Dominican Republic. A. Definitions and sources of data

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1 Dominican Republic A. Definitions and sources of data Foreign direct investment (FDI) data are collected by the Central Bank of the Dominican Republic. In the Foreign Investment Law of the Dominican Republic, FDI is defined as contributions originating from abroad, belonging to foreign individuals or corporations or individual nationals residing abroad, to the capital of a company operating in national territory. The Dominican Republic recognizes that foreign investment and technology transfers contribute to the economic growth and social development of the country insofar as they favor the generation of jobs and foreign currency, promote the process of capitalization and provide efficient production, marketing and management methods. According to the Foreign Investment Law, FDI can take the following forms: Contributions in freely-convertible currency, exchanged in a banking institution authorized by the Central Bank; Contributions in kind, such as industrial plants, new and re-conditioned machinery, new and re-conditioned equipment, replacements, spare parts and parts, raw material, intermediate products and final goods, as well as intangible technological contributions; and Those financial instruments which the Monetary Board relegates to the category of foreign investment, except those that may be the product of contributions or internment of an operation for the re-conversion of the Dominican foreign debt. The Dominican Republic has set specific targets for FDI. These include: a) Investments in the capital of an existing or new company, as per the provisions contained in the Commercial Code of the Dominican Republic, including the establishment of branch offices, pursuant to the conditions set by the laws. Foreign Investment in share companies must be represented in nominative shares; b) Investments in real properties located in the Dominican Republic, with the limitations in effect and applicable to foreigners; and c) Investments towards the acquisition of financial assets, pursuant to the general norms issued in this area by the monetary authorities. Whereas the Dominican Republic is clear in setting targets for foreign investment, it also specifies categories where foreign investment is not allowed: a) Disposal and remains of toxic, dangerous or radioactive garbage not produced in the country; b) Activities affecting the public health and the environmental equilibrium of the country, pursuant to the norms that apply in this regard; and c) Production of materials and equipment directly linked to national defense and security, except for an express authorization from the chief executive.

2 B. Statistics on FDI and the operations of TNCs

3 Table 1. Summary of FDI Variable Inward Outward 1. FDI flows, (annual average) FDI flows as a percentage of GFCF, (annual average) FDI stock, FDI stock as a percentage of GDP, Sources : Based on tables 3a and 4 and UNCTAD, FDI/TNC database. Notes: Data for 2003 are estimates. Data for outward flows refer to average ; data for outward stock and outward stock as a percentage of GDP refer to 2002.

4 Table 3a. FDI flows, by type of investment, Inward investment Outward investment Reinvested Reinvested Year Equity earnings Other Total Equity earnings Other Total Sources: UNCTAD, FDI/TNC database. FDI inflows are based on information from Central Bank of the Dominican Republic for ; International Monetary Fund, Balance of Payments CD ROM, June 2003, for and UNCTAD estimates for For FDI outflows, data are based on information from International Monetary Fund, Balance of Payments CD ROM, June 2003, for and UNCTAD estimates.

5 Table 3b. FDI flows, by type of investment, Inward investment Outward investment Reinvested Reinvested Year Equity earnings Other Total Equity earnings Other Total Source: Inward and outward flow data were retrieved from the balance-of-payments tape of the International Monetary Fund in January 2004.

6 Table 4. FDI stock, by type of investment, Year Equity Inward investment Intracompany Reinvested earnings loans Total Equity Outward investment Intracompany Reinvested earnings loans Total Sources: UNCTAD, FDI/TNC database, based on information from Central Bank of the Dominican Republic and UNCTAD estimates. Notes: Inward stock is based on information from the Central Bank for and UNCTAD estimates for Outward outstock is an accumulation of flows since 1993.

7 Table 5. FDI flows in the host economy, by industry, Sector / industry Total Primary Mining, quarrying and petroleum Mining and quarrying Secondary Tertiary Electricity, gas and water Production, collection and distribution of electricity Construction Trade Hotels and restaurants Transport, storage and communications Transport and storage Post and communications Finance Unspecified Source : Central Bank of the Dominican Republic, International Department.

