Climate

The position of the country, to the south of the Tropic of Cancer, ensures a tropical maritime climate, with an average annual temperature of 25° C. A peak temperature of 34° C is reached in the months of June, July and August, while the lowest 19°C is experienced in the months of December, January and February. The humidity varies between 65 and 80 per cent. There are two main rainy seasons: from May to July and from October to November.
The Dominican Republic, as part of the Caribbean Basin, is very susceptible to tropical storms. However, its topography and geographical location often help to reduce the intensity and even change the course of such storms.

Population Trends

In the last census made in July 1994, the population of the country was estimated at 7.8 million, with 60.4% living in the urban areas and the remaining 39.6% residing in the countryside. It has an average density of 151.5 inhabitants per square kilometer. 
For the period of 1990 to 1995, the population growth rate was 2.8% per year, and the average longevity was registered at 63.9 years for men and 68.1 for women.

History and Culture 

The island, named by its spanish settlers "Hispaniola", was inhabited by a group of Arauaco Indians, known as "Tainos". Upon its discovery by Christopher Columbus in 1492, the island became the base for the further expansion of the spanish empire into the Antilles and the american continent. 
The city of Santo Domingo was founded over two years, 1496-98, and soon became the seat of the first viceroyship, the first cathedral, the first hospital, and the first university in the Americas. 
The island remained a Spanish colony until 1697, when its western third was transferred to France under the Ryswick Treaty. In 1797, with the Treaty of Basle, the entire island became a french possession. 
In 1804, after the slave revolt led by Toussaint Louverture and Dessalines, the western third of the island (Haiti) became independent. The eastern two thirds remained under French domination until 1808 when Juan Sánchez Ramírez won the battle of "Palo Hincado", becoming a Spanish colony again in 1809. 
In 1821, the Dominican people, lead by José Núñez de Cáceres, proclaimed their independence from Spain in an effort to join the political movement of the "Gran Colombia". But this independence is often referred to as "ephemeral" because in 1822 the entire island fell under the political control of Haiti. 
The Dominican Republic gained its independence from Haiti in 1844, as a result of an ambitious political movement lead by Juan Pablo Duarte, Ramón Matías Mella and Francisco del Rosario Sánchez, who became the "Founding Fathers of the Nation". 
Between 1861 and 1869, apart from constant conflict with Haiti, there were several attempts, first to return the country to the spanish fold, and later, towards giving control to the United States of America. In 1882 the country fell under the dictatorship of Ulises Hereaux until his assassination in 1899. 
In 1905, the United States of America assumed control of the country's finances to ensure the collection of the public debt, and in 1916 the U.S. armed forces invaded the country, remaining in place until 1924. 
In 1930 the thirty one-year dictatorship of Rafael L. Trujillo was initiated, ending with his assassination in 1961. Afterwards, several provisional governments were installed until the democratic election of Juan Bosch in 1962. Nine months later a military coup overthrew his administration, and in 1965 a civil revolt caused another intervention in the country of the U.S. armed forces. 
Since then, democracy has matured and consolidated. From 1966 to 1996 nine consecutive democratic elections have been held.

Political, Legal and Judicial System 

Political System 
Under the Constitution of 1994, the Dominican Republic has a representative democratic government with power being divided between three independent branches: executive, legislative, and judicial. The system of government is defined in the Constitution as being democratic, republican and presidential. 
The executive power is exercised by the President of the Republic, who is the Head of the State for the Government, the Public Administration and also the Commander in Chief of the Military Forces; and a Cabinet of Ministers appointed by him. The President is elected by direct vote for a period of four years. 
Legislative power is vested in a bicameral Congress, formed by the Senate and the Chamber of Deputies. Members of both Chambers are elected by direct vote for a term of four years. At this moment there are 30 senators, each representing one of the twenty-nine provinces and the National District, where the Capital is located, and 145 deputies, each representing fifty thousand inhabitants, or a fraction exceeding twenty five thousand, of every province and the National District. 
In 1994 the Constitution was amended and important changes to the political system were introduced, such as the following: 

• Presidential re-election for consecutive periods is now prohibited; 
• There is to be a second round of Presidential elections if a simple majority (50% plus 1 vote) is not reached in the first round ; 
• Presidential elections are to be held separately from Legislative and Municipal elections ; and 
• The National Judicial Council was created to ensure the autonomy of the judicial branch. 

