do business in the Dominican Republic - Pellerano & Herrera

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DOING BUSINESS INTHE DOMINICAN REPUBLICEducation is an integral part of the Cybernetic Park, which includes theTechnology Institute of the Americas (ITLA), a computer-training center with itsown labs for technological research.The institute also participates at joint traininginitiatives in the education field with other public entities, such as theMinistry of Education and the Ministry of Higher Education, Science andTechnology.2TOURISM60The Dominican Republic is currently the major tourist attraction in theCaribbean.This is due to the fact that the country, apart from having rich naturalresources, a consistent tropical climate and places of historical and cultural interest,offers also highly competitive hotel prices, and all this within a backgroundof security and political stability.Furthermore, the Dominican Republic has important forest and scientificreserves, as well as national parks, where the authorities seek to protect the greatvariety of endemic flora and fauna of the island. For such reasons, ecologicaltourism has also been starting to develop during the last years,and the public andprivate sector promote visits to places of ecological interest such as LakeEnriquillo, and the Shrine of the Humpback Whales in Samana Bay.OVERVIEW AND PERSPECTIVESThe tourist industry started to expand in the 70's, after the Government haddeclared that the development of this sector was of national interest.At the beginning clearly guided by government initiatives, the tourist sector sawprivate participation gradually increasing, especially in the 80's, when sources offinancing became available under programs like the Lome Convention.Today tourism is one of the backbones of the Dominican economy, contributingsignificantly to the creation of jobs and foreign currency.The tourism earningsrepresent 69% of exports of goods and services, excluding free zones.In the year 2001, for the first time in the last two decades, tourism experienceda reduction of 4.4%, caused chiefly by external factors such as the decelerationof world economy, euro depreciation and September 11 events.This influencedthe flow of visitors to the country, which fell by 6.8%. The occupation rate inhotels dropped 3.9%, while the increase in accommodation capacity fell from4.6% in 2000 to 3.9%.Tourism infrastructure in the Dominican Republic belongs in a 54.7% to nationalcapital and in a 45.3% to foreign capital.The strategic activities undertaken by the Ministry of Tourism and the private sectorsince the beginning of 2002 allowed the country to have greater impact ontourism generating markets, which resulted in an increase of tourist arrivals atthe end of the year.The process of recovery of the tourism industry is still going on. Despite nega-
Pellerano & HerreraAttorneys at lawtive factors, such as hurricanes, the increase of oil prices, dollar depreciation inrelation to the euro, and others, the Dominican Republic has maintained its positionas the most visited destination in the Caribbean.The country has the largest tourist accommodation capacity in the region, havingaround 60,000 hotel rooms. Currently the main sources of tourism for thecountry are Europe and North America.The increase in the number of visitors to the country was due to several reasons,such as the variety of the tourist offer and the quality of services.To this we mayadd logistic aspects such as the start of operations of new airlines, thus increasingthe availability of seats.Promotion of Private InvestmentThe Government keeps on promoting the development of the country's touristzones, and is interested to encourage private participation in the sector. Forthese reasons the State has been traditionally concerned with the followingactivities:(i) The construction of adequate infrastructure for the tourist industry, such asroads, ports, airports and public services.(ii) The development of human resources through co-operation with universitiesand technical institutions.(iii) The realization of promotional campaigns in foreign markets.(iv) The granting of credits and incentives to private investors.The Tax Code recognizes that private investors wishing to participate in thetourist sector might obtain tax exemptions through the signature of specialagreements with the Executive Power, upon authorization of the NationalCongress.In this sense, the Government passed, in the year 2001, a new tourism promotionstatute (Law 158-01 on Promotion of Tourism Development), aimed at gratingincentives to tourist activity, but focusing certain areas that have not yet fullydeveloped their potential.It should also be noted that Law 141-97 on the Reform of Public Enterprises mandatesthe privatization of the hotels belonging to the Corporation for thePromotion of the Hotel Industry.As a result,national and foreign private investorscan have access to the valuable assets owned by the State in this sector.In any case,the State has already started to allow the participation of private companiesin the management of its hotels, and has already leased several hotels to aFrench capital enterprise for a period of 35 years.MINISTRY OF TOURISMLaw 84-7961According to Law 84 of 26 December 1979, the tourist sector is regulated by theMinistry of Tourism (“Secretaría de Estado de Turismo-SECTUR”), which has thefollowing attributions:
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