PTP-CELAC - Official Report: Dominican Republic

PUBLISHED TO MARK THE DOMINICAN REPUBLIC’S PRESIDENCY OF THE COMMUNITY OF LATIN AMERICAN AND CARIBBEAN STATES

CELAC: Promoting economic integration in Latin America and the Caribbean

DOMINICAN REPUBLIC

AGRICULTURE • TOURISM • INFRASTRUCTURE • F INANCE

O F F I C I A L R E P O R T

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C1 OFC Dominican Republic 2016.indd 1 22/03/2016 11:25

H.E. DANILO MEDINA SÁNCHEZPresident of the Dominican Republic Towards a more integrated region 4

ANDRÉS NAVARRO GARCÍAMinister of External Relations, Dominican Republic A new ‘architecture of diplomacy’ 6

HÉCTOR VALDEZ ALBIZUGovernor, Central Bank of the Dominican Republic Steady as she goes 8

JOSÉ DEL CASTILLO SAVIÑÓNMinister of Industry and Commerce, Dominican Republic The power of regional trade 10

FRANCISCO JAVIER GARCÍAMinister of Tourism, Dominican Republic Growth through diversification 12

ANGEL ESTÉVEZ BOURDIERDMinister of Agriculture, Dominican Republic Raising the bar in agriculture 16

OSMAR BENÍTEZPresident, Junta Agroempresarial Dominicana (JAD) Growing for gold 18

DR JEAN-MARC ANGA and DR JOSÉ ANTONIO MARTÍNEZ ROJASExecutive Director, International Cocoa Organisation (ICCO), and National Coordinator, 3rd World Cocoa Conference (3WCC)A model for the future of cocoa 21

HÉCTOR RIZEK and MASSIMILIANO WAXCEO and Vice-President, Strategy and Business Development, Rizek Cacao S.A.S. Moving up the value chain 26

DR ANTONIO ISA CONDEMinister of Energy and Mines, Dominican Republic Developing new resources 29

KEITH DUNCAN and GUILLERMO ARANCIBIAGroup CEO and Country Head, Dominican Republic, JMMB Group The regional player making waves 30

ENRIQUE RAMÍREZ PANIAGUAAdministrator General, BanReservas Promoting financial inclusion 32

DR JEAN ALAIN RODRÍGUEZExecutive Director, Centre for Export and Investment of the Dominican Republic (CEI-RD) Onward and upward 34

H.E. DR FEDERICO CUELLO CAMILOAmbassador of the Dominican Republic to the United Kingdom New diplomacy in action 36

Contents

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By H.E. DANILO MEDINA SÁNCHEZPresident of the dominican rePublic

Towards a more integrated region

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The Dominican Republic takes the helm of the Pro-Tempore Presidency of the Economic Community for Latin America and the Caribbean (CELAC)

in a year in which the world in general – and our region in particular – are facing immense challenges, in a complex web of interlinked problems that can only be addressed and resolved politically. Through CELAC we should speak with one voice, conveying the consensus political solutions required.

After Asia, the Latin American and Caribbean (LAC) region will see the largest share of its population moving up to the middle class – 130 million according to the OECD. However, together with Sub-Saharan Africa, the LAC region is the most unequal in the world. Ten per cent of the population earns 32 per cent of regional income, while the poorest 40 per cent retains just 15 per cent. Inequality is the enemy we have to beat together.

Addressing inequality through regional integrationInequality, as measured by the GINI coefficient, has decreased 5 per cent. But with growth slowing down to barely 0.2 per cent for the region as a whole, clearly a collective response is needed so that we can rely more on the growth potential of our own regional market, rather than suffering disproportionately the effects of extra-regional developments.

In this regard, regional integration, promoted through CELAC, has to be an important element in the battle against inequality. Our integration mechanisms, however, are advancing at different paces. MERCOSUR, SICA, CARICOM, the Pacific Alliance, the Andean Community, UNASUR, and ALBA, among others, have not been able to bring us together around the same table to address our common challenges.

In seeking to deepen LAC’s regional integration, the needs of three types of actors have to be considered: First, 67 per cent of our regional output is produced by fully globalised firms that generate just 20 per cent of our jobs. Then, SMEs provide 23 per cent of the region’s GDP and 30 per cent of our jobs. And last, microenterprises and the informal economy generate the remaining 10 per cent of the regional output while proving jobs for about half of our citizens.

Therein lies the challenge of overcoming inequality in the LAC region: to develop stronger links in our value chains, between our globalised firms, our SMEs and our informal sectors, so that they can increase their productivity and generate much more than the barely 10 per cent of GDP our SMEs and informal sectors are providing presently.

This, in the context of a renewed commitment to deepening our regional integration, should provide us with the internal dynamics our growth trajectories currently lack, thus making us less vulnerable to changes in our main export markets.

The urban-rural nexus in sustainable developmentWith the renewed focus on sustainable development provided by Agenda 2030, standards of living in rural areas have to increase so that our cities can themselves become more sustainable, thus helping us master the urbanisation process and slowing down its pace.

Our most prosperous rural areas are filled with agricultural cooperatives of smallholder farmers, which have decreased rural-urban migration. This is one of the many reasons why the Dominican Republic has increased funding for agriculture, providing land titles to our farmers and ensuring their access to seeds, technology and irrigation infrastructure. Through a policy of surprise visits, I supervise this process personally, achieving sustained rates of growth in a sector that has been left behind from our policy priorities for much too long.

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DANILO MEDINA was elected President of the Dominican Republic in May 2012, and took office in August that year. A graduate of the Universidad Autónoma de Santo Domingo (UASD), he was elected a Deputy in the National Congress in 1987, and rose to become President of the Chamber of Deputies in 1994. He subsequently served twice as Secretary of State to the Presidency.

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A collective response is needed so that we can rely more on the growth potential of our own regional market, rather than suffering disproport-ionately the effects of extra-regional developments

In the meantime, the Dominican Republic has declared 2016 as the Year of Housing. Allied with the private sector, we seek to build thousands of new homes so that our peoples can live with dignity in healthy communities, thus helping us overcome health challenges, increase security and ensure peaceful coexistence, while generating jobs and educating our peoples. It is my hope that Habitat III, taking place in Quito this year, will take us in the direction of making housing a right for all of our peoples.

Drugs: time to explore new avenuesInternational drug trafficking is a social problem that generates grave institutional and security challenges. For many decades, the region has dedicated an important share of its human and financial resources to fight a problem that is far from diminishing in importance. This in a region with urgent educational, energy, health and urban security needs.

From South America to Mexico, through Central America, the Dominican Republic and the rest of the Caribbean, the transit of drugs through our territories towards those countries where they are consumed – mostly developed country markets – threatens the stability of our democracies and the very lives of our citizens.

We cannot allow this issue to continue taking centre stage at our encounters, year after year, while facing the constant scepticism and frustration of our peoples without exploring new avenues nor opening new perspectives for our debates.

This year’s Summit of the General Assembly on the world drug problem should propose policies and measures on drugs that are centered on the human being, taking into account the inalienable rights of all peoples, that should result in the reduction not only of the supply but most importantly the demand for

drugs. CELAC wants the problem to be addressed as one requiring prevention, a public health approach and of rehabilitation, introducing a systematic evaluation process of its outcomes.

It is all our countries, the ones suffering the most from this trade, who must make our voices heard.

Addressing youth unemploymentWorld Bank figures paint an appalling picture: one in five young people in the LAC region between 15 and 24 years of age neither goes to school nor works. There are millions of young men and women brimming with energy, enthusiasm and ability, needing our message of hope and our efforts to create opportunities for their education and their honest work, which are the only ways for us to prevent their criminalisation.

Let us always be mindful of our young people when we envisage the future of CELAC. Our efforts should be guided by their aspirations, hopes and needs.

Towards a more integrated, operational and proactive CELACThe commitment of the Dominican Republic to CELAC is real and immediate. It is in the faces of our people and it is propelled by the urgency of their demands.

Our turn at the pro-tempore Presidency fills us with joy and with pride. It renews our commitment to the strengthening of our bonds with extra-regional partners such as the European Union. It is the occasion for us to demonstrate our political will to be proactive in facing our challenges and advancing our common interests.

In this fashion, we will do our best to hand over the Presidency in 2017 after contributing to a more integrated, more operational and even more recognised common space on the global stage. F

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Opposite: President Medina addresses the IV Summit of CELAC heads of state in Ecuador

Left: President Medina makes a surprise visit to a deprived neighbourhood in Los Guarícanos

IntErvIEw wItH ANDRÉS NAVARRO GARCÍAminister of external relations, dominican rePublic

A new ‘architecture of diplomacy’

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It’s a little over a year since you took office as Foreign Minister. What have been your main priorities to date, and how successful have you been in meeting them?

One of the main challenges this government has taken on is that of strengthening the institutions of the Dominican Republic, and in my case, that means a complete overhaul of the foreign ministry and our diplomatic corps.

Last year, 2015, we embarked upon a process of institutional reform aimed at creating a new ‘architecture of diplomacy’, and that has involved changing the whole structure of the ministry. But this has only been the first step, and the process of implementing a strategic plan to coordinate the ministry’s activities will take five years.

This plan includes verification mechanisms to allow us to evaluate the efficiency of the ministry’s different activities. For example, we have created a prize for diplomatic excellence and are now rewarding best practices by our staff. We have also reformed the way the ministry is financed. Just as importantly, we are in the process of improving the training our diplomats undergo. Among the things I most want to see is Dominican diplomats accredited abroad taking a more proactive role in disseminating information about the country, especially the government’s human rights and social policies.

At the same time, the Export and Investment Centre of the Domincan Republic (CEI-RD) is preparing a list

of exportable products so that diplomats can look for opportunities in the countries where they are posted.

Another key task is to look after the interests of Dominicans living abroad, who number some two million, or 20 per cent of the population. With this in mind, we have launched the Dominicans Abroad Institute (INDEX), an academic, arts and research institution. This initiative is aimed at averting the Dominican diaspora’s disconnect with the Dominican Republic and to assist the large Dominican communities living in cities like New York, Madrid, and Barcelona. These communities can play a big role in helping the towns and cities they come from back home. For example, in Madrid, most of the Dominican community comes from four or five towns in the same region. We need to be establishing stronger ties between them.

It’s time we let the world know that the Dominican Republic is more than beach, bachata and baseball. In short, we are creating a competitive institution able to play an important role in regional affairs, and the reforms I have outlined are part of a new vision of diplomacy, one that is more inclusive, that involves society as a whole: business, civic organisations, NGOs. Our reinvigorated diplomacy should reflect the interests of the nation, not the just the government. This is a process that must involve the whole country.

How important is this year’s Presidency Pro Tempore (PPT) of the Community of Latin American and Caribbean States (CELAC) for the Dominican Republic, and what does it mean for the image of the country abroad, both regionally and globally?

It is true that traditionally we have not played a very big role in CELAC – or for that matter, the Organisation of American States (OAS). For us, CELAC is important because it is a space for political dialogue: it is different to the OAS because its agenda is more focused on our region. As I’m sure you know, over the last year there has been a concerted international campaign against our immigration policies toward Haiti and Haitians living in the Dominican Republic. Our aim now is for CELAC, and the OAS, to get to know the DR better and to understand why we have taken certain decisions.

Under the leadership of President Danilo Medina, the Government of the Dominican Republic’s

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ANDRÉS NAVARRO attended the Universidad Autónoma de Santo Domingo (UASD) and Universidad Nacional Autónoma de México (UNAM), before embarking upon a diverse career as an architect, writer, professor and politician. Between 1998 and 2014 he held a number of senior posts in the municipality of the National District (Santo Domingo), becoming Secretary General in 2012. He served as Cabinet Director to the Minister of Public Works from April to September 2014, when he was appointed Minister of External Relations by President Danilo Medina.

Everybody needs good neighbours: the Dominican Republic’s

Foreign Minister, Andrés Navarro with Former

President of Haiti, Michel Joseph Martelly

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Diplomacy is about more than just foreign affairs: business relationships are often more sustainable than their political counterparts

overriding priority is to reduce poverty and inequality among CELAC’s 33 members. This theme tops the five pillars of the “Agenda 2020”, tabled by Costa Rica and Ecuador, which held the presidency in 2014 and 2015 respectively. The other pillars are education, technology and innovation; the environment and climate change; infrastructure and connectivity, and financing for development.

During our presidency of CELAC, the DR will also be pushing the United Nations 2030 Sustainable Development Agenda, which we believe should be the cornerstone of OAS policies. The problem our region faces is that it has become too isolated, and that is something we want to address during our presidency. In the case of the OAS, we want to see reform: the organisation needs to be stronger, it needs renewing, and it needs to be more cohesive. Overall, the main challenge we need to tackle is how to promote better dialogue among the members of both organisations, and in particular over human rights, democracy, and security.

I would also like to mention CARICOM, which has been particularly critical of the DR over our immigration problems with Haiti. The DR needs time to establish a relationship with CARICOM if we are to address the concerns of Haiti.

You have dedicated a lot of your time in office to resolving the difficult bilateral relations with the DR’s closest neighbour. What outcomes do you feel you have achieved?

Haiti is our neighbour on the island of Hispaniola (originally known as Quisqueya to the native Taíno indians), and as such it is one of our most important relationships. But the situation there has been very unstable for many years, and has been made more difficult since the earthquake of 2010. Quite simply, the situation is still not stable enough to establish an agenda yet. We will have to wait until the country is able to hold its general elections, and then make a decision based on what happens afterwards. All of this has made it difficult to establish long-term relations and to map out policies for the future. Everything we did last year was necessary to help establish this relationship. As soon as a new government is installed we will continue talking.

