branch grants the “national environmental prize” to individuals, companies and institutions with an outstanding record on environmental protection, sustainable management of natural resources and adherence to healthy environmental procedures.

Additionally, the government fosters investment projects for domestic, commercial and industrial waste management (recycling, reuse, etc.), including incentives for social communications media to dedicate time and space to environmental education campaigns. The implementation of the General Law on Environmental and Natural Resources has generated profits in the industrial sector, increasing its level of competitiveness through the application of environmentally friendly techniques and technology such as the execution of environmental management systems, allowing entry into the carbon markets and the Clean Development Mechanism (see below). At the same time, the implementation of the DR-CAFTA (DR-Central American Free Trade Agreement), has provided access for industries to raise international financing or export products abroad its borders. As a signatory country of the Kyoto Protocol Agreement since 2002, the DR is working to help public and private sectors take advantage of the carbon bonds generated through the Protocol’s Clean Development Mechanism, which provides funding for efforts to reduce greenhouse gases., The broad natural potential of the DR along with the fiscal incentive programs have converted the country into an ideal destination for the development of ecotourism projects, sustainable forestry and renewable and alternative energies. In addition, activities such as mining have proven very attractive considering the quantity of minerals to be found in the country and the geographical location of the deposits.

References: • GEO Report - Dominican Republic 2010 – State and Perspective of the Environment. Ministry of Environment and Natural Resources, United Nations Environment Program (UNEP), 2010. • General Law of Environmental and Natural Resources (64-00). • Kyoto – Protocol • Encyclopedia of the Earth by World Wildlife Fund (WWF)

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ith tourism in Latin America representing 6.6% of GDP and 12.6% of total employment in the Caribbean region1, one can hardly dispute the industry’s profound economic and social implications. Tourism not only acts as the driving force behind wealth creation in many countries, but when judiciously exercised, it also encourages gender equity and youth participation; protects, restores and preserves the environment; and honors local cultural heritage. This is what I know to be sustainable tourism – a model that promotes economic development, encourages business to generate progressive, innovative solutions to ever-changing social and industry demands, and allows the tourist enterprise to compete successfully over the long run by striking a careful balance between today’s needs and those of tomorrow. The Dominican Republic’s tourist industry began four decades ago via the establishment of Casa de Campo and Punta Cana. It goes without saying that the DR understands the ramifications, both positive and negative, of tourism as a primary generator of economic activity. Indeed, the DR’s profound experience in the tourism industry allowed the country to proudly weather the global economic storms, reporting no fluctuations in tourism from 2008 to 2010, and in 2011 tourism represented 5.5% of GDP and supported 210,000 jobs.2 The DR is positioned as one of the most competitive tourist destinations in the world and in order to remain competitive, the industry, like all others, will undoubtedly need to address the tides of climate change and globalization. These matters resonate not only with international organizations like the United Nations, and various world leaders, but also with the very tourists we aspire to serve, as well as our employees and partners. Fortunately, major players in Punta Cana, La Romana, Bayahibe, Puerto Plata and Constanza have already taken tremendous steps toward sustainability, from establishing elaborate recycling centers to community-based and agro-tourism initiatives, setting industry trends and paving the way toward environmental, social and economic responsibility. Given the maturity of DR’s tourism sector and its unique ability to adapt and respond to economic, cultural and en-

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vironmental challenges, it’s within the reach of any investor to turn his or her vision for a sustainable, responsible development into reality.

these principles inform the day-to-day business decisions that position the project as a model for responsible tourism in the DR, the Caribbean and the world.

In fact, I have come to understand that the task of carving out the DR as a unique haven for sustainable tourism is one filled with opportunity, invaluable partnerships and new friendships; an exercise made possible only because political institutions, civil society and other private sector actors are also on board. Case in point is my experience with Tropicalia, an exclusive, environmentally responsible real-estate venture of the Cisneros Group of Companies that is completely committed to sustainability.

Tropicalia is a 25-year, US$2 billion investment. As a long-term business venture, we embrace a stakeholder approach to management, acknowledging that the health of business directly relates society’s wellbeing. We are the sector’s first luxury entrant in northeast Dominican Republic, and have a truly unique oppor-

When my family and I decided that Costa Esmeralda in the El Seibo province, a diverse habitat of pristine and incomparable beauty in northeast Dominican Republic, would be the home for Tropicalia, I knew the project’s success would be directly linked to a strong sustainability strategy incorporating economic, environmental and social principles of development. This holistic approach to business influences the choice of our team, partners and supply chain; the design of our master plan, golf course, hotel and villas; the creation of the Fundación Tropicalia, with its mission to carry out vital community programs; and the nonnegotiable commitment to preserve, restore and protect our most precious resource — the environment. At Tropicalia,

Adriana Cisneros de Griffin Vice Chairman and Director of Strategy, Cisneros Group of Companies Chief Executive Officer, Tropicalia President, Fundación Cisneros

Responsible tourism With some of the most diverse landscapes in all the Caribbean,

tunity to do things “the right way” from the start and create a benchmark for sustainable tourism in the region. Our competitive advantage depends heavily on the restoration and protection of the surrounding environment, the education and employability of the community, and the extent to which the Municipality of Miches and the El Seibo province, declared a Millennium Village by the UN, is prepared to respond creatively to a significant shift in economic activity. To accomplish our objectives, we have formulated a hybrid and innovative business model, combining profit and not-for profit components supported by a mix of commercial financing, grant funding and public-private partnerships. When faced with development challenges that pose a threat to progress, we use these partnerships to generate effective, long-term solutions for business and society, a philosophy that opens the door to national organizations ranging from the government to the U.S. Chamber of Commerce and RENAEPA (National Business Network for Environmental Protection), as well as international organizations, like the IDB (Inter-American Development Bank), USAID (United States Agency for International Development) and the UN Global Compact. Tropicalia deeply reveres the environmental integrity of Costa Esmeralda, a unique ecosystem of ocean, coastline, wetlands and mountain ranges and has taken all the steps necessary to pre-

serve, restore and protect these precious resources. At the same time we strategically select partners for their deep appreciation and commitment to environmental sustainability. These partners support several win-win relationships between stakeholder and project needs. For example, Auberge Resorts incorporates local materials in every aspect of design, from restaurant menus to architecture; Odebrecht, respected worldwide for its transparent and ethical business conduct, hires and houses a local workforce, and supports their professional development throughout the life of the project and beyond; EDSA and Cooper, Robertson & Partners, known for their ground-breaking work in sustainable design, utilize indigenous natural materials to create spaces in harmony with nature; and finally, the world-renowned landscape architect Tom Doak employs a minimalist approach to golf course design, using the natural features of the land to create championship courses. Since 2008, Tropicalia has been executing community programs via the Fundación Tropicalia, in areas key to business, society and environment. FT works in four program areas: education, productivity, environment and wellbeing, and caters its initiatives to the specific needs of Tropicalia’s most prized stakeholder – the Miches community. We work closely with the Miches school district, its teachers and students through several initiatives. Thanks to PPPs with the Ministry of Education, INDOTEL, Banco Popular and the Fundación Cisneros, since 2008 we’ve renovated ten schools, impacted the lives of thousands of students and supported the professional development of dozens of teachers.

With our eye on environmental sustainability, Fundación Tropicalia and its partners also established an agricultural training center to promote best farming practices among local producers. This program promotes sustainability in agriculture, diversifies produce and will supply Tropicalia’s future demand. As farmers adopt responsible agricultural practices, FT will support the creation of cooperatives and is already providing microfinancing options. We also established the League of Agricultural Entrepreneurs in Training (LEAF), an after-school initiative that allows students to design their own organic school garden, and develop entrepreneurship skills as children learn to bring their products to market. Recognizing that the prosperity of the local community is a key component to sustainability, Fundación Tropicalia partnered with FONDESA, one of the country’s largest microfinance institutions, to bring access to banking and credit to financially marginalized individuals. Additionally, we actively work with local authorities, civil society, academia and international organizations to strengthen local institutions, support Miches as a tourist destination, and execute training programs for local micro entrepreneurs. The vision for Tropicalia has always been holistic — one of sustainability, integration and social inclusion. We want our visitors to safely, comfortably and harmoniously experience the local culture and natural habitat of the region. The only way to guarantee this experience is to support the sustainable development and integration of all stakeholders in Miches and beyond. So while every strategy caters to our project in particular, we also seek to bolster sustainable tourism trends taking place elsewhere in the country, fostering an environment that is friendly to FDI by linking economic opportunities to responsible development. Indeed, our efforts have nurtured an indepth knowledge of the day-to-day lives of local and national stakeholders, their perceptions and expectations; working together to build a common future has been by far the most exciting part of this project.

the Dominican Republic is a land of extraordinary beauty. Its mountains boast pine, rain and cloud forests, while its oceans and waterways are home to mangroves, wetlands and rare marine life New players in the tourism & real estate industries integrate environmental preservation, local economic development and social responsibility into their business models change and globalization

(1) Inter-American Development Bank, Tourism: http:// www.iadb.org/en/topics/tourism/tourism-growth-in-latinamerica-and-the-caribbean,3853.html. Accessed: 12-01-11 (2) World Travel & Tourism Council, Country Report: Dominican Republic, http://www.wttc.org/research/economic-impact-research/country-reports/d/dominicanrepublic/. Accessed 12-01-11 Photo: Timothy Greenfield-Sanders

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he recent economic crisis has provided travelers with an opportunity to appreciate the sector’s high quality-price value, and the cruise industry has been able to maintain its reservation levels over 2008-2009. A basic cruise—visits to several destinations over a period of at least one week—has become one of the easiest ways to take a vacation. This, combined with cruise lines’ increasingly strong focus on turning higher-quality ships into destinations themselves, has been a great boost to the industry. In the DR the tourism industry has grown impressively but as it faces the challenge of maintaining this growth, cruise ship tourism is an important element that has not yet achieved its full potential. According to the Florida-Caribbean Cruise Association (FCCA), in 2009, 10,290,000 cruise guests originated from North America, 76.5% of total passengers worldwide. Other key markets are Germany, Italy, the United Kingdom and Spain. Since

Sharon Mei Sans Souci Commercial Director

80% of cruise passengers think of cruising as an effective way of sampling destination areas to which they may return, increasing the number of passengers means opening the country to further visits. The industry uses two modalities: cruise ship arrivals to a port city, which can be day calls or port-of-call arrivals, where the ship is received as part of its itinerary, or as a home port or turn-around call, where the port is first and last stop on the itinerary. A port, depending on its strategy and its location, can operate using one or both modalities. In either case, there is a great deal of interaction between everyone involved: tourists enjoy the destination and all its leisure and entertainment options; the community benefits from the creation of employment and commercial exchanges (taxis, tours, shops, restaurants, attractions, etc.); logistical chains are set up (in the case of the home port operation) and the government ensures steady income, currency generation and an overall increase in economic and fiscal activity. The DR has four facilities for receiving and hosting cruise liners: the ports of Santo Domingo and La Romana and the arrival facilities at Catalina Island and Samaná. All are private sector concessions that have involved investments in infrastructure for equipping them to international standards. The largest port infrastructure investments have been made in La Romana and Santo Domingo, where terminals and docks have been specifically built. These investments reached US$70 million in 2008. In Cayo Levantado, Samaná, dock operator Bahia Cruise Services has made a US$2 million

Cruise destination The cruise sector is one of the most dynamic segments in the global travel tourism industry, and the Caribbean Sea continues to rank as the dominant destination, with 37.2% of all itineraries Through private concessions, the Dominican Republic is upgrading its port infrastructure to accommodate a booming cruise ship market that has been growing by 7.4% on average annually since 1980 and sees almost no traces of recession

investment to equip the reception facilities. The improvements have translated into an increase in the number of arrivals and passengers visiting the DR on cruises. The country received 300,000 passengers in 2005, expects 500,000 passengers during the current season and could reach 1 million passengers in four year’s time. In Santo Domingo, Sans Souci Ports has made investments exceeding US$45 million, remodeling Don Diego Terminal and building the new San Souci terminal, up to date the most modern cruise terminal in the region. The Port of Santo Domingo operates as port-of-call as well as home port arrivals. The Port of La Romana is the DR’s other home port. Over the past five years, a broad range of cruise lines (Royal Caribbean, AIDA, Costa, Pullmantur, Thompson and Tui Cruises) have been managed by both ports under this modality on a regular basis. Santo Domingo also manages niche line passenger embarkment operations focused on specialist markets (Club Med, Saga Cruises and SeaCloud). All these infrastructural improvements are just the launching point for consolidating cruise ship tourism in the DR, however. The country’s potential lies in its skill at coordinating the infrastructure with additional investments—public as well as private—at the same destinations, in order to make the experience more appealing to both cruise ship passengers and cruise lines. Coordination of good tour and transport services and easily accessible port attractions (parks, restaurants, museums and activities) is essential for the continuing development of this sector. Economic impact studies by the FCCA show that the average tourist spend is in out-of-port activities (i.e. in the destination itself) and that the destination that has the most varied offer and that succeeds in positioning itself best is the one that will achieve the greatest spend per passenger. The average cruise passenger spending per port-of-call was $97.26, while for crewmembers it was $89.24. For Santo Domingo’s development as a destination, Sans Souci Port has overseen a public works investment program in nearby areas with the aim of making the city’s seafront a more attractive area for local people and visitors and providing local training programs with the Ministry of Tourism and the FCCA. The FCCA has selected the DR as the host nation for the 2010 FCCA Annual Conference .

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ow have marinas have been developed since the creation of Casa de Campo in 1998? Many dismissed the creation of the Casa de Campo Marina as an amusing extravagance, but we at the Central Romana Corporation thought it would provide Casa de Campo with a key luxury tourism element that would add to the resort’s services. Casa de Campo had three golf courses, 24 or more tennis courts, a polo field, a hotel, 1200 villas and a private international airport. A marina seemed the ideal component to expand the resort’s services and boost its status – and it worked. The country’s yachting market grew overnight, other tourist operators in the country followed our lead and today there are nine marinas in the DR, the quality of the existing ones has been improved and there has been major growth in the sector.

Bahamas, Turks and Caicos, Cuba, Jamaica, Puerto Rico, the Virgin Islands, St. Thomas and many others that form a large arc from Miami to the South American coastline. All these islands have a strong yachting tradition, but up till now the DR has been left out of this circuit. The industry needs to be reactivated at both the private and government levels in order to make up for lost time. We need to implement policies that ease visits, increase arrivals, do away with internal bureaucracy in the ports and provide tax stimuli for creating new marinas.

How is the DR positioned as a destination for nautical tourism? The Dominican Republic is right at the heart of the Caribbean, surrounded by islands and archipelagos like the

If we consider just one of the many regattas, for example Antigua Week, where some 170 to 180 sailing boats compete, the spending on hotel rooms, restaurants, crew, berthing and replenishing supplies is US$15,000 to US$20,000 per boat, or a total of about 3.6 million dollars.

On the Caribbean islands, not including the South and Central American coasts or the Bahamas, 25,000 to 30,000 vessels are expected during high season, ranging from private sailing boats and charters to motorboats and large yachts, generating income of some 35 to 40 million dollars.

Describe the DR’s existing marinas. The DR’s marina situation is very deficient. On the northwest coast we have the Bay of Luperón, which is a place that would be perfect for several marinas. An American group recently presented a good project that was turned down by the authorities. Giannfranco Fini, Yacht Club Manager Marina Casa de Campo

On the whole, the Dominican coast has a very regular outline with few places appropriate for developing a marina.

Yachting The Dominican Republic is rebuilding its reputation as a top yachting destination in the Caribbean Governmental authorities have passed on new regulations to simplify private yachts entrance procedures to Dominican ports and privately held marinas have been built in Santo Domingo, Samana and Puerto Plata

In addition, Dominicans don’t tend to look towards the sea, which is especially strange when one considers that the DR was the site of the first Caribbean ports in history. We can divide the DR’s marinas into three categories. The modern marinas are linked to several facilities and offer good services: Casa de Campo Marina, the Club Nautico de Boca Chica, the Marina Punta Cana on the east coast, Puerto Bahía in the Bay of Samaná, Sans Souci at the mouth of the Ozama River in Santo Domingo and Ocean World in Puerto Plata. Then we have the intermediate category, marinas with few services and docks that are generally in the commercial ports, such as Puerto Plata, the Salado River in La Romana, the Zarpar Marina in Boca Chica, and the Salinas Marina on the south coast, near Barahona. The third category consists of what amount to poorly constructed havens for boats, such as those in Luperón Bay and in the mouths of several rivers like the Cumayasa. What are the tourist attractions in each destination with existing marinas? Does the DR need to develop a circuit of marinas to promote international events? A country’s tourist attractions, especially in the case of a peninsula, island or archipelago with existing marinas, allow owners of modestly-sized boats to make one- or two-week long yachting trips, stopping at several marinas, overnighting in equipped places, making landfall and getting to know different areas. This generates employment and income by also creating charter facilities and complementary offers. The vast majority of Caribbean islands offer this type of yachting tourism these days. In the DR, this opportunity is underexploited, and it makes for an excellent investment opportunity. The DR should promote a world-famous international event to spread the word about our potential, especially for large yachts that can sail out of Antigua, St. Martin, St. Barts or St. Thomas. What investment opportunities exist for foreign investors in the marina sector? The current global financial crisis presents a challenge, but in the near future I see a great deal of potential in this country for any high-end or middle- to highend tourism investment. This is the type of tourism we’re currently lacking, and demand for it is always on the rise.

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olf has become a tremendous industry and a key amenity for real estate and resort projects around the world. As Latin American and Caribbean tourism has flourished over the past two decades, golf has taken a primary role in planning and project development. Golf courses provide an attraction for both real estate buyers and tourists seeking to enjoy a little a bit of paradise during their vacation time. The Dominican Republic is slowly positioning itself as one of the world´s top golf tourism destinations. Alongside a thriving tourism industry that has been able to attract 4 million visitors per year seeking out the country’s main commodities—the sun and its beautiful beaches—the DR has been able to develop an excellent parallel offer. Golf opens a new and lucrative business segment for the tourism industry, taking advantage of a climate that allows for golf to be played year round.

Efren Garcia Estrada Director of The Cap Cana Championship 2008 – 2010

The DR as a premier Caribbean golf destination With more than 20 “signature” golf-courses by Pete Dye, Robert Trent Jones, Nick Faldo and Jack Nicklaus, the Dominican Republic has become one of the top golf travel destinations in the Caribbean The combination of high-end golf courses, marinas and luxury resort accommodation is enhancing golf tourism and transforming the DR into the new international ‘It’ destination for golf

According to the Golf Channel, golfers spend about $26.1 billion a year on golf travel, 75% of which goes to hotels, transportation and the food and beverage industries. Golfers spend over 4 times more than traditional tourists and seek upscale accommodation and complementary services, boosting profitability, creating jobs and attracting multimillion investments. The DR’s proximity to the U.S. and Canada, which together have the largest number of golfers in the world, is another major asset for enlarging the DR’s market share in the region. According to Golf Channel Solutions, there are over 26 million golfers in the U.S., with the term “golfer” defined as anyone 18 or older who played at least one regulation round of golf in the past 12 months. And 36.7 million Americans are golf “participants,” defined as anyone 5 or older who either played a round of golf or visited a golf practice facility. Based on the RCGA’s 2006 Golf Participation in Canada survey, conducted by Ipsos Reid, there are approximately 5.9 million golfers aged 12+ in Canada who play at least one round of golf per year.

