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UNCLAS SANTO DOMINGO 001973 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD OPIC USTR KTDB PGOV DR
SUBJECT: DOMINICAN REPUBLIC - 2009 INVESTMENT CLIMATE REPORT 
 
REF: STATE 123907 
 
  ¶1. The 2009 Investment Climate Update for the Dominican 
Republic. 
 
---------------------------------- 
A.1 Openness to Foreign Investment 
---------------------------------- 
 
¶2. While the Dominican government welcomes foreign 
investment, significant systemic problems can make investing 
in the country a risky undertaking.  Foreign investors cite a 
lack of clear, standardized rules by which to compete and a 
lack of enforcement.  Complaints have included corruption, 
requests for bribes, delays in government payments, failure 
of the Dominican government or of Dominican private sector 
entities to honor contracts, disregard for Dominican court 
rulings, and non-standard procedures in Customs for valuation 
of imported goods.  In 2008, the Dominican Republic dropped 
from 99 to 102 among the 163 countries included in the 
Corruption Perceptions Index of the international 
non-governmental organization Transparency International.  On 
March 1, 2007, the free trade agreement between Central 
American countries, the Dominican Republic and the United 
States (CAFTA-DR) entered into force.  Changes are expected 
over time to allow better regulation and to provide further 
opportunities for investment. 
 
¶3.  Under the Foreign Investment Law (No. 16-95), unlimited 
foreign investment is permitted in all sectors, with the 
exception of the disposal and storage of toxic, hazardous or 
radioactive waste not produced in the country; activities 
negatively impacting public health and the environment of the 
country; 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 the Dominican Republic have been made, 
especially by the Center for Exports and Investment in the 
Republica Dominicana (CEI-RD).  A partial privatization of 
state-owned enterprises (called &capitalization8) was 
carried out in the late 1990,s; foreign investors purchased 
shares and obtained management control of formerly 
state-owned enterprises engaged in activities such as 
electricity generation, airport management and milling 
sugarcane. 
 
¶4.  In 2007, foreign direct investment flow into the 
Dominican Republic totaled US $1.51 billion according to the 
Dominican Central Bank. 
 
-------------------------------------- 
A.2. Conversion and Transfer Policies 
 
-------------------------------------- 
 
¶5.  The Dominican exchange system is a market with free 
convertibility of the peso.  The economic agents perform 
their transactions of foreign currencies under the conditions 
freely negotiated by them. 
 
¶6.  The Central Bank uses the weighted average of the market 
exchange rate to set the rate for its own operations. 
Importers may obtain foreign currency directly from 
commercial banks and exchange agents. 
 
¶7.  The Central Bank participates in this market in pursuit 
of monetary policy objectives, buying or selling currencies 
and performing any other operation in the market.  Some 
industries, particularly those operating in free trade zones 
(zonas francas), complain that the Dominican authorities 
carry out operations through the Central Bank and the 
government-owned Banco de Reservas that result in an 
overvalued peso, penalizing export sectors and the tourism 
sector. 
 
¶8.  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. 
 
------------------------------------ 
A.3. Expropriation and Compensation 
------------------------------------ 
 
¶9.  More than a few U.S. investors have outstanding disputes 
with the Dominican government concerning unpaid government 
contracts or expropriated property and businesses.  Property 
claims make up the majority of expropriation cases.  Most but 
not all confiscations have been used for purposes of 
infrastructure or commercial development.  In some cases, 
claims have remained unresolved for many years.  Investors 
and lenders have typically not received prompt or adequate 
payment for their 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 
one case, the Dominican Supreme Court in 1970 ordered the 
government to compensate a U.S. family whose land and 
businesses had been expropriated.  The Dominican government 
compensated owners only for the expropriated land but to date 
has not offered compensation for the businesses.  In other 
cases, lengthy delays in compensation payments have been 
blamed on errors committed by government contracted property 
assessors, slow processes to correct land title errors, and 
other technical procedures. 
 
