Policies Towards Foreign Direct Investment

The Dominican economy presents both challenges and opportunities for foreign investors.  While the Dominican government promotes inward FDI and has established formal programs to attract it, lack of clear rules and uneven enforcement of existing rules complicates foreign investment.

The Dominican Republic provides tax incentives to investment in tourism, renewable energy, film production, Haiti-Dominican Republic border development, and the industrial sector.  The Dominican Republic is also a signatory of CAFTA-DR, which mandates non-discriminatory treatment, free transferability of funds, protection against expropriation, and procedures for the resolution of investment disputes.  However, some foreign investors indicate that the uneven enforcement of regulations and laws, or political interference in legal processes, creates difficulties for investment.

There are two main government agencies responsible for attracting foreign investment, the Export and Investment Center of the Dominican Republic (CEI-RD) and the National Council of Free Trade Zones for Export (CNZFE).  CEI-RD promotes foreign investment and aids prospective foreign investors with business registration, matching services and identification of investment opportunities.  CEI-RD also oversees “ProDominicana,” a branding and marketing program for the country launched in 2017 that promotes the DR as an investment destination and exporter.  CNZFE aids foreign companies looking to establish operations in the country’s 74 free trade zones for export outside Dominican territory.

There are a variety of business associations that promote dialogue between the government and private sector, including the Association of Foreign Investor Businesses (ASIEX).

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no general (statutory, de facto, or otherwise) limits on foreign ownership or control.  According to Law No. 98-03 and Regulation 214-04, an interested foreign investor must file an application form at the offices of CEI-RD within 180 calendar days from the date on which the foreign investment took place.  CEI-RD will then evaluate the application and issue the corresponding Certificate of Registration within 15 working days.

In order to set up a business in a free trade zone, a formal request must be made to the CNZFE, the entity responsible for issuing the operating licenses needed to be a free zone company or operator.  CNZFE assesses the application and determines its feasibility.  For more information on the procedure to apply for an operating license, visit the website of the CNZFE at http://www.cnzfe.gov.do.

The Dominican Republic does not maintain a formalized investment screening and approval mechanism for inbound foreign investment.

Other Investment Policy Reviews

The Dominican Republic has not been reviewed recently by multilateral organizations regarding investment policy.  The most recent reviews occurred in 2015.  This included a trade policy review by the World Trade Organization (WTO) and a follow-up review by the United Nations Conference on Trade and Development (UNCTAD) regarding its 2008 investment policy recommendations.

2008 UNCTAD – https://unctad.org/en/pages/PublicationArchive.aspx?publicationid=6343 

2015 WTO – https://www.wto.org/english/tratop_e/tpr_e/s319_e.pdf 

2015 UNCTAD – https://unctad.org/en/PublicationsLibrary/diaepcb2016d2_en.pdf 

Business Facilitation

In the World Bank’s report, “Doing Business,” the Dominican Republic’s overall ranking for ease of doing business fell from 102 in 2019 to 115 in 2020, reflecting stagnant performance in several of the indicator categories.  According to the report, starting a limited liability company (SRL by its Spanish acronym) in the Dominican Republic is a seven-step process that requires 16.5 days.  However, some businesses report the full incorporation process can take two or three times longer than the advertised process.

The Dominican Republic has a single-window registration website for SRL registration (https://www.formalizate.gob.do/) that offers a one-stop shop for registration needs.  Foreign companies may use the registration website.  However, this electronic method of registration is not widely used in practice and consultation with a local lawyer is recommended for company registrations.

Outward Investment

There are no legal or government restrictions on Dominican investment abroad, although the government does little to promote it.  Outbound foreign investment is significantly lower than inbound investment.  The largest recipient of Dominican outward investment is the United States.

Transparency of the Regulatory System

The national government manages all regulatory processes.  Information about regulations is often scattered among various ministry and agency websites and is sometimes only available through direct communication with officials.  It is advisable for U.S. investors to consult with local attorneys or advisors to assist with locating comprehensive regulatory information.

On the 2019 Global Innovations Index, the Dominican Republic’s overall rank remained flat (87) compared to 2018.  In sub-sections of the report, the Dominican Republic ranks 98 out of 129 for regulatory environment and 74 out of 129 for regulatory quality.  The World Economic Forum 2019 Global Competitiveness Report ranked the Dominican Republic 87 out of 141 countries with respect to the efficiency of the legal framework in challenging regulations, and 108 out of 141 regarding burden of government regulations.

The World Bank Global Indicators of Regulatory Governance report states that Dominican ministries and regulatory agencies do not publish lists of anticipated regulatory changes or proposals intended for adoption within a specific timeframe.  Law 200-04 requires regulatory agencies to give notice of proposed regulations in public consultations and mandates publication of the full text of draft regulations on a unified website: http://www.consultoria.gov.do/ .  Foreign investors, however, claim that these requirements are not always met in practice and many businesses note that the scope of the website content is not always adequate for investors or interested parties as not all relevant Dominican agencies provide content, and those that do often do not keep the content up to date.  U.S. businesses reported that some laws went into effect before agencies issued implementing regulations to guide the businesses on how to comply with requirements.

The process of public consultation is not uniform across government.  Some ministries and regulatory agencies solicit comments on proposed legislation from the public; however, public outreach is generally limited and depends on the responsible ministry or agency.  For example, businesses report that some ministries sometimes upload proposed regulations to their websites or post them in national newspapers, while others may form working groups with key public and private sector stakeholders participating in the drafting of proposed regulations.  Public comments received by the government are generally not publicly accessible.  Some ministries and agencies prepare consolidated reports on the results of a consultation for direct distribution to interested stakeholders.  Ministries and agencies do not conduct impact assessments of regulations or ex post reviews.  Affected parties cannot request reconsideration or appeal of adopted regulations.

The Dominican Institute of Certified Public Accountants (ICPARD) is the country’s legally recognized professional accounting organization and has authority to establish accounting standards in accordance with Law 479-08, which also declares (as amended by Law 31-11) financial statements should be prepared in accordance with generally accepted accounting standards nationally and internationally.  The ICPARD and the country’s Securities Superintendency require the use of International Financial Reporting Standards (IFRS) and IFRS for small and medium-sized entities (SMEs).

By law, the Office of Public Credit publishes on its website a quarterly report on the status of the non-financial public sector debt, which includes a wide array of information and statistics on public borrowing (www.creditopublico.gov.do/publicaciones/informes_trimestrales.htm).

In addition to the public debt addressed by the Office of Public Credit, the Central Bank maintains on its balance sheet nearly USD $12 billion in “quasi-fiscal” debt.  When consolidated with central government debt, the debt-to-GDP ratio is near 53 percent, and the debt service ratio is near 30 percent.

International Regulatory Considerations

Since 1995, the Dominican Republic has presented 280 notifications to the WTO Committee on Technical Barriers to Trade (TBT).  In recent years, the Dominican Republic has frequently changed technical requirements (e.g., for steel rebar imports and sanitary registrations, among others) and has failed to provide proper notification under the WTO TBT agreement and CAFTA-DR.

Legal System and Judicial Independence

The judicial branch is an independent branch of the Dominican government.  According to Article 69 of the Constitution, all persons, including foreigners, have the right to appear in court.  The basic concepts of the Dominican legal system and the forms of legal reasoning derive from French law.  The five basic French Codes (Civil, Civil Procedure, Commerce, Penal, and Criminal Procedure) were translated into Spanish and passed as legislation in 1884.  Some of these codes have since been amended and parts have been replaced.  Subsequent Dominican laws are not of French origin.

The World Economic Forum 2019 Global Competitiveness report ranked the Dominican Republic 123 out of 141 countries in judicial independence and 87 of 141 in the efficiency of the legal framework in settling disputes.  On the 2018 Global Innovations Index, the Dominican Republic ranked 91 out of 129 countries for rule of law.

There is a Commercial Code and a wide variety of laws governing business formation and activity.  The main laws governing commercial disputes are the Commercial Code; Law No. 479-08, the Commercial Societies Law; Law No. 3-02, concerning Business Registration; Commercial Arbitration Law No. 489-08; Law No. 141-15 concerning Restructuring and Liquidation of Business Entities; and Law No. 126-02, concerning e-Commerce and Digital Documents and Signatures.

Some investors complain of long wait times for a decision by the judiciary.  While Dominican law mandates overall time standards for the completion of key events in a civil case, these standards frequently are not met.  The World Bank’s 2020 Doing Business report noted that resolving complaints raised during the award and execution of a contract can take more than four years in the Dominican Republic, although some take longer.  Some investors have complained that the local court system is unreliable, is biased against them, and that special interests and powerful individuals are able to use the legal system in their favor.

While the law provides for an independent judiciary, businesses note the government does not respect judicial independence or impartiality, and improper influence on judicial decisions is widespread.  Several large U.S. firms cite the improper and disruptive use of lower court injunctions as a way for local distributors to obtain more beneficial settlements at the end of contract periods.  In order to engage effectively in the Dominican market, many U.S. companies seek local partners that are well-connected and understand the local business environment.

Laws and Regulations on Foreign Direct Investment

The legal framework supports foreign investment.  Article 221 of the Constitution declares that foreign investment shall receive the same treatment as domestic investment.  Foreign Investment Law (No. 16-95) states that unlimited foreign investment is permitted in all sectors, with a few exceptions for hazardous materials or materials linked to national security.

The Export and Investment Center of the Dominican Republic (CEI-RD) aims to be the one-stop-shop for investment information, registration, and investor after-care services.  CEI-RD maintains a user-friendly website for guidance on the government’s priority sectors for inward investment and on the range of investment incentives (http://cei-rd.gob.do/ ).

Competition and Anti-Trust Laws

The National Commission for the Defense of Competition (PRO-COMPETENCIA) has the power to review transactions for competition-related concerns.  Private sector contacts note, however, that strong public pressure is required for PRO-COMPETENCIA to act.

Expropriation and Compensation

The Dominican constitution permits the government’s exercise of eminent domain; however, it also mandates fair market compensation in advance of the use of seized land.  Nevertheless, there are many outstanding disputes between U.S. investors and the Dominican government concerning unpaid government contracts or expropriated property and businesses.  Property claims make up the majority of cases.  Most, but not all, expropriations have been used for infrastructure or commercial development.  Many claims remain unresolved for years.

