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Daily News - Tuesday, 17 June 2008

The Catch-22 of fuel taxes
There appears to be a structural failure in the Hydrocarbons Law 112-00. The DR is hurting under the burden of its increasing oil import bill, but ironically, the government benefits when more fuel is sold. Thus, the government has ironically little incentive to discourage gas consumption, as reported in Listin Diario. In the DR, 12.5% of all government revenues (RD$88.7 billion) come from fuel taxes. During the first four months of the year taxes on fuels yielded RD$5.96 billion in revenues, while the 16% ITBIS (VAT) tax on fuel yielded a total of RD$5.2 billion during that same period of time. This is a total of RD$11.15 billion in fuel taxes for the first four months of the year. Listin Diario estimates that at this rate the DR will collect a total of RD$45 billion on fuel taxes alone, making them the state's third largest revenue generator. Some sectors have asked the government to reduce the taxes on fuel as a way of easing the crunch on consumers, while others have argued that this would only lead to increased consumption. But the Economy Minister Temistocles Montas and Hacienda Minister Vicente Bengoa have said "no way," because they have already factored in that these taxes will go to pay for the also increasing foreign debt.

Time to pay for PetroCaribe
The DR has to pay Venezuela US$4.04 million in interest on the PetroCaribe fuel agreement by the end of the year and must pay US$18.7 million in interest for 2009. The Hacienda Ministry says that every time the Dominican Refinery (REFIDOMSA) receives fuel from Venezuela it pays 60% of the cost in cash. The remaining 40% is credited as revenue for the Dominican government. Hacienda Minister Vicente Bengoa said that the DR has collected US$720 million in revenue from Petro Caribe, which has been invested in the State-run Electricity Companies (CDEEE). Bengoa said that the US$18.7 million would be paid with agricultural products, medicines or tourism services.

Consumers and retailers feel crunch
According to Ignacio Espaillat, president of the National Gasoline Wholesalers Association (ANADEGAS), gas pump sales so far this year are half of what they were in 2006, reflecting consumers feeling the crunch of escalating prices. According to Espaillat, stations that sold 100,000 gallons per month in 2006 are now selling 50,000 gallons of fuel. Espaillat says that there has been a decline of 1.2% per month on average, but recently, the decline has been more pronounced, reaching 5%.
Electricity Superintendent Francisco Mendez said yesterday that the government has to come up with the funds to keep subsidizing 85% of the energy output and that the energy subsidy could total US$1.1 billion by the end of 2008. The government had allocated US$650 million to the subsidy from the National Budget for all of 2008. Speaking on the recent increases in rolling blackouts, Mendez said that the outages are caused by three factors: scheduled maintenance, problems in the system or the amount of power given to a sector depending on how much they pay.

Housing slows rhythm
House and apartment sales have declined by 60% in recent months, according to a report in Hoy. The pace of construction has also slowed by 50% over the same period of time. Nevertheless, Jaime Gonzalez, president of the Constructors and Housing Promoters Association (ACOPROVI), says that real estate sales have maintained a steady pace in tourist areas around the country. The decline is attributed to increases in builders' costs that have translated into higher housing prices. The price of cement has gone from RD$180 per bag to RD$240 per bag while the price of a quintal of metal bars has gone from RD$1,400 to RD$2,700. Industrialists say that the increase in fuel prices in relation to product costs is disproportionate because if fuel increases by 5%, product prices increase by 10%.

Agreement with Spain continues
Labor Minister Jose Ramon Fadul says that a cooperation agreement between the DR and Spain is still valid. The agreement enables Dominican workers to go and work in Spain on temporary visas, but officials say that the increase in cheap labor in Spain and the failure of the Spanish authorities to get Dominicans to return home has put strains on the program. The Labor Ministry has sent an estimated 5,000 Dominicans to Spain and the Minister said that the Ministry is hoping to sign similar agreements with the Canadian government. Hoy writes that the Spanish government might start paying temporary workers to return to the DR, paying them 40% of the funds upon departure and the remaining 60% once they arrive in the DR.

Fake pill market is big
The Pharmaceutical Representatives, Agents and Producers Association (ARAPF) says that the illicit/forged medicine market is valued at an estimated RD$800 million and is ever increasing. This announcement comes after the Ministry of Public Health admitted that it doesn't have the technical support to stop the trafficking of fake medicines. Fernando Ferreria says that fake medicines make up about 12% of the pharmaceuticals market. He says that his organization has been calling for the curbing of this black market for the last 20 years. Deputy Health Minister Maria Villa says that 17 technicians are currently working on inspections, but they need 15 more technicians to staff the ports.