The government and business leaders of the Dominican Republic will continue to work with our Haitian counterparts to overcome stumbling blocks, and we have already outlined areas for cooperation. These include improving trade and normalising freight transport between the two countries. We have both given our support of the Quisqueya Binational Economic Council (CEBQ) initiative, which gives a key role to the private sectors of our two countries. At the same time, our respective foreign ministries are

in constant contact to coordinate the repatriation of undocumented people.

The two countries’ private sectors appear to have closer relations than their governments, as the CEBQ initiative shows. What can government learn from the approach and experience of the private sector in this regard?

We return to the idea that diplomacy is about more than just foreign affairs: business relationships are often more sustainable than their political counterparts, which is how the CEBQ will help promote human development in our border regions with Haiti. Improving relations with Haiti is not just about political dialogue, there is a whole range of other organisations and sectors involved in the process: sport, culture, business, education, and so on. As with the European Union, which doesn’t function simply at the political level, neither can our diplomatic relations with our neighbours. We need to take a more inclusive, participative approach to diplomacy, and that means involving civil society and business.

At home, the foreign ministry’s team is working closely with the leadership of the National Business Council (CONEP) to outline a strategy to boost exports and promote trade and investment in the Dominican Republic.

Our aim is to forge a partnership to collaborate and develop various topics of common interest with the private sector as part of an ongoing process of trade liberalisation, creating jobs and spurring the growth of exports in the process. The government is committed to bolstering ties with the export sector, which, as I say, can play a leading role in the efforts of our ambassadors abroad. Ours is a broad vision that will connect the foreign ministry with business, in the knowledge that this strategic alliance can lead to economic development. F

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Dominican Foreign Minister Andrés Navarro in conversation with Alastair Harris, Editor of FIRST

IntErvIEw wItH HÉCTOR VALDEZ ALBIZUGovernor, central bank of the dominican rePublic

HÉCTOR VALDEZ ALBIZU is the Dean of Central Bank Governors of the Americas. During his 18-year tenure (1994-2000 and 2004-present) of continued macroeconomic stability, the Dominican Republic registered the highest average rate of growth in the Americas, more than tripling the size of per capita GDP. He is a graduate of the Universidad Autónoma de Santo Domingo (UASD), the Institute of Social Studies of Chile’s Universidad Católica and the IMF’s Institute of Advanced Studies.

Steady as she goes

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At a time when Latin American and Caribbean economies are struggling to adjust to the downturn in China and the continued impact of the financial crisis in

the EU and the United States, in contrast, the mood in the Dominican Republic is one of quiet confidence in the future.

“The governor of the Central Bank of Mexico recently told me that we’re laughing while our neighbours are crying,” says Central Bank governor Héctor Valdez Albizu, adding: “The big risk to the region comes from the fall in commodities prices: Latin America now faces the conditions that will reduce growth.”

Mr Valdez Albizu has worked at the Central Bank for most of his career, rising through the ranks after he joined in 1970 to become governor in 1994, a post he has occupied continuously since then, aside from a four-year break between 2000 and 2004. A veteran political insider, he is one of the main architects of the Dominican Republic’s economic reforms of the last two decades, and offers unique insight into his country’s success story and what sets it apart from its regional neighbours.

“Generally speaking, there are two kinds of economy in Latin America and the Caribbean: those focused on exporting raw materials and commodities, and those like ours, which while small, are open, flexible, and diversified,” he explains.

After growing by an average of 4.3 per cent between 2004 and 2011, the economies of Latin America managed just 2.6 per cent in 2015. “Brazil has had to raise interest rates sharply to contain inflation and is unlikely to beat its 2013 growth of 2.3 per cent. Mexico, although less commodity-driven than South America, is unlikely to do much better. The data suggests that Chile is growing at its slowest rate for four years. Even Peru, along with Panama, the region’s star economy of the past decade, is feeling the pinch,” says Mr Valdez.

“Last year, Brazil went into recession, while we enjoyed 7 per cent growth; the previous year was 7.3 per cent. The growth in our economy has not been affected by the financial crisis in the US or China’s slowdown,” he continues, noting that in 2015, tourism, the economy’s biggest sector, brought in US$6.5 billion in foreign earnings, while remittances from Dominicans working abroad amounted to US$4.5

billion. In total, the Dominican Republic’s foreign exchange earnings from tourism, remittances, foreign investment, and exports of goods and services for last year exceeded US$23 billion, or 35 per cent of the total GDP, says Mr Valdez. The country’s economy is worth around US$61 billion. Inflation remains at 2.3 per cent, below the 4 per cent target set by the government.

Mr Valdez says neither is he overly concerned about fall-out from the situation in Venezuela, even though its heavily oil-dependent economy has been sent into a tailspin by the collapse of crude prices, starving the country of cash to pay for domestic energy subsidies and imported goods. With little foreign currency reserves left, the economy is contracting, inflation has soared and the government has resorted to rationing food and other consumer staples.

Under former President the late Hugo Chávez, Venezuela launched the so-called Petrocaribe accord in 2005, seeking to become a low-cost energy provider and win political favour among small island economies heavily reliant on oil imports. Since then, it has drastically cut back that policy.

“Fortunately, the Dominican Republic has a more diverse source of oil imports and will not be hit as hard by the loss of cheap Venezuelan oil,” says Mr Valdez. Furthermore, he says, much of the capital flight from Venezuela has landed in the DR’s tourism sector.

Looking to the longer term, Governor Valdez believes a solution will be found to the current political stalemate in Venezuela.

Learning the lessons of historyThe Dominican Republic learned the lessons of overdependence on commodities during the military rule of the early 1960s. When it emerged from civil war in 1965, successive governments introduced legislation to create an industrial base and to diversify the economy.

By the mid-1990s, having laid the foundations for a reasonably diversified economic base, successive governments began setting up special economic zones that provided the ideal conditions for capital investment by allowing companies within them to effectively operate outside the regular domestic economy.

What the DR also did was embrace globalisation. While many other countries have also done the same since, the Dominican Republic’s experience has

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Whilst its regional neighbours are buffeted by the chill winds of global commodity markets, the Dominican Republic continues to chart its own very different course

permeated more deeply, says Mr Valdez. By the first years of the new millennium, the

Dominican economy was stronger than it had ever been: it had enjoyed the fastest economic growth in Latin America since the 1970s, averaging 3.2 per cent annually until 2003. But that year it embarked on the ill-advised bailout of Banco Intercontinental (known as BanInter), the country’s second-largest private bank, sparking a crisis that doubled government debt and destroyed the value of the currency.

“A drastic overhaul was needed to restore macroeconomic stability and confidence in the financial sector, as well as to tame spiralling interest and inflation rates,” explains Mr Valdez.

In the years that followed, a series of hard-hitting financial reforms and the close coordination between monetary and fiscal policies ushered in a new period of economic growth and a revitalisation in all sectors.

Since then, the country has continued to attract FDI, which has increased by 245.5 per cent over the last decade. “The main factors that have influenced this increase are the country’s macroeconomic stability, low inflation and relative stability of the exchange rate and a healthy financial, liquid, solvent and well capitalised system,” says Mr Valdez.

“Creating the conditions investors need is not rocket science,” he notes, highlighting the impact of continued legislation to improve the business climate, such as an FDI Act that provides the same facilities and guarantees to foreign investors as Dominicans, based on clear rules and regulations, with incentives for investors in different sectors.

“Diversification has contributed to the increase in investment flows,” says Mr Valdez. “In 2000, four sectors: electricity, telecommunications, trade, and tourism, accounted for 82 per cent of FDI. Today, the spectrum of sectors has expanded to include real estate, construction, and finance. We’re confident that we can now attract greater investment to develop mining and agriculture.”

“In addition, ours is a country characterised by long-standing democracy that has provided political and social stability,” he adds.

The country also benefits from its location along Caribbean and Central American shipping routes, while it is just three hours flying time from the eastern seaboard of the US. The country has first-world transport infrastructure, with eight international airports and a world-class telecommunications system.

Over the last four years, the DR has also pursued a policy of greater regional integration.

The country’s participation in major trade agreements like DR-CAFTA, CARICOM, the Economic Partnership Agreement (EPA) with the EU and others boosts its appeal as an investment

destination. In January, the Dominican Republic took over the rotating presidency of the Community of Latin American and Caribbean States (CELAC).

Banking sector reformSince the crisis of 2003-2004, the financial sector has undergone considerable development through the implementation of robust policies that have addressed fundamental weaknesses and greatly improved performance.

New regulations, such as additional capital requirements, have been implemented, says Mr Valdez. Enhanced transparency in the eyes of the general public has been a key step, which has been supported via independent regulatory institutions and the introduction of relevant banking requirements, he explains.

“The principles of the Basel Accords were also adopted so as to enhance the standing of the Dominican Republic’s financial sector within the international system: market risk is now highly regulated by ensuring equal treatment to all entities, regardless of capital origin,” says Mr Valdez. The periodic review of contingency plans is also employed in order to address the shortage of funds of financial intermediaries.

Measures such as publishing of monthly and annual financial statements, as well as detailed information on the loan portfolios of various financial intermediaries, have improved transparency in the sector and contributed to its health: “We have moved to a model of risk-based supervision, based on high levels of liquidity and solvency, as well as greater international openness.”

Elections unlikely to affect growth or investmentMr Valdez is confident that the presidential elections in May, which current incumbent Danilo Medina is expected to win, will have little impact on the broader economy: “We project that this year, the DR will continue its sound economic performance, growing by its potential level of 5.5 per cent to 6 per cent, and that inflation will converge toward the lower limit of the target range of 4 per cent to 1 per cent at the end of the year, with a current account deficit of around 2 per cent of GDP.” Mr Valdez says macroeconomic performance will be driven by the favourable international environment for the country, characterised by improved terms of trade (particularly lower oil prices and higher gold prices) and by the recovery in the United States, the country’s main trading partner.

“Continued high levels of exports from industrial free zones, along with tourism, remittances, and foreign direct investment will all continue. Additionally, we expect private sector loans will grow by around 10 per cent, similar to the rate of expansion of nominal GDP, thus contributing to maintaining the growth of private production.” F

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IntErvIEw wItH JOSÉ DEL CASTILLO SAVIÑÓNminister of industry and commerce, dominican rePublic

JOSÉ DEL CASTILLO SAVIÑÓNgraduated in Law from Pontificia Universidad Católica Madre y Maestra University, from which he also received a Master’s in Economic Legislation and Business Law. In addition to his legal advisory firm Gabinete Economico S.A., which provides legal advice to private and public enterprises in trade, foreign investment, government relations and communications, in 2011 Mr Del Castillo was appointed Vice Minister of Industry and Commerce for Fuels and Mining, before assuming his current role in the government of President Danilo Medina in August 2012.

The power of regional trade

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More than 95 per cent of businesses in the Dominican Republic are small and medium-sized enterprises (SMEs), generating more than two million jobs and accounting for 30 per cent of the country’s GDP. What is the ministry doing to help this vital sector?

Within days of taking office we set about implementing measures to help micro and SMEs which, as you say, are the backbone of the country’s industrial and commercial sectors. One of the main problems micro and SMEs face is barriers when trying to access credit, and for that reason we are in the process of identifying potential new financial resources for these enterprises. In this regard, we have established a fund and created the Solidarity Bank, which is helping to meet the needs of SMEs.

In October 2013, the government launched a one-stop shop to facilitate the starting of new businesses and formalising the existing ones, because we should remember that more than 50 per cent of jobs are still in the informal sector. Our goal is also to encourage the formalisation of small, micro and medium-sized businesses currently operating in the shadow economy. Previously, it took up to a month to set up a company, involving multiple money transfers, three forms, and four visits to different offices. Now the process to set up a company takes just seven working days, and requires just one transfer to the Chamber of Commerce.

How are the various free trade agreements (FTAs) signed with the US and EU, along with the country’s Free Trade Zones (FTZs), impacting on trade and investment?

The Dominican Republic has four FTAs in force. Most of our trade is carried out through these agreements. Exports to the US and the EU are at record highs. Investment comes mostly from those same sources, although Brazil, Mexico, Colombia and Venezuela are growing fast in importance.

With Haiti, our second most important export market at the moment, we hope to strengthen our regional ties in the context of our Economic Partnership Agreement (EPA) with the EU, which includes a regional preference clause to that effect. By virtue of this clause, what the DR gave the EU will be extended to Haiti and vice-versa. However, this requires Haiti to ratify the EPA, which has been pending since 2009.

The new strategy for trade negotiations envisages our developing closer ties with countries like Canada, Colombia, Chile, Mexico and other regional trading blocs. These are necessary requirements for us to consolidate our potential to become the logistics hub of the Americas.

The key policy of encouraging FDI through the expansion of FTAs and the development of FTZs has been a significant success. As a signatory to several major international trade pacts, the Dominican Republic has attracted the interest of larger markets as a result of its productive capacity and its enviable location between North and South America, en route to the Panama Canal from Europe and other markets around the world.

The FTAs give us duty-free access to the largest consumer markets with greater purchasing power. Furthermore, these facilities place us on equal terms with Central American countries. Also, these treaties provide us with an environment of greater legal certainty, which is a further incentive for investment. What’s more, these treaties can be beneficial in so much as they oblige our manufacturers to compete more effectively by offering products that meet the standards demanded by these countries. In the agricultural sector, for example, there is still a lot of potential for us to reap the benefits of these treaties.

