The commercial relationship between Brazil and Paraguay is not just a geographical adjacency; it’s a dynamic economic alliance that has seen remarkable growth over the years. Brazilian investments in Paraguay have significantly fostered this partnership, extending beyond traditional economic ties. In this blog post, we will delve into the quantifiable aspects of this economic collaboration, exploring the numerical data behind the commercial relationship between Brazil and Paraguay, the key sectors involved, and the substantial impact on job creation in recent years.

Brazilian Investments in Paraguay

Brazil’s strategic investments in Paraguay have left an indelible mark across various sectors, from energy and agriculture to infrastructure and manufacturing. The collaboration between these two nations has been quantifiably robust, driving mutual growth and development.

The colossal Itaipu Dam stands out as a testament to their collaboration in the energy sector. The joint investment by Brazilian companies Eletrobras and Itaipu Binacional exceeds a staggering $19 billion. This hydroelectric power plant addresses a substantial portion of both countries’ electricity needs and exemplifies the success of cross-border partnerships in numerical terms.

Additionally, Brazilian agribusiness has made significant inroads into Paraguay, with investments from global giants like JBS and Amaggi. The value of these investments is substantial, contributing not only to Paraguay’s economic growth but also solidifying Brazil’s position as a significant player in the global agribusiness market.

Brazilian Companies Making Waves in Paraguay

Several Brazilian companies have strategically invested in Paraguay, making substantial contributions across various sectors. For example, Fibria’s investment of over $2 billion in a state-of-the-art pulp mill in Paraguay bolsters the economy and quantifiably strengthens ties between the two nations.

In the banking sector, the expansion of Banco do Brasil and Itaú Unibanco into Paraguay contributes quantifiably to the commercial relationship between Brazil and Paraguay and the financial stability and growth of the Paraguayan banking industry. These banking giants, leveraging their financial prowess, are crucial in supporting local businesses and stimulating economic activity with quantifiable impacts.

With the involvement of Brazilian companies like Odebrecht, the construction and infrastructure sector has seen significant projects in Paraguay. The numerical value of these initiatives not only enhances connectivity but also quantifiably creates job opportunities and stimulates economic development. Among the other companies that have invested significantly to expand the commercial relationship between Brazil and Paraguay are:

Agribusiness Sector

• JBS: A global meat processing giant, JBS has made significant investments in the Paraguayan agribusiness sector. The company operates in various areas of the supply chain, contributing to the growth of the agricultural industry.

Banking Sector

• Banco do Brasil: A major Brazilian bank, Banco do Brasil has expanded its operations into Paraguay, contributing to the financial stability and growth of the Paraguayan banking industry.
• Itaú Unibanco: Another major Brazilian bank, Itaú Unibanco, has extended its presence into Paraguay, playing a role in the financial sector’s development and supporting local businesses.

Food and Beverage Sector

• Cervecería Ambev: Brazilian brewing giant with operations in Paraguay, producing brands like Brahma and Skol.

Automotive Sector

• THN Industria: Manufactures plastic and metal automotive parts in its Ciudad del Este plant.

Textile and Clothing Sector

• Lupo: Leading Brazilian lingerie brand with a production facility in Hernandarias.
• Dudatex is a clothing manufacturer with a factory in Villarrica.

Value of Brazilian Investments in Paraguay

The commercial relationship between Brazil and Paraguay consists of investments in Paraguay exceeding $30 billion, underscoring the depth of their economic partnership. This substantial financial injection has quantifiably catalyzed economic development, spurred innovation, and positioned both countries as significant players in regional and global markets.

Job Creation Impact

One of the most compelling quantitative aspects of Brazilian investment in Paraguay is its impact on job creation. As Brazilian companies expand operations and undertake new projects, many jobs are quantifiably generated across various sectors.

Brazilian companies’ construction and infrastructure projects have quantifiably provided employment opportunities to the local population. Skilled and unskilled labor alike have found new avenues for employment, contributing to a quantifiable reduction in unemployment rates and an overall improvement in living standards.

In the agricultural sector, the quantifiable impact of investments made by Brazilian agribusinesses is evident in increased productivity and job creation throughout the supply chain. From farm workers to transportation and logistics professionals, the agribusiness boom in Paraguay has quantifiably been a boon for the labor market.

With the Itaipu Dam at its forefront, the energy sector has not only provided a stable source of electricity but has quantifiably created jobs in maintenance, operation, and support services. The continued collaboration between Brazilian and Paraguayan professionals in the energy sector has quantifiably fostered a cross-cultural exchange of expertise, contributing to the professional growth of individuals on both sides of the border.

