Toyota is exploring alternatives to restart its vehicle production in Brazil after a severe storm destroyed its engine plant in Porto Feliz (SP). The automaker has admitted that it could take months to resume operations, and all domestic production is currently compromised. This situation has sparked concern for the company, its workforce, and Brazil’s automotive industry, given Toyota’s role as a major player in the national market.

Storm Damage Halts Production in Porto Feliz

The Porto Feliz engine plant, a critical facility for Toyota in Brazil, suffered extensive damage during the recent storm. Preliminary assessments indicate structural damage considered extremely severe, with an overhead crane falling onto machinery and directly compromising the assembly line. According to Toyota, restarting the engine plant will take several months, making immediate resumption of car production in Brazil impossible.

The engines manufactured in Porto Feliz are vital for Toyota’s two main vehicle factories in Brazil. In Sorocaba (SP), they are used in the Corolla Cross and Yaris models, including units destined for export, as well as the initial units of the Yaris Cross, whose national launch has now been delayed. In Indaiatuba (SP), the engines power the Corolla sedan.

Engine Models Affected

The engines affected by the disaster include the 2.0 Dynamic Force, used in the Corolla line, and the 1.5 flex engine, adopted for the Yaris family. Toyota was also preparing to assemble a hybrid flex variant of the 1.5 engine domestically, intended for the top trims of the Yaris Cross compact SUV.

The 2.0 engine version used in Brazil, identified by the codename M20A-FKB, is produced in multiple Toyota plants globally. According to Automotive Business, four factories abroad—located in Thailand, Poland, the United States, and Japan—could potentially supply engines to Brazil. This creates an opportunity for Toyota to import engines temporarily to sustain car production in Brazil while the Porto Feliz plant undergoes repairs.

Toyota’s Disaster Response Protocol

Toyota is no stranger to extreme weather events. The company has a disaster response protocol that outlines measures to minimize disruption during emergencies. This includes supply mechanisms to avoid production gaps and logistical tools designed to mitigate damage.

In the case of Porto Feliz, the preliminary damage assessment indicates that the plant cannot resume operations in the short term. Toyota has revealed that the plant may not return to full operational capacity until 2026, which underscores the severity of the situation. As a result, exploring alternative engine supply options has become a strategic priority to maintain car production in Brazil.

Importing Engines as a Temporary Solution

One potential solution Toyota is considering is importing engines from its international factories. This approach aims to maintain production continuity in Sorocaba and Indaiatuba. By leveraging global supply chains, Toyota hopes to minimize the disruption to Brazil’s automotive market and fulfill both domestic and export demands.

However, importing engines is not without challenges. Logistics, customs clearance, and transport costs all play a role in how quickly the engines can reach Brazilian plants. Despite these hurdles, the move is seen as necessary to sustain car production in Brazil during this unforeseen crisis.

Workforce Protection Remains a Priority

Despite the production challenges, Toyota has assured that it will not lay off employees in the affected plants. The Sorocaba and Region Metalworkers’ Union confirmed that the company is committed to preserving jobs, at least in Sorocaba. The complex provides 4,500 direct jobs and supports a supply chain that generates roughly seven indirect jobs for every direct position.

“The union guarantees that there will be no layoffs. The trust built over the years has always allowed us to find solutions in difficult situations, such as during the pandemic. Now, faced with the climate crisis that halted production in Sorocaba, Porto Feliz, and Indaiatuba, we are once again mobilized to ensure peace of mind for workers and alternatives to keep the industry active,” said Leandro Soares, president of the Metalworkers’ Union of Sorocaba.

Toyota has also begun discussions with the unions to explore alternatives aimed at maintaining employment across the three production units. Proposals will be presented for approval and implemented on an emergency basis, further demonstrating the company’s commitment to its workforce while seeking solutions to resume car production in Brazil.

Economic Impact of the Porto Feliz Plant Closure

The Porto Feliz plant plays a critical role in Brazil’s automotive sector. Beyond directly employing thousands, it supports a network of suppliers, logistics companies, and ancillary services. The temporary halt in engine production has repercussions throughout the industry, from dealerships awaiting vehicle shipments to suppliers dependent on consistent demand.

Maintaining car production in Brazil is essential not only for Toyota’s business continuity but also for the broader Brazilian economy. The automotive sector represents a significant portion of industrial output and export revenue. Any prolonged interruption can affect GDP contributions, trade balances, and employment rates in the sector.

Global Supply Chains as a Strategic Advantage

Toyota’s access to international engine manufacturing facilities highlights the advantages of having a diversified global supply chain. Plants in Thailand, Poland, the United States, and Japan offer a lifeline, allowing the company to continue production despite domestic setbacks. This strategy reflects a broader trend in the automotive industry, where flexibility and supply chain resilience are increasingly vital for maintaining operations under adverse conditions.