Investors and lenders have reported that they typically do not receive prompt payment of fair market value for their losses.  They have complained of difficulties in the subsequent enforcement even in cases in which the Dominican courts, including the Supreme Court, have ordered compensation or when the government has recognized a claim.  In other cases, some indicate that lengthy delays in compensation payments are blamed on errors committed by government-contracted property assessors, slow processes to correct land title errors, a lack of budgeted funds, and other technical problems.  There are also cases of regulatory action that investors say could be viewed as indirect expropriation.  For example, they note that government decrees mandating atypical setbacks from roads or establishing new protected areas can deprive investors of their ability to use purchased land in the manner initially planned, substantially affecting the economic benefit sought from the investment.

Many companies report that the procedures to resolve expropriations lack transparency and, to a foreigner, may appear antiquated.  Government officials are rarely, if ever, held accountable for failing to pay a recognized claim or failing to pay in a timely manner.

Dispute Settlement

ICSID Convention and New York Convention

In 2000, the Dominican Republic signed the International Center for the Settlement of Investment Disputes (Washington Convention), however, the Dominican Congress did not ratify the agreement as required by the constitution.  In 2001, the Dominican Republic became a contracting state to the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).  The agreement entered into force by Congressional Resolution 178-01.

Investor-State Dispute Settlement

The Dominican Republic has entered into 11 bilateral investment treaties that are in force, most of which contain dispute resolution provisions that submit the parties to arbitration.

As a signatory to CAFTA-DR, the Dominican Republic is bound by the investment chapter of CAFTA-DR, which submits the Parties to arbitration under either the ICSID or the United Nations Commission on International Trade Law (UNCITRAL) rules. There have been three U.S. investor-state dispute cases filed against the Dominican Republic under CAFTA-DR.  One case was settled; in the other two, an arbitration panel found in favor of the government.  Dual nationals of the United States and Dominican Republic should be aware that their status as a Dominican national may interfere with their status as a “foreign” investor if they seek dispute settlement under CAFTA-DR provisions.  U.S. citizens who contemplate pursuing Dominican naturalization for the ease of doing business in the Dominican Republic should consult with an attorney about the risks that may be raised by a change in nationality with regard to accessing the dispute settlement protections provided under CAFTA-DR.

There are at least 27 U.S. investors who are involved in ongoing legal disputes with the Dominican government and parastatal firms involving payments, expropriations, contractual obligations, or regulatory obligations.  The investors range from large firms to private individuals and the disputes are at various levels of legal review.

International Commercial Arbitration and Foreign Courts

Law 489-08 on commercial arbitration governs the enforcement of arbitration awards, arbitral agreements, and arbitration proceedings in the Dominican Republic.  Per law 489-09, arbitration may be ad-hoc or institutional, meaning the parties may either agree on the rules of procedure applicable to their claim, or they may adopt the rules of a particular institution.  Fundamental aspects of the United Nations Commission on International Trade (UNCITRAL) model law are incorporated into Law 489-08.  In addition, Law 181-09 created an institutional procedure for the Alternative Dispute Resolution Center of the Chamber of Commerce Santo Domingo (http://www.camarasantodomingo.do/).

Foreign arbitral awards are enforceable in the Dominican Republic in accordance with Law 489-09 and applicable treaties, including the New York Convention.  U.S. investors complain that the judicial process is slow and that domestic claimants with political connections have an advantage.

Bankruptcy Regulations

Law 141-15 provides the legal framework for bankruptcy.  It allows a debtor company to continue to operate for up to five years during reorganization proceedings by staying legal proceedings.  It also authorizes specialized bankruptcy courts; contemplates the appointment of conciliators, verifiers, experts, and employee representatives; allows the debtor to contract for new debt which will have priority status in relation to other secured and unsecured claims; stipulates civil and criminal sanctions for non-compliance; and permits the possibility of coordinating cross-border proceedings based on recommendations of the UNCITRAL Model Law of 1997.  In March 2019, a specialized bankruptcy court was established in Santo Domingo. The national juridical school is still training specialized bankruptcy judges.

The Dominican Republic scores lower than the regional average and comparator economies on resolving insolvency on most international indices.

Investment Incentives

Investment incentives exist in various sectors of the economy, which are available to all investors, foreign and domestic.  Incentives typically take the form of preferential tax rates or exemptions, preferential interest rates or access to finance, or preferential customs treatment. Sectors where incentives exist include agriculture, construction, energy, film production, manufacturing, and tourism.

Foreign companies are not restricted in their access to foreign exchange.  There are no requirements that foreign equity be reduced 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.

The Renewable Energy Incentives Law No. 57-07 provides some incentives to businesses developing renewable energy technologies.  Foreign investors praise the provisions of the law, but express frustration with approval and execution of potential renewable energy projects.

Special Zones for Border Development, created by Law No. 28-01, encourage development near the economically deprived Dominican Republic-Haiti border.  A range of incentives, largely in the form of tax exemptions for a maximum period of 20 years, are available to direct investments in manufacturing projects in the Zones.  These incentives include the exemption of income tax on the net taxable income of the projects, the exemption of sales tax, the exemption of import duties and tariffs and other related charges on imported equipment and machinery used exclusively in the industrial processes, as well as on imports of lubricants and fuels (except gasoline) used in the processes.

Incentives for manufacturing apply principally to production in free trade zones (discussed below) or for the manufacturing of textiles, clothing, and footwear specifically under Laws 84-99 and 56-07.  Additionally, Law 392-07 encourages industrial innovation with a series of incentives that include exemptions on taxes and tariffs related to the acquisition of materials and machinery and special tax treatment for approved companies.

Tourism is a particularly attractive area for investment and one the government encourages strongly.  Law 158-01 on Tourism Incentives, as amended by Law 195-13, and its regulations, grants wide-ranging tax exemptions, for fifteen years, to qualifying new projects by local or international investors.  The projects and businesses that qualify for these incentives are: (a) hotels and resorts; (b) facilities for conventions, fairs, festivals, shows and concerts; (c) amusement parks, ecological parks, and theme parks; (d) aquariums, restaurants, golf courses, and sports facilities; (e) port infrastructure for tourism, such as recreational ports and seaports; (f) utility infrastructure for the tourist industry such as aqueducts, treatment plants, environmental cleaning, and garbage and solid waste removal; (g) businesses engaged in the promotion of cruises with local ports of call; and (h) small and medium-sized tourism-related businesses such as shops or facilities for handicrafts, ornamental plants, tropical fish, and endemic reptiles.

For existing projects, hotels and resort-related investments that are five years or older are granted 100 percent exemptions from taxes and duties related to the acquisition of the equipment, materials and furnishings needed to renovate their premises.  In addition, hotels and resort-related investments that are fifteen years or older will receive the same benefits granted to new projects if the renovation or reconstruction involves 50 percent or more of the premises.

Finally, individuals and companies receive an income tax deduction for investing up to 20 percent of their annual profits in an approved tourist project.  The Tourism Promotion Council (CONFOTOUR) is the government agency in charge of reviewing and approving applications by investors for these exemptions, as well as supervising and enforcing all applicable regulations.  Once CONFOTOUR approves an application, the investor must start and continue work in the authorized project within a three-year period to avoid losing incentives.

The government does not currently have a practice of jointly financing foreign direct investment projects.  However, in some circumstances the government has authority to offer land or infrastructure as a method of attracting and supporting investment that meets government development goals.  In January 2020, the government announced a special development plan to encourage high-quality investment and infrastructure development in Pedernales and the southwest region of the country, with an emphasis on inclusive and sustainable development. Also, in February 2020, the government passed a law on public-private partnerships that may encourage high-quality infrastructure projects and help catalyze private sector-led economic growth, but implementation is still pending, and it is not yet clear whether it will apply to sectors other than infrastructure.  The Dominican government does not currently offer special incentives for foreign businesses investing in women-owned or women-led projects, but the country’s development goals prioritize support for small businesses, particularly women-owned businesses, and the government offers numerous programs through CEI-RD and the Ministry of Industry and Commerce to support women entrepreneurs.

Foreign Trade Zones/Free Ports/Trade Facilitation

The Dominican Republic’s free trade zones (FTZs) are regulated by the Promotion of Free Zones Law (No. 8-90) of January 15, 1990, which promotes the establishment of new free zones and the development and growth of existing zones.  The law also provides for 100 percent exemption from all taxes, duties, charges, and fees affecting production and export activities in the zones. These incentives are for 20 years for zones located near the Dominican-Haitian border and 15 years for those located throughout the rest of the country.  The National Council of Export Free Trade Zones (CNZFE) is the official authority that regulates compliance with Law 8-90, on Free Trade Zones and is composed of representatives from the public and private sectors, chaired by the Minister of Industry and Commerce.  This body has the objective of delineating policies for the promotion and development of Free Zones, as well as approving applications for operating licenses, with discretionary authority to extend the time limits on these incentives. Products produced in FTZs can be sold on the Dominican market, however, relevant taxes apply.

In general, firms operating in the FTZs report fewer bureaucratic and legal problems than do firms operating outside the zones.  Foreign currency flows from the FTZs are handled via the free foreign exchange market.  Foreign and Dominican firms are afforded the same investment opportunities both by law and in practice.

According to CNZFE’s 2018 Statistical Report, the most recent available, 2018 exports from FTZs totaled $6.2 billion, comprising 3.3 percent of GDP.  There are 673 companies operating in a total of 74 FTZs.  Of the companies operating in FTZs, approximately 40 percent are from the United States.  Other major presences include companies registered in the Dominican Republic (22.4 percent), United Kingdom (8.2 percent), Canada (4.5 percent), and Germany (3.5 percent).  Companies registered in 38 other countries comprised the remaining investments.  The main productive sectors receiving investment include: medical and pharmaceutical products, tobacco and derivatives, textiles, services, agro-industrial products, footwear, and metals and plastics.

Exporters/investors seeking further information from the CNZFE may contact:

Consejo Nacional de Zonas Francas de Exportación
Leopoldo Navarro No. 61
Edif. San Rafael, piso no. 5
Santo Domingo, Dominican Republic
Phone: (809) 686-8077
Fax: (809) 686-8079
Website Address: http://www.cnzfe.gov.do 

Performance and Data Localization Requirements

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.  Senior management and boards of directors of foreign companies are exempt from this regulation.

The Dominican Republic does not have excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility of foreign investors and their employees.  The host government does not have a forced localization policy to compel foreign investors to use domestic content in goods or technology.

There are no performance requirements as there is no distinction between Dominican and foreign investment.  Investment incentives are applied uniformly to both domestic and foreign investors in accordance with World Trade Organization (WTO) requirements.  In addition, there are no requirements for foreign IT providers to turn over source code or provide access to encryption.

