Dominican Republic: Investing

FDI in Figures

The Dominican Republic is among the main recipients of FDI in the Caribbean and Central America. Foreign investment significantly influences the economy: FDI flows represent 3.7% of GDP, 63% of goods exports, and contribute to 30% of tax revenues. According to UNCTAD's World Investment Report 2023, FDI inflows to the country reached USD 4 billion in 2022 (+25.5% y-o-y). At the end of the same period, the stock of FDI amounted to USD 51.9 billion, representing around 46.1% of GDP. Data from Prodominicana show that FDI inflows amounted to USD 4.390 billion in 2023 (3.7% of GDP). This growth was largely attributed to the tourism and energy sectors. As per the latest figures released by the Central Bank, cumulative investment from 2010 to 2023 totals USD 39.6 billion, with the United States contributing 26.8% (USD 10.6 billion), followed by Canada at 14.4% (USD 5.7 billion), Spain at 7.8% (USD 3.1 billion), and Mexico at 7.3% (USD 2.9 billion). France ranks 7th, providing USD 854 million, equivalent to 2.2% of the total investment. Traditionally, the tourism, real estate, telecommunications, free trade zones, mining, and finance sectors have been the primary recipients of FDI. As per the Central Bank, there are 659 companies in the Dominican Republic with at least 10% foreign capital, comprising 414 within free trade zones and 245 outside these zones. These entities constitute 0.7% of all companies in the DR. Typically, these are sizable enterprises, with 40% employing over 150 individuals, whereas 75% of Dominican companies have fewer than 10 employees.

The Dominican government actively seeks FDI through enticing tax breaks and other incentives. Membership in the Central America Free Trade Agreement-Dominican Republic (CAFTA-DR) further enhances its appeal to foreign investors, fostering competition, bolstering legal frameworks, and broadening access to high-quality goods. Incentives for investment span various sectors including tourism, renewable energy, film production, and industrial development along the Haiti-Dominican Republic border. With a keen eye on nearshoring opportunities, the Dominican Republic boasts extensive free trade zones offering nearly full tax exemption. Key agencies responsible for attracting FDI include the Export and Investment Center of the Dominican Republic (CEI-RD) and the National Council of Free Trade Zones for Export (CNZFE). Foreign Investment Law No. 16-95 permits unrestricted foreign investment across most sectors, ensuring national treatment for foreign investors as per the Constitution. Both foreign and domestic entities enjoy the liberty to establish and operate businesses. Although labor laws stipulate a majority Dominican workforce, enforcement varies. Foreign investors in the Dominican Republic highlight several systemic challenges, including unclear and non-standardized competition rules, inadequate enforcement of regulations, and pervasive corruption at national and local government levels. Additional concerns encompass deficient technical capabilities within the government, centralized decision-making processes, delays in payments, and weak intellectual property rights enforcement. Moreover, bureaucratic obstacles, slow judicial procedures, and biased administrative processes further hinder investment. Land tenure laws and private property rights face ongoing issues, while administrative and judicial decisions are perceived as inconsistent and opaque. Overall, a lack of transparency and ineffective law implementation exacerbate investor grievances. The country ranks 108th among the 180 economies on the 2023 Corruption Perception Index and 58th out of 184 countries on the latest Index of Economic Freedom.

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Latest Update: May 2024