Legal System 
The Dominican Republic is a civil law jurisdiction based on the Napoleonic Codes adopted in France at the beginning of the nineteen century. These codes were introduced to the island, first by the French and later again under haitian rule, and adopted formally in 1884 as part of the national legal system. Notwithstanding the fact that these codes have been modified through the years, it is argued that they do not always keep up with the changing social environment and should be revised on a more periodic basis. 
The Dominican legal system is also influenced by other systems. The Land Registration Law, for instance, is based on Common Law legislation established in 1920 during the first U.S. occupation in the country. 

Judicial System 
The Dominican judicial system is largely based on the french judicial organisation system. It is composed by the following courts: 

• The Peace Courts, which are formed by one judge and handle minor and special cases determined by law. Although these courts are by law specialised, the cases attributed to them are so numerous and diverse that they may well be considered as the competent courts for small cases. There is a Court of Peace in each Judicial District;
• The Courts of First Instance, which are formed by one judge and handle all the cases not expressly attributed by law to another court. There is a Court of First Instance in each Judicial District. Depending on the size of the Judicial District, these courts may be divided into a Criminal Chamber and a Civil and Commercial Chamber, which in turn may be sub-divided into various chambers with their own territorial jurisdiction. This is the case for the Court of First Instance of the National District, which is divided into five Civil and Commercial Chambers and ten Criminal Chambers, each having jurisdiction over a Judicial District; 
• The Appeals Courts, which are formed by five judges and review the judgments rendered by the Courts of First Instance, including the facts of the case. There is an Appeals Court in each Department, each Department comprising five Judicial Districts. These courts, depending on the size of the Department, may be divided into a Criminal Chamber and a Civil and Commercial Chamber; and 
• The Supreme Court of Justice, formed by sixteen judges, which is the higher Court and may review the decisions rendered by all other Courts, but only in questions of law. 

In addition, there are other specialised courts which handle administrative, labour, traffic, and land registration matters. 
Judges are granted great authoritative power. There are no juries in Dominican courts and it is the judge who pronounces the verdict. Since the amendment of the Constitution in 1994 judges are appointed by a newly created institution, the "National Council of Magistrates". This new institution has its roots in the French judicial system and seeks to increase the independence of the judicial branch from the executive and legislative powers. 

Foreign Relations 

It is part of the commercial policy of the country to be open to the rest of the world for all kinds of business relations, and the government is currently in the process of adopting new and far-reaching strategies in order to promote and encourage trade relations with other countries. 
At this moment, the major source for international trade and investment in the Dominican Republic is the United States, mainly for the following reasons:

• Its geographical proximity to that country; 
• The preferential commercial treatment granted to the country under the Caribbean Basin Initiative (CBI), which makes the United States a very attractive market for Dominican products; and 
• The large number of Dominican immigrants living in the United States, which are a source of freely convertible currency for the country. 

The Dominican Republic also maintains trading relations with all the countries in Latin America, and in particular with Mexico and Venezuela, which under the San José agreement supply oil to the Dominican Republic at preferential rates. 
Furthermore, the country has also very good trading relations within the Caribbean Basin. In cooperation with the French, Dutch and British Chambers of Commerce, the Santo Domingo Chamber of Commerce organised in the years 1992, 1993 and 1994 the "Congress of Entrepreneurs in the Caribbean". The purpose of this event was to encourage the development of commercial relations within the Caribbean in order to establish common strategies and agreements with the countries of CARICOM. 
As to the relations with Cuba, the Dominican government has recently renewed its consulate relations with that country and signed an immigration agreement with the Cuban government. The two islands also maintain an excellent cultural exchange. 
Relations and trade with Europe have been developing consistently under the Lome convention, not only because of the advantages derived therein, but also because of the belief that Europe can be the ideal counterweight to balance the influence of the United States. 
France, Spain, Germany, Italy and Britain have embassies in Santo Domingo, and eight European Chambers of Commerce work to encourage the development of trade and levels of cooperation with the Dominican Republic. 
Among the Asian countries, Japan, Taiwan and South Korea have embassies in the Dominican Republic, which shows their desire to promote economic and trading relations with the country. Other nations, such as Israel, also maintain very active embassies in the country, and Russia has recently opened a consulate and created a Chamber of Commerce.

