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Dominican Republic 2014 | ECONOMY | INTERVIEW

TBY talks to Juan Temístocles Montás Domínguez, Minister of Economy, Planning, and Development, on growth sectors, the investment environment, and supporting SMEs.

Juan Temístocles Montás Domínguez
BIOGRAPHY
Juan Temístocles Montás Temístocles is a university professor, renowned politician, and author of various books on the electricity sector, politics, and economy in the Dominican Republic. He has completed a number of post-graduate programs in the Dominican Republic and Spain, and has distinguished himself in international conferences with the World Bank, the IMF, and the British Chamber of Commerce, among others. He has held key positions related to the Dominican economy, and currently serves as Minister of Economy, Planning, and Development.

Which economic sectors hold the greatest potential for investment, and what about the Dominican Republic attracts foreign investors?

Montás DomÍnguez The most attractive sectors for private investment have been ICT, mining, and tourism, which have experienced dynamic growth. These sectors will remain attractive to foreign investment in the near future. Meanwhile, the climate, its history, and its accessibility make the country one of the largest tourist attractions in the Caribbean region. Also, we have important open mineral deposits that make environmentally sustainable mining activity viable. The country also wants to attract foreign investment to its logistics and manufacturing industries to create higher value-added.

What steps have been taken to maintain economic stability and foster economic growth?

Macroeconomic stability is necessary to sustain achievements in welfare over time, and to encourage economic growth. Additionally, fundamental equilibrium in terms of the external, monetary, financial, and tax sectors must be ensured. And in order to maintain macroeconomic stability, the budget has featured a reduction of government spending and national debt, while a tax reform is raising revenues and keeping public finances on the right path. Meanwhile, the Central Bank of the Dominican Republic (CBDR) has adopted an inflation-targeting scheme that uses interest rates to signal the stance of monetary policy.

What fiscal policy did the government pursue in 2013, and what is your prognosis for investment?

During 2013, the government had to adopt a more restrictive fiscal policy, increasing taxes and reducing spending, which has impacted the decisions of private agents and economic activity. It is a period of adjustment that, once over, should see economic activity and investment returning to natural levels. Growth levels in 2013 reached 3%, following a slow 1Q2013, but there was much more dynamism in the third quarter. We are optimistic for both growth and investment over 2014. According to Deloitte's latest Business Barometer, 44.1% believe that the economic situation will have improved within around a year, whereas 35.5% believe that the business and investment environments will also improve.

“ Growth levels in 2013 reached 3%, following a slow 1Q2013, but there was much more dynamism in the third quarter. "

What actions are being taken to promote greater specialization and modernization in the Dominican economy?

The Ministry has assumed two major challenges to boost economic growth in the country and make this process a more inclusive one. Firstly, we developed the National Development Strategy 2030, which defines the country Dominicans want for 2030 and the policies to be implemented to achieve it. In this context, we consulted over 7,500 people and 1,425 civil society organizations, who all expressed their views on the country's image in 2030, including goals and policy guidelines. Secondly, we strengthened the National Planning and Public Investment System and implemented the National Development Strategy 2030. It was hard work that required training and coordination, and has already been reflected in three versions of the Multi-Year Plan for the Public Sector, which ensures the consistency of government investment guidelines to meet the goals of the National Development Strategy.

You recently reviewed projects in the country funded by the World Bank worth $274 million. What will be the impact of these projects on the local economy?

The relationship with the World Bank, as with other multilateral cooperation agencies, has been designed to support the country in its efforts to further develop its economy, financing projects in priority areas such as education, health, social care, energy, and governance, as well as supporting our budget and contributing to the country's fiscal and macroeconomic stability. We are in the process of defining the new strategy with the World Bank. The two sectors we plan to prioritize are education and electricity.

SMEs are one of the main economic engines of the country, employing more than 850,000 people. What policies are in place to strengthen local SMEs and facilitate access to credit?

Strategic programs to support SMEs are one of the main priorities of our government. In this context, we created the Vice-Ministry of SMEs within the Ministry of Industry and Trade, which is responsible for the formulation and implementation of programs to promote and support this sub-sector. Currently, there are some ongoing plans, programs, and projects to promote the sustainable development of SMEs and facilitate their formalization in terms of business activity. Regarding access to credit, we created a portfolio of public credit for SMEs in the CBDR of the Dominican Republic, which has Ps4 billion available for SMEs and an extra Ps600 million and Ps500 million through the Foundation for Microfinance Reserves and the National Council for Promotion and Support for Small and Medium Enterprises (PROMIPYME), respectively. Similarly, we created the Solidarity Bank with the objective of providing better access to quality financial services for low-income people, thereby facilitating the democratization of credit and the creation of social capital. We have also eased the regulatory requirements for the assessment and granting of credit to small borrowers through the adoption of the Rules of Microfinance. In addition, we amended the Regulation of the Law on Procurement and Public Contracting Procurement, aimed at simplifying the requirements for the State Register of Providers. This initiative has allowed the formal registration of a significant numbers of SMEs that supply the government. Furthermore, we implemented the virtual window platform at the national level and physical stop shop for the formalization of SMEs, providing a comprehensive registration service, expediting the process and revoking the mandatory legal assistance in drafting the bylaws of SMEs.

What is the importance of new technologies for improving the management of the government and its relationship with citizens?

Recently, we launched a new website, accessible from mobiles and other portable devices. The existence of open data requires availability and free access at any time, without restrictions in terms of using and distributing data. For this purpose, we have established guidelines to standardize access to information, and our commitment is to implement them as soon as possible. Open data encourages the active participation of citizens not only with suggestions and proposals, but also with the generation of citizen content such as photos and videos. These are tasks that the General Government Directorate of Ethics and Integrity, under Decree No. 486-12, follows up on in terms of implementation.

The National Development Strategy is presented as a tool to advance the development and cohesion of society, expressing the vision of the country in 2030. What are the cornerstones of this strategy and how does it determine the policies implemented by the Ministry?

Proposals for the National Development Strategy 2030 are articulated around four strategic pillars with institutional, social, economic, and environmental themes. In this context, we want to develop a social and democratic state in which institutions act ethically, transparently, and efficiently, ensuring safety and promoting equality, peaceful coexistence, and national and local development. We want to promote a society with equal rights and opportunities, in which the entire population has access to education, healthcare, decent housing, and quality basic services, progressively reducing poverty and social and territorial inequality. We also want to integrate regional economies, boost innovation, diversity, and quality, and create the base for sustained high growth in a competitive local market within a global economy. Finally, we aim to consolidate a society with sustainable consumption and production, managed with fairness and efficiency, protecting the environment and natural resources of our country. These actions are complemented by crosscutting policies aimed at ensuring public sector action and the guarantee of human rights, environmental sustainability, territorial cohesion, social participation, and the widespread use of ICT.


 

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