The commercial relationship between Brazil and Paraguay is flourishing, driven by substantial Brazilian investments that can be quantified across various sectors. Notable companies like JBS, Eletrobras, Banco do Brasil, and Odebrecht lead the way, injecting billions of dollars into the Paraguayan economy and creating a quantifiable ripple effect of positive economic outcomes.

As the economic ties between these two nations continue to strengthen, the quantifiable impact on job creation in Paraguay is undeniable. Brazilian investments have not only contributed to the development of critical industries but have also played a crucial role in quantifiably improving the livelihoods of the Paraguayan people.

This quantifiable symbiotic commercial relationship between Brazil and Paraguay is a shining example of how strategic partnerships can lead to mutual prosperity and growth. As both nations navigate the challenges and opportunities of the global economy, their shared commitment to economic cooperation, backed by quantifiable data, sets the stage for sustained development and shared success.

Mining in Peru is a fundamental pillar of the nation’s economy. Its importance is reflected in various macroeconomic indicators. In this blog post, we will analyze in detail how mining impacts the country’s production, investment, employment, and exports.

Contribution of mining to national GDP

During the last ten years, mining activity has driven, on average, more than 8% of the national GDP. This places it as one of the most significant contributors to the nation’s economy and consolidates it as a critical sector.

At the end of 2022, the GDP of the metal mining sector reached S/ 47,039 million (US$ 12.5 billion), contributing 8.3%

It is essential to highlight that national copper mining production leads with 57.9% of the metal mining GDP. In addition, the national mining production of zinc and gold follows with 12.1% and 9.8%, respectively.

Production and reserves of metallic minerals

Peru remains one of the largest producers of minerals in the world, boasting significant volumes, seven of which are most traded: gold, copper, silver, zinc, lead, tin, and molybdenum.

Due to mining in Peru, we must highlight that the country remains the second-largest producer of copper and zinc globally. In addition, it is the first producer of zinc and tin in Latin America. No less important is that it has the largest silver reserves globally and the third-largest reserves of copper and molybdenum.

Mining exports

Mining exports are important to the country due to their notable participation in total national exports. In the last ten years, mining exports represented, on average, 60% of the total value of national exports.

At the end of 2022, the total value of national exports registered US$ 65.8 billion, of which US$ 38.8 billion represent mining exports (metallic and non-metallic), representing 57.3% and 1.7%, respectively. It should be noted that copper and gold exports are the most representative.

Mining investment

Mining investment in Peru for 2022 was US$ 5.4 billion, registering a positive variation of 2.1% compared to what was registered for 2021, where it reached US$ 5.2 billion. Of the latter, plant investment recorded US$ 1.4 billion in companies that included Anglo American, Quellaveco, Compañía Minera Antamina, and Minera Chinalco, which concentrated 52.8% of the investment in processing plants. In infrastructure, it recorded US$ 1.3 billion in the companies that included Anglo American Quellaveco, Minsur, and Southern Peru Copper Corporation, which concentrate 46.1% of the investment in infrastructure. In development and preparation, it is recorded that US$ 931 million was invested in mining companies. Among them were Yanacocha, Shougang Hierro Perú, and Volcan Compañía Minera, concentrating 65% of the investment in development and preparation.

The 2023 Mining Investment Project Portfolio comprises 47 mining projects with an investment of US$ 53.7 billion. This portfolio is made up of projects whose objective includes the execution of the investment through the construction of the necessary infrastructure to achieve operational start-up to carry out mining activities such as exploitation and/or benefit of minerals. All projects are owned by large and medium-sized private mining companies that cover metallic and non-metallic production.

Job creation

Mining in Peru positively impacts local communities by implementing support and job training programs. The sector also encourages the growth of local employment and services.

At the end of 2022, mining activity generated an annual average of 231,479 direct jobs, which represented an increase of 6.8% compared to the yearly average of 2021 and 21.7% higher than the average of 2019(before COVID-19). This is a historical record achieved in Peru.

It is essential to highlight that the mining sector generates direct jobs and represents a significant source of indirect employment for other sectors of the national economy. According to a Peruvian Institute of Economics (IPE) study, eight additional jobs are generated in the rest of the economy for every direct job generated in mining activity.

Mining canon

The mining canon consists of 50% of the income tax revenue the State receives for exploiting mineral, metallic, and non-metallic resources. It aims to finance projects and infrastructure works that impact the regional and local levels. In addition, an amount is allocated for scientific and technological research, which is transferred to the national universities of the regional government constituencies.