We are also trying to boost our mining exports, a sector designated as strategic by the government. For example, the implementation of the Pueblo Viejo gold mining project will add more than US$2 billion to our overall export figures in 2016, which represents a 20 per cent increase in our exports. The government also aims to provide continuity to the Export Processing Zone (EPZ) scheme to further attract FDI into the Dominican Republic, especially in the manufacturing sphere.

The Dominican Republic currently holds the presidency of the Community of Latin American and Caribbean States (CELAC), which puts increasing regional trade as one of its primary goals. Is the Dominican Republic making the most of the potential to boost its exports to the region?

Obviously, our biggest export market is by far the United States: nearly 60 per cent of our exports go there. After that, it’s Haiti and the EU, the main destinations for goods produced in the DR. In total,

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The only way to create a stronger Haiti, one that can be a better business partner for all the countries in the region, is to sit down and talk

we are talking about exports worth US$9.6 billion last year. Unfortunately, one of the main challenges we face in increasing our share of trade with some of our regional neighbours is the protectionist policies they still pursue. This has to do with the scale of their economies: they cannot compete with us on price, so they protect their markets. They see us a power in the region, the biggest economy in the Caribbean region, for instance, and in many ways as a threat to them. The other difficulty is lack of connectivity. We do not have fast, efficient ways to get our goods to these regional markets. Transport costs are high. The Caribbean should be a natural market for us, but it isn’t. We want to diversify our export markets, but until these two issues are addressed, we’ll have to look further afield. We are looking at Russia particularly, as well as China and Asia, for luxury goods such as rum, organic cocoa, and cigars: we control 40 per cent of the world cigarette and cigar market. They are our second biggest agroindustrial export.

What is being done to improve tax collection? The informal economy is the key challenge here. This is why part of the measures we’ve introduced are fostering people working in the shadow economy to formalise SMEs while making it simpler for them to pay their taxes. What’s more, we have tax scales so that smaller firms pay a lower rate of tax. On the issue of unfair competitive advantages of companies operating in FTZs, they are entitled to sell part of their production to the domestic market, and recently adopted legislation has approved a 2.5 per cent tax on these companies’ activities in the local market that effectively constitutes an income tax. Such a move aims to eradicate potentially unfair competition. We believe that the EPZ scheme should be continued, because it currently generates 130,000 direct jobs and over US$4 billion in exports.

The first meeting of the Quisqueya Binational Economic Council (CEBQ) to facilitate the development of the Haiti/DR border area, took place in November, between leaders of the private sectors of Haiti and the Dominican Republic. Given the current uncertainty in Haiti, how confident are you that this initiative can gain traction?

As you know, Haiti is in the midst of a major political crisis and this has interrupted the talks. We understand the difficulties they face, but our more immediate priority is to deal with the Haitian ban on Dominican imports. These sanctions could end up costing us US$500 million in lost exports over the year. As part of ongoing trade talks, our two governments agreed to enhance commercial trade and normalise ground transport of goods. Even though there have been

political problems between the Dominican Republic and Haiti, trade between our two nations continues on a daily basis, although much of it is smuggling. We will be able, through this agreement on trade, to fight against smuggling – the scourge that hinders economic development in Haiti. Estimates suggest Haiti loses more than US$300 million because of smuggling. The only way to fix it and to help build a stronger Haiti, one that can be a better business partner for all the countries in the region, is to sit down and talk. The private sectors in both countries have asked their respective governments to work faster toward the ratification of mechanisms for tariff harmonisation, taking into account existing regional trade agreements.

In recent years the DR has begun developing closer ties with China. How has the trade relationship been affected by China’s economic slowdown?

China is not a key export market for us yet, in fact it’s our competitor in terms of manufacturing. Recently, we have been benefitting from increased labour costs in China, particularly in textiles. China has been hit by different factors that have pushed up its manufacturing costs, which has allowed us to position ourselves better, particularly in the FTZs, where we have created 46,000 jobs in recent years. So, the slowdown has not had a negative effect, in fact, it has helped us. That said, over the last few years, we have increased diplomatic and trade relations with China, and we now have mutual commercial representative offices here and there. At the same time, we are organising official visits between both countries to improve trade links. Trade relations will increase as we move forward, and as I said, we are focusing on increasing exports to China. There are many opportunities for both countries to develop commercial and industrial ties, particularly in the mining and energy sectors.

Looking to the future, which sectors do you expect to drive sustained economic growth in the Dominican Republic?

We are looking at developing non-traditional areas, and we will do this through the FTZs. As I just mentioned, we want to increase our share of textiles exports, and jewellery, medical instruments, pharmaceuticals, electrical and electronic components, are already at the top of our export list. Moreover, we’re strengthening our presence in Europe through organic products, particularly cocoa and banana, as well as tropical fruits and vegetables. We also have potential in heavy industry, as well as technology, and we are talking to [Taiwanese electronics giant] Foxconn about setting up an assembly plant. We also need to set up clusters to link education, technology, and manufacturing to foster innovation. F

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IntErvIEw wItH FRANCISCO JAVIER GARCÍAminister of tourism, dominican rePublic

FRANCISCO JAVIER GARCIA graduated in Economics from UASD and also undertook postgraduate studies in Law at the University of the Caribbean. He is a member of the Partido de la Liberación Dominicana (PLD) and the principal director of its election campaigns, including the current campaign of President Danilo Medina and those of his predecessor, Leonel Fernández. Mr Javier has held a number of senior roles in government and public life, and was Minister of Industry and Commerce prior to his appointment as Minister of Tourism, by President Fernández, in 2008.

Growth through diversification

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What is your assessment of the current health of the Dominican tourism sector, both in historical terms and vis-à-vis your competitors in the region?

The Dominican Republic leads the Caribbean in tourism growth. 2015 was our most impressive year to date, with a record 5.6 million tourists, about 9 per cent higher than 2014. Growth should continue during 2016, both in arrivals – due to additional tourism avoiding crisis areas in the Mediterranean – and in capacity, with more than 1500 rooms under contract, in order to keep up with the present upward trends.

What is the current contribution of the industry to the Dominican economy, both directly and indirectly?

Last year tourism generated US$6.2 billion and over 250,000 direct and indirect jobs. For a country with the ninth largest economy in Latin America – and the largest in the Caribbean and Central America – these are not insignificant numbers. We are talking about a sector that represents 10 per cent of Dominican GDP and generates about the same share of direct and indirect jobs.

Tourism also makes the Dominican Republic more resilient to international shocks. In 2008, the last crisis year for the world economy, tourism managed to grow 3 per cent. Since then, growth rates have picked up and new investments continue to arrive, allowing us to cater to different market segments.

You have overseen one of the most important periods of growth in the DR’s tourism sector since taking office in 2008, and have said that the country’s future prosperity depends on the further development of the sector’s potential. Is the country’s mainstay – the all-inclusive sun and beach model – sustainable, in your view? What is your strategy for diversifying the Dominican tourism offering and moving it further up the value chain?Diversification for us means moving up-market. There are more villas for sale and for rent than ever before, surrounded by award-winning golf courses. Growth in this segment continues unabated.

New luxury hotels in all areas of the Dominican Republic have opened up. Some belong to the most prestigious networks, such as Relais & Chateaux, the Leading Hotels of the World and the Small Leading Hotels of the World. In all cases, the natural environment is as superb as in the all-inclusive hotels – this is the Dominican Republic after all – but the quality of service and the sophistication of the facilities have reached new heights.

All niches are being targeted: golf travel, eco-tourism, MICE (meetings, incentives, conferences and exhibitions) adventure travel and business-leisure spaces – but we are working to define, support, grow and sustain these categories and initiatives.

Punta Cana continues to receive about 66 per cent of our visitors. While all-inclusive hotels – in Punta Cana and the rest of the country – will continue to be a staple of Dominican tourism, new types of travelers, whether interested in our natural parks or our heritage, in adventure or in luxury, have plenty of lodging options available.

The Dominican Republic has an ‘embarrassment of riches’ in niche sub-sectors such as wildlife and eco-tourism, yet is only just beginning to market itself as such. What is your view of the potential of this area, and what is the ministry, and the private sector, doing to capitalise on it?

The potential offerings for eco-minded travelers are rich and plentiful. We are proceeding cautiously and with great care to structure eco-tourism in a way that minimises the impact on our ecosystems, while sustaining the surrounding communities. In order to become successful in these sectors, we must be able to preserve them not only for the enjoyment of

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The historic Fortaleza San Felipe in Puerto

Plata: the region was at the forefront of

the DR’s early tourism development and is now experiencing a revival in

visitor interest

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Last year tourism generated US$6.2 billion and over 250,000 direct and indirect jobs in the Dominican Republic

future generations, but with the utmost respect for our indigenous flora and fauna.

Our protected national parks represent about two-fifths of the national territory. They are open and ready for adventurous visitors willing to experience our unique ecosystems, our indigenous flora and fauna and the legendary hospitality of Dominicans in rural areas. In spite of the hype elsewhere, no other country in Central America or the Caribbean has the biodiversity we have in the Dominican Republic. This being recognised more and more and, in a sustainable way, has to become part of what we offer our visitors.

Do you see a significant role for the likes of health and religious tourism in the country?

We have seen more interest in historic/cultural travel and wellness travel as a whole. Travelers are interested in visiting us to learn about our diverse history and how this has shaped our culture – this includes Carnival parades, visits to Santo Domingo’s Colonial Zone to explore our extremely rich cultural heritage, participating in Holy Week celebrations, making pilgrimages to the Basilica in Higüey or the Santo Cerro (Holy Hill) in La Vega and more.

Visitors also are arriving to our more nature-centric areas, such as Samaná, Puerto Plata and Jarabacoa, to pursue many forms of wellness – seeking to “detox” or to disconnect from their devices and daily stress, and use nature or adventure as a path to their personal wellbeing. More and more of our hotels have outstanding spa facilities, where the healing hands of Dominican masseuses are guaranteed to work their magic on many a painful back.

You recently announced new investment projects in Pedernales province. What more can you tell us about the government’s master plan to develop the region?

We have a strategic master plan to develop the province of Pedernales, beginning in 2017. The plan has been designed to maintain the sustainability of the protected areas that make up 55 per cent of the territory of the province.

Despite the evident prosperity of the Capital, and other hubs like Punta Cana, the reality for ordinary Dominicans living in rural areas is very different. What role can the tourism sector play in spreading the economic benefits to those most in need?

Punta Cana is the destination that sees the heaviest number of tourism arrivals. However, it is just the easternmost tip of the island. We are working to demonstrate to travelers that there is much more to the Dominican Republic than all-inclusive resorts. Other up-and-coming tourism hubs include Puerto Plata, Samaná, La Romana, Jarabacoa and Pedernales, to name a few.

The tourism industry truly benefits the entire country, and all of its sectors. From jobs provided by the existing pillars of tourism – resorts, hotels, restaurants, spas, attractions and transportation – to the creation of new jobs through further developments elsewhere in the country.

Agriculture, animal husbandry and fishing benefit greatly from tourism as well. All of the food served in our hotels is grown locally, ensuring rural jobs and further enhancing the impact of tourism in fighting poverty. Our food-producing sectors supply the Dominican and Haitian domestic markets as well as important export markets in the Americas and Europe. But clearly, the additional demand arising from an additional 5.6 million visitors is an additional source of ‘exports’ to our foreign visitors, without having to worry about international freight rates.

In addition to these, we are still constantly looking for ways that we can do more. This is reflected in our cruise port strategy. Our cruise ports are located near rural areas that so that those areas may benefit from the cruise passengers’ spending on locally manufactured crafts. We are looking for additional ways to increase the number of tourists that arrive via cruise ship, so that we may continue to grow the economies of these surrounding communities.

How concerned are you about the impact of improved Cuban-US relations and the easing of travel restrictions for US citizens on what is, after all, the DR’s most important source market? Which other countries are you targeting to make up for any shortfall?

Lifting travel restrictions from the US to Cuba should increase the rate of growth of the Cuban economy. The logical consequence is that greater growth in Cuba

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Bahia de las Aguilas in Pedernales province, near the border with Haiti, is widely considered one of the finest beaches in the world

All photographs: Ministry of Tourism

of the Dominican Republic

All of the food served in our hotels and resorts is grown locally, ensuring rural jobs and further enhancing the impact of tourism in fighting poverty in the DR

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should result in more Dominican growth: our private sector has a history of catering to the needs of the Cuban market in a number of areas, from construction materials to toiletries to foodstuffs. Moreover, it should benefit the Caribbean as a whole by making it a more diverse and unique travel destination for the US tourist.

The hotel industry in the Dominican Republic is conscious of the capacity constraints in Cuba, a market with which they have been competing for non-US tourists for many years now. Once these are overcome, we will continue to be prepared for further competition by providing to the most discerning tourists something unique – our very diversified tourism product, with our nine distinct ecological zones, our rich and unique cultural heritage, our growing roster of luxury resorts, our award-winning golf courses and our gastronomy. We are well-prepared to welcome the new waves of travelers that should become ever more interested in the Caribbean as a result of the changes in Cuba.

In addition, the Dominican Republic is investing in growth opportunities outside of North America, and these have already begun to see success. Markets include, but are not limited to Brazil, Argentina, Chile, Venezuela and Colombia.

The Hard Rock Hotel chain is developing a 40-storey property in Santo Domingo, which seems a pretty bullish move, to put it mildly. What is the Ministry’s strategy for attracting more visitors to the Capital – and where does the MICE segment figure in your plans?

