Swiss-Dominican Economy and Trade Association

National Consumer Price Index RD, 2011 (December 2010=100)

admin — Wed, 08 Feb 2012 20:57:42 +0000

MONETARY BOARD AUTHORIZES CENTRAL BANK TO ADOPT INFLATION TARGETING

admin — Wed, 08 Feb 2012 20:46:50 +0000

The Central Bank of the Dominican Republic wishes to inform the public that the Monetary
Board, in its First Resolution of December 15, 2011, authorized the establishment by the
Central Bank of a monetary policy framework based on Inflation Targeting (IT) as of
January 2012. In this regard, the Central Bank recently released its 2012 Monetary Program in
conformity with an Inflation Targeting framework.

The inflation target is defined as the year-on-year change in the Consumer Price Index (CPI),
following the best practices of many central banks that implement this monetary policy strategy.
The current scenario approved by the Monetary Board authorizes the Central Bank to follow a
declining inflation target for the next 4 years, according to the scale listed below:

The long term inflation target of 4% has come about as a result of research that indicates that this
is an optimal level, sustainable over time and compatible with the potential GDP growth rate.

Under Inflation Targeting, central banks report the decisions relative to monetary policy and the
arguments that support such measures taken. Beginning in 2005, the Central Bank began
preparing the technical aspects needed to achieve a gradual transition from a monetary aggregate
target to an inflation targeting framework, with the advice of experts from the major central
banks of the region and the IMF.

In view of this, for the past several years the Central Bank has been holding monthly Monetary
Policy Meetings to determine whether to maintain or vary its monetary policy stance, as reflected
in the interest rate corridor resulting from short-term interest-bearing deposits, which carry the
policy rate, and the Lombard interest rate. These meetings discuss the trade-offs between
domestic and international risks to the established inflation target and make the adjustments
deemed necessary given the estimated transmission channels of monetary policy, as is the case
with all central banks that have adopted an inflation targeting framework.

Decisions arising from this monthly meeting are published in a communiqué on the Central Bank
website. In addition, the Central Bank publishes biannually, in June and December, a Monetary
Policy Report (IPoM), which looks at the history, strategy, and results of the monetary policy
implemented during the previous period, as well as the short and medium-term prospects for the
relevant   macroeconomic   variables,   especially   inflation,   with   the   aim   of   strengthening
transparency with regard to monetary policy decisions.

In its 2010-13 Strategic Plan, under Objective 1 for ‘Price Stability’ the Central Bank formalized
the strategy of adopting a monetary policy framework based on inflation targeting, and has been
involved in a gradual transition, introducing elements of IT, among which are:

   Strengthening of macroeconomic variable forecast systems,
   Studies on the various monetary policy transmission channels,
   Surveys of macroeconomic expectations and business community opinions,
   Definition of the monetary policy interest rate corridor,
   Use of indirect monetary policy instruments for liquidity management,
   Institutionalization of monetary policy meetings and publication of the communiqués,
   Publication of the Monetary Policy Report.

The Monetary Board's decision to adopt an Inflation Targeting framework draws upon Article
228 of the Constitution of the Dominican Republic, which provides, inter alia, that the Central
Bank is to ensure price stability. Furthermore, it draws upon the acknowledgement that after the
banking crisis of 2003-2004, the relationship between base money and inflation was debilitated
due to the sophistication of the financial system and the payment system. This is a situation
shared with many other countries.

The goal of transforming monetary policy into an Inflation Targeting based scheme is also
contained in the Stand-by Agreement with the International Monetary Fund, which runs until
February 2012, in which the Central Bank pledges to establish a monetary policy framework
based on inflation targeting by 2012.

Unlike the traditional system based on monetary aggregates, under the new IT strategy monetary
aggregates become indicative or tracking variables. Accordingly, anchoring inflation expectations
to the announced target becomes the intermediate objective of monetary policy, given that the IT
framework is forward-looking in the sense that it acts to prevent possible inflation deviations
with respect to the announced target.

The Central Bank of the Dominican Republic (CBDR), aware of its role as the main monetary
authority and of its principal objective of ensuring price stability as established in the
Constitution of the Dominican Republic and the Monetary and Financial Law, is implementing
this new Inflation Targeting Framework in the furtherance of institutional strengthening and
modernization of its management of the economy.