Mining royalties

In 2022, transfers for royalties from mining in Peru amounted to more than S/ 7,844 million (US $ 2.07 billion), marking a historical maximum value and experiencing a significant increase of 166.1% compared to the previous year. This incredible increase is due to the impressive collection obtained in 2021 thanks to the historic prices achieved by essential metals such as copper and gold.

The mining royalty is the economic consideration that the owners of the mining activity are obliged to pay the Peruvian State for exploiting metallic and non-metallic mineral resources. It comprises two types of income: mining royalties of legal origin and mining royalties of contractual origin.

At the end of 2022, national, regional, and local governments received more than S/ 2,953 million (US$ 779 million) in legal and contractual mining royalties, experiencing a reduction of 17.2% compared to 2021. This decrease is due to the drop in the prices of metals in the international market and the decrease in the volume of exports to the leading industrialized countries.

Mining in Peru stands as a cornerstone of the nation’s economic vitality, playing a pivotal role in shaping critical macroeconomic indicators. With mining consistently contributing over 8% to the national GDP, the sector has emerged as one of the primary drivers of economic growth. The production and reserves of metallic minerals, particularly gold, copper, silver, zinc, lead, tin, and molybdenum, underscore Peru’s global significance as a major player in the mining arena. Notably, the industry’s impact extends beyond economic metrics, fostering job creation with a historical record of over 231,000 direct jobs generated in 2022. Moreover, mining exports, accounting for a substantial portion of total national exports, have positioned Peru as a significant player in the global market. The sector’s economic contributions extend to regional development through the mining canon and royalties, which fund critical projects and infrastructure at local and national levels. With its impressive growth, strategic global positioning, and multifaceted contributions, Peru’s mining industry is vital to the nation’s progress and prosperity.

The importance of agribusiness in Uruguay is manifested in the country’s production of quantities of food that far exceed its domestic consumption requirements.

What are the main crops of Uruguay?

Among dryland crops, the primary productivity occurs in:

• Wheat
• Barley
• Corn
• Sorghum
• Soy
• Other oilseeds

Regarding irrigated crops in Uruguay, the highest production occurs in:

• Rice
• Sugar cane

What are the largest agricultural regions in Uruguay?

The regions with the most significant agricultural activity with dryland crops are found mainly on the country’s coast in departments such as:

• Paysandu
• Rio Negro
• Salto
• Colonia
• Soriano

Meanwhile, the regions with the highest production in terms of irrigated crops are found in the departments of:

• Artigas
• Treinta y Tres
• Cerro Largo
• Rivera

Livestock farming in Uruguay

The same characteristics that enhance agriculture, such as climatic factors, hydrographic networks, and soil fertility, also make this an environment more than conducive to the production and breeding of livestock.

According to the latest censuses in the country, there are at least 38,000 livestock establishments, occupying approximately 13 million hectares of pasture where more than 12 million head of cattle are raised. Uruguay produces around 550,000 tons of beef annually, 180,000 for internal consumption and 370,000 for external consumption.

Agribusiness in Uruguay is a lucrative investment

There are many reasons to invest in agribusiness in Uruguay, such as these five:

The exceptional situation of the country in the regional context

Uruguay has a robust and consolidated democratic system, through which the three most representative political parties have alternated in government, thus maintaining a commitment to respect and stability of the business climate.

Additionally, after 17 years of slowed but uninterrupted economic growth (the longest in the country’s history) between 2003 and 2020, it is currently one of the most equitable countries with the highest per capita income in Latin America and the Caribbean.

The macroeconomic solidity, the reduction of vulnerabilities in the banking sector, the ample reserves, the diversification of exports, and the energy matrix have allowed stability to be preserved in a more turbulent regional and global environment.

Potential and availability for agricultural activity

Among the territories that make up Uruguay, 16.4 million hectares are suitable for agricultural activity. That is, more than 90% of the country’s land area. In addition, land has appreciated substantially, quadrupling over the last 15 years.

With a population of approximately 3.4 million inhabitants, Uruguay produces food for 28 million people. The country has the potential to continue increasing the production of agricultural and agro-industrial goods.

According to the Food and Agriculture Organization of the United Nations (UNAA/FAO), the demand for agricultural goods is steadily increasing worldwide. This has been the case since the seventies, maintaining a firm trend for the coming decades, fundamentally supported by demographic advancement and greater consumption of proteins, fats, and sugars in developing economies.

