In 2024, the Dominican Republic free zones sector demonstrated remarkable growth, becoming a vital economic development and job creation engine. The National Free Zones Council, under the Ministry of Industry, Commerce, and MSMEs (MICM), approved 74 new companies, showcasing the sector’s resilience and capacity for expansion. These new companies represent a total investment of 11.572 billion pesos, equivalent to hundreds of millions of dollars. They are projected to generate approximately 7,000 jobs, further cementing the sector’s role as a significant contributor to the nation’s economic landscape.

Expanding Export Potential

The Dominican Republic free zones sector also played a pivotal role in driving export growth. Between January and November 2024, exports from these zones reached an impressive $7.974 billion, reflecting a 7.12% increase compared to the same period in 2023. This robust performance underscores the sector’s importance in sustaining the country’s trade balance and economic stability. Exports were broadly categorized into consumer goods (51.88%), capital goods (33.00%), and raw materials (15.12%), indicating a well-rounded and diversified export base.

Key products from the Dominican Republic free zones included optical and photographic instruments and apparatus, which accounted for 22.15% of total exports. Tobacco and its derivatives followed closely at 15.32%, demonstrating the continued global demand for high-quality Dominican tobacco products. Machines and electrical equipment (13.56%) also featured prominently, highlighting the country’s growing capabilities in technology-related manufacturing. Other significant exports included pearls and precious stones (9.02%), garments (7.29%), pharmaceutical products (5.98%), and plastics and related products (4.71%).

The United States remained the top export destination, accounting for 72.88% of the total. This strong trade relationship underscores the strategic importance of the Dominican Republic’s free zones in fostering economic ties with its largest trading partner. Other key export markets included Puerto Rico (4.78%) and Haiti (3.54%), reflecting the sector’s regional influence.

A Comprehensive Industrial Network

As of 2024, 820 companies operated across 87 industrial parks in 28 provinces, underscoring the extensive reach and impact of the Dominican Republic free zones. These industrial parks provide a robust infrastructure that supports a wide range of industries. Since 2017, the sector has seen cumulative investment grow from $4.473 billion to $7.496 billion, a testament to its dynamism and appeal to local and foreign investors.

The sector is highly diversified, with companies concentrated in services (191), tobacco and derivatives (152), textile manufacturing (106), and agro-industrial products (59). This industry mix reflects the adaptability of the Dominican Republic’s free zones in meeting global market demands. From the perspective of capital origin, Dominican investors primarily support the sector, contributing 40.4% of the total investment. The United States follows with 31.6%, demonstrating its continued confidence in the Dominican economy. Other significant investors include Canada (3.3%) and Spain (1.8%).

Supporting Micro, Small, and Medium-Sized Enterprises (MSMEs)

Beyond the free zone sector, the MICM has made strides in empowering micro, small, and medium-sized enterprises (MSMEs), which are critical for inclusive economic growth. In 2024, the MICM formalized 12,427 new businesses through its one-stop service window, providing a streamlined business registration and compliance process. Additionally, 7,600 MSMEs received certifications, recognizing their economic contributions and enhancing their access to domestic and international markets. Notably, 24% of these certified businesses are women-led, emphasizing the MICM’s commitment to promoting gender equality and empowering women entrepreneurs.

To strengthen MSMEs’ competitiveness, the MICM provided 3,737 technical consultations. These consultations covered crucial areas such as packaging design, trademark registration, social media management, and business strategy. Such support enables MSMEs to enhance their market presence and operational efficiency, positioning them for sustainable growth.

Economic Impact and Sustainability

Combining a thriving Dominican Republic free zones sector and a robust MSME ecosystem creates a strong foundation for sustained economic growth. The free zones’ significant export contributions are instrumental in earning foreign exchange, reducing unemployment, and fostering industrial diversification. Meanwhile, developing MSMEs ensures that economic benefits reach a broader segment of society, including underserved and underrepresented communities.

