On the occasion of the celebration of the 50th anniversary of the Association of Industries of the Dominican Republic, leaders from the manufacturing sector analyzed the issues and outlook for the sector during a luncheon held yesterday, Thursday 29 November.
During the event, a report “Fifty Years, Five Decades, One Industry” was presented. The picture is bleak: the manufacturing sector has lost 100,000 formal jobs from 2000-2011. The reasons given include overvalued exchange rates, informality in the market, constant changes of rules in the energy sector, high cargo costs, lack of credit and high labor costs, as reported in El Caribe.
The panel members discussing the report were Roberto Bonetti Guerra, Sociedad Industrial Dominicana, Franklin Baez Brugal, Brugal & Co., Elena Viyella de Paliza, Monte Rio Power Corp, Manuel Estrella Cruz, Grupo Estrella, and Franklin Leon, Cerveceria Nacional Dominicana. Journalist Alicia Ortega was the moderator.
AIRD president Ligia Bonetti Du-Breil said that in 2000, some 505,000 workers had jobs in the industry, but that by 2011 only 400,000 were employed.
The panel focused on local competitiveness. Bonetti said that production costs in the DR were higher than international levels. Regarding labor costs, she said that in addition to wages, employers need to add on another 65% in hidden costs, or for every RD$1 in wages, another RD$0.65 needs to be paid in other charges. In Chile the extra labor costs are 31%.
Bonetti added that greater efforts needed to be made to create local linkages. She observed that manufacturing in the DR is not linked to tourism, tourism is not linked to agriculture and agriculture is not linked to industry. Likewise manufacturing and duty-free manufacturing are two separate worlds, she said.
“Local furniture manufacturers cannot sell their furniture to a hotel because for the hoteliers it is more convenient to import them because then they enter duty free; industry does not source from the local farms because there is no financing or insurance and it is easier to import goods than to produce them here,” she said. She said that this has happened to peanuts, cotton, blonde tobacco and soya, and now with corn and tomatoes. It is now easier to get financing for a car than for machinery.
She said there is a need for unified positions within government, pointing to Center for Export & Investment and Pro Consumidor that are not integrated with the Ministry of Industry and Commerce.
She stressed that the industrial sector pays the most taxes of all business. She called for a development vision that includes farm sectors and all industry.
“If we can achieve that, we will make the National Development Strategy that has been drafted a reality and generate the level of confidence that we need now more than ever to lead our country to true development, without restrictions, without fears, but with openness and transparency, despite the fact that many may resist,” she said.
Elena Viyella mentioned informality, the electricity sector and overvaluation of exchange rate as obstacles to manufacturing. She said that the Madrid Accord expires in 2016 and then the government will be obliged to issue tenders for power at competitive prices. She complained that the government constantly changes the rules of the game in the electricity sector. “The country needs to resolve its energy problems and there should be transparent contracts for financing investments in the power sector,” she said.
Viyella pointed out that overvalued exchange rates give imports an advantage over local industry.
She called for efforts to eliminate informality in the domestic market, describing it as a tax on taxpayers.
Viyella called for efforts to increase the export capacity of the government to achieve economies of scale so the country can compete abroad, and for improvements in primary, middle and high school education standards.
Franklin Baez Brugal called for more honesty from the state. He said while there has been stability and growth, fiscal discipline is questioned. “A deficit of more than 8% of the GDP, more than RD$200 billion is a matter of concern,” he stressed.
www.elcaribe.com.do/2012/11/30/informalidad-electricidad-carga-laboral-entre-escollos-industria