According to Minister of Industry and Commerce Jose del Castillo Savinon, in recent years the Dominican Republic has been recovering its competitiveness in light manufacturing and more jobs are being created in the industrial free zone sector. He was speaking during a commemorative event for the 25th anniversary of the Dominican Association of Free Zones (Adozona) yesterday, Wednesday 16 October, which was also attended by President Danilo Medina. Castillo said that as the US economy improves, more work is likely to be contracted to local free zones.
Adozona president Aquiles Bermudez called for changes for business. He said that new conditions needed to be created for the country to gain new markets, improve workers training, deregulate cargo and passenger transport and introduce more flexible financial regulations.
“The free zones need to be the magnet for attracting new investments and afterwards we would work with national companies to establish the productive linkages,” he said. He said the country needed to become a “speed car racer” that would propel the DR to become one of the three most competitive countries in Latin America.
Also speaking during the event, US business expert Harold Sirkin of the Boston Consulting Group (BCG) said that US companies were once again contracting local manufacturers in response to increased production costs in China and the appreciation of the Chinese currency. He said that US companies are again looking to place their production in the Caribbean and Central America. Sirkin said it costs manufacturers 7% less to produce clothing in the DR than in the US. Apparel makes up 18% of free zone production in the Dominican Republic.
The expert recommended increased flexibility in the country’s labor laws, which he considered too strict. He said the country has the highest labor costs in the region, especially because there is a dual system where social security and severance payment need to be fulfilled.
He also recommended that the country concentrate on the stronger industries, educate for market needs and worker skills development as required by industries. He invited the government to become more involved and act as a cheerleader for the country before foreign companies.
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