Law No. 172-13 on Comprehensive Protection of Personal Data restricts companies from freely transmitting customer or other business-related data inside the Dominican Republic or beyond the country’s borders.  Under this law, companies must obtain express written consent from individuals in order to transmit personal data unless an exception applies.  The Superintendency of Banks currently supervises and enforces these rules, but its jurisdiction generally covers banks, credit bureaus, and other financial institutions.  Industry representatives recommend updating this law to designate a national data protection authority that oversees other sectors.

Real Property

The Dominican Constitution guarantees the right to own private property and provides that the state shall promote the acquisition of property, especially titled real property.  All land must be registered under Dominican law, and that which is not registered is considered state land.  There are no restrictions or specific regulations on foreigners or non-resident owners of land.

Mortgages and liens exist in the Dominican Republic.  The Title Registry Office maintains a reliable system of recording titles, as well as a complementary registry of third-party rights, such as mortgages, liens, easements, and encumbrances.  A patchwork history of land titling systems and sometimes violent political change has complicated land titling in the Dominican Republic.  The country transitioned to a new system based on GPS coordinates in 2008 and has been working towards establishing clear titles, but industry sources estimate the proportion of clear titles remains around 35 percent of all land titles.  The government advises that investors are ultimately responsible for due diligence and recommends partnering with experienced attorneys to ensure that all documentation, ranging from title searches to surveys, have been properly verified and processed.

Property owners maintain ownership of legally purchased property even if it is unoccupied or occupied by squatters.  However, for land without a title (thereby state-owned), “adverse possession” can come into play, meaning squatters can acquire legal ownership of the land.

Land tenure insecurity persists, fueled by government land expropriations, institutional weaknesses, lack of effective law enforcement, and local community support for land invasions and squatting.  Some companies have reported that concessions granted by the government are subsequently interfered with or not respected and cite alleged political expediency or influence as reasons for such actions.  In some cases, holders of title certificates received little or no additional security.  Long-standing titling practices, such as issuing provisional titles that are never completed or providing title to land to multiple owners without requiring individualization of parcels, have created substantial ambiguity in property rights and undermined the reliability of land records.  Some of these practices have been curtailed in the last few years, but nonetheless undermine the reliability of existing land documentation.  In addition, the country has struggled to control fraud in the creation and registration of land titles, including illegal operations within the government agencies responsible for issuing titles.

According to the World Bank’s report Doing Business 2020, registering property in the Dominican Republic requires 6 steps, an average of 33 days, and payment of 3.37 percent of the land value as a registration fee.  In the 2020 report, the Dominican Republic rank for ease of registering property improved from 77 to 74 (out of 190 countries in ease of registering property).  In the last decade, the Dominican government received a $10 million USD Inter-American Development Bank (IDB) loan to modernize its property title registration process, address deficiencies and gaps in the land administration system, and strengthen land tenure security.  The project involved digitization of land records, decentralization of registries, establishment of a fund to compensate people for title errors, separation of the legal and administrative functions within the agency, and redefinition of the roles and responsibilities of judges and courts.

Intellectual Property Rights

Intellectual property rights (IPR) are issued by several IP authorities in the Dominican Republic.  The National Copyright Office (ONDA) issues copyrights, the National Office of Industrial Property (ONAPI) issues trademarks and patents, the Ministry of Public Health and Social Assistance (MISPAS) issues sanitary registrations required for marketing foods, pharmaceuticals, and health products, and the Directorate of International Trade (DICOEX) has jurisdiction over the implementation of geographical indications.  Despite strong IPR laws on the books and marginal operational improvements in recent years, the quality of decision-making at these IPR-issuing authorities is still inconsistent.

Enforcement is carried out by the Customs Authority (DGA), the National Police, the Special Office of the Attorney General for Matters of Health, the Special Office of the Attorney General for High Tech Crimes, and the National Copyright Office (ONDA).  However, due to the absence of an interagency mechanism, these institutions demonstrated varying levels of capacity and commitment.  The result is that enforcement remains weak as the government achieved little progress in addressing longstanding IPR issues such as the widespread cultural acceptance of signal piracy and counterfeit products.

Signal piracy has become the most common and flagrant IP infringement in the Dominican Republic, and it continues to become more widespread with the development of new technologies.  For example, many people modify Amazon Firesticks to gain illegal access to virtually unlimited content via internet protocol television (IPTV).  Businesses that provide services related to piracy often operate with impunity as ONDA rarely submits formal requests for the telecommunications regulator (INDOTEL) to cancel the licenses of those using pirated signals.  Similarly, the country’s Special Prosecutor for High Tech Crimes rarely pursues copyright infringement cases, instead focusing resources on cybercrimes.

Despite the efforts of the Special Office of the Attorney General for Matters of Health, illicit or counterfeit goods are also still widely available.  Counterfeit or smuggled alcohol and cigarettes are common because those items are taxed at a relatively high rate.  In certain shopping districts like La Duerte, Villa Consuelo, and Moca, it is easy to find counterfeit apparel, shoes, luxury handbags, pharmaceuticals, cosmetics, and electronics.  The availability of counterfeit goods in these shopping districts is common knowledge and law enforcement is unresponsive, reflecting the cultural acceptance of counterfeiting throughout the country.

Industry representatives also noted that the absence of specialized tribunals and weak technical capacity in the judicial system hinder prosecution of IP violations.  While a limited number of judges in the capital city of Santo Domingo possess the skills and experience to adjudicate IP disputes, judges outside of the capital have little or no understanding of IP legal issues.

In 2019, the Dominican Republic passed Law No. 17-19 on the Eradication of Illicit Trade, Smuggling, and Forgery of Regulated Goods, which increased prosecution of some IP violations.  This law prohibits the sale of pharmaceuticals, spirits, gasoline, and tobacco without official registration.  The law also allows prosecutors to pursue legal action in the absence of a plaintiff.

According to the Special Office of the Attorney General for Matters of Health, much of the increase in its counterfeit goods cases can be attributed to this new legislation.  In 2019, the number of counterfeit goods cases pursued by this office increased 76 percent and arrests increased 31 percent over 2018.

Since 2003, the U.S. Trade Representative (USTR) has designated the Dominican Republic as a Special 301 Watch List country for serious IPR deficiencies.  The country, however, is not listed in the notorious market report.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The Dominican Stock Market, the Bolsa de Valores de la Republica Dominicana (BVRD), is one of the more active stock markets in the Caribbean region.  It is regulated by the Securities Market Law (No. 249-17) and supervised by the Securities Superintendency, which approves all public securities offerings.

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.  The Central Bank regularly issues certificates of deposit, using an auction process to determine interest rates and maturities.

In recent years, the local stock market has continued to expand, in terms of the securities traded on the BVRD.  There are very few publicly traded companies on the exchange, as credit from financial institutions is widely available and many of the large Dominican companies are family-owned enterprises.  Most of the securities traded in the BVRD are fixed-income securities issued by the Dominican State.

Money and Banking System

The Dominican Republic hosts a robust banking sector.  According to the Global Partnership for Financial Inclusion, approximately 56 percent of Dominican adults have bank accounts.  While full-service bank branches tend to be in urban areas, several banks employ sub-agents to extend services in more rural areas.  Technology has also helped extend banking services more widely throughout the country.  The Dominican Republic’s financial sector is relatively stable, and the IMF declared the financial system largely satisfactory during 2019 Article IV consultations, citing a strengthened banking system as a driver of solid economic performance over the past decade.

The Dominican banking comprises 124 entities, as follows: 50 financial intermediation entities (including large commercial banks, savings and loans associations, financial intermediation public entities, credit corporations), 42 foreign exchange and remittance agents (specifically, 36 exchange brokers and 6 remittances and foreign exchange agents), and 32 trustees.  According to the latest available information (September 2019), total bank assets were $35.33 billion.  The three largest banks hold 68.3% of the total assets – Banreservas 28.56%, Banco Popular 23.84%, and BHD Leon 15.9%.

The Dominican Monetary and Banking system is regulated by the Monetary and Financial Law (No. 183-02), and overseen by the Monetary Board, the Central Bank, and the Banks Superintendency.  The mission of the Dominican Central Bank is to maintain the stability of prices, promote the strength and stability of the financial system, and ensure the proper functioning of payment systems.  The Banks Superintendency carries out the supervision of financial intermediation entities, in order to verify compliance by said entities with the provisions of the law.

Foreign banks may establish operations in the Dominican Republic, although it may require a special decree for the foreign financial institution to establish domicile in the country.  Foreign banks not domiciled in the Dominican Republic may establish representative offices in accordance with current regulations.  To operate, both local and foreign banks must obtain the prior authorization of the Monetary Board and must process it via the Banks Superintendency. Major U.S. banks have a commercial presence in the country, but most focus on corporate banking services as opposed to retail banking.  Some other foreign banks offer retail banking. There are no restrictions on foreigners opening bank accounts, although identification requirements do apply.

Foreign Exchange and Remittances

Foreign Exchange

The Dominican exchange system is a market with free convertibility of the peso.  Economic agents perform their transactions of foreign currencies under free market conditions.  There are generally no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

The Central Bank sets the exchange rates and practices a policy of managed float.  Some firms have had repeated difficulties obtaining dollars during periods of high demand.  Importers may obtain 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 the market to minimize volatility.

Remittance Policies

Decree No. 214-04 on the Registration of Foreign Investment in the Dominican Republic establishes the requirements for the registration of foreign investments, the remittance of profits, the repatriation of capital, and the requirements for the sale of foreign currency, among other issues related with investments.

Foreign investors can repatriate or remit both the profits obtained and the entire capital of the investment without prior authorization of the Central Bank. Article 5 of the aforementioned Decree 214-04 states that “the foreign investor, whose capital is registered with the CEI-RD, shall have the right to remit or repatriate it…”

Sovereign Wealth Funds

The Dominican government does not maintain a sovereign wealth fund.

State-Owned Enterprises (SOEs) in general do not have a significant presence in the economy, with most functions performed by privately-held firms.  Notable exceptions are in the electricity, banking, and refining sectors.  In the partially privatized electricity sector, private companies mainly provide the electricity generation, while the government handles the transmission and distribution phases via the Dominican Electric Transmission Company (ETED) and the Dominican Corporation of State Electrical Companies (CDEEE).  CDEEE is the largest SOE in terms of government expenditures.  However, the government participates in the generation phase, too (most notably in hydroelectric power) and one of the distribution companies is partially privatized.  In the financial sector, the state-owned BanReservas is the largest bank in the country, with a 32 percent market share by assets.  In the refining sector, the government is the majority owner of the only refinery in the country; Refinery Dominicana (Refidomsa) operates and manages the refinery, is the only importer of crude oil in the country, and is also the largest importer of refined fuels, with a 60 percent market share.

