Dominican Republic - Foreign investment

In August 1996, the Dominican congress passed the Multilateral Investment Guarantee Agreement (MIGA) and in September 1996, President Leonel Fernandez signed the accord. The program was designed to encourage the flow of foreign private investment to less developed countries by mitigating political risks associated with a project. It also provides guarantees to foreign investors against the risk of transfer restriction, expropriation, and war and civil disturbance in the host country. In 1997, the government established the Office for Investment Promotion (OPI).

In 1998, foreign direct investment (FDI) inflows rose to nearly $700 million, up from $421 million in 1997 and then peaked at a record $1.3 billion in 1999. For 2000 and 2001, average yearly FDI inflow was a little over $1 billion. At the end of 2000, total FDI stocks were an estimated $5.2 billion, up from $2.9 billion at the end of 1998. In 1998, the tourist sector was the destination of 44.5% of FDI inflows, but in 1999, tourism accounted for only 20% while foreign investments in electricity became the single largest destination for inward FDI, attracting 47.2%. In 2000, the tourist sector was the destination of only 7.7% of FDI inflows, investments in electricity (29.5%), telecommunications (28.6%), and trade (16%) all ahead of it.

In 2000, the leading source of FDI was the United States, recorded as the source of 21%, although part of the inflow from the Cayman Islands (4%) and other offshore locations was also probably US-based. Other major sources in 2000 were Spain (20%), Canada (14%), and France (10%). Major foreign investors include GTE and Bank of Nova Scotia of Canada; Shell of Holland/England; and Central Romana, Philip Morris, Citibank, Esso, Texaco, and Colgate Palmolive of the United States.