By importing engines, Toyota not only seeks to keep production lines running but also demonstrates the company’s capacity to adapt to emergencies. This strategic flexibility could serve as a benchmark for other manufacturers facing similar disruptions, emphasizing the importance of preparedness and international coordination in sustaining car production in Brazil.

Delays in New Model Launches

The disaster has also affected the planned launch of new models. Specifically, the national debut of the Yaris Cross has been postponed due to the engine shortage. This delay impacts marketing campaigns, dealer inventories, and consumer expectations. By sourcing engines internationally, Toyota aims to minimize these delays and ensure that its lineup remains competitive in the Brazilian market.

The situation also underscores the interdependence of production facilities. While Porto Feliz is focused on engine manufacturing, its disruption directly affects assembly plants and the introduction of new products. The ability to resume car production in Brazil depends on quickly addressing these interlinked supply challenges.

Commitment to Sustainability and Resilience

Toyota has long emphasized sustainability and operational resilience. The current crisis is a reminder of the growing impact of extreme weather events on industrial operations. The automaker’s efforts to resume production while protecting its workforce align with these principles, ensuring that social, economic, and environmental factors are all considered in decision-making.

Furthermore, the company’s commitment to exploring emergency alternatives, such as engine imports, shows a proactive approach to maintaining continuity. This balance between operational necessity and responsibility to employees demonstrates Toyota’s dedication to sustainable practices in the automotive sector.

Looking Ahead: Recovery and Restart Plans

While the Porto Feliz plant is unlikely to resume full operations before 2026, Toyota is actively working on a path forward. By exploring engine imports and collaborating closely with unions, the company aims to minimize production gaps, sustain employment, and preserve its market share in Brazil.

The situation is a clear reminder that car production in Brazil depends not only on domestic infrastructure but also on robust contingency plans. Manufacturers must be prepared to address unforeseen challenges to maintain supply, protect jobs, and meet consumer demand.

Conclusion

The severe storm that damaged Toyota’s Porto Feliz plant has created a significant challenge for the automaker and Brazil’s automotive sector. With engine production halted, the company faces the prospect of months-long disruptions. However, by considering the importation of engines from overseas, Toyota is taking proactive steps to ensure that car production in Brazil continues, safeguarding jobs and stabilizing supply chains.

Toyota’s approach highlights the importance of global supply networks, workforce protection, and strategic planning in maintaining industrial resilience. While the road to full recovery may be long, the company’s commitment to its employees, customers, and the Brazilian market demonstrates a strong and responsible response to an unprecedented

Uruguay continues to stand out as one of the most business-friendly countries in Latin America, earning global recognition for its political stability in doing business. According to the Global Innovation Index (GII) 2025, published by the World Intellectual Property Organization (WIPO), Uruguay ranks fourth worldwide in policy stability for businesses. This achievement underscores the country’s reliability and predictability, key factors for investors seeking low-risk environments.

Despite a slight decline in overall innovation rankings, Uruguay’s consistent approach to governance and operational security ensures that it remains a top destination for international companies.

Why Political Stability in Doing Business Matters

For investors and multinational companies, stable political conditions are critical. Political stability in doing business reduces the risk of sudden regulatory changes, minimizes bureaucratic delays, and ensures a predictable operating environment. Uruguay’s fourth-place global ranking puts it ahead of most Latin American countries, only slightly behind Switzerland, Luxembourg, and Singapore.

This stability makes Uruguay a compelling choice for businesses seeking to expand into South America. It reassures investors that long-term projects can proceed without major disruptions due to political, legal, or security uncertainties.

Strengths in Sustainability and Digital Trade

Beyond policy stability, Uruguay excels in sustainability and digital innovation. WIPO highlighted Uruguay’s 12th-place global ranking in low-carbon energy use, a distinction that makes it a regional leader, surpassed only by Paraguay. For businesses focused on sustainable operations, Uruguay offers a forward-looking environment aligned with global green standards.

Uruguay also ranks 16th worldwide in ICT services exports as a share of total trade. This positions the country as a growing digital hub, capable of supporting technology-driven industries such as software development, fintech, and IT-enabled services. A combination of strong ICT infrastructure and political stability in doing business gives Uruguay a unique edge for tech-focused investors.

Operational Stability: Minimizing Risks for Companies

Operational stability is another area where Uruguay shines. The country ranks 16th globally and first in Latin America in this category, which measures the likelihood and severity of risks—political, legal, operational, or security-related—that could affect businesses.

For companies entering Latin America, operational stability is critical. Uruguay’s low risk profile allows businesses to operate efficiently and confidently, making it a preferred location for regional headquarters, manufacturing hubs, and export-oriented enterprises.

Weaknesses and Opportunities

While Uruguay’s stability is a significant advantage, the GII report identifies areas for improvement. Gross capital formation as a percentage of GDP ranks 114th globally, indicating relatively limited domestic investment in business infrastructure. Patents by origin and graduates in science and engineering also rank low at 108th.