But being “close” in geographical terms does not always mean “easy to get to” in logistical terms. It has taken the DR authorities and private developers many years of joint work to make the DR an extremely accessible destination with a total of nine international airports to service its main tourist hubs. The value of this forward-looking vision among tourist industry and real-estate developers cannot be underestimated. They realized that the DR could compete with other established warm-weather destinations such as Florida and South Carolina. Enhancing their projects with top-of-theline golf courses designed by well-known golf course designers with highly acclaimed “signatures” has provided extra exposure and added enormous value to the finished product. It was 30 years ago that Casa de Campo first opened the spectacular Pete Dye Teeth of the Dog, turning the attention of international golfers to the great courses of the DR. The country now has golf courses by well-reputed signatures like P.B Dye, Robert Trent Jones, Tom Fazio, Nick Faldo, Nick Price and Jack Nicklaus. Dominican developers have been able to provide course designers with spectacular oceanfront real estate that others without such foresight might have kept for building homes. This has allowed the DR to offer not only a varied array of fine golf courses but also to stamp many of them with the added value of being “oceanfront.” These are the golf courses that are becoming the standard bearers of the DR destination, due to the great visibility they can provide. They have provided a new dimension to golfing in the DR and now allow the country to position its golf offer alongside the best.

There is still much to be done, and a range of opportunities are available within this industry segment. On the infrastructure side, what’s needed are better roads connecting destination hubs such as Punta Cana and La Romana. Roads will surely help enhance the attractiveness of traveling to the DR to play golf. Increasing the number of hotel properties catering to the needs of the golf traveler will also make the destination more interesting and accessible. Although the quality of the DR’s oceanfront golf courses is turning heads and creating a media buzz, there is still a great deal of ground to cover in consolidating the image of the country as a premier golf destination. The DR needs to be included among the world´s official tournament sites; it certainly put itself on the map with the PGA TOUR’s Champions Tour event, held in Cap Cana 2008 – 2010. “From both players, visitor feedback and my own personal experience, the Dominican Republic is no doubt, one of the world’s premier golf destinations,” Champions Tour President Mike Stevens said recently. “The extensive domestic and international exposure the Cap Cana Championship has received the last couple of years from the Golf Channel telecast and the consumer and industry media coverage reinforces the Dominican Republic’s existing reputation as a great golf and resort destination.”

It is this combination of geography, climate and airport infrastructure that provides the DR with such a competitive advantage that tourism and real-estate developers have been busy trying to consolidate the DR’s extraordinary golf courses with their real estate and hotel projects.

This environment in our neighbors to the north puts the DR in an excellent position to meet the demands of golfers who seek to play their favorite game any time of the year, but most importantly during the winter months, when these regions are cold and many are covered with snow.

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he DR is universally known for its idyllic beaches and its magnificent geographical conditions. The particular combination of geographical diversity with well preserved historic sites has helped the nation become an ideal setting for filming movies. From the iconic “The Godfather II” in the early 1970s, to “Havana”, “The Lost City”, or “Miami Vice”, Santo Domingo colonial buildings and the typical urban scenarios of many Dominican cities have been part of great stories brought to the big screen.

Local producers have shown an interest in cinematography by exploring and building a national film-making industry. As a direct result of these initiatives the DR has become quite competitive in the film making industry. Since the early 1990s, dozens of Dominican projects have been produced and filmed in our country, enabling the development of a wide group of experienced artists, professionals, and technicians, all specialized in the various stages of the cinematographic production.

Notwithstanding these advantages, it is evident that the development of a film industry requires a lot more than a strategic location, skilled professionals and beautiful landscapes. The incentives have launched and supported the cinematographic industry in many states of the US, France, Canada, New Zealand, Fiji, Australia, Germany, Israel, Iceland, Ireland, South Africa, Taiwan and many others. Like the above-mentioned nations, we have jumped onto this bandwagon by adopting long-awaited legislation that regulates and encourages film production on Dominican soil. With this added value, the spectacular locations and our political, economic, and social stability are complemented by new tax incentives that seek to convert our country into the main cinematographic destination of the Caribbean. With a formula that has already proven successful in other industries like Free Trade Zones and tourism, the Dominican President, Dr. Leonel Fernandez Reyna, has enacted a new law, 108-10, for the Development of Cinematographic Activity in the DR. This new legislation is meant to become an effective vehicle for economic development and competitiveness in the Dominican filmmaking industry, which has a potential for becoming a US$375 million dollar industry and employing over 24,000 people.

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The ultimate film destination in the Caribbean Marco Herrera Executive Director Funglode

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Film industry in the DR: Shooting for the stars Jasbinder Singh Mann Indomina Group Co-Chairman and CEO

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Dominican cinema Arturo Rodriguez Fernandez Film critic, scriptwriter, playwright and writer (In Memoriam)

Andy Garcia shooting The Lost City in Santo Domingo

Marco Herrera Executive Director Funglode

The entertainment industry is among the most competitive in the world. Its full development requires massive international investment in order to promote the nation’s

The ultimate film destination in the Caribbean The Dominican Republic has stepped into the 21st century as a new world class film industry location. The US$2.7 billion Caribbean, Central and South American audiovisual markets need locations that combine shooting facilities with tech cultural industries, domestic talent and fiscal incentives

creative industry, its local talent & expertise and the technological means necessary to tap into its tremendous potential. The approval of Law 108-10 is an important milestone for local filmmakers as well as investors and foreign producers. It promotes production, distribution and exhibition of both films and audiovisual works. It declares the film industry as an economic and cultural activity with public and social interest, regarding its imminent stimulation of domestic and foreign investment. Nevertheless, the most innovative aspect of this regulation is the implementation of a special tax credit for film production. This incentive provides a 25% transferable tax credit for all film production expenditures incurred in the Dominican Republic. Both films and other audiovisual productions such as TV series, documentaries, soup operas, and musical videos are eligible projects, provided that they have a minimum base investment of US$ 500,000. Of course, in many jurisdictions, transferable tax credits have been available for the film industry. In order to reach an adequate level of competitiveness, this particular incentive was structured to efficiently compete in attracting international productions with its many flexibilities and advantages. Therefore, it contemplates the possibility of aggregating multiple projects in order to meet the investment threshold and it allows multiple transferees of the credit with up to 3 years carry-forward time limit. Qualifying expenditures include all preproduction, production and postproduction expenses incurred in the Dominican Republic and, more importantly, it has no caps for above-theline expenditures. Qualifying productions may also apply for an additional sales tax or ITBIS exemption (16%) for all goods and services directly related to film preproduction, production and postproduction. Although this incentive seeks to attract international investment, it was structured to allow its use by domestic producers as well. With this possibility, and with many large taxpayers in the Dominican economy, the development of an active market to acquire the credits is warrantied. The incorporation of these tax credits places our country along the lines of most jurisdictions in the US, with advantages that exceed many of them. Its combination with the already mentioned ITBIS or sales exemption and -a skilled, un-expensive and non-union workforce, investment opportunities in the movie industry in the DR are countless.

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Film industry in the DR: Shooting for the stars The DR’s new Cinema Law will support domestic producers, distributors and exhibitors and promote international investment in film production in the country by offering both economic incentives and an attractive location for foreign films An award-winning director, recording artist and entrepreneur with over 20 years experience in entertainment and multimedia distribution, Jasbinder Singh Mann is the Co-Chairman and CEO of the Indomina Group and has set up shop in the Dominican Republic to help it become the ideal shooting & postproduction location in the Caribbean

Jasbinder Singh Mann Indomina Group Co-Chairman and CEO

he DR is known for its creative arts and diversity, and offers a wide range of possibilities for the media industry. Since my first visit I have found several similarities between the DR and India, where my family is originally from. Dominicans are an optimistic people with a very positive outlook about life. In an environment where people welcome you with open arms rather than skepticism, things become a lot easier. I pretty much fell in love with the DR – the people, the country, the variety – and found it an excellent location for The Indomina Group and Pinewood Indomina Studios. I have been in the entertainment industry since I was sixteen years old and I understand the challenges of shooting and getting involved in the creative arts in a developing country. There’s a learning curve, there are language barriers, people need to be trained and talent upgraded to meet international standards. The Caribbean is an ideal location and the DR is well known in the movie industry since many internationally renowned feature films have been shot here. To further enhance the country´s possibilities in the industry we created a first-rate logistics company. Since 2008 we have brought in a number of commercial shoots and production crews, but the best is yet to come. We are building a world-class production facility (Pinewood Indomina Studios) for film, TV and multimedia content, on a 300acre property located just 15 miles from the Santo Domingo international airport and the Caucedo container sea terminal. Our four state-of-the-art, digital-ready soundstages will be open for business in 2012 and the studio will become the top facility of its kind in the region. The country now hosts six to ten feature films per year and we expect this figure to double over the next few years with the presence of Pinewood Indomina Studios. Starting 2012 we will be bringing in an average of two movies and one television series per year. It is a self-perpetuating workflow that includes our own products, commercials that are constantly shooting, finding productions to service and big feature film productions brought in through Pinewood. Before we embarked on shooting in the Dominican Republic we spent the last two years understanding the dynamics of

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the country and finding the right people to work with. We found that technical crew such as grip, electrical and cameras are at a very good level, -as good as anywhere else in the world. However there are certain areas that need improvement, such as makeup, costumes and art department. Since further training is needed to bring these up to the level needed to serve a top international production, we are creating a vocational school that will open this year. It’s important to help people develop skill sets so these productions create opportunities for Dominicans. We will be providing hands-on training in art department work, wardrobe, even camera and electrical. We can bring highly skilled people from overseas and let them share their knowledge with individuals who have a passion for this industry. A principal objective for Indomina is the generation of shared value, which could in time contribute to sustainable social and economic development within the Dominican Republic. This is exemplified by the on-the-ground crew training program for local talent which will ultimately empower and prepare them to create and manage their own businesses. Our training institute along with these recently launched programs will help us realize this imperative goal. Film production is interconnected with many other industries, especially architecture, because when you are building a set the initial process is the same as if you were creating a blueprint for a building. So our vocational school will also be training people in the fields of architecture and production design. When we bring international productions into the country, they bring in the key individuals who handle the technical and creative roadmap for the film. In general, the rest of the work is in collaboration with local talent. In essence, what happens immediately is that you create opportunities for secondary cast members to perform in these productions, so it gives local actors a chance to assess their own performance level and how they need to improve.

into the country they will help the artists improve so they are performing on an international level. Eventually the market will start maturing and you will have a multiplier effect, where locals will be setting up acting schools and representing Dominican actors so they will find work not only in productions that come to the country to shoot but also in Hollywood. It creates a portal, a gateway to opportunity for a lot of performers. The creation of our studios, a world-class production facility in the heart of the country and our vocational school will bring the DR to a new level in the industry. Our film studios in the DR will be operated and marketed internationally by Pinewood Studios, with 80 years experience in the field. We will bring productions to the country that will be filming both outside and within the facility. Those productions will stimulate the local economy, since cinema is a massive service industry, requiring not only actors and crew, but transportation, catering, rental equipment and so on. It will create a constant workflow. Shooting films in the DR will also have other positive collateral effects on the country´s economy, bringing in celebrities and boosting tourism, for example. The entertainment industry has new interest in the DR as a shooting destination. In the last two years we have brought production managers over to the DR to visit the entire country and show them the terrain, locations and how it could work for them. Production department heads from Disney, Warner, Fox, Universal Studios and many others have toured the DR and their feedback has been very positive. There´s nowhere in the region where you can find the kind of diversity in locations and the regional accessibility of the DR. Documentaries help broadcast the country’s beauty, culture and musical talent. We are already analyzing scripts for projects that are being sent to us by Dominican writers and artists. Since our company is based in both the DR and L.A. and partners with a major studio in London, this is a big opportunity for these artists. It gives them a voice and a place to send material that we can help them develop. On the music

side we focus on distribution. Indomina is creating a music distribution platform, signing artists and releasing globally to give Dominicans not just regional but international exposure. And for the movies we are producing from the ground up, we are working with Dominican artists to give their music cross-marketable exposure. The DR’s new Cinema Law will support local producers, distributors and exhibitors as well as foreign investment in films and location sets. We have made a comparative study of the investment incentives offered by other Caribbean & Central American countries, to understand how to make the DR cost-effective and competitive as a shooting & postproduction location. With a fully transferable 25% tax credit the DR becomes one of the most favorable and competitive places to shoot in the region. “Pirates of the Caribbean Four,” recently shot in Puerto Rico, poured over US$60 million into the economy. The DR is fully prepared to host this kind of productions and we will be here making sure that it does. We are passionate about the DR and especially about creating value and opportunities for the people behind the company. We are here because we have been lucky and successful in our lives and now it’s time to pay it forward. The thing that appeals to me personally about being in the DR is that I felt an immediate affinity for the country and I hope that in some small way I can bring opportunities to everyday people. This is about some young kid sitting at home watching TV, playing video games or going to the movies or reading comics, who starts sketching some of his or her own ideas. Let’s give these kids an opportunity to achieve their dreams and realize their talent. That is the biggest payoff you could possibly have, so we are trying to create opportunity from the bottom up, not from the top down.

Among other things, we are working to build local proficiency in casting or acting, and provide the knowledge base and the training opportunities for artists who want to be performers. It is an area that needs improvement, and when you have international casting directors coming

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ew countries can offer as many advantages for shooting films as the Dominican Republic, with its privileged geographical location, its climate, its sunshine, the diversity and beauty of its landscape and the friendliness of its inhabitants. One of President’s Leonel Fernandez’s aims as a lover of the Seventh Art has been to encourage filming in our country for national as well as foreign productions. He has said he hopes one day to see the DR become Latin America’s Bollywood. When he was elected into office in 2004, foreign productions ranging from Andy García’s The Lost City to Luis Llosa’s The Feast of the Goat were among the films starting shooting. And the President instructed Minister of Culture José Rafael Lantigua to take steps to set up a National Cinema Board to further encourage the industry, now fully in place under the name DINAC.

It’s true that during the 1970s, the idea of filming major movies in the DR was given a great push by Gulf & Western president Charles Bluhdorn, responsible for The Godfather II being shot in Santo Domingo. During those years, the DR experienced an avalanche of European—mainly Italian and Spanish— filmmaking, turning out movies such as Noa Noa, El Dios Negro, Samoa, Order to Kill, Pantaleón y las visitadoras and 100 or so more. Other major U.S. productions shot in the DR were Wes Craven’s The Serpent and the Rainbow and Sydney Pollack’s Havana. Nonetheless, until DINAC, no formal government body had the task of attracting and facilitating these projects. So DINAC immediately took on the task of convening industry professionals with a view toward reaching a consensus for submitting a proposal to the national legislature for a Cinematographic Law. Jump to the present: After lots of discussion and generous advice from a foreign expert (Colombian Gonzalo Castellanos, responsible for several Latin American laws on the subject), a preliminary draft of such a law has been sent to Congress and is expected to be approved and enacted quite soon. When the bill is passed into law, foreign producers will have an easier time than ever to come and film their movies on Dominican territory. President Fernández has met with many of them himself, and a range of foreign directors (such as Sergio Gobbi, an Italian based in

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France who is the president of Les films de L´Ástre) plan to open permanent offices in the DR, including new studios. In the meantime, international producers wishing to film in the DR should contact DINAC for expedition of customs and administrative procedures governing such key details as bringing cameras into the country, getting help scouting locations, securing permit to film and overall security matters. Even without the film law in place, the DR is quite well prepared for any situation. Films shot in the DR during President Leonel Fernández’s government have included Robert De Niro’s Good Shepherd and Michael Mann’s Miami Vice. Several scenes were also filmed for The Fast and the Furious II with Vin Diesel, who has become the Dominican nation’s unofficial ambassador in Hollywood with his loud praise of our people and the beauty of our locations.

Filmmakers continue to be drawn to the DR because there are few other countries where, in such a small area, a director can find beautiful beaches as easily as spectacular mountains, the oldest colonial city in the Americas and even deserts. Almost anything can be filmed in the DR, even something as non-Caribbean-seeming as a snowy winter scene in The Lost City that is supposed to set in New York City. Indeed, the DR is an island of contrasts that offers unprecedented attractions for the eye of the camera. That is not to mention the convenient and comfortable accommodations our country has to offer. There is no place you can film in the DR that isn’t a short drive away from excellent hotel facilities, capable of accommodating entire crews and suiting all budgets.

Arturo Rodriguez Fernandez Film critic, scriptwriter, playwright and writer (In Memoriam)

Dominican cinema Our friend Arturo Rodríguez Fernandez passed away on April 16, 2010, soon after writing this piece He chaired The Dominican, National Cinema Association (DNAC) and was the Film Commissioner of the Ministry of Culture Arturo was the soul of Dominican cinema. This section is dedicated to his memory, his enthusiasm and professionalism. He is greatly missed

Exporting excellence The Dominican Republic is currently one of the leading exporters of tropical organic products The EXIM Bank of the Dominican Republic, the country’s first and only export credit agency is being developed with assistance from the EXIM Bank of South Korea and it will be fully operational in 2012

Eddy Martinez Manzueta Executive Director CEI-RD and Secretary of State

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Exporting excellence Eddy Martinez Manzueta Executive Director CEI-RD and Secretary of State

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Sugar in the Dominican Economy César Heredia President of UNAZUCAR

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Dominican rum conquers the world Alberto Nogueira, GM Barcelo Ron

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Best Cacao? Hector José Rizek Executive VP Rizek Cacao

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The history of Dominican tobacco Hendrik Kelner General Manager, Tabadom Holding Inc.

he Dominican Republic has undergone a dramatic economic transformation over the last 40 years, moving from a commodity-producing and exporter economy to a diversified one. The country now exports increasingly sophisticated and high-quality goods and services to international markets. Just a few decades ago, exports of sugar and other agricultural products made up almost 70% of our hard currency income while these now represent just 5% of the total. Only 20 years ago, non-traditional goods exports, including free trade zone products, made up 14.6%, while in 2009 they represented 92.7% of the total exported.

to improve competitiveness, given that most exports consist of goods with limited technological content, such as agricultural products, raw materials, natural resources and low-tech industrial products. In order to promote the sector, five initiatives launched by the CEI-RD are under way, run with technical and financial support from international institutions, donor countries and the international banking sector: • The South Korean government’s Ex– Im Bank is offering a financing system for the operation and expansion of Dominican exporters.

Four out of the ten cigars ranked best in the world are produced in the DR. According to the International Cocoa Organization, the DR is the world’s largest exporter of organic cacao, with a 45% market share. The centuries-old experience of Dominican rum production has led to widespread acceptance of the product at international level, enabling a US$90 million growth in hard currency generation, 14 times the value exported in 2000.

• Support for the National Development Strategy, launched by the Ministry of Economy, Planning and Development (MEPyD), following a proposal President Leonel Fernández Reyna made to the government of South Korea in 2006. The proposal is for technical assistance from the Korean Development Institute (KDI) for the development of a National Export Strategy, now in its second phase of implementation.

In 2009 more than 2,500 Dominican product lines were exported to over 100 countries around the world and these have reached values exceeding US$1.5 billion for four consecutive years. Fifty-four products have generated more than US$20 million each. The products that are sold overseas for more than US$20 million per category include handmade cigars, steel re-bar, dialysis equipment, identifiable circuit breakers, disposable sheets, brassieres and men’s shoes with leather uppers. Other products are sugar cane rum, raw cane sugar, cement, cacao, computer parts, gold pieces, gold and diamond rings, scrap iron and steel, telephone parts, disposable medical products, organic bananas, electricity meters, fire and security alarms, fertilizers, avocados, beer and wheat flour.

