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Daily News - Monday, 19 February 2007

Telecoms companies to spend RD$2 billion
According to the head of the government's telecommunications institute, INDOTEL, Jose Rafael Vargas, the major telecommunications companies currently operating in the Dominican Republic will be investing as much as RD$2 billion over the coming year as they compete to increase their local market share. With America Movil's purchase of Verizon and the sale of Centennial, local competition is expected to increase, according to Diario Libre. The newspaper quoted Central Bank figures that assigned a 26% growth and a 9% share of GDP to the communications sector in 2006. There are currently 165,000 Internet accounts in the Dominican Republic, meaning that an estimated 1.4 million Dominicans have Internet access. As one of the most connected nations in Latin America, Vargas pointed out that 57 of every 100 Dominicans has access to a telephone and 46% have access to cellular phone services, 80% of which is digital. Listin Diario also reported that the INDOTEL would be installing computer centers and computer schools in each of the country's 32 provinces. The article emphasized the fact that the government agency installed 202 of these centers last year and that this year's plan is for an additional 205 learning and computer centers to be installed.

The bridge that started out cheap
The recently inaugurated bridge over the Higuamo River in San Pedro de Macoris is 628 meters long with a suspension span of 390 meters. It is not the longest, or the largest in the world, but the structure must surely set some record for cost. Originally budgeted at RD$60 million in 1999, the final price announced by the government was RD$1.338 billion, 22.3 times the original estimate. According to National Geographic, the type of construction used for the span is among the "most cost-effective", however, this particular bridge is a case of a lack of foresight and planning on the part of the Ministry of Public Works. At the time of the initial studies, the man in charge of the Santo Domingo Metro, Diandino Pena was Minister of Public Works. According to Domingo Abreu Collado, writing for Hoy, the original budget of sixty million pesos was to have been sufficient to complete the entire structure including "a bouquet of flowers for the First Lady." By 2002, the budget was readjusted to RD$590 million during the administration of then Public Works Minister Miguel Vargas Maldonado who announced that the bridge would be completed by August that year. The work on the span was halted, with everything nearly ready. In order to discover what happened to mandate such a huge increase in the costs, Abreu Collado went to the geological engineer Osiris de Leon, the final consultant on the studies for the structure. While studies were conducted on the west bank of the river, nothing was done on the eastern bank. When the studies were ordered for the east bank, after construction had been begun, the builders were able to verify that the eastern bank, where the support tower was to be anchored, was mostly swampy. As a result, the bridge had to be extended four times the original length in order to reach soils sufficiently strong enough to withstand the stress of such a structure. According to Abreu Collado, the increase in the cost of the structure was justified because "it was not possible to go back and start again". Abreu Collado notes that Osiris de Leon is the same person who has been warning about the lack of preliminary studies for the Metro, which is currently under construction under the same person, Diandino Pena, who gave the go ahead for the bridge construction without adequate studies.
Abreu, in his feature today, speculates that it is most likely that the same rationale for continuing will again be heard again, this time with the metro, that the work is too advanced and there can be no turning back.

24/7 power for some
EdeSur, the electricity distributor for much of Santo Domingo, has announced an increase of its "A" circuits to include customers in the areas around the Republic of Colombia and Monumental Avenues. These fourteen residential areas will now get a 24/7 electricity service because of their good payment track record. Work began yesterday on the necessary connections and three EdeSur officials are supervising its progress. The Inter-Community Council of Neighborhood Watches represented the fourteen residential areas or apartments that will get the new service. During the month of January, the number of "A" circuits reached 73 of a total of 157 circuits. Work began in Villa Claudia and will eventually reach 1,200 homes.

World Bank funds still stuck
One hundred million dollars that are part of a World Bank loan for the energy sector have not been issued due to the fact that the Dominican government has not fulfilled some of the requirements. This was the statement made by Cristina Malmberg Calvo, the World Bank representative in the Dominican Republic. Among those requirements, according to Hoy newspaper, is an increase in collections on energy supplied to customers. The Bank feels that the recovery process has been too slow. Another issue is the formation of independent companies to handle electric transmission and the 22 hydro-electric dams. Malmberg said that the need to change the General Electricity Law was not the reason for the holdup, but she did say that a strong law was needed to regulate the sector.

Recapitalization calls for more bonds
The Chief Executive will submit a proposal to recapitalize the Dominican Republic Central Bank by means of a series of yearly bond issues that will tackle the problems arising from the quasi-fiscal deficit generated interest payments made on certificates of deposits during and after the banking crisis of 2003. Currently the deficit is pegged at RD$165 billion. The legislative proposal will go to Congress next 27 February, and will provide for yearly bond issues over a ten-year period. The first emission will be for RD$36.0 billion. According to Central Bank governor Hector Valdez Albizu, the executive will also submit changes to the Monetary and Finance Law, as required by the International Monetary Fund in order to fulfill the Stand-by arrangement through 2008.