These challenges highlight the need for continued investment in research and development and workforce education. Strengthening these areas could elevate Uruguay’s innovation performance and further attract high-value industries seeking a skilled labor pool.

Innovation Rankings: A Decline but Not a Crisis

Uruguay’s overall innovation ranking dropped six places to 68th globally in the GII 2025, matching its lowest mark since 2020. Regionally, Chile leads at 51st, Brazil follows at 52nd, and Mexico follows at 58th. Among high-income economies, Uruguay ranks 47th.

The country fell to 61st in innovation inputs and 76th in innovation outputs, signaling gaps in translating policy stability into measurable innovation outcomes. However, these declines do not diminish Uruguay’s appeal for businesses prioritizing low-risk environments and operational predictability.

What This Means for Investors

For investors, Uruguay’s position in the GII sends a clear message: political stability in doing business is a strategic advantage. Companies can rely on predictable policies, strong regulatory frameworks, and minimal operational risk. This makes Uruguay ideal for long-term investments, particularly in sectors such as renewable energy, technology, and export-oriented services.

By leveraging its sustainability and digital strengths while addressing innovation gaps, Uruguay offers a balanced environment for growth. Businesses that support local R&D initiatives and invest in workforce development can benefit from both stability and emerging opportunities in this dynamic market.

Looking Ahead: Balancing Stability with Innovation

Uruguay’s model demonstrates that political stability in doing business provides a strong foundation for economic growth. While innovation rankings have dipped, the country’s stable environment, sustainable energy use, and digital infrastructure continue to attract forward-thinking investors.

Focusing on strengthening education, research, and innovation ecosystems will allow Uruguay to complement its global leadership in stability with rising innovation performance. For international companies seeking a reliable and secure entry point into Latin America, Uruguay remains a top-tier choice.

Conclusion

In an era of regional volatility, Uruguay stands out for its combination of political stability in doing business, operational reliability, and environmental leadership. While innovation performance faces challenges, the country’s predictable policy environment and low-risk business climate make it an ideal destination for investment.

For businesses aiming to expand in Latin America, Uruguay provides a compelling mix of security, sustainability, and emerging technological potential, proving that stability is not just a comfort—it’s a competitive advantage.

Peru has taken a decisive step to boost competitiveness and attract domestic and foreign investment by creating new special economic zones. With the publication of Law No. 32449, the country officially launches a new framework for Private Special Economic Zones (ZEEP), offering a unique combination of tax and customs benefits that aim to stimulate industrial development, innovation, and export diversification. The initiative, approved by the insistence of the Congress of the Republic, represents one of the most ambitious economic modernization measures of recent years. By providing 0% income tax for the first five years and a gradual tax structure thereafter, the law seeks to position Peru as a regional hub for manufacturing, technology, and service exports.

A Strategic Framework to Boost Competitiveness

Law No. 32449 establishes a special tax and customs regime for the newly created special economic zones in Peru, granting benefits for up to 25 years. The goal is to create competitive environments that attract private capital, foster technological innovation, and stimulate job creation across all regions of the country. According to the regulation, the purpose of the law is to enhance national competitiveness by promoting industrial activities with added value, encouraging scientific research and technological development (R&D), generating quality employment, and strengthening non-traditional exports and services. This legal framework is designed not only to make Peru more attractive to investors but also to reduce regional disparities by enabling economic growth outside of Lima and other major urban centers. Each ZEEP will serve as a catalyst for industrial clustering, innovation, and export-driven production, helping integrate local economies into global value chains.

How the New Private Special Economic Zones Will Operate

Under the law, a private operator is defined as a private legal entity authorized to manage, promote, and develop one or more ZEEP. These operators will be responsible for overseeing the construction, administration, and overall functioning of the zones, ensuring compliance with regulations and promoting a business-friendly environment. The government’s strategy emphasizes private-sector participation. Unlike traditional free zones that rely heavily on public investment, these special economic zones in Peru will be privately developed and managed. This approach is expected to attract high-caliber investors with the capacity to build modern infrastructure, logistics hubs, and industrial facilities tailored to the needs of global markets. In addition, the zones will offer streamlined customs procedures, making it easier for companies to import machinery, raw materials, and components while maintaining competitive export conditions. The integration of customs and tax incentives will reduce operational costs and enhance supply chain efficiency—key elements for companies seeking to establish a foothold in Latin America.

