Located about 1,400 miles south of Miami and halfway between the French islands of Guadeloupe and Martinique, Dominica is an island nation in the Eastern Caribbean. The country has seen its GDP double over the past two decades to reach US$0.6 billion in 2017. However, its exposure to frequent natural disasters such as flash floods and hurricanes can put its economic growth and development plans at risk. In September 2017, for example, Hurricane Maria caused about US$1.3 billion worth of damage to crops and the country’s physical infrastructure, such as road and power supply, bringing much of the country’s economic activity to a halt and impacting its economic growth.
Dubbed “The Nature Island of the Caribbean”, Dominica’s unique natural beauty has helped it become one of the region’s tourism hot spots. Its natural attractions include one of the largest boiling lakes in the world in the UNESCO World Heritage Site at Morne Trois Pitons National Park. With tourism becoming an increasingly important part of the country’s economy, the Dominican Government has increased its efforts to develop the sector, attracting investment in high-end boutique hotels, exclusive villas, eco resorts, health and wellness spas, marinas and attractions for stay-over, excursion and cruise passengers, such as green tourism featuring nature-related activities and experiences.
Another key driver of Dominica’s economy is agriculture, thanks largely to the fertile volcanic soils which are good for cultivating bananas and tropical fruits. In line with the country’s emphasis on attracting investment in sustainable and environmental-friendly manufacturing activities with employment and export-earning potential, the growth of the country’s agro-processing sector has been encouraged. This covers light manufacturing areas such as bulk and bottled water, brewing, seafood, beverages and juice, canned food and fruit processing, and herbal teas and natural medicines.
There is a growing demand for “near-shoring” relocation in Latin America among businesses looking to cater to the North America market. To take advantage of this, the Dominican Government has designated business processing outsourcing (BPO) as a key sector for further development on the island and strongly supports foreign investment in the sector with generous investment incentives. Situated at the centre of the Caribbean in the same time zone as the Eastern US, Dominica is increasingly becoming a location of choice for investment by the BPO industry.
As a member of the Eastern Caribbean Currency Union (ECCU), Dominica uses the Eastern Caribbean dollar as its official currency. Dominica benefits from a number of preferential trade agreements with countries such as Armenia, Australia, Canada, the Caribbean Community (CARICOM) members, the EU, Japan, Kazakhstan, New Zealand, Russia, Turkey and the US. For instance, under the Caribbean Basin Economic Recovery Act, the US offers duty-free treatment for Dominica-origin products.
Since 2013, sustainable and climate-resilient development has become one of Dominica’s leading priorities. The country has facilitated foreign investment, for example, by offering incentives such as tax holidays of up to 15 years (20 years in the case of hotel and resort developments), waivers of import duty for machinery, equipment, spare parts, building materials, raw and packaging materials used for local manufacturing, processing and services, and no restrictions on the repatriation of earned profits. The Citizenship by Investment Programme is another ongoing initiative to attract foreign investment, particularly in the public projects and the real estate industry. More information on the investment environment and the relevant regulations or programmes can be found at the country’s investment promotion agency, Invest Dominica Authority.
The inflows of foreign direct investment (FDI) to Dominica amounted to US$19 million in 2017. According to the mainland Ministry of Commerce (MOFCOM), China’s total stock (flows) of FDI in Dominica exceeded US$3 (nil) million as of the end of 2016, up from US$0.7 (nil) million in 2008. The level of Hong Kong’s trade and investment with Dominica, however, remains relatively insignificant.
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