A Magnet for Capital

FOREIGN INVESTMENT

A Magnet for Capital

Data and macroeconomic indicators of the country favor the attraction of foreign investment. Inflation, devaluation, legal stability, trade agreements and economic growth are the foundation of this comparative advantage.
A company considers two groups of variables when it analyzes the feasibility of undertaking an investment in another country. On the one hand, those related to macroeconomics; on the other hand, a detailed study of the environment, the competition and the market sector in the territory it is pointing towards.
 
The analysis of the second variable helps to determine whether the project is profitable, if it requires funding that settle with debt policies, if it reaches reasonable breakeven point and, even more, if it is sustainable.
 
The results of the first are an essential tool that taken into consideration by the investment committee or the board of directors of a company to approve the direction of funds into a business plan in another country.
 
Under this scenario, the investment climate in the Dominican Republic is ideal; and there are several key element leading to this conclusion. Some key elements are the low inflation, controlled devaluation, attractive tax regime with legal stability for foreign investment, agreements with trade preferences, and continuous logistical capacity.
 
The lack of control in price increase is a matter of the past. The dollar exchange rate is annually moving within an acceptable framework that does not involve trauma or threats that could lead to a flight of capital. There is no discriminatory treatment to foreign capital, its scope, its access to capital or profit repatriation.
 
The country has a valid set of trade agreements that guarantee access to exports to markets such as the US that grant rate advantages to imports. It also has an on- growing infrastructure, in port, road and airport facilities that qualifies the country in in the high levels of efficiency demanded by international trade. This set of reasons give the country a distinction that serves as encouragement for business investment: the investment climate is entirely favorable.
 
An evidence that supports what the most recent report (April 2016) of the International Monetary Fund said on the Latin American economy that projects the Dominican economic growth as one of the two highest for 2016 and 2017, with levels of 5.4% and 4.5% respectively. Panamanian GDP exceeded mainly driven by the impact of the huge investment in the Canal. Additionally, the Dominican market is center of attraction because its development stands out in the midst of a continent marked by a widespread slowdown in economic growth.
 
The Central Bank states that “the country continues to grow above its potential.” For CEPAL, which predicts a growth of 5.5% in 2016, two factors are in favor: “the continuity of strong domestic demand and favorable external conditions, due to low oil prices and the vitality of the US economy”.
 
The growth tendency of an economy is a huge factor when choosing it as an investment destination. In the case of the Dominican Republic, this growth is not a fleeting behavior, but a reflection of stability in the fundamentals of the economy, and these are a magnet for foreign capital.