Tax Benefits for Investors

One of the most attractive elements of Law No. 32449 is its favorable tax treatment. Operators and users of the zones will enjoy a 0% income tax rate during their first five years of operation, provided they meet the authorization and compliance requirements. After the initial five-year period, the tax rates will gradually increase as follows: 7.5% from the sixth to the tenth year, 10% from the eleventh to the fifteenth year, 12.5% from the sixteenth to the twentieth year, and 15% from the twenty-first to the twenty-fifth year. Even at their peak, these rates remain far below Peru’s general corporate income tax rate of 29.5%, representing a significant competitive advantage. This structure ensures that early investors benefit from substantial tax relief while maintaining long-term fiscal sustainability. However, not all industries are eligible. The law specifically excludes financial, accounting, and legal services; extractive activities such as mining and fishing; leasing, insurance, and the exploitation of intellectual property rights. This limitation ensures that the benefits are directed toward sectors that generate added value and employment rather than speculative or extractive activities.

Geographic and Sectoral Scope

While the law declares it a matter of national interest to create at least one ZEEP in each department of the country, it also makes clear that each zone must be created through a law or regulation with equivalent legal authority. This ensures a controlled expansion process aligned with regional economic priorities and infrastructure readiness. Importantly, the new regime does not apply to the existing special development zones located in Ilo, Paita, Matarani, Cajamarca, Chimbote, Tumbes, and Loreto, nor to the Special Economic Zone of Puno or the Free Trade Zone of Tacna. These will continue operating under their current frameworks, maintaining stability for ongoing projects while allowing new initiatives to take shape under the updated legislation. This dual-track approach reflects the government’s intention to modernize its investment promotion tools while preserving the continuity of previous economic policies. Over time, the coexistence of both regimes could allow for valuable comparisons and best-practice sharing across zones.

Potential Impact on Investment and Regional Development

The introduction of special economic zones in Peru marks a turning point for the nation’s industrial and export strategy. By combining tax exemptions, flexible customs regimes, and private management models, the country aims to attract investors in manufacturing, logistics, technology, and renewable energy. These zones are expected to create clusters of innovation where companies can benefit from shared infrastructure, skilled labor, and access to both domestic and international markets. The emphasis on R&D and technological development could also encourage partnerships between industry and academia, leading to knowledge transfer and higher productivity. From a regional perspective, the law supports decentralization by encouraging investment outside the capital. Departments such as Arequipa, Piura, and La Libertad, which already possess strong industrial bases and port connectivity, are likely candidates for early ZEEP implementation. Over time, other regions could follow suit, leveraging local strengths in agriculture, textiles, and manufacturing.

A Vision for Sustainable Growth

The new special economic zones in Peru are not merely a tax incentive tool—they represent a broader vision for sustainable and inclusive economic growth. By promoting private-led development and focusing on high-value-added activities, Peru aims to diversify its production base and reduce its reliance on raw material exports. Moreover, the 25-year benefit horizon provides long-term stability, giving investors the confidence needed to commit to large-scale projects. Combined with Peru’s network of free trade agreements and improving logistics infrastructure, the country is well-positioned to become a leading destination for global firms seeking to expand operations in South America.

Conclusion

Law No. 32449 signals Peru’s determination to enhance its competitiveness and attract quality investment through innovation and private participation. The establishment of new special economic zones in Peru with 0% income tax during the first five years, followed by a gradual rate increase, positions the country as one of the most investor-friendly destinations in the region. If effectively implemented, these zones could usher in a new era of industrial development, technological advancement, and regional integration—laying the groundwork for a more diversified, resilient, and dynamic Peruvian economy.

Top of Form

With an almost limitless potential, the region is poised to become a major energy supplier for the technology industry. The rise of artificial intelligence (AI) across all areas of human activity has brought with it an unprecedented increase in energy consumption, setting new benchmarks for electricity production to meet the growing demand of the ever-expanding network of data centers that sustain this technology.

According to estimates from the International Energy Agency (IEA), data processing centers currently account for 2% of global electricity consumption—about 536 terawatt-hours (TWh)—a percentage that will continue to grow as AI applications expand into new areas of daily life and as consumers spend more time using AI-powered devices.

In fact, consulting firm Deloitte forecasts that by 2026, AI data centers will consume 90 TWh per year—approximately one-seventh of the total energy projected for global data center infrastructure, which by 2030 could reach between 1,000 and 1,300 TWh. This scenario highlights one of the most important opportunities for Central America, as the region’s renewable energy potential becomes crucial—especially given its leadership in renewable generation worldwide. The challenge now lies in developing the necessary infrastructure to become a reliable and preferred energy supplier for the generative AI industry.

Initial Steps

According to the Latin American Energy Organization (OLADE) global ranking of renewable electricity generation, among the 20 countries with the highest share of renewables in electricity production, seven are from Central America: Costa Rica (the only country, alongside Paraguay, producing 100% renewable energy), El Salvador (84%), Panama (84%), Belize (76%), Nicaragua (74%), and Guatemala (71%).

While hydropower remains the dominant source of electricity generation in all these nations, other renewable sources are gaining ground. Costa Rica stands out, with 24% of its generation derived from wind and geothermal sources—an approach now being replicated by neighboring countries.