Minister defends school drink
Speaking at a press conference yesterday, Education Minister Alejandrina German defended the "quality and safety" of the drink purchased from local suppliers for the public school breakfast program nationwide. TV journalist Nuria Piera showed two laboratory results of tests carried out on school milk from Ladom, principal supplier to the Ministry of Education, with the quality of the milk well below Ministry parameters and closer to water with sugar, than the milk preparation the Ministry is paying for. One milk expert speculated that the preparation was whey-based with sugar and flavoring, and explained that imported whey costs 20% of what imported powdered milk costs. Ladom is the nation's largest importer of whey.
Piera also showed results of lab tests on milk from another supplier that came closer to the required level. The investigative journalist also reported that one of the minister's daughters works in Ladom's management department. The Minister said that the Ministry uses the governmental Institute of Innovation in Biotechnology and Industry (IIBI) to monitor the quality of the drink, but refused to show past test results from the IIBI as proof of her statements.
German argued that school milk has nutritional value and said that the accusations against the food program were politically motivated. She took the claims as a public insult saying that they were an attempt to defame her character.
After the lab tests were revealed by Piera, the Dominican Pediatrics Society (SDP) called on the Ministry of Education to discontinue the purchase of the Ladom breakfast drink that fails to meet its own established minimum standards of nutrition.

Deputies question auditors
The government auditors underwent questioning by the Chamber of Deputies yesterday, after internal bickering led to revelations about their apparent lack of qualifications for the job reaching the press. The Chamber of Accounts members are among the highest paid government officials, earning wages reaching more than RD$400,000 a month. Nevertheless, their audits have been deemed of little use. In the midst of the scandal comes the news that among the auditors' perks paid for by taxpayers' money is a golf instructor. Last year, the auditors also made headlines when they tried to award themselves a hefty wage increase. The members of the Chamber of Accounts justify the poor results of their work by claiming that they need more funds. The auditors are appointed by the Senate, so it is not clear why it is the Chamber of Deputies that is questioning their performance. The members are considered political appointees. Chamber of Accounts president Andres Terrero said that he would not resign.

Politur defends the DR
Tourism Police (POLITUR) Chief Manuel de Jesus Miranda is challenging a recent travel warning issued to US travelers to the DR. In its page on the DR, the US Department of State warns US citizens to "be aware that foreign tourists are often considered attractive targets for criminal activity, and should maintain a low profile to avoid becoming victims of violence or crime. In dealing with local police, US citizens should be aware that the standard of professionalism might vary. Police attempts to solicit bribes have been reported, as have incidents of police using excessive force."
The US government warning continues: "The dangers present in the Dominican Republic, even in resort areas, are similar to those of many major US cities. Expensive jewelry attracts attention and could prompt a robbery attempt. Limiting the cash and credit cards carried on your person and storing valuables, wallet items, and passports in a safe place is recommended."
Jesus Miranda says that tourism destinations are safe for people of all nationalities. His comments were backed up by National Police Chief Rafael Guillermo Guzman Fermin who said that crime in the DR has been reduced significantly. Guzman said that the DR is among the safest countries in Latin America, and added that news might create the perception of increased crime but this doesn't reflect the reality of the situation.

Mercer ups Santo Domingo ranking
Santo Domingo is perceived as an above-average place to live in Latin America. The capital city has improved in the quality of living ranking recently released by Mercer Consulting. The capital city improved its ranking to position 115 in the world, out of a list of more than 215 countries, and up 12 places compared to 2007. New York City is ranked in 100th place. Among the factors enhancing the quality of living ranking is the imminent operation of the metro and the excellent telecom availability, according to a report in El Caribe. San Juan, Puerto Rico (72nd) is the highest ranked city in Latin America, Buenos Aires ranks 78th and Santiago de Chile 88th.
Multinationals and international human resource managers use the Mercer survey to determine the appropriate hardship allowance for relocating their employees. Interestingly, the Worldwide Quality of Living ranking takes into account criteria such as internal stability, air pollution and hospital services. The city reports also take into account other criteria such as political considerations, economic and health considerations.
In regards to Personal Safety, Santo Domingo ranked 92nd. This compares to Panama (96th), Monterrey (99th), Santiago de Chile (110th), San Jose de Costa Rica (125th), Buenos Aires (134th) and Bogota (207th).
For more on how other cities are rated, see

