2. Economic Environment
Political Environment
Trading Environment
Traditional vs Modern Trade
Market Entry Strategy
Brand and Trademark Registration
Ports and Taxes
Challenges
Questions
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OVERVIEW
3. DOMINICAN REPUBLICS ’S ECONOMIC
OVERVIEW
GDP PER CAPITA (USD) $14,900 (2015 est.)
POPULATION Total: 10,478,756 (July 2015 est.)
Santo Domingo: 2.945 million
GDP BY SECTOR Agriculture: 5.6%
Industry: 31.4%
Services: 63% (2015 est.)
UNEMPLOYMENT 14% (2015 est.)
POPULATION BELOW POVERTY LINE 41.1% (2013 est.)
INFLATION 0.7% (2015 est.)
LABOUR FORCE 4.93 million (2015 est.)
EXCHANGE RATE $1US = 45.02 peso (2015 est.)
T&T POPULATION
1.2 million
T&T PER CAPITA
32,100
3
13200
14200
14900
12000
13000
14000
15000
16000
2013 2014 2015
Dominican Republic's GDP Per Capita
2013-2015
GDP Per Capita
4. POLITICAL ENVIRONMENT
General Elections- 15th May, 2016
Modification to the 2010 constitution
Leading Parties in the elections are as follows:
Dominican Liberation Party- Danilo Medina***
Modern Revolutionary Party- Luis Abinader
Alianza País (ALPAÍS)- Guillermo Moreno García
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5. TRADE AGREEMENTS
CARICOM-DR agreement signed on August, 1988.
T&T exporters will benefits from preferential treatment/ duty
free access into the Dominican Republic
EPA- Source raw materials for exports to Europe
Regional Preference Clause (Article 237)
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7. TRADING ENVIRONMENT-OVERVIEW
• In the 2016 Ease of Doing
Business Rankings, Dominican
Republic ranked 93rd
• Dominican Republic’s total
non-energy imports for 2014
valued US$ 14,873,406,000
• Haiti’s total non-energy
imports experienced positive
growth of approximately 20%
in 2015 when compared to 2011
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9. GROCERY RETAILERS IN THE
DOMINICAN REPUBLIC
Traditional Grocery Retailers VS Modern Grocery Retailers
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Traditional Grocery Retailing Modern Grocery Retailing
Lower income consumers Upper income consumers
Great Number of Outlets (convenience) Located in major cities
Small Size Larger size (wider aisles and cold
storage)
Limited Product Assortment (daily
consumption products)
Wider product assortment
Stock local products Domestic and imported products
Grocery and non-grocery items
Colmados, Independent small grocers,
Food/drink/tobacco specialist
Supermarkets, Hypermarkets,
Discounters, Convenience stores
Additional Services: Free home delivery,
Store credit
Loyalty cards to earn points
10. GROCERY RETAILERS IN THE
DOMINICAN REPUBLIC
Leading Grocery Retailers
Ramos Business Group (Grupo Ramos) -10%
La Sirena
Supermercado Pola
Aprezio
Centro Cuesta Nacional (CCN)- 8%
Jumbo
Jumbo Express
Supermercado Nacional
Other Major Retailers
Carrefour, Supermercados Bravo, Mercatodo, Plaza Lama etc 10
20. BRAND AND TRADEMARK REGISTRATION
In Dominican Republic the Brand and Trademark is registered
not the product.
Ideally the exporter should register the brand and trademark
Cost of registration is US$130 for a 10 year period
The process takes approximately 3 months
Tutorial www.formalizate.gob.do
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21. PORTS AND TAXES
• Value Added Tax (ITBIS) -18%
• Luxury Tax- 15-60%
• Customs Charge of $100 per container
• **Tariff
• Handling Fees (if using a broker)
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Other Charges
• Terminal handling charge $100-$200
• Local discharge $75
• Trucking is Unionized in DR:
• 12000RD from Caucedo
• 8000RD from Rio Haina•
22. SHIPPING DOCUMENTS
Original CARICOM Invoice
Certificate of Origin
Packing List
Fumigation Certificate***
Bill of Lading
Licenses, permits, and other governmental authorizations required for specific
products.
*** It takes 48 hours to clear a container in the Dominican Republic
****A company has up to 10 days to declare what is in the container before you incur
charges and 6 months to remove it from the port
****Inaccurate, late, and false declarations are subject to fines and other penalties.***
*****Use of Customs Brokers is not legally required, but recommendable
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Price of oil is approximately 45$ VS 120$
There is a greater need for exporter more than ever
This presentation is to change the perspective of persons towards the market
HOW MANY OF YOU VISITED IN THE MARKET BEFORE?