• The Production Systems in a Controlled Environment Program, with US$50 million provided by Deutsche Bank and the National Housing and Production Bank (BNVP) and US$30 million by the government of Israel. • An office for promoting Dominican agricultural products at the Hunts Point market in New Jersey serves over 30 million people in New York, New Jersey and surrounding states.

With US$16 billion worth of international trade, the main Dominican export markets are the United States, France, South Korea, Puerto Rico, Haiti, the Netherlands, the United Kingdom, Canada, Belgium, Luxemburg, Germany and Japan.

The development of the export sector is a national priority. Efforts are focused on positioning our exportable offer and improving our market share, with projections for increasing the US$7 billion in exports achieved in 2008, including free trade zone exports, to US$10billion in 2010, or to achieve at least US$25 billion in exports for 2020.

• A program for developing Dominican firms as “global companies” so that Dominican business owners with dynamic companies and export vision can receive special help in their quest to become real trans-national corporations. These will follow the example of Dominican companies already positioning themselves successfully in international markets and showcasing the export potential and competitiveness of Dominican products. The challenge is to convert at least five Dominican firms into global companies with exports greater than US$300 million each.

The DR is the world leader in the production and export of premium cigars, rum, cacao and organic bananas, as well as one of the regional leaders in exports of tourism services, which have created a worldclass brand of quality and prestige.

These objectives will be achieved by exploring new frontiers, new markets and new products, and by creating synergies and alliances for exporting world-class Dominican products. Human capital and innovation will be at the center of efforts

Supporting the export sector is key for the country’s economic and social future in order to consolidate an economy of world-class products and services and to achieve the goal of almost doubling per capita exports between 2010 and 2015.

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he DR has been known for its sugar production for centuries. From the colonial years of the 1400s, when a rudimentary mill called the “trapiche” was used to extract the cane juice, to the 19th century factories with their steam machinery, to the modern sugar mills of the 20th and early 21st centuries, the sugar industry has been the country’s main economic activity. The sugar sector was the backbone of the national economy until a few decades ago. In the late 1970s, the sugar sector occupied 12% of all the country’s farmland, provided 49% of its export income, 75% of export taxes and 20% of the government’s fiscal revenue, and accounted for 85% of its GNP. By the mid-1980s, international prices had plummeted and a crisis shook the industry. Internationally, sweeteners were increasingly replacing sugar and at the domestic level, the Dominican sugar sector was being undermined by increased government taxes, difficulties in hiring labor for cane cutting and the substitution of sugar cane with other crops. The Dominican government was operating only 12 of its 16 sugar mills, and the nation’s most important economic sector fell into collapse and bankruptcy. But in the private sector, the Dominican sugar industry has made a remarkable comeback. Today, this sector is represented by three domestic producers – Central Romana Corporation, Consorcio Azucarero Empresas Industriales (CAEI) and the Consorcio Azucarero Central – the first two on self-owned land and the third on land leased from the Dominican Government. These three corporate groups, with planned and sustained investment, have gradually made the changes and technological adaptations needed to compete in a market that demands greater efficiency. Today, the Dominican sugar industry is a competitive producer of traditional sugar cane products such as sugar and molasses, the latter used for industrial production of renowned rums, both Dominican and foreign.

The country’s sugar cane plantations now comprise more than 1.6 million acres, with annual production of over 500 thousand metric tons of sugar, more than 30 million gallons of molasses and over 30 thousand metric tons of furfural (a sugar byproduct used in petrochemical refining and solid resin production). The Dominican sugar industry currently generates 30,000 jobs a year and distributes approximately US$100 million a year in salaries; including some US$14 million invested in corporate social responsibility. The industry also generates foreign currency

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Sugar in the Dominican economy After Cuba, the Dominican Republic is the Caribbean second-largest Caribbean producer of sugar cane, the nation’s leading commercial crop The sugar industry in the DR has been a cornerstone of the nation´s development

amounting to US$120 million from exports of sugar, molasses and furfural, plus over US$243 from domestic sales of sugar and molasses, contributing some US$62 million a year in government taxes. Under public scrutiny like any business in the private sector, the Dominican sugar industry has been the target of accusations and groundless suspicions, in addition to slanderous campaigns at the international level. Nevertheless, credible organizations such as the International Labor Organization (ILO) acknowledge the enormous work done by the Dominican business sector to eradicate child labor in the sugar production environment, the freedom given to labor unions and the free access to justice for any factory and/or field worker of the sugar industry. In addition, the Dominican Ministry of Labor acknowledges unlimited respect for the rights of all immigrant workers in the sugar industry, and last year the plenary of the United Nations Office of the High Commissioner of Human Rights, in its Regular Universal Report in Geneva, recognized without reservation the progress made by the DR on this issue. Given the efficiency of the Dominican sugar sector, the country now has a window of opportunity to expand sugar cane production – not only for traditional byproducts, which today enjoy competitive market prices, but also for fuel and energy production and other products that are raw materials in over 50 products with commercial value in the domestic and export markets. To seize this opportunity, it is critical to take advantage of the land left empty as a result

César Heredia President of UNAZUCAR of shutting down state-owned sugar mills. And for this very reason, the government has created a legal framework that regulates and encourages investment in renewable energy and the production of ethanol. The development of new projects using sugar cane as renewable raw material provides significant advantages for investment. One example is the project proposal submitted by CAEI and other associates to install a production plant for 1.0 million gallons of ethanol, 70 megawatts of power energy and 100,000 metric tons of sugar, with an investment of over US$500 million on the land owned by the government´s three sugar mills. This project, of strategic importance for restoring the industry and the economy in the Eastern region, currently awaits government approval to facilitate investment of domestic and foreign capital. Thanks to innovative investment projects like this, building on the DR’s centuries of experience in sugar production, the future of the country’s sugar industry looks even brighter than its historic past.

he Caribbean region is the epicenter of the world´s rum industry although India is the world´s largest producing market. This fermented mixture of sugar and water has become a symbol of the Caribbean, and stands out as one of our regional trademarks.

Its origins date back to the discovery of the New World, when sugarcane arrived in the American continent on Columbus’s second trip in 1493. Sugar had a tremendous economic and social impact all over the Americas and led to the creation of the Caribbean´s most popular beverage. Although sugarcane was first planted in Hispaniola and Cuba, Barbados was the first island in the Caribbean where large areas were cultivated with the purpose of producing sugar for export. The beverage made from molasses was first mentioned in some historical documents from Barbados in 1650. The proliferation of sugar refineries led to the growing popularity of a drink made from fermenting molasses, a spirit drink that is associated with pirates, sailors, slaves, white sand, blue seas and palm trees to this day. Rum was referred to as ‘Mata-Diablo’ or ‘Kill-Devil’ and ‘Rumbullion’ (a word from Devonshire, England, meaning ‘great turmoil’). In the French Antillean colonies, it was later called ‘guildive’ (modification of “kill-devil”) and tafia, an African or indigenous term. Later, it was called Rum (Rhum in French and Ron is Spanish), which seems to have come from Jamaica, and has kept the name ever since. The production techniques employed at the time were rudimentary, and rum was a strong and rough drink. Father Labat, a Dominican priest was responsible for the use of more sophisticated stills, and the quality of the product improved and rum production developed notably in most of the English and French colonies. During the 18th century the rum industry started growing in the Spanish Caribbean territories, especially in Cuba, followed by Puerto Rico and La Hispaniola. The Caribbean rum is produced from cane juice as well as from molasses and can be classified as “heavy” or industrial (those produced from distilled or low-grade alcohol and in single-column stills). Agricultural rum or “rhum agricole” uses cane juice as a raw material, distilled in copper stills. In the Dominican Republic, Cuba,

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Puerto Rico and other Latin American countries, the rums produced are known as light, which use molasses as their main raw material and are distilled in stills with more than one column, resulting in a much purer alcohol. Molasses are fermented with yeast converting the sucrose to alcohol. During distillation the alcohol separates from the other substances as a result of differences in temperature. The high quality raw material, the yeast, and the purity of the water used during the entire processing of the molasses are essential elements to quality. The alcohol produced is poured into aging containers and after purity tests it is placed into white oak barrels until it reaches a point of maturity required for each of the rums that is going to be prepared. Once the product is ready, in stainless steel tanks, it is left to rest for a period of time, the length of which depends on the type of rum desired.

to date, the Dominican Republic has been reaping the success of the rum industry, from traditions of families engaged in its manufacture to modern companies that produce rum to high-quality standards using modern techniques. In the late 20th century, rum acquired a great deal of popularity in the global marketplace fuelled by the Dominican tourism industry expansion, which has notably helped Dominican rum’s global introduction. In this decade of the 21st century Dominican rum has acquired an unprecedented prestige that is now maximized in combination with other products like chocolate. Rum is the taste of the Caribbean and the essence of the Dominican Republic´s spirit. It is a high quality beverage worth around US$ 135 million per year in exports, and is one of the country’s leading products.

A very strict legislation in the Dominican Republic requires rum to be aged for a minimum of 12 months in oak barrels. Since there are many rum producing countries that have no government control to maintain high standards, they take advantage of this to market products under false ages. In the past there were large numbers of rum producers and almost every merchant had a still where he produced his own rum for sale. Since the 19th century

Alberto Nogueira GM, Ron Barceló

Dominican rum conquers the world Rum is a great, authentic Dominican product that is made using 100% national ingredients. Its raw material, molasses or sugar cane juice, is a product that comes from the very heart of the Dominican soil. For Dominicans, rum is considered both a historical and a cultural asset, and is one of the DR’s identifying symbols overseas and an integral part of the country’s branding Dominican rum has a well-earned reputation in the country as well as overseas, where it competes successfully with the most prestigious international beverages

any citizens of cocoa producing countries proudly claim that their cacao is the best. Assessments of this kind are based on the past reputation of certain cocoa producers, transmitted from generation to generation and, of course, fueled by natural patriotism. As we all know, well-prepared cocoa beans together with cocoa butter and sugar are the main ingredients required for preparing fine chocolate. Its main component, the cacao bean, was once called the food of the Gods. Like coffee, in the case of the cocoa industry an interesting dichotomy arises because one country can claim to produce the best cacao beans, while another one can maintain they prepare the best chocolate. If we build a pyramid of quality we can evaluate the different processes involved in the manufacturing of a premium dark chocolate and debate with the experts the percentage of importance that each one of these holds in attaining excellence. In today’s gourmet and fine food market, competition among premium chocolatiers is tougher than ever. The sophisticated modern day consumer is very well informed and demanding, not just interested in a superficial account of the history and traditions behind the more or less well deserved reputation of a particular cocoa growing country, but also likely to demand a substantiated explanation on the precise origin of the beans, on the planting material, on the different processes involved in the manufacturing of the finished product as well as the full traceability from the very farm up to their supermarket shelves. Customers would probably want to make sure that the whole supply chain was managed in accordance with the basic rules of respect of the environment and of the biodiversity. And last but not least, the curiosity of these novel knowledgeable consumers would in all probability question every fraction of the bean-to-bar value chain in order to formulate a proper estimation of how much of what they are paying actually increases the income of farmers and what is the social and economic impact of their purchase on the cocoa growing communities. Summing-up, the consumer asks for high quality raw materials, organically grown, ethically sourced, which must be processed and commercialized in a way that

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keeps and displays the full traceability of every single ingredient. As with any unique item, also in cocoa you reach fame first by creating noise, rumor about you and then by many years of consistency which should confirm the widespread assessment of being “the Best”. The equation is a plain triple equivalence: noise becomes a rumor; rumor generates talks, and these, at their turn, become a sort of common knowledge, confirmed by tradition and public awareness. In the specific case of the cocoa world, the rank of best cocoa origin was traditionally judged according to two schools of thought: Ghana was considered the finest bean by those who held in the highest esteem its irreproachable, traditional fermentation style, while Venezuela and Ecuador shared the same reputation of excellence owing to its noble Criollo genotype and its unique floral aroma, respectively. Then in the 1990’s came the analytical qualification system put in place by the ICCO in order to determine which countries had the right to use the label of Fine and Flavor Cocoa producers, which is still held some consideration in several markets. The ICCO rating system is based on a combination of chemical ratios together with a tasting in search of specific flavors and aromas.

comprehensive system of performance and compliances along the whole supply and value chain. We believe that today’s Best Cacao to Best Chocolate award will go to the companies and countries that are able to obtain the highest average scores on the following steps and processes: • The sustainability of their entire cocoa sector. • The farmer’s succession to their children. • The best possible income for the farmers and their families. • The wider scope and reach of certifications. • The genetic variability to satisfy the different demands in terms of basic flavors. • The common objective of the cocoa industry operating as a cluster: cocoa producers and chocolate makers working hand in hand. • The traceability system for multiple purposes. • The entire control of the postharvest process. • The ability to the fine tune the basic taste profile of their beans. These are the main drivers that in our opinion are going determine who deserves the award of Best Cacao award. And this is what the Dominican Republic is trying to achieve.

The truth about these received ideas looks today far more complex. The actual reach of the concepts of quality and excellence seem to go well beyond the traditional reputation of a given country or its capacity to meet some analytical and chemical ratios. Excellence is not a constant anymore; it has become a full evolutionary and rapidly changing concept that covers a more

Hector José Rizek Executive VP Rizek Cacao

Best cacao? Cocoa has evolved from mass-market consumption to a gourmet product. The growing endorsement of its healthy qualities and a growing demand for artisanal chocolate from industrialized nations is making this commodity boom on the international markets The DR is now the world´s first producer of organic cacao and flagship of the country´s image as an environmentally friendly and socially responsible product helping sustainable development in farming regions

he official history of tobacco began when Columbus made a diary entry describing how the indigenous population had given him dry leaves as a symbol of peace and friendship. These same leaves had already played a role in local customs and political, religious and social ceremonies for many centuries. Tobacco smoke was used for communicating with gods and other spirits. The colonists started cultivating tobacco as a commercial crop in Santo Domingo in 1531, and they extended this practice to Cuba in 1580. The Dominican Republic was the first country to commercially exploit tobacco for almost 50 years.The Spanish crown’s decree that tobacco, among other products, could only be exported through the Port of Santo Domingo made it the object of contraband by the English, French and Dutch on the nearby northern coast. Nonetheless, despite these obstacles, what was to become known as the tobacco society began to take shape in the tobacco-growing areas of the north, around the Old Town of Santiago. This society was made up of land-owning farmers and independent merchants who have since continued to proudly pass on their jealously guarded knowledge and experience of tobacco cultivation from father to son. In the mid-nineteenth century, Germany bought more than 90% of Dominican tobacco and this near-monopoly led to the creation of categories of quality that did not always match reality. Dominican tobacco lost much of its value, which discouraged and ultimately ruined the tobacco producers. The tobacco crisis caused by this situation forced a search for alternative markets, which in turn began to stimulate the development of tobacco companies once again. La Habanera was founded in 1902, and Eduardo León Jimenes combined operations with La Aurora in 1903. Despite the efforts of these and other companies, they were not able to consolidate a large enough local market to serve as a base from which to launch an export market. In the early 1960s, several pivotal events put the DR back on the cigar export map. With the support of exiled Cuban tobacco experts and the foundation of the Tobacco Institute; there were considerable advances in methods for seeding, planting, curing, fermentation and selection, combined with testing new varieties for production of fillers, wrappers and binder leaves. The United States blockade on Cuba, which transferred export production for cigars aimed at the U.S.

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The history of Dominican tobacco The Dominican Republic is the world’s largest producer of premium cigars. Known as ¨Cigar Country,¨ the DR has an ideal growing environment for tobacco, giving rise to a great variety of flavors, aromas and colors. It is the birthplace of cigars from some of the world´s most popular brands Tobacco is a labor-intensive industry, with 6,100 producers employing over 35,000 people. The cigar tradition is deeply rooted in the country’s cultural DNA market to other countries provided a window of opportunity for the country as a raw materials exporter (of fillers and binders). While the country was establishing itself as a tobacco exporter for cigars, in the early 1970s, the Consolidated Cigar Company set up operations in La Romana. In 1974, the Quesada family founded Manufactura de Tabacos, S.A., and 1979 General Cigar, a tobacco multinational, set up operations in the Santiago Industrial Free Zone. The DR was managing to develop a strong tobacco export industry without relying on the support of an internal market. While we were establishing ourselves as a first-rate cigar exporter for the U.S. market, a crucial event took place: in 1990, Davidoff, the most famous brand in the world, symbol of perfection and refinement, moved its production from Cuba to the DR. From this moment on, the DR’s name as a cigar producer was respected all over the world, and new markets opened up. In 1992, the country’s main cigar producers met and formed an association called Procigar (Association of Cigar Producers of the Dominican Republic) with the central aim of promoting and defending the DR’s reputation as a producer of high-quality cigars. Their efforts and joint promotions, their gentlemen’s agreement to promote the country’s reputation above everything else, as well as their commitment to quality, achieved the only thing that the country was missing: an exceptional product that was distinguished from any competitor. The DR very rapidly became Cigar Country and the world’s major cigar exporter. Consumers started to ask for Dominican cigars as a generic product that provided prestige and guaranteed quality.

Hendrik Kelner General Manager Tabadom Holding Inc

All of a sudden, consumers in the U.S. began to demand cigars at an extraordinary rate, creating what has been described as the “Cigar Boom.” The outcome of this phenomenon, which initially got under way in 1993, was a five-fold growth in the US market in just 4 years. The DR not only maintained its market share but increased it, despite the entry of new countries as suppliers and the aggressive nature of traditional competitors. The strength of the DR’s image as a producer of fine cigars and the fame of the brands that are produced in the country ensured a formidable potential. It is a history of successes and failures, obstacles, monopolies, penalizations, exclusions, contraband and limitations, but one that had produced a culture of quality around Dominican tobacco. The industry generates more than US$300 million in exports, employs 50,000 people in the countryside (some 10,000 in raw materials processing and over 15,000 in cigar manufacturing), and has managed to maintain its status not only as the DR’s most important export product but also as the pride of a nation that passes its traditions down through the generations.

he Dominican Republic’s industrial sector is a basic pillar of the nation’s economic development. The DR’s industrial output includes food and beverage production, chemicals, pharmaceuticals, graphics and paper processing, plastics, construction materials, steel and mechanical metals, textiles, footwear, machinery and electrical equipment, furniture and mattresses, among other products. The industrial sector’s economic activity provides the largest share of the GDP, accounting for over 23% in several quarters, and employs about 14% of the country’s workforce. Dominican industry is intricately linked to other economic sectors, generating added demand for services in finance, insurance, transport, communications and security. The industrial sector is also one of the primary fiscal contributors, providing more than 34% of the country’s tax income and does a great deal to fill the government´s tax coffers through efficient duty collection.

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Dominican Industry overview Circe Almanzar Melgen Executive Vice-President of the Dominican Republic Association of Industries (AIRD)

Circe Almanzar Melgen Executive Vice-President of the Dominican Republic Association of Industries (AIRD)

Dominican industry’s main strengths include the country’s geographical location, with quick access to the East Coast of the United States, as well as the Caribbean and Central American regional markets, and its location on the route between Latin America and Europe, which lowers freight costs and enables rapid response capacity for orders. Moreover, our country has signed five free trade agreements involving more than 48 countries in the world.

