Free trade zones: Dominican Republic faces the challenge of expanding its export offerings

The free zone regime has shown its capacity to respond to changes in the demand of the large destination markets where it exports, strengthening links with the local economy and interest in productive linkages.

This was stated by the executive director of the National Council of Free Zones (CNZFE), Daniel Liranzo, who said that the Dominican Republic is working to address its challenges, being the expansion of the exportable supply one of the most important challenges.

“Having more trade facilities, allowing the implementation of zero bureaucracy, the expansion and diversification of destination markets and greater capacity building for competitive insertion, are other challenges we face to grow the sector,” said Liranzo.

During the first quarter of 2021, exports from free zones totaled US$1,648.3million a growth of 16.2%, compared to the same period in 2020, when the figure totaled US$1,470.4 million, according to Central Bank figures.

The executive director of the CNZFE, said that the structuring of investment promotion programs with a focus on countries, markets and companies with high potential to do business here is one of the axes of the strategy being implemented to position the country as an investment destination.

In addition, they are working on the development of alliances, the dissemination of trade agreements with emphasis on commercial diplomacy and potential investors, the promotion of clusters and productive linkages.

However, for the president of the Dominican Association of Export Processing Zones (Adozona), José Luis Bonilla, proving that in the Dominican Republic successful manufacturing processes of goods with a global criterion can be carried out, has been the main challenge already overcome by the export sector.

“The proof of this is the leadership that the free trade zones have achieved, both regionally and globally, with exports of important items such as cigars and cigarillos, medical devices, electronics and some textile categories, footwear, candles, among others,” said Bonilla.

In the services sector, he highlighted the growth of call centers and customer service centers (call centers/BPO) in recent years, as well as logistics, led by the ports and centers operating in the free trade zone regime, which are leading the country to become the Regional Hub proposed in the National Development Strategy.
Diversification

According to the president of Adozona, the diversification of the industrial matrix in the free zones is also an achievement of the sector during the last years.
He stated that in the 70’s and 80’s, manufacturing in the free zones was based on textiles. “But today the sector is highly diversified, both in the area of manufacturing of goods, as well as in the provision of services,” he added.

From last August to date, the CNZFE has approved the installation of 45 new companies that will create 6,600 new formal jobs, with an estimated investment of RD$7.25 billion. The executive director of the institution and the president of Adozona agree that improving the permitting part will allow a greater diversification of the free zones, bringing to the country more multinational companies from various sectors.

“It is evident that the permitting part has improved and has become more efficient, since it is one of the pillars on which the Relaunching Plan of the Free Zones sector is based”, said Liranzo.

He explained that processes continue to migrate to virtual platforms and signature processes have been decentralized and delegated. In addition, greater rigor and frequency have been established in the measurement of the established response deadlines.

On his side, Bonilla stressed that it is necessary to eliminate all bureaucratic excesses that generate delays and cost overruns to operations.

“We are working together with the Ministry of Industry, Commerce and Mipymes (MICM) and the CNZFE, in coordination with other public institutions, for the creation of a single permit to reduce the time required for the installation of new companies,” he said.
Labor force

In the last years, free zone companies have incorporated more sophisticated processes to manufacturing, so they are also demanding more and more qualified personnel.

Bonilla assured that the formation of human capital is a fundamental pillar for the development of free zones.

“This institution has exhausted an intense work agenda with the universities and the Technical Professional Training Institute (Infotep) to align their training offers to the requirements of the free zones”, he added.

The country’s main universities already offer their engineering students certification in medical devices, more than 90% of whose graduates are hired by free zone companies.

Bonilla explained that with Infotep they have designed and launched new training actions such as electronics operator, medical device operator; group leader program and English for call centers, which have emerged in response to specific needs of companies.

“All these trainings will help us to meet the job creation goals set by the Government, with 100,000 new formal jobs during the next four years,” he said.

 

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