The city is a booming hub for business travel. Its conference and meeting spaces offer the latest in presentation and professional technology, in a setting that is as cosmopolitan as it is historic. We are working

to demonstrate to a variety of niche markets that our capital city has much to offer, whether that may be a family looking for an educational vacation, a group interested in haute cuisine, travelers searching for a boutique hotel experience or business travelers looking to make the most of their trip.

We are similarly confident in the opportunities for growth in Santo Domingo, and are doing the necessary research, so we have the hard data to support our goals. A recent example is the feasibility study we conducted on building a new convention centre in Santo Domingo by 2017.

The MICE segment is an important one for this destination, particularly given Santo Domingo’s central location and the accessibility to the other destinations of Punta Cana, Samaná, Puerto Plata and others.

It is probably fair to say that many visitors to the DR are unaware that it shares the island of Hispaniola with Haiti. The private sector-driven Quisqueya Initiative [to promote cross-border investment and economic development between the two] represents an important step in improving economic – and hopefully, political relations. What potential do you see for greater collaboration in tourism?

We have already set several things in motion to help Haitian tourism regain its growth potential. We have developed a special committee of leaders from the private and public sectors of both countries. Together, they are working to develop and promote not only tourism to Haiti, but also understanding how we can work together to grow as a multiple destination – once they are ready.

Mosquito-borne diseases such as Chikungunya, and most recently, Zika, have caused widespread alarm, particularly among those travellers thinking of starting a family – such as honeymooners, who have long favoured the Caribbean as a ‘dream’ destination. What impact has the outbreak had on tourist numbers in the DR so far? What is the Government doing to address the issue, and what would you say to would-be visitors worried about the situation?We have not seen a significant change in visitor numbers, nor many travel cancellations. We have long been aware of various mosquito-borne ailments and have been taking proactive measures against such diseases for many years. Due to this, the impact of the recent alarm on the country has been minimal – tourist areas have not been impacted, as we have dedicated teams working to treat for the insects and educate hotel operators and locals alike on how to safely destroy mosquito breeding grounds, which includes regular removal of any standing water. F

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Santo Domingo’s Colonial Zone: the centrepiece of the

government’s strategy to develop the capital’s

tourism potential

LA MÁXIMA EXPRESIÓNDONDE LA ATENCIÓN A LOS DETALLES, HACEN LA DIFERENCIA

FRENTE A LOS MÁS EXIGENTES VIAJEROS.

DE ESTILO Y ELEGANCIA.

Contamos con salones de reuniones y eventos, granvariedad de servicios de lujo en el Lounge Ejecutivo.Ubicados en el lujoso y moderno complejo comercialBlue Mall SD.

IntErvIEw wItH ANGEL ESTÉVEZ BOURDIERDminister of aGriculture, dominican rePublic

ANGEL ESTÉVEZgraduated with a BSc in Agricultural Sciences from UASD. He began his career in 1985 at DOMEX, an Israeli company producing and exporting melons and vegetables, before joining Anglo-American as a seller of agrochemicals. He subsequently moved to CALOSA in 1993, becoming general manager of the company in 1996. A member of the PLD since 1982, he joined the party’s Central Committee in August 2012 and was appointed Minister of Agriculture on 24 April 2014.

Raising the bar in agriculture

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The agricultural sector in the Dominican Republic has expanded significantly in recent years. What have been the main factors driving this growth, and how do you see the outlook in the medium term?

Over the past four years, total agricultural production in the Dominican Republic increased in volume by 5.6 per cent, from 5.7 million metric tonnes in 2012 to 6 million tonnes in 2015. Among the factors driving this growth were the increased planting of rice, which posted a record increase of 17 per cent in the first half of 2015, despite the severe drought. As part of this drive, the Bioarroz project was launched in Juma, Bonao, renovating three centres producing high-quality rice seeds and thus improving rice varieties.

More generally, growth in agriculture has resulted from the additional availability of credit, with US$1.2 billion disbursed over the period. Productivity gains have been obtained as well: levelling of agricultural lands enabled a 300 per cent increase in corn [maize] production in the province of San Juan alone.

Risk management has also been an important factor in enabling this growth. By virtue of the new Law on Agricultural Risks, enacted in 2013, some 27,000 subsidised insurance policies have been issued, a cumulative growth of 74 per cent, covering an area of 16,719 hectares, for about US$5.4 million.

Agriculture should continue to grow 15 per cent by volume in the medium term, to 7 million tonnes. This we expect to achieve by incorporating new planting areas – from 325,000 to 362,500 hectares, a 10 per cent increase; through a 48 per cent growth in greenhouse production – reaching some 14 million square metres; by distributing 1.6 million seedlings, covering at least 10,625 hectares of fruit production; and by better pest control practices through precision application of pesticides.

Investment in infrastructure, a mainstay of Dominican agriculture, should continue as well, through the construction and rehabilitation of 5,000 km of roads between farms, reducing transport costs for inputs to farms and of farms’ output to destination markets.

Water scarcity will continue to be addressed by accelerating the introduction of efficient irrigation systems on top of our network of water canals. Priority will be given to the irrigation of bananas and plantains, which represent 38 per cent of planted areas.

Agricultural credit is set to increase as well, by 70 per cent, from US$1.2 to 2.0 billion. And so is

the expansion of agricultural insurance, by 108 per cent, from 96,471 to 200,522 hectares. In terms of employment, we expect to create 112,526 additional direct jobs, for qualified and non-qualified personnel.

The DR has been extremely successful in adding value to its tobacco and cocoa exports, in particular. Which other agricultural products do you see as offering significant potential in this regard, and what steps is the government and private sector taking to move the country further up the value chain?

There are several crops with high export potential, which have experienced dramatic growth recently. Among these, pineapple exports grew by 34 per cent, mango exports by 7 per cent, passion fruit exports by 291 per cent and eggplant [aubergines] by 174 per cent, from US$2.3 to 6.3 million.

In the livestock sector, the export of fish and shellfish grew 38 per cent, from US$9.5 to 13.1 million; beef exports grew 93 per cent; honey and derivatives grew 38 per cent and milk and dairy products grew 6 per cent, from US$8.3 to 8.8 million.

The government tries to encourage investment in these products while focusing on creating and maintaining the right sanitary conditions to reduce risks in demanding destination markets in Europe and North America.

Much of the DR’s agricultural produce still comes from smallholdings. What support is the government providing to help improve these farmers’ productivity and expand their operations?

In order to develop the agricultural sector, priority is given to supporting small and medium-sized producers. Whilst all projects and initiatives are aimed at benefitting all producers, special priority is given to those smallholders with less than 2 hectares which, left unsupervised, would have to survive through basic subsistence farming.

All smallholders are potential agricultural entrepreneurs. To realise their potential, the ministry is promoting associations and cooperatives, in order to increase productivity by allowing the production of greater volumes of standardised products meeting the demands for quality of domestic and international clients. Success in exporting Fairtrade bananas and cocoa

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All small-holders are potential agricultural entrepreneurs. To realise their potential, the ministry is promoting associations and cooperatives, in order to increase productivity

would have been impossible without this approach.A massive land title programme is also well under

way, so that small holders are eligible for credit in formal markets. Additional support is provided through public services such as training, extension, and land levelling, as well as through the provision of high-quality planting materials, and our long-term commitment to the improvement of infrastructure.

At the other end of the scale, where do you see the greatest investment opportunities for the expansion of larger-scale agribusiness in the DR?

I think there is a great opportunity in sub-sectors such as fruit and vegetables, and livestock. The DR has the necessary conditions to produce almost all kinds of food. In addition to which, our strategic location allows our producers to reach quickly and reliably our main destination markets in the US and Europe. The private sector has already identified these opportunities, and it is only a matter of time before the take-off of Dominican agro-industry is achieved.

There is great investment potential in harnessing the added value of agricultural commodities such as coconut, cocoa, and corn [maize], as well as in greenhouse production, aquaculture, honey and derivatives, among others. In this fashion, we are ready to take the next step, moving from our status as a provider of high-quality commodities. Branded cosmetics and pharmaceuticals are being produced already with Dominican inputs. The next step would be to add value to our commodities in our own territory, taking advantage of our favourable tax regime for industrial exports, as well as of our optimal location, logistics and free trade agreements with the US and Europe.

Last year’s outbreak of Mediterranean fruit fly was a wake-up call for Dominican producers who had grown used to relying on the United States as the main destination for the country’s exports. How successful has the DR been in diversifying its export markets, and what steps are being taken to prepare for the expiration of preferential tariffs in 2020?

In recent years, the country has diversified both its exports and its target markets. In this regard, our main export markets are the US, Haiti, the EU, Russia, Japan, China, and other Asian and African countries. Regarding livestock, we managed to reopen markets in Hong Kong, El Salvador, Cuba and Haiti. So, we are making good progress in diversifying our destination markets. And with the joint efforts of institutions that promote the quality of our products around the world, such as the Ministry of External Relations and CEI-RD, we hope to continue succeeding in the future.

Demand for quality foodstuffs continues to rise in many parts of the world. To what extent is the DR able to ramp up its production to meet this demand?

The DR has the potential to increase its export volume to address the growing demand in existing markets as well as the needs of new markets. Our agricultural exports grew 15 per cent during 2012-15, from US$1.8 billion to 2.0 billion. Over the next four years we expect an increase of 56 per cent, or US$1.1 billion, from US$2.0 to 3.1 billion. This is underpinned by the expected growth in total agricultural production of 15 per cent mentioned earlier.

The DR’s hosting of the 3rd World Cocoa Conference in May this year is a testament to the quality and efficiency of the country’s farming and processing methods. In which other agricultural sub-sectors do you see the DR leading the world in future?

The DR has the capacity to lead the world in productivity and quality of a number of products, including organic bananas, organic and non-organic avocados, red peppers, plantains and coconuts.

The most serious challenge to the sector has been the drought that has affected the country over the past three years. What lessons have been learned from this experience, and are you confident that the government is getting to grips with the situation?

Climate change is a growing reality that threatens world agricultural production, including, of course, the DR. Some of the corrective measures taken I mentioned earlier – such as land levelling and precision irrigation. Other measures include the promotion of silage for the livestock sector, and the storage of water in wells and reservoirs, as well as the construction and repairing of dams. And, of course, the introduction of high-yielding varieties requiring less irrigation.

The DR’s agricultural sector has benefitted greatly from the volume of air traffic generated by the country’s tourism sector. As increasing numbers of visitors come to the DR from countries such as Russia, do you see the country’s export footprint changing significantly?

I believe that these conditions represent an opportunity to reach markets in which our country still has no presence, but above all, to increase our exports to existing markets such as the US, Europe and Asia, from which 85 per cent of visitors to the DR originate. Besides that, we are also focused on increasing domestic exports, interlacing our small producers with the growing tourism infrastructure of the country. It is a sizeable market; after all, 5.6 million tourists visited the Dominican Republic in 2015. F

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IntErvIEw wItH OSMAR BENÍTEZPresident, Junta aGroemPresarial dominicana (Jad)

OSMAR BENÍTEZ is the CEO of the Junta Agroempresarial Dominicana (the Dominican Agribusiness Board). He graduated from the Universidad Católica Madre y Maestra, as an Agricultural and Food Technology Engineer and holds a Master’s in Agricultural Economics and Agribusiness Management from Ohio State University, USA. Mr Benítez has been Agricultural Advisor to the last 4 Presidents of the Dominican Republic: Joaquin Balaguer, Leonel Fernández, Hipólito Mejía and Danilo Medina.

Growing for gold

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How did the creation of JAD come about? What are the organisation’s main activities, and how does it differ from other industry associations in the Dominican Republic?

JAD was created out of a need to establish new technical skills to facilitate the development of non-traditional agriculture in the Dominican Republic. We saw that there was a need to provide technical assistance to agricultural entrepreneurs who were looking for new investments to take advantage of the huge market opening that came about with the US Caribbean Basin Initiative, under President Ronald Reagan.

Our main activities include increasing the productivity and competitiveness of the agriculture and livestock sectors, and improving investment opportunities in them.

JAD differs from other industry associations due to the size and extent of its membership representation throughout the country: we are the largest and most important organisation of farmers and agribusiness entrepreneurs in the Dominican Republic with a membership of over 160,000 producers. In addition to acting on behalf of its members in any policy discussion with the Executive, Legislative and Congressional Powers, JAD also provides the largest and most complete technical assistance programme to the

farming sector in the Dominican Republic.Our services range from direct technical assistance

to market development – both export and local – a commodities exchange, market intelligence and reports, economic analysis, financial assistance, agricultural laboratories, farmers’ training and support, watershed reforestation, and eco/agro tourism, among others.

What benefits do producers derive from their membership of the organisation?

Membership of JAD offers producers the opportunity to belong to a recognised national and international institution that unifies the agricultural sector and promotes the valuable role played by farmers and agribusiness in the country: one that promotes the best interests of the sector and which has obtained important gains for its members, such as zero tariff rates for the importation of inputs, equipment and machinery for the agricultural sector.

In the international arena, JAD acts in the interests of its members in a number of important areas, such as leading trade negotiations to ensure proper treatment of goods and services in accessing potential markets that will boost our economy. It promotes the enactment and adoption of laws, policies and measures that help create a better investment environment and policies to benefit the agricultural sector, as well as providing high-quality laboratory analysis at competitive prices.

Furthermore, JAD offers commercial, organisational, and technical assistance services, which improve the productivity and competitiveness of its members. It has updated information on aspects such as markets, prices, production costs, and business opportunities, and provides producers with a programme of Integrated Management of Pests (IPM) which makes possible the phytosanitary health of crops, thereby improving the quality of their produce.

