President Leonel Fernandez submitted three bills to Congress yesterday outlining plans that aim to regulate and organize the country's financial system. Listin Diario reports that they involve the transformation of the Ministry of Finances into the Ministry of Treasury, the substitution of the Presidential Technical Secretariat with the Ministry of Planning and Development, and a third project that would create an Integrated System for Financial Administration. The latter is proposed to guarantee the unity of command and coordination that will assure consistency in the handling of public finances, the quality of operational management, transparency and accountability reports. The Ministry of Planning and Development seeks to update the economic, social, territorial and administrative planning system, whose legal framework has become obsolete.
Diario Libre reports that also presented to Congress were the Protocol of Intention between the governments of the DR and Brazil in the area of technical production and use of ethanol, and the cooperation agreement for combating illegal sea and air traffic of narcotics and psychotropic substances in the Caribbean, these two for ratification.
In spite of President Leonel Fernandez's efforts to strengthen state institutions and promote advances in the judicial system, the DR is still getting negative scores from international organizations, except for the area of macroeconomic growth and the considerable drop in the foreign exchange rate which have been praised internationally. According to Listin Diario, there are still complaints about human rights violations of Haitian immigrants, extra-judicial executions, generalized corruption, judicial impunity, exploitation of children, weak educational system and extreme poverty. To all this must be added Foreign Policy's classification of the DR as being in risk of becoming a "failed state"-the worst classification Dominicans have received throughout the nation's history. Although the World Bank and other financial institutions have recognized the strength of the tourism sector and the increased production capacity of goods and services for export, the 20 July 2005 "failed state" report has reduced the potential for attracting foreign investment.
An official delegation from the DR, led by Minister without Portfolio Miguel Mejia, is visiting the People's Republic of China seeking to establish commercial, cultural, educational and investment relations between the two nations. Diario Libre reports that Mejia, who is in Shanghai, stated that the DR wants closer relations with the Asian giant. Since 1949, the DR has maintained diplomatic relations with Taiwan (Republic of China). The People's Republic of China considers Taiwan a "rebel province" and demands that all countries wanting to become their allies must first sever diplomatic relations with Taiwan.
According to Presidential Technical Secretary Temistocles Montas, new proposals have arisen for lawmakers' consideration and which they have promised to analyze regarding the proposed tax reform bill in Congress. Diario Libre reports that he did not offer greater details but said there have been advances towards an agreement. Chamber of Deputies President Alfredo Pacheco did not disclose the new options presented by the government technicians.
Listin Diario reports that the government had reached an agreement with producers of coffee, cooking oils, and sugar for their inclusion in the 16% VAT (ITBIS) as stipulated in the tax reform bill in Congress. These producers will not be directly affected as the VAT is paid by the consumers. According to Montas, the agreement stipulates that if the tax is removed from one of these products, it will automatically be removed from the others. Coffee, sugar and oil are always in great demand and, according to authorities, would contribute RD$4 billion in taxes. Montas also said progress had been made with the hotel sector, the government having committed itself to seeking a solution to their problems after the reform is passed. He insisted that the tax reform does not increase the amount paid by the people as the products are currently paying 13% for exchange rate commission and customs tariffs which will be eliminated, something opposition leaders are trying to hide. He complained that the PRD lawmakers are lying when they say the government is creating new taxes.
The American Chamber of Commerce luncheon held yesterday had the President of the Senate, Andres Bautista, and the President of the Chamber of Deputies, Alfredo Pacheco, as guest speakers. Bautista spoke about the implementation of DR-CAFTA and productive re-conversion, indicating that the benefits of the treaty for the DR will depend on the country's capacity to design and execute adequate policies and procedures directed at solving structural restrictions the limit competitiveness. He mentioned the commercial relations existing between the DR and the US and referred to the Caribbean Basin Initiative (CBI) of the 1980s. Compared to the CBI, which was a unilateral and temporary preference system established by the US, DR-CAFTA is a multilateral treaty with permanent characteristics that will guarantee the stability of thousands of jobs generated in the industrial free zone system. Bautista indicated that healthy and sustainable development can only be attained with an increase in competitiveness and productivity and that DR-CAFTA means that the DR must adapt to changes that have taken place in the world economy. Bautista later outlined legislative action accomplished and pending in Congress. He said that it was essential to provide productive sectors with infrastructure and the adequate legal and institutional framework to take advantage of the agreement. The Senate has passed initiatives and has approved financing operations to increase competitiveness. It has also been involved in the design and adoption of a national strategy for competitiveness and is working on the legal framework for the National Competitiveness Council, which has been operating for several years and should become the necessary forum for the private and public sectors to adopt a national agenda to this end. Pending is the adaptation of existing legislation, to reduce the costs of business transactions in the country, the creation of an arbitration system, and the availability of a quick and flexible program for the assistance in the preparation of business and investment proposals. The Senate is working on a bill to create adequate conditions for the national productive sector to reconvert itself and adapt to the demands of a more open market. Bautista referred to the importance of agriculture in the DR, indicating that 34% of the population is rural, and agribusiness is the third most important sector conforming the GNP (11.8%) without considering the contributions of the agricultural industry as applied to manufacturing and free zones. He indicated that the rural population lives and works in conditions of inequality, which is evident in basic services such as health, education, electricity, recreation, housing, roads, tap water systems, access to production means-land, financing and technology-and markets. He presented a proposal for production development as an initiative for the rural population and other vulnerable sectors that see DR-CAFTA as a threat rather than an opportunity. His proposal is directed at supporting agricultural producers in the adoption of technological innovation, the diversification of activities and productive transformation required by the opening of the Dominican economy within the DR-CAFTA framework. He specifically mentioned the following: 1) a fund for the promotion of technological innovation; 2) the diversification of production and incentives for productive investment in the rural areas; 3) risk management of agricultural work.