United Nations likes re-privatization
The secretary general of the United Nations Conference on Commerce and Development (UNCTAD) is suggesting that in order to make the electricity system sustainable, it should be privatized again. Supachai Panitchpakdi confirmed that the levels of fraud and non-payment that exist in the Dominican Republic are beyond any possible regulating framework, and this can only be solved by private industry. For the UNCTAD spokesperson, privatization includes transmission and the 22 hydroelectric facilities currently in existence. These two areas are currently the exclusive property of the CDEEE. Maximo del Orbe, the project manager for the Dominican Republic, told El Caribe reporters that illegal connections to the network were a major factor, and a study is due to be completed by the end of 2007 that would provide solid recommendations for resolving these issues. The study will be called the Investment Policy Review.

JCE to pay taxes
Pushed by the declarations made by magistrate Aura Celeste Fernandez, the Central Electoral Board (JCE) has approved Resolution 5-2007 that introduces changes to the Board's salary structure. Beginning immediately, all salaries received, whether the "fixed" salary or the "incentives", will be taxed under the Income Tax Code. This means that the RD$66,000 in monthly incentives will be subject to RD$19,284.30 in tax. The idea of the new resolution is to eliminate any accusations of "a hidden fraud" as magistrate Fernandez was alleging.

A plan to rescue industries
Members of the business sector, together with manufacturers and government officials will meet in Santiago today to discuss how to restore competitiveness to the industrial sector, which has taken some serious hits recently. Just last Friday it was announced that the huge Interamericana Products company was closing its factories in Santiago and La Vega, leaving 10,000 or more unemployed. For several months representatives of the sector have been after the government to do something to relieve the pressures they are under. The meeting will take place at Santiago's PUCMM campus. One of the keynote speakers is Nabil Z. Nasr, a specialist on integrated manufacturing from the Rochester Institute of Technology.

Business owners offer a 5% increase
In the face of a government request to increase salaries, the business community has submitted a proposal to increase salaries by 5% this year, but only for minimum wage earners. The labor representative called the offer "pyrrhic", but he probably did not know the meaning of the word. Rafael Abreu, the labor representative at the negotiations, said that the Central Bank has established RD$18,000 as the cost a family's basic necessities. The current minimum wage is between RD$5,200 and RD$6,400 depending on the job. A 5% wage increase would amount to only about RD$300 more per month. Abreu said that talks would go nowhere if this was all the employers could offer. The last major salary increase came in 2004 when salaries were raised by between 25% and 30% across the board. The pay raise was due, in large part, to the devaluation of the Dominican peso caused by the Baninter collapse when the peso reached nearly 60 to the US dollar. It is currently pegged at around RD$33.5 to the dollar, a figure many businesspeople say is too low to allow the country to compete on the international markets. Union leader Rafael Abreu told reporters that he would attend today's meeting of the tri-partite discussion group out of protocol, because workers' representatives are insisting on a 30% increase for all employees earning under RD$30,000 per month.

Ambassador's comments get heat
Almudena Mazarrasa, the Spanish ambassador to the Dominican Republic, called the investment scenario "worrisome" and with problems in the areas of "judicial guarantees, public safety and corruption." The diplomat said that contracts are often not fulfilled, and that some foreign investors have expressed doubts about the lack of surety in observing some laws. Mazarrasa spoke at the inauguration of the Citizens Information and Guidance Center in Santiago de los Caballeros. According to Listin Diario, the ambassador also referred to public safety issues in this country as well as others in Latin America. El Caribe reported that noted figures from the government's justice system and the Anti-Corruption Department took up the challenge and refuted the diplomat's conclusions. DEPRECO head Octavio Lister pointed out that Spanish investment in the DR has continued and is increasing every year, which seemed to contradict the diplomat's suggestions. Luis Henry Molina, the head of the National Magistrates School, said, "the legal system is strong enough to safeguard any foreign investors." Molina also pointed out that in such cases as the ambassador's allegations, there are certain protocols that need to be observed, and the Spanish diplomat did not follow these conventions.

Mortgage fair sells RD$3.35 billion
According to preliminary reports, the government's commercial banking institution the Banco de Reservas was able to sell RD$3.35 billion during its recent annual mortgage fair. Low interest rates were one of the main attractions leading to the sale of 1,590 housing units at the five sales sites across the country. Apartments, single-family dwellings and villas were all on offer. The Santo Domingo metropolitan area was the leader in sales with 403 units going for RD$992 million. This was followed by the north and northeast of the country, where sales of 424 units generated RD$807 million. There was a great demand for low-income housing, with a 10.66% fixed rate for 1.5 years as an added attraction.

