A recent Dominican Republic Association of Industries (AIRD) study emphasizes the importance of strengthening the productive linkages between local companies and export free zones. The consolidation of this model would support inclusive growth between the free zone companies and the rest of the economy, says the study, “Fomento de Encadenamientos Productivos en el País (Promoting Productive Chain in the Country), sponsored by the AIRD and the InterAmerican Development Bank (BID-FOMIN).
The study criticizes that free zones act as enclaves and calls for efforts to enable there be more local reliable suppliers in quality, cost and delivery for the generating of the desired productive linkages. This all requires an adequate business climate, economic and social stability.
Pavel Isa Contreras, Elka Scheker, Lynette Batista and Danny Rodríguez carried out the study for the AIRD. The study looks into the obstacles to promoting more productive chains in the Dominican Republic. Among these is a lack of trust and lack of coherence in public policies that foster capacities in local companies. Another obstacle is the present tax regime that favors the free zones importing inputs rather than sourcing locally.
Julio Virgilio Brache, vice president of the AIRD, in his opening words during the discussion on the finding of the report urged that local manufacturers receive the same tax treatment as the imports from foreign suppliers to the free zones and also to the tourism sector. The taxation schemes make it easy for major hotel chains to import their food from abroad rather than source locally. “The great challenge is that the authorities can resolve this situation to facilitate and promote linkages and make this a real state policy, to generate greater national added value,” Brache stressed.
He highlighted that Dominican free zones purchased US$4 billion in inputs last year, but of this
Brache encouraged Dominican manufacturers to visualize productive linkages as a clear strategy that favors their efficiency and promotes long-term business partnerships, which can result in large manufacturing capacity and the opening of doors to new markets.
Read more in Spanish:
Acento
El Dinero
Competitividad
11 March 2019