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Daily News - Tuesday, 16 August 2005

Fernandez wants lower energy bills
President Leonel Fernandez has instructed all public and de-centralized government institutions to reduce fuel and energy consumption by 20%, as reported in the Listin Diario. This measure is aimed at easing the adverse situation produced by the constant increases in prices of crude oil on the international market. The information was offered by the Presidential Administrative Secretary, Luis Manuel Bonetti, who also said that an official commission appointed by the President will travel to Venezuela to discuss aspects related to the Petro-Caribbean agreement. He stated that Dominicans must make saving fuel and energy their first priority.

Venezuela refutes Refidomsa
The Venezuelan Ambassador in the DR has denied that his government is opposed to the Dominican Republic receiving the benefits of import financing within the Petro-Caribbean agreement, signed recently in Caracas. This came as a reaction to statements made by the president of the Dominican Petroleum Refinery (REFIDOMSA), Aristides Fernandez Zucco, who warned against Venezuela's objections. The Venezuelan government insists that it will comply with the Petro-Caribbean agreements to benefit the DR, and described the classified statements by Fernandez Zucco as 'shameful'.
Ambassador Francisco Belisario Landis stated that Petro-Caribbean was a Venezuelan initiative with the objective of contributing towards the energy security and the socio-economic development and integration of Caribbean countries. Fernandez Zucco had warned that Venezuela had expressed some objections to the DR receiving the financing benefits for the import of petroleum through Petro-Caribbean.
Ambassador Landis explained that the agreement states that if the price of oil reaches US$50 per barrel, the amount to be financed would be 40%, if the price reaches US$100 per barrel, the financing would be 50%. The ambassador warned that he would not enter into conflict with public officials because that is not his mission. "I must work towards strengthening of ties of friendship and solidarity between the two countries", he stated.
Meanwhile, Listin Diario reports that Venezuelan President Hugo Chavez has expressed surprise that anyone would object to the DR receiving the benefits of Petro-Caribbean, and assured the country that it will receive equal treatment with the agreement. Presidency Press Director Rafael Nunez said that Presidents Leonel Fernandez and Hugo Chavez discussed this issue by telephone yesterday.

RD$32 billion for petroleum
During the first semester of this year, the DR disbursed RD$32.44 billion (US$1.081 billion) as a result of the increase in demand and the higher prices of crude oil. El Caribe reports that this amount represents 15.7% of the current general budget. Central Bank statistics indicate that the purchase of fuel during the first semester of this year increased by US$348.5 million when compared to the same term last year, when it was US$732.9 million. During the period from January to June 2005, the international price of petroleum reached levels exceeding US$58 per barrel. These higher prices have caused an approximate increase of 47.6% in the DR's petroleum bill. The volume imported increased by 12.3%. Crude oil closed at US$66.27 per barrel on the New York market yesterday, a 59c drop compared to Friday's record price of US$67.10.

Petroleum causes food prices to increase
The high petroleum prices on the international market have begun to push up the internal costs of agricultural products. Agricultural transporters say they cannot resist increases in the price of fuel. Listin Diario reports that the products that have gone up in price are plantains, bananas, potatoes, onions, garlic, lettuce, peppers, cabbage, pumpkins, as well as red, pinto and black beans. The main reason for the higher prices is the increase in the cost of fuel used to transport the products to the consumer. The cost of diesel was at RD$71.30 in June compared to the current price of RD$81.30, a 14% increase. This is the type of fuel used to transport foodstuffs from the countryside to the main distribution centers in the cities.

