In the Dominican Republic’s Foreign Investment Report, the US State Department points out that the country is a hotbed of allegations of bribery and allegations of corruption by investors.
Investors report delays in government payments, poor enforcement of intellectual property, bureaucratic sanctions, slow, sometimes biased administrative and judicial processes, and bizarre customs assessment and import classification practices.
The administrative summary of the report is here
Foreign direct investment (FDI) plays a key role in the Dominican economy, making the Dominican Republic one of the largest recipients of foreign direct investment in the Caribbean and Central America.
The government is actively seeking foreign direct investment with generous tax breaks and other incentives to attract companies to the country. Historically, the tourism, real estate, telecommunications, free zones, mining and finance sectors have received foreign direct investment.
In January 2020, the government announced a special incentive program to promote high-quality investment in tourism and infrastructure in the Southwest region, and in February 2020, passed a law
Public-private partnership to promote economic growth driven by the private sector.
In addition to financial incentives, membership in the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) is one of the greatest benefits to foreign investors. The audience credits the agreement with increasing competition in the Dominican Republic, strengthening the rule of law and expanding access to quality products.
The United States continues to be the largest investor in the Dominican Republic. The CAFTA-DR includes protections for foreign investors from member countries, including mechanisms for resolving disputes.
Despite the negative economic impacts of the epidemic, the Dominican Republic’s international competitiveness and transparency indicators remained stable.
Foreign investors in the Dominican Republic report numerous systematic problems, citing a lack of clear and standardized rules for competition and non-implementation of existing rules.
Complaints include widespread corruption allegations; Demands for bribes; Delay in government payments; Poor enforcement of intellectual property rights; Bureaucratic restrictions; Different practices in slow and sometimes domestic dependent justice and administrative processes, and customs assessment and import classification.
Weak land laws and government acquisitions without proper compensation continue to be an issue. The public considers administrative and judicial decision making to be inconsistent, opaque and time consuming. Corruption and non-implementation of existing laws are the main complaints of major investors.
U.S. companies operating in the Dominican Republic often need to take comprehensive measures to ensure that foreign corruption practices comply with the law. Many US companies and investors have expressed concern that government corruption, including in the judiciary, continues to restrict successful investments in the Dominican Republic.
In August 2020, President Louis Abinader became the 54th President of the Dominican Republic, leading the first transfer of power in 16 years. By taking office with bold promises to curb corruption, the government quickly arrested a number of high-ranking officials from the previous administration who were embroiled in corruption – those who were considered untouchables under previous governments.
It remains to be seen whether Abinadar will fulfill complex obligations such as institutional reforms or long-delayed power sector reform to improve transparency.
The Dominican Republic, an upper-middle-income country, shrank by 6.7% in 2020 and ended the year with a 7.7% deficit thanks to the epidemic. International Monetary Fund and World Bank Project Growth for 2021 to 4.0 to 4.8%.
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