“This new methodology will allow us to bring certainty to economic agents, creating the
conditions for inflation to gradually converge on the objective. It will also enable further
institutional progress and greater autonomy for the Central Bank.”
Hector Valdez Albizu – Governor of the Central Bank (November 26, 2011)

Among the benefits provided by this new framework is that IT allows for the anchoring of the
economic agents’ and investors’ expectations to the Central Bank inflation target, so as to create
confidence and help eliminate unwanted expectations that affect the business environment, and
thus, stability. In effect, with regard to inflation, this will allow businesses to plan their activities
each year within a horizon of security.

Central Bank News 19.1.2012

Why invest the Dominican Republic?

admin — Tue, 07 Feb 2012 21:47:30 +0000

Stable economic and political environment
FDI Friendly environment
Sound legal framework for foreign investment
Preferential market access to the United States, Europe, Central
America and the Caribbean
Customized Training
Abundance of competitive, experienced and qualified labor force
Modern transportation infrastructure
Advanced and reliable telecommunication infrastructure
Supporting Industries & services Competitive costs for doing business
Nearshore location
Quality Life Standards

Bright People Outlook

Globally competitive wages
78% of population under the age of 30.
Predominant bilingual work force
The D.R. has 30 universities and 369 training centers.
Absenteeism rate per labor secretariat is less than 3%
Turnover rate is less than 2.5%

DR is a key point for technological businesses

admin — Tue, 07 Feb 2012 21:44:08 +0000

Companies at the Cybernetic Park of Santo Domingo recruit high-level personnel with knowledge of information technology and engineering.

Among these are Caribbean Manufacturing Solutions, Telvent and Mannindia. The park already has 947 people working there. The investment in infrastructure of the business complex is nearing US$80 million.

The Hindu Arockia Arulsami travelled thousands of kilometers from Tamil Nadu in India, to Santo Domingo. He did not come as a tourist. He arrived to work in the Cybernetic Park of Santo Domingo (PCSD). After being recruited in India by an aircraft engineering firm, he has been working for the last two years in the Dominican Republic for the US company, Caribbean Manufacturing Solutions (CMS).

Arockia works in the Quality Department of the company, whose headquarters are in Cincinnati, Ohio. In the DR factory that they have run for the last two and a half years, they manufacture parts for vehicles and airplanes from well-known companies such as Ford, Boeing, and General Electric (for their space division). They also make parts for medical equipment.

But why would a company of this type install itself out past the Boca Chica tollbooths? Robert L. Smith, the operations manager of CMS, gives the answer: "the geographical location of the country and the close proximity to the Cincinnati headquarters". He pointed out that there is another factory in China but its distance makes things difficult. Plus, he said, there are the incentives that are offered by the Cybernetic Park for businesses to install their factories, and the human resources available in the country. Regarding the latter, he said that there are currently 30 employees, of which three are Hindu. This month the employees will be increased to 60 or 80 for a project that will begin production in June of this year.

But the CMS is not the only certified foreign company that thought it was a good idea to locate in the eastern zone of Santo Domingo. And it is because the Cybernetic Park, that occupies 440,000 square meters, and was created in 2000, has already invested US$80 million in infrastructure. There are already 26 companies operating there, divided into 12 international companies that occupy 2 large buildings, and 14 that are at the business "incubator" Emprende, with the idea of becoming large businesses.

These go from software developers and other technologies, to "call centers", human resource managers, and manufacturers of auto parts.

According to the president of the PCSD, Eddy Martinez, there are 947 employees and the tendency is to increase over the coming months. He says that the salaries are competitive, ranging from RD$30,000 to RD$40,000 per month.

Although not a company that generates dollars per se, inside the PCSD there is the widely recognized Technological Institute of the Americas (ITLA). Currently, there are 2,200 young people pursuing degrees there, and, in addition, some 120 students that study or have studied for Masters Degrees over the last three years at the extension of Stevens Institute of Technology.

"This is a successful model that promotes a culture of technological industrial parks. Education and in-service training, job creation and investment, promotion of entrepreneurship and social and scientific development all come together", said the president of the PCSD.

Software from the Orient

When the Hindu Roopan Shyam is asked why his business Mannindia (specialists in telecommunications software decided to establish themselves in this Caribbean country, the answer is, in essence, no different from operations manager at CMS. In nearly flawless Spanish, he said, "We know that Venezuela has problems, Colombia has a history of problems, Panama… costly, and Santo Domingo, perfect!"

And with good reason, The PCSD is located five minutes from the Las Americas International Airport and the Caucedo Mega-port. At the same time the Las Americas highway provides easy access to the capital.

