The Dominican Republic is an upper middle-income country and the second largest economy in the Caribbean. In 2018, the Dominican GDP grew an estimated 7 percent, the highest growth rate in the Western Hemisphere. Foreign direct investment (FDI) plays a prominent role in the Dominican economy. U.S. FDI (stock) was USD 2.1 billion in 2017, an increase from USD 1.2 billion in 2016. Total FDI flows (inward) declined nearly 30 percent in 2018, according to the Central Bank. The tourism, real estate, telecommunications, free trade zones, mining, and financing sectors are the largest FDI recipients. Historically, the United States has been the largest investor, followed by Canada, Brazil, and Spain.
The Central America Free Trade Agreement-Dominican Republic (CAFTA-DR) increased bilateral trade between the United States and the Dominican Republic from USD 9.9 billion in 2006 to USD 14.3 billion in 2018. Observers credit the agreement with increasing competition, improving the rule of law, and expanding access to quality products in the Dominican Republic. CAFTA-DR includes protections for foreign investors, including mechanisms for dispute resolution.
Despite a relatively stable macroeconomic situation, U.S. investors have reported to continuously face numerous systemic problems in the Dominican Republic. Foreign investors cite a lack of clear, standardized rules by which to compete and a lack of enforcement of existing rules. Complaints include allegations of widespread corruption; requests for bribes; delays in government payments; weak intellectual property rights enforcement; bureaucratic hurdles; slow and sometimes locally biased judicial and administrative processes; and non-standard procedures in customs valuation and classification of imports. Businesses have noted that weak land tenure laws and government expropriations without due compensation continue to be a problem. The public perceives administrative and judicial decision-making at times as inconsistent, nontransparent, and overly time-consuming. Dominican authorities have carried out some efforts aimed at improving fiscal transparency. Nevertheless, corruption and poor implementation of existing laws are widely discussed as key investor grievances.
The Dominican government in 2017 was the subject of a large corruption scandal, sparking public protests and calls for institutional change. U.S. companies say the government’s slow response to this scandal has contributed to a culture of perceived impunity for corrupt public officials. U.S. businesses operating in the Dominican Republic often need to take extensive measures to ensure compliance with the Foreign Corrupt Practices Act. Many U.S. firms and investors have expressed concerns that corruption in the government, including in the judiciary, continues to constrain successful investment in the Dominican Republic.
The investment climate in the coming years will largely depend on whether the government demonstrates the political will to implement reforms necessary to promote competitiveness and transparency, rein in expanding public debt, and bring corrupt public officials to justice.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||129 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||102 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||87 of 126||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2017||$2.1 billion||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||$6,630||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Dominican government promotes inward FDI and has established formal programs to attract it, including the 2017 launch of the “ProDominicana” program. 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 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.
The Export and Investment Center of the Dominican Republic (CEI-RD) offers assistance for prospective foreign investors, including assistance with business registration and identification of investment opportunities. The National Council of Free Trade Zones for Export (CNZFE) offers assistance to foreign companies looking to invest in the free trade zones.
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 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 Organization for Economic Cooperation and Development (OECD) has not conducted an investment policy review of the Dominican Republic. The United Nations Conference on Trade and Development (UNCTAD) published an investment policy review in 2009. The World Trade Organization (WTO) published a trade policy review in 2015.
- UNCTAD – https://unctad.org/en/pages/PublicationArchive.aspx?publicationid=6343
- WTO – https://www.wto.org/english/tratop_e/tpr_e/s319_e.pdf
According to the World Bank’s 2018 Doing Business report, starting a limited liability company (Sociedad de responsibilidad limitada or SRL) in the Dominican Republic is a seven-step process, which requires 16.5 days. SRL registration steps include (1) verifying the availability of the company name with the National Office of Industrial Property (ONAPI); (2) purchasing the company name with ONAPI; (3) paying the incorporation tax with the National Internal Revenue Agency (DGII); (4) registering the company with the Chamber of Commerce and obtaining a tax identification number (RNC); (5) filing for the national taxpayer registry and applying for fiscal receipts at DGII; (6) registering local employees with the Ministry of Labor; and (7) registering employees at the Social Security Office.