8 Table 6. FDI flows in the host economy, by geographical origin, Region/economy Total world Developed countries Western Europe European Union France Italy Netherlands Spain United Kingdom Other Western Europe Switzerland North America Canada United States Developing economies Latin America and the Caribbean South America Chile Other Latin America and Caribbean Cayman Islands Unspecified Source : Central Bank of the Dominican Republic, International Department.

9 Table 9. FDI flows abroad, by geographical destination, Economy Belgium / Luxembourg China Colombia France Malaysia United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above. Table 12. FDI stocks in the host economy, by geographical origin, Economy Canada Colombia Germany United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above. Table 15. FDI stocks abroad, by geographical destination, Economy Brazil Colombia United States Venezuela Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above.

10 Table 23. The number of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany Italy United States Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the economies listed above. Table 35. Employment of affiliates of foreign TNCs in the host economy, by geographical origin, (Thousands of employees) Economy Germany United States Source : UNCTAD, FDI/TNC database. Notes: Data are based on information reported by the economies listed above. Data for the United States refer to majority-owned affiliates only. Table 45. Sales of affiliates of foreign TNCs in the host economy, by geographical origin, Economy Germany Italy United States Source : UNCTAD, FDI/TNC database. Notes: Data are based on information reported by the economies listed above. Data for the United States refer to majority-owned affiliates only.

11 Tables 21,28,33,38,43,48,53,58. Number, assets, employment, wages and salaries, sales, value added, profits and exports of foreign affiliates of Dominican Republic TNCs in the United States, (Number, millions of dollars and thousands of employees) Table no. Variable Number Assets Employees Wages and salaries Sales Value added Profits before taxes Exports Source : UNCTAD, FDI/TNC database. Note: Data are based on information reported by the United States. Tables 30,40,50,55,60,65,85. Assets, wages and salaries, value added, profits, exports, imports and royalty payments of affiliates of United States TNCs in the Dominican Republic, Table no. Variable Assets Wages and salaries Value added a Profits before taxes b Profits after taxes Exports Imports Royalty payments Source : UNCTAD, FDI/TNC database. Notes: Data are based on information reported by the United States and refer to majority-owned affiliates only.

12 Table 86. Largest home-based TNCs, 2002 (Millions of dollars and number) Company Industry Sales Employees A. Industrial Paraiso Industrial Chemicals 3.. Caribex Dominicana Food.... B. Tertiary Tricom Telecommunications 15.. Industrias Asociadas Trade.... Encargo Export Trade.... C. Finance and Insurance Assets Employees Grupo Financiero Popular Finance.... Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003); and information from ECLAC.

13 Table 87. Largest foreign affiliates of home-based TNCs, 2002 (Millions of dollars and number) Company Host economy Industry Sales Employees A. Industrial Paradise of Puerto Rico United States Furniture B. Tertiary Tricom USA United States Telecomminications Encargo Export United States Trade Caribex International United States Trade Inasca Corporation United States Trade Tricom Panama Panama Trade 12 C. Finance and Insurance Assets Employees Popular Bank and Trust Panama Finance 505 a 37 a BPD International Bank United States Finance.. 50 Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003). a December 2001.

