Throughout the Dominican Republic there are a number of special places with companies that produce everything from medical equipment to jewelry and are exempt from taxes.
These are free zones, industrial parks with more benevolent fiscal and customs rules than in the rest of the Caribbean country and which currently channel two-thirds of Dominican exports.
These areas have also become a source of employment for this nation of 11 million inhabitants, with 198,000 direct jobs generated until the end of last year, according to figures from the Association of Free Zones of the Americas (AZFA).
In fact, the Dominican Republic has become the Latin American country with the most direct jobs through free zones and parks under that regime, followed by Costa Rica and Honduras respectively, according to the same source.
“Free zones have been key in our country for decades, regardless of the party that has been in government,” says Claudia Pellerano, a Dominican who presides over the AZFA, in dialogue with BBC Mundo.
They play an important role in the country’s economy, which holds presidential elections this Sunday.
However, these special places have received critical notes from the World Bank.
“They have diversified”
Free zones have become a kind of long-term policy that the Dominican Republic has had to attract investment since 1969, when it opened the first of them in the city of La Romana.
That venture was born at the behest of a transnational with sugar investments, Gulf and Western Americas Corp., after approving industrial incentive regulations that exempted companies installed in the country’s free zones from taxes.
Over time, other free zones emerged in the Dominican Republic. The companies that operated in them exceeded one hundred as early as 1983. And in the following years its growth rate was already outstanding at the level of the Caribbean and Central America.
This special Dominican regime received an important incentive from the United States, first with preferential tariffs on products from the region and then with the free trade agreement with Central America and the Dominican Republic (DR-CAFTA) starting in the 2000s.
There are currently some 820 local and foreign companies in the Dominican free zones that moved exports for more than US$8,000 million in 2023 according to official figures, a record figure for the country, with the U.S. as the main destination (79% of the total).
These sales range from traditional textiles and tobacco to pharmaceutical products and medical equipment, which together are the main export, totaling US$2,474 million and exceeding 30% of departures from free zones.
They also exported plastic, metal, electrical and footwear products, among others.
This industrial range added thousands of jobs in the Dominican free zones, according to its defenders, at a faster rate than in other Latin American countries, where small and medium-sized commercial or service companies abound in these areas.
Based on its geographical location and infrastructure of ports and airports, the Dominican Republic is now betting on benefiting from nearshoring, a trend whereby Western industries outsource part of their production to nearby countries to simplify their logistics instead of doing so in Asia.
