A legislative proposal for the Classification of Companies currently in Congress, which has been rejected by the Dominican Small and Medium Business Confederation (Codopyme), is backed by the Micro-Business Financing Fund (Fondomicro).
In a letter addressed to the Deputy Minister of Pymes at the Ministry of Industry and Commerce (MIC) Ignacio Mendez, the executive director of Fondomicro, Marina Ortiz, said that the legislative proposal is in line with the best international practices in this area. She suggested a classification that is more adjusted to the national reality than the current Law 488-08 that governs the Mipymes.
In her letter, Ortiz says that the legislative proposal for the Law for the Classification of Companies establishes criteria for the number of workers and sales levels on a yearly basis for the classification of micro, small or medium companies in the Dominican Republic. “While it is true that the number of workers used in other countries for the classification is the same as what is used in this rough draft, the sales levels vary according to each country, according to empirical studies,” she indicates.
The Fondomicro executive explains that the new proposal establishes compliance with two criteria for the classification and specifies that if one of them is surpassed, the company will be classified in the next highest category. “This is to say, that if the company sells, for example, 100 million pesos a year, but has 175 workers, it would be classified as a large company because of the number of workers, although it has sales of 100 million pesos a year,” she notes. Ortiz adds that the surveys by Fondomicro, and in particular that of 2013, document that there are approximately 18,337 Pymes in the country, employing 522,231 workers. By separating the small from the medium, it was found that of the total of 522,231, 85.9% are small companies, measured by the number of workers, while 14.1% are medium companies, under the same criteria.
The considerations by Fondomicro come about after the Codopyme president rejected the legislative proposal for classification of businesses that is currently in Congress on the grounds that this law would permit large companies to obtain the benefits of the small ones.
According to Fondomicro, before Law 488-08, 29.3% of the 15,750 small companies as classified by the number of workers would be considered “medium” because of the level of sales. Likewise, of the 2,587 medium companies because of the number of workers, 11.8% would be considered “large,” because they exceed the yearly level of sales in order to classify as medium. And with the new legislative proposal, 12.7% of the 15,750 small companies as established by the number of workers would go on to be considered “medium” because of their sales level. Finally, 6.1% of the 2,587 medium companies ranked as such because of the number of workers would go on to be considered “large” because they exceed the annual sales level for classification as medium.