No final agreement on tax reform
The government is holding a further meeting with social and trade union representatives on Wednesday to continue identifying compensatory measures for the neediest sectors of society within the framework of the tax reform. These sectors oppose the inclusion of oil, sugar and coffee in the list of products that will be subject to VAT (ITBIS). They also want the government to increase investment in social programs from 7.2% to 10% of GDP.
The private business sector hasn't agreed on a reform either. After the agreement announced by the government and the business sector, which was represented by the National Private Business Council (CONEP), groups such as the National Association of Hotels and Restaurants (Asonahores), the Dominican Agribusiness Board (JAD), among others, have presented their independent proposals, which are hindering the development of a consensus for submitting the bill to Congress.
Yesterday, Asonahores president Enrique de Marchena said that CONEP's position did not represent the tourism sector. The hotel sector is requesting a special 8% VAT (ITBIS) for the sector to be able to compete with the Maya Riviera and Cancun, where the rate is 10%. They also request that tourists should not be subject to the selective consumer tax and that the sector be included in the export benefits as they are "exporters of services".
The JAD wants raw materials to be exempt from taxes as well as machinery for the agricultural sector and basic foodstuffs.

Public hearings wanted for tax reform
PRSC deputies will request today that the tax reform agreed upon between the government and the business sector should be debated in public hearings in Congress, according to a report in Listin Diario. This proposal will be presented by the PRSC spokesman in the Chamber of Deputies, Ramon Rogelio Genao, who stated that his party's lawmakers do not endorse the agreement between the business sector and the government. He said the proposal must be modified to protect the interests of the poorest members of society. The PRSC is opposed to creating new taxes and applying VAT (ITBIS) on more than 200 products that are currently exempt from the tax.

Asonahores rejects Conep proposals
The president of the National Hotel and Restaurant Association, Asonahores, has described the fiscal reform package presented by the National Council of Business (CONEP) as little more than "tax mathematics". He said that CONEP's position does not represent the tourism sector's point of view. Asonahores' position is that the fiscal reform project presented by CONEP is not the result of a consensus and does not take into consideration important agreements reached during talks regarding the tourism sector. Asonahores president Enrique Eduardo de Marchena presented the association's position in a written document. De Marchena said that the tourism sector would take their position directly to the government, Congress and the political sectors, as well as to other economic sectors. He stated that tourism needs to be treated as an exporting sector in the fiscal reform package.

Lobby of Dominican Exporters
Representatives of the National Council of Free Zones (CNZFE), Agribusiness Council (JAD), and National Association of Hotels & Restaurants (Asonahores), and supporting businessmen met in La Romana with local economic press editors over the weekend to hear the position of a new movement, known as the Lobby of Dominican Exporters. The lobby urged the creation of an alliance to seek that fiscal reform package that be passed contribute to the competitiveness of the productive sector.
They also mentioned that the government's participation in the fiscal reform debates, represented by the director of the Tax Department, whose main role is to increase tax revenues, falls short of accomplishing the goal of contributing to national development, lacks transparency and on the contrary, may even contribute to maintaining the present government inefficiency when it comes to public spending.
Victor Nunez, spokesman for the group, explained that the Lobby of Dominican Exporters seeks to do away with the bias against exporting that he says has traditionally existed in the DR. "It is seeking a change in attitude, and strives to be an open forum for those who feel they can contribute to the national strategic plan that can serve as a sustainable plan in the medium and long range," he stated. The group's position is that there is more of a need to promote the fulfillment of the laws presently in place. He mentioned that the laws that provide incentives for tourism and agriculture are not being fulfilled by the government. He criticized the fact that the funds that Law 158-01 allocates to tourism promotion are being used for other purposes.
The lobby's position is that fiscal reform needs to be more comprehensive and systematic, and should include elements aimed at contributing to the sustainable development of productive sectors and the nation. They presented 10 key points that are essential for national competitiveness.
The lobby urged for the application of clear rules that would penalize monopolies, now that the approval of the Free Trade Agreement is just round the corner, in order to protect small companies.
The lobby met in La Romana to strengthen alliances among the sectors that are not in agreement with the fiscal reform that has resulted from the National Dialogue discussions.
Economist Freddy Emam Zade, participating in the La Romana meeting, commented that the conditions are not in place for the approval of the fiscal reform, regardless of the FTA's approval. In his opinion, productive sectors need a reform that is much more than just an increase in taxes. If not, "then we will be taxing the productive sector to maintain the unproductive bureaucracy," he stated. He stressed that there should not be a rush to pass the fiscal reform, and that the government does not have any rush to pass the reform, nor is this a requirement by the IMF, nor for the implementation of the DR-CAFTA.
Speaking for the hotel sector, Enrique de Marchena stated during the meeting, "We are pointing out that the proposed reform will only cause government inefficiency to increase. It is a trail to the wrong road," he said. During the meeting, the government's inefficiencies were pointed out. For instance, the fact that there are 8,500 people employed by Customs, when studies have shown that only 600 are needed to do the job. There are 17,000 employees on the Ministry of Agriculture payroll, of whom only 3,000 are technicians. In addition, there are 106,000 people on the Ministry of Education payroll, of whom only 40,000 are teachers, meaning that 66,000 are bureaucrats. In private education, the ratio usually is of only one office person for every ten teachers.
Speaking at the meeting, Osmar Benitez of the Dominican Agribusiness Council (JAD) also has called for increased transparency in the fiscal reform package. He called for the abolition of what he described as taxes on technology. By failing to do so, he said, the government would be stimulating the use of Haitian labor. In his opinion, agriculture in the DR needs to specialize in order to survive the new DR-CAFTA era.
Economist Frederic Emam Zade said that while there is a consensus for passing the DR-CAFTA agreement, there is not yet a consensus for the passing of the fiscal reform. Emam Zade denied the passing of the fiscal reform is a requirement of the IMF, and emphasized that there is time to do it right.
To contact Dominican Export Lobby coordinators Victor Nunez, Hugo Ramirez or Alan Ramirez, write to [email protected]

