By TBY | Dominican Republic | Feb 04, 2015
According to the FondoMicro 2013 survey, there are 791236 micro, small, and medium-sized enterprises (MSMEs) in the Dominican Republic. These companies employ over 2.1 million persons, who represent 46.2% of […]
According to the FondoMicro 2013 survey, there are 791236 micro, small, and medium-sized enterprises (MSMEs) in the Dominican Republic. These companies employ over 2.1 million persons, who represent 46.2% of the economically active population, and 54.4 % of the total employment in the country. The MSMEs sector is pivotal for the Dominican Republic’s economy, as MSMEs account for 27% of country’s GDP, and represent 97% of 600,000 Dominican companies.
In accordance with Law No. 488-08, enacted on December 30, 2008, which establishes the regulatory regime for the development and competitiveness of Dominican MSMEs, and President Medina’s strategic development guidelines, the Dominican Republic is focused on promoting opportunities for MSMEs, and small business development centers (SBDC), which aim to facilitate their insertion into global markets. This promotion strategy includes initiatives such as: financing, integration, associative practices, and capacity building.
The Dominican government has assigned the responsibility of designing and implementing the respective work plans among different public institutions; the Ministry of Industry and Commerce (MIC), through its Vice-Ministry of National Council of Promotion and Encouragement of Micro, Small, and Medium Enterprises (PROMIPYME), as well as the Export and Investment Center of the Dominican Republic (CEI-RD), are the key institutions responsible for introducing the necessary programs on entrepreneurship, competitiveness, market access, ICT, as well as the implementation of quality systems, international negotiations, and technical assistance.
Moreover, several private organizations, such as: National Confederation of Small and Medium Enterprises (CODOPYME), Association of Industries of the Dominican Republic (AIRD), National Confederation of Small and Medium Construction Enterprises (COPYMECON), and the Santo Domingo Chamber of Commerce (CCPSD) are also strongly engaged in activities to strengthen the role of MSMEs sector.
In October 2013, the Government has launched a one-stop window in order to facilitate starting new businesses and formalizing the existing ones. “Our goal is to promote the creation and formalization of small, micro and medium-sized businesses, taking into account that this sector represents 96% of the companies in the country and contributes 27% to GDP,” noted the Minister of Industry and Commerce, José del Castillo Saviñón. Previously the formalization process lasted approximately a month, and involved seven transfers, three forms, and four visits to different administrative units. “Now, through www.formalizate.gob.do, the process to form company is done in only seven working days, and only one transfer to the Chamber of Commerce.”
In January 2014, the Inter-American Development Bank (IDB) approved a loan of up to US$30 million to help expand access to credit for Dominican MSMEs. The initiative seeks to increase their productivity by facilitating access to medium- and long-term credits through intermediate financial institutions. By financing investment projects, permanent working capital, and technical assistance, the project attempts to increase labor productivity and sales among Dominican MSMEs. The IDB loan has a term of 25 years, a grace period of 5 years, and an interest rate based on the London Interbank Offered Rate (LIBOR).
Furthermore, in July 2014, the Inter-American Investment Corporation (IIC) approved a US$3 million loan to Banco Múltiple Santa Cruz to finance 200 loans to the Dominican Republic’s MSMEs, primarily for foreign trade operations and working capital. “The purpose of this operation is to strengthen ties between the IIC and Banco Santa Cruz to continue developing the Corporation’s lines of business geared to SMEs in the Dominican Republic and help diversify their sources of medium- and long-term financing,” commented Sandra Reyes Correa, IIC’s senior investment officer. This loan was the IIC’s second operation with Banco Santa Cruz. The first one benefited 70 Dominican MSMEs. “The experience acquired through the IIC in global best practice has substantially improved our internal practices, enabling us day by day to strengthen our competitive advantages,” said Rafael Jiminian, Banco Santa Cruz’s executive vice president for business. “The funding approved will likewise enable us to continue our aggressive pursuit of business in our main segment, SMEs.”