Dominican industry overview

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The Future of the Dominican Industry Elena Viyella de Paliza President of Interquimica Dominicana

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Construction Industry Julissa Baez Executive Director of ADOCEM

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A new investment opportunity Diogenes Aybar Vice Minister of Higher Education, Science & Technology CEO & President Aybar Ecotechnologies

The Dominican Industrial sector accounts for over 23%

Free trade zones Luisa Fernandez Executive Director of National Free Trade Zone Council

economic model to further enhance industrial competitiveness

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of the country’s GDP and 14% of its workforce The trade balance with Latin America and the U.S. due to free trade agreements is low, and many industrialists advocate for a change in the DR’s

The country also has an efficient telecommunications system, which favors foreign investment and startups, a developed basic road system, preferential access to regional and global markets, a cooperative labor force that is easy to train and adaptable to change, and a constantly growing tourism market. We also have a large population of Dominicans living overseas, making it possible to develop ethnic export markets and technology transfer. In short, we have the potential to become the region’s industrial leader. Industry in the Dominican Republic is truly a land of opportunities. However, the country is currently struggling with a large deficit in its current accounts, which has placed our economy in a fragile state that requires urgent attention. The solution is to promote exports of goods and services as a source of compensation and as a basic element for generating employment of ever-increasing added value. The AIRD believes that it is possible to convert the industrial sector into an example of modernity, efficiency and competitiveness, and in addition, to become the main exporting power in the Caribbean region. This may be difficult, but it is not impossible. And it is essential now because even in the domestic market, which is already limited, national industries are in fierce competition with international companies due to the free trade agreements and the opening of our economy. This is not just a challenge for industrialists; it is an issue for the country as a whole. If our businesses go bust, so will the Dominican Republic. The AIRD has proposed a set of challenges aimed at stimulating this export culture that we all strive for, and which, despite the circumstances, we are now seeing in the growth of some non-traditional areas. The DR is at an auspicious point in its history for the industrial sector to help drive the engine of change; we must place our faith in exports without turning our backs on the domestic market. As part of this process, it is essential for us to work closely together with other sectors and with the Dominican government. In fact, Dominican industrial leaders are looking to the government to lead the way to our country’s export future. Our government officials must be the driving force, defining the rules and regulations, together with the industries being regulated. A healthy industrial export sector will make us all proud of Dominican industry and proud to be Dominican.

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he DR’s economic recovery since the 2003 crisis has been spectacular. With very steady banking and real estate sectors, the country has not been significantly affected by the international recession and is still scoring very decent economic growth levels. How do you envision the DR’s economic outlook for 2011-2012? The DR has always had a remarkably responsive economy at difficult times and this is no exception. Unlike most of the world, the DR was able to meet the challenges of the 20072008 global crises thanks to a strong banking system that had taken the right steps after our 2003 domestic financial crisis. In terms of GDP growth, we are very dependent on what happens in the U.S. economy, so we will be affected positively or negatively by US economic growth. As for investment, efforts are being made to attract more FDI to boost development. The Pueblo Viejo Gold Mine, which is the largest mining investment in the entire region will favorably impact the DR’s development and growth. With regard to public finances, under the agreement with the IMF, the government has committed to reduce inflation to 4% by 2012; reduce the debt-to-GDP ratio to levels prior to the 20072008 crises; reduce by 42% the electricity subsidy and maintain the government payroll for 2011 at 2010 levels.

The DR has maintained robust growth numbers for the last decade, but must now focus on being more competitive as the free trade agreements have not produced positive results so far. Within the private sector we are focused on transforming the economic model to one that will promote more sustainable jobs and increased productivity through better education and opportunities, which should make us all more competitive. In 1996, the DR implemented a whole set of reforms that boosted growth, investment and infrastructure development, and at this point, we need to push for this second wave of reforms that could attract further investments in manufacturing and agro-industrial productivity, tourism and a revised model to converge the tax free manufacturing facilities with the local industry. Which industries do you think have the most potential in the years to come, and why? Personally, I believe that specialized niche agro-industrial, energy, renewable energy and tourism service industries have the biggest potential in the coming years – not that the others will not grow,

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the industrial sector can embrace the challenges of industrial production in the 21st century? There is minimal investment in R&D in our country. We are early adopters of new technologies and industries, but we are definitely lagging in education levels. This is a challenge that we need to overcome if we are going to be successful, especially in the areas of IT and manufacturing.

but I think these are the ones we should bet on. On electricity, because there is a need for investment in generation, transmission and distribution, and on agroindustrial and tourism service industries because these are areas where the country has a successful track record. Privatizing infrastructure, ports, airports and freeways has been a key government priority. Privately managed infrastructure and more transparent customs administration are necessary to boost the transportation sector´s potential. Which other areas of the nation’s transportation sector need improvement? The national ground transportation system, especially for general cargo, needs substantial improvement. This is an area where we need to work for more competition, free contracting and better, more reliable equipment to deliver transportation services. President Fernandez is a big advocate of new technologies and industries such as IT, call centers or cinema production, which will help integrate the DR into the knowledge-based economy. Despite his vision, education levels in the DR remain one of the lowest in the region and R&D levels are still very far from those of a developed country. What is your assessment of the nation´s R&D levels and how

What do you see for the future of our free trade zone & industrial parks, taking into account certain industries’ lack of competitiveness with Asia? There have been recent changes in Asia, where workers are demanding better salaries and conditions and where we recently saw the first labor strike in China. This should start to change the current unlevel playing field of global competition and help our industries become more competitive.

Elena Viyella de Paliza President of Interquimica Dominicana

The Future of the Dominican Industry One of the most prominent business leaders of the DR shares her views on the Dominican economic outlook and the country´s industrial challenges ¨I believe that specialized niche agro-industrial, energy, renewable energy and tourism service industries have the biggest investment potential in the coming years¨

The DR is the leading world producer of organic cacao. How can the country do to tap into this product’s international potential? Which other agro-industrial products have the most export potential and how should international investors take advantage of that? Branding our organic cocoa as a premium gourmet product, which is underway, will bring better prices and growth. Other agroindustrial products are mangoes, avocados, guavas and other exotic fruits that could be marketed internationally either through foreign direct investment or joint ventures with local partners. Domestic and foreign investors can invest under the same terms under the DR’s foreign investment law. Good sources of information would be the Junta Agroempresarial Dominicana (JAD) and the AIRD. The industrial sector provides the largest GDP contribution, exceeding 23% in several periods and employing 14% of the country’s working population. Many industrialists advocate for a change in the DR’s economic model to further enhance industrial competitiveness. What are the risks and opportunities for the Dominican industrial & export sector? The questions are whether we will be able to resolve the high cost and unreliable supply of electric power, whether we are going to have a competitive, efficient ground transportation system for merchandise and whether sufficient longterm financing with favorable terms will be available for the industrial and export sectors. Otherwise, Dominican industry cannot compete with other producers in more efficient, highly productive countries. President Fernandez has appointed

Celso Marranzini to drive the changes in the energy sector, but he also needs to commit to back these efforts, especially to improve collections, which is the major problem with the power industry’s unbalanced cash flows. Solving this problem is a critical challenge for the DR’s further development, especially for manufacturing, but it is important for all sectors. The opportunities are there. We are signatories of the DR-CAFTA, CARIFORUM and the EPA (The European Union Economic Partnership Agreement). We are strategically located in the Caribbean between North and South America, and between South America and Europe, close to the Panama Canal. We have state-of–theart telecommunications infrastructure, a reasonably good highway system that is improving as we speak, and we are working toward a bilingual population -- all powerful reasons to Invest in the DR. We are a stable democracy with a relatively stable currency and economy, and we are open to foreign direct investment as well as domestic partnerships. DR-CAFTA will totally privatize industrial production in the next five years and companies will have to learn to compete. The trade balance with Latin America is low, and industrialists blame the sector’s lack of competiveness on the energy deficit, the lack of proper financing for industrialists, low education levels and high taxes. In this context, what would you say is the country’s potential to become the Caribbean’s largest manufacturing center, and what steps should the private and the public sector take to achieve this goal? We can become the region’s largest manufacturing center provided the Central American countries bring their tax systems in sync with ours, eliminating subsidies that create unfair competition that has hurt Dominican producers. We must also resolve the high costs and unreliable delivery of electric power, provide long-term financing to industry and continue to strengthen our Customs Agency, which has been significantly improved and modernized. The public and private sectors have to continue to work together to pursue sustainable development under a revised economic model. The industrial sector provides 34% of the country’s tax income but has been hindered by domestic legal changes required to comply with the aims set out by the IMF until December 2011. The AIRD (Dominican Republic Association of Industries) solution is to promote exports of goods and services as a source

of compensation and as a basic element for generating employment of ever-increasing added value. Others advocate for the elimination of export taxes, the end of the free trade zones’ advantages in domestic sales, and the creation of a wider governmental export support fund. What are your views on this, and how should the government deal with the sector´s tax policies? The government must align our customs duties and domestic taxes with our neighboring and competing countries. We should be promoting our exports and domestic investments that create new and better-paid jobs. The government must also neutralize the effect of the high energy costs on domestic producers, ultimately guaranteeing competitive energy costs. Dominican exports have grown by only 15% while the GDP has increased 50% in the last few years. According to CEI-RD, in the first quarter of 2010 exports increased by 11%, with an 89% growth in the exports of non-traditional products (agro-industrial, agricultural, industrial and crafts). What is your assessment of the DR’s export policy and what improvements are needed? Traditionally, we have not promoted our exports. Haiti is a natural market, and our only bordering market, but many still mistakenly view exporting to Haiti as smuggling goods. We need better controls along the border, but we must export regularly and promote higher exports to Haiti. The export policy needs to give our national exports the same treatment as competing exports from other countries around us. What are the investment opportunities in the Dominican industrial & export sectors and their competitive advantages in Central America and the rest of the Caribbean? How do you perceive the image of the Dominican industrial sector internationally and what would be your assessment of its global performance level? Dominican industry has managed to survive and even thrive after struggling through different crises over the years. I believe it is perceived as a modern, hardworking sector that needs to push for the second wave of reforms required to really enhance its productivity and make it more sustainable, as the new trade agreements enter into full implementation in the coming years. It’s now up to the manufacturing sector together with the public sector to ensure that these reforms and structural transformations take place in a timely manner.

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Construction industry The Dominican Republic’s privileged geographical position, its climate and its environmental bounty constantly attract tourism and real estate investment, and this in turn directly benefits the local construction sector In 2010, the industry returned to economic growth after four periods of regression. This was thanks to an evolution of the market, improved monetary policies and strength, efficiency and profitability in the sector that is due to a series of large and successful investments in previous years

Julissa Baez Executive Director of ADOCEM

he construction industry is a leading activity for any nation´s development. It boosts investment, production and employment, and it also has a tremendous impact on the social and the political stability of a country. In the DR, state monetary policies have strongly influenced private and public construction by granting access to private financing for housing construction and acquisition. In 2010, the Dominican economy scored a real growth rate of over 7.8% as a result of the positive behavior of several key industries. Construction grew over 10.1% in comparison to 2009, when it decreased almost 20% due to the impact of the world economic recession.

The cement industry has long had a powerful role in the industry’s growth, and cement production capacity has grown at an annual 6% rate over the past 30 years. Annual production jumped from 866,000 metric tons in 1978 to over 6 million tons nowadays, growing 6 times its volume over 30 years to the point where fully 53% of its excess capacity is now dedicated to exports. The cement industry’s performance is tied closely to the efficiency of the construction industry, although these dynamics also depend on the government’s economic and urban construction policies. In order to continue on the current growth path, help translate housing construction into higher employment, improve domestic input and promote development, the government must assume a more active role in housing. The upcoming Mortgage Market Development Law will facilitate the construction of a wide range of housing projects and low-cost dwellings, creating strong incentives for the industry. If this project is developed responsibly and sustainably, in time it will become an excellent instrument for pension funds, making the funds profitable and guaranteeing a solid future for the Dominican Republic, which is now suffering a million-home deficit. Favorable macroeconomic conditions are what is needed now to multiply investment and financing resources; provide access to credit; and generate more affordable op-

tions for the Dominican population. The Central Bank has decreased mortgage interest rates down to 8-10%. Regarding the growth of the financial sector’s credit portfolio, predictions are that if the current conjuncture on exchange rate prevails and inflation can remain in the single digits, the system will continue to reactivate economic activities throughout the country. More access to credit and financing is required. Approximately 85% of the construction force in the DR is of Haitian nationality. The challenge of fully integrating this community has to be a joint effort by public and the private institutions, with the goal of creating a system that ensures better salaries and working conditions as well as more involvement of construction workers in social care programs. Short-term market expectations in the cement and construction industry remain positive but moderate. The potential conjuncture of higher costs and weaker demand makes it critical to efficiently administrate our resources and focus on better project planning and execution. Our industry is subject to several factors that affect its performance and imply some uncertainty in its future. In addition to governmental projects for affordable housing, there need to be strong incentives for larger consumption of housing services, a more efficient assignment of property rights, proper mortgage financing with low and stable interest rates as well as low-risk real estate investment. There is also a market niche for sustainable construction techniques that should be able to foster strategic alliances with international companies that have experience with green building. And there is a wide variety of business opportunities in the construction of hotel complexes in the country’s main tourism zones, as well as urban construction, state infrastructure projects and buildings funded by private investment.

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uietly and virtually unnoticed, the Dominican Republic has recently become stronger in the area that is perhaps the most important for economic and social development: human resources. College graduates and experienced professionals who have gone abroad to pursue graduate studies in specialized fields of science and technology are now coming back to establish themselves in the DR. And they are starting up research careers and launching businesses of all kinds, with biotechnology among the key fields rising to meet challenges in the areas of food, pharmaceuticals and renewable energy technologies. The DR has barely begun to organize and promote such activities; our universities and research institutes are still lacking in the scientific personnel, equipment and resources required to respond to the demands of the international market. A few isolated bright spots are worth noting, however. Among the key factors influencing recent biotechnology trends in the DR: a) the DR is a small tropical island; b) its landscape resembles a small continent, because of the variety of climates; c) the country is endowed with a wide range of endemic plants and grasses with enormous potential for pharmaceutical applications; d) it produces a great variety of tropical fruits; e) the DR is highly dependent on imported fossil fuels for energy production and transportation; f) because its internal market is relatively small, projects requiring intensive capital investment are primarily an endeavor of government institutions and small, new, knowledge-intensive companies founded by scientists and other skilled professionals trained abroad. The Government has begun encouraging independent research and development in the past three years through The National Foundation for Scientific and Technological Innovation (FONDOCyT), with an emphasis on food and agro-industry, pharmaceuticals, and renewable energy (including bio-fuels). Some encouraging results can be already seen, with international patent applications pending, for instance, for at least two food-related biotechnologies funded by FONDOCyT, with the Dominican Ministry for Higher Education, Science and Technology (SEESCyT) covering the costs of the patents.

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Although numerous local companies in the food and pharmaceutical industries use state-of-the-art biotechnology, only a few are themselves focused on R&D. The government itself was the pioneer in this respect through the establishment of the Instituto Dominicano de Tecnología Industrial (INDOTEC) and later its transformation into the Instituto de Innovación en Biotecnología e Industria (IIBI). IIBI is dedicated to supporting R&D and technology transfer as a means of increasing the global competitiveness of the national economy. The companies benefiting include Aybar Ecotechnologies (AE), a small firm founded in 1994 to generate new biotechnologies and products and respond to international demand for clean, simple and environmentally friendly solutions. AE exports a range of products to the US and throughout the Caribbean through a contract with Nikay Bioproceso, a small company that manufactures processed foods and dietary supplements resulting from its own R&D activities and supplies them to the food industry, both locally and overseas. AE also licenses its technology for other products to Nikay Bioproceso exclusively for the Dominican market, and is negotiating licensing in Europe, the US and Brazil. While Nikay Bioproceso was originally founded to manufacture products designed by AE, it has also developed products of its own, although in many instances using AE’s licensed biotechnologies.

Ecotech Group, another growing firm, was started by a group of scientists who developed a series of fermented drinks through an R&D effort funded by the Technology Institute of Santo Domingo (INTEC) and SEESCyT. Ecotech is currently manufacturing for the domestic market and seeking partners to help it expand overseas. Also worth mentioning is Vitrolab, whose founders worked for the Secretary of Agriculture Research Department and are now involved in plants and plant products for the domestic and international markets, with a focus on aloe vera.

Biotechnology Research and Development Centers in the DR Center

Sector

Area of interest

Products and projects

Instituto de Innovación en Biotecnología e Industria (IIBI)

Centro de Biotecnología Vegetal (CEBIVE)

Government

In vitro culture, Molecular biology, Genetic engineering, Detection of modified organisms

a) Characterization of Mangifera indica b) Molecular characterization of Theobroma cacao L. genotypes c) Genetic characterization of rice varieties (Oryza sativa) d) Molecular characterization of avocado (Persea Americana Mill) e) In vitro reproduction of pineapple (Anana comosus L.) f) In vitro mass production of black sigatoka resistant bananas, yucca, yautia, orchids and strawberry

Biotecnología Industrial

Government

R&D of Biotechnologies applied to food processes and products, Technical assistance to national food industry clients

a) Biochemical food preservation b) Development of NOPAL food and cosmetic products c) Tender coconut pulp d) Biochemically preserved long-life coconut milk e) Other food products

Biotecnología Médica

Government

Research on medical problems important for national public health. Health and legal related services of molecular biology applications

a) Haplotypes of the β-globin gene in patients with sickle cell anemia in the DR b) Genetic structure of pre-Columbian population in the DR and its presence in the present c) Molecular study of the Dengue virus in the population of Aedes aegypti in the DR, serotypification and study of transovaric transmission

Biotecnología Farmacéutica de Productos Naturales

Government

Phitopharmaceutical research of the DR flora Search of naturally occurring insecticides

Antimicrobial products for skin infections derived from medicinal plants endemic of the DR

Aybar Ecotechnologies

Private

R&D and commercialization of biotechnologies and products.

a) Biophysically Enhanced Enzymatic Hydrolysis of Cellulose for the Production of Fermentable Sugars (main application: Ethanol Production), b) High Yield and Efficient c) Extraction of Plant Products, d) High Yield and Efficient Production of Fruit Concentrated Homogenates for the production of Fruit Nectars, e) High Yield Low Cost Chromatographic Technique for the Production Level Purification of Proteins and Oligopeptides with Pharmaceutical, Medical and Scientific Applications.

Nikay Bioproceso

Private

Biotechnologybased food products and processing development and Commercialization

a) Concentrated Liquid Ginger, Ginger Paste and Ginger Powder b) Fruit Concentrated 1Homogenates c) Tropical Fruits Honey Mix d) Other Non-biotechnological products

Biotech Group

Private

Fermentation Beverages

a) Mabí, a local traditional Fermented beverage b) Tropical Fruit Ciders c) Tropical Fruits carbonated beverages2

Vitrolab

Private

In vitro Vegetable Tissue culture, and en mass reproduction to supply national and international markets

Bananas and Yautía, commercial level, and flowers at pilot level

Perhaps the most important characteristic of biotechnology-based companies in the DR is that the technologies they have developed are intended fundamentally for the international market. The initial concept was to simply add value to exports of Dominican products, but these small firms are now also in search of overseas business partners, buyers and potential licensees.

