Under a luminous blue Caribbean sky, the capital of the Dominican Republic, Santo Domingo, hums with a youthful energy, despite its status as the oldest continuously inhabited European settlement in the Americas. From the city’s grand colonial core, where cobblestone streets bisect shaded parks inhabited by stray cats and surprisingly gentle street dogs, modern highways vault towards modern districts, containing thriving businesses, such as Naco and Poligono Central.
For those who prefer to forgo the roads, a rapid transit system, the Metro de Santo Domingo, opened in 2008. The metro features two lines of above-ground and below-ground train routes with cars supplied by the French firm Alstom, and ranks as the largest metro system in the Caribbean and central America.
A good call
Good connections are not limited to the city's transport system, however. In January 2015, Héctor Valdez Albizu, the governor of the Banco Central de la República Dominicana, said that foreign investment in the country exceeded $2.2bn in 2014, an improvement of some $247.1m on 2013, representing a 12.4% increase. Among the highest performing sectors were mining, which saw a 20.9% increase in investment; construction, with a 11.4% increase; and tourism, which grew by 9.6%.
The country has also seen a growth in call centres, owing in no small part to the fact that a significant proportion of the population are fluent English speakers – many having spent time living in the US – and this sector alone currently accounts for some 35,000 jobs. Paris-based Teleperformance is currently the largest employer in this sector.
“Part of the success of the Dominican Republic is that we’re pretty diversified,” says Jean Alain Rodríguez, secretary of state and executive director of the Centro de Exportación e Inversión de la República Dominicana (the Dominican Republic Export and Investment Centre, or CEI-RD), speaking to fDi from CEI-RD’s offices, located just off the capital’s iconic Plaza de la Bandera.
CEI-RD has worked to expedite procedures and permits for investors, and has made some notable improvements. Whereas previously application processes were spread out across a number of different entities, entailing a considerable investment of time and effort – it could easily take between two to three years to get all necessary permits for a large hotel, for example – CEI-RD handles permitting to help move things along. A hotel project would now expect to wait between four and six months to receive the necessary permits.
“Now, instead of going to 10 or 20 places, you come here and we can give you everything at this institution,” says Mr Rodríguez.
For the past decade, the Dominican Republic has been governed by the centrist Partido de la Liberación Dominicana (Dominican Liberation Party, or PLD). First this was under the leadership of lawyer and academic Leonel Fernández between 2004 and 2012 (Mr Fernández also served as president from 1996 to 2000), and, since 2012, under the leadership of economist Danilo Medina.
PLD came to power in the wake of the 2003 collapse of Banco Intercontinental, the country’s second largest privately held commercial bank. The bank was bailed out by the government to the tune of $2.2bn before it went into administration, revealing significant levels of fraud within the institution and leaving the government with debt that amounted to more than 10% of the country's GDP. The tentacles of the scandal also stretched into the country’s political establishment, with accusations levelled against members of both the PLD and the opposition Partido Revolucionario Dominicano (Dominican Revolutionary Party, or PRD).
Now, in a country that currently boasts eight international airports and 12 international ports, things are quite different. “We have a stable economy and a stable political environment,” says José Nelton González, senior manager of public relations and governmental affairs at DP World Caucedo, a marine terminal and free zone located 25 kilometres east of Santo Domingo. The terminal has plans to nearly double in size in coming years. “We have a very close relationship between the public and the private sector, and the government has been very focused on maintaining [economic] stability,” says Mr González.
PLD has not been without its critics, however. Some commentators worry that the party’s strong control of the Dominican Republic’s congress and – some have argued – its influence over the country’s supreme court and electoral tribunal have created an unhealthy concentration of power.
An ongoing bitter public debate about the status of the estimated 1 million-plus Haitians living in the Dominican Republic (and, by extension, Dominicans of Haitian descent) culminated in a September 2013 supreme court decision to strip tens of thousands of Haitians and Dominicans of Haitian descent of their citizenship. This was followed with an order by the Inter-American Commission on Human Rights, the human rights body of the regional Organisation of American States, for the Dominican Republic to revoke the decision, which, in turn, led to the country’s withdrawal from the body in late 2014.
