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The Dominican Republic is a presidential democratic republic: the president is the head of state and government, and is directly elected for a four-year term. The sitting presidents are eligible for re-election up to two terms. Currently, this position is hold by Luis Abinader, from Modern Revolutionary Party (PRM), who was elected on the 5 July in 2020, replacing Danilo Medina from the Dominican Liberation Party (PLD). This elections have meant the end of 16 years of PLD rule. The National Congress is bicameral, comprising the Chamber of Deputies (lower house) and Senate (upper house), whose members are directly elected every four years too. Abinader´s party, PRM, also secured a majority in both chambers of Congress. The country is divided into 31 provinces plus the National District (DN), where the capital Santo Domingo is located. These provinces are divided into 158 municipalities and 232 municipal districts.
Political stability and pro-business environment are likely to continue under Abinader´s rule. Democratic institutions have been considerably consolidated since the mid-1990s, after a long history of authoritarianism and politically motivated violence, although a widely spread problem of corruption in the country affects political level too. Main priorities for the new government are the improvement of transport and energy infrastructures, as well as attracting foreign investment to tourism (main economic sector) and mining sectors. The Dominican Republic is the largest economy in the Caribbean, and is also larger than all the economies in Central America. In fact, it was the third fastest growing economy in Latin America and the Caribbean, with a growth rate of 5.1% for 2019. This has been a consequence of a series of broadly pro-investment governments since at least 2000, all of which have favored FDI (especially from the US), higher transparency in the extractives sector (mainly for mining) and the growth of the services sector, especially tourism.
However, the COVID-19 has heavily hit its economic outlook, especially if we take into account its economic dependence on the tourism sector. According to the IMF, the economy of the Dominican Republic contracted by 6,7% in 2020, while a growth of just 5,5% is expected for 2021. The government implemented a series of measures aimed at curbing the spread of COVID-19, that included a nationwide curfew and border closures. A gradual de-escalation of containment measures began in May 2020, though some level of operational disruption to business is likely to continue during 2021, particularly if we take into account the current situation of uncertainty. COVID-19 projections forecast that the country will face now a decreasing trend in the number of infections, after experiencing a slight peak in late-April, 2021 (IHME). Dfferent restrictions and regulations are still in place in the country, such a curfew, social distancing and the mandatory use of mask in certain places. Despite some restrictions, Dominican Republic frontiers are open, even for tourism.
Investors face a range of operational risks, even though the country is one of the main recipients of FDI in the Caribbean and Central America region. Widespread corruption at all levels hampers ease of doing business in the country. The absence of a clear and standardized set of rules for competition and a lack of enforcement of existing rules remains an issue. Additionally, crime poses the most significant threat to foreign businesses and personnel. The government has had limited success in tackling crime, particularly in major urban centres such as the capital Santo Domingo and Santiago de los Caballeros (Santiago province).
Dealing with bureaucracy, the effect of the spread of the coronavirus disease virus, and electricity blackouts are the main risks affecting companies and main challenges. Local communities are likely to stage anti-government protests over perceptions of corruption or demanding lower fuel prices, an end to power blackouts, and greater investment in basic services such as healthcare, water supply, education, and waste management.
Remittances, the Dominican Republic's main foreign-exchange sources are likely to mitigate potential revenue losses resulting from a fall in tourism over the fear of traveling resulting from the virus spread. Expansionary fiscal and monetary policies to deal with COVID-19 are likely to partially sustain economic activity.
The Dominican Republic is generally politically stable. Democratic institutions have been gradually consolidated since the mid-1990s, though major challenges persist. The country still has a democratic deficit, with widespread corruption (one of its main problems), patronage networks, and lack of a truly independent media.
The country has a pro-business stance that has contributed to some of the highest economic growth rates in Latin America over the past few years. Foreign direct investment (FDI) is one of the main drivers of economic expansion, particularly in the tourism sector. Economic openness is likely to continue with the new government. Ideological differences are minimal among the three main parties, all of which adopt a pro-business stance that is unlikely to change in subsequent administrations. However, the government remains prone to intervention and discretional decision-making in some sectors. The government has a significant interest in solving problematic energy issues.
Political stability is likely to remain unchanged during Abinader’s term in office. However, tensions may arise in the event of a lax anti-corruption policy, or in the event of corruption cases implicating ruling party officials. Measures to reduce high levels of political patronage and clientelism, and control excessive use of public funds during election campaigns, are unlikely given that major parties and elites associated with them benefit from the status quo. Corruption seems to remain as one the the country's biggest challenge.
There are few ideological differences between all major political parties, which remain largely pro-business and open to investment. Moreover, legislative gridlock will prevent regulatory gaps affecting significant sectors, particularly energy and mining, from being addressed.
Regarding its foreign relations, tensions with Haiti continue their long history of animosity, dating back to Haiti’s occupation of the Dominican Republic in 1822-24. Haiti is much poorer than the Dominican Republic and many Haitians illegally cross the border in search of work, usually in the agricultural sector. They are frequently rounded-up and deported, and NGOs, multilateral organisations, and the Haitian authorities often complain about alleged ill-treatment of both undocumented immigrants and Dominican-born individuals of Haitian descent.
Dominican Republic is considered a Flawed Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 61 out of 167 countries scored.
The country ranks 88 at the 2020 Human Development Index developed by the United Nations Development Programme.
Even though the country is one of the main recipients of FDI in the Caribbean and Central America region, investors face a range of operational risk. Primary examples of this are the inefficient bureaucracy, the widespread corruption, and the COVID-19 virus spread. Corruption is endemic in public institutions, including the government bureaucracy, the legislature, and municipal governments. Bidding processes often lack transparency while the government handpicks contractors for public works and purchases. The government implemented a series of measures aimed at curbing the spread of COVID-19. Therefore, some level of operational disruption to businesses is likely to remain over the next year due to pandemic related measures and uncertainty.