Diogenes Aybar Vice Minister of Higher Education, Science & Technology CEO & President Aybar Ecotechnologies

A new investment opportunity Through the application of biotechnology, the DR’s abundant natural resources can maximize its production potential in the fields of agro-industry, biomedicine and pharmaceuticals, as well as renewable energy Since most of biotech companies in the DR are small, low-capital and knowledge-intensive, they lack the economic and organizational strength for accessing the international market and therefore represent an excellent investment opportunity

Since most of these companies are small, low-capital and knowledge-intensive, they lack the economic and organizational strength for accessing the international market. Their capital is information, experience, and the value of spending so many years in search of technological solutions to a range of key modern problems. Many of the biotechnologies developed by these companies are already on the international market and present genuine opportunities for investors or established international companies working in food, pharmaceuticals or biofuels. The economic and organizational limitations of these companies represent business opportunities for foreign investors and established companies. It’s worth noting that big companies in more traditional Dominican sectors are generally not prepared to invest in new technologies or to partner with these new firms. Because of this situation, a range of interesting R&D projects are stuck mid-development for lack of capital, while other technologies are fully developed but lacking foreign investment or licensing. These small, knowledge-based companies are a gold mine during times of economic readjustment as the ones we are living through now, mainly because their technologies offer such key innovations. What’s more, their areas of expertise are those most likely to emerge as the strongest survivors of this period: a) food biotechnology, b) pharmaceutical and medical biotechnologies and c) biofuels.

1. The technologies for these products were developed by Aybar Ecotechnologies (AE); Nikay Bioproceso Produces these products and introduces adaptations of AE’s technologies under agreement with AE. 2. These products are produced with a specific yeast isolated, identified and characterized by a group of researchers at IIBI with grants from SEESCyT and INTEC; we are currently pursuing to obtain an international patent for the processes and the microorganism.

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reliminary reports from the Dominican Central Bank for the last 3 quarters of 2010 show that free trade zones improved productivity by almost 3.7% by the end of the year. In the DR, there are 48 industrial free trade zone parks where 556 companies operate: 25% of them produce textiles; 19% are services companies; 10% work in shoe manufacturing; and 5% produce pharmaceutical and medical devices. The free trade zones represent 2.4% of the Dominican GDP, 5% of the total employment of the nation and 6.7% of its total FDI. Fully 48% of the companies are based in the northern part of the country and 40% of the investors are from the US while 36% are Dominican capital companies. Over 135 countries around the globe host 3,000 free trade or economic zones, employing over 70 million people. In this global marketplace, the Dominican free trade zone system has emerged as a successful economic model with sustainable growth projections. The DR is number 21 in the world in terms of export volume and 18th in the number of square feet of textiles sold to the US market. According to “The Major Shippers Report,” in 2010 this segment exported US$ 625.84 million, growing 2.04% from the 2009 figures. Although in terms of volume, figures dropped 1.51% because fewer products were exported, they were higher priced as there was more value added. The challenges The world economic recession and the entrance of China into the textile market are two of the main challenges that the free trade zone sector has to face. In 2005, Chinese participation in the US textile import market was 27.61% while in 2010 it reached 39.1% or US$27.974 million. Figures show a certain lack of competitiveness in the textile industry vis a vis China, because since the first quarter of 2005, China has competed in the US market without quantitative restrictions. Nevertheless the DR has managed to increase exports, mainly through diversification.

2011 starts with the announcement of 35,000 more jobs created through investments that will benefit the sectors of electronics, medical products, jewelry, greenhouses, leather seats, airplane parts, cigars and shoe manufacturing, as well as textile production. Predictions are encouraging enough to expect the creation of 1 million jobs in 10 years time.

able to maintain its textile export flow, which had dropped US$1.5 million in the past 5 years. Other areas showed excellent results, such as shoe manufacturing (49%), jewelry (49%), tobacco manufacturing (14%) and others (15%). This diversification offers an important investment opportunity for both national and local businessman interested in expanding. In 2010, approval was granted to 54 new companies that will bring investments of around US$100 million. And President Leonel Fernandez has granted authorization to create 5 new industrial parks involving investments of over US$70 million.

The operation of Free Zone Industries in the Dominican Republic is governed by a legal framework defined by Law 8-90 (Free Zones)

Several Central American nations and Haiti have displaced some investments from the DR because of cheaper labor, although the Dominican working population has proven to be more skilled, with higher proficiency in the English language. We have 40 years of expertise in the production of everything from cigars to electronics and our workforce is highly competitive. An economic powerhouse The free trade zones are one of the main pillars of the Dominican economy in terms of investment attraction, exports and employment. Although in the past several years the sector showed negative growth, it improved in 2010 and there were 9,000 more jobs than in 2009, with employment reaching 121,000.

Luisa Fernandez Executive Director of National Free Trade Zone Council

Free trade zones 2011 will be a fruitful year for the Dominican Republic’s Free Trade Zones. Exports will surpass the US$4.080 billion reached in 2010 Free Trade Zones continue to be at the core of Dominican exports, as the source of 70% of the total country´s exports to the largest markets of the US and Europe

ADOZONA is a not-for-profit organization made up of the associations grouping the free zone companies in the country and the private operators of industrial parks. It advocates certain changes in Law 8-90, the revision of 5 or 6 articles in the Labor Law and new financing options. According to ADOZONA, the export sector must have a new legal framework that allows export growth, prevents losses in markets where the country has made major investments facing increased regional competition. Law 8-90 should be upgraded to suit new market requirements resulting from international agreements reached within the framework of the DR-CAFTA and EPA agreements

Although the sector requires certain legal changes, it continues excelling. The Center of Development Studies of Harvard University has recognized the achievements and stability of the Dominican free trade zones as well as the role of the National Free Zone Council. The Harvard analysis emphasizes the value of the industrial park environment, its improvements in productivity and the acquisition of new markets. The investigation, which is called ¨Building a better future for the Dominican Republic: Strategies for development,¨ suggests implementing a model that is compatible with the World Trade Organization (WTO) and launching a new production system that is based on strategic sectors.

trade agreement between the US and Israel, as part of the Qualified Industrial Zones. The DR has been recognized for the successful development of its Free Trade Zone Program. The positive upturn of the sector exemplifies the DR´s excellent investment climate and our global competitiveness. We are proud that so many large corporations and internationally well-known commercial brands have chosen us to manufacture their products in the DR and we invite you to evaluate our country as your next investment destination in the Caribbean. Competitive advantages of the Dominican Republic Free Trade Zones

The report recognizes our constant dialogue with companies and potential investors, identifying obstacles for investment and requirements for improving production, along with efforts between governmental agencies to resolve conflicts and serve the public.

• A strategic geographic location in the heart of the Caribbean.

Industrial parks provide higher levels of infrastructure than the national average; a business environment that is conducive to international competitiveness and services is cheaper to run because of the economies of scale that parks are able to implement, servicing several companies at the same time.

• Political & social stability. A country characterized by a solid democracy for more than 45 years.

Another recommendation is using Haitian input. The report says the DR should propose a new Haitian Input program – HIP program -- to the US Congress, in which the rules of origin would be similar to those in the free

• 1 hour and 45 minutes from Miami and Caracas, centrally located between the northern and southern markets of the Americas.

• Efficient labor market and highly skilled work force at competitive costs and with high productivity. • Excellent treatment for foreign investment, with an attractive tax incentive program. • Modern port and airport infrastructure, with excellent sea and air transport services. • Excellent telecommunications systems, comparable to those in the most developed countries in the world. • Modern road network and freeways to facilitate the movement of goods from one point to another in the country. • Adequate governmental support • Preferential access to international markets through different trade schemes.

In 2009, the DR exported medical devices for almost US$ 1 million US$ and was

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Energy sector in perspective The DR energy sector has been plagued by crisis over the last 40 years. Blackouts, illegal connections, low bill collection, large losses and high government subsidies are the toughest obstacle to economic development EGE Haina is one of the largest energy generators of the country, pioneer of renewable energy projects in the DR

Tito Sanjurjo CEO of EGE Haina

he power sector in the Dominican Republic has traditionally been, and continues to be, a bottleneck to the country’s economic growth. According to the World Bank, the revitalization of the Dominican economy depends greatly on sound reform of the sector.

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Invest in renewable energy Alfonso Rodriguez Villalba Renewable Energy Consultant

Prior to reforms during the 1990s, the Dominican power sector was in the hands of the state-owned, vertically integrated Corporación Dominicana de Electricidad (CDE). The operation of the company was characterized by large energy losses, poor bill collection, lack of investment and deficient operation and maintenance. In the 1990s, rapid economic growth boosted the power sector (GDP growth was 5.9%, and demand for electricity increased at an annual rate of 7.5% in the years 1992-2001), but the industry couldn’t keep up. This translated into continuous supply constraints and widespread blackouts, sometimes lasting for as many as 20 hours.

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Energy Independence is Garbage Timothy K. Judge President of EcoAssessment, LLC, Sleepy Hollow, NY, Assistant Professor of Environmental Studies, Ramapo College, New Jersey

In order to address these shortages, several Independent Power Producers (IPPs) were encouraged by the government to sign Power Purchase Agreements (PPAs) with the CDE, and the government enacted the Public Sector Enterprises Reform Law, which provided the framework for the privatization and restructuring of the power sector.

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Energy sector in perspective Tito Sanjurjo CEO of EGE Haina

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The electricity sector on the recovery path Celso Marranzini Vicepresident CEED

In 1998-99, under the first government of President Leonel Fernández, the sector was unbundled and the vertically state-owned Corporación Dominicana de Electricidad (CDE) was divided into a number of generation companies. Empresa Generadora de Electricidad Haina (EGE Haina) and Empresa Generadora de Electricidad Itabo (EGE Itabo), which ran the thermal plants, were capitalized and remained as half stateowned, while at the same time, three distribution companies—EdeNorte, EdeSur and EdeEste—were created and capitalized. One of the main objectives of this initiative was to attract new investment to diversify the generation matrix, which at the time was almost completely dependent on heavy fuel oil. A comprehensive regulatory framework was enacted in July 2001, with the Electricity Law (Law 125-01) passed under the government of Hipólito Mejía. Under this law, the government’s operational presence in the sector was to be through three entities: • The formerly vertically integrated utility CDE, which kept the contracts with the IPPs. • A transmission company, Empresa de Transmisión Eléctrica Dominicana (ETED). • A hydropower production company, Empresa de Generación Hidroeléctrica Dominicana (EGEHID). A new holding company, Corporación Dominicana de Empresas Eléctricas Estatales (CDEEE), was established to take ownership of ETED and EGEHID and to eventually take the CDE’s place. Initially, the government intended to transfer its assets to manage the companies as an investment under a Trust Fund that was separated from the entities governing the sector, rather than using its ownership as a potential instrument for sector policy. However, this change was never implemented. The 2001 law and its supporting regulations from 2002 included the creation of an autonomous regulatory agency, the

Electricity Superintendence (SIE). It also created the National Energy Commission (CNE) and a wholesale market under the responsibility of an Independent System Operator (Organismo Coordinador). The Dominican power sector attracted a significant amount of foreign direct investment (FDI) following the privatization of the main generation facilities and the distribution companies in 1999 and the subsequent expansion of capacity. In the period of 1996-2000, the sector accounted for over 28% of FDI, reaching 37% in 2001, according to World Bank figures. Energy Opportunities Now Latin America is going through a period of sustained economic growth, but the electrical industry in the region has not registered comparable levels of investment. That leaves significant opportunities for acquisition and direct participation, especially in countries such as the Dominican Republic, where the industry remains heavily reliant on oil to generate electricity. The solutions are simple but will be quite unpopular: a) raise prices, i.e. pass the variable cost of energy or fuel to the end users; b) eliminate subsidies; and c) most importantly, enforce the new electricity law, i.e. punish end users for electricity theft and follow the established regulatory framework. Also, measures must be adopted in the short-term to diversify the energy network in order to make it more efficient and steps taken toward developing renewable energy, specifically biofuel, in the long run. Large-scale local generators are certain that a properly capitalized, well-operated power investment vehicle versed in the realities of developing world power will find sufficient growth opportunities in the DR. The Dominican energy sector needs investors with experience in developing energy businesses in emerging markets, as well as high-quality management and the entrepreneurial push to prosper in markets where others have failed.

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ow would you describe the Dominican energy sector and what are the key elements for solving the electricity crisis? The DR’s energy sector has been in a historic energy crisis for over 40 years. While other countries in the region with smaller economies, such as Nicaragua, Honduras and El Salvador, have overcome their lack of energy resources, the DR is still taking the steps necessary for recovery. The first thing needed is a change of mindset: Dominican consumers have always considered electricity a bill that didn’t need to be paid. The losses in the sector have led to poor-quality service and must be reduced.

The government’s debts to the electricity generators have been cleared thanks to state subsidies. The current payment scheme should stay in place, not just because we have to meet IMF requisites but also because we must demonstrate our capacity for improving the electricity sector the way we have many other sectors. In telecommunications we have set an international example, with 100% coverage, and we’ve been successful in tourism, free trade zones and exports. But we haven’t achieved the same result with the electricity sector. We need to turn this around by implementing a coherent medium- and long-term plan, and to this end President Fernández has laid the foundations for changing the electrical system in the next four years. No investments have been made in the Dominican electricity sector for the last seven years. This lack of capital represents a great opportunity for investors in both generation and distribution, as the DR has to double its energy capacity over the next few years with the installation of over 2,000 megawatts. The country’s electricity system has not been structured in a coherent way. A capitalization process led by President Fernández was started with five governmentowned companies in 1999, when 50% of the companies were sold to the private sector. In the the distribution sub-sector, three distribution companies where created: Edenorte, Edesur and EDESTE, the first two were capitalized and operated by Unión Fenosa. EDE Este was taken over by AES. Unfortunately this privatization process was aborted, and this has resulted in massive long-term losses.

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How do you attract foreign investors to distribution and how can the distribution system in the country be improved? Although it is a challenge, we must unify and invest in the distributors. There is a very bold plan for distribution with funding from the World Bank, the InterAmerican Development Bank and the government to ensure that cost and user revenues are accurately measured. Customers who are below the poverty threshold will receive a “bono-luz” government subsidy, and general subsidies will be eliminated. All these advances will change the distribution structure. The investment we need to make in the next three years should take the distribution companies to a break-even point by the middle or end of 2012.

The generation efforts have been slightly more successful. Companies that were capitalized with private and public funding have been profitable. Significant investments were made in 1998-2003, but since then there has been no further investment. Disagreement over whether the industry should be state-run or private stagnated investment in both sectors, resulting in the current lack of generation capacity. Some generating plants are obsolete and those are largely to blame for the DR’s inability to meet its energy needs. Meanwhile, consumers pay for barely 65% of the kilowatts placed on line. No business can be profitable with 35% losses. Non-payment and illegal connections are common across all income levels, in part as a consumer protest against poor service. The problem of non-payment must be resolved by improving service and customer relations and by penalizing non-payers, and these changes are under way. We have set up a call center to take complaints from customers, so we can supervise distributors and so the public will start to see their company as one that provides optimum service.

What are the main goals for the DR’s energy generation and energy needs for the next few years? The DR’s energy capacity has to be doubled. Although we say we have capacity of 3,000 megawatts, 500 megawatts of hydro-energy are only generated at certain times of the year.

Celso Marranzini Vicepresident CDEEE

The electricity sector on the recovery path The DR’s energy sector has been unstable for decades and its restructuring is critical to the country’s economic development The appointment of Dominican business leader Celso Marranzini as director of the Dominican Corporation of State Electricity Companies (CDEEE) in August 2009 with the aim of revitalizing the electricity sub-sector has been one of the current government’s most acclaimed decisions

We need to reduce our 47% dependence on fuel oil and diesel. Oil prices are rising and this prevents a decrease in electricity fees. The distribution investment program will enable us to reduce losses for 2012 to 18% instead of the current 35%.

You have always advocated for an end to general subsidies on the grounds that the country’s electricity bill is reaching more than US$500 million, which could be invested in other priority areas like education and health. When will we stop seeing multi-million peso subsidies in the sector? Some subsidies are part of the government’s social policy, for example, electricity for hospitals, the armed forces, the police and the Dominican Agrarian Institute, and those need to be kept in place. The tariff stabilization fund ensures that the rates are not raised is neither considered a subsidy. The US$500 million subsidy can only be reduced by increasing the sector’s efficiency. The subsidy is a crime against Dominicans who need to resolve education and health problems and this is why it’s important for the sector to reach a breakeven point as soon as possible. This is going to take a joint effort by everyone in the country. We cannot continue to bear the burden of US$1 billion each year in the sector. How is the price of power in the DR going to be reduced and when are we going to see the results? How can we make ourselves more competitive for investors who are deciding whether to invest in the DR or go to other destinations where electricity is cheaper? An investor isn’t just concerned about the price of energy, but also about inefficiency and poor service, which are the first things that need to be tackled. In Central America the cost per kilowatt is higher than in the DR, however, these are countries that do not subsidize the service and where the famous “Dominican blackout” doesn’t exist. The DR’s production areas have 24-hour electricity in free trade zones and industrial parks. The DR offers other advantages to investors: a stable democratic system, free elections for 40 years, respect for foreign investment and the possibility of unrestricted profit repatriation. It’s a safe coun-

try with the most open economy in Latin America, privileged tax-free access from Europe and the U.S., and an excellent geographic location. Combine these advantages with the fact that we are going to solve the energy problem in the next three or four years, the DR represents the most attractive country for investment in the Latin American region. Mexico and Venezuela are oil producers and their electricity is cheap, but in Guatemala, Honduras, El Salvador and Puerto Rico, power costs are higher than in the DR. Reducing electricity rates is not feasible in the short term due to our heavy dependence on fuel oil and diesel. Gas- or coal-fired plants will take about three years to build. We may see a rate reduction in the medium term – within two to four years. Thanks to DR-CAFTA and the energy sales opportunities there is a greater interest in investment and generation. Once the distributors have recovered they can be privatized and this will create greater business opportunities. The law governing investment in renewable energy is attracting capital to the sector. What are the current projects? Many businesses, both domestic and international, are interested in generation. We’re seeing renewed private sector interest in reinvesting in the sector due to the confidence that payments are upto-date, there is greater transparency in the sector’s management, and major investments are expected in the next two years. We’re talking about a 600-megawatt generation plant with a budget of US$500-600 million dollars. A two-billion megawatt increase over four to five years will cost about US$3 to 4 billion with transmission lines and gas terminals. This would be the best short-term investment in the DR’s energy system. The DR energy industry needs to maintain itself technically and in the short term it has to be confident that energy efficiency is recognized as a long-term national priority across Dominican society. The CDEEE needs to have strong and efficient oversight in order to regulate the private sector. Private investment in generation and distribution is nothing to be afraid of; it will lead to clear, strong and efficient supervision of the public sector. Strong supervision has been key to efficiency in the financial sector, and the same is true in the energy sector.

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uring the past decade, renewable energy (RE) has received significant support from public and private sectors in many different countries and begun to provide an eco-friendly, sustainable alternative to fossil fuels. The Dominican Republic, with new government supports and a natural wealth of rich soil, strong winds and constant sunshine, is poised to become a part of this green revolution. Brazil and Mexico have been the natural leaders in the implementation of RE projects in Latin America. Almost 5,000 MW of green electricity have been installed in the last few years in Brazil, with biomass projects and windfarm projects, such as a new one in Oaxaca, Mexico, attracting capital investment from Europe and the United States. Foreign and local investors have found in these larger Latin American countries great opportunities for investing in biomass and power generated by water, wind and other natural resources for the production of electricity, heat and biofuels. This success has been nurtured by government policies, investment from the private and public sectors and development of new technologies that make transforming these natural resources into different forms of energy more and more feasible. The DR is a country with heavy dependence on foreign fossil fuels, as indicated in diagram Nº1., especially coal, heavy fuel oil and natural gas. This makes the local price of electricity vulnerable to external factors such as the price of crude— hence, higher(*) than the cost of energy derived from renewable energy sources, such as hydro, wind and biomass. Only green energy projects can reduce this dependency on carbon-intensive fuels, eventually generating carbon credits through the Flexible Mechanisms of the Kyoto Protocol. According to statistics from the Dominican government, the local energy market will require a range of new installations if it is to meet current and future energy demands. These installations may produce energy from fossil fuels or renewable energy, or both. This depends greatly on the conditions of the Dominican electric sector and on having a strong legal framework for protecting such investments and their profitability in the long term.