¶10.  The past four Dominican administrations have 
expropriated fewer properties than their predecessors and 
have generally paid compensation in those cases.  Discussions 
of the U.S.-Dominican Trade and Investment Council meetings 
in October 2002 prompted the Dominican government to 
establish procedures under a 1999 law to issue bonds to 
settle claims against the Dominican government dating from 
before August 16, 1996, including claims for expropriated 
property. 
 
¶11.  In 2005, with assistance from the U.S. Agency for 
International Development (USAID), the Dominican government 
identified and analyzed 248 expropriation cases; most (65.5 
percent) were resolved by paying claimants with bonds or by 
dismissing the claim.  However, as noted in paragraph 9, a 
number of U.S. claims against the Dominican Republic remain. 
 
------------------------ 
A.4. Dispute Settlement 
------------------------ 
 
¶12.  In preparation for the entry into force of CAFTA-DR, the 
regional trade agreement with the United States, the 
Dominican Congress passed legislation to comply with the 
dispute settlement chapter of the agreement (see Chapter 20 
of the CAFTA-DR agreement).  While CAFTA-DR provides dispute 
settlement mechanisms, the Dominican government has not yet 
established domestic capacity in this area.  The authorities 
state that they are in the process of hiring and training 
personnel to handle this aspect of the agreement.  Currently, 
quite a few U.S. investors, ranging from large firms to 
private individuals, have disputes with the Dominican 
government and parastatal firms involving payments, 
expropriations, or contractual obligations.  Both free trade 
zone companies and non-free-trade-zone companies have 
problems with dispute resolution.  U.S. firms indicate that 
corruption in Dominican businesses, government and judiciary 
impede their access to justice so as to defend their 
interests.  The Embassy expects that the entry into force of 
the CAFTA-DR agreement will be accompanied by an increase 
over the short term in the number of disputes, as terms and 
conditions change. 
 
¶13.  In April 2002, the Dominican Republic associated itself 
with the International Center for the Settlement of 
Investment Disputes ("ICSID", also known as the "Washington 
Convention").  In August of the same year the country 
implemented the New York Convention on Recognition and 
Enforcement of Foreign Arbitral Awards (the New York 
Convention).  The New York Convention provides courts a 
mechanism with which to enforce international arbitral 
awards. 
 
-------------------------------------------- 
A.5 Performance Requirements and Incentives 
-------------------------------------------- 
 
¶14.  Foreign investors receive no special investment 
incentives and no other types of favored treatment, except in 
the area of renewable energy.  There are no requirements for 
investors to export a defined percentage of their production, 
unless firms are operating under the regime of free zones 
(zonas francas).  Free zone firms are required to export at 
least 80 percent of their production.  Foreign companies are 
unrestricted in their access to foreign exchange.  Law 69 
requires local sourcing when components are of approximately 
equal cost and quality compared to imports, but this law has 
not appeared to hinder investors.  There are no requirements 
that foreign equity be Qduced over time or that technology 
be transferred according to defined terms.  The government 
imposes no conditions on foreign investors concerning 
location, local ownership, local content, or export 
requirements. 
 
¶15.  The Dominican labor code establishes that 80 percent of 
the labor force of a foreign or national company, including 
free trade zone companies, be composed of Dominican nationals 
(although the management or administrative staff of a foreign 
company is exempt from this regulation).  The Foreign 
Investment Law provides that contracts licensing patents or 
trademarks, leases of machinery and equipment, and contracts 
for provision of technical know-how must be registered with 
the Directorate of Foreign Investment of the Central Bank. 
 
¶16.  The Renewable Energy Incentives Law (57-07) ), which 
entered into vigor in June 2008, provides an array of 
incentives to business developing renewable energy 
technologies.  This law was passed as part of the Dominican 
government,s efforts to invigorate the local production of 
renewable energy as well as renewable energy manufactured 
products.  The incentives include a 100 percent exemption 
from taxation on imported inputs (equipment and materials) 
and a 10-year exemption from all taxation on profits up to, 
but not beyond, the year 2020. 
 