Law 10-04 requires the Chamber of Accounts to audit SOEs.  Audits are published in http://www.camaradecuentas.gob.do/index.php/auditorias-realizadas .  However, the available audits are dated several years ago.  In addition, all audits are available upon request according to freedom of information provisions.

Privatization Program

The government does not have any privatization programs.  A partial privatization of state-owned enterprises (SOEs) in the late 1990s resulted in foreign investors obtaining management control of former SOEs engaged in activities such as electricity generation, airport management, and sugarcane processing.

The government does not have an official position or policy on responsible business conduct, including corporate social responsibility (CSR).  Although there is not a local culture of CSR, large foreign companies normally have active CSR programs, as do some of the larger local business groups.  While most local firms do not follow OECD principles regarding CSR, the firms that do are viewed favorably, especially when their CSR programs are effectively publicized.

The Dominican Constitution states, “Everyone has the right to have quality goods and services, to objective, truthful and timely information about the content and characteristics of the products and services that they use and consume.”  To that end, the national consumer protection agency, Pro Consumidor, offers consumer advocacy services.

The country joined the Extractive Industries Transparency Initiative (EITI) as a candidate in 2016.  The government incorporates EITI standards into its mining transparency framework.  In 2019, EITI conducted a validation study of the Dominican Republic’s implementation of EITI standards.

The Dominican Republic has a legal framework that includes laws and regulations to combat corruption, and which provide criminal penalties for corruption by officials.  However, the government did not implement the law effectively, and officials frequently engaged in corrupt practices with impunity.  Enforcement of existing laws is often ineffective.  Individuals and NGOs noted the greatest hindrance to effective investigations was a lack of political will to prosecute individuals accused of corruption, particularly well-connected individuals or high-level politicians.  Government corruption remained a serious problem and a public grievance.

The Dominican Republic’s rank on the Transparency International Corruption Perception Index fell from 129 in 2018 to 137 in 2019 (out of 180 countries assessed).  The World Economic Forum’s 2019 Global Competitiveness report ranked the Dominican Republic as 110 of 141 countries for incidence of corruption.

In September 2019, the Dominican Supreme Court began a trial against six of the 14 defendants indicted in 2017 for alleged links to $92 million in bribes paid by the Brazilian construction company Odebrecht to obtain public works contracts.  A 2016 plea agreement between the U.S. Department of Justice and Odebrecht implicated high-level public officials in the Dominican Republic; the six current defendants include a senator, a lower house representative, a former senator, and a former minister of public works.  Civil society welcomed the trial as a step forward in the fight against corruption, but activists highlighted what they perceived as a lack of political will to investigate thoroughly the case, which involved the country’s political and economic elites.

U.S. companies identified corruption as a barrier to FDI and some firms reported being solicited by public officials for bribes.  It appears most pervasive in public procurement and the awarding of tenders or concessions, but complaints from U.S. investors indicate corruption occurs at all phases of investment.  At least one firm said it intended to back out of a competition for a public concession as a result of a solicitation from government officials.  U.S. companies also frequently cite the government’s slow response to the Odebrecht scandal as contributing to a culture of perceived impunity for high-level government officials, which fuels widespread acceptance and tolerance of corruption at all levels.  U.S. businesses operating in the Dominican Republic often need to take extensive measures to ensure compliance with the Foreign Corrupt Practices Act.

Civil society is engaged in anti-corruption campaigns.  Several non-governmental organizations are particularly active in transparency and anti-corruption, notably the Foundation for Institutionalization and Justice (FINJUS), Citizen Participation (Participacion Ciudadana), and the Dominican Alliance Against Corruption (ADOCCO).

The Dominican Republic signed and ratified the UN Anticorruption Convention.  The Dominican Republic is not a party to the OECD Convention on Combating Bribery.

Resources to Report Corruption

Procuraduría Especializada contra la Corrupción Administrativa (PEPCA)
Calle Hipólito Herrera Billini esq. Calle Juan B. Pérez,
Centro de los Heroes, Santo Domingo, República Dominicana
Telephone: (809) 533-3522
Fax: (809) 533-4098
Email: info@pepca.pgr.gob.do

Linea 311 (government service for filing complaints and denunciations)
Phone: 311 (from inside the country)
Website: http://www.311.gob.do/ 
Participación Ciudadana
Phone: 809 685 6200
Fax: 809 685 6631
Email: info@pciudadana.org

There is no recent history of widespread, politically motivated violence in the Dominican Republic.  In February and March of 2020, there were multiple, mostly-peaceful protests throughout the country over the Dominican electoral authority’s decision to suspend national municipal elections after widespread failure of its electronic voting system.  There are no examples of politically motivated damage to projects or installations in the last 10 years.  In polling, Dominicans consistently cite crime and violence as among the largest challenges affecting daily life.  The World Economic Forum 2019 Global Competitiveness Report ranked the Dominican Republic 118 out of 141 countries in overall security imposing costs on business and 97 of 141 in terms of organized crime imposing costs on businesses.

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.  According to 2019 Dominican Central Bank data, the Dominican labor force consists of approximately 5 million workers.  The labor force participation rate is 65.3 percent; approximately 63 percent of the labor force works in services, 14.8 percent in government/administration, 10 percent in industry, and eight percent in agriculture, with the remaining four percent categorized as other work.  The labor force is divided roughly 50-50 between the formal and informal sectors of the economy.  In 2019, unemployment fell to 5.8 percent, with youth unemployment measured at 13.2 percent.  A 2017 survey by the National Statistics Office and UN Population Fund found that of the 334,092 Haitians age 10 or older living in the country, 67 percent were working in the formal and informal sectors of the economy.

The Dominican Labor Code 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 code applies equally to migrant workers, however, many irregular Haitian laborers and Dominicans of Haitian descent working in the construction and agricultural industries do not exercise their rights due to fear of being fired or deported.  The law requires that at least 80 percent of non-management workers of a company be Dominican nationals.  Exemptions and waivers are available and regularly granted.  The law provides for severance payments, which are due upon layoffs or firing without just cause.  The amount due is prorated based on length of employment.

Although the Labor Code provides for freedom to form unions and bargain collectively, it places several restrictions on these rights, which the International Labor Organization (ILO) considers excessive.  For example, it restricts trade union rights by requiring unions to represent 51 percent of the workers in an enterprise to bargain collectively.  In addition, the law prohibits strikes until mandatory mediation requirements have been met.  Formal requirements for a strike to be legal also include the support of an absolute majority of all company workers for the strike, written notification to the Ministry of Labor, and a 10-day waiting period following notification before proceeding with the strike.  Government workers and essential public service personnel, in theory, may not strike; however, healthcare workers protested and went on strike frequently in the second half of 2019 due to government failure to comply with the retirement law for doctors and nurses.

The law prohibits dismissal of employees for trade union membership or union activities.  In practice, however, the law is inconsistently enforced.  The majority of companies resist collective negotiating practices and union activities.  Companies reportedly fire workers for union activity and blacklist trade unionists, among other anti-union practices.  Workers frequently have to sign documents pledging to abstain from participating in union activities. Companies also create and support company-backed unions.  Formal strikes occur but are not common.

The law establishes a system of labor courts for dealing with disputes.  The process is often long, with cases pending for several years.  One exception is workplace injury cases, which typically conclude quickly – and often in the worker’s favor.  Both workers and companies report that mediation facilitated by the Ministry of Labor was the most rapid and effective method for resolving worker-company disputes.

Many of the major manufacturers in free trade zones have voluntary codes of conduct that include worker rights protection clauses generally aligned with the ILO Declaration on Fundamental Principles and Rights at Work; however, workers are not always aware of such codes or the principles they contain.  The Ministry of Labor monitors labor abuses, health, and safety standards in all worksites where an employer-employee relationship exists.  Labor inspectors can request remediation for violations, and if remediation is not undertaken, can refer offending employers to the public prosecutor for sanctions.

The Dominican Republic is an eligible country for DFC financing purposes and there are current DFC-funded programs operating in the country.  As an upper-middle income country, projects in the Dominican Republic must meet additional criteria to qualify for financing.  The project must be in the infrastructure sector, target women’s empowerment, have a substantial development impact, or have a U.S. nexus.   For example, a current project that began in 2019 provides two $10 million loan financing facilities to support lending to small- and medium-sized enterprises, with an emphasis on women-owned businesses.  Under a 1962 bilateral agreement, DFC funding for a project must also receive approval from the Dominican government.  In January 2019, the Dominican government and the DFC clarified the process for obtaining this approval in a bilateral letter.  The Dominican government is a party to the Multilateral Investment Guarantee Agency (MIGA).

* Source for Host Country Data: Central Bank of the Dominican Republic (BCRD).  The BCRD does not report investment stock positions.

Table 3: Sources and Destination of FDI

No information for the Dominican Republic is available on the IMF’s Coordinated Direct Investment Survey (CDIS) website.  According to the Dominican Central Bank (BCRD), total inward flows of FDI for 2019 were $3.01 billion.  The BCRD provides a breakdown of FDI to the Dominican Republic by individual source country for the top investing countries.   The five largest investing countries accounted for 82.3 percent of total inward FDI in 2019.  Neither World Bank nor Dominican sources break down FDI from the Dominican Republic to individual destination countries

* Source for Host Country Data: Central Bank of the Dominican Republic (BCRD), 2019 FDI inward flows.

Economic Officer
Embassy of the United States of America
Avenida República de Colombia #57
Santo Domingo, Dominican Republic
+1 (809) 567-7775
InvestmentDR@State.gov

Policies toward Foreign Direct Investment

Haiti’s legislation encourages foreign direct investment. Import and export policies are non-discriminatory and are not based on nationality. Haitian and foreign investors have the same rights, privileges and protections under the 1987 investment code. The Haitian government has made some progress in recent years to improve the legal framework, create and strengthen core public institutions, and enhance economic governance. The Haitian Central Bank continues to work with the International Monetary Fund (IMF) and the World Bank to implement measures aimed at creating a stable macroeconomic environment. The IMF concluded an Article IV economic consultation with Haiti in January 2020 (ww.imf.org/en/countries/hti). In April 2020, the IMF loaned Haiti USD 112 million through its rapid credit facility mechanism to provide liquidity to Haiti fore expenditures to address COVID-19.

Haiti continues to experience a challenging political environment and civil unrest that has at times shut down much economic activity in the country. The crisis has taken a toll on the economy and the already vulnerable population. Output is estimated to have contracted by 0.9 percent in FY 2019. The exchange rate of the gourde to the dollar depreciated by 25 percent over the same period. As fiscal revenues have plummeted and the cost of energy increased, the fiscal deficit widened to 3.8 percent of GDP in FY 2019 and domestic arrears rose sharply. The public debt-to-GDP ratio increased from 40 percent to 47 percent over the fiscal year.