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Why Invest In Renewable Energy in the DR? The DR offers extensive natural resources, a reliable legal framework and political stability—three key ingredients for building a renewable energy industry that is competitive and capable of attracting capital investment for the development of RE projects, as many other countries have done before. The natural conditions of the country include windy conditions year round, strong sunshine and fertile soil, making it a perfect place for developing green energy. Not to mention that the country has probably had more experience with sugar cane plantations than any other in the hemisphere. In 2007, the government signed the 57-07 Law of Incentives and Special Regimes for Renewable Energy Sources with the intention of making the most of these natural conditions, increasing energy independence, boosting investment in the RE sector and minimizing the environmental impact of the electricity sector. In 2008, when the law went into effect, it made the DR one of the most competitive environments in Latin America for the development of RE, as recognized by IDB and OAS officials. Under the new law, renewable energy projects are now at a significant advantage over other projects, instead of barriers to development, as they have tended to be in most Latin American countries. Tax incentives and stable pricing have been among its key provisions. Imposing this framework on such favorable natural resources has fostered the design and implementation of projects with significant rates of re-

turn, including (a) wind farms; (b) thermal and photovoltaic solar projects; (c) hydraulic projects; and (d) biomass projects. Some of these projects are already fully developed by local companies, while others are in search of entrepreneurs and partnerships, both in the DR and overseas. Project developers have consistently found the 57-07 Law of great benefit during the process of obtaining necessary licenses, permits and other authorizations, as well as for conducting and promoting business activities. Wind Energy The DR is a windy place, a fact that places this natural resource in especially good position for generation of electricity. According to NREL studies(**), 20 provinces offer goodto-excellent wind resource potential.

Alfonso Rodriguez Villalba Renewable Energy Consultant

Invest in renewable energy As net oil importer, the DR relies on oil supplier nations for 80% of its needs. It is estimated that one out of three US$ exported by the country are being assigned to the oil bill In order to reduce oil dependence, Law 57-07 was passed in 2007 in order to provide incentives for the production of renewable energy sources and with the aim of changing the country´s energy matrix in 10 years time

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In early 2010, the National Energy Commission announced that it had more than 1GW of projects with provisional concessions; all that was missing were the licenses, studies and authorizations to acquire a definitive concession. Some projects have already obtained definitive concessions, however, and have moved on to the engineering, procurement and construction phases of their wind farms. These include two leading companies in the sector: Inveravante, a Spanish firm with two 50MW projects, “Matafongo” and “Los Granadillos”; EGE Haina, developing the “Juancho Los Cocos” wind project, a two-phase 100MW project. These wind farms will sell electricity to the grid and are working to generate carbon credits by registering the projects under the Clean Development Mechanism of United Nations Framework Convention on Climate Change, because they have been clearly shown to reduce carbon emissions and promote technology transfer. The additional income produced through this mechanism will enhance the performance of the investment and make the DR more competitive overall in this area. Bio-energy The DR’s special climate and the fertility of Dominican soil give bio-energy projects great potential. For a long time, the sugar industry used top-quality soil to meet local demand and for export to the United States and Europe, but since the sugar crisis of the 1980s and 1990s, much of this land has been unused. Now energy crops such as sugar cane and merker grass are showing promise as biomass for energy purposes or ethanol. The DR also has a significant amount of land in the southern part of the country and near the border with Haiti which is suitable for the development of 2nd generation biodiesel, with crops such as Jatropha curcas L. And local institutions such as the IDIAF(***) have identified the most appropriate areas for biodiesel crops, such as sugar-to-ethanol production. (The 57-07 Law bans the use of of food crops for energy, in an efforts to support the coexistence of energy independence and food security.) In recent years, a large number of foreign bio-energy companies have begun to take advantage of this confluence of new policies and productive Dominican soil. The DR has free trade agreements with the United States and the European Union, which enables companies producing biofuels within the Dominican Republic to export with preferential conditions to those markets.

Energy produced in Dominican Republic in 2008 by fuel Source: Coordination Body of Electric System.

1,2% Fuel Oil Nº6

11,8%

36,1%

17,3%

Fuel Oil Nº2 Fuel Oil Nº2 & Nº6 Natural Gas

20,7%

Coal

9,0% 3,9%

Hydro Other

Electricity Price under Law 57-07 when sold 100% to the Grid. Price in cUSD/kWh.

Technology

2008

2009

Hydro Biomass Eolic

7.35 11.60 12.52

7.64 12.06 13.06

Ethanol produced 100% in the country can be exported to the EU and US with preferential conditions, and dehydrated ethanol (30% of which has been produced in the country) can also be exported to the US market. The local Dominican market itself is another huge, potential market for ethanol and biodiesel consumption, especially as the National Commission of Energy begins to implement a national plan for fuel blends containing biofuels. Lately, biomass projects are acquiring increasing support overseas as a way of avoiding erratic fossil fuels pricing and as part of global efforts to reduce the carbon footprint overall. But in addition, coal-fired power plants can burn up to 20% biomass, as long as coal prices are competitive. This means the local energy market in the DR can easily absorb more than 600,000 MT/ yr of dry biomass for large-scale power generation. Other potential clients may be cement kilns, which are willing to substitute petcoke for biomass residues, along the lines of the CEMEX Dominicana project. Also, international markets have developed significant demand for biomass pellets for energy purposes. Under the trade agreements signed with Europe and the United States, this makes for a profitable commerce of green fuel and biomass pellets. During the last two years, biomass gasification projects have also achieved some significance thanks to the combination of new, cutting-edge technology (manufactured in the Dominican Republic) and in-

/ renewable energy

ternational entrepreneurship. Koar Energy Dominicana and Bio-Gen Ltd. Corporation, a project developer and technology manufacturer respectively, are implementing biomass-to-energy projects through the gasification process—an efficient and profitable way to produce green energy from agricultural residues. Solar Energy Finally, there is the inexhaustible power of the Caribbean sun to consider. Geographical and climate conditions in the DR permit constant sunshine (5-6kWh/m²/day on average), enabling the development of thermal and photovoltaic solar installations to feed residential, business and tourist needs throughout the country. Strong export conditions and the existence of local suppliers for electrical power creates an excellent environment for Dominican based manufacturing and assembly in this sector. The Spanish company Fluitecnik has invested in the country to establish a subsidiary company for assembly and regional distribution of solar goods. The DR is going green!

(*) According to the Coordination Body of the Electric System, the Average Variable Cost of Electricity in December 2009 was 130 USD/MWh. More information at www.oc.org.do. (**) “Wind Energy Resource Atlas of the Dominican Republic” from the National Renewable Energy Laboratory, United States of America. (***) Dominican Institute for Agricultural, Livestock and Forestry Investigation.

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he economic vitality of the Dominican Republic is, for better or worse, tied to overseas energy markets way beyond the nation’s control. With no natural gas or crude oil reserves of its own, the nation imports about 120,000 barrels (bbl) of oil per day. The volatility of international oil markets easily sends price shocks through an economy as dependent on energy imports as the Dominican Republic, inhibiting international investment and domestic growth. Energy independence for the Dominican Republic will require exploitation of existing resources, including wind, biomass and a range of resources that are commonly considered wastes. Domestic energy production helps reduce the impact of oil price swings and has a stabilizing effect on local economies, significantly reducing the kinds of risks that foreign investors tend to worry about.

The way forward for a country lacking domestic energy production is a national leadership that recognizes and embraces innovation, as the Dominican Republic did in 2007 with the adoption of the Renewable Energy Incentives Law 57-07. This law provides market mechanisms that actively encourage technological solutions to the national energy predicament, boosting investment in alternative and renewable energy production and demonstrating the government’s willingness to move beyond fossil fuels. This bold new policy shift has created a favorable environment for deploying alternative waste disposal systems that produce energy in the Dominican Republic. Advanced technologies such as waste to ethanol, and gasification to electricity, will provide jobs, domestic energy production, and public health benefits not realized under the current practice of land filling. Using waste to ethanol as an example, if the Dominican Republic combined its capacity to produce ethanol from waste with that produced from sugar cane; the country could become the largest producer of ethanol in the Caribbean and an exporter of this valuable transportation fuel. This would allow the country to follow the model of Brazil from the 1970s and achieve a degree of energy independence. As a member and signatory of the United States-Dominican Republic-Central AmericaFreeTradeAgreement(DR-CAFTA), the Dominican Republic has access to the US ethanol market not available to other ethanol producing countries.

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Governments seldom account for the true and full costs of waste disposal, exacting a high cost in poor public health and a degraded natural environment. Simply filling a hole in the ground with garbage not only ignores the problem; it makes it worse. Global lenders have learned this lesson, and now demand full and transparent accounting for waste disposal projects, insisting that generators of wastes in both the public and the private sectors bear the expenses themselves. However, the challenge is greater than just the management of the waste. The challenge is to find actual value in waste and to capture that value in ways that improve lives. With risks for Malaria, Dengue Fever and waterborne diseases relatively high in the Dominican Republic, proper waste management is a crucial municipal function. Potential breeding sites for mosquitoes, for instance, can be completely eliminated by properly managing garbage, thereby reducing the incidence of malaria and its ability to render otherwise healthy people unable to work, robbing them and the economy of their productivity. Wastewater treatment is not only beneficial to public health and the environment, but can also provide the high quality water infrastructure that many manufactures need and demand when investing and locating facilities.

Energy independence, good public health and environmentally sustainable practices cost money. Investing in these practices in the Dominican Republic now will provide valuable jobs and further develop the energy infrastructure and public utility capacity that will become the foundation for attracting more investment in the future.

Timothy K. Judge President of EcoAssessment, LLC, Sleepy Hollow, NY, Assistant Professor of Environmental Studies, Ramapo College, New Jersey

Energy Independence is Garbage ¨If municipalities are able to generate part of their energy demands through waste management and energy generation solutions, they will demand less drown from the national grid, saving resources and making a positive social, environmental and economic impact¨ “This expense reduction results in less dependency on oil, fewer gas emissions, helping municipalities to provide better infrastructure, sanitation, public transportation and other services at lower cost to the inhabitants, resulting in benefits for the local community like less tax and a significant improvement in the quality of life of the population”

have always found it good corporate strategy to establish meaningful relationships in the community in which a business operates. Forming such a bridge requires first that a business reach out and offer assistance. Then, as the relationship matures, it becomes reciprocal, with the end result being a considerable and at times measurable dividend to both sides.

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Invest in education Kevin P. Manning FDI & Energy Consultant Former President of AMCHAM-DR

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More than just a trend Marta Fernandez Marzal President & CEO of CSR Consulting SRL President of AMCHAMDR’s CSR Committee & CSR Consulting

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Sur Futuro Foundation and social responsibility Melba Segura de Grullón President of the Sur Futuro Foundation

Each of the four pillars is important, but there is no doubt in my mind that education prevails, in both need and benefits to the community, the company and the country. One only needs to take a look at recent Dominican investments to see that this is so.

The businesses over which I have presided in the Dominican Republic have sought to establish community programs based upon four pillars; education, health, the environment and youth sports. Each of these pillars provides public relations opportunities, productive interactions and, to some extent, cross-pollination of ideas and efforts. Supporting and improving the infrastructure of a local clinica materno infantil, or mother-child clinic, for example, upgrades often neglected public health services in the immediate community, decreases workplace absenteeism and gives the business stronger support among local families. Supplying uniforms or perhaps a playing field to a youth sports team provides a company with one of the best opportunities to promote its brand repeatedly for a full season.

Historically, education has been very much under-funded in the Caribbean and Latin America. Several Central American governments are doubling their budgets in this area in order to introduce educational reforms that should bring their systems into the 21st century. The DR needs to step up as well. What’s required is a major boost in infrastructure and teacher quality and the gradual abandonment of the system of multiple four-hour shifts in basic and secondary education. To this end, the American Chamber of Commerce called in January 2007 at the Presidential Forum for Excellence in Dominican Education for a Gran Pacto Social for the Transformation of the Educational System, arguing that such a transformation was the responsibility of all.This call was supported by the DR’s three Ministries of Education as well as the teachers union, and was incorporated into the Forum’s final declaration. The National Council of Private Enterprise (CONEP) has embraced this effort and is moving forward with a range of projects.

Kevin P. Manning FDI & Energy Consultant Former President of AMCHAM-DR

Meanwhile, major investors are taking direct measures to improve education in their operating areas. Investors in tourist developments in the Punta Cana area on the east coast, for instance, are working to improve elementary and secondary schooling in the surrounding communities, and have established a technical institute for employees. And mining investors are addressing educational deficiencies by establishing training programs in their area of influence and sponsoring programs to improve teacher skills for nearby schools. One mining service organization has gone so far as to “adopt” the local technical institute in order to improve instructional equipment and modernize the teaching agenda with the hope of entic-

Invest in education Mr. Manning’s commitment to and advocacy for higher quality of education in the DR gave birth to AMCHAM-DR CSR Committee. He is fully involved now with the Dream Project, an educational foundation in Cabarete, Puerto Plata. His views are key to understanding Dominican educational needs According to several studies, the DR education system is among the poorest in the Latin American region, and several private-public sector initiatives are working hard to reverse this trend

ing graduates to come to work for them after completing the full course of studies. My favorite model, however, is continuous sponsorship of elementary schools of the kind provided by the Falconbridge Foundation, which at last count was offering support and guidance to more than 130 schools. How can both small and large business units get involved in education? Simple: Find the school closest to your plant or office and pay the school’s director a call. Ask for a list of school priorities, estimate the cost of each item and discuss developing a project to be financed and controlled directly by your own staff. Most schools require additional classrooms, assembly areas where none exist, student desks, chairs and rudimentary teaching aids. As your efforts to support local education expand and funding becomes more significant, consider contacting government agencies as well as multilateral organizations that might assist in obtaining grants or matching funds for your projects. At some point, it will be necessary to reach an agreement with the Ministry of Education in order to formalize the responsibilities of both parties. Also consider establishing a non-profit foundation and file for recognition both in the Dominican Republic and as a 501(c)(3) non-profit educational organization in the United States. These recognitions are important when partnering with other organizations for project development or when seeking corporate sponsorship from U.S. corporations. When knocking on corporate doors for fund raising in the United States and especially in the New York area, it is common to encounter Dominicans who have risen in the corporate ranks and serve as members or directors of community relations and will be predisposed to help your efforts in their country of origin. Institutes of higher education in the DR may also be interested in some involvement. Students can help with staff development; research projects can be farmed out at reasonable costs; and the process of sharing technology can open new fields of interest for research and business development. Anyone questioning the value of investing in local education needs only to look at businesses with such programs already underway. Companies working in the DR that have focused on education as the main pillar of their community relations programs are able to demonstrate that employee relations are stronger, absenteeism and turnover are minimized and staff development has been enhanced along the way. Education is the keystone to building a better society while reducing poverty in any developing country, and should be among the top priorities of companies doing business in the DR.

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lot has been written about Corporate Social Responsibility (CSR), some describing it as nothing more than a trend but others convinced that it is an entirely new way of doing business— that is, if you’re interested in a competitive advantage over other companies. Social responsibility is what some of the most admired and respected companies in the world have in common. Usually, CSR is a series of particular elements that when strung together make up a distinct philosophy: paying fair wages, being aggressive about human resources development, giving back to society in some concrete way and whatever else would put a particular company in the public’s favor—sometimes even as a source of national pride. It’s an enviable position, because this type of company attracts the most qualified professionals, investors interested in corporations with social awareness and societies determined to assume longterm commitments. So it’s natural to ask: If CSR is so clearly beneficial, why is that more companies don’t implement it? The truth is that some are not interested or are simply not ready yet to change the way they think about doing business. Most international investors in the Dominican Republic, however, have begun to realize that, with 42.2% (2004)1 of the population living below the poverty line, social investments need to be part of their business implementation strategy. This is especially true in areas such as healthcare and education that overwhelm the local authorities’ capacity and simply must be readdressed in order to obtain better and more tangible results in the long run. A recent business poll conducted by GlobeScan on the state of sustainable business worldwide shows that climate change and human rights are among the most significant priorities. Those surveyed were increasingly optimistic that sustainability would be a core aspect of business strategy in the years ahead. Gaining public trust will require demonstrating the positive impact of their work as well as innovations for sustainability. Nearly nine out of ten people said their companies’ sustainability budgets would stay the same or increase next year, and most companies either measured the ROI of their sustainability efforts or plan to do so soon.

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More than just a trend Marta Fernandez shares her expertise on CSR issues in the Dominican Republic through an overview of the sector and its importance for both private and public institutions In a country where almost 40% of the population lives below the poverty line, it is essential for private sector companies & international investors to further increase their CSR initiatives for the wellbeing of the Dominican population

Why CSR in the DR? It’s hard to say for sure where CSR originated in the DR, but the same companies would probably come to mind among most Dominicans on the subject of sound practices in the areas of human resources, community improvement, environmental protections, and social awareness overall: - Grupo PuntaCana has been implementing CSR initiatives for several decades now; the PuntaCana Foundation and Ecological Foundations have signed strategic alliances with organizations including Save the Children - Caminantes por la Vida (Crisol) - The Bon-Macadamia Case A recent report on CSR in the DR2 highlights the following results: • Local companies are not making the most of their social investment potential. • Dominican companies are at a disadvantage alongside international competitors that have adopted CSR as a competitive strategy because not having a CSR platform often cuts off access to certain markets that have established it as a selection criteria for business partners or associates.