14 Table 88. Largest affiliates of foreign TNCs in the host economy, 2002 (Millions of dollars and number) Company Home economy Industry Sales Employees A. Industrial Falconbridge Dominicana C Por A Canada Mining and quarrying Colgate Palmolive (D.R.), Inc. United States Pharmaceuticals Bristol-Myers Squibb SA United States Pharmaceuticals Productos Avon, C Por A United States Pharmaceuticals.. 90 Johnson & Johnson Dominicana, SA United States Pharmaceuticals.. 80 Frito Lay Dominicana, SA United States Food.. 40 Impresora Del Yaque C. Por A. United States Paper.. 40 H.B. Fuller Dominicana, SA United States Chemicals.. 25 Paxar Dominicana United States Textiles.... Aileen Internationaln Inc. United States Textiles.... 3m Dominicana SA United States Paper.... Abbott Diagnostics Division United States Pharmaceuticals.... B. Tertiary Allegro Resorts Dominicana SA Spain Hotels Esso Standard Oil United States Trade.. 75 Santai Dominicana C. por A. Japan Trade.. 30 Gillette Dominicana Sa United States Trade.. 30 Biper Dominicana SA Mexico Telecommunications.. 16 N.C.R. Dominicana C Por A United States Trade.. 14 Kodak Dominicana C Por A United States Other business services.... Kpmg Dominican Republic United States Other business services.... C. Finance and Insurance Assets Employees Creditos Y Cobranzas S.A. Japan Finance.... Sources: The Banker's Almanac, 2003 (London, Reed Information Services, 2003); Kaigai Shinshutsu Kigyo Soran (Tokyo: Toyokeizai and Dun and Bradstreet ltd., 2003); Thomson Analytics ( Who Owns Whom, 2003 (London, Dun and Bradstreet, 2003); and information from ECLAC.

15 C. Legal framework for FDI I. National policy framework Decree No. 2543, 2 March 1945 Source: Investors Handbook and Business Guide 1988, op. cit. Law No of 22 October 1955 on Free Industrial Zones (effective, 1983) Amendment: Law No. 96 of 1983 Source: Official Gazette, 28 February 1983 Law No. 4456, 24 May 1956 Source: Investors Handbook and Business Guide 1988, op. cit. Law No. 305 on Channels of Communication, 1968 Source: Ibid., p. 241 Law No. 153 on Promotion and Incentives for Tourist Development, 1971 Source: Ibid. op. cit., p. 260 Law No. 146 on Mining, 1971 Source: Central Bank of Dominican Republic Law No. 221 on incentives for Small Industries and Artisans 1971 Source: Investors Handbook and Business Guide 1988, op, cit., p. 271 Law No. 290 of 29 March 1972 declaring of Public Interest the Transference to the 'Instituto Agrario Dominicano' of all Rice Lands Source: Central Bank of the Dominican Republic Law No. 861 on Foreign Investment 1978 Source: Official Gazette, 11 November 1978 Amendment: Law No. 138 of 24 June 1983 Source: Ibid., 30 June 1983 Law on Foreign Investment, 1995 Source: The National Law Centre for Inter-American Free Trade, 5 March 2004 Law No. 69 on Export Promotion 1979 Source: Investors Handbook & Business Guide 1988, op. cit., p. 272 Law No. 409 on Promotion of Incentives and Protection for the Agro-Industry 1982 Source: Ibid., 12 January 1982 Decree No on Commercial Interchange1984 Source: Official Gazette, 31 May 1956 Regulation of the Monetary Commission of 10 May 1985 Source: Central Bank of the Dominican Republic

16 Tax Law on Inheritance and Donations 1950 Source: 5 March 2004 Law No of 22 May 1962 on Income Tax Source: Official Gazette, 16 May 1984 Amendment: Law No. 14 of 5 February 1988 Source: Ibid., 15 February 1988 Law No. 299 on Industrial Protection and Tax Incentives 1968 Amendment: Law No. 145 on Foreign Investment Tax Incentives 1983 Source: Official Gazette, 29 May 1983 Law No. 139 on Taxation of Transfer of Property 1987 Source: Investors Handbook and Business Guide 1988 (American Chamber of Commerce of the Dominican Republic, 31 Dec 1987, p. 241 Regulation No. 407 governing Promotion of Incentives provided by Law No Source: Official Gazette, 31 August 1988 Tax Code of the Dominican Republic 1992 Source: 5 March 2004 Law 147 of Tax Reform 2000 Source: Ibid Law No. 08/90 on Development of Free Export Zones 1990 Source: Official Gazette, 15 January 1990 Law No on Registration and Protection of Intellectual Property 1947 Source: Ibid., 16 April 1947 Law No. 213 on Commercial and Industrial Patents 1984 Source: Investors Handbook and Business Guide 1988, op. cit. Amendment: Law No. 140 of 29 December 1987 Source: Official Gazette, 31 December 1987 Law No. 32 on Copyright 1986 Source: World Intellectual Property Organization, Copyright Laws and Treaties, Nos. 7-8, (July/August 1987) Law of Electronic Commerce Documents and Digital Signatures 2002 Source: 5 March 2004 II. International framework 1. Multilateral and regional instruments Dominican Republic is a party to the following multilateral and regional instruments: Paris Convention for the Protection of Industrial Property, 20 March 1883, amended and revised New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958

