Academic journal article Current Politics and Economics of South and Central America

2014 Investment Climate Statement: Dominican Republic *

Academic journal article Current Politics and Economics of South and Central America

2014 Investment Climate Statement: Dominican Republic *

Article excerpt

Bureau of Economic and Business Affairs


Under theForeign Investment Law (No. 16-95), unlimited foreign investment is permitted in all sectors, with the exception ofthe disposal and storageof toxic, hazardous or radioactive waste not produced in the country; activities negatively impacting public health and the environment; and the production of materials and equipment directly linked to national security unless authorized by the President. There are no limits on foreign control of firms or screening of foreign investment in the open sectors. In practice, improvements in assisting foreign investors wanting to invest in theDominican Republic have been made, especially by the Center for Exports and Investment of the Dominican Republic (CEI-RD). A partial privatization of state- owned enterprises (SOEs) carried out in the late 1990s resulted in foreign investors purchasing shares and obtaining management control of former SOEs engaged inactivities such as electricitygeneration, airport management and milling sugar cane.

According to the USTR's, the U.S. foreign direct investment (FDI) in Dominican Republic (stock) was $1.7 billion in 2011, up 32.7%from 2010.

Table 1B-Scorecards: TheMillennium Challenge Corporation, aU.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, produced scorecards for countries with a 2012 per capitagross national income (GNI) ofUSD 4,085 or less. A list of countries with MCC scorecard and links to those score cards is available here: Details on each of theMCC's indicators and aguide toreadingthe scorecards are available here:


The Dominican exchange system is amarket with free convertibility of the peso. Economic agents perform their transactions of foreign currencies under free market conditions.

The CentralBank usesan averageof the exchangerates reported by the foreign exchange market and financial intermediaries to set the rate for its own operations. Importers mayobtain foreign currency directly from commercial banks and exchange agents.

The Central Bank participates in this market in pursuit of monetary policy objectives, buying or selling currencies and performing any other operation in themarket.

Resolutions 64-06 and 106-06, issued by the Dominican Civil Aviation Board, require all airlines serving the Dominican market to pay nearly all local taxes in U.S. dollars as opposed to local currency for both entry and exit of each passenger. Some airlines have considered challenging this requirement in the courts, but the fines for failure to comply are punitive and compel the airlines to comply until the courts decide otherwise.


There are approximately 30 outstanding disputes with the Dominican government concerning unpaid government contracts or expropriated propertyand businesses. Property claims make up the majority of expropriation cases. Most, but notall, confiscations have been used for purposes of infrastructure or commercial development. In some cases, claims have remained unresolved formany years. Investors and lenders have typically not received prompt or adequate payment for the ir losses, and payment has been difficult to obtain even in cases in which a Dominican court has ordered compensation or the government has recognized a claim. In other cases, lengthy delays in compensation payments have been blamed one rrors committed by government-contracted property assessors, slow processes to correct land title errors, and other technical procedures. The procedures for resolution of expropriation cases are opaque and by zantine to the outsider, and Dominican government agencies frequently disagree on where the responsibility lies for the next action. …

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