State of the Economy 

In general terms, the Dominican economy has continued to recover from the economic stagnation of the 1980's. This process has been led by measures implemented by the Government and the Central Bank, which have included an economic modernisation program, stricter fiscal discipline, and aggressive efforts to attract foreign investment. These results can be appreciated in the levels of improvement of the Gross National Product, Balance of Payments and rates of inflation of the country. 

Gross National Product 
Positive economic results and a compliance with International Monetary Fund (IMF) guidelines enabled the Dominican Republic in June of 1993 to enter its third Stand-by Agreement with the IMF. The Agreement, which provided for 31.8 million Special Drawing Rights "SDRs" (approximately US$44.2 million), expired on March 28, 1994. The Government chose not to renew the Agreement after that date. 
During 1995 and 1996, the economy continued with the overall satisfactory trend that started in 1991. According to Central Bank data, real GDP growth for 1995 was 4.8% and 7.3% for 1996 (see Table 1). This figure was higher than the estimated average growth in GDP for Latin American countries in the same period. 
The most dynamic sectors in the economy during 1996 were telecommunications, which experienced a 16.7% increase; the construction industry, with a 13.6% growth rate; agriculture and cattle (specially in some of the so-called "traditional" exports: coffee, cocoa and tobacco ), which showed a 9.6% increase over the previous year; and the tourist sector (hotels, bars and restaurants), with a 9.5% increase. Internal trade and transports made also a substantial contribution to the GDP growth rate, with an increase of 8.6% and 7.7%, respectively. 

Balance of Payments 
For several years during the 80's and 90's the Dominican Republic had balance of payment surpluses. The Economic Commission for Latin America and the Caribbean ("CEPAL") reported that in 1994 the Dominican Republic was second among all Latin American countries in terms of the situation of its current account and balance of payments, with a deficit amounting only to 1.2% of the GDP (i.e. US$134.6 Million). This was attributed to the combined result of a 23.8% increase in the income derived from the export of goods and services, a reduction in the payments against international obligations, and the fact that in 1994 the interest incurred on the external debt was 33% less than the amount paid in 1992, a benefit resulting from the country's debt restructuring. 
During 1995 and 1996 the solid economic growth experienced in the country led to a surge of imports which caused the balance of payments deficit to continue increasing. 

Inflation
According to official figures, during 1994 the inflation rate reached 14.3%, its highest level since 1990. As a result of a number of monetary measures, mainly adopted in the form of resolutions issued by the Monetary Board of the Central Bank, inflation was gradually reduced, reaching a lower rate of 9.2% in 1995 and only 3.8% in 1996. 

International Trade 

Foreign trade plays a key role in the economy of the Dominican Republic. Imported components, according to estimates, account for 60% of the value of the goods consumed in the local market. On the other hand, the Dominican Republic exports a variety of finished and semi-finished products. Sugar, coffee, cocoa, ferro-nickel, gold, silver, textiles and footwear are the country's main exports. In addition, the manufacture of goods for export, specially clothing, has significantly expanded due to the growth of free trade zones. Tourism has also increased in importance and now constitutes a major source of foreign exchange and employment. Finally, the processing of agricultural products, oil refining, minerals and chemicals can also be mentioned as some of the main sectors of the domestic industry. 

You can download the following Excel sheets with International Trade Figures

• Commercial Trade Figures of 2006 (major countries)
• Commercial Trade Figures of 2005 (major countries)
• Commercial Trade Figures of 2004 (major countries)

Imports 
The Dominican Republic imports goods from all over the world, but approximately 43% comes from the United States. The most common imports include gas, oil, wheat, soya beans, sheep and goat fat. Many raw materials are imported for assembly and then exported. Such products include textiles and clothing, footwear, medical equipment and supplies, and small appliances. 
In September 1990, Presidential Decrees 339-90 and 340-90 comprehensively reformed the import tariff system. The measures were aimed at harmonising Dominican customs duties by reducing the number and variety of import taxes, levies having an equivalent effect, exonerations, exemptions and the like, and thus increasing efficiency and expanding the tax base of imports. Consistent with those objectives, the internationally recognised Harmonised System of Codification and Designation of Goods was adopted. 
In September 1991, Presidential Decree 366-91 reduced even further the value added taxes (VAT) levied on some food items, medicine and raw materials. All the reforms were eventually integrated into Law 14-93. 