Dominicans of Haitian descent are often associated politically with the opposition PRD, one of whose most storied leaders, José Francisco Peña Gómez, was himself the son of a Haitian immigrant. Mr Gómez lost the 1996 presidential election after Mr Fernández’s PLD struck an alliance with the Partido Reformista Social Cristiano (Social Christian Reformist Party) of former dictator Joaquín Balaguer.
Sunny side up
Nevertheless, the strides the country has made in getting its economic house in order during the past decade have been impressive.
At the beginning of 2015, the country paid off nearly all of its $4.1bn debt to Venezuela, which stemmed from its subscription to the Petrocaribe programme. The programme, which sold low-cost petroleum to countries in the Caribbean and central America, was started in 2005 under Venezuela’s then-leader Hugo Chávez as a way to expand Venezuela’s regional influence, and was continued by president Nicolás Maduro after Mr Chávez’s death in March 2013. The Dominican Republic's pay-off was aided by a more than 50% discount, which enabled the government to pay 98% of its debt.
The extraordinarily wide scope of foreign investment in the Dominican Republic – from construction to tourism to call centres to mining – has seen strong growth on multiple fronts. This growth has been helped along, as it happens, by the turmoil rocking the aforementioned Venezuela, where some have accused Mr Chávez, and his successor Mr Maduro, of employing authoritarian methods that stifle free expression, individual liberty and economic growth, which has left foreign investors taking a cautious stance in the country.
“We’ve received a lot of funds from Venezuela given the situation that Venezuela has been facing, [and they have been] in a diversity of sectors, from commercial construction such as malls and in tourism, and in real estate development,” says Jabar Singh, director of commercial and corporate banking with Scotiabank in the Dominican Republic. “We’ve received a lot of Colombian capital, as well, mainly in industry and manufacturing, such as cement and plastics products.”
Mr Singh’s words are born out by a quick survey of recent investment projects in the Dominican Republic. Venezuelan real estate investment firm Grupo Velutini was instrumental in the construction of the Blue Mall retail development in Santo Domingo and is now providing financing for a sequel, which is being constructed near Punta Cana on the country’s eastern tip. Venezuelan construction firm Sambil built another mall, Sambil Santo Domingo, in 2010, and the real estate arm of Venezuelan media and entertainment organisation Cisneros is currently working on the development of Tropicalia, a $2bn luxury tourist development along the country’s northern Samaná Peninsula.
Large-scale projects also seem to have become an integral part of the FDI landscape in Dominican Republic. The Pueblo Viejo gold mine – a joint venture between Canadian firms Barrick and Goldcorp, which goes under the name Pueblo Viejo Dominicana Corporation – is, at almost $4bn, the largest single foreign investment in the history of the Dominican Republic. The site began commercial production in January 2013.
The project was not without its difficulties, however, with local residents protesting over a number of issues, including the lack of consultation over the construction and operation of the mine, alleged water contamination caused by the mine's operation, the poor working conditions at the facility and the failure of the construction company to preserve local heritage. Nevertheless, the Pueblo Viejo mine made $1.4bn of shipments during 2014, and $2.7bn since the mine began operations.
As the Dominican Republic seeks to further diversify its energy matrix, in the Peravia province, south-west of the capital, construction has begun on a $2bn thermal plant, Central Termoeléctrica Punta Catalina.
The project is a joint venture between Italy's Maire Tecnimont, Brazil’s Odebrecht and the Dominican Republic’s own Estrella. Under the aegis of the country’s state power entity, the Corporación Dominicana de Empresas Eléctricas Estatles (Dominican Corporation of Electric Companies), the project will see the installation of a pair of coal-fired boilers – designed and manufactured by North Carolina’s Babcock & Wilcox Company. These will generate energy from clean burning pulverised coal, with capacity to generate 752 megawatts. The project is due to be completed in October 2017.
The telecommunications sector in the Dominican Republic is also robust, with the Luxembourg-based multinational Altice having recently purchased the Orange Dominicana mobile telephone company for $1.4bn, only the latest indication of the interest that this sector is receiving.
All of which adds to an impressive few years for the Dominican Republic when it comes to FDI. 'Diversify the economy' is an oft-repeated mantra by governments wanting to bring in investment and ensure future growth. The Dominican Republic has gone a long way to showing how it is done.