What do you regard as the DR’s greatest achievements, in agricultural terms?

The Dominican Republic has reached a very high level of performance and enjoys positive brand recognition in the international specialty agricultural export markets, particularly in the organic and fair trade sectors. The Dominican Republic is the major exporter of organic bananas and cocoa worldwide.

DOMINICAN REPUBLIC

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Some like it hot: Dominican producers

now export more than 100 agricultural products

to world markets

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In less than four years, the DR’s agricultural exports have gone from US$1.2bn to almost US$1.7bn

Are Dominican producers doing enough to diversify their product portfolios and export markets, in your view?

Yes, I think so. Dominican producers have worked very hard to diversify our agricultural economy away from well-known traditional crops like sugar cane, cocoa, coffee and tobacco. Nowadays, we export more than 100 different crops that find their way into the international market. In less than four years, our agricultural exports have gone from US$1.2 billion to almost US$1.7 billion.

One area of Dominican agriculture that still requires attention, however, is getting producers to take greater advantage of the country’s existing Free Trade Agreements, especially DR-CAFTA and our Economic Partnership Agreement (EPA) with the EU.

What are the main trends shaping the growth and development of the agricultural sector in the DR, and which products and niches do you expect to benefit most?

I would say that the most promising new trends in international and domestic markets that are driving the future of the Dominican farming sector sector are: Organic Agriculture, Tropical Agriculture, Ethnic Agriculture, Cosmetological and Medical Agriculture, Touristic Agriculture and Political Agriculture. All of these provide extraordinary opportunities for Dominican farmers to participate in a food market-driven future. The market demands of these seven segments have shown an exponential increase in consumption. We should take advantage of that, and we are working on it.

What rules and regulations should prospective foreign investors be aware of when exploring agribusiness opportunities in the DR?

The Dominican Republic has the most complete foreign investment legal system of any country in the whole of Central America and the Caribbean, which is why we have been so successful in attracting international capital into our economy.

In addition to this legal framework, the DR’s people, its government and its infrastructure are high-value assets that any foreign investor would want to have, to give them confidence in investing their resources. In addition to which we have a free and open market to the most important regions of the world.

What do you regard as the DR’s main competitive advantages in the agricultural sector, and where do you see areas of concern?

The Dominican Republic’s competitive advantages include its natural resources, fertile soils, abundant water supply, skilled labour, economic and political stability,

and the fastest-growing economy in the region.In addition, we also benefit from a unique

geographical location, close to the most important markets in the world: the United States and the European Union.

How satisfied are you with the government’s support for the sector – particularly its response to the drought of the past three years? What more would you like to see it do?

As I mentioned earlier, JAD is the largest agribusiness institution in the country, so I can safely say that we speak for the sector regarding the government public policy for the sector.

Broadly speaking, I would say we are satisfied with the government’s performance and its attitude towards the agricultural sector. The current President, Danilo Medina, when he was still a candidate for the presidency, committed himself to fulfilling a ten-point policy proposal that we submitted as a guide to fostering the agricultural transformation of the country.

To date, his government has complied with each and every one of these ten points that we jointly agreed that we would work on together.

What is the Bolsa Agropecuaria de la República Dominicana (BARD) and how does it work?

The Bolsa Agroempresarial de la República Dominicana (BARD) was created under Securities Market Law No. 19-00, with the objective of increasing efficiency in the trading of products, articles and services in the industrial and agribusiness sectors. To date, BARD has provided a platform for new business worth more than US$500 million to the farming sector. F

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No grain, no gain: the Dominican Republic intends to raise its total area under cultivation from 325,000 hectares to 362,500 by 2020

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The Dominican Republic’s cocoa sector has begun implementing a sustainable, value-added business model that bigger producers around the world can learn

from to protect their own livelihoods and guarantee the future of the global chocolate industry, according to the International Cocoa Organisation (ICCO).

In May, the resort town of Bávaro, on the country’s east coast, will host the ICCO’s third biennial World Cocoa Conference (3WCC), an opportunity for the DR’s producers to showcase their achievements and share their knowledge and experiences in moving cocoa up the value chain.

“One of the reasons we awarded the conference to the Dominican Republic was so that representatives from Africa in particular could talk to growers and producers here about developing new business models for growers,” says Dr Jean Marc Anga, the ICCO’s outgoing executive director and the driving force behind its strategy to create a sustainable cocoa value chain since he took over the organisation in 2010.

Cocoa (from the Spanish cacao) cultivation dates back to at least 400 BC, under the Maya cultures of Central America and southern Mexico. By the 14th century, it was a central part of the Aztec civilisation. The first outsider to drink chocolate was Christopher Columbus, when he visited the shores of Venezuela on his third trip to America, but it was Hernán Cortés, leader of an expedition in 1518 to the Aztec empire, who returned to Spain in 1528 with the Aztec recipe for xocoatl.

Over the following 500 years, cocoa cultivation has spread around the world in a belt 10 degrees either side of the equator. The largest producing countries today are Côte d’Ivoire, Ghana, and Indonesia. Prices have fallen steadily since the high of US$18,000 per tonne in 1977 to around US$3,000 per tonne over the last year, and over the last four years, annual production has averaged around 4 million tonnes.

Since that mid-1970s high, the global cocoa sector, says Dr Anga, has been increasingly unstable, recently raising concerns about its future and talk of “peak chocolate”, whereby supplies will collapse by 2020.

Dr Anga, who has more 20 years’ experience in agricultural commodity development, seventeen of which have been acquired at the ICCO, explains the problems facing the cocoa sector: on the demand side,

“growth in demand is likely to continue for decades as incomes, population, emerging markets and taste for more and new cocoa and chocolate products continue to expand.” What’s more, consumers are increasingly demanding sustainable, certified, traceable cocoa and chocolate products. “But we have not been able so far to reassure consumers that cocoa is sustainably produced, or that the additional efforts required by farmers to do so will be rewarded,” he adds.

On the supply side, he says, farmers are struggling to meet the requirements of demand: “This is due to lack of organisation, poor business skills, lack of information on existing cocoa resources, low yields, losses from pests and diseases, ageing trees, land and soil degradation, competing land use, food security, climate change, lack of access to financing, and finally, young generations moving away from the country.” At the same time, the long-term nature of cocoa growing means that supply is further threatened by under-investment in research, and creating seed banks, for example.

Under Dr Anga’s leadership, the ICCO continued with its roots-and-branch overhaul of the sector that had begun in 2007 in Accra, Ghana, when the ICCO brought together representatives from all the players in the cocoa value chain: producers, cooperatives, traders, exporters, processors, chocolate manufacturers, wholesalers, government and non-government organisations, financial institutions, as well as donors and international development aid bodies. Out of this meeting several priority areas along the cocoa value chain were identified, chief among them creating an institutional framework through the ICCO, along with sustainable production, trade, processing and manufacturing, and consumption.

Two years later, participants got together to set an agenda for future meetings that included transparency, compliance with laws, remuneration for quality cocoa, productivity and improving income for farmers, access to credit and rural development, market access and information, decent working conditions, support for farmers’ associations, land use planning and infrastructure, and conservation and diversity.

A year later, in 2010, an International Cocoa Agreement was concluded in Geneva under the auspices of the UN. The next year, the ICCO agreed to organise the WCC in 2012 in Côte d’Ivoire’s capital, Abidjan.

“At that conference, all the stakeholders in the cocoa value chain reviewed the key challenges facing

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A model for the future of cocoa

DOMINICAN REPUBLIC

JEAN-MARC ANGAExecutive Director, International Cocoa Organisation (ICCO)

JOSÉ ANTONIO MARTÍNEZ ROJAS National Coordinator, 3WCC

IntErvIEw wItH DR JEAN-MARC ANGA and DR JOSÉ ANTONIO MARTÍNEZ ROJASexecutive director, international cocoa orGanisation (icco), and national coordinator, 3Wcc

It is important that changes are put in place so that producers can earn a living wage from cocoa. In short, we need to stop selling beans and start selling chocolate

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the world cocoa economy, hammering out a strategy to tackle them. The outcome was the Global Cocoa Agenda for a sustainable world cocoa economy, with an action plan at the global level to implement specific actions at national levels,” explains Dr Anga.

The Global Cocoa Agenda was again ratified at the Amsterdam WCC, adding further recommendations, to address cocoa genetic resources, consumption promotion in emerging and origin countries, prices and farmers’ incomes, diversification, minimum farm size and crop combination to ensure economic profitability, land tenure, best agricultural practices, farmers’ organisations, farmers’ training in business management, certification, child labour, gender equality, the impact of climate change, and biodiversity.

Since it was set up in 1973, the ICCO has been based in London, home to the benchmark NYSE Liffe cocoa futures contract, but is now set to relocate to Abidjan, a decision that not everybody in the ICCO, particularly some Latin American and Asian producers have welcomed.

At the Abidjan WCC, President Alassane Ouattara, who won the country’s elections in 2010 but only took full control of Côte d’Ivoire in 2011, offered to house the ICCO in Abidjan rent free for ten years during which the organisation would build its offices in the capital.

As Dr Anga explains, President Ouattara has been pressing ahead with a reform of the cocoa sector, the country’s most important industry. The government has introduced forward-selling auctions of cocoa,

aimed at improving price stability and guaranteeing its farmers a greater share of revenues.

Until civil war erupted in 2002, Abidjan was a financial hub for West Africa, and home to the headquarters of the African Development Bank. The hope now is that the country once described as the Switzerland of Africa can now regain its former role.

Dr José Antonio Martínez Rojas, founder of the Dominican National Cocoa Commission and National Coordinator of 3WCC, signed the agreement to move the ICCO to Abidjan in 2001. He remembers visiting Côte d’Ivoire shortly after to oversee the ICCO’s move there. “It was crazy: there was a curfew and fighting going on, so we decided to put off the move until things settled down. But it was always the intention to move here: after all, this was where the first WCC was held, and West Africa is the biggest producer,” he explains.

Dr Martínez, who has spent most of his life working in the cocoa sector, has been Chairman of the ICCO and twice Chairman of the Alliance of Cocoa Producing Countries (COPAL), headquartered in Lagos, Nigeria, and is a pioneer in producing organic cocoa, having created the Hispaniola brand in 1985. He stopped exporting several years ago. “I may resume exporting when my children return from their studies in the United States,” he says from the Bibijagua bar, restaurant and craft market complex he owns, on a prime location along the beach front in Bávaro, where the WCC will be held.

A long-standing activist in supporting farmers,

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Growth in demand is likely to continue for decades as incomes, population, emerging markets and taste for new cocoa and chocolate products continue to expand

Dr Martínez helped set up the National Cocoa Commission in 1976 to formulate policy relating to cocoa in the DR, including policies which impact the prices paid to farmers. It is a semi-public organisation working in collaboration with the Cocoa Department of the Ministry of Agriculture. “The NCC is the DR’s representative in the ICCO and is also tasked with maintaining the quality of exported cocoa and runs a free quality control lab for this process. It approves exports of Dominican cocoa and grants export licenses,” explains Dr Martínez.

The Dominican cocoa value chainThe Dominican Republic has consolidated its position as a leading cocoa exporter in recent years and is now increasingly recognised as a producer of quality, organic and Fairtrade-certified cocoa.

The prices farmers in the DR receive for their cocoa is set daily by the companies in the private sector (which includes producer cooperatives). Exporters sell based on the New York price, which is also the basis for the local producer price.

The DR may have carved a niche for itself as a producer of high quality, organic cocoa, says Dr Martínez, but if it is to survive and grow in the long term, its cocoa sector needs to address the disparity between a growing international market and weakening local systems of production, which are characterised by low investments in farm maintenance, ageing trees and a failure to attract younger generations. “As the cocoa produced in the DR

can command some of the highest prices on the world market and has a promising future, it is important that changes are put in place in order to make sure that producers capture more benefits from this and earn a living wage from cocoa. In short, we need to stop selling beans and start selling chocolate” he argues.

There are between 36,000 and 40,000 active cocoa producers in the DR who sell to a number of private exporters. Among these, CONACADO, the National Confederation of Dominican Cocoa Producers, is made up of 9,200 producers, while Rizek Cacao S.A.S., a family-run firm dating back a century, has 6,000 registered producers. Both CONACADO and Rizek have worked hard to find international markets for their cocoa and are certified to many social and environmental standards.

CONACADO’s export director, Abel Fernández, explains that the cooperative began as a development project in 1985 through initiatives to improve both the quality of Dominican cocoa as well as the living standards of growers. “We work closely with Fairtrade to build and renovate schools, libraries and community centres, as well as providing school supplies and scholarships for students from low-income families,” he says. The organisation has also helped with road improvements, building and repairing bridges, electrification projects, storage/drying/cocoa collection facilities, housing assistance for producers, clean water projects, providing a rural healthcare clinic and free medical check-ups, erecting

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Opposite:A path well trodden: local producers bring their crop to CONACADO’s drying and fermentation facility in Yamasa

Left:Budding entrepreneurs: improved strains of cocoa are attracting young people to cocoa productionPh

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The DR cocoa value chain has both potential and limitations: organic fermented cocoa can command much higher prices but, due to local production constraints, certain bottlenecks exist

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buildings for women’s associations and other support for women’s groups.