What are your perceptions of the market?
Measure of the standard of living in a country GDP per capita
The country as a modest aging population but number of those under 20 years makes up a significant portion of the population
The agricultural sector employs 14.5% of the workforce. Farmers produce both for
the domestic market and exports. About 30% of the island is suitable for crops.
Principal cash crops such as rice, sugarcane, bananas, coffee, cocoa and tobacco
are all grown on large plantations.
Manufacturing accounts for 15.4% of GDP and employs 9.3% of the workforce. The
Dominican Republic is one of the main centres of clothing "assembly for export",
The country's tourist industry normally receives more than four million visitors each year, making it the most-visited destination in the Caribbean
Unemployment was 12.8% in 2015 and it will fall to 12.3% 2015. The unemployment rate among females is nearly three times that of males. Underemployment is also a serious problem. Most of the jobs being created are in low-skilled industries in the informal sector. Unofficially, employment in the informal sector is estimated to be around 50% of the total workforce.
Inflation is expected to be 3.5% in 2016 but but low oil prices could help curb this
The economy is performing better than most of its neighbours in the region but the pace could still be accelerated with improvements in infrastructure. Annual growth of about 4.0% per year is expected in the medium term.
**** Leading party according to Political Observatory 10th April, 2016****
Dominican Republic President Danilo Medina will be eligible to run for re-election next year under a constitutional change approved by the Caribbean nation’s lower congressional chamber Tuesday.
The law modifies the 2010 constitution and adopts a U.S.- style election system that allows for two consecutive presidential terms and limits presidents to a total of eight years. Current law prohibits consecutive terms. The measure passed both the House of Deputies and Senate with a two-thirds majority.
Trade Agreements with DR
CARICOM – DR
2. CARIFORUM (EPA)
3. Central America Agreement ( CR, EL Salvador, Guatemala, Honduras, Nicaragua)
4. DR-CAFTA ( Central America-DR and USA)
5. Panama
Recently signed an agreement with Paraguay
Haiti and DR to resume talks over the ban of DR products in Haiti
The DR is one of the countries that Trinidadian manufacturers can source raw materials from for the purposes of cumulation under the agreement. In this regard, inputs sourced from the DR would be considered as local inputs provided that they are indeed of DR origin. Once the final product exported to Europe from TnT meets the specific rules of origin, then it will benefit from duty free treatment in the EU.
2. In the EPA, there is a Regional Preference Clause (Article 237) which states that any more favourable treatment granted to the EU by either CARICOM or the DR must also be granted to each other. This has direct implications for the CARICOM-DR FTA since it means that goods granted duty free treatment under the EPA but which do not enjoy similar treatment under the CARICOM-DR FTA ought to be liberalised under the latter. What this would do in a practical sense is expand the range of goods that can be traded under preference in the context of the CARICOM-DR FTA. However, both Sides have not yet enforced the Regional Preference Clause.
This information was taken from the SEW system and refers to T&T’s total non-energy exports that qualify under the rules of origin in 2015.
It is evident that T&T’s exports
Grocery retailing is vastly important in the Dominican Republic, accounting for a 68% value share of store-based retailing in the country. These retailers offer products needed on a daily basis.
Positioning varies greatly between traditional and modern retailers. Traditional grocery retailers usually cater to lower-income consumers. They succeed due to the high level of convenience provided by the great number of outlets spread throughout the country. Due to their small size, they carry a limited product assortment, typically only to meet daily consumption needs. The prevalent type is represented by colmados, which usually stock domestic products, but are also expanding to imported food and drinks. Prices in these outlets, however, tend to be higher compared to those of modern retailers. Extended services from these outlets include free home delivery and store credit for customers. Colmados rely on personal relationships with their customers as a way to preserve loyalty, especially given the strong competition. These outlets are also gathering places, where friends meet, listen to music and drink.
Modern grocery retailers usually offer a wide range of products, both domestic and imported, including grocery and non-grocery items. These outlets are large with wide shopping aisles and offer cold storage. Within these outlets, there are also outside providers of additional services, such as banks, pharmacies and utility companies. Modern supermarkets and hypermarkets are located in major cities such as Santo Domingo, Santiago and La Vega, but they are expanding to reach smaller cities, including tourist destinations such as Puerto Plata, La Romana and Punta Cana. As part of their loyalty schemes, supermarkets and hypermarkets offer loyalty cards for consumers to earn points for purchases.