The government’s commitment to both sectors highlights a balanced approach to economic development. Investments in infrastructure, streamlined regulatory processes, and targeted support programs have created a business-friendly environment that attracts global investors and nurtures local enterprises. As a result, the Dominican Republic free zones and MSMEs are pillars of economic stability and drivers of innovation and resilience in the face of global challenges.

Future Prospects

The Dominican Republic free zones sector is poised for continued expansion. The approval of new companies and the consistent rise in exports indicate a strong growth trajectory. Moreover, the sector’s diversification into high-value industries such as pharmaceuticals, electronics, and advanced manufacturing positions the Dominican Republic as a competitive player in the global market.

Simultaneously, the MICM’s ongoing efforts to support MSMEs will ensure that the broader economy remains inclusive and dynamic. By fostering entrepreneurship, enhancing access to resources, and promoting innovation, the Dominican Republic creates an environment where businesses of all sizes can thrive.

In conclusion, the Dominican Republic’s free zones and MSMEs represent a robust and resilient economic framework. Their sustained growth, coupled with strategic government support, underscores the country’s commitment to achieving long-term prosperity and competitiveness on the global stage.

2025 is poised to become a period of economic growth in Guanajuato, driven by the influx of foreign investment and the expansion of nearshoring. According to the state’s Secretariat of Economy, over USD 1.1 billion will generate more than 7,000 jobs and boost the growth of industries such as automotive, aerospace, pharmaceutical, and food production.

ESG Principles: A Cornerstone for Industrial Development

According to PwC, at least 82% of investors consider it essential to include Environmental, Social, and Governance (ESG) aspects in corporate strategy, prompting industries to take action now. Adriana Pulido, CEO of ILUNKA and a sustainability expert, noted that this landscape and the growing adoption of ESG-focused strategies are neither coincidental nor isolated.

Pulido explained, “They are a response to the increasing demand for more environmentally friendly production methods, the creation of new mandatory regulations and standards, and the requirements of international investors seeking partners with global, sustainable standards.”

Sustainable Value Chains: The Integration of MSMEs

For Guanajuato, integrating 10,000 micro, small, and medium enterprises (MSMEs) into the supply chains of major multinational companies will be critical for sustainable management. Supply chains are among the most vulnerable links in management, as two-thirds of industrial pollution stems from them. With the enactment of Sustainability Reporting Standards (NIS) by CINIF in 2024, MSMEs will enter a new era in 2025. Companies must report ESG aspects within their organizations, requiring strategies to measure environmental and social impacts, optimize resources, and adopt advanced technologies.

This development aligns with the broader goals of nearshoring in Guanajuato, which seeks to integrate sustainability and innovation into supply chain practices, benefiting both local MSMEs and multinational corporations.

Meeting Evolving Customer Expectations

Consumer behavior is evolving rapidly, with buyers demanding greater transparency and sustainability. In 2025, these trends will significantly influence Guanajuato’s industrial development. Buyers increasingly want detailed product information, including manufacturing and distribution processes and community impact. According to EY, environmental considerations are almost as important to buyers (50%) as price (61%). Guanajuato’s economic diversification and nearshoring efforts will enhance its ability to meet these expectations by connecting industries with global markets through sustainable practices.

Cybersecurity: A Pillar of ESG Implementation

Mitigating internal and external risks is essential in applying ESG criteria. Protecting industrial data must become a priority for companies aiming to enhance their socio-environmental focus. More than 66% of companies in Mexico lack cybersecurity programs or initiatives (KPMG), exposing them to economic losses, reputational damage, and reduced trust among investors, buyers, and employees. Companies engaging in nearshoring in Guanajuato must prioritize cybersecurity to maintain their competitive edge and fulfill investor expectations.

Diversifying Talent to Foster Social Sustainability

Social sustainability will take center stage in 2025, requiring industries in Guanajuato to adapt recruitment processes to be more inclusive regarding gender, talent, and human rights. Companies that fail to adjust their corporate social responsibility policies may struggle to attract young or specialized talent, a critical factor for investors and regulatory bodies. Inclusive practices will drive workforce innovation and adhere to ESG standards, enhancing nearshoring in Guanajuato.