--------------------------------------------- ----- 
A.6. Right to Private Ownership and Establishment 
 
--------------------------------------------- ----- 
 
¶17.  The Dominican Constitution guarantees the freedom to own 
private property and to establish businesses.  The Foreign 
Investment Law provides foreign investors the same rights to 
own property as are guaranteed by the Constitution to 
Dominican investors.  Public enterprises are not given 
preference over private enterprises.  An area of concern, 
however, is the legitimacy of property titles.  The Dominican 
Republic has a history of problems resulting from conflicting 
property titles.  In an effort to combat this problem, the 
authorities are working with the Inter-American Development 
Bank to create an electronic database of all property titles 
within the country.  This project will authenticate and 
reissue electronically generated property titles to owners. 
It is not yet clear how conflicts between titles will be 
resolved. 
 
---------------------------------- 
A.7. Protection of Property Rights 
---------------------------------- 
 
¶18.  The Dominican Republic has laws with sanctions adequate 
to protect copyrights and has improved the regulatory 
framework for patent and trademark protection, but United 
States industry representatives continue to cite a lack of 
enforcement of intellectual property rights (IPR) as a major 
concern.  The government committed in a side letter to 
CAFTA-DR to take measures to halt television broadcast piracy 
and agreed to report on its efforts in this regard in a 
quarterly report to the Office of the U.S. Trade 
Representative (USTR).  The Dominican authorities have 
delivered these quarterly reports since January 2005.  The 
Embassy has noted improved coordination in this regard among 
various government agencies including the Secretariat of 
Industry and Commerce, the Attorney General,s Office, the 
Patent Office and the Copyright Office.  In 2005 the 
authorities advised cable television operators of their legal 
responsibilities regarding copyright and secured a formal 
agreement with the operators' association in August 2005. 
Since that time authorities have seized equipment from 
various operators found to be infringing the laws.  The 
authorities temporarily closed down several broadcasters 
found to be violating the law. 
 
¶19.  To fulfill CAFTA-DR requirements, the Dominican Congress 
passed legislation in November 2006 to strengthen the IPR 
protection regime by criminalizing end user piracy and 
requiring authorities to seize, forfeit, and destroy 
counterfeit and pirated goods as well as the equipment used 
to produce them.  CAFTA-DR mandates both statutory and actual 
damages for copyright and trademark infringement, and 
requires measures to help ensure that monetary damages can be 
awarded even when it is difficult to assign a monetary value 
to the infringement. 
 
----------------------- 
Patents and Trademarks 
----------------------- 
 
¶20.  The U.S. pharmaceutical industry has expressed concern 
that the sanitary authority of the Dominican Republic,s 
Department of Health continues to approve the import, export, 
manufacture, marketing, and/or sale of pharmaceutical 
products that infringe patents duly registered in the 
Dominican Republic.  The Industrial Property Law, which was 
revised in 2000, has only rarely been applied in legal 
proceedings, so the effectiveness of the law has not been 
thoroughly tested.   In one case in which a Dominican 
defendant was found guilty of patent infringement, the 
Dominican Patent Office issued a subsequent opinion, based on 
obsolete sections of Dominican law; and a Dominican judge 
cited the newly issued but incorrect opinion to suspend the 
patent.  The decision was ultimately reversed by a court of 
appeals, but the process took several months and added to the 
uncertainty about the degree of protection offered to 
industrial property in the Dominican Republic. 
 
¶21. CAFTA-DR requires that test data submitted to the 
Dominican government for the purpose of product approval be 
protected against unfair commercial use for a period of 5 
years for pharmaceuticals and 10 years for agricultural 
chemicals.  Legislation modifying the industrial property law 
was passed in November 2006.  Trademark infringement is now a 
criminal offense.  At the same time various other 
dispositions of intellectual property laws were strengthened. 
 The Dominican Congress abolished criminal penalties for 
patent infringement, a measure applauded by Dominican firms 
engaged in pharmaceutical piracy or gray marketing.   Patent 
violations must be pursued entirely through civil actions. 
 
