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Daily News - Wednesday, 18 June 2008

Fernandez asks UN for fund
President Leonel Fernandez revealed yesterday evening that he has sent a letter to the United Nations Secretary General requesting the creation of a "solidarity fund" to finance the economies of developing countries that are being hard hit by increasing petroleum and food prices. The Chief Executive told reporters from Listin Diario that he sent Ban Ki-moon a letter two days ago under the aegis of the Central American System for Integration (SICA). He pointed out that without the facilities that Venezuela provides under the PetroCaribe Agreement, the Dominican economy would not be sustainable. Fernandez commented that behind the spiraling price of petroleum is speculation. "There are no clear rules, and there are transactions that are not regulated in the stock market, which creates speculation, and more so, there is the belief that there could be fraud. What we understand is this level of speculation could lead humanity to an abysm," he said. Fernandez spoke during the presentation of the book on the development of the economy, "Where We are Headed," by Economy Minister Temistocles Montas.

Melanio orders diesel audit
Industry and Commerce Minister Melanio Paredes has ordered an audit of the transport unions that benefit from the use of government subsidized diesel fuel. Special attention is being given the National Confederation of Unified Transporters (CNTU), headed by Ramon Perez Figuereo. According to Hoy newspaper, Paredes said that Perez Figuereo is "suspected of not giving proper use" to the subsidized fuel. The announcement of the audit came moments after Perez Figuereo told reporters that the ministry headed by Paredes was creating "disorder" with the subsidized fuel and warned that beginning Thursday his members were going to increase fares for passengers and the cost of freight haulage. According to the union leader, who appeared at the Presidential Palace to deliver a document addressed to President Fernandez, the increase in passenger fares will be between RD$3 and RD$15, and the freight rate would increase by about one thousand pesos. Minister Paredes, also at the Presidential Palace, told reporters that it was true that the dispatch of subsidized diesel fuel to the CNTU union had been "suspended" for the time being. Paredes said that the fuel that was supplied to the union "apparently did not arrive at a good destination." The minister urged reporters to consult with the Land Transport Office (OTTT) to see whether the CNTU vehicles used diesel or propane (LPG) to power their vehicles.

Millions for greenhouses
Paino Abreu Collado, the administrator of the Agriculture Bank, told reporters that his institution had made loans worth more than RD$600 million to finance greenhouses in several parts of the country. Of a total of RD$623.2 million, RD$490 million have gone to build the greenhouses and RD$133 million to finance the crops. Areas such as Jarabacoa, Constanza, Moca, San Jose de Ocoa, Comendador, San Jose de las Matas, Bonao, Monte Plata and Salcedo have become centers for producing and exporting prime crops. According to Abreu, the bank has financed 196 greenhouses and there is demand for many more.

Debt climbed 3.3% in first quarter
The national debt climbed by 3.3% during the first quarter of 2008, according to figures from the Ministry of Hacienda. The absolute increase equaled US$280 million. The national debt amounts to 20.8% of the GDP for 2008 and is made up of US$7.757 billion in non-financial public sector debt and US$1.091 billion in debt from the financial sector. The foreign debt makes up 87.5% of the total and the increase in the foreign portion was US$176 million from the end of 2007.

Promipyme loans millions
The National Council for the Promotion and Support of Micro and Medium-scale Business (Promipyme) finances RD$140 million each month. The figures were given to Diario Libre reporters by the executive director, Juan Rodriguez Melendez, after a meeting between sector representatives and President Fernandez in the Presidential Palace in Santo Domingo. Rodriguez Melendez said that he was confident that Congress would approve the law that elevates the bureau he directs to a department level, a status that would allow it to access international funding available for the micro and medium-scale business sector. Yesterday afternoon, the President hosted representatives from the sector at a reception at the Presidential Palace.

We pay a lot of fuel taxes
The Value Added Tax on fuels in the Dominican Republic is a progressive tax, meaning that as prices rise, the consumer pays more and more in tax money. During the first four months of the year, consumers paid 50% more compared to the same period last year, 2007. The VAT tax is different from a fixed tax that only changes through inflation and was set by the Hydrocarbon Law 112-00 at 7.4%. However, the 16% VAT tax is applied to the import price of petroleum, and as petroleum goes up, so does the amount of tax. In the first four months of 2007 the government collected RD$5.546 billion in taxes under Law 112-00. In 2008 the figure was RD$5.955 billion. With the 16% VAT tax the numbers are different. In 2007 the state raised RD$3.475 billion, according to Listin Diario, and in 2008 the sum was RD$5.1 billion, a 49.4% increase. What this means for consumers is that for 2008, some RD$6.9 billion will be paid in VAT taxes on fuels.

Free Zone bill goes to committee
The Senate has sent a bill proposing complete tax-free status for industrial free zone industries to its Permanent Commission on Industry and Commerce and Free Zones for further study. The bill, which was sent to Congress by President Fernandez, seeks to increase the competitiveness of Dominican free zone industries. It proposes 100% relief from income taxes and import duties on raw materials, equipment and vehicles. When Fernandez sent the bill to Congress, he said that in order to move towards the development of the free zones it was necessary to have a judicial base upon which to build and sustain competitiveness.

Chamber of Accounts under fire
As the Chamber of Accounts members came under hard questioning by a legislative commission, some rather serious situations came to light. According to El Nuevo Diario, the revelations could lead to the dismissal of members of the state auditing body. The crisis came to a head when seven of the auditors accused the chief magistrate of mismanagement. According to one report, the secretary of the Chamber is deaf, and would send his son to take minutes at their meetings. Another case in point was the fact that the chamber members were planning to increase their salaries to RD$550,000 per month (up from RD$400,000), which added to their existing perks would have brought their monthly income to RD$850,000. The Chamber of Accounts was also intending to request a RD$10 million loan to finance their pensions when they finish their term of office. According to the newspaper, Andres Terrero, the chief magistrate of the auditors, had an RD$8 million fund that he could use at his discretion. The deputies are interviewing the auditors in groups of three, and their declarations will be finished after today's session. So far, most of the members interviewed by the Chamber of Deputies' commission have openly admitted that they are subject to a great deal of political pressure when they have to audit any of the government offices.