Trade deficit with the US
The DR is the only DR-CAFTA signatory that maintains a trade deficit with the US in spite of being its biggest client among the Central American countries, according to a report in Diario Libre. International trade expert Manuel Gonzalez Tejera indicated that in spite of the deficit, the DR increased its exports to the US by 5.6% during the first semester of this year. During that same period, the five Central American countries (Costa Rica, Nicaragua, El Salvador, Guatemala, and Honduras) sold more than they bought from the US (US$9.038 billion against US$8.218 billion) and only Costa Rica showed a decrease in exports. Tejera is recommending a summit of the FTA beneficiaries so that they can design a joint trade strategy for the region that would guarantee it a better position as a client of the US.

Names please, Mr. President
The president of the National Business Council, Elena Viyella de Paliza has asked the President to reveal the names of companies that are stealing power. She urged the authorities to apply the Electricity Law, and identify those who do not pay for the service. Celso Marranzini, a former Conep president, said that President Fernandez should have mentioned the names of the politicians that are stealing the service. The general manager of Edesur, Ruben Bichara said that that company and Edenorte have identified 900,000 clients that do not pay for the service, as reported in Diario Libre.
The government, in an agreement with the World Bank, has appointed new general managers to head EdeSur and EdeNorte, the power distribution companies that manage two-thirds of the power supplied in the DR. EdeNorte will now be under Peruvian Manuel Suarez, and EdeSur will continue under Ruben Bichara, now assisted by Chielan Alejandro Gomez. Their role is to ensure that the companies increase their collection level, currently at just 53%.

More gold found in DR
The GoldQuest Mining Corporation has announced the discovery of two new zones of gold-bearing quartz veins and a third zone of copper-gold-silver-molybdenum mineralization in the north of the Dominican Republic. These were discovered during the Gold Fields-funded exploration program with Gold Fields retaining a back in right to earn a 60% interest. The El Toro, Santa Ana and El Tuerto concessions and applications are located 110 km northwest of Santo Domingo.
Company president David J. Hall said upon announcing the success in exploration of new gold and copper districts, that the Dominican Republic is becoming recognized as a serious exploration country. He explained, "The El Toro, Santa Ana and El Tuerto projects would rapidly progress to the drilling stage and along with the breakthrough discovery of porphyry gold mineralization at Cerro Dorado and Pueblo Viejo style mineralization at Tres Palmas, this highlights the value adding work by the GoldQuest team."
GoldQuest through its subsidiaries owns and explores mineral properties in the Dominican Republic. GoldQuest is 34.6% owned by Minmet plc, a mining and exploration company listed on the Irish Stock Exchange. Gold Fields and Placer Dome Inc. are also significant shareholders in the Company.