Investment viability and protection for agribusiness in Uruguay

The promulgation of the Investment Promotion and Protection Law No. 16,906 has established that foreign investment in Uruguay must receive the same treatment as national investment. There are no restrictions on the repatriation of capital nor the transfer of profits, dividends, and interest.

Advantages of Uruguay in food production

Together with Argentina, Brazil, and Paraguay, Uruguay makes up the largest food-exporting region in the world. In addition to the aforementioned climatic conditions, soil fertility, and hydrographic networks, Uruguay has various comparative advantages in producing food and agricultural goods at an international level.

Likewise, the recognized prestige of Uruguayan agricultural production on the world map is also explained in the production processes and quality of various farm products, which are focused on safe production and guided by the strictest health controls.

The advanced use of new technologies in Uruguay’s agricultural sector allows for the absolute availability of information on the products from when an animal is born, for instance, until it reaches the final consumer. These georeferencing systems are also being applied in various other sectors, such as poultry meat, honey, citrus, and viticulture.

Sustainability and environmental protection

Uruguay maintains a strict policy of sustainable and environmentally friendly agricultural development that includes, among other things, plans for the use and responsible management of soils and sustainable dairy production.

Additionally, Uruguay leads the energy transition throughout the American continent. It has been recognized for its successful commitment to renewable energies in the 2020 Energy Transition Index of the World Economic Forum. In the index, in addition to the first position in the American continent, it occupies the eleventh position globally.

Since the country committed to transforming and generating energy from renewable sources in 2007, it has contributed significantly to environmental protection, the economy, and the well-being of citizens. Currently, Uruguay produces 98% of its electricity from renewable sources.

In this way, Uruguay is consolidated as a country of high agricultural development and environmental friendliness in a highly productive region, with outstanding comparative advantages in the sector, which offers stability, security, and ample opportunities for investment in agribusiness.

Investment in agribusiness in Uruguay is an attractive option due to its exceptional potential, robust democratic system, and sustained economic growth. With a focus on both dryland and irrigated crops, including wheat, barley, corn, soy, rice, and sugar cane, the country’s diverse agricultural regions offer vast opportunities. Livestock farming is thriving, with over 38,000 establishments and 12 million cattle, contributing to Uruguay’s annual beef production of 550,000 tons. The nation’s stable macroeconomic environment, commitment to democratic principles, and the Investment Promotion and Protection Law ensure a favorable climate for foreign investment. With 16.4 million hectares suitable for agriculture and a population of 3.4 million producing food for 28 million, Uruguay emerges as a key player in global food exports. The country’s dedication to sustainability, environmental protection, and renewable energy further solidifies its position as a leader in agricultural development, offering stability and ample investment opportunities in the agribusiness sector.

In recent years, central American countries have emerged as potential hotspots for foreign direct investment (FDI). This region, comprising countries such as Guatemala, Honduras, El Salvador, Costa Rica, and Panama, has attracted attention due to its strategic location, economic reforms, and growing consumer markets. In this blog post, we will delve into the individual FDI situations of these countries, focusing on key sectors and providing a data-driven analysis of the benefits and challenges associated with foreign direct investment opportunities in Central America.

Guatemala: Unveiling Foreign Direct Investment Opportunities

Guatemala, the largest economy in Central America, offers diverse foreign direct investment opportunities across various sectors. The manufacturing industry has grown substantially, with a notable emphasis on textiles and apparel. The country’s government has implemented policies to encourage foreign investment, resulting in a 7.1% increase in FDI in 2022, reaching $1.3 billion. Projections for 2024 indicate that foreign direct investment in Guatemala will reach $1.5 billion.

Additionally, the agricultural sector in Guatemala presents an attractive proposition for investors. The coffee, bananas, and vegetable production has contributed to the country’s export revenue and enticed foreign investors seeking stable returns. Despite these opportunities, challenges such as bureaucratic hurdles and infrastructural limitations persist, requiring careful consideration before engaging in FDI in Guatemala.

Honduras: Navigating Challenges for Promising Returns

Honduras, with its strategic location and rapidly growing economy, has become a focal point for foreign investors. The manufacturing sector, particularly in textiles and automotive components, has experienced a surge in FDI. In 2022, FDI in Honduras reached $1.1 billion, a 5.8% increase from the previous year.

Furthermore, the renewable energy sector in Honduras has garnered attention, with the government promoting sustainable practices. However, potential investors should be aware of challenges such as political instability and security concerns, which can impact the overall investment climate. Despite these challenges, Honduras showcases potential returns for investors willing to navigate these complexities effectively.