The region has made important strides toward consolidating its energy industry, including initiatives such as the Electric Interconnection System of Central American Countries (SIEPAC), which links national power grids; the Regional Operating Entity (EOR), which manages and operates energy transactions across borders; and the Regional Electricity Market (MER), which facilitates the buying and selling of power. Additionally, the region aims to coordinate national expansion strategies within a unified regional framework.

“These initiatives lay the groundwork for clean energy supply contracts that ensure the reliability required by data centers and AI operations,” explains Cindy Arrivillaga, director of banking and finance at the Guatemala office of the multinational law firm Arias. These developments highlight one of the strongest opportunities for Central America—to strengthen its position as a trusted provider of clean, high-capacity energy to the global technology ecosystem.

Preparing the Ground

However, despite its undeniable potential, Central America still faces significant challenges that must be overcome to achieve the goal of becoming a major energy production hub capable of meeting the demands of generative AI.

Diego Gallegos, a partner at Arias – Costa Rica, believes the objective is achievable, but only as a medium- to long-term process. “It requires sustained investment in infrastructure, modernization of the regulatory framework, and political and social backing at every stage of transformation. Costa Rica already has the foundation thanks to its renewable energy tradition, but to meet global demands, it must continue expanding,” he says.

Building new wind, solar, and geothermal power plants; modernizing transmission networks to ensure stable and uninterrupted supply; and strengthening regional interconnections to expand energy exchange and backup capacity are all essential actions. These strategies reflect key opportunities for Central America, particularly in positioning itself as a renewable energy hub supporting AI infrastructure.

“If these interconnections are reinforced and exportable surpluses generated, the region could advance toward that goal—although it must always be complemented by firm energy sources that guarantee supply stability,” adds Missuly Clark, senior associate at Arias – Panama.

The Necessary Framework

A crucial aspect of consolidating Central America as a secure energy supplier to the technology industry is the establishment of a robust regulatory framework. Several countries in the region have already adapted their laws to cover all aspects—from generation to distribution and interconnection—ensuring stable energy transfers across borders.

Costa Rica, a global pioneer in renewable energy and a Central American leader in the technology industry, has developed a strong legal framework led by the Law Authorizing Autonomous or Parallel Electricity Generation, the Law on Rational Energy Use Regulation, and Law 10.086 on the Promotion and Regulation of Distributed Energy Resources from Renewable Sources.

“Despite this framework, there are still opportunities to enhance the country’s energy development. New legislation should promote investment through tax incentives, regulate energy storage integration, modernize the grid to support bidirectional flows, and, above all, simplify bureaucratic procedures,” notes Gallegos. His remarks highlight another area of opportunities for Central America—to strengthen legal and regulatory alignment to attract sustainable investment and technological infrastructure.

Panama, one of the first nations in the region to embrace renewable energy, enacted Law 45 (2004) to promote investment in new renewable sources (solar, wind, geothermal, and biomass) and Law 44 (2011) establishing a special regime for wind farms. However, Clark believes there are still areas for improvement, such as the need for specific regulations on energy storage and sustainable data center operations involving AI.

“The creation of a framework linking energy efficiency, green certification, and investment attraction in digital infrastructure will be essential for positioning the country in this new scenario. Likewise, regional integration for exporting surpluses must be reinforced through clear rules that facilitate Central American electricity trade,” she explains.

Honduras, which enacted the Law for the Promotion of Electricity Generation from Renewable Resources in 2007 and amended it in 2013 to attract renewable investments, strengthened the initiative further with the 2014 General Law of the Electricity Industry, eliminating the monopoly of the National Electric Power Company (ENEE). However, the reform was reversed in 2022 through Decree 46-2022, which redefined electricity service as a public good and matter of national security.

“In general terms, Honduras has a relatively comprehensive legal framework to regulate the energy sector. The challenge lies in ensuring that regulatory entities enforce these laws clearly, coherently, and realistically, based on the state’s capacity to guarantee power supply,” says Mario Agüero, partner at Arias – Honduras. His assessment underscores the ongoing opportunities for Central America to strengthen governance, legal certainty, and energy management systems to meet global AI power needs.

In summary, the combination of abundant renewable resources, advancing interconnection systems, and growing institutional experience presents significant opportunities for Central America to emerge as a critical clean energy provider for the world’s AI-driven economy—if it can overcome infrastructural, regulatory, and political challenges with a long-term vision and regional cooperation.

The Dominican Republic once again became the subject of special attention on the international stage following the publication of the Investment Climate Statement 2025 report by the U.S. Department of State. The annual report assesses the attitude of foreign investors towards the business environment in the country and the conditions under which they are willing to make long-term or additional investments in the future. The new report highly praises the work of the Dominican government in the fight against corruption and its desire to maintain transparency. However, it also notes significant obstacles to making the Dominican Republic an attractive place for investments in the form of weak and poorly defined rules.