Despite passing anti-money laundering and anti-corruption laws to ensure that Haiti’s legislation corresponds with international standards, the government has not strictly followed the legal framework of these laws, and has failed to incentivize investment in Haiti. In early 2017, the Parliament enacted legislation making electronic signatures and electronic transactions legally binding. Other pieces of legislation that may improve Haiti’s investment climate are pending parliamentary approval, including incorporation procedures, a new mining code, and an insurance code. Haiti’s Finance Ministry is implementing measures to improve revenue collection and control spending. The Ministry signed an agreement with Haiti’s Central Bank in November 2019 to strengthen fiscal discipline and limit government monetary financing.

The Center for Facilitation of Investments was established to promote investment opportunities in Haiti. The CFI’s main initiatives include streamlining the investment process by simplifying procedures related to trade and investment, providing updated economic and commercial information to local and foreign investors, and promoting investment in priority sectors. In practice, however, the Haitian government made limited progress in 2019 to incentivize job creation and boost national production in agriculture, apparel assembly, and tourism. The looting and country lockdown movement resulted in the closure of many businesses in 2019 and the loss of thousands of jobs. Haiti’s Tourism Association reported a 60 percent loss of jobs in the sector. The Haitian government seeks to redirect the CFI’s focus towards the promotion of domestic and international investment. The CFI also offers tailored services to large investors interested in Haiti.

The CFI’s Director General oversees the agency, including decisions to offer tax incentives to new businesses. The Director of Promotion works to attract investment in Haiti, while the Director of Facilitation coordinates with public sector agencies and administrative entities to ensure that the CFI is following-up with businesses in a timely fashion. The CFI was closed for multiple weeks and unable to operate at full capacity during periods of civil unrest in 2019.

Limits on Foreign Control and Right to Private Ownership and Establishment

Investors in Haiti can create the following types of businesses: sole proprietorship, limited or general partnership, joint-stock company, public company (corporation), subsidiary of a foreign company, and co-operative society. The most commonly used business structures in Haiti are corporations. The company’s law (Société de Droits law), which would facilitate the creation of other types of businesses in Haiti, such as LLCs, has been drafted and is currently pending parliamentary approval.

Foreign investors are permitted to own 100 percent of a company or subsidiary. As a Haitian entity, such companies enjoy all rights and privileges provided under the law. Additionally, foreign investors are permitted to operate businesses without equity-to-debt ratio requirements. Accounting law allows foreigners to capitalize using tangible and intangible assets in lieu of cash investments.

Foreign investors are free to enter into joint ventures with Haitian citizens. The distribution of shares is a private matter between the two parties. However, the State regulates the sale and purchase of company shares. Investment in certain sectors, such as health and agriculture, requires special Haitian government authorization. Investment in “sensitive” sectors such as electricity, water, telecommunications, and mining requires a Haitian government concession as well as authorization from the appropriate state agency. In general, natural resources are the property of the state. Mining, prospecting, and operating permits may only be granted to companies established and resident in Haiti.

Entrepreneurs are free to dispose of their properties and assets, and to organize production and marketing activities in accordance with local laws.

The Haitian government does not impose discriminatory requirements on foreign investors. Haitian laws related to residency status and employment are reciprocal. Foreigners who are legal residents in Haiti and wish to engage in trade have, within the framework of laws and regulations, the same rights granted to Haitian citizens. However, Article 5 of the Decree on the Profession of Merchants reserves the function of manufacturer’s agent for Haitian nationals.

Foreign firms are also encouraged to participate in government-financed development projects. Performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

Other Investment Policy Reviews

Haiti’s last investment policy review from the United Nations Conference on Trade and Development occurred in 2012-2013. In general, Haiti’s political instability, weak institutions, and inconsistent economic policies impede the country’s ability to drive foreign direct investment. The International Finance Corporation and the World Bank’s Investment Climate Advisory Services support the Haitian government’s plans to implement integrated economic zones throughout Haiti. Haiti is also working with the United Nations Conference on Trade and Development to implement an investment promotion strategy that will foster the expansion of bilateral trade, and the development of border-zone industrial parks to make Haiti more competitive.

The World Trade Organization’s (WTO) 2015 Trade Policy Review stated that Haiti’s Investment Code and Law on Free Trade Zones is fully compliant with the Agreement on Trade-Related Investment Measures.

Business Facilitation

The Ministry of Commerce and Industry internet registry allows investors to search for or verify the existence of a business in Haiti. The registry will eventually provide on-line registration of companies through an electronic one-stop shop. The one-stop shop is part of a project sponsored by the Inter-American Development Bank with the CFI that seeks to reduce the time needed to register a limited company in Haiti to 10 days. At present, it takes between 90 and 120 days to complete registration with the Commercial Registry at the Commerce Ministry and obtain the authorization of operations (Droit de fonctionnement). However, the CFI also offers a service providing pre-registered and fully authorized companies in manufacturing, agribusiness, and real estate the opportunity to reduce their registration time. Once the Inter-Ministerial Investment Commission validates these established companies, the shares are transferred to the new owners.

Businesses, both foreign and domestic, can register at Haiti’s Center for Facilitation of Investments (CFI): http://cfihaiti.com/ . All businesses must register with the Ministry of Commerce, the Haitian tax office, state owned Banque Nationale de Crédit, the social security office, and the retirement insurance office. According to the World Bank’s 2019 Ease of Doing Business Report, the average time to start a business in Haiti is 189 days.

Outward Investment

Neither the law nor the Haitian government restricts domestic investors from investing abroad. Still, Haiti’s outward investment is limited to a few enterprises with small investments. The profile of these investors includes businesspersons with dual citizenship and others of Haitian origin who presently reside in the country in which their firms operate. The majority of these firms are service providers and not investment firms. There is no current program or incentive in place to encourage Haitian entrepreneurs to invest abroad.

Transparency of the Regulatory System

Haitian laws are written to allow for transparency and to be applied universally. However, Haitian officials do not uniformly enforce these laws and the bureaucratic “red tape” in the Haitian legal system is often excessive.

Tax, labor, health, and safety laws and policies are also loosely enforced. The private sector often provides services, such as health care, to employees that are not entitled to coverage under Haitian government agencies or institutions. All regulatory processes are managed exclusively by the government and do not involve the private sector and non-governmental organizations.

Draft bills or regulations are available to the public through “Le Moniteur,” the official journal of the Haitian government and some information is available online. Le Moniteur contains public agency rules, decrees, and public notices that Les Presses Nationales d’Haiti publishes.

International Regulatory Considerations

Haiti is a member of the Caribbean Community (CARICOM). The CARICOM Single Market and Economy (CSME), created in 1989, aims to advance the region’s integration into the global economy by facilitating free trade in goods and services, and the free movement of labor and capital. CSME became operational in January 2006 in twelve of the fifteen Member States. Haiti, as a member of CARICOM, has expressed an interest in participating fully in CSME. However, to become eligible, Haiti must amend its customs code to align with CARICOM and WTO standards.

Haiti also adheres to the compulsory jurisdiction of the International Court of Justice on issues of international law, and of the Caribbean Court of Justice for the settlement of trade disputes within CARICOM.

Haiti is an original member of the WTO. As such, it has made several commitments to the WTO with regard to the financial services sector. These commitments include allowing foreign investment in financial services, such as retail, commercial, investment banking, and consulting. One foreign bank, Citibank, operates in Haiti. Haiti has committed to notifying the WTO Committee on Technical Barriers to Trade of all draft technical regulations. However, Haiti is not party to the Trade Facilitation Agreement.

Legal System and Judicial Independence

As a former French colony, Haiti adopted the French civil law system. The Supreme Court, also known as the Superior Magistrate Council, is the highest court of the nation, followed, in descending order, by the Court of Appeals and the Court of First Instance. Haiti’s commercial code dates back to 1826 and underwent significant revisions in 1944. There are few commercial laws in place and there are no commercial courts. Injunctive relief is based upon penal sanctions rather than securing desirable civil action. Similarly, contracts to comply with certain obligations, such as commodities futures contracts, are not enforced. Haitian judges do not have specializations, and their knowledge of commercial law is limited. Utilizing Haitian courts to settle disputes is a lengthy process and cases can remain unresolved for years. Bonds to release assets frozen through litigation are unavailable. Business litigants often pursue out-of-court settlements.

The Haitian Chamber of Commerce and Industry, in partnership with the Haitian government and with funding from the EU, has a commercial dispute settlement mechanism, known as the Arbitration and Conciliation Chamber that provides a mechanism for conciliation and arbitration in cases of private commercial disputes.

Haiti’s legal system often presents challenges for U.S. citizens seeking to resolve legal disputes. There are persistent allegations that some Haitian officials use their public office to influence commercial dispute outcomes for personal gain. However, with international assistance, the Haitian government is actively working to increase the credibility of the judiciary and the capacity of the national police.

Laws and Regulations on Foreign Direct Investment

The Investment Code prohibits fiscal and legal discrimination against foreign investors. The code explicitly recognizes the crucial role of foreign direct investment in promoting economic growth. It also aims to facilitate, liberalize, and stimulate private investment, and contains exemptions to promote investments that enhance competitiveness in sectors deemed priorities, especially export-oriented sectors. Tax incentives, such as reductions on taxable income and tax exemptions, are designed to promote private investment. Additionally, the code grants Haitian and foreign investors the same rights, privileges and equal protection. Foreign investors must be legally registered and pay appropriate local taxes and fees.

The code also established an Inter-Ministerial Investment Commission (CII) to examine investor eligibility for license exemptions as well as customs and tariff advantages. The CFI is the Technical Secretariat of the CII. The Prime Minister, or his delegate, chairs the CII, which is composed of representatives of the Ministries of Economy and Finance, Commerce, and Tourism, as well as those ministries that oversee specific areas of investment. The CII must authorize all business sales, transfers, mergers, partnerships, and fiscal exemptions within the scope of the code. The CII also manages the process of fining and sanctioning enterprises that disregard the code.

Investment in certain sectors, such as health and agriculture, requires special Haitian government authorization. Investment in “sensitive” sectors, such as electricity, water, and telecommunications, requires a Haitian government concession as well as an authorization from the appropriate state agency. In general, the Haitian government considers natural resources as state property. Accordingly, exploring or exploiting mineral and energy resources requires concessions and permits from the Ministry of Public Works’ Bureau of Mining and Energy. Mining and operating permits may only be granted to firms and companies established in Haiti.

