Dominican Republic: Pearl of the Caribbean

Aired May 2009

The most visited tourist destination in the Caribbean.

A country of palm-fringed beaches, turquoise waters, and passionate music.

Where the best pleasures are humble and life is savored slowly.

There is no better definition of paradise on earth. Welcome to the Dominican Republic.

But there is more to the Dominican Republic than its image as a Caribbean playground. It is also a magnet for foreign investment, thanks to a solid and investor-friendly legal regime, generous incentives and an impressive infrastructure capable of supporting new industries and companies.

Its strategic geographic position allows an easy access to the markets of the United
States, Latin America and the Caribbean. An ongoing process of modernization has spurred economic growth, coupled with aggressive efforts by the government and the private sector to promote trade liberalization and economic integration. We look at the nation today as it enjoys an environment of political stability and wide-reaching optimism.

Located in the Caribbean Sea, the Dominican Republic shares with Haiti the island of Hispaniola. Its closest neighbors are Cuba and Puerto Rico. Its capital is Santo Domingo.

The Dominican Republic is a country on track for progress and development. A quick look at the nation’s economic indicators show that growth has been both sustainable and dynamic. The nation has set itself as a good example to the world of positive structural and economic reform, and a strong wave of economic consolidation is sweeping throughout. This the most open and cosmopolitan nation in the Caribbean.

The Dominican Republic has shown some of the highest growth rates in Latin America and the Caribbean, thanks in part to the leadership of the nation’s president, Leonel Fernandez.

On March 2007, the Free Trade Agreement between the Dominican Republic, the United States and Central America, called DR-CAFTA, was signed. 75 percent of the country’s exports are sent to the United States, making it the Dominican Republic’s largest trading partner.

INVESTMENT

Taking advantage of its unique position, the country is actively promoting itself as an ideal investment centre for projects that fulfill its strategic goals: mainly to promote employment and, at the same time, its position in new technologies.

As the sun rises on the east, the Dominican Republic awakens to the sound of ocean waves, its clear, pristine blue waters brushing up against the pure stretches of powdery-white sand, and swaying coconut trees complete the backdrop. A booming tourism industry fuels the region. The country is truly blessed. It is no wonder the Dominican Republic is the most popular destination in the Caribbean for Americans.

The capital city of Santo Domingo is the oldest city in the New World. A walk through the Zona Colonial, with its magical ambience and romanticism, is a must for every visitor. This one square mile boasts the hemisphere’s oldest European ruins from the days of the conquistadors, ruled in the 16th century by the family of its founder, Christopher Columbus. Though crammed with monumental architecture, it’s also a living, breathing city.

It’s not just the sights that make the Dominican Republic so outright absorbing and to many Americans, so addictive. In spite of the invasion of tourists, the Dominican Republic retains an attitude and personality that’s more full-bodied and distinctive than you’ll find in any other Caribbean nation.

TRANSPORT & INFRASTRUCTURE

Santo Domingo at rush hour. Like any major capital city, Santo Domingo is not immune to traffic. But in January 2009, the first subway system in the Dominican Republic and second in the Caribbean opened its doors. The Santo Domingo Metro is a rapid transit system, part of a major “National Master Plan” to improve the transport infrastructure in Santo Domingo as well as the rest of the nation.

Prior to the 1970’s, the Dominican Republic had a backward and crumbling infrastructure, ruined by decades of neglect and under-funding. How times have changed.

Today, the Dominican Republic’s infrastructure is second to none in the Caribbean. The government has designed a business model that favors the development of private sector investment in airports, ports and roads.

In keeping with its privatization agenda, the government sold control of its airports’ management to various foreign companies. The country’s main airport is Las Americas International Airport in Santo Domingo, run by Aeropuertos Dominicanos Siglo XXI, or AERODOM, a Dominican Republic-based private corporation, with a 25-year concession to build, operate, and transfer 6 airports in the Dominican Republic.

To date, Las Americas International Airport is one of the largest in the Caribbean, handling over 3 million passengers per year through its air terminal.

Aerodom was acquired by the global private equity firm Advent International. The acquisition is the first leveraged buyout in the Dominican Republic, and underscores the confidence foreign investors have in the country.

The Cibao. The word the Taino indians used to describe the Central Cordillera mountain range in the Dominican Republic’s interior. These mountains move westward to Haiti, to underneath the ocean floor all the way to Cuba and Central America. In this fertile valley, snake most of the country’s main sources of renewable energy: water.

ENERGY

The energy sector in the Dominican Republic has always been a very sensitive subject. An ongoing concern is the inability of participants in the electricity sector to establish financial viability for the system. Due to low collection rates and infrastructure problems, distribution losses remain high. According to the World Bank, the revitalization of the Dominican economy depends greatly on a sound reform of the sector. Thankfully, things are looking up.

Three regional electricity distribution systems were privatized in 1998 via sale of half of its shares to foreign operators, and the government repurchased all foreign-owned shares in two of these systems in late 2003. The third, serving the eastern provinces, is operated by American concerns and is partly U.S.-owned. Flash forward to six years later, and there is still a lot of opportunity for partnerships between the United States and the Dominican Republic in the energy sector.

In 2006, by request of President Leonel Fernandez, the main players designed a comprehensive plan for the electricity sector that will last until 2012. This plan aims at achieving self-sustainability in the Dominican Republic.

So what is next for the Dominican Republic? As the world’s economic forecast for 2009 keeps getting bleaker and the United States keeps sinking into a recession, this nation of over eight million Dominicans in the heart of the Caribbean has an optimistic vision for the future. A challenging market indeed, but also the best place in all of the Caribbean to combine business and pleasure.