----------- 
Copyrights 
----------- 
 
¶22.  Piracy of copyrighted materials is common in the 
Dominican Republic, despite a strong copyright law passed in 
2000, the appointment of a specialized IPR prosecutor with 
nationwide jurisdiction in 2003, and some improvement in 
enforcement activity. Audio and video recordings, as well as 
software, are frequently copied without authorization.  The 
authorities will occasionally seize and destroy such pirated 
goods, but rarely prosecute offenders. 
 
¶23.   The copyright and telecommunications authorities 
cooperated closely in 2005 in a campaign to oblige cable 
television operators and broadcasters to obtain licenses for 
re-broadcasting satellite signals and for broadcasting 
cinematic films.  Several firms were closed, fined or warned. 
 Concerning broadcast piracy cases, U.S. industry 
representatives point to extended delays in the judicial 
process when cases are submitted for prosecution. 
 
--------------------------------------- 
A.8. Transparency of Regulatory System 
--------------------------------------- 
 
¶24. In recent years the Dominican government has carried out 
a major reform effort aimed at improving the transparency and 
effectiveness of laws affecting competition.  Nonetheless, 
efforts to establish the rule of law in many sectors of the 
economy have been impeded or in some cases soundly defeated 
by special interests.  For example, in 2008, the Government 
refused to enforce a court ruling to halt an illegal blockade 
of a U.S. business by disgruntled ex-contractors.  Many 
investors, both Dominican and foreign, consider that 
influence through political contacts will predominate over 
formal systems of regulation. 
 
¶25. On November 20, 2002, Congress passed the Financial and 
Monetary Law (Law 183-02) to regulate banks and other key 
players in the financial sector.  The IMF standby agreement 
negotiated in 2003 and 2004 required additional regulation 
and improved supervision of the banking sector, and 
authorities have required banks to improve capital ratios in 
order to meet international standards.  The Superintendent of 
Securities does not regulate the issuance or trading of 
commercial paper outside the formal securities exchange. 
Issues traded on the exchange are regulated, although the 
regulatory entity is weak, and these account for a very small 
portion of total trades. 
 
¶26.  In November 2007, the Dominican Senate passed a law on 
Innovation and Competitiveness that creates a framework for 
manufacturing companies located outside of industrial free 
zones to enjoy facilities previously only granted to 
companies inside the free zone parks.  The legislation 
changed the former Industrial Promotion Corporation (CFI) 
into the new Center for Industrial Development and 
Competitiveness (Proindustria). 
 
--------------------------------------------- ---------- 
A.9. Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ---------- 
 
¶27.  During the 1990s, a period of strong GDP growth and 
largely successful economic reform, Dominican authorities 
failed to detect years of large-scale fraud and mismanagement 
at the privately owned Banco Intercontinental (Baninter), the 
country,s third largest bank.  The failure of Baninter and 
two other banks in 2003 cost the government in excess of US$ 
3 billion, severely destabilized the country,s finances and 
shook business confidence.  The failures and their 
consequences brought about a crisis of devaluation, inflation 
and economic hardship.  Upon taking office in August 2004, 
Leonel Fernndez,s administration formulated with the 
International Monetary Fund a comprehensive program aimed at 
addressing the weaknesses in macroeconomic policies and in a 
wide range of structural areas.  Business confidence 
gradually returned, but effects of the 2003-2004 economic 
crisis linger. 
 
¶28.  In early 2005, the IMF board approved a 28-month Standby 
Agreement worth approximately US$660 million.  Quantitative 
targets were generally met with large margins, especially on 
the monetary side.  Dominican authorities had more difficulty 
in making required structural changes.  The Agreement ended 
in January 2008. 
 