Four supermarkets chains control the majority of trade. Two of them have expanded to become hypermarkets and more, so wider range of imports (Grupo Ramos, CCN)
•Pricesmart and Carrefour are there, but have a smaller percentage of the market
•Supermarket have increased the number of private label products both own and imported
HEADLINES
In 2015, grocery retailers records current value growth of 8% to reach Do$329.7 billion
Emerging discounters channel proving to be a successful model
Ramos Business Group (Grupo Ramos) leads grocery retailers with a 10% value share
PriceSmart: This is a well-known Club/ Warehouse Outlet, with two big stores in the Santo Domingo area, and one in Santiago. PriceSmart rents space in their stores to other businesses which provide additional services to its customers such as banking, utility payments, ETC.
Carrefour: This is an in international franchise (France) with its regional headquarters in Martinique. It has only one store in the DR with no plans to expand in the near future. Though it mainly caters to higher income customers, its strategic location in one of the most important highways of the country, the Autopista Duarte, allows it to attract many customers from lower income levels. Carrefour handles between 45 and 50 thousand different products. It has its own private label brand; however, it is open to handling both local and foreign brands. Carrefour has expressed interest in U.S. Dairy products like yogurts and cheese, as well as U.S. wine, whiskey, juices, turkey, meat, frozen & fresh products, fruits & vegetables, sugar -ice cream- cones among others.
Centro Cuesta Nacional (CCN): One of the biggest supermarket chains, CCN has a total of 34 stores in different formats. The largest format is Jumbo Hypermercados. There are 7 of them. The medium size format is known as “Nacional” supermarket. There are 13 of them. The smallest format is the Jumbo Express, of which there are 6. The remaining stores are known the Panera bakeries. CCN is a major importer of U.S. meat, dairy, and fruits and vegetables. They rely heavily on the Food Club, Value Time and Full Circle brands. Additionally they have a locally produces private label marketed under the Líder brand.
Grupo Ramos: One of the biggest chains with a total of 42 stores in different formats around the country. The largest format is known as “La Sirena.” There are 24 of these. The medium format is known as “Pola” supermarket. There are 7 of these. Finally, the convenience stores known as “A Prezio,” with 11 outlets. This chain caters more to the medium and lower income levels. Grupo Ramos also has its own brand, First Class, as well as two exclusive brands, Shurfine and Shurfresh.
Supermercados Bravo: This Company owns 6 supermarkets, 5 in Santo Domingo, and one in Santiago. These stores cater more towards the middle income sector of the population. This company imports U.S. cold sausages, cured meats, frozen and special products, and has expressed interest in California wines. This company also buys fruits and vegetables from Chile and Europe. Supermercados Bravo has started an in-house cheese factory named “Mu” using a new customer experience model called “see it while we make it”. Mercatodo: This is another important company which owns the Supermercados La Cadena with a total of 10 stores.
Mercatodo maintains a very active communication with the Office of Agricultural Affairs for help with business contacts. This company is mainly interested in importing poultry, shrimp, rice, and beans. Mercatodo does not yet have a private label brand. Plaza Lama: This is a large chain with 12 stores catering to the middle income segment of the population.
Plaza Lama regularly imports directly from the US, or buys from major brokers. It participates frequently in US food shows in order to increase their business contacts. Gold Select, Hytop and Better Value are their major brand suppliers.
Hipermercados Olé: This Company has 13 stores of which 5 are supermarkets and 8 are hypermarkets. These stores are located in some of the larger cities around the country. Iberia and Zaglul, are important names in the Eastern region of the country as well.
EG: If Massy stores open small supermarket shops in various communities
Aprezio, from Ramos Business Group (Grupo Ramos), recorded the highest value sales growth in 2015. The brand still represented only a fragment of grocery sales, but it has proved to be successful; since its opening in 2012, the brand has more than doubled its number of outlets. The brand is able to reach customers in populous lower/mid-income neighbourhoods with a smaller format compared to supermarkets and hypermarkets, but larger compared to traditional formats, and also offers a wider array of products than traditional outlets.