El Salvador: Unlocking FDI Potential in a Changing Landscape

El Salvador, undergoing economic transformations, presents evolving opportunities for foreign investors. The technology and services sector has seen significant growth, attracting FDI inflows of $600 million in 2022, marking a 9.2% increase from the previous year. The country’s commitment to digital innovation and favorable regulatory environments has positioned it as a hub for technology-driven investments.

El Salvador’s financial services sector has also witnessed increased foreign interest, driven by regulatory reforms and government initiatives. However, concerns over corruption and crime rates persist, requiring potential investors to conduct thorough due diligence. Despite challenges, El Salvador’s changing economic landscape provides unique opportunities for savvy investors.

Costa Rica: Stability and Diversity in FDI

Costa Rica stands out in Central America for its stable political environment and diversified economy. The technology and innovation sector, commonly called the “Silicon Valley of Central America,” has attracted substantial FDI, reaching $2.5 billion in 2022, a 6.4% increase from the previous year. The country’s commitment to education and innovation has positioned it as a regional leader in technology-driven industries.

Moreover, Costa Rica’s ecotourism and renewable energy sectors offer sustainable foreign direct investment opportunities and options. However, the high cost of living and competition for skilled labor can present challenges for potential investors. Costa Rica’s stability, coupled with a focus on sustainable practices, makes it an appealing destination for FDI, with careful consideration of associated challenges.

Panama: The Crossroads of the Americas

Strategically positioned at the crossroads of North and South America, Panama is a prime example of the benefits derived from foreign direct investment (FD) opportunities. The country’s commitment to economic openness and investor-friendly policies has fostered an environment conducive to robust FDI inflows. One of the significant advantages for foreign investors in Panama is its stable political climate, providing a secure backdrop for long-term investments. The nation’s strategic location, epitomized by the Panama Canal, positions it as a crucial gateway for global trade, attracting investments in logistics, transportation, and maritime services.

Moreover, Panama boasts a dollarized economy, reducing currency-related risks for investors and enhancing monetary stability. This factor and low inflation rates contribute to a favorable macroeconomic environment, further appealing to entities seeking reliable foreign direct investment opportunities. The real estate sector, fueled by FDI, has experienced unprecedented growth, with commercial and residential projects transforming the skyline of Panama City.

Conclusion: Navigating the Central American Investment Landscape

In conclusion, Central America provides diverse opportunities for foreign direct investment, with each country showcasing unique strengths and challenges. Guatemala’s growing manufacturing and agricultural sectors, Honduras’s emerging manufacturing and renewable energy industries, El Salvador’s dynamic technology and services sector, and Costa Rica’s stable and diversified economy all offer potential returns for investors.

However, investors must conduct thorough market research and risk assessments before committing to FDI in these countries. Political instability, security concerns, bureaucratic hurdles, and competition for skilled labor are challenges that should be considered. By leveraging statistical data and a pragmatic approach, investors can navigate the intricacies of the Central American investment landscape, unlocking the region’s untapped potential. As the global economy continues to evolve, strategic and informed investments in Central America can prove lucrative for those willing to embrace the opportunities while mitigating the associated risks.

Vladimir Pimentel
Deputy General Director
ProDominicana
Santo Domingo, Dominican Republic
vladimir.pimentel@prodominicana.gob.do

LATAM FDI: Vladimir Pimentel is with us today. He is the deputy general director of an organization in the Dominican Republic called ProDominicana.

Hello Vladimir. I’ll let you introduce yourself, say a bit about your biography, and tell us about your organization and how it promotes foreign direct investment in the Dominican Republic.

Vladimir Pimentel: Okay, thank you very much. I’m really happy to be with you on this important podcast offering information to different people interested in foreign direct investment in the Dominican Republic. As you told me, we will talk about investment in my country and maybe the trends and what is happening in Latin America and the world as they relate to FDI. Well, it’s not simple to talk about yourself. So, I want to say that I am an economist. I have been working for a long time in the academic sector as a professor in international business and different economics areas. And I have been working in international trade maybe since 2008. At this moment, I am, as you mentioned, the deputy general director of ProDominicana. ProDominicana is the center for export and investment promotion in the Dominican Republic. I know that you know very well how important it is for the promotion in a country, the agency in charge of bringing new capital and foreign direct investment to the country. This is true, especially when discussing a small or developing economy like the Dominican Republic. And I am, of course, a person who is interested in these topics.