Achieving Net Zero: An Industrial Imperative

To achieve net-zero goals, industries in Guanajuato must adopt strategies focused on energy transition, waste reduction, and clean technologies. These measures will be critical for reducing operational pollution and maintaining competitiveness. Compliance with regulations like the Sustainable Taxonomy, sustainability reporting standards, or circular economy frameworks will play a vital role in shaping the region’s industrial landscape.

A Transformative Period for Guanajuato’s Economy

The industrial sector in Guanajuato is undergoing a significant transition. Starting in 2025, it must adapt to increasing social and regulatory pressures. By focusing on an ESG-oriented model, companies will strengthen their position as pillars of development and contribute to improving the socio-environmental conditions of the regions in which they operate.

Nearshoring: A Strategic Opportunity for Guanajuato

Nearshoring in Guanajuato will grow significantly in 2025, marking a transformative period for the region’s economy. Fueled by over USD 1.1 billion in foreign investment, Guanajuato is set to expand its key industries, including automotive, aerospace, pharmaceutical, and food production. This surge is closely tied to integrating ESG principles, which have become vital for meeting investor expectations and regulatory requirements.

By adopting sustainable value chains, MSMEs in the state will be better positioned to support multinational supply networks while aligning with global sustainability standards and evolving consumer demands for transparency and sustainability present both challenges and opportunities. Cybersecurity measures, talent diversification, and net-zero commitments will ensure resilience and competitiveness. Companies that embrace these trends will drive regional economic growth and contribute to a more sustainable industrial ecosystem.

This year, 2025, promises significant growth for the national automotive industry as BYD invests heavily in Brazil with full car production at its new factory in Camaçari, Bahia. Starting this January, the company will initiate a recruitment process to boost job creation in the region. Ten thousand positions at BYD will be available at the Bahia facility, marking a transformative moment for the Brazilian automotive sector.

BYD’s Recruitment Process: A Major Boost for Employment

According to the automaker, the details of the BYD hiring program will be announced in the coming days. Professionals from Bahia and other states must mobilize to seize these job opportunities. The hiring schedule includes opening 2,000 positions in January, 3,000 in May, and 5,000 in August, amounting to 10,000 new jobs by the end of the year. These roles will span various sectors within the factory, reinforcing BYD’s commitment to fostering economic development and addressing unemployment in the region.

Stella Li, CEO of BYD for the Americas and Europe and the company’s global executive vice president, highlighted that this massive hiring program boosts the local economy and contributes to developing a greener and more efficient value chain. “This is an opportunity not just to create jobs but to set new standards in automotive manufacturing,” Li stated.

As BYD invests heavily in Brazil, Camaçari is poised to become a hub for innovation and technology, earning the automotive industry the “Silicon Valley of Latin America” moniker. The company’s initiatives include establishing a robust Research and Development (R&D) center and training local engineers and technicians to lead in cutting-edge innovation.

BYD’s Global Success: The Context Behind Its Brazilian Expansion

BYD’s remarkable global performance in 2024 set the stage for its ambitious expansion in Brazil. The company sold 504,003 passenger vehicles in November alone, representing a 67.2% increase compared to the same month in the previous year. Total global sales for 2024 exceeded an impressive 3.7 million units, solidifying BYD’s position as a worldwide electric and hybrid vehicle market leader.

In Brazil, November was particularly significant, with a record-breaking 12,308 vehicles sold during the month, supported by the Black Friday sales boom. Vehicle registrations reached a historic high of 8,037 units. For the first 11 months of 2024, BYD sold over 66,000 vehicles in Brazil—an astonishing 272% growth compared to 2023. These achievements underscore the company’s strategic focus on Brazil as a key market for its expansion.

Alexandry Baldy, BYD’s senior vice president in Brazil and head of sales and marketing for BYD Auto, affirmed that the hiring initiative aligns with the company’s ambition to become one of Brazil’s top three automotive brands within the next five years. “Our vision for Brazil extends beyond market share; we aim to contribute to a sustainable and innovative automotive ecosystem,” Baldy remarked.