Marta Fernandez Marzal President & CEO of CSR Consulting SRL President of AMCHAMDR’s CSR Committee & CSR Consulting

• Access to capital markets is also at risk of being cut off for companies that do not adopt CSR practices in the short-term, because so-called “ethical funds” favor companies that apply corporate governance and social values. • The shortage of national programs to promote CSR may be due to the absence of effective leadership to define them, as there are plenty of public and private sector entities working on CSR issues that could be used as the initial foundation. • National programs should deploy tools developed at the international level and focus on consider small and medium-sized enterprises (SMEs) as a priority, since they represent the largest percentage of the country’s productive units. It’s clear that integrating CSR more extensively in the DR will benefit companies’ bottom lines, and of course it is the top responsibility of any firm to deliver and sustain shareholder value. CSRrelated policies, processes and reporting will only enhance good governance, business ethics, human capital management, supply chain management, environmental health and safety and community engagement. How and where to start? Adopting CSR is actually simpler than you think. It starts with an effort to see that your employees and surrounding communities are your primary stakeholders. Then your options are unlimited, whether you choose to reach out through culture, sports, education, environment, health or try a less-traditional approach, such as sponsoring self-sustainable pilot projects managed by specific communities—perhaps in line with your particular business focus. For example, tobacco companies might sponsor the development of local tobacco cooperatives. For-profit organizations lacking the staff to focus on social issues that may require time and manpower can join forces with entities already set up to support non-profit organizations, such as foundations and other NGOs managing social projects in a more cost-efficient manner. For example, CSR program guidelines established by the non-profit American Chamber of Commerce for the Dominican Republic (AMCHAMDR) seek to develop individuals´ competitiveness

CORPORATE SOCIAL RESPONSIBILITY IN LATIN AMERICA Regional Medians % Agree

% Disagree

% Don’t know / Refused

21 18

Invest in the development of their employees

Give opportunities for advancement to any employee who is qualified, regardless of their race, social origin, or gender

Make contributions and donations in areas that are fundamental for the communities where they operate

Are truly committed to making a positive impact on consumers’ quality of life

Includes 2008 Data from Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay, and Venezuela

so that they can participate more effectively in the global marketplace. The idea is to focus on areas of the economy that are critical for national development and evolution of the private sector—and which currently represent obstacles. Therefore, the program´s focus is on basic/elementary education and community development, with environmental issues cutting across all programs. A sound CSR strategy needs to approach a company’s policies both from within and externally. Internally, it’s critical to get the support and participation of as many highprofile executives as possible and to identify and engage anyone who is especially passionate about CSR role in the business. Externally, your CSR strategy is basically the positioning document for responsible business practices. A consultant can shed light on the exact content of such a positioning document, offering support on issues such as implementing a CSR management system, CSR reporting, stakeholder engagement and communication.

In the DR, companies such as Global Reporting Initiative (GRI) can help you assess your CSR Strategy and make sure it is in line with local realities. You’ll also need to identify national and multilateral agencies offering support to firms with CSR initiatives who are working in emerging countries. These include FUNGLODE and its sister institution in the U.S., Global Foundation for Democracy and Development (GFDD), the Inter-American Development Bank (IDB), and the UN Development Program (UNDP). Companies with a strong CSR focus are companies which make a contribution to a strong, solidarity-based, vital society, and promote an environment in which they can do business successfully.

(1) According to The World Factbook – CIA - updated May 27, 2010. (2) Olivares, Mirtha, “Responsablidad Social Empresarial en la República Dominicana”, Alianza ONG-W. K. Kellogg Foundation, 2008.

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ur Futuro Foundation, Inc. is a private non-profit organization founded in 2001, supporting the poorest communities in the southern region of the Dominican Republic. Our solid knowledge and extensive experience of the region enables us to run effective programs and projects for the preservation of natural resources, the fight against poverty and the improvement of the population’s quality of life.

Established in 2001, Sur Futuro has served as a channel for the commitment of a private sector interested in social investment for the benefit of the country’s poorest communities. Today, Sur Futuro offers opportunities for visionary and innovative businesses that value the importance of social responsibility for investing in change. Over 60% of all projects are currently financed with private sector resources, including national and international donations. We create specific programs by combining efforts by international investors and institutions in the region to enable communities in the southern region to generate wealth in harmony with the natural and social environment. For the promotion and preservation of natural resources we created the Bank Fund, which is funded by contributions from national and foreign financial institutions. This fund has supported initiatives to preserve national resources and important activities aimed at overcoming the conditions of economic and social poverty that contribute to the deterioration of the environment. Other major projects undertaken in support of the environmental sector have been sponsored by strong domestic business groups, including Grupo León Jimenes, which has launched awareness campaigns focused on the importance of the rational use of water. Industrias Banilejas (INDUBAN) has sponsored activities to promote sustainable coffee cultivation. In partnership with the Association of CoffeeGrowers Padre las Casas (Asociación de Caficultores Padre las Casas), Sur Futuro has established a high quality coffee brand, certified under the name “Café Monte Bonito”. This initiative will allow production partners to secure better prices and benefits in the coffee market. We support the construction and operation of greenhouses for the production of high market value produce while simultaneously providing financial support and technical advice. Crop cultivation in a controlled environment increases the profitability of agricultural production in highland areas and contributes to sustainable land management. There is also a focus on programs supporting educational quality in the southern region. The Internet Centers and Virtual Libraries

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were created with the support of Verizon Dominicana in 2004. Visited by more than 200 children, young people and adults from the community of Padre Las Casas every day, the project has been expanded by the Dominican Institute of Telecommunications (INDOTEL), with the opening of three new Computer Training Centers in other communities. Through the International Youth Foundation, 360 young people have been trained in information and communications technology, and 35% of them were able to enter the labor market, thus adding to their family income. A second group of 398 young people is currently being trained. Another example of effective partnership with the private sector in the implementation of Social Responsibility Programs is that of Cementos Colon, which has sponsored five schools in the municipality of Nigua since 2005, benefiting 1,300 students. In 2007, with support from Acero Estrella, the Amaury Germán Aristy Community Children’s Playground was built, providing direct care for children over the age of three, using games as a learning resource. With the Citi Foundation, Nantik Lum Foundation and the Madrid Independent Community (Comunidad Autónoma de Madrid) Sur Futuro has developed Microcredit Programs that have financed over 2,000 small business owners, contributing to their growth, an improvement in their income levels and the quality of life of these beneficiaries. Sur Futuro is the first private institution in the Dominican Republic to reach an institutional cooperation agreement with the National Council for Climate Change and Mechanism for Clean Development (Consejo Nacional para

el Cambio Climático y Mecanismo de Desarrollo Limpio), as they are committed to raising awareness about Climate Change. The Foundation is an official observer at the United Nations Convention on Climate Change and attended the XV meeting of the Conference of the Parties (COP) in Copenhagen, December 2009. More recently, the Foundation was accepted as a member of the International Union for Conservation of Nature (IUCN). Sur Futuro firmly believes in the synergy of wills in channeling corporate resources to deliver hope to the southern region of our country. As the country is vulnerable to the natural disasters that regularly affect the Caribbean region, especially our island of Hispaniola, the Foundation is involved in mitigation and response actions in the affected communities, channeling local and international aid from numerous corporations, distributed through local agencies to the target population. We continue to open pathways of hope for the communities of the southern region in order to advance their integrated development, so that an increasing number of strategic alliances may form to meet the needs of the local community.

Melba Segura de Grullón President of the Sur Futuro Foundation

Sur Futuro Foundation and social responsibility “More than social responsibility, the Sur Futuro Foundation promotes the development and welfare of communities in the southern region of Dominican Republic as an end in itself, that is our commitment”

am a huge fan of the Dominican Republic. In fact, it’s hard for me to be objective and hide the enormous pride I feel for this half-island. But that is the only risk you take if, after reading my words, you decide to invest in the Dominican Republic. On postcards for tourists you see only splendid beaches and the excellent summer weather we enjoy 365 days of the year. But this is a much more diverse country here, and among our riches is one invaluable asset: our people.

For many years now, I have moved in the world of Dominican culture and I am always astonished by the volcano of talent that is constantly erupting. Here creativity is directly proportional to the beauty of the surroundings. I manage Casa Teatro, a cultural institution that fosters and hosts creative artists of every genre: actors, writers, painters, musicians, photographers, dancers, comedians…the list goes on. Every day the volcano of creativity erupts and gives us the miracle of authentic and marvelous artistic expression. In the Colonial Zone of Santo Domingo there are many similar centers, galleries, small theaters and countless bars and restaurants, drawing visitors to an old city that grows younger every day. Santo Domingo sits on a riverbank and faces the sea, but most of its secrets are inland. Although on the map we are in the middle of the Caribbean, we are very cosmopolitan, and this explains the variety of flavors you can find in our restaurants. Italian, Spanish, Brazilian, Portuguese, Turkish, Hungarian, Japanese, Thai, Peruvian and even Australian chefs have made our city a culinary Tower of Babel.

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The first city, the perfect destination Freddy Ginebra Owner of Casa Teatro

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Musical heritage of the Americas Darío Tejeda Director of the Institute of Caribbean Studies (INEC)

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The Dominican art of cooking Esperanza Lighgow Dominican Master Chef of the Ministry of Tourism

Photo: ¨Serie Memoria Signica¨ by artist Juan Mayí

Freddy Ginebra Owner of Casa Teatro

The stages of Santo Domingo, like its restaurants, offer a spectacular menu. The biggest stars on the world music scene include the DR on their tours, including Caetano Veloso, Sting, Andrea Bocelli, Paulina Rubio, Alberto Cortés and Marc

The first city, the perfect destination The Dominican cultural scene is dominated by a large variety of musicians, artists and writers who have faithfully gathered at Casa de Teatro for over 30 years Tradition and modernity blend in the birthplace of the Americas. This ethnic melting pot simmers with local art, music, theater and cinema

Anthony. Casa Teatro regularly presents world-renowned performers such as Juan Luis Guerra, Johnny Pacheco, Aventura and Michel Camilo. Our city has theaters large and small that are alive with activity all year round. Avant-garde plays alternate with classical ballet and symphony orchestras. The incredible talents of our performers have contributed to the success of the country’s musical theater. Broadway plays and Disney classics have come to life thanks to local talent, earning well-deserved praise from international critics. We are the cradle of merengue and bachata. Bolero, “son” and salsa fill the air we breathe with their contagious beat. In recent years, reggaeton has become the native music of our suburbs, the natural habitat of popular culture. Several arts & craft fairs are held every year, displaying the history, identity and creativity of our various regions. Three world-renowned fashion events also take place here each year, with our young designers displaying their talent alongside the seasoned expertise of celebrities like Carolina Herrera and our national treasure, Oscar de la Renta. The film industry is thriving, offering opportunities for local artists and making the DR an attractive location for international productions shot with our experienced crews. In 2010 we were named “Culture Capital of the Americas” and our varied cultural offerings demonstrate why. But my pride as a Dominican does not blind me to our challenges. We have been port of transit for the Americas, a stopover, as my grandfather used to say, and for that I feel blessed. But now, besides serving as an artistic trampoline, we want to become the pool that blends culture together. Dominicans are magnanimous, helpful and friendly, never hesitant to lend a helping hand. When you invest in the DR, you do it to get the highest possible return on your investment. But from my perspective, there is a better bet: the future of this country. We must not only invest in the material aspects of life, but on dreams, on quality time, on the joy of living, tranquility and good company. Just visit us and you will understand. Take a chance, as I have done, and you will be rewarded. Santo Domingo, the first city, is just the starting point of the best destination.

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he island of Hispaniola has the historical distinction of being the first place where the peoples of the Americas, Europe and Africa converged, making it the setting for a uniquely triangular trade and a blend of their three cultures, further enriched over time by Asian immigration to the Caribbean. This trans-cultural heritage set in motion a process that leaves present -day Dominican Republic as heir to one of the world’s greatest musical treasures, characterized by a great diversity of rhythms, instruments, songs, dances and even musical scales (Medieval European, African and modern). The chroniclers of the Indies wrote about the musical instruments and dances that they observed the indigenous ethnic groups using for festivities and rituals, like the Areíto, the Taíno indians’ main celebration. Maracas, fotutos, caracoles (shells) and pitos (whistles) inherited from the Indians are still used in Dominican cities and in the countryside.

The conquistadors introduced their knowledge of musical notation along with their string, wind and keyboard instruments. They brought trumpets, tambourines and string instruments (guitars, lutes, small guitars and mandolins) in the ships they used to cross the Atlantic to reach the New World. Churchgoers used them to sing praises, rosaries and hymns, while troubadours sang romances, motets and Christmas carols, or danced the zapateo and the fandango. Africans left their legacy to Caribbean music in the strength of percussion and rhythms, and in replicas of the drums and graters used since ancient times to accompany farming rituals, like planting and harvest dances, or magical-religious celebrations. Dominican religious ceremonies use many of the instruments, musical elements and dances derived from Africans and their descendants. Palos or atabales celebrations can be found all over the country. UNESCO has declared the Congos del Espíritu Santo a Masterpiece of Intangible Oral Heritage of Humanity. Ancient calends were the precursors for

Photo: Sol Caribe, Mairen Films 2009

Darío Tejeda Director of the Institute of Caribbean Studies (INEC)

Musical heritage of the Americas With a Masters degree in Caribbean studies, Darío Tejeda’s writings include the story of Juan Luís Guerra & Los 4:40, the most prominent Dominican musical stars of the last few decades

many common elements of present-day carnival celebrations, including masks, costumes and dance movements. The process of adapting to the new inter-ethnic reality between the 16th and 19th centuries was a mix of loss and gain for the original cultures. Creoles (the children of Spaniards who were born and raised on this land) originated a new home-grown culture and a new human group born of this racial melting pot: the Dominican people. The result was a cultural syncretism that can be seen in any sphere today, from the sancocho stew in gastronomy to the rituals of religion, music and dance. The Dominican passion for dance owes a great deal to the Spanish national inclination towards that particular art form, as well as to the Africans and indigenous people. Salves, which are of Catholic origin, are sung to the lively beat of atabales drums. The musical genres that predominate in contemporary Dominican culture are a result of the transformation of a society from rural to urban, the passage of the economy from agrarian to servicebased, and the extension of capitalism through technological development and the growth of communications—especially records and radio. Some musical and dance expressions have been left by the wayside, like the mangulina or the carabiné. In contrast, rhythms like merengue and bachata, which in the past had been looked down on by the elites (who for centuries had been used to European music like counter-dance, waltzes, polkas, mazurkas and minuets) have become a clear expression of identity for the poor majority of Dominicans. Today, these genres share their throne with pan-Caribbean musical styles like son, salsa and bolero, or creolized genres originating in the U.S., like Latin rock or jazz, or academic or symphonic music. Indeed, it was in the 20th century that Dominicans fully stylized merengue by taking the traditional or typical merengue to the status of ballroom orchestras until it became the country’s musical emblem. Living legends of this musical heritage include Juan Luis Guerra, Michael Camilo, Joseíto Mateo, Johnny Ventura, Milly Quezada, Wilfrido Vargas, Cuco Valoy, Francis Santana, Fernando Echavarría, Francisco Ulloa, Fefita La Grande, José Manuel Calderón, Luis Segura, el Cieguito de Nagua and Jorge Taveras.

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he Dominican Republic has a wide array of agricultural products that enrich our cuisine with native ingredients, creating gourmet dishes of the highest quality: simply delicious, cheerful and colorful – like our traditional music, the merengue, and our smiling, vibrant and gracious people. Our art of cooking is part of the Creole cuisine developed in the West Indies, Central and South America. Blending tradition and culinary innovation with typical dishes and nouvelle cuisine, Dominican cooking is a rainbow of flavors that defines our country.

The most common traditional Dominican dish, our “national dish,” is composed of rice and beans with chicken and salad. The Dominican culinary tradition is one of the cornerstones of our culture and lifestyle and is one of the greatest components of ¨Dominicanidad.” On rainy days, family and friends gather to have sancocho, a slow-cooked soup spiced up with local ingredients, seven types of meat, corn and vegetables. Pork roasted over hot coals for over 12 hours, until it is so tender you don´t need to cut it with a knife, or the famous Dominican ¨chivo¨ (goat) are among our excellent traditional dishes that are attracting international attention. The Dominican Republic has one of the richest cuisines in the Caribbean because of the variety of the local products used in the preparation of our food. We were the first civilization of the Americas to develop our own cuisine, and the variety of recipes we are able to concoct with different combinations of the same ingredients is very rich.

Esperanza Lighgow Dominican Master Chef of the Ministry of Tourism

Classic preparation methods of slow cooking, lemon, olive oil and salt dressings and marinades that are now the basis of the popular Mediterranean diet were brought here the Spanish & French settlers. These elements have evolved into a modern cuisine in which we reinvent recipes using the same basic ingredients, adapted to 21st century tastes.

The Dominican art of cooking The Dominican Republic’s culinary ambassador to the world and the Ministry of Tourism’s official chef, Esperanza Lithgow is one of the country’s best-known cooking experts Heir to Spanish, Haitian and French influences, Dominican cuisine is the perfect example of the cultural melting pot here in the first country of the New World

While we are preserving traditional cooking as part of the nation’s cultural heritage, we also innovate in gourmet and nouvelle cuisine, enhancing traditional recipes and using local ingredients in new ways. Yucca and avocado salads, sweet potato jelly or desserts based on mango, pineapple, papaya or coconut are delighting today’s new and demanding consumers. Dominican universities train culinary professionals in every discipline to support our broad tourism sector. Cooking schools proliferate and students learn both Dominican and international cuisine. The most acclaimed chefs of this new generation include Carol Castillo, Juancho Ortiz and Carlos Estevez. The internationalization of Dominican cooking is a vital element for attracting increasing numbers of tourists and promoting an appreciation of the Dominican lifestyle. Dominican rum is recognized worldwide, and now the global trend of ethnic and gourmet food, using coriander, ginger, mango, yucca, avocado, coconut, banana and cacao, opens opportunities not only for our export products but also for our recipes and our culinary culture. In order to expand awareness of the Dominican art of cooking at a national level and help bring our cuisine to the 4.1 million tourists who join us every year, we need to open inexpensive restaurants all over the country, especially in the major tourist areas, ports and airports. Our country’s restaurants should be obliged by law to offer Dominican food on their menus and build dishes around local ingredients, to promote the use of local products rather than imports. We must also create restaurants in the world’s largest cities and in areas with a high concentration of Dominican expatriates. We should train local cooks to further promote our cuisine worldwide, as well as inviting world famous chefs to learn more about the quality of our products and to bring innovation to our cuisine. Countries such as Peru, Brazil, Thailand, Italy and Spain have effectively promoted their cuisines around the world. The Dominican Republic, as the foremost tourist destination in the Caribbean, must export not only its high-quality products but also its culinary traditions and techniques, as part of the renaissance of Dominican culture.