Evans Paul on Haitian birth certificates
Haitian presidential candidate Evans Paul has said that the Haitian consulates should take on the role of providing Haitian documentation for children born in the Dominican Republic. He said that this is one of the main problems for relations between the two countries. In the past, Haitian consulates have refused to issue birth certificates to Haitian children born in the DR.
Paul told Hoy newspaper: "Any person born to a Haitian father or mother is Haitian. I think that my country and my government will recognize them as Haitians," he said. He said that the children of Haitians are Haitians living abroad and that International Law refers to jus solis and jus sanginis, and the Haitian Constitution recognizes jus sanginis, which is the right of bloodline. He said that the priority is to provide a solution to the problem of hundreds of Haitian children who do not have a legal status. He said he would work to create favorable conditions for businessmen wanting to invest along the border with Haiti.

Illegal Haitians deported
EFE press agency reports that over the weekend, 1,012 Haitians were deported from the DR after being arrested in the provinces of Santiago, La Vega, Puerto Plata, and other areas in the northwestern region of the country. According to regional Immigration Department spokesman Arcadio Rojas, this is part of an operation launched by immigration authorities with the aim of controlling and regulating illegal immigration into Dominican territory. An immigration source told EFE that more than 3,000 Haitians had been arrested over the weekend but their date of deportation was not disclosed. Organization of American States (OAS) Secretary General, Jose Miguel Insulza, admitted that the Haitian crisis is affecting the DR and called upon the international community to cooperate with the Dominican government in tackling the situation. Insulza stated that the DR cannot handle Haiti's problems because it does not have the economic resources for this. He said that over the last few years the DR has received a large volume of Haitian migration without receiving any aid from international organizations. The DR and Haiti share the island of Hispaniola and are separated by a border of almost 400 kilometers. Dominican authorities estimate the number of Haitians living in their territory at one million, mostly illegal aliens, working mainly in sugar plantations and the construction industry.

Illegal Dominicans intercepted in PR
According to the Associated Press, 116 illegal Dominican immigrants were intercepted on a fragile boat off the northwestern coast of Puerto Rico. The group - composed of 95 men and 21 women - was trying to reach the beach on a wooden, 9.8 meter boat with an engine, according to coast guard spokesman Eric Willis. A Puerto Rican police patrol discovered the group about 3.2 kilometers offshore before dawn. All the immigrants were found to be in good health and were turned over to the coast guard for deportation, said Willis. Thousands of Dominicans risk crossing the Mona Passage between the DR and Puerto Rico, in search of better economic conditions. This year, over 3,800 illegal immigrants, mostly Dominicans, have been caught trying to reach Puerto Rico. At least 90 immigrants have drowned over the same period.

Quirino case is sixth most important worldwide
Listin Diario reports that according to the Director of the National Drug Control Department (DNCD), Ivan Pena Castillo, the case involving former captain Quirino Ernesto Paulino Castillo is considered the sixth most important drug trafficking case worldwide, because of its transcendence and the involvement of people from five different countries. Pena Castillo's statements are part of a report of his first year leading the department. Paulino Castillo was extradited to the US where he is facing drug trafficking and money laundering charges related to the seizure of 1,387 kilos of cocaine in Santo Domingo last December. He is also accused of heading a network transporting drugs from Colombia to the United States, using Venezuela, the DR and Puerto Rico as bridges. Pena reported that during his directorship of the DNCD, over two tons of cocaine was seized in several intelligence operations. He also reports that 159 drug mules were arrested with the help of the canine unit (K-9) at DR airports and ports. He also stated that more than one million ecstasy pills had been seized in a joint operation with the US Drug Enforcement Agency and the Dutch Anti-Narcotics Police in The Hague.
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