State Department memo causes stir
The United States State Department advisory on safety issues for tourists visiting the Dominican Republic has caused a predictable reaction from public and private quarters. From the head of the Tourism Police (Politur), to the chief justice of the Supreme Court, Dominicans have rejected most of what the State Department said as an "exaggeration" and as "discriminatory". According to El Nuevo Diario, chief justice Jorge Subero Isa told reporters that, "the warning from the State Department is a serious warning that needs to be answered." The State Department warning said that, "crime continues to be a serious problem in the Dominican Republic." The memo goes on to describe how thieves use motorcycles to pluck handbags and other items from unsuspecting tourists. However, General Manuel Rodriguez Miranda told reporters that crime was "90% controlled" in his area of responsibility. In El Caribe newspaper, reporters interviewed the District Attorney for the National District, Juan Hernandez Peguero, and the head of the National Police, General Rafael Guzman Fermin. Both said that while there was some incidence of criminal activity, "crime is under control."
Politicians voiced their opinions, some echoing the government's line of thought and others, such as PRSC representative Ito Bisono, who said that the memorandum reflected the reality of life in the Dominican Republic.

Untold millions taken from official
Millions of pesos were apparently taken from a safe in the house of the financial director of the Ministry of Public Health, according to the official himself. Contacted by investigative journalists Nuria Piera and Huchi Lora on their morning radio program, the official, Miguel Espinal, said that he did not know how much had been taken, as it was his wife who handled the money in the safe, and she was out of the country. The financial officer admitted that it was strange that a person of his stature would not know the amount of money stored in his safe, "even though it's strange, that's the way it is." Espinal said that the police have recovered three million, and that a million belonged to him and a friend. The rest belonged to his wife. He explained that the money was in the safe because he was going to make a deal, and the money was the result of his entire life savings. Even the prosecutor for Santo Domingo, Jose Miguel Cabrera, has no idea how much was stolen from the safe because Espinal did not specify the amount when he reported it to the Police.

Inflation hits construction hard
The stories continue to roll in on the rising cost of all types of construction. Today's Hoy reports that engineers and businessmen from the sector are requesting a meeting with the Minister of Industry and Commerce and the Superintendent of Banking. As construction is considered to be a major player in the Dominican economic process, the sector is somewhat in disarray, and both government and the private sector are seeking relief. Reporter Aleida Plasencia said that the basic industry ingredients, re-bar, cement and sand have all seen large increases in costs. Cement was up more than 10% between May and June, an 8" cinder block was up 25%, and bundled rebar has gone from RD$54,000 just a few weeks ago to RD$73,000 today. Nonetheless, raw material costs are just part of the problem, according to representatives from the sector. Jaime Gonzalez, the head of the Builders and Housing Promoters Association (ACOPRVI) told the reporter that financing costs have also increased, with home loans going from 12% to 17% just recently. Short-term building loans that constructors receive to build their projects have gone from 14% to as much as 18%, and just a month ago this rate was 10%.

French aid vessel in port
The French navy supply-type vessel "Francis Garnier" is in port at Santo Domingo on a courtesy visit. The ship, which is based in Martinique, makes regular visits to the islands of the Caribbean, and supplies needed relief assistance in times of disaster. The Garnier was built in 1971 as a military supply vessel, capable of close, in-shore loading and unloading. Today the ship is capable of carrying a complete medical center and assist hospitals on land that have been damaged by storms or other events. The current visit is part of a program of joint exercises with the Dominican navy. The Francis Garnier leaves for its home port on Saturday.

Ecuador without visas
Ecuador has announced that beginning Friday, 20 June, any traveler from any country may visit without needing a visa. The new rules were laid out by the Ecuadorian Ministry of Foreign Relations, Trade and Integration. Eduardo Duran, the Ecuadorian Charge de Affaires in the Dominican Republic made the announcement here. According to the note, Ecuador is trying to increase its tourism through this new effort.

Mangoes in Bani
Expo Mango 2008 opens in Bani tomorrow. Growers, exporters and industrialists are joining together to celebrate the mango season, and this provides a rare opportunity to see and taste all the varieties of mango grown in the Dominican Republic. Visits to model mango farms are also on offer, and business opportunities or other possibilities could be on the agenda for visitors. A business forum will be held to coordinate all the sectors involved in the harvesting, processing, manufacturing and export of mangoes and mango products. Bani, which is known as the DR's "Mango Capital" wants to enhance its image as the perfect place to grow the crop. As a cash crop, mangoes cater for an expanding local and international market. In 2007, some 3,200 hectares were under cultivation, divided between 1,100 farms, and over 120 containers were exported to the United States and Europe. The Dominican Republic also exports organic mangoes.

DR-Korean trade grows
The Dominican Republic and the Republic of South Korea are continuing to increase their commercial ties. According to Listin Diario, the trade balance for 2007 favored the Dominican Republic by US$6 million on US$126 million in trade. According to Kwon Sun-hung, the representative of the Korean Agency for the Promotion of Investment and Commerce (KOTRA), South Korea exported US$120 million to the DR. According to Kwon, South Korea purchased US$115 million in steel from the DR last year including US$35,000 in aluminum. In the first quarter of 2008, South Korea purchased US$30 million from the Dominican Republic, of which US$22 million was spent on scrap steel.
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