a) Import Duties 
The current System of Tariffs can be summarised as follows: 

• A basic import tax ranging from 5% to 35%, depending on the nature of the item imported (i.e., raw materials, processed or manufactured products, etc.); 
• A consumption tax (excise tax) ranging from 5% to 80% on certain "luxury" imports, to be calculated upon the CIF price plus the amount of prior taxes and duties, with the exception of the 16% VAT charged on the transfer of industrialised products and services (ITBIS), described below; 
• An 16% VAT (ITBIS) on imported industrial products, calculated on the CIF price of the item plus the amount paid for all the taxes and duties aforementioned; and 
• Importers have to pay 13% Exchange Tax (= Comisión Cambiaria).

For the payment of the import taxes, the use of a clearing agent is highly recommended. In all cases, import licenses are required. 

b) Exemptions from Import Duties 
Apart from the exemptions granted under the "temporary admission regime" established by Law 69 and to certain traditional products, which are dealt with in the following section, the only exemptions to the tariff are the items destined for free zones. Law 8-90 provides significant tax and duty exemptions to enterprises which start to operate or invest in free zones. More specifically, free zone companies are exempt from currency exchange controls, corporate income tax, and import duties on raw materials used for production. This law further encourages domestic and foreign investment in an already rapidly growing sector. 

Exports 
There is no general policy concerning exports but several laws affect this area. The manufacture of most exports takes place in Free Zones where Law 8-90 applies. 
The Dominican Republic exports a variety of finished and semi-finished products. Exports from Free Zones include clothing, shoes, electronic components, medicines, and foods. Traditional goods consist of sugar, coffee, cocoa, and tobacco. Minerals exported include, gold, tin, silver, and copper.

a) Export of Non-Traditional Products 
Law 69 distinguishes between traditional and non-traditional products, the first ones being those expressly mentioned by Law No. 69 of 1979, which do not benefit from any fiscal exemptions or privileges and are, on the contrary, penalised with certain taxes when destined for export. 
Non-traditional products embrace all the items not expressly mentioned by Law 69 and include garments, shoes, electronics, and some agricultural products like vegetables and fruits. This law encourages the export of such products by granting the exporters of these items whose facilities are located outside the Free Zones, a "temporary admission regime", which implies exemption from import taxes and duties when the imported goods are used within a twelve month period to produce or repair such items. 
The Dominican Association of Exporters and the United Nations Programme for Development have submitted proposals for the reform of the temporary import regime created by this law. 

b) Export of Traditional Products 
Law No. 532 of 1969 grants exemptions from import taxes to some agricultural and livestock products such as insecticides, herbicides, and pesticides. Furthermore, certain other agricultural products, as well as medicines and raw materials, which are considered necessary to satisfy basic social needs, enjoy an import tax exemption by virtue of Presidential Decrees 339-90 and 366-91. 
Exporters of some traditional products, such as sugar , coffee and cocoa, are subject, for the purposes of tax payment, to a surcharge on the income arising from their operations, which varies depending on the quantity of production, the value of the goods and the type of product. 