Annual Business Environment Reports by the U.S. Department of State

The Department of State annually publishes its Investment Climate Statements to inform American entrepreneurs and investors about the prospects for doing business in other countries. The Dominican Republic is not an exception and is included in the 2025 list. In this new report, the government of President Luis Abinader has been credited for its actions to improve the investment climate and curb corruption, which is among the biggest challenges that have plagued the country. In particular, in the report, the attention of the government of the Dominican Republic to institutional integrity, fiscal independence, and quality personnel has been positively noted. Nevertheless, the report also has a critical component, claiming that structural problems continue to restrain the Dominican Republic’s competitiveness and potential. In particular, the report singles out bureaucracy, weak rule of law and non-transparent policy implementation, and unequal competition between domestic and foreign companies as some of the key issues.

Anti-Corruption Initiatives Continue to Gain Recognition

The most positive evaluations, as can be seen from the text of the report, were, again, given to anti-corruption measures by the current administration. Since coming to power, Abinader has made it a priority to combat corruption and increase the transparency and accountability of all state institutions. “The current government has made a concerted effort to address corruption and transparency issues,” the report claims. Specific measures that have earned it recognition are the filling of top management positions with technically competent professionals and the approval of the law on civil asset forfeiture. The first of these initiatives is designed to restore confidence in the legal system and reduce impunity. In addition, fiscal and administrative independence of government agencies has been actively encouraged to minimize political influence on corruption cases. In this new work, the strengthening of governance by the current administration has also improved the Dominican Republic’s image among international organizations and investors. The report, however, concludes that the country needs to institutionalize these measures as much as possible so that the fight against corruption does not become a matter of political will. Otherwise, further significant improvements in the investment climate in the Dominican Republic will be difficult to achieve.

The Dominican Republic is Welcoming Foreign Investments

For its part, the Investment Climate Statement 2025 report acknowledges the open attitude of the Dominican Republic towards foreign direct investment (FDI), which is the stated strategy of the country’s national economic development plans. Thus, the government has approved a number of incentive packages for investors that include tax breaks on certain types of business, including renewable energy, tourism, free trade zones, and manufacturing. The country’s membership in the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR) is seen as one of the most significant advantages, which makes the Dominican Republic an attractive market for American investors and a partner in trade liberalization. In addition, the Investment Climate Statement 2025 report points out that there are almost no legal restrictions on the operation of foreign companies, and the country is open to foreign capital in most industries. There are also no limits on the size of ownership and the right to repatriate profits. Immigration and visa policies are also not overly restrictive and do not create a barrier to the arrival of business leaders and technical experts. In this sense, the report states that the Dominican Republic is one of the most open and liberalized markets in the Caribbean region in terms of business environment. Nevertheless, attracting the planned foreign investment inflows will be an arduous task due to long-standing inefficiencies that damage business confidence.

Investment Climate in the Dominican Republic: Problems Persist

At the same time, there are still a number of long-standing problems that prevent the Dominican Republic from joining the first league of investment destinations. The report, among other things, notes inconsistencies in the application of regulations, excessive bureaucracy, and other violations that are often ignored in the case of politically influential domestic companies. Foreigners often complain that, as a rule, they are at a disadvantage in competition with local investors and have to overcome a much larger number of bureaucratic barriers. This does not only speak about an unequal business climate in the Dominican Republic but also complicates business planning for the medium and long term. The report also notes the absence of a single set of rules for doing business for all provinces of the Dominican Republic. License applications, environmental permits, and inspections of certain facilities may be delayed for an indefinite period. In the eyes of investors, all these things make it impossible to plan.

Tax Reform and Need for Further Structural Changes

In addition, the Investment Climate Statement 2025 report raises the issue of tax reform in the Dominican Republic as one of the steps that would have a positive impact on the investment climate. In this regard, experts who were interviewed for the report’s preparation noted that the government should work to reduce high corporate tax rates and streamline the taxation and payment system. Structural reforms in the field of streamlining of bureaucracy, strengthening logistics, and modernization of infrastructure are also seen as a need. The report also recalls that the government of the Dominican Republic had previously developed a reform program, which had to be withdrawn after widespread public criticism at the end of 2024. This program, which envisaged a number of measures to reduce bureaucracy and optimize fiscal efficiency, was regarded as one of the keys to sustainable economic growth. However, the public rejection of the structural reforms became a warning that any further changes will require a consensus between the executive and the public.

Dominican Republic’s Investment Climate: Potential Sectors for Investment

For a positive investment climate in the Dominican Republic, the country still has considerable competitive advantages. This, in particular, refers to its geographic position. The country is in a strategic position at the junction of the main maritime communications between North America, Latin America, and Europe. The availability of a developed network of ports and airports, free trade zones, and support for renewable energy are all attractive for logistics, trade, and the location of manufacturing, textiles, and electronics production facilities. The tourism sector is also strong and stable, bringing billions of dollars a year. In particular, the renewable energy sector is actively supported by the government and is now one of the priorities of the energy transition. The Dominican Republic also has a young and relatively well-educated workforce, which is also a major advantage for foreign companies. All this would be enough to take decisive steps to improve the investment climate in the Dominican Republic if the existing barriers could be largely overcome.