¶29.  The Dominican securities market, the Bolsa de Valores de 
Santo Domingo, was founded in 1991.  Since beginning 
operations, the Bolsa has handled initial offerings of 
commercial paper.  The relatively inexperienced 
Superintendency of Securities (SIV) contends with a very 
aggressive private banking sector that maintains a 
non-transparent, unregulated secondary market in securities. 
This legal but unregulated trading of securities generally 
escapes supervision.  The Capital Market Law and its 
regulations and the Monetary and Financial Law 183-02 are not 
specific on how to regulate the market in commercial paper. 
 
¶30. The private sector has access to a variety of credit 
instruments.  Foreign investors are able to obtain credit on 
the local market but tend to prefer less expensive offshore 
sources.  There are 14 multi-service banks, 15 development 
banks, 18 savings and loan associations, a mortgage bank, 69 
finance companies, 23 loan houses, and a national housing 
bank.  The Central Bank regularly issues certificates of 
deposit, using an auction process to determine interest rates 
and maturities. 
 
------------------------- 
A.10. Political Violence 
------------------------- 
 
¶31.  There have been occasional spontaneous outbreaks of 
protest in some of the poorer areas of the Dominican Republic 
over spiraling electricity costs and lengthy rolling 
blackouts.  Occasional labor protests have been peaceful. 
 
----------------- 
A.11. Corruption 
----------------- 
 
¶32.  Corruption remains an endemic problem in civilian 
government, in the private sector, and within the security 
forces.  Corruption and the need for reform efforts are 
openly and widely discussed.  A respected Dominican 
non-governmental organization supported by USAID sponsored 
research in 2004 that established the fact that during the 
previous 20 years, only one sitting government official had 
been convicted of corruption.  That individual was released 
after serving only six months of the sentence.  The judiciary 
has dealt administratively with judges deemed corrupt, but no 
known prosecutions of corrupt judges have taken place. 
¶33.  The Dominican Congress ratified the UN Convention 
against Corruption on October 26, 2006.  The UN Convention 
has a broader scope on corruption than do other agreements; 
it includes provisions regarding money laundering, 
obstruction of justice, private sector corruption, and asset 
recovery. 
 
¶34.  In April 2005 the President established a National 
Ethics and Anti-Corruption Commission empowered to receive 
complaints about actions and decisions of government 
officials.  The Commission is little known and underutilized 
by the general public. 
 
¶35.  The letter of agreement with the IMF stipulated that the 
authorities would obtain the passage of legislation 
criminalizing the theft of electricity.  This legislation was 
also a requirement of a World Bank lending program for 
electricity sector reform.  The legislation finally passed in 
August 2007, but the deadline for implementation passed 
without any enforcement.  The law still has not been 
implemented as of December 2008 indicating a lack of 
political will to address reforms in the sector and  reduce 
the government,s massive subsidy (2008 est. over $1 billion) 
to the electricity sector. 
¶36.  In June 2005 a group of former officials including a 
former minister, transport union leaders and businessmen were 
convicted of fraud in handling government subsidies for the 
purchase of buses for public transport.  The minister was 
sentenced to three years of house arrest and a fine.  The 
verdict was confirmed on appeal and in July 2008 the Supreme 
Court denied a petition to revise the verdict. 
 
¶37.  In July 2008, the Supreme Court upheld the convictions 
in the Baninter bank fraud case for violation of the banking 
and monetary laws, as well as money-laundering.  Two senior 
bank officials and a noted Dominican-American bank advisor 
were sentenced to ten years and hundreds of millions of 
dollars of indemnification and fines were imposed.  In 
November 2008, the Supreme Court also upheld the convictions 
of two senior Bancredito bank officials for similar offenses. 
 They were sentenced to eight years in prison. 
 