“With help from partners such as the cocoa processor ICAM, CONACADO soon took the lead in improving the drying and fermentation process and in identifying and consolidating Fairtrade and organic markets,” explains Mr Fernández. Following CONACADO’s example, other exporters also began investing in drying and fermentation facilities in order to capture the higher value of fermented and organic fermented cocoa. CONACADO now sells around a quarter of the DR’s cocoa market. “We were also the first organisation to buy from organic producers,” adds Mr Fernández.

The DR cocoa value chain has potential and limitations in equal measures: organic fermented cocoa can command much higher prices, and demand for it has increased in keeping with the changing consumer tastes in the West that Dr Anga and Dr Martínez have identified. This places the DR in a favourable position as the leading global producer of organic high-quality cocoa. But due to local production constraints, certain bottlenecks exist in the value chain. Value is created through drying and fermentation, which is not in the hands of individual producers, as is the case in many countries. This results in cocoa companies having to make costly investments in drying and fermentation facilities and in producers not being able to sell high-value cocoa directly.

Looking to the futureNevertheless, cocoa is increasingly perceived as attractive relative to other crops due to recent price rises, while at the same time, there is increased interest in cocoa cultivation by traditional producers such as Rizek. Higher cocoa prices are also said to be attracting

new farmers who are keen to do things “properly” and are planting with good quality material, which is a positive development for the industry.

At the same time, as Juan Cuello, executive secretary of the National Cocoa Commission, explains, efforts are underway to boost productivity through the use of improved strains of cocoa that are attracting young people to cocoa production, or for children to take over their parents’ plantations.

Cocoa and coffee cultivation also play an important role in protecting the DR’s environment, says Mr Cuello. “Together they account for around 20 per cent of forest cover. You cannot grow these crops without existing forest, so it is vital for us to continue to extend forest cover in the DR through planting saplings. Our forest cover also protects the sources of our rivers, high up in the mountains,” he adds. The government has proposed legislation to pay cocoa and coffee farmers a subsidy in return for protecting and extending forest cover.

The WCC in Bávaro will provide a unique forum to take stock of the progress achieved by stakeholders since the implementation of the Global Cocoa Agenda adopted in Abidjan in 2012, as well as to review recent developments in the cocoa sector. Exhibition space will give brands an opportunity to showcase their products and projects to the most influential gathering of professionals from the cocoa and chocolate industry, says Dr Martínez.

“We expect more than a thousand delegates, among them industry leaders from all geographical regions throughout the entire supply chain, and there will be many side events and parties during the week. Equally importantly, as Dr Anga has said, it will be a fantastic opportunity to for our guests to learn about what we here in the Dominican Republic have been doing to ensure the sustainability of the sector.” F

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The organic cocoa market represents a very small share of the total cocoa market, estimated at

less than 0.5 per cent of total production. ICCO estimates production of certified organic cocoa at 15,500 tonnes, sourced from the following countries: Madagascar, Tanzania, Uganda, Belize, Bolivia, Brazil, Costa Rica, the Dominican Republic, El Salvador, Mexico, Nicaragua, Panama, Peru, Venezuela, Fiji, India, Sri Lanka and Vanuatu.

However, the demand for organic cocoa products is growing at a very strong pace, as consumers are increasingly concerned about the safety of their food supply along with other environmental issues. According to Euromonitor International, global

organic chocolate sales were estimated to have increased from a value of US$171 million in 2002 to US$304 million in 2005.

Certified organic cocoa producers must comply with all requirements associated with the legislation of importing countries on production of organic products. The benefit for cocoa farmers is that organic cocoa commands a higher price than conventional cocoa, usually ranging from US$100 to US$300 per tonne. However, originating countries with smaller volumes can fetch much higher premiums. This premium should cover both the cost of fulfilling organic cocoa production requirements and certification fees paid to certification bodies.

Organic cocoa and chocolate

IntErvIEw wItH HÉCTOR RIZEK and MASSIMILIANO WAXceo and vice-President, strateGy and business develoPment, rizek cacao s.a.s.

HÉCTOR RIZEKCEO, Rizek Cacao

Moving up the value chain

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The Dominican Republic may be one of the world’s smallest producers of cocoa, exporting around 85,000 metric tonnes a year – a drop in the ocean compared to

Côte d’Ivoire’s 1.5 million tonnes – but it has earned a reputation in international markets for the quality of its organically grown beans.

Over the last two decades, the country’s oldest and largest producer, Rizek Cacao S.A.S., has been driving the transformation of the cocoa sector, establishing the Dominican Republic as a source of high-grade beans.

Having established itself as a trusted supplier to some of the world’s leading chocolate producers, such as Meiji, Mars, Storck, Scharffenberger, and Kraft, along with smaller manufacturers like the UK’s Green & Blacks, or French luxury chocolatier Valrhona over the last two decades, in 2011, Rizek decided to become the Dominican Republic’s first cocoa producer to take the bean to the bar. The result is Kah Kow, a range of four 50-gram full-milk, 55 per cent, 62 per cent and 70 per cent bars, along with a “milk-no milk”, all-vegetable creamy chocolate, made with almond and coconut.

For the moment Rizek has no plans to export the Kah Kow range, which is available through selected high-end outlets in the DR, as well as from its own Kah Kow shop in Santo Domingo’s Blue Mall shopping centre. The establishment is not only a retail outlet, but provides customers with a “full chocolate experience,” explaining the production process from

bean harvesting through to fermentation, and then the different stages involved in producing chocolate bars. Visitors are invited to learn to identify the qualities that make Rizek’s chocolate special at tasting sessions. Also available at Rizek’s ‘house of chocolate’ are chocolate cones, and its spreadable Chocodamia, a blend of chocolate with macadamia; Ganache, a low-sugar chocolate mousse; and a lighter product, called Parfait.

Founded in 1905, Rizek is the largest producer of fine or flavour cocoa in the DR. The family-owned business has some 2,000 hectares of cocoa cultivation, and also buys some beans directly from its network of around 6,000 small-scale farmers, as well as sourcing through intermediaries, producing around 14,000 tonnes a year.

Traditionally, Dominican cocoa, known as ‘Sanchez’ after the port from where it was originally exported, had a poor reputation on international markets. Recognising that the DR couldn’t compete with the major cocoa producers of West Africa in terms of quantity, in the 1990s, Rizek decided to focus on producing high-quality cocoa beans that would differentiate it from other competitors. This has allowed it to meet the demands of luxury chocolate makers constantly in search of subtle variations in taste and bouquet. “Since then, we’ve become a very different animal: we create new things in the cocoa world,” explains CEO Héctor Rizek, whose great-great grandfather began the business.

The transition toward high quality production has involved what Mr Rizek calls “a new definition of who does what” that started with persuading growers to introduce new varieties of cocoa and then creating a control system that allows the company to trace the cocoa throughout every step of the supply chain.

Producing luxury chocolate starts with growing the type of cocoa beans that upscale chocolate makers want. “Using genetic material already in seed banks and clone gardens, we have improved on the varieties that have been here for more than a century, such as criollo, nacional, and trinitario, sometimes creating new, successful hybrids” explains Mr Rizek.

The next stage in differentiating Rizek’s beans is the fermentation process, vital for bringing out the subtle differences in flavour. This begins with drying the beans. In the past, the poor quality of the DR’s beans was in large part due to incomplete drying, says Massimiliano Wax, Rizek’s Vice-President Strategy and

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MASSIMILIANO WAXVice-President, Strategy and Business Development, Rizek Cacao

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Over the past two decades, the country’s oldest producer has been driving the trans-formation of the cocoa sector, establishing the DR as a source of high-grade beans

Business Development. “Heavy rainfall at particular times of year in the DR can make it impossible for smallholdings to dry cocoa to international standards by sun-drying alone, so we decided to build the biggest drying and fermentation plant in the world.”

In the same way that the best wine producers choose grapes from specific areas, Rizek describes its beans in terms of terroir (the qualities associated with certain soil and climatic conditions) and cru (the system of buying from specific vineyards or groups of vineyards).

“The purpose of fermentation is to form the precursors of the flavour, aroma, and colour of chocolate by provoking biochemical reactions in the beans. This is the most important part of the whole process; there are an infinite number of flavours that we can fine-tune during fermentation. This is what gives our beans terroir,” explains Mr Rizek, adding: “One infallible way to recognise a high-quality cocoa product: smell it. The first note you perceive must be the typical cocoa note. If you smell vanilla or sugar…move on.”

A sustainable approachMore than 85 per cent of cocoa farming in the Dominican Republic is carried out by small-scale farmers, who cultivate plots or around 2.5 hectares on average, most of who use outdated agricultural practices and lack the finance to invest in their plots. “This has meant that traditionally, crop yields are low, profitability is negligible, and farmer incomes subsequently remain at poverty level,” explains Mr Wax. This negative cycle has discouraged younger generations from cultivating cocoa, he adds, arguing that Rizek’s long-term approach to the business will persuade younger people to stay in what should be an increasingly profitable business.

“The big challenge has been how to earn money from growing and producing cocoa. The DR has seen large numbers of people leave the countryside for the cities,” he explains, adding, “but we can manage this, because the demographics make it an emerging market: the DR is experiencing big population growth. We will have labour available. Families will stay. It’s a challenge, but we can manage it. We have to help them to produce more efficiently.”

Rizek’s long-term approach has also seen it garner a series of certifications for its organically grown beans from the US Department of Agriculture, the European Union, the Rainforest Alliance, UTZ, the largest sustainability program for cocoa in the world, Fair Trade USA, Japanese Agricultural Standards (JAS), and Bio Swiss Standards.

“Certifications are more than an endorsement of a compliance scheme: they represent our commitment to a system of values and practices that are crucial to the sustainability of the cocoa sector,” says Mr Rizek.

Similarly, the company is also looking to differentiate its beans by creating denomination of origin (DO). It currently has two: Los Bejucos and El Ramonal, produced by more than 200 farms. “DO is now an important part of traceability. People want to know where the product comes from, right back to the grower,” explains Mr Wax.

The company also has an active programme of Corporate Social Responsibility and funds the non-profit foundation for cocoa producers known as Fuparoca, which includes its 6,000 cocoa farmers.

Rizek provides its Fuparoca-affiliated farmers with advice and education on a variety of issues including grafting, replanting/conservation, child labour, rubbish disposal, non-use of chemicals and water purification initiatives. At the same time, the Fuparoca Foundation has initiated many community support activities, donated items and provided important development assistance such as building bridges and installing piped water.

“It’s hard to overestimate the importance of sustainability to a sector like ours. You have to remember that the DR had virtually no primary forest: much of it was planted, while historically, successive governments have protected it,” explains Mr Rizek. “Today, around 40 per cent of the DR’s forest is dedicated to cocoa and coffee; around 40 per cent of our rivers originate in the forested highlands. In short, cocoa is one of the DR’s national treasures, and so we have to protect it.”

When well managed, cocoa trees can be productive for up to a century. “And those trees have different flavour profiles that help make our cocoa more competitive. We’re studying cloning to create recipes for the future,” explains Mr Wax, adding: “Sponsoring fine or flavour will keep the DR at the top in terms of quality. Ours is a constant quest for differentiation, to create individual flavours, in short, to have the best cocoa process in the world.” F

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Opposite and below:From bean...to bar

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IntErvIEw wItH DR ANTONIO ISA CONDEminister of enerGy and mines, dominican rePublic

ANTONIO ISA CONDE holds a doctorate in Law and undertook postgraduate studies in Administration and Banking at the University of Rome. He has been an activist in student movements, civil society organisations and business associations. Dr Isa Conde was Executive Director of the State Sugar Council in 1996, and was President of the Public Enterprise Reform Commission from 1997-2000. He assumed his current role on 29 April 2015.

Developing new resources

Since taking up his post at the Dominican Republic’s revamped Ministry of Energy and Mines in May 2015, Dr Antonio Isa Conde has been busy creating a series of overarching

policies, and notably, working on plans that could lead to the development of an oil and gas industry for the first time in his country’s history.

“We now have a better idea than ever regarding our hydrocarbon potential. We have enough initial information to potentially re-launch the policy of exploration and production of hydrocarbons in the Dominican Republic,” Dr Isa Conde says.

This has been made possible after the ministry collated and digitised geophysical information dating back to the 1960s. “We have digitised thousands of maps, drawings, seismic profiles, well logs, files, reports, and magnetic tapes. Schlumberger-Surenco, a regional subsidiary of Schlumberger, the leading oil services provider worldwide, is working with the Dominican government to create the first National Hydrocarbons Database,” he says, adding that there has been considerable interest from multinationals.

The idea is to tender pre-formulated standard contracts, taking into account the best development and investment plans. To address this, the ministry is preparing model contracts and the terms of reference of the bidding process to award blocks.

Mining sector to be overhauledMeanwhile, the Ministry of Energy and Mines has been working on a major overhaul of the mining sector, focusing on imposing much stricter environmental standards and greater transparency in negotiating contracts.

“Until now, mining in the DR has been managed like a ship adrift: instead we intend to develop it with the island’s fragile environment in mind, as well as the needs of local communities. We live on an island whose ecosystem has been severely impacted, and our reality is very different to that of countries such as Chile, Argentina and Peru, which have seen remarkable development in extractive mining,” he says, adding that all mining exploration and concessions in the country are being carefully studied, and that a Land Use Law is required.

The Ministry estimates that the country sits atop US$60 billion in mineral and metal reserves, including as much as 40 million ounces of gold. The Pueblo

Viejo project, run by Barrick Gold and Goldcorp, is estimated to hold 25.3 million ounces of gold, as well as substantial reserves of silver, copper and zinc.

But decades of mismanagement at many of the country’s mines that has led to major environmental damage has turned public opinion against further development of the sector.