The representative of Telvent Global Services has the same opinion. Telvent is another information technology company that is dedicated to projects in the energy, health, public administration, traffic and transportation areas. "For us, the Dominican Republic plays a role of strategic importance because of its geographical location. Of course, from the cost point of view, for us it was a very valid option and we think that it has a beneficial system that favors us," says the Spaniard Carlos Delgado.

The executive also praises the fact that in the Dominican Republic there is a clear push for the country to become modern.

With the development of the information technology enterprises, the president of the PCSD is project that in three years the Dominican Republic will be exporting US$500 million in software.

Because of the economic crisis, last year was not so good for Mannindia, which employs 20 persons at their facility. However, for this year they are thinking of recruiting more trained personnel and so reach 100 employees and take care of a project that Venezuela, Puerto Rico, the United States and others are expected to develop in the country. "Now we have a large project in the banking area, in Puerto Rico, and therefore we are going to need about 890 persons", he says.

Telvent also foresees going from 30 persons to 150 high level specialists in computer and electrical engineering employed this year and next.

Pilot solar panels

In this country with energy problems, would it be an adventure to try creating a solar panel for house or business? Since last November, the Fluitecnick Solar Company, which established itself two years ago in the PCSD, has "planted" what it calls a "photovoltaic solar garden" next to the side of their building. The "garden" provides energy to the building by means of 240 modules, which produce 270 volts each.

According to the public relations person of Fluitecnick, Yodari Padro, the company, a subsidiary of a Spanish corporation, came to the Dominican Republic in 2007, taking advantage of the facilities of the Cybernetic Park and the Law 57-07 regarding Incentives for Renewable Energy and Special Regimes. Fluitecnick Solar was founded 19 years ago and only has factories in Portugal and the Dominican Republic.

The company takes advantage of the boom in renewable energy to sell its solar panels, in spite of the fact that they are not cheap. A solar panel such as one built by Fluitecnick, of 120 watts, is sold in the country for US$550. Another type, of 22 volts, that produces a kilowatt per day goes for between US$850 and US$900 each.

Padro pointed out that in order to install one of the technologies in an ordinary house, the person has to determine the daily energy consumption. An average house consumes between 15 and 16 kilowatts per day. Do you want to change?

In three years, the Dominican Republic could export US$500 million in software resulting from the high-tech businesses installed in the PCSD.

Businesses at the PCSD
Education and Training

ITLA, Stevens Institute of Technology, Contact Center Institute and Cyberpark Film School

Start-ups in incubation

Merkimport, Reenergy, Ashbox, 809 Studios, Aurora Wireless Technologies, Ltd., Conacen, Tau electronics, Fixadom, Hispano Sano, Medios Libre, Estufas GAIA, AirHybrid Technology, Gestacion Tecnologica Global.

Job Creators

FCM Injection Molding, Flujitecnick, Telvent, Stream, Terremark, Emprende, Caribbean Manufacturing Solutions, Penncro Associates S.A., Notola, Mannindia Technologies and Gennisource.

Source: Diario Libre, 4/3/2010 edition.

An investment of US$765 million announced; it involves natural gas

admin — Sun, 07 Aug 2011 11:02:58 +0000

SD. President Leonel Fernandez chaired yesterday the meeting of the Presidential Cabinet for Investment and Strategy, where it was announced that five investment projects were coming to the country totaling US$765 million, including a collection center for natural gas in the town of Haina, San Cristobal with a cost of over US$300 million.

The cabinet also approved the start of two solar energy projects for 80 megawatts; a tourism project and a business project. The latter consists of the sale of breakfast, lunch and dinner at low prices and will involve some 20,000 women that will become businesswomen.

At the end of the meeting, held in the Trinitarios Room of the Presidential Palace, Eddy Martinez, the director of the Center for Exports and Investments of the Dominican Republic (CEI-RD), reported that the tourism initiative has to do with the rescue of this sector in the province of Puerto Plata, but that it would be next week before he revealed more details with regard to it. Nevertheless, he said that this hear they would start off a project that he feels will be a transformer for the "Bride of the Atlantic."

Martinez indicated that all of the projects, for which they created commissions to provide monitoring, are financed with foreign capital, and will be started this year, and that the one related to food is expected to start a pilot program within three months.

Also present at the meeting were the ministers of Industry and Commerce, Manuel Garcia Arevalo, and the Environment, Jaime David Fernandez Mirabal, as well as others, including United States businessmen and investors from Peru and Spain.

De Diario Libre