The following areas are often noted by businesses as challenging aspects of Haitian law: operation of the judicial system; publication of laws, regulations, and official notices; establishment of companies; land tenure and real property law and procedures; bank and credit operations; insurance and pension regulation; accounting standards; civil status documentation; customs law and administration; international trade and investment promotion; foreign investment regulations; and regulation of market concentration and competition. Although these deficiencies hinder business activities, they are not specifically aimed at foreign firms; rather, they appear to affect both foreign and local companies equally.

Competition and Anti-Trust Laws

There is currently no law to regulate competition. Haiti is one of the most open economies in the region. The investment code provides the same rights, privileges and equal protection to local and foreign investors. Anti-corruption legislation also criminalizes nepotism and the dissemination of inside information on public procurement processes. Haiti does not, however, have anti-trust legislation.

Expropriation and Compensation

The 1987 Constitution allows expropriation or dispossession only for reasons of public interest or land reform, and is subject to prior payment of fair compensation as determined by an expert. If the initial project for which the expropriation occurred is abandoned, the Constitution stipulates that the expropriation will be annulled and the property returned to the original owner. The Constitution prohibits nationalization and confiscation of real and personal property for political purposes or reasons.

Title deeds are vague and often insecure. The Haitian government established the National Institute of Agrarian Reform to implement expropriations of private agricultural properties with appropriate compensation. The agrarian reform project, initiated under the Preval administration (1996-2001), was controversial among both Haitian and U.S. property owners. There have been complaints of non-compensation for the expropriation of property. Moreover, a revision of the land tenure code, intended to address issues related to the lack of access to land records, surveys, and property titles in Haiti, has been pending in Parliament since 2014. A recent partnership between the private sector, Haitian government, and international organizations developed a useful guide formalizing land tenure, which can be found here: http://www.foncier-developpement.fr/publication/la-securisation-des-droits-fonciers-en-haiti-un-guide-pratique/ 

Dispute Settlement

ICSID Convention and New York Convention

In 2009, Haiti ratified the 1965 International Convention on the Settlement of Investment Disputes between states and nationals of other states (ICSID). Under the convention, foreign investors can call for ICSID arbitration for disputes with the state. The Haitian government appears to recognize that weak enforcement mechanisms and a lack of updated laws to handle modern commercial disputes severely compromises the protections and guarantees that Haitian law extends to investors.

Haiti is not a signatory to the Inter-American-U.S. convention on International Commercial Arbitration of 1975 (Panama Convention).

Investor-State Dispute Settlement

Haiti is a signatory to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards, which provides for the enforcement of an agreement to arbitrate present and future investment disputes. Under the convention, Haitian courts can enforce such an agreement by referring the parties to arbitration. Disputes between foreign investors and the state can be settled in Haitian courts or through international arbitration, though claimants must select one to the exclusion of the other. A claimant dissatisfied with the ruling of the court cannot request international arbitration after the ruling is issued. The law provides mechanisms on the procedures a court should follow to enforce foreign arbitral awards issues.

International Commercial Arbitration and Foreign Courts

International arbitration is strongly encouraged as a means of avoiding lengthy domestic court procedures. In principle, foreign judgments are enforceable under local courts.

Haiti is working with the international community to create a domestic culture that accepts international arbitration as an effective means for dispute resolution. In 2005, the Haitian Chamber of Commerce and Industry and the Inter-American Development Bank jointly developed the Haitian Arbitration and Conciliation Chamber, which provides mechanisms for conciliation and arbitration in private commercial disputes.

Bankruptcy Regulations

Haiti’s bankruptcy law was enacted in 1826 and modified in 1944. There are three phases of bankruptcy under Haitian law. In the first stage, payments cease and bankruptcy is declared. In the second stage, a judgment of bankruptcy is rendered, which transfers the rights to administer assets from the debtor to the Director of the Haitian Tax Authority (Direction Generale des Impots). In this phase, assets are sealed and the debtor is confined to debtor’s prison. In the last stage, the debtor’s assets are liquefied and the debtor’s verified debts are paid prorated according to their right. The debtor is released from prison once the debtor’s verified debts are paid. In practice, the above measures are seldom applied. Since 1955, most bankruptcy cases have been settled between the parties.

Although the concepts of real property mortgages and chattel mortgages – based on collateral of movable property, such as machinery, furniture, automobiles, or livestock to secure a mortgage – exist, real estate mortgages involve antiquated procedures and may fail to be recorded against the debtor or other creditors. Property is seldom purchased through a mortgage and secured debt is difficult to arrange or collect. Liens are virtually impossible to impose, and using the judicial process for foreclosure is time consuming and often futile. Banks frequently require that loans be secured in U.S. dollars.

Investment Incentives

In order to attract investment to certain industries, the Investment Code created a privileged status for some manufacturers. Foreign and Haitian investors enjoy equal protection under the Law. Under the Investment Code, eligible firms can benefit from customs, tax, and other advantages. Investments that provide added value of at least 35 percent in the processing of local or imported raw materials are eligible for preferential status.

The statute allows for a five- to ten-year income tax exemption. Industrial or crafts-related enterprises must meet one of the following criteria in order to benefit from this exemption:

• Make intensive and efficient use of available local resources (i.e., advanced processing of existing goods, recycling of recoverable materials);
• Increase national income;
• Create new jobs and/or upgrade the level of professional qualifications;
• Reinforce the balance of payments position and/or reduce the level of dependency of the national economy on imports;
• Introduce or extend new technology more appropriate to local conditions (i.e., utilize non-conventional sources of energy, use labor-intensive production);
• Create and/or intensify backward or forward linkages in the industrial sector;
• Promote export-oriented production;
• Substitute a new product for an imported product, if the new product presents a quality/price ratio deemed acceptable by the appropriate entity and comprises a total production cost of at least 60 percent of the value added in Haiti, including the cost of local inputs used in its production;
• Prepare, modify, assemble, or process imported raw materials or components for finished goods that will be re-exported;
• Utilize local inputs at a rate equal or superior to 35 percent of the production cost.

For investments that match one or more of the criteria described above, the Haitian government provides customs duty and tax incentives. Companies that enjoy tax-exempt status are required to submit annual financial statements. Fines or withdrawal of tax advantages may be assessed to firms failing to meet the Code’s provisions.

A progressive tax system applies to income, profits, and capital gains earned by individuals.

Foreign Trade Zones/Free Ports/Trade Facilitation

A law on Free Trade Zones (FTZ) was established in 2002. The law defines the conditions for operating and managing economic FTZs, with exemption and incentive regimes granted to investment in such zones. The law is not specific to a particular activity. Instead, it defines FTZs as geographical areas to which a special regime on customs duties and controls, taxation, immigration, capital investment, and foreign trade applies, and where domestic and foreign investors can provide services, import, store, produce, export, and re-export goods.

FTZs may be private or joint venture. The law provides the following incentives and benefits for enterprises located in FTZs:

• Full exemption from income tax for a maximum period of 15 years, followed by a period of partial exemption that gradually decreases;
• Customs and tax exemptions for the import of capital goods and equipment needed to develop the area, with the exception of tourism vehicles;
• Exemption from all communal taxes (with the exception of fixed occupancy tax) for a period not exceeding 15 years;
• Registration and transfer of the balance due for all deeds relating to purchase, mortgages, and collateral.

A FTZ has been established in the northeastern city of Ouanaminthe, where a Dominican company, Grupo M, manufactures clothing for a variety of U.S. companies at its CODEVI facility. Additionally, several American apparel companies lease factory space in this free zone. All the factories at CODEVI combined employ over 13,000 Haitians as of February 2020.

In October 2012, the Haitian government, with the support of the Inter-American Development Bank and the United States government, opened the 617-acre Caracol Industrial Park located near the town of Caracol in Haiti’s northeastern region. As of 2020, five companies are operating in the park: S&H Global, a South Korean company; MAS Holdings, a Sri Lankan company; Everest, a Taiwanese factory; and two Haitian companies, Peintures Caraibes and Sisalco. Altogether, these companies employ over 13,000 Haitians. S&H Global is the single largest private sector employer in Haiti.

In 2015, three major FTZ’s were added to the list: Agritrans, the first agricultural free trade zone in Haiti; Digneron, an entity of the Palm Apparel Group which also owns and operates the Palmiers free trade zone; and Lafito, a USD 150 million Panamax port and industrial park. Port Lafito, located 12 miles north of Port au Prince, includes port facility business services that cater to bulk and loose cargo imports, as well as terminal services to worldwide container service shipping lines. The Lafito economic zone currently includes a cement plant, but the industrial park portion of the project is not yet operational.

Performance and Data Localization Requirements

Foreign firms are encouraged to participate in government-financed development projects. However, performance requirements are not imposed on foreign firms as a condition for establishing or expanding an investment, unless indicated in a signed contract.

Under Haitian laws, foreign investors operate their businesses and use their assets to organize production freely. Companies are not forced to localize or to use local raw materials for the production of goods. Foreign information technology providers are not required to turn over source code or keys for encryption to any public agencies.

Real Property

Foreign investors have noted that real property interests are affected by the absence of a comprehensive civil registry. Lease agreement regulations are the same for locals and foreign investors.  Many companies report that legitimate property titles are often non-existent and, if they do exist, they often conflict with other titles for the same property. Verification of property titles can take several months, and often much longer. Mortgages exist, but real estate mortgages are expensive and involve allegedly cumbersome procedures. Banks are also risk-averse to issue loans or mortgages. Squatting is not a common practice, but was popular in the aftermath of the 2010 earthquake.

Additionally, mortgages are not always properly recorded under the debtor or creditor’s name. The Affordable Housing Institute (AHI), the World Council of Credit Unions, USAID, and Habitat for Humanity jointly launched the Home Ownership and Expansion (HOME) Program in 2015. The HOME project works with local financial institutions and housing developers to promote access to affordable housing to low- and medium-income households and to improve purchasing power through long-term financing.

Intellectual Property Rights

Haitian law protects copyrights, patent rights, and inventions, as well as industrial designs and models, special manufacturers’ marks, trademarks, and business names. The law penalizes individuals or enterprises involved in infringement, fraud, or unfair competition; however, enforcement is weak. Some report that weak enforcement mechanisms, inefficient courts, and judges’ inadequate knowledge of commercial law may impede the effectiveness of statutory protections.

Haiti is a member of the World Intellectual Property Organization (WIPO). Haiti has completed accession to the Berne Convention for the Protection of Literary and Artistic Works and the Paris Convention for the Protection of Industrial Property. Haiti is a signatory to the Buenos Aires Convention of 1910, the Patent Law Treaty, and the Beijing Treaty on Audiovisual Performances.

