2022 is projected to be the best year for free trade zones
Santo Domingo, DR
Free zones have played a leading role in the economic recovery process, as evidenced by the most recent impact study conducted by Analytica and presented by the Dominican Association of Free Zones (ADOZONA), together with the Ministry of Industry, Commerce and Mipymes (MICM), as part of the celebration of the National Day of Free Zones, which estimates, taking into account the entire value chain, that to date the total impact of the free zone sector in direct and indirect jobs amounts to 403,318.
According to the study, if the sector maintains the trend registered during the first semester of this year, it is expected that the total exports of goods and services from free zones will exceed US$10,000 million, with a net foreign exchange generation close to US$1,700 million and a GDP growth of 9.3%. In addition to this economic data never seen before, it is also important to highlight that, considering the entire value chain, the free zone sector would return to the economy by the end of 2022, 15 times what the State invested in it.
The impact study revealed that in 2021, in terms of exports of goods from free zones, exports reached US$7.18 billion, with a growth of 15% in 2019 and 22% in 2020. This growth in free zone exports has contributed to macroeconomic stability in the last decade, mainly during the pandemic.
“The performance of the sector during 2021 evidences why our free zones are zones of opportunities for all Dominicans, and the prospects for the close of 2022 allow us to affirm that we will continue to break records,” said Ito Bisonó, Minister of Industry, Commerce, and Mipymes.
With respect to the United States, an essential destination for the Nearshoring strategy, the Dominican Republic leads exports of cigarettes, ligatures for sutures, and photosensitive papers, among other products, with shares between 68% and 37% of that market. Therefore, the experience and presence of companies in these areas in the country augur a favorable outlook in the short term.
The free trade zone sector has diversified in the last decade by incorporating industrial and service activities. Today, this sector includes textile products, tobacco products, with a worldwide leadership, chemical products, jewelry, medical products, electrical appliances, business support services (BPO), contact center services, and port services, among others.
At the close of 2021, 79 parks were registered nationwide, primarily (85%) managed by the private or public-private sector. Seven hundred thirty-four companies are operating in these parks with a total investment of US$5,903 million, 79% of which is of international origin, led by North American companies. Global capital amounts to US$4.642 billion, 12% of total foreign investment in the country.
Quality and technician jobs
Free trade zones are present in 28 of the 32 provinces, generating significant contributions to formal employment and the welfare of Dominican households. In 2021, the sector closed with 183,000 jobs, which, compared to 1.4 million formal employees, represents 13 out of every 100 formal jobs for the Dominican economy.
In some provinces, the incidence of free trade zones represents almost 1 out of every four formal private jobs. These employees directly impact 119 thousand households, where 439 thousand Dominicans live, and their income represents 64% of the total income of these households, including remittances, and government transfers, among others.