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 advisable for company registrations.
The Ministry of Industry and Commerce (MIC) leads the Dominican Republic’s assistance and registration program for micro, small, and medium-sized enterprises (PYMES). The PYMES program, a partnership between the MIC and the National Competitiveness Council, offers technical assistance to majority Dominican-owned micro, small, and medium companies. According to the Law no. 187-17, micro enterprises are those with 10 employees or less, the small enterprises are defined as those with 11 to 50 employees, and medium enterprises employ 51 to 150 employees.
There are no legal or government restrictions on domestic investment abroad, although outbound foreign investment is significantly lower than inbound investment. The largest recipient of Dominican outward investment is the United States.
2. Bilateral Investment Agreements and Taxation Treaties
The Dominican Republic has Bilateral Investment Treaties (BIT) in-force with: Chile, Finland, France, Italy, Republic of Korea, Morocco, Netherlands, Panama, Spain, and Switzerland. (Note: The Dominican Republic also had a BIT with Taiwan. Post is working to confirm whether that agreement remains in force after the Dominican Republic’s recognition of the People’s Republic of China in May 2018. End Note.). The Dominican Republic has signed BITs with Argentina, Cuba, and Haiti, however, these agreements are not in force. According to the Dominican Ministry of Industry and Commerce, free trade agreements currently in force include: CAFTA-DR; the Economic Partnership Agreement (EPA) between the European Union and CARIFORUM (an organization of Caribbean nations, including the Dominican Republic); a trade agreement between the Dominican Republic and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua; a free trade agreement with CARICOM (the Caribbean Community); and a trade agreement with Panama.
An agreement for the exchange of tax information between the United States and Dominican Republic has been in effect since 1989. In 2016, the United States and the Dominican Republic signed an agreement to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA). However, the agreement has yet to be implemented. The Dominican Republic has tax agreements in force with Canada and Spain to avoid double taxation and prevent tax evasion.
3. Legal Regime
Transparency of the Regulatory System
On the 2018 Global Innovations Index, the Dominican Republic ranks 104 out of 127 for regulatory environment and 73 out of 127 for regulatory quality. The World Economic Forum 2018 Global Competitiveness Report ranked the Dominican Republic 95 out of 140 countries in efficiency of the legal framework in challenging regulations, and 99 out of 140 in burden of government regulations.
The World Bank Global Indicators of Regulatory Governance states that Dominican ministries and regulatory agencies do not develop forward regulatory plans. In other words, they do not publish a list of anticipated regulatory changes or proposals intended for adoption or implementation 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. Moreover, many businesses note that the scope of the website content is not always adequate for investors or interested parties. Some report that individual ministries sometimes upload proposed regulations to their websites or post them in national newspapers. Ministries sometimes form working groups with key public and private sector stakeholders participating in the drafting of proposed regulations.
Some Ministries and regulatory agencies solicit comments on proposed legislation from the public; however, public outreach is generally limited to stakeholders. Comments are not publicly accessible. Some ministries and agencies prepare consolidated reports on the results of the consultation, which they distribute directly 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 stock market regulator (Superintendencia del Mercado de Valores) 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 produces a quarterly report on the status of the non-financial public sector debt. The Office of Public Credit presents a wide array of information and statistics on public debt bonds and projections on its website. 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 approximately USD 11 billion in “quasi-fiscal” debt. Added to other borrowing, it puts the Debt-to-GDP ratio near 53 percent, and the Debt Service Ratio near 30 percent.
International Regulatory Considerations
Since 2003, the Dominican Republic has presented 226 regular 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 notify these requirements under the WTO TBT agreement and CAFTA-DR.
Legal System and Judicial Independence
The World Economic Forum 2018 Global Competitiveness report ranked the Dominican Republic 125 out of 140 countries in judicial independence and 95 of 140 in the efficiency of the legal framework in settling disputes. On the 2018 Global Innovations Index, the Dominican Republic ranked 78 out of 126 countries for rule of law.