For his part, Alfredo Pacheco spoke about institutional reform, especially those directed towards improving the rule of law and the fight against corruption as crucial for the economic development of the region. Pacheco also mentioned the CBI, launched by President Ronald Reagan in 1984, which was a unilateral guarantee of tax-free imports of many Dominican products into the US. Other preferential access was established with European countries through the Lome Convention. Both systems contributed to the DR's economic growth during the past decades and thanks to the CBI, the DR transformed from an exporter of primary agricultural goods to an exporter of textile goods and services. However, statistics show that national exports stalled and the change of the export profile did not respond to the business and investment strategies of the local industry, which has remained focused on satisfying the demands of the national market. The positive impact of this transformation was limited to the employment of local labor. Pacheco said that the DR is the country with the greatest economic development in Latin America in the last 40 years with an average rate of 5.4% according to a recent CEPAL report. This contrasts with the decrease in the human development index prepared by the United National Development Program (UNDP) which shows that the higher the nation's GNP, there is greater deterioration in health, education, employment, life expectancy and other development indicators. Pacheco believes that the adaptation of the free zone law and the promotion of exports law are priorities in order to create a legal framework for the industrial development in the country that would integrate industries within and outside the free zones parks. He also indicated that a World Bank (WB) report on NAFTA's effects in Mexico ten years after its implementation show that the benefits could have been greater with more aggressive: 1) strengthening of public institutions; 2) training of the workforce; and 3) improvement of infrastructure services. The WB is already warning that in order for the DR to take real advantage of DR-CAFTA, we must: 1) improve the investment climate, including the competitiveness law which would be a tool to assure the free and loyal competition between national and foreign companies; 2) improve the quality of public institutions by increasing transparency and the application of government regulations; 3) improve the systems of measurement, quality of health and sanitary regulations as well as simplify customs procedures; 4) increase the productivity of the workforce through more and better education and access to health services; 5) reduce the costs of transactions and take better advantage of logistics.
The Superintendence of Electricity announced higher electric tariffs for residential and commercial clients using more than 200 kiloWatt/hours. This comes as a result higher fuel prices and the slight increase in the foreign exchange rate, which have generated an accumulated increase of 30% being paid out by the state. According to Listin Diario, the government will continue to subsidize residential consumers of less than 700 kW/hours. Residential and commercial users consuming from 0 to 200 kW/hours will be kept with the same tariff which is RD$2.87 per kW/hour. Clients within the BTS-I (simple residential low tension) tariff within the 201 and 300 kW/hour range will see an increase of 2.4% compared to last month's bill. The new cost is RD$4.09 per kW/hour. The tariff for the 301 to 700 kW/hour range will increase by 4.31% to RD$6.09 per kW/hour. Meanwhile, clients consuming more than 700 kW/hours will receive a 5.77% increase which will place their tariff at RD$7.89 per kW/hour.
A "mafia" dedicated to falsifying property titles, as well as signatures of officials, title registrars and owners of real estate such as apartments, houses, improvements, and urban lands with tourist and agricultural vocation, valued at hundreds of millions of pesos, is currently under investigation, according to Diario Libre. Affected are owners of real estate in Arroyo Hondo, Las Praderas, Bella Vista, Mirador Sur and central areas of Santo Domingo. The situation is hindering large-scale investment projects and has caused expenses in the millions. Also affected are lands in the Higuey tourist zone where one case is affecting property worth US$150 million. Also under investigation are lands in the Bahia de las Aguilas area which has been the subject of a conflict since 1997 when the Attorney General's Department indicted several officials and businessmen linked to a network dedicated to selling and buying lands within the protected area at ridiculously low prices.
Last night, the National Drug Control Department (DNCD) arrested Juan Danilo de Jesus Jimenez, the main suspect in the case of 128 kilos of pure cocaine seized within a container loaded with 10,000 sports pants that was going to be shipped to New York from Puerto Plata (see DR1 Daily News 3 November 2005). According to intelligence organizations, he was being used to ship the drugs and was part of a network, as reported in Listin Diario. They are continuing their investigations. The sports pants had been purchased from a free zone factory in Santiago.
A two-year-old girl was taken to Dario Contreras Hospital yesterday morning after being hit by a stray bullet at 5:00 am while she was sleeping at home in El Tamarindo Adentro in eastern Santo Domingo, according to Listin Diario. Santa Severino was wounded in her right arm. Also being treated at the same hospital is three-year-old Christian Rojas who was hit in his left leg at 11:00 pm Wednesday while he was sleeping at home in Ensanche Ozama. During the last few months there have been several cases of children wounded by stray bullets while sleeping or playing in or near their homes.
Dominican composer and singer Juan Luis Guerra won two prizes during the VI Latin Grammy Awards held in Los Angeles last night. Guerra won the "best Christian album" and "Best tropical song" categories. Throughout his career, Juan Luis has sold more than 10 million records. In 1994 the international superstar became an evangelical Christian. The audience at the Shrine Auditorium, where the ceremony was held, gave Guerra a standing ovation.
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