Page 1 of 4 123 ... LastLast
Results 1 to 10 of 40
  1. #1
    Regular
    Join Date
    Oct 2002
    Posts
    41
    Post Thanks / Like

    Question Free Trade Zones....?

    I have some questions about Free Trade Zones for all of you.

    If you were to put it in very, very simple terms, are they basically factories located in the DR where the US can send materials free of import tax, where Dominicans are employed cheaply to turn the materials into sellable products (like clothes, furniture, etc.), and from where the finished products can then be sent back to the US once again free of import tax (except for on the labor)? Are there any good books or articles that anyone could recommend for learning more about FTZs and their impact on the Dominican economy and society?

    My other question is about what the FTZs are doing for Dominicans. Most of the people I speak to who work as blue-collar employees at FTZs in the DR tell me that FTZ work is pseudo-slavery. They have to work ridiculously hard for hardly any money, and they certainly don’t get any respect from their employers. And the lack of alternatives, some have told me, is contributing to the drug problem in the DR (and also prostitution, crime, etc.). Why work under pseudo-slavery conditions and earn little when you can be your own boss (kind of) and earn lots of money and very quickly? Sure, many poor people will never make the decision to “work” in the illegal sector, but for many, it certainly is an attractive alternative.

    So, my question is, are there any feasible ways that any of you can think of to create job alternatives to the FTZs? Any ways in which the DR can create much-needed jobs (and ideally a variety of jobs with competing salaries) so that FTZs become one job option rather than the only one? Obviously without FTZs, many blue-collar workers would go from having bad jobs to no jobs – so, simply getting rid of FTZs is not a good choice. Plus they provide also much-needed white-collar jobs to those who were fortunate enough to have been able to go to college. So, pretending for one moment that politicians would be willing to invest money into creating jobs rather than putting it in their own pockets, what do you think would be some good, realistic ways to go about creating alternative job opportunities? Thanks in advance for all of your thoughts…this is new ground for me, and I’m very interested in learning as much as possible about it.

    ~Leja

  2. #2
    On Vacation!
    Join Date
    Mar 2002
    Posts
    3,887
    Post Thanks / Like

    Default

    First Leja, the opening section of your post describes fairly accurately what a Free Zone is.
    It is my understanding that some of the goods produced are also "released" into the Dominican market after all appropriate duties and taxes have been paid.
    My housekeeper has family that works in the free zone and she feels that compared to most wages for hotel/resort workers they are well paid. Given a choice between hotel/resort work or free zone employment they would rather work in the free zone.
    I believe most beginning wages are in the 4500-5000pesos a month range which is a lot better than the 2000-3000 pesos a housekeeper or hotel maid makes.

  3. #3
    Moderator
    Join Date
    Jan 2002
    Posts
    18,102
    Post Thanks / Like

    Default

    Okey, then, let's try this.
    The FTzs are areas, just like you say, where companies from all over, especially the US, Korea, Canada and Dominican Republic, manufacture goods for re-export.
    It is not true that these are semi-slave conditions, and I would invite you to visit some of the factories in Santiago. All the major entities in the ZF of Santiago are OSHA approved. That is, they comply to OSHA requirements as to working conditions, hygiene, sexual matters, and age.
    Furthermore, the wages are far above the legal minimum required in the DR. (And are at least three times the wages paid in Central America.) Many workers earn twice to three times what a school teacher makes. Any visit to a ZF will show you an incredible number of vehicles (2 and 4 wheeled) owned by the workers.
    Now, who did you talk to and at what time of the day was this? Unless your interview was conducted at night or on the weekend, you were talking to someone not employed. Most poorly educated, rural people would sell their kidneys to get a job in a ZF....Hard work? 44 hours a week?
    Well for someone not accustomed to showing up on time or who wants to leave when he/she feels like it, sure it is difficult. They do not get many breaks in the ZFs. Production and shipping on time are the most important things to the managers, otherwise there is hell to pay. For example, if a company has to supply Wal-Mart with 50,000 pairs of jeans a week, and the delivery date is the 14th, and the shipment arrives on the 16th, they don't take delivery!. And the company is screwed. Sure there is pressure, but have you ever worked in an automobile assembly factory in Detroit, or and electronics factory in Silicon Valley? Or a furniture factory in North Carolina? Life is work, and then play....