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 country is divided into 12 Judicial Departments, each one headed by a Court of Appeals with jurisdiction over civil and criminal matters in 35 Judicial Districts. Justices of the Peace handle small claims, certain traffic accidents, landlord-tenant disputes, and other matters. There are also specialized courts with jurisdiction over labor cases, disputes involving registered land, cases involving minors, and administrative matters. The Supreme Court is the highest court, with jurisdiction to handle most appeals from the courts of appeal, and first instance jurisdiction in criminal matters involving certain high-level government officials. The Constitutional Tribunal rules on the constitutionality of laws, decrees, and treaties and decides cases involving constitutional questions.
Some investors complain of long wait times for a decision by the judiciary. According to the World Bank’s Doing Business report, while Dominican law mandates overall time standards for the completion of key events in a civil case, these standards frequently are not met. The Civil Procedure Code dates from 1884, and there have been few modifications. The resolution of a civil case normally takes two to four years, although some take longer. Some investors have complained that the local court system is unreliable, biased against them, and that special interests and powerful individuals are able to use the legal system in their favor.
U.S. firms indicate that corruption on all levels – business, government, and judicial – impedes their access to justice. Several large U.S. firms have been subjects of injunctions issued by lower courts on behalf of distributors with whom they are engaged in a contract dispute. According to some reports, these disputes are often the result of the firm seeking to end the relationship in accordance with the contract, and the distributor uses the injunction as a way of obtaining a more beneficial settlement. Many companies have noted that these injunctions often disrupt distribution activities, with negative effects on sales. 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.
Decree No. 610-07 placed the Directorate of Foreign Commerce (DICOEX) in charge of commercial dispute settlement, including disputes related to the Investment Chapter of CAFTA-DR. 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.
Laws and Regulations on Foreign Direct Investment
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 take action.
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 land taken. 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 they could be argued to be indirect expropriation. For example, they note that government decrees mandating atypical setbacks from roads or other public infrastructure may deprive investors of the economic benefits of their investments.
Many companies report that the procedures to resolve expropriations lack transparency and, to a foreigner, may appear antiquated. Few examples exist where government officials are held accountable for failing to pay a recognized claim or failing to pay in a timely manner.
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 12 bilateral investment treaties, 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. There are currently three pending U.S. investor-state dispute cases filed against the Dominican Republic under CAFTA-DR.
The Embassy is aware of at least 28 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.
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, according to the World Bank’s Doing Business Report.
4. Industrial Policies
Foreign investors receive no special investment incentives and no other types of favored treatment, except for investments in renewable energy; in manufacturing investments located in Special Zones; and investments in tourism projects in certain locations. There are no requirements for investors to export a defined percentage of their production.
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.
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 get 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. It has contemplated changes to the investment legal framework, such as a law on public-private partnerships, but this change has not yet been introduced.
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), which provides for 100 percent exemption from all taxes, duties, charges and fees affecting production and export activities in the zones. These incentives are for 20 years for zones located near the Dominican-Haitian border and 15 years for those located throughout the rest of the country. This legislation is managed by the Free Trade Zone National Council (CNZFE), a joint private sector/government body with discretionary authority to extend the time limits on these incentives. Products produced in FTZs can be sold on the Dominican market, however, relevant taxes apply.
In general, firms operating in the FTZs experience 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.
In 2018, FTZs exports totaled USD USD 6.2 billion, comprising 3.3 percent of GDP. According to CNZFE’s 2018 Statistical Report, there are 673 companies (up from 665 the previous year) operating in a total of 74 FTZs (up from 71 the previous year). Of the companies operating in FTZs, 39.9 percent are from the United States. Other significant investments were made by 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 22.6 percent of investments. The main FTZ sectors receiving investment include: medical and pharmaceutical products (27.3 percent); tobacco and derivatives (20 percent); textiles (14.5 percent); services (7.7 percent); agroindustrial products (6 percent), footwear (4.2 percent); metals (3 percent); plastics (2.6 percent); and electronics (2.4 percent).
