The Dominican Republic is primarily known as a sun-and-beach destination and a prominent producer of rum and tobacco. However, a closer look reveals a richer and more complex picture of the Dominican Republic. The country has become one of the most important logistics hubs in the Caribbean and Central America. It boasts the fastest-growing economy in Latin America this year—projected to grow around 5% in 2024, according to the Central Bank of the Dominican Republic and the IMF. This growth is fueled by expanding sectors such as tourism, construction, and services.
The Role of Free Zones in Economic Development
One of the key drivers contributing to this development is the Dominican Republic free zones. With exports exceeding $8 billion, the sector accounts for 67% of the nation’s total trade. It is, in fact, the second-fastest-growing economic activity in 2024, with a 6.5% increase, surpassed only by financial services, as highlighted by the Dominican Central Bank. The modernization of local infrastructure, the professionalization of the workforce, and incentive policies have propelled its progress.
“In recent years, its attractiveness has been further strengthened by the risks posed by geopolitical conflicts that have disrupted supply chains, driving investing and exporting companies to embrace friendshoring practices. This involves establishing operations in countries like the Dominican Republic that do not pose such risks,” explains Antonio Bonet, president of Spain’s Club of Exporters.
Nearshoring as a Strategic Advantage
Adding to this is the United States’ decision to encourage the relocation of companies from Asia to destinations closer to its shores under its nearshoring policy. “These Dominican Republic free zones create significant hubs of wealth, primarily exporting to the U.S.,” says Juan Carlos Martínez Lázaro, an economics professor at IE University. Among the primary benefits of the free zone incentive system is a 100% exemption on nearly all types of taxes.
“There’s also the fact that we have a free trade agreement with the U.S.,” remarks Daniel Liranzo, Executive Director of the National Council of Export Free Zones (CNFZE), referring to the DR-CAFTA, which opens the doors to the U.S. market for goods produced in the Dominican Republic free zones.
“These zones offer a significant opportunity,” Martínez Lázaro emphasizes. Their appeal could grow even further if Donald Trump follows through on his threats to impose tariffs on Mexico, which is traditionally a key access route to the American market. However, the IE professor notes that, for now, Spanish investment in these Dominican Republic free zones remains relatively undeveloped compared to other sectors.
Current Investment Landscape in Free Zones
The Dominican Republic has 92 industrial parks operating under this incentive regime, housing 854 companies from 50 countries. Of these, only 18 are Spanish, 15 of which are small and medium enterprises (SMEs), according to the CNFZE. “There is a mistaken impression that only large companies can operate here, but that is not the case,” says Francisco Lage, president of Sym Naval, a medium-sized company based in Barcelona specializing in naval construction and technical services for cruise ships and merchant vessels.
In 2021, the company operated in a Dominican Republic free zone near Boca Chica, about 25 kilometers from Santo Domingo. Lage explains that this is due to the city’s proximity to the U.S., Mexico, Central America, Colombia, Venezuela, and Guyana.
“Additionally,” he adds, “there is the agreement to avoid double taxation, which is very beneficial for Spanish investment in terms of dividend distribution to the parent company, as well as the Social Security agreement, allowing us to transfer personnel while maintaining enrollment in Spain.”
Commercial Relations Between Spain and the Dominican Republic
To put the weight of commercial relations into perspective, the Spanish State Secretariat for Trade (SEC) indicates that cumulative Spanish investment in the Dominican Republic amounted to €1.766 billion in 2022 (the latest available data). Meanwhile, bilateral trade in goods reached €1.02 billion in 2023, with a positive balance for Spanish imports, which totaled €892 million, primarily in equipment, semi-manufactures, and food products, as detailed by Bonet from the Club of Exporters.
Spain’s Presence and Investment Opportunities
Spain is one of the leading investors in the Dominican Republic, ranking behind the United States and alternating between second and fourth place with Mexico and Canada. According to the SEC, 107 Spanish companies operated in the Dominican Republic in 2023. The primary sectors of activity include tourism (21.3%), engineering and construction (14.8%), and energy (9.3%).
Antonio Bonet highlights that “the country is advancing with strategic projects that open new doors for Spanish investment.” Examples include the development of a cruise port in Samaná, the promotion of agro-industrial and biotechnological Dominican Republic free zones in the Cibao region, and the establishment of public transportation systems in several cities.
Conclusion
The Dominican Republic has emerged as a dynamic gateway to the American market, showcasing rapid economic growth and robust investment opportunities. In 2024, its economy is projected to grow by 5%, driven by sectors like tourism, construction, and services. Its Dominican Republic free zones play a pivotal role in this progress, contributing to 67% of the nation’s trade, with exports surpassing $8 billion. These zones benefit from friendshoring and nearshoring trends, bolstered by a 100% tax exemption and the DR-CAFTA agreement with the U.S., making them attractive hubs for global investors, particularly in agroindustry and biotechnology.
Despite their potential, Spanish investment in the free zones still needs to be developed, with only 18 Spanish companies operating there. However, companies like Sym Naval have benefited from favorable tax and Social Security agreements, leveraging the Dominican Republic free zones’ proximity to major markets.
Spain is a significant investor in the Dominican Republic, particularly in tourism, construction, and energy. Cumulative Spanish investment reached €1.766 billion in 2022, with bilateral trade in goods totaling €1.02 billion in 2023. Strategic projects, such as a cruise port in Samaná and agro-industrial free zones in Cibao, present new opportunities for Spanish investors. The Dominican Republic free zones, with modern infrastructure, a skilled workforce, and strong trade ties with the U.S., position the country as a vital logistics hub in the Caribbean and a growing center for economic innovation, particularly in high-potential sectors like agroindustry and biotechnology.