Job Creation During Factory Construction

Even before the factory became operational, its construction had already generated numerous employment opportunities in Camaçari. Less than nine months after beginning construction, the project is progressing rapidly. The first phase of the automotive plant project (Phase 1.1) includes facilities for assembling cars using the SKD (Semi Knocked Down) system, a final inspection factory, and test tracks for speed and obstacle trials. This phase is expected to reach completion shortly after Carnival 2025.

The next phase (Phase 1.2) will focus on producing electric and hybrid vehicles. This ambitious stage involves the construction of 28 new buildings and two large yards, signaling BYD’s commitment to scaling its operations. Full-scale production of electric and hybrid models is slated to commence later in the year. These developments highlight BYD’s vision to expand its manufacturing footprint and take charge of sustainable automotive production.

Transforming Brazil’s Automotive Industry

As BYD invests heavily in Brazil, the company is revolutionizing the country’s automotive landscape. The new factory in Camaçari is set to become BYD’s largest production facility outside of China, showcasing Brazil’s strategic importance in the company’s global operations. This facility is designed to support BYD’s goal of fostering sustainability, innovation, and efficiency.

The establishment of the R&D center is a cornerstone of this transformation. By training local talent and advancing cutting-edge technologies, BYD ensures Brazil becomes an electric and hybrid vehicle production leader. This initiative aligns with global trends toward reducing carbon emissions and promoting environmental stewardship.

Moreover, BYD’s investments are expected to have a ripple effect on the regional economy. The influx of jobs will spur growth in ancillary industries, including logistics, supply chain management, and local services. With the promise of 10,000 direct jobs and countless indirect opportunities, BYD’s presence in Bahia is a game-changer for the local economy.

The Road Ahead: A Greener and More Innovative Future

The automotive industry’s shift toward sustainability is at the heart of BYD’s strategy. The company’s focus on electric and hybrid vehicles aligns with global efforts to combat climate change. By investing in Brazil, BYD is tapping into a growing market and contributing to the country’s transition to a greener economy.

Stella Li of BYD Americas emphasized that the companies efforts in Brazil are just the beginning of a long-term commitment to innovation and sustainability. “We see Brazil as a pivotal market for our global strategy. The investments we are making today will shape the future of mobility, not just in Brazil but worldwide,” she said.

In conclusion, as BYD invests heavily in Brazil, its ambitious initiatives—including establishing its groundbreaking factory in Camaçari—signal a transformative era for the national automotive industry. With the creation of 10,000 jobs, the development of a cutting-edge R&D center, and the introduction of innovative electric and hybrid vehicle production, BYD is revitalizing the local economy and setting a new standard for sustainability in manufacturing. This strategic expansion reinforces Brazil’s position as a key hub in the global automotive landscape and underscores BYD’s commitment to long-term growth and environmental stewardship in the region.

Paraguay, recognized as one of the most dynamic economies in South America, is emerging as an increasingly attractive destination for Chilean investors. The Chilean newspaper El Mercurio recently highlighted this trend in an article. The publication underscored Paraguay’s economic potential and the growing interest among Chilean businesses in exploring opportunities within the country.

Key Drivers of Investment Interest

Among the factors that make Paraguay appealing to South American entrepreneurs are its market-friendly regulations, political stability, and advantageous tax policies. These elements combine to create an environment conducive to investment and business growth. Specific sectors currently being analyzed for investment include real estate, forestry, energy, infrastructure, and finance. Each of these industries offers significant opportunities for development and expansion, particularly as Paraguay positions itself as a hub for foreign direct investment in the region.

The private sector in Chile has noted Paraguay’s pro-business stance. Clear regulations and globally competitive tax rates are foundational to this appeal, helping establish a highly favorable business climate. These attributes have not only drawn the attention of Chilean investors but also solidified Paraguay as a destination for investments, enhancing its reputation as a strategic location for long-term economic endeavors in South America.

