Country Forecast Dominican Republic July 2018

Country Forecast Dominican Republic July 2018

  • July 2018 •
  • Report ID: 1697839 •
  • Format: PDF

Policy towards private enterprise and competition


2018-19: Some progress in improving transparency for public procurement and cutting red tape for investment. Improved help for small enterprises. Distortions persist, owing to political patronage and strong vested interests in some sectors.


2020-22: Regulatory transparency remains relatively weak, and competition is limited. The state continues to be involved in electricity distribution and will retain at least part ownership of a new coal-fired thermoelectric complex.


Policy towards foreign investment


2018-19: Regulatory system liberal towards foreign firms. Dominican Republic-Central America Free-Trade Agreement (DR-CAFTA) fosters more secure and transparent environment. International property rights protection is weak in some areas, and intellectual property protection can be lacking.


2020-22: Efforts continue to attract foreign direct investment to higher-value services, such as IT and back-office services, but skills shortages remain an impediment. Protection of intellectual property improves, but remains inadequate.


Foreign trade and exchange controls


2018-19: Reduction of import tariffs under DR-CAFTA and Cariforum-EU continues. Increased trade flows with Europe.


2020-22: DR-CAFTA tariff reduction schedule is met in 2020. Stable and open regulatory climate for trade and capital flows. Efforts to join the Caribbean Community remain stalled.


Taxes


2018-19: Corporate tax rates remain at current levels, but reduced tax exemptions, improved enforcement and piecemeal tax changes raise the overall tax burden.


2020-22: Efforts made to broaden the tax base, simplify tax legislation and reduce evasion, but a wholesale tax reform remains elusive.


Financing


2018-19: A high degree of concentration in the financial system, limited alternative financing sources and supervisory shortcomings contribute to high borrowing costs. Financial soundness indicators and are relatively strong.


2020-22: Slow gains are made in banking-sector efficiency, but access to long-term financing via capital markets is limited. Technological advances in financial services broaden financial inclusion somewhat.


Labour market


2018-19: Unemployment falls marginally. Skills shortages and low productivity persist, owing to a weak education system.


2020-22: Education reforms show modest results, but skill levels remain too low to support higher-value-added industries.


Infrastructure


2018-19: Structural problems in the power sector persist. Road and transportation projects, especially in Santo Domingo, advance.


2020-22: Despite increases in generation capacity, the sector's key failing-distribution-remains inefficient.


Technological readiness


2018-19: Government continues push to improve the scope and quality of e-government services, with a specific intention to facilitate small business operations.


2020-22: Clearer regulation and increased regulator capacity lead to higher private investments in mobile-phone technology, leading to an increase in coverage and cell phone penetration..



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