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Why are manufacturing companies moving to the Dominican Republic?

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SANTO DOMINGO, Dominican Republic – In a bold strategy that has revolutionized the international investment landscape, a growing number of free zone companies are making the Dominican Republic their top choice, relocating their businesses, as well as their production plants.

The reason? An attractive fiscal framework, highlighted by the word “ZERO”: zero income taxes, zero duties, zero construction taxes. This robust tax exemption framework, under Law 8-90, grants complete exemptions, amounting to 100 percent for nearly all national and local taxes.

But the allure of the Dominican Republic doesn’t stop with tax exemptions. The country’s strategic location in the heart of the Caribbean makes it the ideal destination for nearshoring. Companies enjoy no logistical complications thanks to the proximity to key markets in the United States and Europe. Boasting international gateways like Las Américas and Punta Cana airports, businesses benefit from seamless connectivity.

Key container ports, such as Haina and Caucedo, facilitate efficient import-export operations, ensuring minimal delays. Complemented by a comprehensive logistics infrastructure, including modern roadways and distribution centers, the nation emerges as a prime destination, positioning companies to achieve unprecedented operational efficiency.

The Dominican Republic’s nearshoring success stories span across various industries, with several multinational companies choosing to move their operations to the country. Notable examples include Convatec, Cardinal Health, Edwards Lifesciences, Rockwell Automation, Eaton, Jabil, Fresenius Kabi, Cosmed Group, and the most recent: League Holdings Group Co., Ltd. These multinational companies, along with many others, have experienced the benefits of nearshoring in the Dominican Republic and are witnessing operational efficiency, increased scalability, and enhanced customer satisfaction for a stronger global competitive advantage.

Recently, the country has been focused on attracting investments in the semiconductor supply chain, especially in assembly, testing, and packaging as well as printed circuit board manufacturing. Thus, the Dominican Republic can support the semiconductor factories that are poised to spring up across the United States thanks to the “CHIPS Act.” The Dominican Republic’s successful track record of manufacturing electronics and medical devices offers clear advantages over its neighbours.

Moreover, the attractiveness is further underscored by the country’s labor cost efficiency, making it an ideal hub for businesses seeking not only financial advantages but also streamlined operational expenses.

As nearshoring continues to gain traction as a strategic business practice, the Dominican Republic is poised to become a go-to destination for companies seeking to optimize their operations and tap into new growth opportunities. With its exceptional workforce, favorable business environment, and geographic advantages, the country offers a compelling package that positions it as a frontrunner in the nearshoring landscape.

The ministry of industry, commerce, and MSMEs (MICM), in collaboration with the National Free Zones Council (CNZFE) and the Dominican Association of Free Zones (ADOZONA), plays a crucial role in facilitating and promoting nearshoring activities in the Dominican Republic.

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.

 

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