Free Trade Zones

You want my advice? WAIT until 2004.

bigD said:

I have a manufacturing company in Canada that I've been looking at relocating to the Puerto Plata area so as to take advantage of the local low cost labour.

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Quick answers as I don't have much time right at the moment. Puerto Plata free zones are not worth the trouble unless you want to pay thousands for the priviledge. Rule number One - Free Zones are not created equal.

I'm particularly interested in how the import/export side of things works for parts that need to be purchased in the US, assembled in the DR and then sold back into the states. (duty)
---Free Zones = No Duty! Currently the President is trying to change this. There are ways however and it is easy if you are established right and do the right paperwork and work out of the right free zone. This scared me silly when I first start in a FTZ and now I wonder why I was scared.

Is is possible to just have an office in the FTZ and manufacture elsewhere while still maintaining the benefits of the FTZ?
---I am doing that currently with a small area of my business. No it is not easy but it is possible.

Selling products in the DR while Manu. in a FTZ?
---Most Everything written about this is not accurate. You need a very specific approval to distribute products in the DR. But Free Zones are not created equal and there are ways. This took me a while to learn.

Will the beach kiosks deliver drinks to the FTZ?
---If you pay them - why not keep your own in your own refrigeration. The free zone that I do business out of has a 98% power uptime...

Also I'm looking for a good customs broker (local to POP) that is connected for shipments to the US.
---You do not need a customs broker local to POP. You need a customs broker that works with the free zone that you establish in. Believe me, it is easier this way. Or you can contact PIB, the Goddess of this board. She knows her business.

Let me have an e-mail with further questions and I'll answer as much as I can.. Remember, now is not a good time to re-establish here but start doing your homework for the future.

Why don't you contact Leo Van Helvert. He has a business in a free zone here and is looking to share some space and equipment. I know he is involved in technical and engineering stuff.

Tel: 809-575-1177
Email: BALANCE.POINT@CODETEL.NET.DO

bigD said:

Thanks for the quick reply.

Are you saying that the FTZ's are product specific, so that if I manufacture a technical product, I would need to be located in a FTZ that has similar businesses. Rather than an area that I would prefer to be located.

We will be doing a joint venture within the DR that requires the products that we manufacture - if we were to manu. outside the FTZ, is it possible to claim back duties paid on products?

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Not so much product specific as it is just simply easier to do business in some FTZ's than others. Some are privatized, some are 'government owned'. Some make it easy, and some are difficult to deal with. You also need to find out where the 'stuff' is that you would need. A lot of business is done Free Zone to Free Zone. No, you cannot pick a free zone in terms of the area you like. You pick a free zone that will give you the business support you require, and have the services your business requires. Like someone on this board has said once - It is not so much what you see, it is frequently who you see.

The second question, if you manufacture outside the FTZ, it is not possible to claim back duties. Containers come into the Free zone without being opened by aduana. It is on export that things are inspected. I have a good relationship with everyone in my FTZ and they are giving me a break for a new product that we are testing. I however have to document every step in the process. I have to have the new process under my eye, and don't go to my office every day. So, here in the DR, you can do things if you know the right people and how to go about it....

A quick story, the FTZ's that I investigated initially, mostly deal with manufacturing businesses. We are a distribution business. We had to teach them how to work with us as we were a 'new entity' to them. They did not understand our business model. Now they do and I get a lot of support. You do not get this everyday and you have to work at it.

It is hard to distribute into the DR from a free zone. This is not automatic. You need 'permissions'. Sometimes you get these and sometimes you don't. Free Zones are designed to bring product in, and export. Somehow it is not a good thing to think you're gonna manufacture for the DR out of a free zone. There are grey areas here. The 20% rule is the one that is published. If you try to follow the 20% rule, you are faced with a slew of regulations in terms of local content. This 20% rule depends on local content and this is scaled up in terms of the years that you manufacture/distribute here in the DR. And remember, often you have to convince customs officials that don't know, or don't understand the rules, that you are operating within the tolerances of the rules. The higher the local content, the more you may distribute here. It is a long story.

I'm trying to give you the sense and the feel of operating in a free zone. Follow up Robert's suggestion as well. The more you know, the easier it is.

FTZs

What you are going to manufacture is important. Santiago and Las Americas are perhaps the most technologically oriented.

If you are in electronics you might want to contact www.interelectronics.net

As I said it depends on what kind of manufacturing you are looking at. Interelectronics also do custom manufacturing.

We have a guy on these boards that is doing really interesting stuff in Nigua. You can drop him a line : Timex on the LIVING board.

You can email me for other stuff. Or Chris, who knows a ton...

HB

the only Free Zone that will permit you to have an office space, for your accounting, invoicing, shipping, and still manufacture somewhare else in the country is the Cyber Park of Santo Domingo.
what you are planning on doing is feasible, but complicated due to the fact that the goods will have to leave the Free Zone bounderies for assembling and custom will have some control problems.
hayon@pcsd.com.do