c) Preferential Export Rights 
Dominican exporters to the U.S. enjoy a preferential status for many of their goods under the Generalised System of Preference (GSP), the Caribbean Basin Initiative (CBI), Items 806.30.001 and 807.00.001 of the Tariff Schedule of the U.S. They also enjoy a preferential status when exporting to the EU under Lome IV. 
The GSP gives the Dominican Republic duty-free access to U.S. markets for manufactured and semi-manufactured products. There are about 3,000 items which can be exported to the U.S. under this program, as long as they have increased in value by 35% due to further processing in the Dominican Republic and are imported directly into the U.S. 
The GSP has been substituted, in practice, by the CBI which applies similar criteria but allows a greater variety of goods to enter the United States market free of taxes and duties. The list of non-eligible products includes: textiles and clothing, canned tuna, certain watches and watch parts, petroleum or petroleum by-products as well as some leather items such as luggage, handbags, footwear and work gloves. 
Another preferential programme is the U.S. Tariff Schedule: Items 806.30.001 and 807.00.001. These provisions grant reduced duties for products made in the U.S. and sent overseas for further processing and later imported back into the U.S. Duty is only paid on the value added by the further processing outside the U.S. Tariff Item 806. 30. 001 applies to metal manufacturers. Operations qualifying under 807.00.001 include the assembly of electrical components and pre-cut material for clothing. Despite the quantitative restrictions on textiles established under the Multifiber Agreement, the Dominican Republic is one of the leading exporters of textile items to the U.S. in the Western Hemisphere, with Item 807.00.001 accounting for 40% of all Dominican-made garments exported to the U.S. 
The last preferential mechanism has been established by the Lome IV Convention, which allows (i) a variety of Dominican exports to enter the European Union countries free of import taxes and duties in most cases, or paying only a small tariff in others, and (ii) access to funds for financing and eligibility for donations. 

Trade with the European Union

Trade with the European Union has been developing consistently under the Lome agreement. Since the year 1990 exports under the Lome agreement have been progressively increasing. The main commercial partners of the country in Europe are Spain, Germany, Italy, The Netherlands, France and the United Kingdom. The main products exported to Europe are tobacco, textiles, bananas, pineapples, coffee, rhum, electronic alarms and oranges.

- Export of the EU 2005: 614 Mio. EURO
- Import of the EU 2005: 237 Mio. EURO

You can download the following documents in Adobe Acrobat format (PDF) and Microsoft Excel format (XLS) for a detailed listing of products exported to Germany, Austria and Switzerland:

• Exportaciones Zonas Francas hacia país acumulado (2006)
• Exportaciones Nacionales hacia país acumulado (2006)
• Exportaciones Zonas Francas hacia la Unión Europea (2005)
• Exportaciones Zonas Francas hacia país acumulado (2005)
• Exportaciones Nacionales hacia país acumulado (2005)
• Exportaciones Nacionales hacia la Unión Europea (2004)
• Exportaciones Zonas Francas hacia país acumulado (2004)
• Exportaciones Zonas Francas hacia la Unión Europea (2004)

For other countries' details or more information on these figures, please contact the respective member chamber directly.

Monetary System 

According to Article 111, paragraph III of the Constitution of 1966, the regulation of the monetary and banking system is the responsibility of the currency-issuing authority, which is the Central Bank of the Dominican Republic. 
The Central Bank is a government financial institution charged of promoting and maintaining the monetary, foreign exchange and credit conditions which are most favorable to the stability and development of the national economy. This is the bank in charge of issuing Dominican pesos, of maintaining their value against foreign currencies and, in general, of taking measures to preserve the economic and monetary stability of the country. 
In order to allow the Central Bank to act, the law has granted it the power to issue administrative measures called "Resolutions" which regulate the financial operations of the commercial banks and other relevant institutions. 
This power is exercised by the Monetary Board which is presided by the governor of the Central Bank, and is in charge of determining the monetary, credit and foreign exchange policies of the nation. All regulations pertaining to the official and private exchange markets, involving interest rates, credit card issues, account openings, granting of credit, and other banking transactions, are determined solely by the Monetary Board. 

Currency 
Although under the Monetary Law still in force in the country a Dominican peso has the same value of an U.S. dollar, the economic realities have many years ago overcome these provisions. 
In spite of the tight control traditionally exercised by the government authorities over the monetary policy, and the high political value attributed by the people to the stability of the Dominican peso, by August 1991 the official exchange rate of the Dominican Peso was RD$12.5 for US$1.00, reaching RD$12.87 in 1995, RD$14 in 1999 and is currently fluctuating between RD$26 and RD$29. The Euro has gained value accordingly, and is currently exchanged a few points above the more commonly traded US Dollar, reflecting approximately the same advantage the Euro's value presently has against the dollar in international currency markets.
March 2005: 1 USD = 28.00 DOP, 1 EUR = 37.00 DOP