¶38.  Many Dominican elected and appointed officials do not 
distinguish between the public interest and their own 
financial and personal interests in the private sector. 
Reports from the private sector reveal that some officials 
work in both sectors simultaneously and have much influence 
over the bidding process of certain contracts.  The new 
government procurement law is intended to end this common 
practice, but it appears that time will be required to 
standardize the new procedures. 
 
---------------------------------- 
¶B. Bilateral Investment Agreements 
---------------------------------- 
 
¶39.  On September Q 2005, the Dominican Congress ratified 
the Free Trade Agreement with the United States and five 
Central American countries (CAFTA-DR).  Implementation 
occurred on March 1, 2007.  The Dominican Republic has 
bilateral investment treaties with Chile, Ecuador, France, 
Spain, and bilateral trade agreements with several Central 
American countries (CARICOM), and a partial trade agreement 
with Panam, but these do not provide the level of protection 
to investors generally offered by U.S. bilateral investment 
treaties.  An agreement for the exchange of tax information 
between the United States and Dominican Republic has been in 
effect since 1989. 
 
¶40.  In 2007, the Dominican government started negotiating 
bilateral agreements with Canada and Mexico.  The Dominican 
government also signed an Economic Partnership Agreement with 
the European Union as part of CARICOM in December 2007 that 
entered into force in 2008. 
 
--------------------------------------------- --- 
¶C.  OPIC and Other Investment Insurance Programs 
--------------------------------------------- --- 
 
¶41.  The Overseas Private Qvestment Corporation has been 
active in the Dominican Republic with both insurance and loan 
programs.  The Dominican government is a party to the 
Multilateral Investment Guarantee Agency (MIGA) Agreement. 
 
--------- 
¶D.  Labor 
--------- 
 
 
¶42.  The Dominican Constitution provides the right of workers 
to strike and the right of private sector employers to lock 
out workers.  The Dominican Labor Code, which became law in 
June 1992, is a comprehensive piece of legislation that 
establishes policies and procedures for many aspects of 
employer-employee relationships, ranging from hours of work 
and overtime and vacation pay to severance pay, causes for 
termination, and union registration.  The Labor Code requires 
that 80 percent of non-management workers of a company be 
Dominican nationals. 
 
¶43.  The Labor Code establishes a standard work period of 8 
hours per day and 44 hours per week and stipulates that all 
workers are entitled to 36 hours of uninterrupted rest each 
week.  An ample labor supply is available, although there is 
a scarcity of skilled workers and technical supervisors. 
Some labor shortages exist in professions requiring lengthy 
education or technical certification.  Most employers have 
found the local work force competent, trainable, and 
cooperative.  Foreign employers are not singled out when 
labor complaints are made.  Organized labor represented an 
estimated 8 percent of the work force.  The Labor Code 
specifies that 20 or more workers in a company may form a 
union.  Before a union may officially call a strike, however, 
it must have the support of an absolute majority of all 
company workers, unionized or not; it must have previously 
attempted to resolve the conflict through mediation; it must 
have provided written notification to the Ministry of Labor 
of the intent to strike; and it must have waited 10 days from 
that notification before striking.  In part due to these 
stringent requirements, brief work stoppages are more common 
than lengthy strikes. 
 
¶44.  Collective bargaining is legal and may take place in 
firms in which a union has gained the support of an absolute 
majority of the workers.  Few companies have collective 
bargaining pacts.  The Labor Code stipulates that workers 
cannot be dismissed because of trade union membership or 
union activities; however, in practice, it appears that some 
firms have fired workers associated with union activities. 
The Dominican labor code establishes a system of labor courts 
for dealing with disputes.  While cases did make their way 
through the labor courts, the process was often long and 
cases remained pending for several years.  Both workers and 
companies reported that mediation facilitated by the 
Secretariat of Labor was the most effective method for 
resolving worker-company disputes. 
 
¶45.  Many of the major manufacturers in the Free Trade Zones 
have voluntary codes of conduct that included worker rights 
protection clauses generally aligned with the International 
Labor Organization (ILO) Declaration on Fundamental 
Principles and Rights at Work.  Workers are not always aware 
of such codes or the principles they contain. 
 
