Free Zones and Human Capital: The Dominican Republic’s Formula for Leading nearshoring in the Region

SANTO DOMINGO, Dominican Republic, Sept. 12, 2024 (GLOBE NEWSWIRE) — The global challenge of securing the right talent in the right place is one that nearly every company faces, especially since the pandemic. However, the Dominican Republic has emerged as a pleasant surprise for many international businesses operating there, particularly due to the quality of its local workforce. During a recent visit by David Lee of Keysight Technologies, Cesar Ozeta, Plant Manager of Vishay’s facility in the Dominican Republic, emphasized this point, stating, “What impresses me most about this country is the availability and quality of human resources.”

Cesar, who has managed operations in various countries, noted that in other regions, employee turnover is a significant issue, with workers frequently moving between plants, disrupting stability and productivity. In contrast, during his five years in the Dominican Republic, this hasn’t been a challenge, underscoring the workforce’s loyalty and commitment.

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Economic and Political Stability: The Backbone of Growth

Stability has defined the Dominican Republic’s trajectory over the past 40 years. The country has consistently maintained an average economic growth rate of 5% and enjoyed peaceful political conditions—a rarity in much of Latin America. This stability is crucial for global companies like Vishay, which has continued to expand its operations and increase investments in the country.

Nearshoring Opportunities and Free Zone Incentives

Major Fortune 500 companies, including Eaton, Jabil, and Medtronic, have expanded their operations in the Dominican Republic. The country’s proximity to key markets—such as the U.S., Europe, and Latin America—is a major draw, as is its excellent air and sea connectivity. These companies, some employing over 5,000 people, benefit from the country’s cost advantages, skilled labor, and logistical efficiency. A key factor enhancing the Dominican Republic’s appeal for foreign investment is its government’s exceptional accessibility. Investors have the unique opportunity to meet directly with the Minister of Industry, Commerce and MSMEs, Victor -Ito- Bisonó, facilitating high-level dialogue with government officials. Additionally, the Dominican Republic distinguishes itself through its solid public-private partnership, a model that has proven fundamental for the successful development of free zones and the attraction of nearshoring investments.

This free zone model offers significant tax incentives. Companies operating in these zones enjoy 100% exemption from income tax, export and import duties, and other local taxes. This program has been instrumental in fostering industrial growth and attracting foreign investment.

Keysight’s Interest in the Dominican Republic

Keysight Technologies, a leader in electronic test and measurement equipment with significant expertise in semiconductor technology, recently visited the country to assess its potential. The company’s interest was particularly piqued by the country’s industrial growth and its strategic emphasis on the semiconductor industry, especially in light of the presidential decree declaring semiconductors a national priority.

The Dominican Republic’s Semiconductor Ambitions

President Luis Abinader has declared the semiconductor industry a national priority, recognizing its importance to the country’s future economic landscape. Companies like Jabil and Vishay, global leaders in semiconductor assembly, testing, and packaging (ATP), are already operating in the Dominican Republic and are poised to benefit from this focus.

A Hidden Gem for Industrial Growth

While the Dominican Republic is often seen as a tropical paradise renowned for its beaches and vibrant tourism, it is rapidly becoming a hotspot for industrial development and nearshoring. The Dominican Republic is no longer just a well-kept secret for vacationers; it is emerging as a hub for nearshoring and industrial growth. With its combination of political stability, skilled human capital, strategic location, and attractive Free Zone incentives, the country continues to attract investment and expand its global footprint in critical industries.

About the Ministry of Industry, Commerce, and MSME’s (MICM)
MICM is the government body responsible for policy formulation, adoption, monitoring, evaluation, and control in the fields of industry, exports, foreign trade, free zones, special regimes, and SMEs.

Contact information
Ministry of Industry, Commerce, and MSME’s (MICM)
Viceministry of Free Zone and Special Regimes
(1) 809-685-5171 ext 1017
www.micm.gob.do