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. The management or administrative staff of a foreign company is exempt from this regulation. The Foreign Investment Law (No. 16-95) provides that contracts for licensing patents or trademarks, for the provision of technical expertise, and for leases of machinery and equipment must be registered with the Directorate of Foreign Investment of the Central Bank.
There are no requirements for foreign information technology providers to turn over source code and/or provide access (i.e. backdoors into hardware and software or turn-over keys for encryption) to surveillance. There are no mechanisms used to enforce any rules on maintaining set amounts of data storage within the country/economy. The government has not enacted data localization policies.
5. Protection of Property Rights
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. The Constitution further provides that it is “in the public interest that land be devoted to useful purposes and that large estates be gradually eliminated.” Furthermore, the state social policy shall promote land reform and effectively integrate the rural population to the national development process by encouraging renewal of agricultural production.
Mortgages and liens exist in the Dominican Republic, and there is a National Registry of Deeds. 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.
Under Dominican law, all land must be registered, and that which is not registered is considered state land. Registration requires seven steps, an average of 60 days, and payment of 3.7 percent of the value of the land as a registration fee. The landowner is required to have a survey of the land, a certificate demonstrating that property taxes are current, and a certificate from the Title Registry Office that evidences any encumbrances on the land (such as mortgages or easements) and serves as a check on the extent of land rights to be transferred. Property ownership may revert to occupants (such as squatters) after twenty years, if they properly register the property.
Many businesses have complained that 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 alleged political expediency or influence as a reason for such actions. Despite the requirement of land registration, some land in the Dominican Republic is not registered, and even if land rights are registered, tenure is not assured, according to some reports. Investors have claimed that ln some parts of the country, unregistered land has been expropriated for development without notice or compensation. In some cases, however, holders of title certificates have reported to receive little or no additional security. Several companies note that 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 report that certain of these practices have been curtailed in the last few years, but nonetheless undermine the reliability of existing land documentation. In addition, companies have complained of the country’s struggles to control fraud in the creation and registration of land titles, including illegal operations within the government agencies responsible for issuing titles.
In the last decade, the Dominican government has implemented reform programs focused on developing institutional frameworks and strengthening government agencies and public administration. As part of its overarching program to modernize the justice sector, the Dominican Republic Supreme Court modernized its property title registration process through a USD 10 million USD Inter-American Development Bank (IDB) loan in an effort to 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.
The Dominican government has instituted a number of reforms, including the development of a cadaster with digitized property titles and the establishment and expansion of 23 land registry offices across the country. In 2012, the government created the State Lands Titling Commission, which, working with the Dominican Agrarian Institute, is intended to achieve the titling of around 150,000 urban and rural properties.
Intellectual Property Rights
Since 2003, the U.S. Trade Representative (USTR) has designated the Dominican Republic as a Special 301 Watch List country for serious intellectual property rights (IPR) deficiencies. Despite strong IPR laws on the books, enforcement is reported to remain weak. In the 2019 Watch List designation, USTR cited the Dominican government’s lack of progress in addressing long-standing IPR issues such as signal piracy and the widespread availability of counterfeit products. Weak IPR enforcement can be attributed to lack of resources and properly trained personnel; weak institutions and the absence of an inter-institutional enforcement mechanism to unite the various IPR authorities; and widespread cultural acceptance of piracy and counterfeiting.
Key IPR issues that third parties have flagged include rampant television signal broadcast piracy, insufficient enforcement actions against the manufacturers of counterfeit pharmaceuticals and other products, and weak customs enforcement against counterfeit trafficking. A 2018 Euromonitor International report noted that 30.8 percent of all alcohol consumed in the Dominican Republic was either counterfeit or smuggled, the highest rate in all of Latin America.