Trump's Cap Cana
Donald J. Trump has chosen Cap Cana in the Punta Cana area for his next luxury resort development. Announced yesterday in New York, "Trump at Cap Cana" will involve the building of a golf course and golf villas, the sale of golf lots, estate lots, a beach club, a condo hotel and residences with Caribbean Sea views. A Trump press release describes the project to be valued at over two billion dollars. The agreement was signed in New York City by Cap Cana's board of directors' president, Ricardo Hazoury and Donald J. Trump, president of The Trump Organization.
The first Trump project in the DR, Trump Farallon Estates at Cap Cana will include 68 estates (of at least 1.5 acres each). The estates will be built within a gated community on top of the highest bluff in the area, at 200 feet above sea level. "This is going to be a magnificent project, and we look forward to developing thousands of spectacular acres into an elite destination that will be known worldwide in the years to come. I look forward to visiting often with my family," said Trump.
Speaking for Cap Cana, Ricardo Hazoury said: "By combining the Trump experience with Cap Cana's natural beauty and the talent demonstrated by our team of professionals, in addition to the DR's stable economy, we are confident that together we will continue to seamlessly create a new standard for tourism, real estate, and hotels for the entire region. We have no doubt that this is a win-win combination and look forward to all that lies ahead."

Fanjul Group in takeover move
The Fanjul Group, owners of Casa de Campo and the La Romana Free Zone as well as the La Romana sugar mill, have acquired Tate and Lyle Canada Ltd., Canada's largest sugar refiner. According to El Caribe, the deal went like this: American Sugar Refining, Inc. (widely known as Domino) has agreed to acquire Tate and Lyle Canada Ltd. (Red Path) for CDN$300 million (US$258 million). Redpath operates Canada's largest cane sugar refinery in Toronto. The majority stockholder in American Sugar Refining (ASF) is Florida Crystal Corporation a subsidiary of Flo-Sun, Inc. that belongs to the corporate group owned by the Fanjul family. Both Flo-Sun and Florida Crystals are run by Alfonso Fanjul, who is chairman and managing director and Jose Pepe Fanjul, the CEO. As well as the operations in La Romana, the Fanjul Group owns and operates four sugar refineries in the United States. Domino Foods is the marketing entity for brands such as Jack Frost, Florida Crystal and C&H, and the new acquisition will oblige an increase in ASF's refining capacity.
Completion of the transaction is subject to customary closing conditions, including Canadian regulatory approvals.

Local tomato production at risk
Tomatoes are an important crop for tens of thousands of people in the Dominican Republic. According to Hoy newspaper, this successful crop is in danger of being eliminated by a flood of cheap tomatoes from huge California agro-business plantations when the country enters the DR-CAFTA agreement. The elimination of tariffs would allow the Californian tomatoes into the DR, effectively doing away with one of the country's most modern harvests. After years of experimentation, mechanization and industrialization, the Dominican tomato harvest is a RD$600 million a year industry that generates over 100,000 jobs. According to Osmar Benitez, executive vice-president of the Dominican Agro-business Council (JAD), a tripartite agreement between the government, the private sector and the tomato growers has successfully pushed forward a program that has been successful in producing high-quality tomatoes for local industries such as Linda, Victorina, Jaja, La Famosa, Baldom and Espalsa, which finance a large part of the harvest each year. Local harvesters around the country are averaging between 18 and 20 tons of tomatoes per acre, according to Hoy. According to Felix Garcia, the president of the association of processors of tomatoes and other crops, local agriculture and industry maintain the Dominican market well supplied with the product.

Bani is thirsty
Community leaders, church representatives and housewives have joined forces to warn about the serious situation in the southwestern provincial capital of Bani. The city is without potable water, and people are paying as much as RD$1,000 per month to purchase water for their homes. According to Listin Diario, most of the blame for this situation lies with the National Institute for Potable Water (INAPA) that, according to the local population, is not maintaining the water pumps needed to supply the city. This water shortage has meant that a new business of water trucks has sprung up, supplying five gallons of "pure" water for RD$30. Like most cities along the Dominican Republic's south coast, Bani was accustomed to drilling artesian wells and pumping the water to tanks where it then flowed to the local population. Nowadays, many of the wells are now polluted with seawater and unfit for human consumption. According to municipal officials, some areas have gone without a piped water supply for over a year, and, as a result, the local population has returned to storing water in cement-lined drums, which has led to an increase in the mosquito population.
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