Tourism, transport, and telecommunications infrastructure generally compares favorably with other developing countries but the energy generation and distribution networks fall below regional standards. Regular power outages continue to cause significant disruption, necessitating emergency back-up private generation that pushes up business and living costs, being the power sector unreliable and in need of reform. Given the country's geographical location, the infrastructure system is also vulnerable to hurricane damage and tropical storm hazards. Additionally, it has to be mentioned that the country faces a shortage of skilled labour.
It should be noted that the Dominican Republic has the highest per capita rate of fatal traffic accidents in Latin America, amounting to nearly 30 deaths per 100,000 inhabitants on a yearly basis. This is due in large part to erratic driving habits, the nonenforcement of traffic laws, and poorly maintained roads. It is advisable to avoid driving oneself when possible, particularly at night.
For similar safety reasons, it also advised to refrain from using public transportation; travel by licensed taxis or chauffeured cars are best.
Airlines serving the Dominican Republic generally meet international safety and security standards, except for Insel Air.
Note that police checkpoints are common. Always drive with proper identification documentation (e.g., passport and visa, if relevant) and car registration information.
Overall, Dominican Republic ranks 115 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 137 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.
Crime poses the most significant threat to foreign businesses and personnel, with serious levels of violent crime. The government has had limited success in tackling crime, particularly in major urban centers such as the capital Santo Domingo and Santiago de los Caballeros (Santiago province). Persistent high levels of socio-economic inequality, the ready availability of firearms smuggled from the US, and the ineffectiveness of the security forces mean that meaningful improvements are unlikely in the short-term. Anti-crime initiatives have mainly involved short-term police operations targeting petty crime, failing to produce a demonstrable improvement in the security situation, as corruption issues also affect the security outlook.
Under-funding and lack of training in law enforcement authorities are a major contributor to the lack of improvement in the security situation; the National Police (PN) remains understaffed and underequipped. Most crime takes place in low-income areas, though it is increasing in more affluent areas in urban centers. Nonetheless, the vast majority of incidents are opportunistic. Organized criminals are present, mainly proxies of South American cartels and Puerto Rico-based gangs, because the island of Hispaniola is located along south-north drug trafficking routes. However, they are significantly less organized and extended than their counterparts in Mexico or Central America.
The murder rate has experienced a downward trend since 2011. Most murders take place in peripheral areas and most victims are locals. The police link high violent crime rates to the growing influence of the drug trade, particularly the expansion of domestic consumption. Although criminals are unlikely to target foreigners, a number of foreign nationals are killed each year, usually during failed robbery attempts.
Violent and drug-related crime is highly unlikely to result in major operational constraints for investors and foreign nationals. The capital, Santo Domingo, has recorded the highest crime rates in the country over recent years, especially in and around the slums on the city’s outskirts, including Barrio Puerto Rico, Cristo Rey, Ensanche Capotillo, Guachupita, Gualey, La 17, La Barquita, Los Guandules, Los Minas, Simón Bolívar, Villa Duarte, and Villa Mella. The main risk to visitors is petty crime, including pickpocketing and bag snatching. The rise in burglaries and violent robberies has led to an increase in private security, especially in areas frequented by tourists.
Local communities are likely to stage protests demanding an end to power blackouts and greater investment in basic services such as the water supply, healthcare, education, and basic infrastructure especially as the COVID-19 virus hits the country. Protests generally involve roadblocks, lasting less than 48 hours, and result in limited property damage against government assets but looting is also likely as shortages intensify over COVID-19. The Green March anti-corruption movement will likely continue to stage peaceful marches in the capital Santo Domingo involving upwards of 10,000 people. However, demonstrations are generally peaceful and at most result in temporary disruption to traffic in localised areas of major urban centres.
The Dominican Republic has no land border disputes with neighboring Haiti and no unresolved maritime border disputes with any other country. The likelihood of interstate war is therefore low. Relations with Haiti are problematic due to the large numbers of impoverished Haitians seeking to illegally cross the poorly patrolled 400-km border and a growing black market in several points along the Dominican-Haitian border. Migrant numbers increased following the January 2010 earthquake that destroyed large parts of the Haitian capital Port-au-Prince and in subsequent periods of political crisis. To control the migrant influx, the Dominican Republic has stationed troops along the shared border.
There is a low risk of terrorism and no known organized terrorist groups operate in the country. The most recent incidents in the country, perpetrated by the now-defunct leftist group Resistencia Popular Duartiana, were all small-scale and resulted in no casualties. These incidents included: a drive-by shooting in 2013 on the office of a mayor in San Francisco de Macorís; a 2011 improvised explosive device attack on a Gas Natural Fenosa power plant in La Vega; and a shooting at a senator's office in San Francisco de Macorís in 2013.
Overall, the Dominican Republic ranks 76 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.
The Dominican Republic is not currently among the most cyber-attacked countries in the world. According to Kaspersky cyber threat map, it is ranked as the 116 most cyber-attacked countries.
No vaccinations are required to enter the country.
The Dominican Republic ranks 91 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).
Hurricane season lasts from June 1 to November 30 and heavy rains from tropical storms often cause floods and landslides. Hurricane Isaac left five dead in August 2012; in August 2011, Hurricane Irene triggered the evacuation of 32,000 people and resulted in at least four deaths. Hurricanes Irma and Maria both passed near the island in September 2017, but neither caused significant damages.
The Dominican Republic is within an active seismic zone and, consequently, is susceptible to earthquakes.
If you plan to visit Dominican Republic, stay informed by the Dominican Republic's Center of Emergency Operations.
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