---------------------------------- 
¶E.  Foreign-Trade Zones/Free Ports 
---------------------------------- 
 
¶46.  The Dominican Republic's free trade zones (FTZs) are 
regulated by Law 8-90, which provides for 100 percent 
exemption from all taxes, duties, charges and fees affecting 
production and export activities in the zones.  These 
incentives are for 25 years for zones located near the 
Dominican-Haitian border, and 15 years for those located 
throughout the rest of the country.  These incentives were 
extended through the year 2015 in agreement with the World 
Trade Organization.  This legislation is managed by the Free 
Trade Zone National Council (CNZFE), a joint private 
sector/government body with discretionary authority to extend 
the time limits on these incentives.  Companies in the FTZs 
must export at least 80 percent of their products. 
 
¶47.  Foreign currency flows from the free trade zones are 
handled via the free foreign exchange market.  Foreign and 
Dominican firms are afforded the same investment 
opportunities both by law and in practice.  The CNZFE,s 
Annual Statistical Report for 2007 noted a Free Zone Sector 
with a total of 53 free zone parks and 526 operating 
companies.  Of those companies, 240, or 45.6 percent are from 
the United States.  Other significant investment was made by 
companies registered in South Korea, Sweden, Netherlands and 
Switzerland.  In general, firms operating in the free trade 
zones experience fewer bureaucratic and legal problems than 
do firms operating outside the zones.  In 2007, free zone 
exports totaled US$4.56 billion, compared to US$4.5 billion 
in 2006. 
 
¶48.  The FTZ sector has experienced a loss of approximately 
60,000 jobs nationwide from 2004 to 2007. The expiration of 
the Multi-Fibre Arrangement, the progressive increase in 
local production costs, including electricity, transportation 
and even customs costs, and an overvalued currency are some 
of the major factors affecting the free zone companies, 
profitability.  Exporters/investors seeking further 
information from the CNZFE may contact: 
 
Consejo Nacional de Zonas Francas 
Leopoldo Navarro No. 61 
Edif.  San Rafael, piso no. 5 
Santo Domingo, Dominican Republic 
Phone: (809) 686-8077 
Fax: (809) 686-8079 and 688-0236 
Web-site Address:  www.cnzfe.gov.do 
 
 
----------------------------------------- 
¶F.  Foreign Direct Investment Statistics 
----------------------------------------- 
 
¶49.  Foreign direct investment in the last few years has been 
largely concentrated in tourism, free trade zone activity, 
electricity generation, real estate development and 
communications.  The Dominican government has made a 
concerted effort to attract new investment, taking advantage 
of the new foreign investment law and of the country's 
natural and human resources.  The decision in the late 
1990,s to privatize or "capitalize" ailing state enterprises 
(electricity, airport management, and sugar) attracted 
substantial foreign capital to these sectors. 
 
Foreign Investment Data (in millions of U.S. dollars) 
Source: preliminary data from Central Bank of the Dominican 
Republic 
 
2007 Numbers 
- - - - - - - - - - - 
FDI Stocks 12,899.9 
FDI Stock /GDP 31.3 percent 
FDI Net Flows 1,516.5 
 
YEAR 2007 FDI flows by source country 
(in millions of U.S. dollars) 
- - - - - - - - - - - - - - - - - - - 
United States 796.1 
Canada 163.3 
Spain 258.3 
United Kingdom 77.8 
France 0.1 
Holland 21.9 
Grand Cayman  -30.4 
Chile 8.5 
Switzerland 80.1 
Italy 1.2 
Others 347.1 
- - - - - - - - 
Total 1,698.0 
 
 
FDI by Sector (in millions of U.S. dollars) 
YEAR 2007 
Preliminary data from Dominican Central Bank 
- - - - - - - - - - - - - - 
Tourism 445.0 
Trade 180.7 
Communications 417.0 
Electricity -19.0 
Finance 53.0 
Free Trade Zones 73.5 
Minerals -170.4 
Real Estate 723.3 
Others 5.1 
- - - - - - - - - 
Total 1,698.0 
 