In February, the Dominican Republic became the 50th country to join the London-based Extractive Industries Transparency Initiative (EITI), the global coalition of governments, industry and civil society that seeks to promote transparency and accountability in the exploitation of mineral resources, oil and gas.

A new era for electricity?At the same time, proposed electric sector reforms, known as the Pacto Eléctrico promise to address a sector that has long been a drag on economic growth. The idea is to complement diversification efforts that have seen a bigger role for natural gas, along with plans to harness renewables, biomass, as well as the longer-term potential from domestic hydrocarbon production. The role of the state, the private sector, and public-private partnerships are among the more controversial areas of the Pacto Eléctrico, and balancing them will require deft management by all involved in order to bring the pact to fruition. Creating the conditions for operational efficiency while recovering costs incurred remains a significant hurdle for both the public and private sectors.

Like many nations in the region, the Dominican Republic is attempting to reduce its reliance on imported petroleum products by switching to natural gas. As one of the earliest and most successful adopters, the Dominican case has become has become a model for the region. Since the inauguration of the AES Andres LNG Terminal in 2003, natural gas use has grown from virtually nothing to comprise over 30 per cent of the country’s electricity supply today.

On the back of its natural gas infrastructure, the Dominican government aspires to become a regional energy hub, distributing natural gas to the greater Caribbean and Central America. Proponents argue that by taking advantage of the AES LNG infrastructure, this hub-and-spoke model would overcome many of the hurdles of cost and scale that have made switching to natural gas difficult for nations in the region. F

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IntErvIEw wItH KEITH DUNCAN and GUILLERMO ARANCIBIAGrouP ceo and country head, dominican rePublic, Jmmb GrouP

KEITH DUNCANGroup CEO, JMMB

The regional player making waves

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When Jamaican Money Market Brokers (JMMB), one of the English-speaking Caribbean’s largest financial groups, began

casting around in 2007 for a base from which to further expand its regional presence, the shortlist of candidates very quickly narrowed down to one: the Dominican Republic, the Caribbean’s largest economy, contributing almost half of the region’s GDP, and with a market of more than 10 million potential consumers.

“The country’s economic and political stability, as well as its friendly business environment and openness to foreign investment, all strengthened in recent years by market reforms, made it the obvious choice,” says Guillermo Arancibia, a Chilean with extensive experience of opening businesses in new markets and who is JMMB’s country manager in the DR.

“The DR made sense to us because we have always focused on underdeveloped markets. We see ourselves as unpretentious, nimble and flexible. To tell the truth, the learning curve wasn’t that steep, and JMMB’s culture and values have fitted in quite easily. “With the right product, the right support, and the right team, I knew we couldn’t go wrong,” he adds.

Furthermore, unlike traditional financial services companies, JMMB says it prides itself on establishing a relationship with its customers. “We take a very personalised approach to banking; before we consider opening an account we talk to customers about their dreams and ideas. We see ourselves as facilitators, and we’re particularly interested in helping small businesses: in effect we create a financial partnership with customers,” says Group CEO Keith Duncan.

Founded in 1992, JMMB is a publically traded company with total assets of US$1.87 billion, as at December 31, 2015, serving a total of around 220,000 clients in Jamaica, Trinidad and Tobago, and the Dominican Republic. JMMB has taken an innovative approach to the markets it has entered, providing a broad range of financial solutions that include securities trading, mutual funds, pension funds administration, investments, remittances, and insurance brokering to individual, corporate, and institutional clients.

Talking to the management team, it becomes clear that its unique corporate culture has contributed to creating a loyal customer base. There is a strong spiritual component to the management strategies

implemented by co founders Dr Noel Lyon and the late Joan Duncan that is still followed by the family today, exemplified by the company’s ethos, which it calls ‘The Vision of Love’ – a somewhat non-traditional approach in the modern financial sector

“It stems from how team members treat each other, how we hire team members”, explains Keith Duncan. “If team members are living and working in an environment that is genuinely respectful and honest and open and caring, then that, we believe, translates into how clients feel,” he explains.

Mr Duncan joined JMMB as trading manager in 1993, becoming deputy managing director in 2000, and was promoted to Group CEO in 2005 with responsibility for overall performance and charting the strategic direction of the group, building one of the strongest financial management teams in Jamaica. His financial expertise has not only benefited the JMMB Group, but also the Jamaican financial sector as a whole. A former president of the Jamaica Securities Dealers’ Association, and vice president of the Private Sector Organisation of Jamaica, he partnered with the Financial Services Commission (FSC) in designing and implementing new structures and models to enhance the effectiveness of Jamaica’s market players.

“My mother saw the need for money markets in Jamaica in the early 1990s,” he explains. “Back then, the banks there had a monopoly on lending, and were exploiting their position by charging very high interest rates, which meant that small businesses in particular were not getting access to liquidity. We have emulated that model in each of the countries we have expanded to since then, and will continue to do so.”

Poised for a new phase of growthA decade on from expanding into the Dominican Republic, during which time it has shaken up the market and established itself as the country’s largest securities broker, JMMB is about to embark on a new phase of growth. “We now have the ability to provide a full range of services, with the incorporation of three new business lines in the DR: a savings and loans bank, a mutual funds administrator and a pension funds administrator,” says Mr Duncan, adding that the group is also targeting operational and cross-selling synergies via JMMB’s flagship head office in Santo Domingo.

The company’s operations in the DR made a net

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GUILLERMO ARANCIBIA Country Head, Dominican Republic, JMMB

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The population here is three times the size of Jamaica’s and product penetration is growing but still low, meaning the market is very scalable

profit of US$1.36 million for the nine-month period up to December 31, 2015: a modest contribution to the group’s post-tax earnings of US$14.44million for the same period. But the group is planning to add money market mutual funds and other new services through local savings and loan bank, Banco Rio de Ahorro y Credito, which it bought last year for US$2.15 million and renamed JMMB Bank, offering serious prospects for accelerating revenue growth.

After making an application to the DR’s Monetary Board in December 2015, JMMB is now awaiting a licence to acquire an 80 per cent stake in Corporación de Crédito de America (CCA), which provides savings and loans to the retail market. The plan is to merge both entities under the JMMB Bank umbrella, allowing it to provide a wider range of financial solutions in order to quickly attract more customers, and then work on drawing portfolio savers through innovative products.

While JMMB’s DR operation makes sense in itself, Mr Arancibia also believes that in a country that operates under a different legal framework and is Spanish speaking, “the move also supports our ambitions of continued growth within the Caribbean and Central American region.” He adds that the group is also willing to provide corporate entities seeking to enter the DR with its range of financial solutions, relationships, and expertise.

Equity markets set for take-offThe Dominican Republic has long been home to deep fixed-income capital markets, but has lacked activity on the equity front. However, new market trends and a recently developed regulatory framework are ushering in a new growth phase that is driving growth in the equity capital markets there.

Strict regulations regarding transparency, capital requirements, and creditworthiness are applied to all capital market participants, with three regulating bodies – the Superintendence of Securities, the Superintendence of Banks and Central Bank/Monetary Board providing the checks and balances to maintain market stability and protect investors.

Increasing interest in corporate governance among Dominican companies is expected to profoundly change the landscape of the Dominican stock market. “If these opportunities crystallise, the market will obviously change dramatically, not because the equities will generate a high transaction volume, but because there will be a more accurate perception in the entire market of what the real value added of the securities market is,” says Mr Arancibia, adding that the government could further boost development of the DR’s capital markets by encouraging private companies to go public.

“The government is working hard to make this country investment grade and has actively been

promoting the DR abroad. Thanks to the government’s reorganisation, the DR’s stock market has made significant progress,” says Mr Arancibia.

As a result, he believes JMMB can help Dominican players dominate the entire Caribbean: “The population here is three times the size of Jamaica’s and product penetration is growing but still low, meaning the market is very scalable.”

For that to happen, says Mr Duncan, the importance of an active securities market needs to be established.

“We would like to see the securities market open up to new opportunities, creating more affordable funding and driving economic growth by helping new businesses to produce locally what today is imported, all of which would have a positive impact on the local economy like job creation, eliminating the demand for cheap US dollars, and helping to increase productivity to export excess production,” he adds.

Having shaken up the Dominican financial services sector with its dynamic approach, the JMMB management team says it expects continued growth to come “organically” in the medium term, benefitting from the appearance of a new generation of companies and business lines that are now in start-up mode and that will mature, bringing greater volumes and more clients. “This approach allows us to compensate for any adverse market conditions that might present themselves in the future.

While its activities in the English-speaking Caribbean market will be planned from its Jamaican headquarters, the JMMB group has made the DR its base for further expansion into the Spanish-speaking Caribbean and Central America, explains Mr Arancibia, concluding: “We’re here to stay.” F

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The sky’s the limit: JMMB’s futuristic headquarters in Santo Domingo

IntErvIEw wItH ENRIQUE RAMÍREZ PANIAGUA administrator General, banreservas

ENRIQUE RAMÍREZ PANIAGUA graduated from the Instituto Tecnologico de Santo Domingo with a BSc in Economics, and also holds a diploma in advanced English from Georgetown University and an MA in International Business from Webster University. He began his career at Citibank, before joining the American Chamber of Commerce, where he was Regional Coordinator. He subsequently moved to Banco Popular Dominicano, where he held a number of senior positions including VP International & Institutional Division, before assuming his current role at BanReservas in 2013.

Promoting financial inclusion

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When you took over the helm at BanReservas in July 2013, there was speculation that the government’s aim was to shake up a private sector that is seen by some as in need of competition. What is the government’s strategy for BanReservas and its role in the Dominican financial sector?

When I was appointed to BanReservas in July 2013, our goal was to reposition the bank in the commercial banking system as a competitive player. As such, in this first stage the strategy was to stabilise the bank’s financial performance, realise financial and processes efficiencies, and improve customer experience. We have made substantial investments on the back end of the bank’s processes, a project that should culminate by the last quarter of 2016. BanReservas is a 75 year old state-owned bank, and as it is in in other countries, we operate as any other private commercial bank while playing a special role in the support of the national productive sectors aligned with the National Economic Development Strategic Agenda.

The Dominican Republic is characterised by low banking penetration and a large informal sector. What role can BanReservas play in educating people about the benefits of banking, and is the bank looking to grow its customer base in this way?

We have several initiatives that promote banking and financial inclusion. One of these initiatives, “Preserva”, is directed at individuals who are not currently participating in the financial system. The programme aims to give these individuals access to banking products and services, encouraging responsible usage of the financial offerings through a strategic plan of educational activities.

Another initiative is focused on bringing banking services closer to the people and to sectors where banking has little presence. “Cerca” is a network of banking sub-agents which eases the execution of banking transactions through affiliate businesses. Currently we have over 1,200 sub-agents across the country.

This is part of the role of a state-owned bank, to educate and make it possible for people to have equal access to financing opportunities.

What are the main policies through which the bank supports small and medium-sized businesses?

We support small and medium-sized businesses by providing them with the proper platform to grow.

As a result, we have implemented key initiatives such as “Prospera” which focuses on designing solutions that have a direct impact on the development of the local economy’s productive sectors, and “Cree” a programme that helps with the development of start-up companies by bringing together entrepreneurs, investors and advisors, providing financial instruments and technical advisory services allowing entrepreneurs to execute their ideas successfully.

The implementation of initiatives such as financial support programmes, technical advice, financial education and programmes intended to improve infrastructure and working capital availability has been proven to be a strong contributor in stimulating small and medium-sized businesses throughout different areas of the economy, creating jobs and improving the quality of life of the population. Today, small and medium-sized businesses, including producers and exporters, have access to bank credit through multiple programmes and services offered to them by BanReservas.

What role is BanReservas playing in the expansion and development of the national infrastructure?

As I mentioned earlier, part of BanReservas’ role is to provide support to key infrastructure projects, in line with the government’s National Development Economic Strategy Agenda. One of them is the trust for the development of affordable housing “Ciudad Juan Bosch”. Through this project, the government aims to guarantee and facilitate the right of every citizen to buy and own a house, thus reducing the country’s housing deficit. We are also participating in the trust for the maintenance and development of the highway infrastructure “RD Vial”. Through this vehicle, the government aims to ensure the proper functioning of the highway network system through the maintenance, rehabilitation and expansion of the current network, including toll road stations and roadside assistance.

What can you tell us about BanReservas’ investment in the country’s key export sectors, such as the pilot project to further develop the banana industry?

In 2015, Banco de Reservas initiated “Prospera,” a programme designed to develop Dominican Republic’s key export sectors through the channelling

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The Dominican Republic’s largest bank is instituting a series of initiatives to increase banking penetration and support the SME sector

of resources to improve the techniques implemented in the production process. Through Prospera, we offer a spectrum of solutions to increment the competitiveness of local producers in terms of assuring sustainability and managing risks.

As part of Prospera, specifically in the banana industry, BanReservas signed an agreement with the Dominican Association of Banana Exporters (ADOBANANO for its acronym in Spanish) which allowed for the approval of RD$440 million in loans to small producers. ADOBANANO granted a guarantee in order for small producers to access the financing needed. This initiative has benefitted a total of 1,521 producers located in Montecristi, Valverde, Santiago and Azua.

The programme also contemplates a technical component. For instance, a technical team in association with the Dominican Institute of Agricultural and Forestry Research is taking soil and water samples to formulate consistent techniques to be implemented in the production process.

You recently returned from a European tour which included participation at the Spanish travel show FITUR. Where do you see opportunities for the bank to increase its participation in the tourism industry?