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Dominican Embassies CANADA Address: 130 Albert St., Suite 418 Ottawa, Ontario, Canadá Tel: (613) 569-9893 Fax: (613) 569-8673 @: info@drembassy.org

JAMAICA Address: Townhouse #12 Norbrook Views, 13 Norbrook Crescent, Kingston 8, Jamaica Tel: (876) 931-0044 Fax: (876) 925-1057 @: domemb@cwjamaica.com

TRINIDAD & TOBAGO Address: 10 B, Queen`s Park West, suite 101, Port of Spain, Trinidad & Tobago, Tel: (868) 624-7930 Fax: (868) 623-7779 @: embadom@hotmail.com

BELGIUM Address: 130-A Avenue Louise 1050 Brussels Tel: 322-346-4935 Fax: 322-346-5152 @: oficios.belgica2@gmail.com

PORTUGAL Address: Campo Grande 35-12° A, 1700087, Lisboa Tel: (351) 21 781-1120 Fax: (351) 21 781-1129 @: embajadadom@mail.ptprime.pt

UNITED STATES OF AMERICA Address: 1715 22nd Street N.W., Washington, DC 20008 Tel (202) 332-6280 - (202) 332-6281 Fax: (202) 265-8057 @: embassy@us.serex.gov.do

PANAMA Address: C/ Elvira Méndez, Torre Delta Panamá City Tel: 011-507-394-7813/14/15/16 Fax: 011-507-263-7725 @: embajadompa@cableonda.net

URUGUAY Address: Tomás de Tezanos 1186, CP11300, Buceo, Montevideo, Uruguay. Tel: (5982) 628-7766 Fax: (5982) 628-9655 @: embajadomuruguay@adinet.com.uy

GERMANY Address: Dessauer Strasse 28-29, 10963 Berlín Tel: 4930-2575-7760 Fax: 4930-2575-7761 @: embajadominicana@hotmail.com

SWEDEN Address: Kungsholmsgatan 10, 5 Tr., 112 27 Stockholm Tel: (468) 667-4611 Fax: (468) 667-5105 @: stockholm@domemb.se

MEXICO Address: C/ Prado Sur 755, C.P. 11000, México, D.F. Tel: (5255) 5540-3841 Fax: (5255) 5520-7661 @: embajada@embadom.org.mx

NICARAGUA Address: Residencial Las Colinas, Managua Tel. (505) 276-2029 Fax: (505) 276-0654 @: embdom@cablenet.com.ni

VENEZUELA Address: Edificio Argentum, Los Palos Grandes, Caracas 1060 Tel: (58-212) 283-3709 / 9279 Fax: (58212) 283-3965 @: embajada_dominicana@hotmail.com

RUSSIA Adress: Rublioskaya Shosse 26, Moscow Tel: 7-495-415-2596 Fax: 7-495-415-3601 @: embadomru@gmail.com

SWITZERLAND Address: Weltpoststrasse 4, 3015 Tel: (4131)351-1585 Fax: (4131)351-1587 @: embaj.rep-dom@sunrise.ch

COSTA RICA Address: Plaza del Sol 900 Tel: (5062) 283-8103 Fax: (5062) 280-7604 @:embdominicanacr@ice.co.cr

ARGENTINA Address: C/ Juncal 802, CP 1062 ABF Buenos Aires. Tel: (5411) 4312- 9378 Fax: (5411) 4312-9378 @: embajadom.baires@gmail.com

PARAGUAY Address: Av. Mariscal López, nº 127 Paraguay Tel: (59521) - 213143 @: embajadadominicanapy@hotmail.com

SPAIN Address: Paseo de la Castellana 30, 28046 Madrid Tel (34) 91 431-5395 Fax: (34) 91 435-8139 @: embajada@embajadadominicana.es

Vatican City Address: Via di Porta Angelica 63, Roma, 00193 Tel: 011 (3906) 686-4084 Fax: 011 (3906) 6819-3255 @: embajadasrdssomgre@gmail.com

CUBA Address: 5ta. Ave. Nro. 9202 La Habana Tel: (537) 204-8429 Fax: (537) 204-8431 @: embajadardc@gmail.com

BRASIL Address: SHIS QL Brasilia,D.F. Tel: (5561) 3248-1405 Fax: (5561) 3364-3214 @: embaixada@republicadominicana.org.br

SOUTH KOREA Address: 19th Fl, Taepyeong-ro B/D 310, Taepyeong-ro 2Ga, Jung-Gu, Seoul, Korea Tel: (822) 756-3513 Fax: (822) 756-3514 @: embadom@kornet.net

FRANCE Address: 45, Rue de Courcelles, 75008 Paris Tel: (33) 1 53 53 95 95 Fax: (33) 1 45 63 35 63 @: secretariat@embajdominicana.fr

UNITED ARAB EMIRATES Address: 7th street, Villa 4, Al Bateen, Abu Dhabi, U.A.E. Tel: 9712-658-0788 Fax: 9712-658-0747 @: domrepem@emirates.net.ae

EL SALVADOR Address:Boulevard del Hipodromo nº 253 San Salvador, Tel: 011 (503) 2223-4036 Fax: 011 (503) 2223-3109

COLOMBIA Address: Carrera 18 #123-41 Santa Bárbara, Bogotá Tel: (571) 601-0023 Fax: 571) 601-4423 @: republicadominicana27@hotmail.com

TAIWÁN Address: Number 9, 6th. Floor, Lane 62 Diplomatic Quarter, Tien Mu West Road,Taipei, Taiwan, 112 Tel: (8862) 2875-1357 Fax: (8862) 2875-2661 @: embassy-dr-tpe@hotmail.com

GREAT BRITAIN Address: 139 Inverness Terrace, Bayswater,London, W2-6JF Tel: (44) 207 727-7091 Fax: (44) 207 727-3693 @: embassy@dominicanaembassy.org.uk

QATAR Address: West Bay Lagoon No.15, Villa 15 Doha, Qatar Tel: (974) 411-3868 Fax: (974) 411-3267 @: dominicanarepembassydoha@ hotmail.com

GUATEMALA Address: 18 C/ 24-69 Zona 10, Zona Pradera Tel: (502) 2261-7016 Fax: (502) 2261-7017 @: embardgt@gmail.com

CHILE Address: Candelaria Goyenechea N°4153, Santiago, Chile Tel: (562) 953-5750 Fax: (562) 953-5758 @: embadom.cl@gmail.com

INDIA Address: C-25, Ground Floor Anand Niketan New Delhi-110021, India Tel: 91 11 4342-5000 Fax: 91 11 4342-5050 @: embadom@dr-embassy-india.com

ITALY Address: Vía Pisanelli N° 1, 00196 Roma Tel: (39) 06 3600 4377 Fax: (39) 06 3600-4380 @: embajadadominicana@tiscali.it

SOUTH AFRICA Address 276 Anderson Street, Brooklyn Petroria 0181. Tel: (2712) 362-2463 Fax: (2786) 567-9613 @: dominican.embassy@gmail.com

HAITI Address: 121, Av. Panamericanie, Petion Ville, Puerto Príncipe Tel: (509) 3657-2932 @: embrepdomhai@yahoo.com

ECUADOR Address: C/ German Aleman E1280,Quito, Tel: (5932) 224-4478 Fax: (5932) 243-4275 @: Info@embajadadominicanaecuador.com

ISRAEL Address: Beit Naor, Hamada 6, floor1 Hertzlia Pituach, 46766. Israel. Tel: (9729) 951-5529 Fax: (9729) 951-5528 Israel@embajadadominicana.net

AUSTRIA Address: Prinz Eugen Strasse 18/1/33 1040 Wien Tel: (431) 505-8555 Fax: (431) 505-8555-20 @: embrepdom@gmail.com

EGYPT Address: 40 A, Mohamed Mazhar, Cairo, 11211 Tel: (202) 2735 6081 Fax: (202) 2735 6082 @: mail@dr-embassy-egypt.com

HONDURAS Address: Plaza Miramontes, Colonia Miramontes Tel: (504) 239-5969 Fax: (504) 239-1594 @: embajadom@cablecolor.hn

PERU Address: Calle Tudela y Varela No. 360. Tel: (511) 421-9765 Fax: (511) 222-0639 @: embdomperu@speedy.com.pe

JAPAN Address: Kowa 38 Bldg Nishi-Azabu Minatu-Ku, Tokio 106-0031 Tel: (813) 3499-6020 Fax: (813) 3449-6733

NETHERLANDS Address: Raamweg 21-22, 2596 HL La Hague, NL Tel: (317) 331-7553 Fax: (317) 404-9890 embajada@embajadadominicana.nl

MOROCCO Address: Mehdi Benbarka nº3, Rabat. Tel: 0-537-71-59-05 Fax: 0-537-71-59-57 @: embdomrabat@gmail.com

CEI-RD

ARGENTINA

CHILE

ISRAEL

SOUTH KOREA, Seul

C/ Juncal 802, Apartamento 6 N, CP1062 ABF, Buenos Aires, Argentina Tel: +(54) 11 4312 9378 @ snazir@gmail.com

Candelaria Goyenechea No. 4153 Vitacura, Santiago, Chile Tel: +(56) 2 953 5750 @: ninotchkatorres@gmail.com

Beit Ackerstein, Medinat Hayehudim 103, 3º Hertzlia Pituach, 46766, Israel Tel: +(972) 9 951-5529 / 951-5530 @: fjanser@yahoo.com

19FI,Taepyeng-ro B/D, 310, Taepyeong-ro 2Ga, Jung-Gu, Seoul, Korea Tel: +(822) 756 3513 @: embadom@kornet.net

BELGIUM

EE UU

ITALY

SPAIN

130-A Avenue Louise 1050, Brussels, Belgium Tel: +(32)-0- 2 346 4935 @: altagracia.reyes@gmail.com

1825 Ponce de León Alud # 217, Coral Gables, FL 33134 Tel: +(1) 305 505 4751 @: vanessa.barros@cei-rd.gov.do

Via G. Pisanelli, 1 00196-Rome, Italy Tel: +(39) 06 4543 4789 @: info@ccird.it

Paseo de la Castellana 30, 1° D. 28046 Madrid Tel: +(34)91 431 5395 @: odile.batista@cei-rd.gov.do

BRAZIL

FRANCE

MEXICO

SWITZERLAND

SHIS QL 6, Conjunto 7, Casa 2, Lago Sul, Brasilia, D.F. Tel: +(55) 61 32481405 @: a.arias@republicadominicana.org.br

45 rue de Courcelles, 75008, Paris, France Tel: +(33) 1 53 53 95 97 @: acsamary@hotmail.com

Address: 138 CECIL STREET # 11-03 CECIL COURT 069538, Singapore Tel.: 65-6227-9989 @: benjamin.tan@cei-rd.gov.do

Weltpostsr 4, 3015 Bern, Switzerland Tel: +(41) 31 351 2243 @:juanalcantara807@gmail.com

CANADA, Ottasa

GERMANY

PANAMA

130 Albert Street Suite 418, K1P5G4, Ottawa Tel: +1 (613) 569-9893 ext 222 @: rherrera@drembassy.org

Dessauer Strasse 28-29, 10963 Berlin Tel: +(49) 30 2575 7760 @: lorabastidas@gmail.com

C/ Elvira Méndez, Torre Delta, Piso 16, Área Bancaria, Panamá, Republic of Panama Tel: +(507) 394 7813 @:paocaamano@gmail.com

139 Inverness Terrace, Bayswater, London, W26JF United Kingdom Tel: +(44) -0- 207 727 7091 @: j.sanchez@dominicanembassy.org.uk

Business Associations

AMCHAM

CONEP

Spanish Chamber of Commerce

ADOZONA

Address: Avenida Sarasota No. 20 Torre Empresarial, 6º Piso, Sto. Domingo Tel: +1- 809-381-0777 Fax: +1-809-381-0286 @: amcham@codetel.net.do

Address: Av. Sarasota No. 20 Torre Empresarial AIRD Piso 12 La Julia. Sto. Domingo Tel: 809-472-7101 / 7078 Fax: 809-472-7850 / 7646 @: conep@conep.org.do

Address: Av Abram Lincoln Nº 1003 Torre profesional Biltmore I, Suite 401 Apartado Postal 967 Sto. Domingo. Tel: 809-567-2147 Fax: 809-565-9751 @: camacoes@codetel.net.do

Address: AV. Sarasota #20, 4º Torre Empresarial AIRD Santo Domingo. Tel: 809-472-0251/52/53/54 Fax: 809-472-0256/0260 @: adozona@codetel.net.do

ASIEX

ANJE

German Chamber of Commerce

ANRD

Address: Hotel Santo Domingo Av. Independencia Esq. Abraham Lincoln Santo Domingo Tel:(809) 535-6165 Fax: (809) 535-1744 @: asiex@asiex.org.do

Address: Av. Sarasota No. 20, esquina Abraham Lincoln Torre Empresarial, 3º Santo Domingo Tel: 809-472-0444 Fax: 809-472-0448 @: anje@anje.org

Address: Calle Isabel La Católica No.212 Zona Colonial, Santo Domingo. Tel: 809-678-6700 Fax: 809- 687-9681 @: camdomalemana@hotmail.com

Address: Edf. Navieros 3er Piso Puerto Rio Haina Oriental Santo Domingo, RD Tel: 539.6080 @: vicepresidencia@anrd.com.do

AIRD

British Chamber of Commerce

Italian Chamber of Commerce

Address: Av. Sarasota No. 20 Torre Empresarial AIRD Piso 12. La Julia. Sto. Domingo Tel: 809-472-0000 Ext. 35 Fax: 809-472-0303 @: fespinal@aird.org.do

Address: Av. San Martín 253, Suite 203 Santo Domingo Tel: 809-616-2335 Fax: 809-616-2336 @: administracion@britchamdr.com

Address: Calle Hostos Esq. Luperón Zona Colonial. Santo Domingo Tel.:809-686-5111 Fax: 809-688-5164 @: c.italiana@codetel.net.do

ADOCEM

France Chamber of Commerce

ADOEXPO

Address: Av. Abraham Lincoln esq. Gustavo Mejía Ricart Torre Piantini Suite 302, Ensanche Piantini, Santo Domingo Tel: 809-563-6860 Fax: 809-563-6965 @: nbueno@adocem.org

Address: Arzobispo Nouel 206, Apartado Postal 1442, Zona Colonial, Santo Domingo Tel: 809-686-0339 / 682-6553 Fax: 809-687-1227 @: contact@ccdfdo.org

Address: Calle Virgilio Díaz Ordóñez No. 42, Esq. Viriato Fiallo Ens. Julieta, Santo Domingo Tel: 809-567-6779/809-227-3388 Fax: 809-563-1926 @: info@adoexpo.org

Santo Domingo Hotels Occidental Embajador

Holiday Inn

Surrounded by lush gardens, it has become the most emblematic hotel in Santo Domingo. With 286 rooms decorated in classic style, professionallevel attention to detail at El Embajador Club Executive Floor and the luxurious service at the Royal Club suite floor.

The newest hotel in Santo Domingo, located at the heart of the business district, offers 179 rooms and 20 suites on 11 floors, with a fitness center, sauna and babysitting services. The outdoor pool on the 8th floor overlooks stunning city views.

Ave. Sarasota No.65 Tel. (+1) 809-221-2131 Fax. (+1) 809-532-5306 www.occidentalhoteles.com

Ave. Abraham Lincoln No. 856 Tel. (+1) 809-621-0000 Fax. (+1) 809-985-1001 www.holidayinn.es

Hilton

Barcel贸

The Dominican Republic Hilton Hotel is one of the newest in the city. It is a leading conference hotel with excellent convention and event facilities, with over 12,410 sq. ft. of meeting space and capacity for up to 700 guests.

Fully renovated in 2010, it provides ideal accommodations for leisure and business trips. Located in the heart of Santo Domingo, it has 7 spacious, fully-equipped event rooms, with a capacity to accommodate 1,200 people.

Ave. George Washington No. 500 Tel. (+1) 809-685-0000 Fax. (+1)809-685-0202 www.hiltoncaribbean.com/santodomingo

Ave. M谩ximo G贸mez No. 53 Tel. (+1) 809-563-5000 Fax. (+1) 809-686-5521 www.barcelo.com

Jaragua

Dominican Fiesta

Renaissance Santo Domingo Jaragua Hotel & Casino, part of Marriot, offers luxury accommodations and a resort-like atmosphere combining traditional service with contemporary style. For meetings and events it offers 23,360 sq. ft. of functional space.

Located in the most elegant residential area of Santo Domingo this sophisticated hotel boasts 298 comfortable and modern rooms equipped with all the most modern amenities and an executive floor.

Ave. George Washington No. 367 Tel. (+1) 809-221-2222 Fax. (+1) 809-686-0528 www.marriott.com

Ave. Anacaona No.101 Tel. (+1) 809-562-8222 Fax. (+1) 809-4 82-8938 www.fiestahotelgroup.com

Intercontinental V Centenario

Hotel Santo Domingo

The hotel has 196 rooms with beautiful sea-views, including 29 suites and the majestic Presidential Suite. The hotel features an elegant InterContinental Club Floor, Spa, Fitness Centre and a spectacular Casino.

It blends classic European styles of yester-year, with the needs and desires of the 21st century traveler. With interiors rich, in native mahogany woods, it has 14 acres of lush tropical gardens, 215 oversized rooms, executive security features and a private helipad.

Ave. George Washington No. 218 Tel. (+1) 809-221-0000 Fax. (+1) 809-221-2020 www.intercontinental.com

Ave. Independencia No. 1 Tel. (+1) 809-221-6666 Fax. (+1) 809-687-4274 www.hotelsantodomingo.com.do

Top Rated Golf Courses

Par: Holes: 72 18 Length of course: 7,400 yards

Par: Holes: 72 18 Length of course: 7,740 yards

Par: Holes: 72 18 Length of course: 7,152 yards

1. Teeth of the Dog

5. Corales Golf Course

World famous championship course fronting the Caribbean on seven holes, four on the front nine and three on the back. Course is extra challenging because of sea breezes and airstrip. Ranked 43rd of the top 100 golf courses in the world by Golf Magazine. Only Caribbean golf course included in the ranking. Located in Casa de Campo, La Romana, Pete Dye´s classic Teeth of the Dog attracts the best professional and amateur golfers in the world.

It is an ocean-side course designed by Tom Fazio located in PuntaCana Resort and officially inaugurated in April 2010. Six of the holes are directly on the ocean set alongside a rocky coastline. The course features lakes, coconut palms, seaside canyons and rocky cliffs with views of the ocean from many holes. The 18th hole requires a tee shot to carry over the ocean making a spectacular finish to this beautifully designed course.

Par: Holes: 72 18 Length of course: 7,200 yards

2. The Links

6. Faldo Legacy Golf Course

Championship inland alternative course within the resort/residential community of Casa de Campo, La Romana. Its moderately hilly track, with tall bahia and guinea grass roughs plus multiple sand traps keep you on your toes. Thought by some to be reminiscent of traditional British and Scottish courses, there are several lagoons and even lakes with wading birds. There are five holes where water comes into play on this course, making it a challenge unto itself.

Designed by golfing great Nick Faldo, is the first golf course within Roco Ki. The championship golf course traverses a lush mangrove forest and four inland lakes before winding uphill into highlands flanked by rocky cliffs and the magnificent Caribbean Sea. The course capitalizes on the natural beauty of the area, incorporating native plant species around its meticulously manicured greens.

Par: Holes: 72 18 Length of course: 7,152 yards

3. Dye Fore

7. Punta Espada Golf Club

Spectacular views of the Caribbean Sea, the mountains, the Chavon River and Altos de Chavon and the Marina located in Casa de Campo, La Romana. The numbers are staggering: 7,740 yards in length, 7 cliffside holes dropping 300 feet to the Chavon River below, 40 mph gusting winds - and breathtaking 360-degree views. It is Pete Dye´s latest gem at Casa de Campo.

First Jack Nicklaus Signature Golf Course in the Caribbean. Paspalum Grass 100%, Punta Espada has 8 holes directly on the ocean and views of the Caribbean sea from 15 of the 18 holes. The course boasts an incredibly dramatic coastline. Punta Espada has been rated the #1 golf course in Mexico and the Caribbean for two years in a row by Golfweek Magazine and is a stop on the PGA Champions Tour (the only stop on the tour outside of the USA).

Par: Holes: 72 18 Length of course: 7,396 yards

4. La Cana Golf Club

8. Playa Grande Golf Course

This sea-fronting golf course with 14 holes interacting with the Caribbean Sea and Panoramic views from all the other holes is located in PuntaCana Resort. The magnificent oceanfront vistas of La Cana Golf Course will captivate the most discerning golf design connoisseurs, while its well-fortified greens challenge the game’s toughest competitors. Designed by P. B. Dye, La Cana boasts fourteen ocean-view holes with four playing right on the water’s edge, and its state-of-the-art Seashore Paspalum grass allows for maintenance with minimal environmental impact .

Sprawling over 370 acres of picturesque coastline, the world-class Playa Grande Golf Course, designed by celebrated architect Robert Trent Jones, Sr., is known as “the Pebble Beach of the Caribbean” by the golf community. With 10 holes playing directly on the ocean, this 7,085-yard course winds along the coastline, providing amazingly open vistas, cliff-side fairways, and sloping greens.

Par: Holes: 72 18 Length of course: 7,400 yards