It could affect the Dominican Republic's position as the second largest recipient of Foreign Direct Investment in the region.
By Reyna Echenique
Special for El Inmobiliario
The draft bill presented by former minister Pelegrín Castillo, which will be taken up by Representatives Elías Wessin Chávez and Eugenio Cedeño, proposes significant restrictive measures. Among these are the requirement for prior authorization from the Executive Branch for the sale of real estate to Haitian citizens and the obligation to verify immigration status for rentals—measures that could have serious consequences for the foreign investment climate in the Dominican Republic.
A blow to legal certainty
The proposed legislation, which would require prior authorization from the Executive Branch for the sale of real estate to Haitian citizens, would not only affect a specific group of investors, but would also send worrying signals to the entire international investor community about the stability of our legal framework.
Constitutional and legal framework
The draft bill presents direct contradictions with our Constitution, specifically with articles 221 on equal treatment of investment, 51 on property rights and 25 on the foreign regime, fundamental pillars for the security of investments in the country.
Contradiction with the foreign investment law
Current Dominican legislation does not condition investment on the investor's immigration status. On the contrary, Law 16-95 uses investment as a means to obtain residency, with "residency by investment" being one of its most attractive benefits for attracting international capital. This reversal of the legal logic—shifting from "invest and obtain residency" to "prove your immigration status to be able to invest"—sends contradictory signals to the international investment community.
Critical moment
At a time when the Dominican Republic is celebrating its position as the second-largest recipient of Foreign Direct Investment (FDI) in the region, with US$2,374.3 million in the first half of 2024, this legislative initiative could seriously compromise our ability to attract future investments. The timing could not be more critical: the global economy is undergoing a reconfiguration of its supply chains, and Latin America is competing intensely to attract companies seeking to relocate closer to the United States.
Expanded impact
Although the draft bill focuses on the real estate sector, its implications could extend to:
– General investor confidence in the country's regulatory stability
– Country risk rating and cost of international financing
– Reputation as an investment destination in global markets
– Regional competitiveness in attracting new investments
Perspectives and recommendations
With projections to exceed US$4.5 billion in FDI by 2024, the Dominican Republic must jealously guard its reputation as a safe and attractive destination for international investment. Public policies, however well-intentioned, cannot undermine the pillars that have sustained our economic development.
This article opens a series on foreign direct investment in the Dominican Republic.
The author Reyna Echenique is a lawyer, real estate entrepreneur, CEO of Echenique Group, Secretary of the AEI board of directors, specialized advisor in attracting foreign direct investment, graduate of the 2023 ProDominicana diploma on foreign investment and analyzes the impact of public policies on the investment climate.