17 Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 18 March 1965, signed on 4 Feb 1994, effective 19 April 1995 ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, adopted on 16 November 1977 Convention Establishing the Multilateral Investment Guarantee Agency of 11 October 1985, signed on 30 September 1996 Agreement on Trade-Related Aspects of Intellectual Property Rights, signed, 15 April 1994 (effective, 1 January 1995) General Agreement on Trade in Services, signed, 15 April 1994 (effective, 1 January 1995) Fourth Protocol to the General Agreement on Trade in Services, 15 February 1997 Fifth Protocol to the General Agreement on Trade in Services, 12 December Bilateral treaties 1. Bilateral investment treaties for the protection and promotion of investments with Switzerland 1993, United Kingdom 1993, Spain 1994, Germany 1995, United States 1995, Chile 1996, Taiwan Province of China 1996, France 1998, Ecuador 2000, Cuba 2001, Netherlands 2001 Source: UNCTAD database on BITs and DTTs 2. Bilateral investment treaties for the protection and promotion of investments with the United States 1995 Source: UNCTAD database on BITs and DTTs

18 D. Sources of information Official 1. Banco Central de la Republica Dominicana: Secondary 1. Anonymous, A Caribbean competitor securing a free trade agreement with the United States and attracting more foreign investment would add a needed edge to the Dominican Republic s developing economy, Latin Finance, vol. 28, November 2002, pp Anonymous, Bolstering local business, LatinFinance, November 2002, p Anonymous, A country under-mined, LatinFinance, November 2001, p Aristy-Escuder, Jaime, Dominican Republic: a CGE analysis, The North American Journal of Economics and Finance, vol. 10, No. 1, 1999, pp Devault, James M., Offshore assembly in the Dominican Republic, World Economy, vol. 20, November 1997, pp Espinal, Rosario, Economic restructuring, social protest, and democratization in the Dominican Republic, Latin American Perspectives, vol. 22, No. 3, Summer 1995, pp Grubaugh, Jerry, and Catherine Campbell, Dominican Republic, Business Latin America, 3 April 1995, vol. 30, No. 13, pp Kaplinsky, Raphael, Export processing zones in the Dominican Republic: transforming manufactures into commodities, World Development, vol. 21, No. 11, November 1993, pp Martinez, Samuel, From hidden hand to heavy hand: sugar, the State, and migrant labor in Haiti and the Dominican Republic, Latin American Research Review, vol. 34, No. 1, 1999, pp Ostensson, Olle, The mineral sector in the Dominican Republic, Raw Materials Report, vol. 11, No. 4, 1995, pp Raynolds, Laura, T., Harnessing women's work: restructuring agricultural and industrial labor forces in the Dominican Republic, Economic Geography, vol. 74, No. 2, April 1998, pp Szterenfeld, Anna, Business outlook: Dominican Republic, Business Latin America, June 10, 1996, vol. 31, No. 23, pp Thoumi, Francisco, E., Thwarted comparative advantage, economic policy and industrialization in the Dominican Republic and Trinidad and Tobago, Journal of Interamerican Studies and World Affairs, vol. 31, No. 1/2, Spring - Summer 1989, pp Willmore, Larry, Export processing zones in the Dominican Republic: a comment on Kaplinsky, World Development, vol. 23, No. 3, March 1995, pp