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Daily News - Wednesday, 09 May 2007

Powerful storm hits Dajabon
What some papers are calling a "tornado" struck downtown Dajabon, on the border with Haiti, and some of the surrounding area yesterday afternoon and injured more than a dozen people. According to El Caribe newspaper, most of the city's electricity lines were knocked down as dozens of light poles and trees pulled the power lines down. Palm trees near the bridge over the Masacre River were uprooted and block after block of the town's roads were littered with debris, mostly electricity poles and tin roofing material. President Fernandez sent personnel from Public Works, the Presidential Social Office, the National Institute for Potable Water (INAPA), and the CDEEE as well as Civil Defense workers. A curfew was in place due to the devastation in the area. The nearby hamlet of Juana Mendez (Oanaminthe) in Haiti was also affected by the violent thunderstorm. No funnel clouds were reported, but the violent winds certainly led people to report a "tornado." An Air Force helicopter that was part of the San Isidro training battalion was damaged, and the training camp itself was severely damaged. Most of the injured were army officers on duty at the frontier that slept in tents. The men had been sent in to reinforce security at the border.

Renewable Energy Law
After years of discussions, after months of legislative sessions and announcement after announcement of its imminent approval, the Renewable Energy Law has been signed into law by President Leonel Fernandez and sent to the Official Gazette for publication. The new law eliminates former Law 2071 that dates from 1949 and that covered the use of ethanol as a fuel. Law 57-07 declares that it is the duty of the state to encourage alternate energy sources, and allows for the development of these sources in the Dominican Republic. The law provides major tax incentives on alternative energy imports and facilities for research and application of new energy technologies.

Bear Stearns investment update
Bear Stearns is bullish on Dominican investment and capital markets issues. "As order has been restored to DR's monetary accounts and overall macroeconomic conditions have improved, benchmark rates have sharply declined, with yields on the Central Bank's 12-month zero-coupon bills, the instrument of choice of institutional investors, sliding to 9.35% at the moment from 12.5% at the beginning of the year and 15.7% a year ago," reports Franco Uccelli, who follows the DR for the Wall Street brokerage firm.
Uccelli writes: "Indeed, the trend has been for yields on one-year wholesale paper, which are negotiated, to converge towards the rates paid on 12-month retail paper, which are set by the Central Bank."
He forecasts: "With one-year retail rates standing at 9%, we believe that it is only a matter of time before institutional rates reach those levels."
Nevertheless, he comments that the reduction in yields is partly being offset, from the perspective of foreign investors, by the revaluation of the Dominican peso, which has appreciated by 3.9% so far this year.
But he observes that "having already dipped to historic lows, we believe that additional upside to local yields is somewhat limited, which makes investing in the DR's local market more a bet on the currency than a play on rates. With foreign capital inflows (exports, remittances, tourism, FDI) expected to remain strong and a tight monetary policy firmly in place, expectations of a further revaluation of the peso seem realistic, in our view. He concludes: "a strong currency will continue to make investing in DR's local market attractive for foreign investors."

Foreign debt at US$8.42 billion
A report issued by the Ministry of Hacienda for the Senate indicates that at the end of the first quarter (31 March 2007), the Dominican foreign debt was US$8,417 million, that is US$38.7 million more than the debt in 2006. Hacienda Minister Vicente Bengoa said that this is 25.6% of the Gross Domestic Product. As reported in Hoy, from January to March, the government received US$242.7 million in disbursements of loans, of which US$138.5 million were used for public works. US$104.2 million financed the National Budget and Balance of Payments. The government is due to pay US$1.15 billion in foreign debt, including US$766.2 million on principal and US$385.1 million for interest payments and commissions. During the first quarter of the year, the government paid US$245.2 million in principal payments and US$120.3 for interest and commissions.

Taxpayers take to the Internet
The director of the Tax Department, Juan Hernandez is hopeful that by 2008, 80% of the tax declarations filed and payment of taxes, an estimated RD$200 billion, would be carried out online. He said that this year, 85% of taxpayers have paid with certified or bank administration checks. But, the trend is for more persons and companies to switch to paying online. He said that during the first quarter of 2007, 88,283 DGII virtual office online payments were received, up from 33,888 for the same period in 2006. Meanwhile, the number of clients paying at banks is up 409%. Payments can be made at the Banco de Reservas, Banco Popular and Citibank.