Haiti is not mentioned in the United States Trade Representative (USTR) 2020Special 301 Report or the 2019 Notorious Markets List.

Resources for Rights Holders

Local lawyers list:  https://ht.usembassy.gov/wp-content/uploads/sites/100/list-of-attorneys-.pdf .

Haitian Copyright Office (BHDA)
Ministry of Culture and Communication
31, Rue Cheriez
Canape-Vert
Port-au-Prince HAITI (West Indies)
Telephone: (509) 2811 0535 or (509) 2811 5626
Email: bhda.gouv@gmail.com or contact@bhda.gouv.ht

Director General/Directrice Generale: Mrs. Emmelie Phrophete Milce
Industrial Property Offices
Intellectual Property Service, Department of Legal Affairs
Ministry of Commerce and Industry
Email: eprophete@bhda.gouv.ht
http://www.mci.gouv.ht/ 

Director of Legal Affairs / Directeur des Affaires Juridiques: Mr. Rodrigue Josaphat
Ministry of Commerce and Industry
Telephone: (509) 4890-0144
Email: rodrigue.josaphat@mci.gouv.ht

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ 

Capital Markets and Portfolio Investment

The scale of financial services remains modest in Haiti. The banking sector is well capitalized and profitable. In principle, there are no limitations to foreigners’ access to the Haitian credit market, but limited credit is available through commercial banks. The free and efficient flow of capital, however, is hindered by Haitian accounting practices, which are below international standards. While there are no restrictions on foreign investment through mergers or acquisitions, there is no Haitian stock market, so there is no way for investors to purchase shares in a company outside of direct transactions.

The standards that govern the Haitian legal, regulatory, and accounting systems do not comply with international norms. Haitian laws do not require external audits of domestic companies. Local firms calculate taxes, obtain credit or insurance, prepare for regulatory review, and assess real profit and loss. Accountants use basic accounting standards set by the Organization of Certified Professional Accountants in Haiti.

Administrative oversight in the banking sector is superior to oversight in other sectors. Under Haitian law, however, banks are not required to comply with internationally recognized accounting standards, and they are often not audited by internationally recognized accounting firms. Nevertheless, Haiti’s Central Bank requires that banks apply internal audit procedures. As part of their corporate governance all private banks also have in-house audit functions. Most private banks follow international accounting norms and use consolidated reporting principles. The Central Bank is generally viewed as one of the well-functioning Haitian government institutions.

Money and Banking System

The banking sector has concentrated credit in trade financing and in the proliferation of bank branches to capture deposits and remittances. Telebanking has expanded access to banking services for Haitians. Foreign banks are free to establish operations in Haiti. Three major banking institutions (Unibank, Sogebank and Banque Nationale de Crédit) hold 80 percent of total banking sector assets. With the acquisition of the Haitian operations of Scotiabank in 2017, Unibank became Haiti’s largest banking company with a deposit market share of 36 percent. As part of the deal, Scotiabank remains one of Unibank’s international correspondent banks. U.S.-based Citibank also has a correspondent banking relationship with Unibank.

The three major commercial banks hold 74 percent of the total loan portfolio, while 70 percent of total loans are monopolized by 10 percent of borrowers. This increases the Haitian banking system’s vulnerability to systemic credit risk and restricts the availability of capital. The quality of loan portfolios in the banking system has deteriorated since May 2019 as Haiti’s economy went into a recession. Per Haiti’s Central Bank, the ratio of nonperforming loans over total loans was 7.2 percent in February 2020 compared to 6.8 percent in December 2019 and 4.15 percent in February 2019. The Central Bank conducts regular inspections to ensure that financial institutions are in compliance with minimum capital requirements, asset quality, currency, and credit risk management.

The Central Bank’s main challenge is maintaining sound monetary policy in the context of a larger-than-expected government deficit and a depreciating local currency. As of April 2020, the Central Bank’s reference exchange rate was approximately 102 gourdes for one USD and inflation reached 20.3 percent, remaining on a gradual upwards trend. The exchange rate suffers from continued pressure on the foreign exchange market. As of mid-April 2020, Haiti’s stock of net international reserves was approximately USD 558 million. Haiti’s Central Bank has been adjusting its interest rates to contain inflation while at the same time trying to support the private sector through the economic recession exacerbated by the coronavirus pandemic.

There are no legal limitations on foreigners’ access to the domestic credit market. However, banks demand collateral of real property to grant loans. Given the lack of effective cadastral and civil registries, loan applicants face numerous challenges in obtaining credit. The banking sector is extremely conservative in its lending practices. Banks typically lend exclusively to their most trusted and credit-worthy clients. Based on a 2018 study by FinScope Haiti, only one percent of the adult population has access to a bank loan. The high concentration of assets does not allow for product innovation at major banks.

To provide greater access to financial services for individuals and prospective investors, the Haitian government’s banking laws recognize tangible movable property (such as portable machinery, furniture, and tangible personal property) as collateral for loans. These laws allow individuals to buy condominiums, and banks to accept personal property, such as cars, bank accounts, etc., as collateral for loans. USAID has a loan portfolio guarantee program with a diversified group of financial institutions to encourage them to expand credit to productive small and medium enterprises, and rural micro-enterprises. Haiti has a credit rating registry in effect for users of the banking sector but does not have the relevant legislation in place to establish a credit rating bureau.

Haiti’s Central Bank issued a series of monetary policy measures to alleviate the potential impact of the COVID-19 on the financial system and the economy on March 19, 2020. These measures include: the reduction in the Central Bank’s policy rate which should help lower interest rates on loans; the decrease of the reserve requirement ratios to reduce the cost for banks to capture resources and grant loans; the reduction in the Central Bank’s refinancing rate to lower the cost of access to liquidity; the alleviation of loan repayment conditions for customers over a three-month period; the waiver of the Central Bank’s fees on interbank transfers to reduce transaction costs for customers; and the increase of limits in transactions through mobile payment services.

Foreign Exchange and Remittances

Foreign Exchange

The Haitian gourde (HTG) is convertible for commercial and capital transactions. Banks and currency exchange companies set their rates at the market-clearing rate. The Central Bank publishes a daily reference rate, which is a weighted average of exchange rates offered in the formal and informal exchange markets. The market determines the exchange rate for the HTG. The difference between buying and selling rates is generally less than five percent. Declining aid inflows and low domestic production led to a 25 percent depreciation of the HTG against the USD in FY2019.

Remittance Policies

The Haitian government does not impose restrictions on the inflow or outflow of capital. The Law of 1989 governs international transfer operations and remittances. Remittances are Haiti’s primary source of foreign currency and are equivalent to approximately one-third of GDP. In 2019, Haiti received about USD 3 billion in remittances. There are no restrictions or controls on foreign payments or other fund transfer transactions. While restrictions apply on the amount of money that may be withdrawn per transaction, there is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad.

The Haitian government has expressed an intention to put in place stricter measures to monitor money transfers in accordance with Haiti’s efforts to deter illicit cash flows, as mandated by the 2013 Anti-Money Laundering Act.

Sovereign Wealth Funds

To date Haiti does not have a Sovereign Wealth Fund.

Per information released by the Central Bank in September 2018, since 2011 Haiti has levied a tax of USD 1.50 on all transfers into and out of the country, with the proceeds designated for the National Fund for Education. According to a Central Bank report in September 2018, more than USD 120 million has been collected since July 2011 on taxes from remittances from the diaspora.

The Haitian government owns and operates State-Owned Enterprises (SOE). The Haitian commercial code governs the operations of the SOEs. The sector included a flourmill, a cement factory, a telephone company, the electricity company (EDH), the national port authority, the airport authority, and two commercial banks: Banque Nationale de Crédit and Banque Populaire Haïtienne. The law defines SOEs as autonomous enterprises that are legally authorized to be involved in commercial, financial and industrial activities. All SOEs operate under the supervision of a sectorial ministry, and are expected to create economic and social return. Today, some SOEs are fully owned by the state, while others are jointly owned commercial enterprises. The Haitian Parliament has full authority to liquidate state enterprises that are underperforming. The majority of SOEs are financially sound, with the exception of EDH. EDH receives substantial annual subsidies from the Haitian government to stay in business.

Privatization Program

In response to the economic difficulties of the late 1990s and mismanagement of the SOEs, the government liberalized the market and allow foreign firms to invest in the management and/or ownership of Haitian state-owned enterprises. To accompany the initiative, the government established the Commission for the Modernization of Public Enterprises in 1996 to facilitate the privatization process.

In 1998, two U.S. companies, Seaboard and Continental Grain, purchased shares of the state-owned flourmill. Each partner currently owns a third of the company, known today as Les Moulins d’Haiti. In 1999, a consortium of Colombian, Swiss, and Haitian investors purchased a majority stake in the national cement factory. In 2010, a Vietnamese corporation, Viettel, officially acquired 60 percent of the state telecommunications company Teleco (now operating as Natcom), with the Haitian government retaining 40 percent ownership. The government has allowed limited private sector investment in selected seaports. Competition is not distorted in favor of state-owned enterprises to the detriment of private companies.

The Haitian government has allowed private sector investment in electricity generation to compensate for EDH’s inability to supply sufficient power. Three independent power producers previously provided electricity generation for EDH in the Port au Prince metropolitan area. The Finance Ministry was instructed in 2019 to suspend payments of any value in connection with the execution of contracts between the government and the three independent power producers. During a council of ministers meeting on October 2019, the Haitian government, through the Ministries of Finance and Public Works, had expressed its intention to suspend contracts with the three private companies which supplied it with electricity: Haytian Tractor & Equipment Co. SA (Haytrac), E-Power, and Société Générale d’Energie SA (Sogener). As of April 2020, E-Power was the only independent power producer still operating in Port au Prince. E-Power opened a 32-megawatt heavy fuel oil power generation plant with financing from the World Bank and International Finance Corporation in 2011. In November 2019, the Haitian government filed criminal fraud charges against Sogener, which had been operating two collocated power plants in Port au Prince starting in 2004.

The National Regulatory Authority of the Energy Sector in Haiti (ANARSE), a state body created by decree in February 2016, launched a series of prequalification rounds for regional electricity grids and power production starting in August 2019. The ANARSE tenders are for the concession of the public service for the production, transmission, and distribution of electrical energy in the Miragoane, South (Les Cayes) and North East (Caracol) networks. On March 2020, the names of prequalified firms were released. More prequalification tenders for additional regional grids are expected in 2020. ANARSE also concluded a prequalification round for mini electricity grids in 2019.