Major Foreign Investors 
- - - - - - - - - - - - - - - - - 
¶50. Following are some of the largest companies registered as 
foreign businesses by the Central Bank of the Dominican 
Republic: 
 
A.) American Movil (Mexican) (Compania Dominicana de 
Telefonos (CODETEL)), formerly owned by Verizon (U.S.), is 
the main telephone service provider. 
 
B.)  Central Romana Corporation (U.S.) is a diversified 
operation that includes an international airport (La Romana), 
a hotel, sugar plantations, a mill and real estate 
businesses, among other activities. 
 
C.)  E. Leon Jimenes (ELJ), Cerveceria Nacional Dominicana, 
¶C. por. A. (a former local partner of Phillip Morris, of the 
United States). This company produces cigars and beer.  In 
November 2006, Phillip Morris sold its interest in ELJ,s 
beer business and assumed 100 percent ownership of ELJ,s 
cigarette business. 
 
D.)  Xstrata (Switzerland), (formerly Falconbridge 
Dominicana) (Canada) produces ferro-nickel for export from 
the Dominican Republic. 
 
E.)  Shell Company (Netherlands/England) is a distributor of 
petroleum products.  In November 2008, Shell completed the 
sale of its 50 percent share in the refinery to the Dominican 
Government. 
 
F.)  Citibank (U.S.) has operated in the Dominican Republic 
for many ears. It maintains corporate operations, but in 
006 sold off its retail banking operation in the Doinican 
Republic to the Bank of Nova Scotia (Scotabank). 
 
G.)  Esso Standard Oil (U.S.) is a longtime distributor of 
petroleum products. 
 
H.)  hevron-Texaco Caribbean (U.S.) is another long-tim 
distributor of petroleum products. 
 
I.)  Colgate Palmolive, Inc. (U.S.) is a leading manufacturer 
in the Dominican Republic of soaps and toothpast. 
 
J.)  Bank of Nova Scotia (Canada) is one of te longest 
established foreign commercial banks in the Dominican 
Republic.  It is known as Scotiabank.  It expanded its retail 
business significantly in 2003-2004 when it purchased assets 
from the failed Banco Intercontinental (Baninter). 
 
K.)  AES (U.S.). Owns and operates electricity generation 
plants. 
 
L.)  Ashmore Energy (U.K.), formerly Prisma Energy (U.S.), 
operates a 180MW electricity generating plant in Puerto 
Plata. The operation was formerly known as Smith-Enron. 
 
M.)  Coastal (U.S.). A major investor in electricity 
generation. 
 
N.)  Seaboard (U.S.). A major investor in electricity 
generation. 
 
O.)  Tricom, 40 percent owned by Motorola, (U.S.), is the 
second largest provider of long distance and cellular 
telephone services in the Dominican Republic. Citigroup of 
New York owns a sizable share of Tricom's debt. 
 
P.)  Campana de Electricidad de San Pedro de Macors 
(Formerly Cogentrix) (U.S./Dominican.) operates a 300MW 
electricity generating plant. 
 
Q.)  Trilogy (U.S.), formerly Centennial, is a cell phone 
operator and provider of long distance calling cards. 
 
R.)  CEMEX (Mexico) is the largest cement producer in the 
Dominican Republic. 
 
S.)  Advent International (U.S.) operates six airports in the 
Dominican Republic, including Santo Domingo,s Las Americas 
International airport (second in passenger volume) through 
its local subsidiary, Aeropuertos Dominicanos Siglo XXI 
(Aerodom). 
 
T.)  Major League Baseball (MLB).  Many of the U.S. MLB teams 
have multi-million dollar baseball facilities that recruit 
and train players for the U.S. clubs. 
 
 
FANNIN