Customs officers have ex officio authority to seize any goods suspected as counterfeit. Prior to destroying counterfeit goods, customs officers must notify the rights holder. During this time, customs stores the goods at the expense of the rights holder. The rights holder then has 30 days to inspect the shipment and reach an agreement with the sender and manufacturer. At the end of the 30 days, if no agreement has been reached, then the rights holder can pay to send the items back or to have them destroyed. If the rights holder does not act, customs will release the shipment to the importer.
U.S. industry representatives observe more willingness on the part of Dominican authorities to prosecute health and safety crimes as opposed to copyright and trademark violations. In 2018, industry representatives said the Attorney General’s office for Technology Crimes, which oversees IPR prosecutions, deprioritized the prosecution of copyright and trademark violations and focused instead on cybercrimes. By contrast, industry representatives complimented the work of the Attorney General’s Office for Health Matters, which is responsible for prosecuting manufacturers and distributors of counterfeit pharmaceuticals, cigarettes, and food products.
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/ .
Resources for Rights Holders
Contact at Mission:
U.S. Embassy Santo Domingo
List of Attorneys in the Dominican Republic, compiled by the Consular Section of the U.S. Embassy in Santo Domingo: https://do.usembassy.gov/u-s-citizen-services/local-resources-of-u-s-citizens/legal-assistance/
American Chamber of Commerce of the Dominican Republic
Avenida Sarasota No. 20
Torre Empresarial, 6to. Piso.
National Copyright Office (ONDA)
Ministry of Industry and Commerce
Edificio del Archivo General de la Nación
Calle Modesto Diaz No. 2
Santo Domingo, D.N.
809-508-7373 / 809-508-7742
National Office of Industrial Property (ONAPI)
Ministry of Industry and Commerce
Av. Los Próceres No.11, Santo Domingo, D.N.
6. Financial Sector
Capital Markets and Portfolio Investment
The Dominican stock market, the Bolsa de Valores de Santo Domingo, is regulated by the Monetary Council and supervised by the Superintendency of Securities, 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.
Money and Banking System
The Dominican banking sector is comprised by 124 entities, as follows: 60 financial intermediation entities (including multiple banks, savings and loans associations, savings and loans banks, financial intermediation public entities, credit corporations), 47 foreign exchange and remittance agents (specifically, 42 exchange brokers and 5 remittances and foreign exchange agents), and 17 trustees.
The mission of the Dominican Central Bank is to ensure the stability of prices, guarantee the efficient regulation of the financial system and the proper functioning of payment systems, as the issuing entity and executor of monetary, exchange, and financial policies to contribute with the growth of national economy
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. 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.
The Dominican government enacted robust banking reforms in the wake of a 2003 financial crisis. Today, the Dominican Republic’s financial sector is relatively stable and the IMF declared the financial system indicators largely satisfactory during 2019 Article IV consultations. The IMF team’s preliminary report noted that the country’s “robust economic performance benefitted from the strengthened policy frameworks, competitiveness, and banking system over the past decade.”
Foreign Exchange and Remittances
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.
The Regulation 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.
Sovereign Wealth Funds
The Dominican government does not maintain a sovereign wealth fund.
7. State-Owned Enterprises
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. The government lists 22 public enterprises in its budget documents, primarily as public utilities, state-run banks, or quasi-public entities that manage infrastructure. The largest of these is the Dominican Corporation of State Electrical Companies (CDEEE). In the electricity sector, generally speaking, private companies only operate in the electricity generation phase of the process, with the government handling the transmission and distribution phases. However, Punta Cana-Macao Energy Consortium (CEPM), a private company that generates and transmits electricity in the Punta Cana area, is a notable exception.
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.
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. In 2017, the government ordered the dissolution of the SOE corporation that previously managed several (now private) SOEs (CORDE).
8. Responsible Business Conduct
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 candidate in 2016. The government incorporates EITI standards into its mining transparency framework. In 2019, EITI is conducting a validation study of the Dominican Republic’s implementation of EITI standards.