The Importance of Political Will for Regulation

As noted in the report, the effective regulation of all this also largely depends on the will of the current political leadership. For this reason, the sustainability and institutionalization of the proposed and already implemented changes by the government in power in the coming years will be critical. The professional staff of the regulatory agencies still does not always have the necessary authority or resources to ensure uniform observance of the standards set in law. This often becomes a reason for concern for foreign investors, especially in infrastructure and energy. For the Dominican Republic, in the opinion of the report, it will be very important to show that it can maintain a stable, rule-of-law environment. This also concerns the implementation of new measures but is also related to the need to apply already existing rules and laws in the same way in all areas.

Investor Confidence in the Dominican Republic’s Investment Climate Needs Improvement

To conclude, further improvement of the investment climate in the Dominican Republic will require active cooperation between government and business. In particular, to increase trust among foreign investors, it is necessary to consolidate the successes already achieved in terms of transparency and the rule of law. Acceleration of administrative and production processes and, consequently, the removal of barriers to business expansion is also a question that must be resolved. The standardization of regulations, the acceleration of administrative services, and equal competition for all actors would become a clear signal to investors that the government is serious about changes. Equally important will be the modernization of infrastructure, in particular, transportation and energy, in order to remove some of the cost barriers noted by the authors of the report.

Summing up, the report Investment Climate Statement 2025 paints a mixed picture. The Dominican Republic, with its efforts to combat corruption and transparency, has gained more credibility and positions itself as a promising leader in the Caribbean region. However, without long-awaited changes in the economy, the ability of the country to show significant results in the area of the investment climate remains in doubt. In particular, the country still has to change a number of long-standing regulatory and institutional practices. Until this is done, it will not be able to fully unlock its considerable potential and create the necessary conditions for sustainable economic growth and improved international competitiveness.

The shift in user preference towards electronic payment methods, as well as the proliferation of digital products and services in the banking sector, are pushing transactional activity across Latin America into a phase of profound change. In the long run, the region will lead the electronic payments industry in Latin America, as consumers fully embrace digital solutions to manage their financial operations, according to a new report by the global consulting firm.

The annual report “The Future is Anything but Stable”, published by Global Payments at BCG (Boston Consulting Group) and which assesses global industry trends, predicts that Latin America’s use of digital payment methods will grow by an average of 7.9% per year between 2024 and 2029, a rate that is “almost twice as fast as the world average of 4% in the same period.

The figure means that Latin America is well on its way to not just participating but also to dominating key electronic payments industry in Latin America debates and, above all, in charting the future of financial products and services in the age of digitalization.

Electronic Payments Industry in Latin America: Global Analysis and Trends

As a reminder, the global electronic payments sector is estimated to reach revenues of US$2.4 trillion by 2029 but will register an annual decline in growth, settling at 4%. The trend of year-over-year growth deceleration is taking place even as the industry is undergoing a historic reconfiguration under the impact of the implementation of frontier technologies and business model reinvention, with a view to fully meeting customer expectations.

Artificial intelligence, as well as other digital assets, solutions, and services are key here, such as agentic artificial intelligence (AI), which the BCG Global Payments report recognizes as one of the main tools for reinventing how people and businesses buy, sell, borrow and lend money in the years to come, especially in the retail sector, along with digital currencies and next-generation fintech business models.

In fact, agentic AI is expected to change the rules of the game for e-commerce and consumer transactional behavior in particular. For those unaware, an agentic AI system is an AI that can achieve a goal with limited or no supervision. In short, an autonomous, intelligent system, similar to a human agent. Going back to digital spending and purchasing activity, the study forecasts that agentic AI may generate more than one trillion dollars in e-commerce revenues globally. In the United States, 81% of surveyed consumers say they will use an agentic AI tool to make online purchases, a clear indication that, in the coming years, this tool will be able to influence over half of all online transactions, according to the report.

Latin America: Transactional Activity Expansion

Latin America, meanwhile, is expected to ride this wave, taking the lead in electronic payments industry in Latin America thanks to regional companies’ abilities to adapt to these and other digital trends and turn them into tangible value for all customers in this increasingly competitive, highly digitalized segment. In this regard, the report says the new digital payment solutions will continue to grow in the region at a “solid” pace and are expected to move at an estimated growth rate of 8% per year until 2029.

“The evolution of new electronic payments in Latin America is set to continue positively in the coming years”, states Gonzalo Troncoso, BCG Managing Director and Partner and co-leader of the Global Payments practice. To some extent, the region will be outpacing the rest of the world in this respect, since the adoption rate for electronic payment methods there is set to reach 7.9% in the coming years against a global average of 4%: what the report calls a “very robust expansion”.

