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.