LATAM FDI: Well, we’ll cover, hopefully, a lot of interesting information about foreign direct investment in the Dominican Republic for our audience today. To start in a general sense, from a global perspective, what are some of the challenges and opportunities that exist in the world today for attracting foreign direct investment to Latin America and the Caribbean in general?

Vladimir Pimentel: Well, one of the, we can say, elements that I try to explain and what I will discuss about challenges and opportunities is that maybe a challenge could be an opportunity for a country. It will depend on the region, area, what is going on, the flows, and how it will impact your country. If you are having a problem in a region and some investors are moving out, it means they will move to another place. For the country with the inflow investment, it is an opportunity, but the one with the outflow investment may have a problem. Okay. But in general, what all the international organizations like the World Bank, IDB, and United Nations agree on is that we are having this global change. There are uncertainties because of the war between Russia and Ukraine and what is going on in Israel. These situations signify risky trends or a complicated moment for investors to decide on where to go with their capital. So that gives us a more complex possibility to convince an investor to come to make foreign direct investment in the Dominican Republic or to invest in any region, not only Latin America, because they are deciding with greater care. And that is very important.

Another part that is happening is that everybody talks about the effects of COVID. It’s not only that we had COVID-19, is that because of COVID we still have a slower environment for investment. We are three and almost four years after the COVID that stopped the world. And we have this shock in the two parts, like demand and offer. That’s why the world is growing in recent years in slow motion. And that’s why you can see that countries like China have issues with their exports. Having a slow-moving world in economics and trade is what is happening. But we have the perspective or the prospects that for 2024, we will have a better perspective. All indications are that trade, in general, will grow and that GDP will move. Like, for example, in the case of the Dominican Republic. We are going to achieve a percentage of growth of about 5%.  We have had this average for between 30 and 40 years. That is one of the main, let’s say, opportunities as they relate to foreign direct investment in the Dominican Republic.

I think that what I mentioned in the beginning if we have more complex dynamics in the other hemisphere of the world, it means that we have a quieter or more comfortable and more stable region for investors. Another opportunity is what is happening. And it’s specifically for foreign direct investment in the Dominican Republic. We have been working a lot in the last few years to make the Dominican Republic a real regional hub for logistic activities, not only for the maritime sector. We include air transport and the tourism sector, using the planes that are bringing the tourism and sending our products to other countries. One big opportunity that we have in the Dominican Republic is that you have a Caribbean region that has been getting more dynamic in recent years. And the expectation is that in 2024 and 2025, many countries in the region will have important growth, including Panama. Besides that, Panama is in Central America, but it’s very important for the Caribbean. Everybody knows Guyana because of the petroleum activity and investment they are experiencing. The Dominican Republic and other small islands have a very dynamic approach, including tourism. It is very important

So, in our opinion, many investors are looking to the region and the Caribbean and specifically looking to make a foreign direct investment in the Dominican Republic.

LATAM FDI: Getting into the specific realm that you just mentioned, what trends are most impactful at this time on foreign direct investment in the Dominican Republic specifically?

Vladimir Pimentel: Okay. You know that one of the main problems historically that we are having in the Dominican Republic is the energy sector. We are still having blackouts this year, in 2024. That’s why, in recent years, the government of President Luis Abinader has concentrated on attracting foreign direct investment in the Dominican Republic in the energy sector. We are pushing a lot to bring investors into the energy sector because we have a concrete and specific problem. We also have a private sector in the Dominican Republic that is investing more and trying to have more reliable electricity and connections in the country. At the same time, we have the presence and the support of financing by organizations like the World Bank,  the International Development Bank, and other regional organizations that are financing and supporting this sector. And that’s why last year, the energy sector was the second sector in investment attraction after the tourism sector. Okay? And of course, and that’s one trend and that’s an opportunity in the world that we are looking for a green world. And that’s why green energy is growing a lot because of foreign direct investment in the Dominican Republic.

We have, let’s say, a general plan for having a new matrix for our energy production. So that’s maybe, in my opinion, one of the most important trends. And, of course, the tourism sector. We recently announced that we reached ten million tourists in the country last year. To support that, you need new investments, new hotels, and better hotels with different offers of services for tourism. And that’s why we are having, like, let’s say we can say that it’s a new development in different regions like Pedernales, an area, a province in the south of the country. You know that in the Dominican Republic, we have developed the east for the tourism sector. So, we have a developed east area, and now we are making the southwest area a new pole. I don’t know if you can say that in English, or like a new and specific space for bringing tourism.

