Leading The Field
The Dominican Republic is one of the fastest growing economies in the region, with a constant GDP growth average of 5.5% over the past 20 years. What is your medium term outlook for the economy and for 2015?
The macroeconomic framework developed by the Ministry of Economy, Planning and Development serves as the economic policy guideline for the short and medium term, forecasts growth for the 2015-18 period at around the potential economic growth of the country, namely 5%. This potential growth considers the projected demographic trends of the country, as well as investment growth and productivity similar to that presented over the past decade.
One of the sectors enjoying robust growth is tourism. In 2013 the country hosted 4.7 million visitors. Since 1980, the first year that the Central Bank reported tourism statistics, related revenues have risen from barely $172 million to $5 billion in 2013. Which sectors of the Dominican economy, besides tourism, hold the most potential for development?
One sector of remarkable growth is mining, which grew by 20% in 1H2014 as compared to 2013. Growth of this sector is mostly a result of the commencement of operations of mining a company, Barrick Gold. Additionally, this administration has emphasized developing MSMEs, for which were allocated resources and efforts and to formalize and develop the companies of this nature. The government developed a comprehensive plan that covers the promotion of formalization, market access for MSMEs, financial development, business development, and the promotion of entrepreneurship. On the other hand, we have made progress in the agricultural sector because of a series of actions and policies implemented and promoted by the State, through the Special Fund for Agricultural Development (FEDA), with the aim of boosting agricultural production, encouraging and expanding exports of agricultural goods and increasing food security for the population. Within these measures we can highlight the support for land preparation services and technical assistance to producers, in addition to financial support through increased financing tools and channels, something that is reflected by the disbursements of the Agricultural Bank, which grew by 6.5% in September 2014.
How far has the Dominican Republic gone with its National Development Strategy 2010-2030? Which of its goals have been achieved, and what are the main challenges the government is facing in its implementation?
In general, two years after the promulgation of the Law on the National Development Strategy 2030, we have achieved at least one measure of policy in almost 45% of all proposed lines of action.
During the first year, we put great emphasis on preparing regulations to implement the strategy and interagency coordination. Following this, we proceeded to meet the proposed lines of action for which policy measures were adopted to achieve the following objectives. These featured participatory democracy and responsible citizenship, the rule of law and public safety, health and universal social security, macroeconomic drivers, competitiveness and innovation, a sector and territory-integrated production structure, and adequate adaptation to climatic change.
In general, one of the main challenges facing the National Development Strategy was thecontinuity of efforts without pause, to move forward in implementing policy to achieve the objectives outlined.
What are the main advantages of the Dominican Republic as an FDI destination, what is the government's strategy to boost its flow, and what would be your message to potential investors seeking opportunities in the Caribbean?
Much of the government's strategy to stimulate FDI has been supported in the process of comprehensively institutionalizing the country, and having the required institutions in operation to create a favorable business climate for FDI. Some of the initiatives and goals of the Administration are to realize the outlined fiscal consolidation process in pursuit of a substantial reduction in the primary deficit, the implementation of prudent and stable macroeconomic policies that prevent abrupt fluctuations, greater transparency of government operations, a state law reaffirming legal certainty, and pro-competition legislation.
What are the main advantages of the Free Trade Agreements (FTAs) signed with the US and EU for the development of the Dominican economy?
The advantage of having such FTAs is duty free access to the largest consumer markets with greater purchasing power. Furthermore, these facilities place us on equal terms with Central American countries, with which we would be at a disadvantage. Also, these treaties provide an environment of greater legal certainty, which is an incentive for investment. Looking ahead, treaties can be beneficial, to the extent that domestic producers improve their ability to compete by offering products meeting higher quality standards demanded by these countries, which would increase exports and employment. In the agricultural sector, for example, there is still room to reap the benefits of these treaties.