Specifically, the increase in e-payments adoption can be explained by such factors as widespread mobile technology adoption for processing transactions, enabling the development of digital wallets and P2P payments. Then, some government policy changes and regulations are intended to “facilitate” digital financial services, and then, the region’s fintech firms, renowned for their agility and creativity, are providing new payment options that are fast, secure, and easy to use.

Latin America, in short, is quickly becoming a regional leader in fintech activity and generating significant volumes of investment for e-payments industry in Latin America products, solutions, services, and companies.

Electronic Payments Industry in Latin America: National Trends

In fact, at the country level, one may highlight the example of the Dominican Republic, where the process of implementing and adopting electronic payment systems is advancing at a significant pace. The initiatives of the BC (Central Bank) to upgrade and reinforce the country’s digital finance ecosystem are key here. Consumers are being encouraged to fully embrace digital channels for their banking operations, to the detriment of more traditional financial channels. At the moment, more and more Dominican bank clients make use of electronic channels to:

• Process transfers
• Pay for services, as well as goods and other purchases
• Withdraw and deposit money at ATMs
• Buy goods and services at physical or virtual POS

The BC’s statistical evidence of how things are rapidly changing in the retail payments segment shows that, between 2008 and 2021, the volume of electronic payments recorded a spectacular increase of 503.5%, while the use of checks plummeted by -33.7%.

To be more specific, in 2008 there were 76.5 million electronic payments, compared to only 32.0 million checks, while by 2021 there were 462.0 million electronic payments and 21.2 million checks.

Market share data in that same time interval is also very revealing, for in 2008 the volume of electronic payments represented 70.5% of total operations, while in 2021 this figure had grown to 95.6% while only 4.4% of all transactions were by check. Electronic transactions, in short, have not just seen an increase in their numbers but are now considered to have reached maturity in the Dominican market.

Dominican consumers are said to be increasingly likely to use their bank accounts for retail payments, whether through the use of debit and credit cards at the POS, ATMs, or online. Financial technology companies (fintechs) have been a leading force behind this transformation. Payment fintechs in particular have grown by 23% a year and accounted for US$176 billion in revenues in 2024 alone. In 25 years, more than US$135 billion of equity capital has been raised by these businesses.

Payment fintechs account for almost half (45%) of all fintech revenues, while the top performers have grown three times faster than incumbent banks. This success is partly due to the fact that fintechs have focused on specific opportunities, and on investing and innovating rapidly to meet rapidly changing consumer expectations.

These forces put increased pressure on companies that are not active in the fintech space and which have not adjusted their business models to keep pace with market evolution. Companies and other financial institutions are increasingly compelled to use cutting-edge technology to keep up with the e-payments industry in Latin America growth and remain competitive.

AI Agents and E-commerce: The Future of E-commerce in Latin America

BCG’s report also underlines the agentic AI’s potential to completely reinvent e-commerce in Latin America. An agentic AI system is capable of using machine learning techniques to achieve a given objective with only a small amount of supervision or guidance, operating, so to speak, automatically and independently, in a manner very similar to the work of a human agent.

In terms of how it could have an impact on online buying activity, for example, the BCG report anticipates it will be used to provide product and service recommendations to consumers on the basis of previous purchases and use data, to automate non-optional purchases and transactions, and to increase the overall efficiency of the online shopping experience.

Agentic AI is also being used by a growing number of online merchants, as well as banks and other retail financial service providers, to decrease friction in the buying and checkout process, reduce the costs associated with online shopping, and increase fraud prevention and security.

As such, it is estimated that within the near future, AI agents will have the capacity to influence over half of all online sales. In short, this tool’s potential to fully personalize the customer experience and customize retail banking services according to their purchasing history and current transactional behavior.

Future Scenarios in the Electronic Payments Industry in Latin America

Summarizing and looking to the future, the electronic payments industry in Latin America will continue to grow at a rate well above the world average, at least for the next decade.

The rate of growth will be greater in the following cases:

• Fintech companies offering new services and solutions to financial sector customers
• SMEs and other companies which engage in digital finance, thus offering their services through mobile and other digital payment channels
• Agencies and central governments encouraging their citizens to adopt these types of digital financial solutions and using payments as a policy tool.
• Firms and investors, to be on the winning side of this digital growth, must therefore keep their eyes open and make sure to leverage these and other technological tools to remain relevant and competitive, and adapt business models and strategies to keep in line with customers’ preferences and needs.

In conclusion, companies that remain digitally stagnant risk not being left behind and losing market share and revenues to those that will incorporate these digital solutions into their operational model and set of activities. As a result, we can say that Latin America’s electronic payments industry in Latin America is growing and will continue to do so on an accelerated trajectory for at least another decade.