Future Prospects for Investment

Looking ahead, Rodrigo Hinzpeter, president of the Chile-Paraguay Business Council within the Chilean Manufacturers’ Association (Sofofa), expressed optimism about Paraguay’s future. He noted that agriculture, livestock, and forestry sectors are expected to see increased interest in the coming years. These industries benefit from Paraguay’s natural advantages, including abundant sunlight and water resources, which enable faster growth of forestry projects compared to other regions.

As highlighted in the article, one notable example of Chilean investment in Paraguay is the partnership between the Chilean company Echeverría Izquierdo S.A. and the Paraguayan firm Paracel. Together, they are constructing a cellulose plant in Paraguay, further demonstrating the country’s potential as a destination for industrial and manufacturing investments. This project reinforces Paraguay as a destination for investments in sectors with significant growth potential, especially those leveraging its abundant natural resources.

Additionally, the energy sector in Paraguay is regarded as having tremendous potential. The nation’s current 100% renewable energy consumption underscores its commitment to sustainable development and positions it as a leader in green energy initiatives. This focus on renewables presents opportunities for domestic and international investors interested in environmentally conscious projects, further solidifying Paraguay as a destination for investments in forward-thinking industries.

Strategic Partnerships and Shared Expertise

The El Mercurio article also emphasized how Chilean expertise has contributed to Paraguay’s growth. A notable example is Paraguay’s USD 5.5 billion public infrastructure plan, which mirrors Chile’s regulatory framework for concessions. This model has proven successful in promoting private sector participation in infrastructure development, fostering economic growth, and enhancing the quality of public services.

Laurence Golborne, a prominent Chilean businessman and former Minister of Mining, highlighted the effectiveness of Chilean investment processes in Paraguay. According to Golborne, these processes have succeeded because Paraguay’s public policies encourage competition and foster economic development. This collaborative approach has strengthened the ties between the two nations, creating mutually beneficial opportunities and reinforcing Paraguay as a destination for investments that yield significant returns.

Tax Advantages and Competitive Edge

Paraguay’s attractive tax structure further bolsters its appeal to foreign investors. With a corporate income tax rate of just 10%, Paraguay offers one of the region’s lowest tax rates. Chile’s corporate tax rate stands at 27%, making Paraguay an attractive alternative for businesses looking to optimize costs while accessing new markets.

These tax advantages extend beyond corporate profits. Paraguay’s simplified tax system is designed to reduce administrative burdens and ensure compliance, making it easier for businesses to establish and operate efficiently. For Chilean investors, this means lower overhead costs and higher potential returns on investment, further cementing Paraguay as a destination for investments that combine profitability with operational simplicity.

Broader Implications for the Region

Paraguay’s rise as an investment destination has broader implications for the South American region. By demonstrating the benefits of political stability, transparent regulations, and economic openness, Paraguay sets an example for other nations seeking to attract foreign direct investment. The country’s strategic location in the heart of South America further enhances its appeal, offering connectivity to major markets across the continent.

Moreover, Paraguay’s emphasis on sustainable development aligns with global trends toward environmentally responsible business practices. As the world increasingly prioritizes renewable energy and resource efficiency, Paraguay’s leadership positions it as a forward-thinking investment destination.

Strengthening Bilateral Relations

The growing interest from Chilean investors also highlights the importance of strengthening bilateral relations between the two countries. Fostering closer economic ties benefits both nations by increasing trade, investment, and collaboration. This partnership enhances economic growth and promotes cultural exchange and mutual understanding.

In conclusion, Paraguay’s emergence as a rising investment destination reflects its commitment to creating a business-friendly environment. With its attractive tax policies, natural resources, and political stability, the country offers compelling opportunities for Chilean investors and other international stakeholders. As Paraguay continues to develop its infrastructure and energy sectors, it is poised to become a key player in the South American investment landscape.

The recent advancements in mining centered in Central America, spurred by the creation of new laws in El Salvador and Costa Rica, are reshaping the map of mining investment in the region. These developments mark a turning point for the industry, positioning Central America as a burgeoning hub for mining activities. Attracting foreign investment is not the sole objective of these legislative measures. They also highlight the potential for economic diversification and equitable growth while signaling to other countries, like Mexico, that their mining policies need urgent reform to remain competitive.

