Spokesmen for the Federation of Industrial Associations (FAI) told Hoy newspaper that local industries will collapse if the government does not implement a fiscal reform to eliminate the high taxes on industrial machinery prior to the going into effect of the DR-CAFTA. He said that Dominican companies have to pay 32% tax on capital goods when countries such as Costa Rica, Honduras and Guatemala pay less than 2% for the same items. Ho Chi Vega told Hoy newspaper that the DR has gone from being ranked in 48th place in competitiveness in 2003 to 72th place in 2004. Speaking in an interview with Hoy newspaper, Vega, accompanied by Ernesto Vilalta and Ramon Baez, highlighted that DR industries cannot compete given the high cost of electricity and loans, in addition to the high taxes. They mentioned that this situation has caused companies such as 3M, Ray-O-Vac, Johnson and Johnson and Warner Lambert to relocate their production to Central America where it costs much less to produce than in the DR.
Likewise, these are the same reasons for the increase in exports from Central America to the DR. The DR has not been able to take advantage of the Central American free trade agreement. The industrial spokesmen highlighted that in 2000, prior to the signing of the FTA with Central America, DR exports to Central America were US$7.7 million, with US$1.8 million in imports. But in 2004, Central America took advantage of the agreement and exported US$111.1 million to the DR, while Dominicans were only able to increase exports to US$12.2 million.
The Industrial Associations Federation (FAI) called for a united front among Dominican industries and businesses in order to be able to compete when the FTA with the United States kicks in. Vega, Vilalta and Baez concluded by saying that “either the industrial sector joins forces or it disappears.”