A look at the trade deficit
In an op-ed contribution in El Caribe, economist Roberto Despradel focuses on the DR's trade deficit with the US a year into the DR-CAFTA trade agreement. The trade deficit for the first four months of 2008 was US$850 million, which is double the deficit for the previous year. Imports were up 24%, while export declined 3%. To explain what has caused the deficit, he comments that the decline in apparel exports continued, and ferronickel exports were also down. Taking those two categories out of the equation, he says that exports to the US were up 7.5%. He mentions that several free zone manufacturing categories are doing well - medical instruments (up 14%), jewelry (up 17%), machinery and electronic components (13%), footwear (23%), and cigars (14%). He explains, nevertheless, that exports outside the free zones, such as beverages, plastic, cacao, vegetables and ceramic goods were down.
The big difference, of course, is due to an increase in imports. He explains that the purchase of electric appliances was up 53%, probably due to the elimination of duties under DR-CAFTA. Likewise, plastics imports were up 35%, while vehicle imports increased 12%. But the biggest increase in imports took place in the food sector, reflecting an increase in the cost of food products. For instance, grains were up 40%, fat and vegetable cooking oil were up 257%, animal fed 36% and fertilizers 300%.
Despradel says that the DR needs to apply policies to promote its exports. "We need to become a competitive country, with a productive sector focused on successfully placing its products abroad. If not, we will feel the trade adjustments in the economy, in the increase in the exchange rate as well as in interest rates."

Cid Wilson to NCLR Board
Cid Wilson, former President of the Dominican American National Roundtable (DANR) and a founding board member of Dominicans On Wall Street (DOWS) has been appointed to the National Council of La Raza (NCLR) national board of directors. NCLR is the single largest Latino organization in the United States and is based in Washington, DC. Wilson becomes the second Dominican ever to serve on the NCLR national board. The last Dominican to serve on the NCLR board was former NYC Councilman Guillermo Linares, who served on the NCLR national board in the 1990s. NCLR's national conference routinely draws over 20,000 Latinos.
See www.nclr.org

Future stars in the making
Emil Santos and Juan Vila Batista have won the gold in the Latin American Youth Table Tennis Tournament being held in Cartagena, Colombia. A total of 24 countries participated. The young team came through in the clutch as they defeated the Argentine team by a score of 3-1. Today Vila starts his defense in the singles tournament and is a strong favorite to repeat with the number one seed. Santos is ranked fourth and could be the best challenger to Vila.

Horford sets example
Being a star on the basketball court is not enough for All Star power forward Al Horford. The young star of the Atlanta Hawks is spending his summer doing what most high-priced athletes would never consider: he is getting his degree. Horford was the third overall pick in the 2007 NBA draft and left the University of Florida after three years. Horford had won two National titles as a Gator and thought it was time to leave and pursue bigger challenges in the NBA. But athletic success wasn't enough. Horford is back finishing his degree in telecommunications and has maintained a 3.3 GPA. Diario Libre reports that the young Horford takes the bus to school and sometimes walks, even though he has a Lexus parked in his driveway. Horford admits that he has thought about quitting school in order to rest, but says his goal is to get his degree.

From California to El Limon
Through baseball, children from a small Dominican village are learning about love, northern California-style. Through Cleats for Kids, the people of Humboldt County, California have been sending hundreds of pounds of baseball and softball equipment as well as medical supplies to El Limon, Samana on the Dominican Republic's northeast shore. The program was formed by KVIQ-TV manager Dave Silverbrand, who has teamed with Rodney Brunlinger, Voice of the Humboldt Crabs, America's oldest semi-pro baseball team.
Following their visit to the village last December, the program has grown to a year round project. It has been endorsed by David Ortiz of the Boston Red Sox, who played Little League in Santo Domingo. Looking for a way to help Dominicans, Silverbrand found Onfalia Morillo, veteran sportscaster and godmother to 600 Little Leaguers in the community where she owns property. "She is a saint in my eyes," said Silverbrand. "You can talk volume all you want, but there is nothing like giving a glove to a Dominican child, watching him smile and then go out and play ball."
You can learn more about their project through www.cleats4kids.net

Tuesday Sales
Carrefour is advertising its Tuesday meat and seafood sales day. The large supermarket and department store is also holding its 2008 Beer Festival at its Autopista Duarte store.
Plaza Lama has green plantains for RD$5.95ea, purple eggplant for RD$5.95lb, carrots for RD$5.95lb, Cubanela green peppers for RD$8.95lb, corn on the cob for RD$11.95ea, and fresh pork chops for RD$64.95.
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