A cut in taxes?
Faced with billion peso decreases in certain income areas, relief in taxes could be coming. Taxes on tobacco and alcoholic beverages could drop. According to the Minister for Economy, Planning and Development (MEPD), Temistocles Montas, government officials and management from the tobacco and liquor industries are talking about ways to overcome the shortfall in tax collection that just for cigarettes is estimated to be close to RD$1.0 billion per year. In the first third of the year, the government received RD$200 million less than the same period for 2006, and most of the drop comes from the beer sales tax. In a TV interview with Cesar Medina, Montas confirmed that the warnings made by both the tobacco and beer companies have come to fruition. Apparently the government will ask the IMF for "permission" to reduce the taxes on these two high consumption items. When Montas was asked if he knew whether the Presidente Beer brewery would revoke their suspension of their biannual Latin music festival if the taxes were relaxed, the minister said that only the beer company could answer that question.
Presidente beer announced this year it would not hold the very popular Presidente Latin Music Festival because the 2007 tax increases had curtailed their sales significantly.

Plates for motorcycles
The Ministry of the Interior and of the Police has announced the start of the registration and licensing of the more than two million motorcycles currently circulating in the Dominican Republic. The Tax Department says it has the plates available and is now installing offices mounted in containers around the country to distribute the new plates. Drivers of the ubiquitous "motoconchos", the motorcycle-taxis, will be supplied with special vests to identify themselves. This will be a two-phase process. Phase one will include registration and immediate access to license plates if all is in order. Phase two will include temporary documentation if some papers are missing, and these papers will be available for a limited time only. The start-up is expected to be announced on Monday or Tuesday of next week.

Penal Code reform goes to Congress
President Leonel Fernandez has sent changes in the Penal Code to Congress. Changes covering preventive custody, contempt of court, the arrest process and interrogation process are expected. A total of 48 articles of the Penal Code will possibly be modified at the request of the Executive Branch. There are 449 articles in the original law. One of the articles to be discussed is Article 38 that covers mediation whereby the justice department is limited to settlements regarding child support payments, custody, visiting rights, and any aspect not related to family violence. Article 74, which covers justices of the peace, is also under discussion, and the suggested modifications would allow the magistrates to impose up to three years of preventive custody instead of the two-year maximum now in effect. Lawyer and presidential legal advisor Cesar Pina Toribio handed the legislative brief to Julio Cesar Valentin, the president of the Chamber of Deputies.

Free zones go on offensive
The National Council of Industrial Free Zones (CNZFE) and leading business owners will be in the US in search of new business for the battered sector. The Miami Beach Convention Center will be the operations headquarters for the next few days as the free zone operators offer their special package of complete service to the Material World Fair, the showcase for the textile industry. M Group president Fernando Capellan and D'Clase Corporation's Jose Clase are just two of the leading figures in the business group of more than forty persons. On Tuesday, Capellan chaired a round table discussion on the future of textile manufacturing within the free zone system of the Dominican Republic. Carlos Manuel Alvarez, Fernando Flaquer and Micalo Bermudez are other former CNZFE officials that are fighting to bring new contracts to the free zones of the DR. Free zones in the DR have been losing contracts to competition from China. Local adverse conditions, such as high labor, electricity, ground transport, shipping costs have affected local competitiveness.

Hanesbrand closing three plants
The Hanesbrand firm, located at the Industrial Park in Haina, has announced that it will stop producing men's underwear at three locations. This translates into the loss of 1,400 jobs. Kim McAleer, speaking on behalf of Hanes brand said that the company regrets that any employee has to lose their job. Hanesbrand produces underwear for Hanes, Champion, Playtex, Bali, Just My Size, Barely There and Wonderbra. McAleer said that the closure of their Dominican factories is part of an international effort by Hanes brand to consolidate and restructure their operations.

Samana heads growth list
The Samana province heads the latest list of provincial growth in the Dominican Republic. According to the economic index produced by Yellow Pages, Samana, Santiago and Monsignor Nouel are the three fastest growing provinces in the DR. Samana posted a record 27% growth for 2006. In absolute numbers, however, as would be expected, Santo Domingo posted more new businesses than any place else, with 13,600 new businesses registered in 2006, and Santiago was a distant second with 3,381 new businesses. Again, as expected, the provinces with the least growth of business were those along the border with Haiti. According to Ivan Reinoso, the president of the Santiago Chamber of Commerce, most of the growth of Samana is tourist-related. Santiago's growth was attributed to the increase in call centers and the cigar business.

