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:
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.