Exchange Controls 
At this moment, two foreign exchange markets operate at the same time, under various resolutions issued by the Monetary Board: a "private" market, where most sectors of the economy are free to buy and sell foreign exchange through the commercial bank system and the exchange agents duly registered before the Superintendency of Banks (since 1997); and an "official" market, where only the non-free trade zone exporters and the oil industry are still required to buy and sell foreign exchange exclusively through the Central Bank. 
The exchange rate at commercial banks varies around the official rate, being lower in times of dollars abundance, and higher in times of relative scarcity. In these cases the Central Bank will be buying or selling dollars, so as to prevent the peso from appreciating or depreciating further.

Commercial Banks
For your convenience we have prepared a list of commercial banks operating in the Dominican Republic. You can download the list in Microsoft Excel (XLS).
Download: banks.xls (last update: March 2005)

Trend and Agenda for Economic Reform

The country is in the process of reforming its legal and economic framework in order to comply with the guidelines set forth in the Uruguay round of Negotiations of the GATT, which will necessarily lead to the liberalisation of the economy. Accordingly, Dominican authorities are concerned with modifying certain aspects of the legal framework under which foreign and national businesses operate in the Dominican Republic, as well as with reforming certain important sectors of the economy in order to open them up to foreign investors.

Tax Reform 
The Tax reform was basically aimed at five major objectives: 

• Reorganise the various laws and presidential decrees that regulated the fiscal system and broaden the State power to collect taxes; 
• Broaden the tax base by reducing the income taxes levied on individuals and corporations; 
• Provide fiscal advantages to the tax payer such as transparency, efficiency and speed in the payment of taxes; 
• Abolish tax incentives and establish a general prohibition on the granting of new ones, which together with the reduction of the direct income tax rates is expected to bring about the liberalisation of the economy; and 
• Adopt new criteria for the definition of "income" and "taxable income". 

On May 31, 1992, the Dominican Congress enacted the Tax Code of the Dominican Republic under Law 11-92, which has four sections. The first establishes the "General Principles, Proceedings and Penalties", the second deals with the "Income Tax", the third concerns the "Tax on the Transfer of Industrialised Goods and Services (ITBIS)" and the fourth regulates the "Excise Tax". 

Promotion of Foreign Investment 
In 1995 the new Foreign Investment Law No. 16-95 was enacted. This law seeks to give equal treatment to foreign and national investors, in the understanding that foreign investment is an important factor for economic development. Accordingly, the law abolished most of the restrictions existing under the previous law, simplified the process of registration of the investment, and widened considerably the possibility to repatriate in freely convertible currency the benefits derived from the investment made in the country. 
In 1997 new measures were adopted by way of presidential decrees to further promote foreign investment in the country. These measures include the adoption of two regulations pertaining to the application of the new Foreign Investment Law, and the creation of a Council for the Promotion of Investments to be charged of encouraging both the canalisation of investments to the country and the adoption and maintenance in the Dominican Republic of an adequate climate to investment. 

Reform and Privatisation of public enterprises 
On June 24, 1997 the General Law for the Reform of Public Enterprises No.141-97 was passed. This legislation seeks to improve the efficiency of public enterprises and the quality of the services they provide to the public by opening up such enterprises to private investment, and sets forth the necessary measures to regulate and give transparency to the process of participation of the private sector in the property and management of public enterprises in order to protect the public interest. 
This legislation provides the general framework under which the privatisation process of public enterprises in the Dominican Republic should take place and will offer interesting opportunities for investment. 

a) Enterprises Subject to Reform 
Law 141-97 enumerates the public enterprises which will be submitted to the reform process. These enterprises will be the following: (i) Corporación Dominicana de Empresas Estatales (CORDE), which is the holding company for a series of enterprises dedicated to various commercial activities (mining, glass fabrication, aviation, etc.); (ii) the electricity company, Corporación Dominicana de Electricidad (CDE), (iii) the hotels belonging to the Corporation for the Promotion of the Hotel Industry; and (iv) Consejo Estatal del Azúcar (CEA), which controls a large part of the sugar production in the Dominican Republic. 

