By Joan Feliz Valoys
Special for El Inmobiliario
Permitting in the Dominican Republic has become one of the main bottlenecks for real estate development. In a country where construction represents approximately 10% of GDP and generates more than 300,000 direct and indirect jobs, according to Central Bank data, the lengthy and cumbersome permit approval processes are slowing the sector's growth and, consequently, affecting investment, employment, and the housing supply.
Currently, real estate developers face a fragmented, bureaucratic, and inefficient system where obtaining the necessary permits can take between 12 and 24 months, depending on the project's location and size. Compared to other countries in the region, where procedures typically take between 6 and 12 months, the Dominican Republic lags behind, leading to cost overruns, discouraging investment, and slowing down the execution of projects that could boost the economy.
This problem not only affects large investors and private developers, but also negatively impacts key sectors such as tourism, affordable housing construction, and commerce. Reform is urgently needed to streamline processes, reduce discretionary power, and eliminate unnecessary obstacles to ensure sustainable and competitive development.
The permitting labyrinth: An unnecessary obstacle
The permitting process in the country involves multiple government entities, each with its own requirements, response times, and methodologies, making the permitting process a monumental challenge for developers. The main institutions involved include:
Ministry of Environment and Natural Resources: Issuance of environmental permits, which can take up to 18 months to be approved, depending on the impact of the project.
Ministry of Public Works and Communications (MOPC): Approval of road plans, access and construction permits in highways or strategic areas.
Municipal councils: Issuance of building, alignment and land use licenses, with processes that can take between 6 and 12 months, depending on the municipality.
Ministry of Tourism (Mitur): In the case of tourism projects, additional approvals are required, with waiting times that can exceed a year and a half.
General Directorate of Internal Taxes (DGII): Processes related to tax payments, land transfers and other tax-related matters.
One of the main problems is that these entities lack an integrated platform for managing all permits simultaneously. Instead, developers must contact each institution separately, submitting the same documentation multiple times and facing long waits with no clear response timeframe.
Added to this is the lack of digitization, since many processes still depend on physical documentation and in-person procedures, which not only delays time but also increases administrative costs for developers.
The economic impact of inefficient permitting
The World Bank, in its "Doing Business 2020" report, ranked the Dominican Republic 115th out of 190 countries in ease of doing business, highlighting permitting processes as one of the main obstacles. An inefficient permit approval system has direct consequences for investment and economic growth
1. Disincentive to foreign and domestic investment: Investors seek countries with streamlined and transparent processes. In countries like Panama and Costa Rica, permit approvals are much faster, leading some capital to migrate to these markets.
2. Increased project costs: Delays in obtaining permits generate additional financial costs, as developers must assume extra expenses for bank interest, land maintenance, and other operational charges.
3. Persistent Housing Shortage: The Dominican Republic has a housing deficit of over 1 million units, according to the Dominican Association of Housing Builders and Developers (ACOPROVI). If building permits were expedited, more social and middle-income housing projects could be completed more quickly.
4. Job losses and economic dynamism: Construction is one of the sectors that generates the most jobs in the country. Every delayed project means hundreds of workers are unemployed for months, affecting the economy of thousands of families.
Success stories in the region: Role models
Several Latin American countries have implemented successful reforms to streamline permitting processes and encourage investment:
Chile: Implemented the "DOM en Línea" digital platform, which allows for the virtual management of building permits with pre-established response times. As a result, approval times were reduced by 40%.
Colombia: Applied the concept of "express licenses" for projects with low environmental and urban impact, reducing approval times from 12 months to 6 months.
Mexico: In cities like Monterrey and Guadalajara, one-stop shops for procedures were established, integrating all institutions in one place, which has reduced bureaucracy and corruption.
These examples demonstrate that, with political will and the use of technology, it is possible to transform the permitting system to make it more efficient and competitive.
Proposals to modernize permitting in the Dominican Republic
To address this problem, urgent measures are needed to facilitate obtaining permits without compromising compliance with regulations and standards. Some key solutions include:
1. Implementation of a digital one-stop shop: An online system where developers can manage all permissions in one place, with real-time tracking and set response times.
2. Maximum response times: Deadlines must be established for each institution. If the deadline expires without a response, the permit must be automatically approved by tacit approval.
3. Automation of processes and elimination of redundant procedures: Digitize and simplify forms, eliminating duplication of requirements between different entities.
4. Greater transparency and control: Implement audit and accountability mechanisms to prevent discretion and corruption in the approval of permits.
5. Reform of municipal regulations: Unify criteria in city councils so that requirements are homogeneous throughout the country and do not vary from one municipality to another.
Conclusion
Real estate development in the Dominican Republic has great potential to continue boosting the economy and improving the quality of life for its citizens. However, permitting processes remain an obstacle that hinders investment and increases project costs.
If the country wants to solidify its position as an attractive destination for investors and maintain sustained growth in the construction sector, modernizing its permitting system is essential. Implementing a digital one-stop shop, establishing maximum response times, and increasing transparency are urgent changes that would benefit the entire sector.
It is time for the government and the relevant institutions to recognize that the current permitting system does not meet market needs and that, instead of being a hindrance, it should become a facilitator of development.
The author is an MBA, a specialist in Digital Marketing, and Operations Manager at Constructora Incaribe, with more than 10 years of experience in the construction and tourism sector.