LATAM FDI: So, when investors look at Latin America and the Caribbean, they look at the Dominican Republic, and they see the things that you just mentioned, such as an influx of foreign direct investment in the electricity sector and the tourism sector. When you consider the broader economy, what case would you make as to why businessmen should bring their foreign direct investment to the Dominican Republic? What are the advantages? What benefits are there? And beyond the two sectors that you just mentioned, what other opportunities for foreign direct investment in the Dominican Republic exist?

Vladimir Pimentel: Well, we can say that the interesting thing for investors now is the trend and dynamism in the economy in general. If you are going to establish your business, if you are going to invest in a specific country, you need to, of course, it will depend on the sector, it will depend on the interest. But normally, you need a very dynamic economy, and you know that this economy is growing. Normally, for a small country, you need a strong structure for exports and for having good, important, and better connections with the world. It means what happened in the country is that about 70% of the exports in our country are done by foreign direct investment in the Dominican Republic. So this means that if investors look and they are going to export, they must make sure that the Dominican Republic has a good connection that you are exporting.  Additionally, there must be good related services and a very good legal system to support the investors and trade.

To have a stable country like the Dominican Republic is a basic issue. That’s why in the current government, specifically, the president has established a program that we call “Zero Bureaucracy.” This means that every governmental institution that has any specific process, or let’s say, service for foreign direct investors or local investors, exporters in general, or businessmen or businesswomen in the Dominican Republic, needs to eliminate any distraction or any unnecessary step or process in investment or setting up a business. That’s very important because that program connects with the competitiveness that we are developing in the country to promote foreign direct investment in the Dominican Republic. Normally, you hear that in many countries they have plans, that they have strategies, that they have programs, of course. However, what happens normally in the public sector, historically in our countries, is that we generate a document or a very beautiful design document. What is happening, and in my personal opinion, what my country is offering is the facilitation of foreign direct investment in the Dominican Republic. It makes a difference to have a president that is a businessman.

And that dynamic is making all the, let’s say, policymakers think like policymakers but act like businessmen. We can mention many things. We have additional specific laws that offer incentives in different sectors. We have the free zone sector, we have the film sector, and we have incentives and facilitation. You can have that. But the important thing is to have a long-term strategy, a long-term development. You need to think of more relevant elements than incentives, like less or no taxes. We need to make and continue the development. We must engender this culture in the Dominican Republic’s people, officials, government, and business sectors.

LATAM FDI: In recent years, the Dominican Republic has successfully attracted foreign direct investment. One sector that stands out for me is medical devices, for instance. What have you done differently to bring about this kind of success in this area of foreign direct investment in the Dominican Republic? Do you have different tools, incentives, and initiatives that you’ve put into place? Could you explain a little bit about that, please?

Vladimir Pimentel: Well, I think that, in general, to have a specific regime in the free zone sector with an incentive in the different, let’s say taxes, that if you are going to export, of course, if you are going to transform the goods and you are going to sell abroad, this is like a very important attraction. All the investors that make inquiries ask me about the free zones. But in the medical devices sector specifically, one of the important things is to have a specialized agency for services for the investors. First, this sector, you know, has an important demand worldwide. It’s not only in a specific region, but the demand is also worldwide. What is happening is that it’s not because this near-shoring is new. We are talking more now to companies interested in foreign direct investment in the Dominican Republic. Many of them are looking at getting closer to the markets that are buying their products, and the United States is one of the main countries buying this type of product. At the same time, Latin America is growing and has more demand. It focuses on spending more on healthcare and having better products for attending or giving health services to Latin Americans.

And that’s why companies are bringing their investors to the Dominican Republic, the Caribbean, and Central America. The support for this sector is very specific and very specialized. It needs good global connections. Additionally, it needs a good possibility to have, how do you say, the raw materials for their processes. They should be in a specific place. We are making this linkage between producers in the Dominican Republic for the established companies in the area.

Additionally, a very basic issue is that we are developing human resources. The universities in the Dominican Republic and training technicians. They are supporting this area with master’s and different degrees for engineering in this sector so that investors do not need to bring in workers from other countries. So, we are offering these resources in the Dominican Republic. We can talk about the Dominican Republic as a hub for this sector because it needs a quick answer when they have a demand when they need to sell because it’s like a new vaccine that you have or a new disease in a specific country.

So, you need to dispatch the product at a good time and in a good manner. That’s why foreign direct investors are looking at countries like the Dominican Republic to establish their logistics activities, import, export, and do what we call reexports, which they need to bring from other companies or countries. They bring items to the Dominican Republic and re-export what they are manufacturing or what they are only importing to re-export.