The Dominican Republic has a legal framework that includes laws, regulations and criminal penalties to combat corruption. Foreign investors, however, indicate that corruption and official impunity are endemic in the security forces, government, and private sector. Many companies complain of the often ineffectiveness in enforcing existing laws. Some report that corruption and the need for reform are an openly and widely discussed public grievance. The 2018 Transparency International Corruption Perception Index ranked the Dominican Republic 129th out of 180 countries assessed. The World Economic Forum’s 2018 Global Competitiveness report ranked the Dominican Republic as 113 of 140 countries for incidence of corruption. U.S. businesses operating in the Dominican Republic often need to take extensive measures to ensure compliance with the Foreign Corrupt Practices Act.
In December 2016, high-level public officials in the Dominican Republic were among those implicated in the far-reaching corruption scandal involving Brazilian construction giant Odebrecht. In a plea agreement with the United States Department of Justice, Odebrecht admitted to paying more than USD 92 million in kickbacks to Dominican officials to secure public works contracts. U.S. companies say the government’s slow response to this scandal contributes to a culture of perceived impunity for high-level government officials, which fuels widespread acceptance and tolerance of corruption at all levels.
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 (Participación Ciudadana), and the Dominican Alliance Against Corruption (ADOCCO).
UN Anticorruption Convention, OECD Convention on Combatting Bribery
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
Contact for government agency responsible for combating 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
Government service for filing complaints and denunciations:
Phone: 311 (from inside the country)
Contact for “watchdog” organization that monitors corruption:
Phone: 809 685 6200
Fax: 809 685 6631
10. Political and Security Environment
There is no recent history of widespread, politically motivated violence. In 2017, there were multiple, mostly-peaceful protests throughout the country over corruption, access to identity documents for Dominicans of Haitian descent, and labor disputes. There are no examples of significant 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 2018 Global Competitiveness report ranked the Dominican Republic 123 out of 140 countries in overall security imposing costs on business and 100 of 140 in terms of organized crime imposing costs on businesses.
11. Labor Policies and Practices
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 2016 World Bank data, the Dominican labor force consists of approximately 5 million workers. The labor force participation rate is 67 percent; 70 percent of the labor force works in services, 18 percent in industry, and 13 percent in agriculture. The labor force is divided roughly 50-50 between the formal and informal sectors of the economy. In 2018, unemployment and underemployment was approximately 16 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 may not strike.
The law prohibits dismissal of employees for trade union membership or union activities. In practice, however, some report that 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.
12. OPIC and Other Investment Insurance Programs
Embassy Santo Domingo is actively working to attract Overseas Private Investment Corporation (OPIC) investment in the Dominican Republic. OPIC was previously active in the Dominican Republic; however, lending largely dried up over the past 20 years, with only two projects approved for OPIC’s investment or political risk insurance since 2000. A breakdown in the process for obtaining Foreign Government Approval (FGA), required for most projects under the 1962 bilateral agreement on investment guaranties, hampered OPIC’s ability to back projects in the Dominican Republic. In January 2019, the Dominican government clarified the FGA process in a bilateral letter, paving the way for future OPIC investment. The Dominican government is also a party to the Multilateral Investment Guarantee Agency (MIGA) Agreement.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
|Host Country Statistical Source||USG or International Statistical Source||USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
|Host Country Gross Domestic Product (GDP) ($M USD)||2018||$81,283||2017||$75,932||www.worldbank.org/en/country|
|Foreign Direct Investment||Host Country Statistical Source||USG or International Statistical Source||USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
|U.S. FDI in partner country ($M USD, stock positions)||N/A||N/A||2017||$2,140||BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data|
|Host country’s FDI in the United States ($M USD, stock positions)||N/A||N/A||2017||$2||BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data|
|Total inbound stock of FDI as % host GDP||N/A||N/A||2017||47.5||UNCTAD data available at https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx|
Table 3: Sources and Destination of FDI
Data not available (country not reported on IMF/CDIS website)
Table 4: Sources of Portfolio Investment
Data not available (country not reported on IMF/CDIS website)
14. Contact for More Information
Embassy of the United States of America
Avenida República de Colombia
Santo Domingo, Dominican Republic