Pork producers object to quota handling
Pork producers are alleging that they cannot hold up against the continual importing of pork pieces and waste products that compete one to one with local producers. The issue appears to be that the Dominican Republic does not have a policy that would compensate local producers and give them equal footing with the importers. The way in which the import quotas are handled is also under discussion. According to members of the National Pork Commission, Jose Alba and Miguel Zaglul, importers are not observing the time lines stipulated in the agreements of DR-CAFTA and thus are depressing the local market for the food products. According to the two officials, "our problem...is the way the imports are being handled. And it is not that we have not warned everyone of this. We did it twice, once during the first round of talks (on DR-CAFTA) and again in Washington when we stopped the discussions when we saw that the intention was to liquidate our sector of production." Apparently there is discord because the treaty allows importers to import containers of whole hogs, but without bones. Instead of 50 whole hog carcasses per container, the de-boned version allows for 200 carcasses to fit into a container. The producers are not worried about production standards, since many of the local pork producers are using state of the art techniques, but their competitiveness is affected by the higher cost of electricity in the country.

Geologist says no volcanoes
Noted geologist Osiris de Leon told reporters that the crack in the ground near Anse Au Pitre, in Haiti, which is emitting a sulphurous odor, is not the result of any volcanic action. De Leon told Listin Diario reporters that volcanic activity on the island of Hispaniola ceased millions of years ago during the continental drift towards the Lesser Antilles. Currently, there are active volcanoes on Saint Vincent and Montserrat. However, there is plenty of evidence of geothermal activities, such as the sulphur springs near Lake Enriquillo, and others in Vicente Noble and Azua. The geologist says that these springs are the result of deep underground waters coming into contact with hot magma, and when these waters come into contact with decomposed organic material, contact with the air produces the unpleasant smells. The sulphur springs can be capitalized for the operation of wellness centers.

Cardinal wants short campaigns
Cardinal Nicolas de Jesus Lopez Rodriguez favors that the presidential campaign be limited to a two week spread. At present Dominicans have to endure at least four months of intense campaigning. Most political parties, nevertheless, get an early start. Lopez Rodriguez also opposes that taxpayers so generously fund the campaigns. "I have always said so and I sustain that I do not agree with the Dominican state giving a cent to any political party for an electoral campaign," he stated, as reported in the Listin Diario.

Police look at three for escape
The National Police is investigating at least three officers in relation to the "escape" of the patrol that is accused of killing three young men last week. According to the Listin Diario, Police chief Bernardo Santana Paez told reporters that a major, a captain and the officer directly in charge of the accused at the jail are under arrest. According to the chief, the Police are looking for lieutenants Roberto Zabala Espinosa, Luis Alfredo Mateo Mota and sergeant Wellington Rodriguez Jimenez, accused of murdering the three young men. Last Monday the forensics report revealed that the three men had been killed with automatic rifles. Reports that the men had been arrested are circulating, but family members say that the Police is holding them. District attorney for Santo Domingo, Jose Miguel Hernandez, said that investigators are still working on the case. Apparently, one of the three victims had a Police record for stealing a truck in 2006. Prosecutors and public figures have condemned the killings as well as the "escape" of the accused.

Felix Sanchez Invitational
Felix Sanchez, the DR's only Olympic gold medal winner (2004, 400m hurdles) will be in Santo Domingo for the IVth Felix Sanchez Invitational that starts this Saturday, 12 May at the Felix Sanchez Olympic Stadium. As reported in the Listin Diario, Asafa Powell, record holder of the 100-meter dash, could also come for the tournament. Regional stars are also expected. Felix Sanchez would compete in the 4 x 400 relay, seeking to help the DR team in its positioning for the Rio de Janeiro Pan American Games.
Felix Sanchez made Dominican sports history for his nearly four-year span that included 43 consecutive victories with 36 finals wins and the 2001 and 2003 World Championship titles, and climaxed with his 2004 Olympic gold medal.
The invitational marks the opening of Sanchez's 2007 season. He says that the 2007 season will not be focused on medals or times but an injury-free campaign.?"I just want to go out here for the love of competition," Sanchez said. "I miss competing and being out there. Winning is not important but being competitive. Don't get me wrong. I am still going to go after a third World Championships but the last two years have taught me patience and to take one race at a time.''
For more information on upcoming events, see http://www.dr1.com/calendar
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