Awareness of responsible business conduct among producers and consumers is limited but growing. Though rather informal, some Haitian firms have a Corporate Social Responsibility (CSR) component to their business plan. Irish-owned telecommunications company Digicel, for example, sponsors an Entrepreneur of the Year program and has built 120 schools in Haiti. Natcom provides free internet service to several public schools throughout the country. Les Moulins d’Haiti, partially owned by U.S. firm Seaboard Marine, provides some services including electrical power to surrounding communities. In the aftermath of the 2010 earthquake, many firms provided logistical or financial support to humanitarian initiatives, and many continue to contribute to reconstruction efforts. Haiti’s various chambers of commerce have also become more supportive of social responsibility programs. As of March 2020, many Haitian, U.S., and other foreign owned firms in Haiti started donating to the country’s efforts to prevent and treat the COVID-19 outbreak.

The Haitian government has not established any incentives to encourage adherence to Responsible Business Conduct.

Haitian law, applicable to individuals and financial institutions, criminalizes corruption and money laundering. Bribes or attempted bribes toward a public official are a criminal act and are punishable by the criminal code (Article 173) for one to three years of imprisonment. The law also contains provisions for the forfeiture and seizure of assets. In practice, however, it has been reported that the law has rarely been applied.

Corruption, including bribery, raises the costs and risks of doing business in Haiti. U.S. firms have complained that corruption is a major obstacle to effective business operation in Haiti. They frequently point to requests for payment by customs officials in order to clear import shipments as examples of solicitation for bribes.

Transparency International’s Corruption Perception Index for 2019 ranked Haiti in the second lowest spot in the Americas region, with a score of 18 out of 100 in perceived levels of public corruption, a decline from a score of 20 in 2018. Drawing on 13 surveys and expert assessment, the index scores on a scale of zero (highly corrupt) to 100 (very clean). The 2019 Corruption Perceptions Index report ranks Haiti 168 out of 180 countries worldwide. The Haitian government has made some progress in enforcing public accountability and transparency, but substantive institutional reforms are still needed. In 2004, the government of Haiti established the Anti-Corruption Commission (ULCC), however it lacks the necessary resources and political will to be effective. In 2008, Parliament approved the law on disclosure of assets by civil servants and high public officials prepared by ULCC, but to date, compliance has been almost nonexistent.

The government of Haiti created the National Commission for Public Procurement (CNMP) to ensure that government of Haiti contracts are awarded through competitive bidding and to establish effective procurement controls in public administration. The CNMP publishes lists of awarded government of Haiti contracts. The procurement law of 2009 requires contracts to be routed through CNMP. In 2012, however, a presidential decree substantially raised the threshold at which public procurements must be managed by the CNMP, resulting in what companies have identified as a decrease transparency for many smaller government contracts. Moreover, the government frequently enters into no-bid contracts, sometimes issued using “emergency” authority derived from natural disasters, even when there is no apparent connection between the alleged emergency and the government contract, according to foreign investors. Haiti’s Superior Court of Auditors issued two reports in January and May 2019 citing poor management practices by the Haitian government and the alleged diversion of nearly USD 2 billion of the Petrocaribe funds. Public anger over the Petrocaribe scandal has since burgeoned into a grassroots movement against widespread corruption in Haiti.

Haiti is not a party to the OECD Anti-Bribery Convention.

Resources to Report Corruption

Any corruption-related activity can be reported to the Haitian Anti-Corruption Unit, responsible for combatting corruption or to Transparency International’s branch in Haiti, Haiti Heritage Foundation, which monitors corruption:

Rockfeller Vincent
Director General
Unite de Lutte Contre la Corruption
13, rue Capotille, Pacot, Port-au-Prince, Haiti
Telephone: (509) 2811-0661 / (509) 2816-7071
Email: info@ulcc.gouv.ht

Marilyn B. Allien
President
Fondation Heritage pour Haiti
Petion-Ville, Haiti
Telephone: (509) 3701-7089
Email: admlfhh@yahoo.com / heritagehaiti@yahoo.com

Some useful resources for individuals and companies regarding combating corruption in global markets include the following:

• Information about the U.S. Foreign Corrupt Practices Act (FCPA), including a “Lay-Person’s Guide to the FCPA” is available at the U.S. Department of Justice’s Website at:

• Information about the OECD Anti-bribery Convention including links to national implementing legislation and country monitoring reports is available at: . Please also see the Anti-bribery Recommendation and Good Practice Guidance Annex for companies:

• General information about anti-corruption initiatives, such as the OECD Convention and the FCPA, including translations of the statute into several languages, is available at the Department of Commerce Office of the Chief Counsel for International Commerce website:

• The International Chamber of Commerce provides rules, guidelines, and comments on efforts by businesses to combat corruption at:

• Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 180 countries and territories around the world. The CPI is available at  . TI also publishes an annual Global Corruption Report that provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption-related events and developments from all continents. For more information, please visit

• The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 212 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. For additional information, please visit: . The World Bank Business Environment and Enterprise Performance Surveys are also available at:

• The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index, and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. Please see:  for more information

• Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 92 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems and is available at:

• Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/

President Jovenel Moise was inaugurated in February 2017 for a five-year term. The U.S. government partners with Haiti in its efforts to strengthen the rule of law and enhance public security; pursue economic growth through increased domestic resource mobilization and support for private investment; and strengthen good governance and anti-corruption efforts. President Moise’s administration has faced repeated challenges due to frequently changing executive branch leadership, an ineffective parliament followed by a parliamentary lapse beginning in January 2020, legislative elections not being held as scheduled in October 2019, continued allegations of widespread corruption, and weak rule of law, and a deteriorating economy. These factors have hindered both reconstruction efforts and the passage of important legislation. Civil unrest in 2019 stemmed from a number of factors, including a stagnant economy and the lack of progress in the fight against corruption. Haiti’s political situation remains fragile.

Political and civil disorder, such as periodic demonstrations triggered by government proposals to increase fuel prices and mismanagement of public funds, at times interrupted normal business operations. In the midst of a widespread fuel shortage in September 2019, Haiti went into lockdown for three months due to insecurity. Schools, most businesses, and government offices were closed. Daily business operations revived by late November 2019 for most business sectors. In early 2020 Haiti saw a spike in kidnappings for ransom, including of a number of American citizens. In March 2020, kidnappings declined but some businesses limited operations due to the COVID-19 outbreak.

The Haitian National Police has continued to improve its ability to maintain public security, especially during widespread protests throughout the year, which called for improved governance and economic conditions along with a fight against corruption. Companies have complained that establishing and safeguarding real property rights in Haiti remains a significant problem, given extremely weak registry and judicial capacity in country. While improvements in the police force’s technical and operational capabilities have reduced kidnapping and homicide in recent years, some report other violent crimes remain a serious problem, along with criminal gang control of a number of Port au Prince’s marginalized areas.

The special legislation of the Labor Code of 1984 establishes and governs labor regulations. Under the Code, the Minister of Social Affairs and Labor enforces the law and maintains good relationships with employers and workers. Normal working hours consist of 8-hour shifts and 48-hour workweeks. In September 2017, the Haitian government passed a labor law to permit three eight-hour shifts in a working day, although this has not been fully implemented for all sectors in Haiti. Workers’ social protection and benefits include annual leave, sick leave, health insurance, maternity insurance, insurance in case of accident at work, and other benefits for unfair dismissal.

Labor unions are generally receptive to investment that creates new jobs, and support from the international labor movement, including the AFL-CIO and ITUC, is building the capacity of unions to represent workers and engage in social dialogue. The Ministry of Labor and Social Affairs is still revising a new labor code that will better comply with international labor standards.

According to U.S. companies, relations between labor and management in Haiti have at times been strained. In some cases, however, industries have autonomously implemented good labor practices. For example, the apparel assembly sector established its own voluntary code of ethics to encourage its members to adopt good labor practices. In addition to local entities, the International Labor Organization (ILO) has an office in Haiti and operates an ongoing project with the apparel assembly industry to improve productivity through improvement in working conditions. The ILO, with the support of the U.S. Department of Labor, launched Better Work Haiti, a program that was designed to ensure compliance with international labor standards and spur job creation in the garment sector.

Since the inception of Better Work Haiti, the garment sector has seen improvement in occupational safety and health across the factories. Employers have increased their efforts to improve chemical safety, and over 95 percent of local factories have initiated policies to create a safer work environment as well as provide good working conditions to garment workers. Wages vary depending on the economic sector. As of November 2019, the minimum wage for the garment sector was HTG 500 for eight hours of work or (approximately USD 5) in the export-oriented apparel industry. These wages are based on production output so workers often earn more than the minimum wage. Better Work Haiti’s annual report found the majority of factories in compliance with the labor law. The report is available at: https://betterwork.org/portfolio/better-work-haiti-18th-biannual-synthesis-report-under-the-hope-ii-legislation/ .

Haiti’s apparel industry has expanded in recent years, and now counts several local and foreign manufacturers, including U.S., Dominican, and Korean investors, which produce a wide range of clothing articles. The sector offers notable opportunities, such as an abundant workforce, duty-free access to the U.S. market, and the Better Work program that ensures good working conditions in factories. Measures are currently underway to enhance the technical skills of the Haitian workforce. The South Korean International Cooperation Agency (KOICA), for example, funded the construction of an apparel training center in the Caracol Industrial Park in northern Haiti.

The U.S. International Development Finance Corporation (DFC) offers innovative financial solutions to support private investors through debt financing, political risk insurance, equity investment, and supporting private equity investment funds. The DFC prioritizes low-income and lower middle-income countries, where its services will have the greatest impact. By mobilizing private capital to help solve critical development challenges, the DFC advances U.S. foreign policy, and catalyzes revenues, jobs and growth opportunities both at home and abroad. The DFC was established by the BUILD Act as the successor to the Overseas Private Investment Corporation and USAID’s Development Credit Authority.

The DFC offers several products including debt financing, political risk insurance, and support for investment funds. If you are an investor interested in DFC financing and would like to know if your project qualifies for DFC financing or insurance support, below are a few questions to consider.

DFC is categorically prohibited from supporting activities that may have an irremediable impact on the environment, an adverse impact on the U.S. economy or employment, or an adverse impact on public health and safety.

Business investments in Haiti may be eligible for financing from the World Bank’s International Finance Corporation and Inter-American Development Bank’s IDB Invest program. Haiti is a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA). MIGA guarantees investments against non-commercial risks and facilitates access to funding sources including banks and equity partners for investors. 13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Merah Baird
Commercial Officer
Embassy of the United States of America
Boulevard du 15 Octobre, Tabarre 41
Port-au-Prince, Haiti
Please address email correspondence to PAPECON@state.gov.