The Dominican Republic seeks Latin American allies to attract investment from Asia

The Dominican Republic seeks Latin American allies to attract investment from Asia

GC EFE
GC EFE

Photo: Ariadna Castro


The country is seeking to negotiate partial treaties with Chile, Mercosur, and countries of the Latin American Integration Association (ALADI for its acronym in Spanish). 

Although the tourism sector has been the real protagonist of the Dominican Republic’s economic recovery in the last year, foreign investment and international trade are playing a key role.

The Caribbean country held the first elections in Latin America at the beginning of the pandemic. The new government quickly pushed ahead with a vaccination strategy that proved effective in healing the economy. The results they got placed them among the countries in the region with the highest growth in 2021.

Today, they are trying to find a balance between macroeconomic stability and social peace, as Foreign Minister Roberto Alvarez explains in an interview for Forbes. Currently, the Central Bank maintains historical reserves of US$14.25 billion, which represent approximately 13% of the Dominican GDP.

On this more stable basis, one of the government’s current priorities is to seek greater linkages with industries that are moving out of Asia to establish themselves in locations closer to the U.S. market. Finding new allies among countries that are complementary has become the new roadmap.

What are the objectives of the Alliance for Development in Democracy with Costa Rica and Panama?

Under President Trump’s administration, tariffs were imposed on Chinese products. UNCTAD did an analysis and found a trade diversion from Asia to the rest of the world for about 21 billion dollars, which sped up with the pandemic. Just a year ago, we created the Alliance for Development in Democracy, together with Costa Rica and Panama, under three axes: political, cooperation, and trade and investment.  

One of the fundamental aspects was the creation of a high-level business council, made up of entrepreneurs from the three countries, and we approached the United States.

Are you thinking of including Ecuador as well?

At the Summit of the Americas, we already had a dialogue with Ecuador and we are integrating it into the Alliance. It was not part of this agreement now, because we had already been working on it for some time. In addition, Ecuador does not have a free trade agreement with the United States, but it is a country that adds.  

If the three founding countries of the Alliance, Panama, Costa Rica, and the Dominican Republic, with a total population of only 20 million, were a single country, we would be the third largest trading partner of the United States in Latin America and the Caribbean, after Mexico and Brazil. As for Mexico, we would be its fifth largest trading partner. These are important figures because they show the dynamism of our economies.

In July, the trade ministers signed the “Joint Consultative Diagnostic on Supply Chains for Economic Growth” in Washington, to identify which companies already established in our countries fit with President Biden’s current trade strategy.

The goal is to see where we can match and promote quality new investments. All three of us have a free trade agreement with the United States, so that has made it easier.

What is your perspective on the integration process in the region?

We have trade agreements with 49 countries, including the United States, the European Union, Central America, and the Caribbean Community countries. We remember that the FTAA did not work; it was truncated in 2004 or 2005, and individual trade agreements were created with no crossover between them. Now we should focus on that. We don’t have an agreement with Mexico. Although we could benefit mutually, it is still in the making.  

We are trying to negotiate partial treaties with other countries, such as Chile and Mercosur, and exploring the possibility of negotiating with ALADI countries, where our products pay up to 25% tariffs. The same happens to Mexican products that come to us. A Jeep manufactured in Mexico pays a 20% tariff in the Dominican Republic. The same Jeep manufactured in the United States pays nothing. These are all aspects that we need to deepen, and there is no single roadmap on the continent. Mexico could take the lead in this regard. It has all the capacity to do so.

A large part of the attraction of countries for the relocation of investments is their logistical capacity. What is your strategy to become a hub?

We are in the center of the Caribbean, equidistant between South and North America, which is extremely beneficial for our country. Tourism has helped connectivity, which is fundamental to being able to develop commercial ties and attract quality investments. Mexico is the second country with the largest direct investments in the Dominican Republic, after the United States.  

In the Central Bank, there are about 2,000 million dollars in registered investments, but there are Mexican companies that have gained shares of companies from other countries and are not registered. The Mexican embassy has registered a total investment of 10 billion dollars.

The reason they have sought the Dominican Republic is its regional distribution capacity, as a logistics hub. With Mexico -and this is one aspect of this visit-, we want to create greater connectivity between our countries because, to improve the trade balance, it is an essential aspect.

What practical and immediate applications are envisaged for the benefit of both countries?

Two words describe the current situation: volatility and uncertainty. Russia’s invasion of Ukraine, which is dragging on over time, has created more dislocation and difficulties in obtaining commodities, commodities such as wheat, soybeans, and fuels.

 The inflation that it has generated for our countries is something worrying. That is another additional expense for governments, because of the subsidies they have to give for fertilizers, fuels, and the population.

With Mexico, we are exploring how to expand their investments in our country and boost trade. We are not satisfied with the level of bilateral trade we have. We are looking for ways to mitigate the global impact that these dislocations are causing.

From the Dominican Republic’s experience, how do you think the international community can contribute to improving Haiti’s economic situation?

The first order of business, with Haiti, refers to the prevailing insecurity in that country, where over 60% of the city of Port-au-Prince is controlled by gangs. I can't think about development or investment until it is brought under control. Last July, the Secretary General of the United Nations was asked to report in October on two aspects: one is the adoption of possible punitive measures against individuals or companies that finance the gangs, and the other is the creation of a regional force to assist the Haitian national police. 

As the country tries to pacify the country, an agreement with the most important social forces should be made to create a broader government, leading to elections. Only after that is it possible to think of a development plan for the country and international capital would be more than if there were a legitimate government.


Source: Forbes Staff (2022, September 29). República Dominicana busca aliados latinoamericanos para atraer inversiones desde Asia. Forbes Dominicana. Retrieved September 29, 2022 from https://forbes.do/estrategia/2022-09-28/republica-dominicana-en-busca-de-aliados-latinoamericanos  

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