EG: If Massy stores open small supermarket shops in various communities
Aprezio, from Ramos Business Group (Grupo Ramos), recorded the highest value sales growth in 2015. The brand still represented only a fragment of grocery sales, but it has proved to be successful; since its opening in 2012, the brand has more than doubled its number of outlets. The brand is able to reach customers in populous lower/mid-income neighbourhoods with a smaller format compared to supermarkets and hypermarkets, but larger compared to traditional formats, and also offers a wider array of products than traditional outlets.
Using a Distributor
Exporters can choose the option of using a distributor in the market. This is where in-market distributors purchase the product(s) and are responsible for the payment of the goods. In being responsible for the payment of the goods, the in-market distributor also assumes the financial risk and provides the support and customer service needed for the products.
Good distributors normally carry a range of complementary products which are non-competitive in nature and this allows for the focus to be on a particular product type without sacrificing a similar or a competing brand at the same time. The advantage of using a distributor is that they usually have a much wider market reach when compared to direct sales. Thus given the size of the Haitian market it will be very effective to have to use the right distributor to ensure effective coverage of the market.
The brand is owned by the person who registers it that is why the exporter should ideally register the brand
Once it already exist in the DR you will not be able to use the name and brand and will be unable to export to the DR
Eg Mac vs Mac Lipstick
Ports with Container Liner Service
Boca Chica Port of Boca Chica
Puerto Plata Port of Puerto Plata
Punta Caucedo Caucedo
Rio Haina Port of Rio Haina
Santo Domingo Port of Santo Domingo
Shipping Lines- Sea Board and CMA-CGM
Seaboard- 8 day transit time with sailing every Friday to Jamaica and then to Rio Haina
CMA-CGA- 5 day transit time with sailing every Sunday and arriving DR Thursday night. ** T&T exports must send good to the port on Thursdays in preparation for sailing on Sunday.
**The DR customer has a total of 10 days to remove the container from the port*** It is important to send the customer the respective documents via DHL and/or FEDEX to assist with this process.
The closest port to the city is Rio- Haina and Caucedo is another port next door to the airport.
The following are additional taxes and surcharges which may apply:
Exchange surcharge (recargo cambiario) on all imports (13%)
Luxury tax on some non-essential items (15-60% of CIF value plus duties on certain luxury items)
Foreign exchange surcharge (5% on transactions involving foreign exchange)
Industrialized Goods and Services Tax - ITBIS (16% on all processed agricultural goods and all non-agricultural goods)
Dominican Rep. assesses a VAT (Value Added tax) (Impuesto sobre la Transferencias de Bienes Industrializados y Servicios [TBIS]) of 18% for most products.
Reduced VAT rate:
13% applies for yogurts, butter, margarine, soy oil, peanut oil, sunflower oil, coconut oil, corn oil, sugar, toasted coffee, cocoa and chocolates (possibly to be increased to 16% starting 2016)
Generally exempted from VAT:
Agricultural products, vegetables, certain types of food, rice, tomato sauce; fresh, frozen, dried and canned fruits and vegetables (originating from farming and ranching sector); bread, milk (incl. dried, evaporated, condensed, powdered and pasteurized milk), flour in general, processed cereals, ground coffee; natural water; livestock; fuel; educational materials; medical drugs; among others
Note: Cocoa and chocolates are no longer exempted from VAT assessment.
Positive Perception of US Brands-
Price Sensitivity- due to the high level of poverty in the market and persons living below the poverty line it is important to offer goods of high quality and at an affordable prices
Perception of Law 173
In the Dominican Republic, since 1966 the contractual relations between the parties to any distribution agreement properly registered in the Central Bank International Department, are regulated by Law No. 173 on Protection to the Importer Agents of Goods and Products and its amendments. This Law grants extraordinary protection to the local agents and distributors, in case of unilateral termination by licensor.
The parties to a contract may agree to resolve their dispute through binding arbitration; and,
The exclusivity is not reputed; it must be clearly expressed in the contract.
In the case of the FTA DR-CARICOM, Article IV of the Protocol Implementing the Agreement Establishing the Free Trade Area between the Caribbean Community and the Dominican Republic, establishes that “[…] Law 173 will not apply when the parties expressly agree that it will not.”
There is need to have a lawyer involved insure other aspects of a normal contract are included such as expiry dates etc.
Language Barrier-
Luxury Tax -
Corruption
Lack of transparency and corruption continue to earn the DR low scores in international comparison tables. The country ranked in 93rd place (out of 189 countries) in the World Bank’s “Ease of Doing Business” Index and in Transparency International’s Corruption Perception Index, the DR ranked in 103 place (of 167 countries).