    To a culture that invented the hammock, that makes the best rocking chairs in the world, that has dominos, beer and cockfighting as the national pastimes (as well as baseball-a game that can last forever), that has Sundays as a PARTY DAY!, I guess you can expect the pressures of production schedules, on-time shipments, prompt payment among other things, to be "excessive" ....But that is how I see it.
    Alternatives? Such as the Tourism industry? Local industries?(Now, that's a laugh), Well, do you have any alternitives??

    HB
    Last edited by Hillbilly; 11-17-2002 at 11:38 AM.

    Moderator DR1.com

  4. #4
    Goddess
    Join Date
    Jan 2002
    Posts
    3,580
    Post Thanks / Like

    Default

    What HB said. But I'll add my own RD$0.40 (at today's rate).

    It is not true that people work in semi-slavery conditions. Yours sound like a paint-by-numbers characterization of the situation. I don’t know where you got your information, but after servicing FZs for over 7 years and having visited virtually every one of them I’d like to say that MOST free zones offer work conditions that the majority of the Dominicans could only dream of.

    It is true that in the far past (10 yrs + ago) there were many reports of worker’s rights violation on the part of many Korean employers. That is not the case today, and although Koreans pay the lowest salaries in the industry (in average) they do comply (or exceed) with labour laws requirements. Believe it or not, Dominican-owned FZs offer equal, if not better in some cases, conditions than American-owned FZs (See Grupo M, D’Clase Apparel and Interamericana, the three biggest in apparel manufacturing). Today we have investors from all over the world, and even if I don’t have the exact figure I know that about 30% + are Dominican-owned companies.

    The only disadvantage of working for a FZ is that they are exempted from sharing their profits with employees. Not that it is too bad, most Dominican companies infringe this law using a number of tricks, like changing names after 3 years of operation, or declaring losses for years. Many FZ companies, however, even give their employees an extra-salary a year (besides the law-mandated "13th salary") to compensate for not paying share-on-profits. Some pay severance every year, some people take home a big chunk of dough every Christmas.

    As HB said, many people are not equipped to work in the demanding environment of FZ companies with their tight schedules, however it is clear that people coming from FZs are more disciplined and trained that regular “private sector” employees. Dominican employees are even being promoted to regional and international positions. I know that the Baxter plant here installed a "twin" factory in China, trained the employees and many worked there. That’s just one example.

    The biggest obstacle for Free Zones is NOT their employees, it is the government. We have enough red tape to tie a bow around the earth for Christmas. The past government did a LOT to ameliorate the situation, this one has pretty much kept the same standards, or they are just slightly worse. Right now, however electric bills, amongst other costs, are killing free zones. One of our customers (a case well publicized) went out of business after almost two decades and in doing that many thousands of people lost their job.

    The point, if there is one, is that Free Zones are an important sector of employment and income for this country. Hopefully we will not flush that, like we seem to be doing lately.
    Last edited by Pib; 11-17-2002 at 01:06 PM.

  5. #5
    Regular
    Join Date
    Oct 2002
    Posts
    41
    Post Thanks / Like

    Default

    Thanks so much for your responses. I’m very glad to learn that the handful of unfavorable reports I’ve heard of FTZs in the DR are not the norm. As you suggested Hillbilly, I would very much like to actually visit some. I hope to do so the next time I’m in the DR. And I definitely agree with you that looking at who is speaking badly about the FTZs and why is very important – as I said, this is new ground for me, and I admittedly haven’t asked a huge range of people about FTZs (which is partly why I wrote this post). So, it is very possible that the individuals who told me that the work is pseudo-slave-labor are not fans of strict schedules, pressure, etc., or that they’ve been unfortunate enough to come across an uncharacteristically unpleasant FTZ. At any rate, now that I have a little more understanding regarding FTZs, I’ll definitely do more digging around and questioning (rather than just listening) on this subject the next time I’m there.

    As for alternatives Hillbilly, I could ramble off a long list of optimistic ideas, but I really don’t even come close to having a firm enough grasp on the dynamics of the DR economy to know which ideas could be potentially realistic and which are simply ridiculous. I definitely don’t pretend to have the answers, but if you or anybody else here is interested in throwing around ideas, I would definitely be up for it.

    Pib, thanks for all the info. Could you explain how ownership of FTZs works? Are they independently owned or owned by governments and then rented out by corporations? And if an FTZ located in the DR is US owned, does the owner (US) have to pay taxes or some type of fee to the DR government?

    Thanks again for all your info, it is very much appreciated!

    ~Leja

    And one last thing…has anybody heard of or read Developing Poverty: The State, Labor Market Deregulation, and the Informal Economy in Costa Rica and the Dominican Republic by Jose Itzigsohn? Any opinions about the book either way….helpful, unhelpful…? Thanks again.

