Dominican Republic - Country Commercial Guide
Market Challenges
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While the DR’s economic growth is expected to exceed that of most other Caribbean countries, systemic challenges persist.  Rising food and energy costs, exacerbated by the conflict in Ukraine, make it increasingly difficult for the poor to afford the basic food basket.  The impacts of environmental degradation, such as mangrove, beach, and coral reef erosion, as well as pollution, threaten long-term critical resources for tourism, which is a major economic driver.

A record 8.3 million tourists visited the DR in 2022, including 1.6 million by cruise ship.  While there are ongoing negotiations, the DR is not yet a party to an Open Skies agreement with the United States, making travel to the DR more expensive than it otherwise would be. With such a heavy dependence on tourism, especially U.S. tourism, the DR faces challenges in developing other sectors of its economy. 

The DR’s per capita GDP of $10,120 masks a very uneven distribution of wealth heavily in favor of the upper classes. Around 28 percent of the population lives below the poverty line, according to official statistics. Education outcomes have been well below other countries in Latin America.  The DR’s poor performance in these global rankings, in terms of both the quality of its public education and time spent in school, has prompted education reforms.  Despite close ties with the United States, only an estimated ten percent of the population speak English.  

The DR is a net importer of oil, and price volatility has a significant impact on the local economy. Additionally, electricity subsidies continue to burden fiscal accounts, making the energy sector a drag on public finances. Compounding the problem is the inability of the state-owned electric power distribution companies to collect payment on roughly 35 percent of the electricity they supply – either through technical losses or non-payment of bills and/or theft by individuals and companies. The accumulation of debts owed to the power generators results in a lack of working capital, disruptions in fuel supplies, and frequent blackouts across the country.

International indicators of the DR’s competitiveness and transparency indicate significant issues. The country has seen significant progress under the Abinader administration in terms of perception of the prevalence of corruption, but foreign investors continue to cite a lack of clear, standardized rules by which to compete and a lack of enforcement of existing rules, particularly in public procurement. Complaints include allegations of widespread corruption, delays in government payments, weak intellectual property rights enforcement, bureaucratic hurdles, slow and sometimes biased judicial processes, non-standard procedures in customs valuation of imported goods, as well as product misclassification as a means of negating CAFTA-DR benefits and increasing customs revenues. Weak land tenure laws and government expropriations continue to be a problem.

The lack of transparency and corruption continue to earn the DR low scores in international comparison tables.  In Transparency International’s 2022 Global Corruption Perception Index, the DR improved five places to 123 out of 180, still among the lowest in Latin America and far behind most of its Caribbean neighbors.  The 2006 law governing public procurement lacks crucial provisions such as enforcement mechanisms for corrupt actors, provisions for a professionalized workforce, and a procurement lifecycle based on transparency and value for money. CAFTA-DR includes requirements for government procurement of goods and services, but several agencies were exempted from the agreement.  Under current law, foreign suppliers can only bid on international public tenders, which are exceedingly rare. However, foreign suppliers can participate in any other procurement process if they set up a local branch or partner/subsidiary or have local tax residence through a mercantile registry. 

There is also a lack of institutional continuity across changes in government administrations. The wholesale turnover in government personnel that typically occurs with changes in administrations can result in loss of records, which in turn can result in payment disputes and rejection of bills for goods and services purchased by preceding administrations.  Multiple U.S. Government agencies are assisting the DR government (GODR) with programs to professionalize its procurement workforce and improve enforcement of existing procurement law.