El Salvador and Costa Rica: The New Mining Reference Points in the Region

In December 2023, El Salvador enacted groundbreaking legislation permitting metallic mining and exploration for the first time in decades. This bold move follows Costa Rica’s advancement of a legislative proposal to legalize open-pit mining, reversing years of stringent environmental restrictions. These initiatives, spearheaded by Presidents Nayib Bukele and Rodrigo Chaves, mark a radical departure for a region traditionally known for its cautious approach to mining.

The opening of the mining sector in El Salvador and Costa Rica has raised expectations of attracting substantial foreign direct investment. Beyond financial gains, these measures catalyze job creation, infrastructure development, and technological advancements. For years, Central America has grappled with the challenge of formalizing its mining sector while balancing environmental considerations. The recent legislative changes signify a newfound commitment to fostering sustainable and responsible mining in Central America, making the region more appealing to global investors.

Mexico: A Major Economy at Risk of Losing Its Appeal

While mining in Central America is gaining momentum, Mexico’s mining sector faces significant headwinds. According to the Fraser Institute’s Investment Attractiveness Index, Mexico’s ranking plummeted 37 places in 2023, landing at 74th out of 86 jurisdictions. The downturn can be attributed to policy decisions that have dampened investor confidence, including the suspension of new mining concessions and delays in environmental permitting processes.

In May 2023, regulatory changes further compounded the issue by restricting private sector involvement in exploration activities. Exclusivity was granted to the Mexican Geological Service (SGM), effectively sidelining private enterprises. Additionally, introducing higher taxes specific to the mining sector has created a disincentive for potential investors.

The impact of these policies is already visible. The Mexican Mining Chamber (Camimex) has projected a 20% decline in sector investment in 2024, estimating a total of $3.8 billion compared to the $5 billion invested in previous years. This decline threatens the country’s position as one of Latin America’s leading mining economies, particularly as other countries embrace reform and modernization.

The Regional Context and Competitiveness Challenges

Central America’s recent progress in mining starkly contrasts Mexico’s challenges. For instance, Panama, despite setbacks such as the closure of the Cobre Panamá mine, is actively pursuing economic diversification and attracting new mining investments. These efforts indicate a broader trend in the region to prioritize responsible mining in Central America, setting the stage for long-term sustainability and growth.

This shift could serve as a wake-up call for Mexico. Andrés Abogado, managing partner at Abolaw in Mexico, said, “The success of these Central American initiatives could mark a paradigm shift that pushes Mexico to reformulate its regulatory framework to regain global competitiveness.” Mexico’s ability to adapt to this new reality will be crucial in determining its future role in the mining sector.

A Paradigm Shift in Mining in Central America

The legislative changes in El Salvador and Costa Rica are not just isolated developments but part of a broader transformation in mining in Central America. These changes emphasize environmental stewardship, community engagement, and the formalization of mining activities, all crucial for building investor confidence. Central American countries are signaling their readiness to compete globally by adopting modern regulatory frameworks.

Meanwhile, Mexico faces an inflection point. The country’s rich mineral resources and long history in mining offer immense potential, but without meaningful policy reforms, it risks losing its competitive edge. The stark contrast between the proactive measures in Central America and Mexico’s regulatory stagnation underscores the urgency for Mexico to reevaluate its strategy.

Conclusion

The mining landscape in Latin America is undergoing a profound transformation. Central America, led by El Salvador and Costa Rica, has taken decisive steps to update its mining policies, positioning itself as a new frontier for investment. These developments in mining in Central America offer a blueprint for sustainable growth, showcasing the potential of responsible practices and modern legislation.

In contrast, Mexico stands at a crossroads. Its current policies have created barriers to investment, and the country risks falling behind as its regional neighbors gain traction. Only by reformulating its regulatory strategy can Mexico hope to reestablish itself as an attractive destination for mining investment and reclaim its position as a Latin American mining sector leader.