  6. #6
    LiVe ThE LiFe YoU iMaGiNeD
    Join Date
    Jan 2002
    Posts
    486
    Post Thanks / Like

    Default

    I disagree, I know that HB and I have had our disagreements about this issue in the past.
    I have a friend who works in electronics in the Franca Zona in San Pedro. He gets paid RD $700 pesos a week ($70 Canadian approx) for his 9am to 4pm, more if you work over time. I do not believe this is good pay, especially when half of your money goes to transportation there and home every day, for lunch and the rest for surviving. That hardly cuts it. It is better than a lot of jobs, but it is still hardly survivable. That is my opinon.

  7. #7
    Goddess
    Join Date
    Jan 2002
    Posts
    3,580
    Post Thanks / Like

    Default

    Let's put this into perspective. RD$700.00/week = over RD$3,000/month, for 44 hrs/week. Not a good salary but still over the law-mandated minimum wage. What does your friend do Meredith? Is he/she a qualified worker? Could he/she be making more money working elsewhere? I suspect not.

    Don't mistake me, I don't doubt that what you say it is true, and I wish people (including me) made made more money, but so is the work market in DR. Somebody less qualified in my position in the US (actual case) is making twice as much money as I do, not fair, but I live here, he lives there. Heck! you could barely survive with my salary and the cleaning lady in my company considers my salary a "fortune". Your friend's case does not support the idea that FZ workers are not well paid or that they work in semi-slavery conditions.

    Leja, the FZs are owned by the DR government. The space is leased to anyone provided they comply with the requirements. The companies are owned by individuals or corporations. They don't pay taxes to the DR government, the benefict comes from employment and the income that it means to the country.
    Last edited by Pib; 11-17-2002 at 09:56 PM.

  8. #8
    LiVe ThE LiFe YoU iMaGiNeD
    Join Date
    Jan 2002
    Posts
    486
    Post Thanks / Like

    Default

    $700 pesos a week is not good pay compared to what the multinationals are selling the products for. They are making billions and billions, while the people make $700 pesos a week! What does a pair of shoes sell for? One pair of Nikes, say 800 to 1000 pesos regularly and the workers make how many shoes in a week, and they don't even earn enough to buy one pair of the shoes by the end of the week. Think about it. I don't care if it is in the DR, it is still not good pay. The workers are getting taken advantage of. Why are there so many zona francas around and free trade zones. Obviously, cheap labour.

    Yes, my friend is a qualified worker, he has a good education, is very smart. He works in electronics as i stated before.

  9. #9
    Goddess
    Join Date
    Jan 2002
    Posts
    3,580
    Post Thanks / Like

    Default

    Life is unfair Meredith. Tell me about it. I am being underpaid, not by my standards, but by international standards. A deck painter in a ship makes the same salary as I do, and I'd like to think I am more qualified. Having said that, this is the market I am working in, I still won't be willing to paint decks in a Norweagian ship or clean bathrooms in Kuwait. Instead of complaining on how my boss has money for constant trips abroad I am concentrating in either getting a better job and/or developing skills that makes me "more wanted" in this market.

    This is a discussion for another time or thread, but the key is education. Why are FZ employees better paid now than 15 yrs ago? Because they are more qualified now, instead of sewing cheap panties they now assemble complex electronic machinery. It takes time, blaming our bosses is not gonna get us anywhere. This is a "my way or the highway" market. Tell me about it.
    Last edited by Pib; 11-17-2002 at 10:20 PM.

  10. #10
    DR1
    Join Date
    May 1999
    Posts
    0
    Post Thanks / Like

    Default

    Meredith, it just ain't that simple.

    What about the millions of dollars Nike spends on manufacturing, marketing, distributing etc etc. If they didn't have low overheads, they couldn't compete, if they couldn't compete, your friend wouldn't have a job.

    Welcome to capitalism, it's what puts food in your mouth and clothes on your back.

    Take a look in your wardrobe, around your house, you may be surprised what multi-nationals you support. What about the computer your using? Do you know it's origin?

    No one is forcing him to work in a free zone, he has a choice.
    If he's smart and educated as you say, why can't he earn more money put of the free zone?
    Maybe he stays because it provides a good wage, job security and benefits?

    Like I always say, never judge the DR by your own country standards and morals, this is not Europe, USA, Asia etc. This is the Dominican Republic and this is how things work...

Page 1 of 4 123 ... LastLast

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •