Hoy newspaper reports that from 1994 to 2002, foreign companies have expatriated profits of US$5.25 billion. During the same period, registered foreign investment reached US$6.17 billion.
On the same subject, the List?n Diario reports that 79.9% of the profits made in the Dominican Republic by foreign investment companies last year were exported. This situation was not always that way. In 1998, these types of companies sent home only 51% of earnings.
The Central Bank says that the new trend has developed since the introduction of the foreign investment law that allows free movement of capital. In a recent report the Central Bank also pointed out, however, that the decline in the percentage of profits these companies reinvest in the DR is causing disequilibrium in the foreign accounts of the country and also this puts pressure on the local exchange market.
The same report says that if the trend were to continue, its impact would be serious. The report explains that in the 90s the country depended on maintaining high levels of foreign investment that compensated for the deficit in the current account of the balance of payment. The high levels of registered direct foreign investment in recent years were responsible for the high growth rates the country was able to post.
These reports are timely now that certain sectors are lobbying for a change in the foreign investment law. Danilo del Rosario, head of the Investment Promotion Office (OPI-DR), favors changing the foreign investment law to make re-investing earnings in the DR more attractive. Others feel that foreign investment should be limited to areas that generate foreign exchange.