"The Dominican Economy: challenges and opportunities" seminar ended its second day of work with a joint demand for an end to the energy crisis by means of the complete application of the General Electricity Law and the revision of the contracts now in force with the power producers. Ramon Flores, one of the founders of the Technological Institute of Santo Domingo (INTEC), and president of the Technology Foundation, called for "difficult decisions" in order to solve the crisis. Eduardo Rodriguez, a government consultant in the energy field, told the seminar that the government could not renegotiate the existing contracts with the power generators if it does not have the ability to obtain the needed resources, since there are no more resources to pay the existing debt with the generators or to pay the subsidy. Ede-Sur administrator Ruben Bichara said that there is no way to end the blackouts, especially at this time with the oil crisis and the need to conserve fuel. He suggested that the government establish reasonable goals and clean up some of the outstanding accounts. Bichara said that if the government could make pledges or guarantees for the current debt, and if they dismantle the pledges of the debt owed to the Union Fenosa, the municipal governments and other loans, the government would saveUS$11 million each month. If this were to occur, EdeSur's representative said that the government would not have to pay a penny in subsidies.
In his closing speech, President Leonel Fernandez called for the revision of the contracts with the electricity generators, and, at the same time, emphasized the need to pay for electricity. The President also announced that the government had approved the installation of a 50 MW wind power facility in the Bani area, in Peravia Province.
Speaking at the seminar on the Dominican Economy: Challenges and Opportunities, World Bank representative, Cristina Malmberg urged the Dominican Republic to invest in education and health, otherwise it will not be competitive within the conditions of the DR-CAFTA trade agreement. The representative also pointed out that GDP growth in past decades was not based on the production of an educated and qualified workforce, but the changes coming with DR-CAFTA, the recent signing of the multi-fiber agreement and the elimination of subsidies to industrial free zones that alter the structure of commercial incentives and require the production of goods with a higher added value or special niches in order to compete. The WB representative added that in order to be competitive it is necessary to increase the quality and level of education in the Dominican Republic, provide adequate health services for the people and increase access to technology. Malmberg said that DR-CAFTA represents a unique opportunity for the Dominican Republic to re-launch its economic growth and create a more inclusive economic model. Malmberg criticized Dominican bureaucracy and the slowness of the processes involved for doing business in the DR. She pointed out that it takes an average of 78 day to get the paperwork done in the Dominican Republic, but only 39 in Guatemala, 31 in Jamaica and 45 in Nicaragua. The WB representative also pointed out that the requirements for exporters are also a serious stumbling block for export expansion. She cited the ADOEXPO report that indicates that there is ten times more paperwork required in order to export something from the Dominican Republic than from the other Latin American countries. Malmberg told the seminar audience that in the Dominican Republic it takes a full day to clear exports, and this looks bad compared to 10 minutes in Costa Rica, five minutes in El Salvador and 30 minutes in Guatemala.
In the early part of last weekend, President Leonel Fernandez met with the head of the Shell Company in Santo Domingo, Rafael Maradiaga, and after reviewing just how to comply with the Petro-Caribe accords, the two men called the various obstacles in the program's way "a misunderstanding." Maradiaga's visit followed the Minister of Industry and Commerce, Francisco Javier Garcia, accusations that the Shell Company was boycotting the start up of the Petro-Caribe accords. Shell is the government's largest partner in the national refinery. In their statements to the press, both Fernandez and Maradiaga promised to keep the lines of communication open in order to achieve a correct implementation of the agreement. The Presidential Minister for Administration, Luis Manuel Bonetti, told reporters that after the talks, the refinery would go forward with the Petro-Caribe Accord which will provide favorable terms for 50,000 barrels of crude per day. This is a little under the 160,000 barrels a day the government says the country needs to import.
At the same time, the Mexican ambassador, Isabel Barbara Tellez, said it "was very risky," to say that her government had not fulfilled its commitments under the San Jose Agreement. Tellez pointed out that during the times when petroleum supplies from Venezuela were irregular or uncertain, Mexico supplied the Dominican Republic with crude oil. The ambassador suggested that the best way to disburse the accumulated funds generated under the San Jose Accords is through the Central American Bank of Economic Integration (BCIE) by means of development projects. The projects should be channeled through the President's Minister for Technical Affairs.
As if something more was needed to blur the future, there are dark clouds on the fuel horizon. Not from Venezuela or Mexico, but, rather, these clouds are local in nature. Apparently, as reported in Hoy, the impending situation is the result of the agreement reached between the Minister of Industry and Commerce (MIC) and the fuel retailers. The agreement will put an end to the retailers' continual complaints, and the commission charged with the issues could possible generate more heat than the recently resolved crisis over the Petro-Caribe Accords and the Shell Company. There are, indeed, serious financial considerations for the major fuel suppliers.
As it turns out, the Shell-Petro-Caribe issue only affects that company, but the agreement reached with the MIC will affect all the fuel distributors. According to sources, the fuel retailers have been losing billions of pesos over the years because the law concerning the sale of fuel is not applied. As it is "supposed" to work, Law 112-00 obliges wholesalers to make an adjustment the sale of fuel to retailers. The sale must be adjusted to a fuel at 15? C according to Resolution 64 of 1995 and Resolution 394 of 2002 that require the fuel to be measured with a precise yardstick. It has been pointed out that since the fuels arrive at the gas stations at a temperature that is generally above 30.6? C, and since the wholesalers do not make the required adjustment to 15? C, the retailers are always charged for more fuel than they actually receive. On average, a gasoline station loses 194 gallons for every 10,000 gallons of regular gasoline they receive. The numbers vary according to the type of fuel, but when one considers that the nation's gasoline stations sell an average of 256,000,000 gallons of regular each year, and 58,000,000 gallons of premium, plus 250,000,000 gallons of diesel, there are major numbers at play here. The retailers are steadfast in their position and the Ministry of Industry and Commerce has promised to enforce the cited resolutions and the law.
Fundacion Semper, an economic think-tank currently advising the the Senate industry and commerce commission on DR-CAFTA's impact on the economy and productive sectors, is proposing that the government replace the proposed ITBIS and income tax extensions with a single 3% tax on gross sales of goods and services. This is considered to be more manageable by the tax department and could be more effective in reducing tax evasion. Fundacion Semper argues that this would eliminate all the tax department red tape. The tax would be known as a Impuesto a las Ventas Brutas (IVB). A similar tax has been proposed for application in the United States by President George Bush. It has already been implemented in Chile with positive results, while other countries such as Mexico and Costa Rica are studying its feasibility.
The president of the Herrera Industrial Association (AEIH), Ernesto Villalta, revealed yesterday that the Director General of Internal Revenue had asked more than 180 enterprises to re-submit their tax returns in order to show non-existent earnings. These businesses, according to a letter sent to them by the IRS director, were supposed to have a net taxable income since they had already paid the 1.5% anticipated earnings tax on their gross incomes from 2003. The letter also said that the IRS would not allow these businesses to discount losses accrued in 2003 due to inflation and the devaluation of the local currency. According to Hoy, Villalta called such a stance "illegal", since the Tax Code, modified by Law 147-00 "does not say anywhere that the companies that pay the 1.5% cannot, in the following period, be compensated for what happened in the previous period."
He called the letter part of the "fiscal enthusiasm" that the IRS has been showing lately.
Several newspapers are questioning whether the excavations under way along Maximo Gomez Avenue in Santo Domingo are part of the much-discussed Metro system.
Listin Diario and other newspapers have confirmed that the construction is not the Metro, but rather, part of the overpass that will connect Villa Mella with the center of the capital where most people work. Diandino Pena, the head of the newly created Office for Transit Reorganization, called the work "preparations for the project that will start in 2006." In fact, it turns out that the work is being done by the Water Commission for Santo Domingo (CAASD), and is moving water pipes to make way for the construction of the overpass system. The new trenches will carry a 48" sewer pipeline to a processing plant next to the Ozama River, as well as a 20"pipeline for drinking water that is currently too near the columns that will support the overpass.
There are over one thousand bus routes covering the Dominican Republic, serviced by both large and small bus companies, some national and some local. Private, organized owner-drivers also service the routes. According to Listin Diario, over a million Dominicans and foreigners move about the country every day, using 50,000 buses of different types. Over the year, the operators earn approximately RD$2.5 billion, according to Augusto Gomez, sub-director of the Technical Office for Ground Transport (OTTT). The OTTT has offices in every province and they are the ones that carry out feasibility studies for possible new routes, as well as granting the necessary permits to operate on the routes. The head of CONATRA, one of the transport unions, told reporters that at least one vehicle each day leaves every town and city in the country towards Santo Domingo or the provincial capital. There is frequently more than one option. Rafael Estevez Almanzar, the coordinator general for CONATRA, says his organization has 1,500 companies and small unions within its membership. According to the report by Ramon Urbaez, 85% of passengers are serviced by small and medium companies and the remaining 15% use the services of large companies like Transporte Espinal, Metro, Caribe Tours, Terrabus, Aetra or Expreso Vegano. These companies also offer package deliver service and even remittance services.
The Third Penal Court of the National District has upheld the lower court decision clearing former Minister of Agriculture Eligio Jaquez and 18 others of malfeasance in the handling of RD$500 million that was used to build 51 greenhouses. The Attorney General's office had asked the court to reverse the decision made by the magistrate of the Second Court of Instruction. The judges rejected the Justice Department appeal that was centered on procedural errors and errors in the interpretation of the laws. However, the Appeals magistrates, Ignacio Camacho, Luis Omar Jimenez, Nancy Joaquin Guzman and Doris Pujols Ortiz declined the motion, and ratified the lower court's sentence. In fact, the court also ratified the lower court magistrate's criticisms of the Justice Department's handling of the case. The Appeals magistrates said that would push the Justice Department to observe the procedures correctly when they prepare their cases in future.
One of the sections in the popular "Que se dice" (What's being said) column comments on the "Now or Never" case concerning poor barrios and their electricity supply. According to the writer, there is a World Bank funded project that aims to organize and legalize electricity in large parts of the barrios. This will be one of the most dramatic steps against illegal electricity use of ever taken in the Dominican Republic. In order to neutralize the possible public rejection of the program of legalizing their connections, nobody will be charged for the installation of the light meters. And the poor families, moreover, can continue to use electricity for free for three more months. After this grace period, the majority will be subject to three levels of subsidized payment that vary from RD$100 per month upwards. The column concludes by saying that "If this project doesn't start to eradicate in large part the culture of free energy, within 50 years we'll continue suffering for the huge losses caused by non-paying users through blackouts".
The Lobby Exportador Dominicano has been holding meetings in Congress to press for the inclusion of a bill seeking to facilitate tourism promotion and the construction and maintenance of tourism infrastructure in the fiscal reform package. The funding would come from existing decrees and laws. These are Law 158-01, Law 184-02, Decrees 369-94, 336-05 and 403-05. The bill seeks to create a fund for institutional promotion and for the construction and maintenance of infrastructure works throughout local tourism destinations
Maria Jooste, John Matz and Diogenes Randes Farias will be participating in a benefit concert to raise funds for the DR's southern border towns, organized by Fundacion Sur Profundo. Staged at the National Theater's Sala Eduardo Brito, Voces del Mundo para el Sur brings together these three award-winning opera performers discovered by the Operalia contests organized by tenor Placido Domingo. The performance will be conducted by Eugene Kohn. Members of the National Choir will also be participating in the presentation of works by Verdi, Rossini, Puccini and Gounod. For a complete listing of cultural events, see http://www.dr1.com/calendar
The contents of this webpage are copyright © 1996-2008. DR1. All Rights Reserved.