b) Entity in Charge of the Reform Process 
The law provides for the creation of a Commission for the Reform of Public Enterprises, which will manage and conduct the reform process and the transformation of public enterprises. The Commission will have the rank of a Ministry of State and will be under the direct supervision of the President of the Republic. 

c) Reform Process 
Before starting the reform process the Commission will hire, through international public bidding, one or more audit firms to assess the financial situation and fix the market value of each enterprise. The results of the audit shall be published in newspapers of nationwide circulation. The reform of the enterprises may then be made through any of the following methods: 
(i) Capitalisation: The public enterprise will be transformed in a limited liability company and the President of the Republic will contribute the assets and/or interests of the public enterprise to the capital of the newly created company. Work contracts may be terminated upon payment of all wages, fringe benefits and compensation required by the Labour Code, but the employees will have the choice to acquire shares in the capital of the company for the amount of the sums owed to them by the enterprise. The President will then authorise by decree the capitalisation of the company, which will be made through an increase of capital with the contributions of private investors. Private participation cannot exceed 50% of the total capital of the company, but the new investors will have control over the management of the company. This control will be ensured by the signature of a management contract with the government. 
(ii) Concession agreements, transfer of shares and/or assets: The President may authorise any of these methods for the reform of public enterprises if the Commission considers that the capitalisation will not fulfill the purposes of the law. The choice of any of these methods shall be announced in a public act transmitted directly through radio and television and in the presence of Public Notaries, observers, the media and the employees of the enterprise. According to Article 55-10 of the Constitution, the sale of assets or shares has to be approved by Congress. 

d) Selection of Private Investors 
National and/or foreign investors will be selected through international public bidding according to criteria established in advance, which will take into account factors such as employment generation, total value of production, tax contributions, construction or reparation of infrastructure, impact on the environment, levels of technology transfer and other. 

e) State Guarantees 
The State cannot grant any guarantee or credit to the private investors participating in the process; however, the President may authorise that the debts of the enterprise be transferred totally or partially to the State, if the Commission considers it necessary in order to carry out the reform process. 

f) Market Regulation 
The authorities cannot allow the participation of any enterprises or persons in the reform process of a public enterprise if as a result of such participation such enterprises or persons would acquire a monopoly position. Furthermore, public enterprises which have currently in the market a monopoly or a dominant position cannot transfer such privileges, and the authorities are given a period of 24 months to eliminate them. 
As it can be appreciated, the adoption of this legislation is an important step towards the liberalisation and modernisation of the national economy, since it will allow the private sector to participate in public enterprises; this will not only contribute to alleviate the public charge that such enterprises represent to the government while improving their performance, but will also further encourage free competition principles in the Dominican Republic. 

Financial Reform 
The Project for a Financial and Monetary Code which is currently being discussed by the Congress seeks to liberalise the financial system and thus encourage the flow of foreign capitals to the sector. 
Accordingly, the project removes the restrictions for the incorporation of foreign capital banks, be it through the incorporation of a Dominican company wholly owned by foreign investors, or through the opening of branches of foreign banks, which may perform banking operations, or simply serve as agencies for the purposes of information or placement of funds. 
These provisions are consistent with the new Foreign Investment Law which has, as it has been explained in the previous section, eliminated the restrictions to foreign investments in the banking sector, as they were applied under Law 861 of 1978. 

Energy 
Although the electricity supply has improved since 1990, the energy industry has yet to meet the demands of the growing Dominican economy, specially in the industrial and tourism sectors. 
Therefore, the government has opened the door to local and foreign investors in this area, and the Dominican Electricity Corporation (CDE) has entered into a sales and supply agreement with a foreign undertaking, Smith/Enron, which is operating a combined cycle power station producing around 20% of the full capacity of the CDE. 
In line with the above, and due to the mounting pressure of the private sector over the inefficiency of the CDE, the government set up in 1993 the National Energy Council, to draft a new legal framework and plan the restructuring of that corporation. 
The bill, currently being discussed by the Congress, seeks to liberalise foreign investment in this area, by separating it into three component parts: generation, transmission, and distribution. 
It should be noted that the adoption of Law 141-97 on the Reform of Public Enterprises does not contradict the draft bill for the privatisation of CDE and that both legislations are programmed to interact in their respective areas of application.