Overview:

• The Dominican Republic is the Caribbean’s largest democratic state.
• The Dominican Republic represents the 7^th largest U.S. export market in the Western Hemisphere.
• The U.S. is the Dominican Republic’s largest export market and its principal trading partner. 80% of Dominican Republic exports are destined for the U.S.
• Privatization of state-owned enterprises began in 1997.

Opportunities:

• Computers and peripherals
• Air Conditioning and Refrigeration Equipment
• Telecommunications Equipment
• Engineering/Architectural Services
• Advertising Services
• Building Products
• Franchising
• Automotive Parts and Services
• Electrical Power Systems

Business Culture:

• Normal business attire is most common.
• Business hours are 8:00am to 5:00pm; government hours are 7:30 am - 2:30 pm.
• Appointments are required, but timeliness is not strictly enforced.
• Most businesspeople speak English, but Spanish remains predominant.
• Bring business cards for exchange.

Doing Business:

• All imports (expect for free-trade zone imports) require a consular invoice, obtained from the exporter’s local Dominican consulate. Exporters dislike the fact that the fees associated with the invoice are hardly nominal and are arbitrarily assigned. The government recently proposed a US$100 stamp to replace the invoice, but critics point out that a consulate is still required to legalize the stamp (at a cost of US$30).
• One notable tax is the “Tax on the Transfer of Industrialized Goods” (the Spanish acronym is ITBS), which covers processed agricultural goods and all non-agricultural goods (just about everything). Including this tax, the effective total tax rate on such imports can rise over 50%.
• Free Trade Zones (there are currently 33) offer impressive benefits, most of which revolve around the elimination of all taxes (ITBS, income, municipal, etc) and fees (consular, license, etc). FTZs are the fastest growing economic sector in the Dominican Republic.
• The Central Bank of the Dominican Republic is committed to a 16.6 peso/USD exchange rate. Inflation in 2000 ran around 8.5%

Travel:

• Visas are available at all Dominican consulates. Purchase of a tourist card (currently $10) negates the need for a visa for stays shorter than three months. The card may be bought at the airport of departure or upon arrival in the Dominican Republic. Business travelers do not require any additional paper or documentation.
• Flights from Miami to Santo Domingo (the capital) take 1.5 hours.

Legal Matters:

• The Dominican Republic’s legal system is based on Civil Law, rather then Common Law, as in the U.S. The most obvious difference is that judges hear and decide all cases. The hierarchy of the courts is as follows:
• The Peace Courts – One judge hears cases that are small and minor in nature.
• The Courts of First Instance – Still one judge, but there are divisions by the nature of the cases (civil or criminal).
• The Appeals Courts – A five-judge panel hears cases raised from the lower courts.
• The Supreme Court of Justice – A sixteen-judge panel. They only hear cases in which the interpretation of the law is in question.
• Commercial disputes that occur in the Dominican Republic must be settled there. The Dominican Republic government generally does not engage in international commercial arbitration or settle directly with firms.

Investment:

• Unlimited foreign investment is allows in almost all sectors. The labor code requires 80% of workers (management and administrative staff excluded) be Dominican citizens.
• “Commercial Paper” is a short-term fixed income investment. Interest rates range from 10%-20%, but the Caveat Emptor applies. Commercial Paper is available in Dominican Pesos and US Dollars, with Pesos paying out a higher rate. Minimum deposit amounts generally are 100,000 pesos.

Do:

• Contact the American Chamber of Commerce of the Dominican Republic.  They offer one-on-one counseling, business contacts, credit reports, and many other informative items.
• Remember that the per capita income is US$2,110.

Don’t:

• Drink the water. Sounds like a cliché, but don’t do it, drink the bottled water that’s available everywhere.
• Driving is a risky proposition due to the lack of traffic law enforcement.
• Avoid striking out on your own in the real estate arena. As reported by the State Department: “Real estate investments by U.S. citizens have been the subject of take-over attempts, either legal or physical.”