LATAM FDI: Just to give the listeners an idea of what things have looked like from a macroeconomic point of view, what has foreign direct investment in the Dominican Republic looked like in recent years? Can you give us some values, identify some sectors, and maybe give us an idea of where this investment in terms of other countries is coming from?

Vladimir Pimentel: Yes, sure. As I mentioned, I’m not sure if I did this part, but what happened last year in 2023 is that we will reach about 4.3 billion dollars. For the Dominican Republic, that is a record. And it’s like, let’s say we have been with an average investment flow of about 2.5 billion dollars in the last ten years. Okay, just for an idea, we have already reached four billion in 2023. Last year, we reached at least this projection, but it will be more than 4.2 billion dollars. In general, if you see the flow of which country is normally the United States. In 2022 we had like 1.5 billion from the United States. You have specifically Spain and Mexico that are important in the flows, specifically in the tourism sector. Additionally, you can mention that Canadian companies specialize in the mining sector and that we have an important participation in our mining exports. And then after that, you have countries like Germany in specific areas such as the energy sector and specific manufacturing activities.

Specifically, when we are talking about sectors, I mentioned tourism, energy, mining, and transportation are important in recent years. What is generally related to logistics is growing fast, and there are many opportunities for local and foreign investors. Additionally, this is like we can say we are following in ProDominica what we call signals for investors and logistics is one of the most important signals. It means that company investors are saying that they are looking to invest in Latin America, maybe in a specific country, or just looking at a potential group of countries. But logistics and energy are now the most active sectors for foreign direct investment in the Dominican Republic, according to our research.

LATAM FDI: Given that we just looked a little bit at the past, what do you see in terms of the future of foreign direct investment in the Dominican Republic in 2024?

Vladimir Pimentel: Yes, in the future, and we can maybe look a little bit more than 2024. As you may know, investment flow in the sector that we are looking for and in the sector that we are having is a more long-term view. Energy is still an important sector for foreign direct investment in the Dominican Republic because there are specific programs, specific needs, and specific plans in the government for 2024 and further into the future. That’s why we will have more investment and more flows and we are working on that. Of course, we continue focusing on green energy, trying to change, as I mentioned, the energy matrix. Another important sector for countries like the Dominican Republic is the one related to information technologies. All sectors need to improve in this area of technology. Businesses require connections for communications. You are in the United States now and I’m here in the Dominican Republic, and we are having this conversation that gives you productivity. It allows me to provide information on foreign direct investment in the Dominican Republic to a global audience. Another very interesting discussion deals with artificial intelligence. This is changing the trend. We have recently a new national strategy to see how the Dominican Republic will answer to the AI trend and how we will bring new capital related to it to the Dominican Republic.

And additionally, and maybe it’s not the last one. Still, the last thing I will mention is that we are focusing on investors who will create and strengthen the export capacity in the Dominican Republic. As a small country, as a limited country related to population, GDP, and land, we need to increase the capacity to export in our country. We are trying to do this, and our dream is to double our exports by 2030. It’s a big dream. It’s a really big dream, but that can happen only with the support of information technology and making that work for people and our exporters in general.

LATAM FDI: Vladimir, we’ve covered a lot of ground here in a relatively brief period discussing foreign direct investment in the Dominican Republic. And we find out that many of the folks who listen to these podcasts after they hear our speakers’ presentations have questions so that we can get them good answers. We would like to ask our speakers like yourself, if somebody wants to get in contact to be able to get information directly from you, how can they contact you?

Vladimir Pimentel: It’s very easy. One of the things that as an agency that is in contact with investors, exporters, and internationally through our web page, www.prodominicana.gob.do, or by email, you can send any questions or any information or express any interest that you have in the Dominican Republic to:

vladimir.pimentel@prodominicana.gob.do.

LATAM FDI: What we’ll do is we typically have a transcript section on the web page that hosts our podcast, and above the transcript, in addition to those things that you just said, I’ll put a link to your LinkedIn profile so that people can contact you that way.

Vladimir Pimentel: That’s perfect. And I hope that you can understand my Spanglish.

LATAM FDI: It’s very good. I’m sure that everybody understood. I thought it was wonderful.

Vladimir Pimentel: Thank you very much. We’re really happy and thankful for this opportunity to talk about foreign direct investment in the Dominican Republic and the region to your audience.

LATAM FDI: Well, thanks to you. We appreciate it. We know that our listeners will find what you had to say very interesting. Have an enjoyable day.

Vladimir Pimentel: Thank you. Bye.