BanReservas’ executives travel to tourism fairs and summits to meet with hotel executives from all over the world. During these meetings not only do we explore business opportunities, but we also take the opportunity to tell the success story of our bank and our country, leveraging the favourable investment landscape.

We are making every effort to help diversify the country’s tourism portfolio, by identifying hotel products and other tourism-related projects that are not present in the country, thus expanding the country’s offer with the goal of appealing to a larger range of tourists.

We believe that our bank’s growth in this segment is linked to the introduction of new hotel products into the country, such as luxury hotels, themed hotels, as well as shopping malls in tourist destinations and attractions in the cruise ports.

You have a lot of experience in the private sector. In which areas of BanReservas’ activities do you most see yourself applying that experience?

Since July 2013, the bank has gone through a transformation process in key aspects, ranging from changes that expedite the opening of a checking account to major investments in technology infrastructure. My experience working in the private sector has contributed to positioning the bank towards a model that is focused on the customers’ experience, thus having a positive impact on operational efficiency and the overall financial performance of the bank.

You have said you intend to leverage the bank’s network by cross-selling products. How do you intend to work with retail and corporate businesses to increase operational efficiencies?

Currently, BanReservas is immersed in a process of revamping its operating systems in order to increase operational efficiencies. Specifically, we are working with top suppliers to implement new core banking and accounting systems. Similarly, we are in the final stages of installing a Customer Relationship Management (CRM) system. This will allow us to better understand and serve all of our customers’ financial needs.

When you assumed your current role, you drafted in specialists to work on the bank’s loan portfolio, stripping out and selling bad debts, and improving credit procedures. What have been the results of this “cleansing” process to date?

First, BanReservas has participated in the sale of portions of its loan portfolio, consisting specifically of loans rated “A” by the Superintendency of Banks and that have shown a flawless payment history. These loans have been acquired by top-rated international banks, who have further sold these to international investors. As such, BanReservas has never engaged in the stripping out or sale of bad debts.

Regarding the improvement in the NPL ratio, which as of December 2015 was 1.44 per cent, below the commercial banking average, this was achieved mainly by maintaining a strict focus on risk management and proactive monitoring of the loan portfolio, through constant communication with clients and covenants monitoring. The Risk unit also performs a “Harvest Analysis” of the loan portfolio, which allows monitoring of the evolution of the clients’ financial performance and payment behaviour and preventing deterioration of the credit before it occurs. This understanding allows us to predict the impact of our customers’ behaviour on our credit portfolios, as well as better understanding our customers, and helping us manage all risks associated with today’s banking operating environment.

The Dominican economy has a good growth record, but it is vulnerable to the effects of Fed tapering and rising interest rates. Are you confident you can continue borrowing on the international financial markets?

The latest US$1 billion Sovereign Bond Issuance in January 2016 demonstrated that global investors have a strong appetite for DR debt. It is important to note that for this transaction the book was 2.8 times oversubscribed. As the country’s credit position continues to improve and our outlook remains positive, we are confident that access to international financial markets will continue to be a financing alternative. F

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IntErvIEw wItH dr JEan aLaIn rOdrÍGUEZexecutive director, centre for exPort and investment of the dominican rePublic (cei-rd)

Onward and upward

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Many of the DR’s major markets have faced significant economic challenges over the past year. How have the country’s exports and investment inflows held up? What have been the most significant trends in each case?

We are proud to say the Dominican Republic continues to be the top investment destination in the Caribbean region, and one of the top 10 in Latin America. We have attracted US$21,700 million in Foreign Direct Investment (FDI) over the last decade, with an average annual growth rate of 8.6 per cent. In 2015, FDI reached US$2,293.4 million, with an increase of 3.8 per cent in comparison with 2014. Various sectors of our economy benefitted from these inflows, in particular industry and commerce, tourism, real estate, free zones, telecommunications, energy and finance.

We have also established ourselves at the top of several rankings: we are the fastest growing economy in Latin America and the Caribbean; the main tourist destination in the region; we have the second best infrastructure in Central America and the Caribbean; we boast the best connectivity in telecommunications, transportation and logistics; and we are second in Latin America with the most qualified human resources in proficiency in English as a Second Language. All of these advantages keep us the number one choice for investment in the region.

Regarding exports, we have been growing at a rate of

3.6 per cent from 2012 to 2015. Despite a contraction of 2.49 per cent in total exports in 2015, mainly due to underperformance in the mining industry and temporary importing restrictions from two of our main markets, we still managed to show 6.8 per cent growth in the Free Trade Zones sector, as well as 2.91 per cent growth in exports of agricultural products, making us very optimistic about 2016.

The Dominican Republic is a more political country than most, and never more so than in an election year. Has there been a noticeable slowdown in investment decisions in recent months?

Not at all. On the contrary, several major projects have been announced or launched since the beginning of this year. We continue receiving potential investors interested in our country on a day-to-day basis with more interest in investing than ever. Just to give you a few examples of some remarkable new investments during these months, in January, the Cisneros Group started construction of the first Four Seasons Tropicalia hotel, a US$300 million investment that will generate around 1,800 direct jobs for the country. In February, RCD Resorts Group, with a presence in the Dominican market since 2011 with the Hard Rock Hotel Punta Cana, announced that it would expand its investment with the construction of a second hotel, this time in the capital city of Santo Domingo.

In early March, Acquire BPO, an Australian company specialising in contact centres and data processing, launched its operations with a projected total investment of US$30 million over five years. Furthermore, at the end of the month General Energy Solutions (GES) will inaugurate the photovoltaic project Monte Plata Solar, recognised as the largest in the Caribbean, which will inject 50 MW of solar power to our energy grid. This project marks a milestone in our country, since it is the largest Taiwanese investment in the history of the Dominican Republic, amounting to US$110 million, to be invested in two phases.

As these results demonstrate, the efforts of the Dominican government to attract FDI have not ceased or diminished.

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JEAN ALAIN RODRÍGUEZ studied law at the Pontíficia Universidad Católica Madre y Maestra in the Dominican Republic and obtained a Master’s and a doctorate from La Sapienza University of Rome, and a Master’s from Rome’s School of Public Administration. He also holds a Master’s in Business Law from La Sorbonne in Paris.

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The Dominican Republic continues to be the top investment destination in the Caribbean, and one of the top 10 in Latin America

This year also sees the DR assume the Presidency Pro Tempore (PPT) of CELAC, which includes a major business forum alongside the Summit of CELAC heads of state next January. What is CEI-RD doing to leverage the PPT and promote greater trade and investment between the DR and its Latin American and Caribbean neighbours?

This year the Dominican government is hosting the first multi-sector export trade show of the Dominican Republic, DR EXPORTS 2016, which will be held from June 27th to the 29th, at Sansouci Port in the city of Santo Domingo. The main objective of the event is to connect Dominican exporters with potential buyers from all over the world, including those from our Latin American and Caribbean neighbours, so the timing of our PPT of CELAC could not be better.

We have also focused our efforts on diversifying our sources of FDI, with great results. In recent years we have received an important flow of investment from Mexico, Brazil, Venezuela, Colombia and other Latin American countries.

Hoping to build on that success, and in order to support regional integration, CEI-RD is actively working with the Caribbean Association of Investment Promotion Agencies (CAIPA) in the implementation of a Regional Investment Promotion Strategy that will boost investment within the region and from third countries, strengthening the Caribbean Investment Promotion Agencies (IPAs) and the capacity building of our regional promoters, as well as providing tools for the promotion and attraction of FDI in the Caribbean.

The Dominican government is seeking to put trade at the heart of its foreign policy. How successful has this approach been to date, and how is CEI-RD gearing up to make this happen?

For the last three years, CEI-RD has been leading the charge in transforming Dominican diplomats abroad into true promotional agents of the country’s exports and investment opportunities. Each year we create a work plan to be executed by Dominican Embassies and Consulates overseas, with the help of the Ministry of Foreign Affairs. This plan sets specific goals that must be met by our diplomats for promoting our products as well as the advantages of investing in the Dominican Republic.

We can proudly say that we’ve had remarkable results with these dynamics. Through CEI-RD’s coordinated work, we have been able to develop a comprehensive strategy for the development of new exportable products, which at the end of the line, have been promoted and placed in international markets with great success. Particularly, in the last three major promotional events organised by CEI-RD, Dominican Embassies and Consulates have surpassed their results by more than 150 per cent compared to

previous years. We plan to continue this strategy of using international networking in order to increase our producers’ chances of doing business with foreign clients and strengthening trade relations between nations.

There is a feeling among European countries that the Central American signatories to the Economic Partnership Agreement (EPA) are failing to make the most of the trade element of the agreement. What is CEI-RD doing to educate the Dominican private sector about its potential benefits?

We are constantly training the private sector on the advantages of all trade agreements signed by the Dominican Republic, including the EPA. Every year we receive inquiries and visits from interested exporters, producers and investors concerning the markets of the European Union (EU), and we proceed to offer them information and technical assistance on an array of subjects, such as preferential access to the EU for products from the CARIFORUM countries, duty free exports, access to EU programmes concerning cooperation in areas like competitiveness and innovation, with the advantage of having an investment chapter with a mechanism for the settlement of disputes, among other matters.

In addition, last year CEI-RD developed a training programme aimed at producers and exporters called ¨How to Export”, which explains the process of exporting into specific markets. For this year we have scheduled trainings on “How to Export to the European Union” and “How to export to the UK”, in order to promote trade to these markets. However, it is important to highlight that the European Union already imports some of Dominican Republic’s highest-ranked products, like organic bananas and cocoa, which have been very well received by EU Members. F

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Opposite:On a roll: Dominican cigars are among the country’s most successful value- added exports

Below: From the DR to the world: the government is seeking to establish the country as a logistics hub for the region

New diplomacy in actionBy H.E. DR FEDERICO CUELLO CAMILOambassador of the dominican rePublic to the united kinGdom

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Positioning any product in the UK is not a job for the faint hearted. And if the task at hand is to market one’s own country, the challenge becomes Herculean. Especially in 2011, a

year in which UK tourism to the DR was declining fast, closing the year at 95,000 visitors – down from 260,000 in 2008. Since then it has recovered by a whopping 71 per cent, reaching a healthier 162,000 in 2015.

Our fresh produce needed new distribution networks in the UK’s mature and very demanding market of about £10 billion, growing as it was at barely 2 per cent – in a good year. Since then, the total growth of DR exports has exceeded 25 per cent – of which 12 per cent was in 2015 alone. As a result, the UK has become the most important destination for DR exports in the EU – well above the Netherlands and Belgium, which are mostly important entry points into continental Europe.

The UK, with 25 per cent of the EU market in illicit substances, required urgent bilateral cooperation to fight this unfortunate traffic, which has found the DR to be one of many transit points from other producing countries in the Western Hemisphere. Now, seizures have increased dramatically.

The role of the ‘new diplomacy’ advocated by my Minister of Foreign Affairs was instrumental in all of these achievements.

Working with the DR Tourism Promotion Office in London, new capacity for air travel in both charter and regular flights was achieved, ensuring sufficient availability of seats to facilitate the recovery of UK tourism to the DR. As the Minister of Tourism states elsewhere in this report, UK visitors now arrive to find a more diversified destination, with a greater

availability of up-market hotels and villas.Tapping into the largest network for fresh produce

sales, the Dominican Embassy in London became an active member of the Fresh Produce Consortium (FPC), becoming the Guest Country for 2012 and participating since then with the largest stand in the London Produce Show year after year. Most products coming to the UK from the DR are either fair-trade or global-gap compliant. And with direct air and maritime connections, DR products arrive ripe and ready to market, faster than from any other country in the Americas – less than 10 hours by plane and 9 days by vessel.

Working with the DR’s British Chamber of Commerce (BritCham), every year we promote all features of Dominican society through a series of events during Dominican Week. Unprecedented connections have been made between importers and exporters, investors and partners, artists and the wider public, allowing us to showcase our creativity, our locational advantages as the emerging logistics hub of the Americas and our diversified and growing economy – the fastest in the Americas and the largest in the Caribbean and Central America, as highlighted by the Governor of the Central Bank in this very issue.

Bilateral mechanisms for achieving all of these outcomes were set by our Foreign Ministers, ensuring clear political priorities in a short but ambitious Memorandum of Understanding.

May this year of Dominican leadership become the year for replicating the DR-UK experience, through the efforts of all our embassies in promoting and achieving deeper and wider regional integration in the Americas; and stronger inter-linkages between

micro, small, medium and global enterprises of our Hemisphere, as proposed by President Danilo Medina in accepting the CELAC Pro-Tempore Presidency.

I am most grateful to F I R S T M a g a z i n e f o r working so closely with the DR Embassy in London on this, our third issue together. Adequate positioning the DR in the world – through the UK – requires no less. F

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FEDERICO CUELLO is the DR’s Ambassador to the UK. His prior Ambassadorial postings include Geneva (1999-2002), Brussels (2005-9) and New York (2009-11). Between 1995-99 he was an Economics Vice-Minister, implementing the WTO agreements, preparing and introducing new legislation on trade, telecommunications, competition policy, consumer protection, copyright and industrial property. He negotiated on these issues in the WTO, the FTAA, the DR-Central America FTA, the CARICOM-DR FTA and the Economic Partnership Agreement (EPA) between Caribbean countries and the EU.

Exports from the DR to selected EU Member States (2008-15, in EUR)

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PTP-CELAC - Official Report: Dominican Republic

Economy & Finance

Transcript of PTP-CELAC - Official Report: Dominican Republic