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The Ultimate Guide to......
The Dominican Republic

We interviewed John Schroder of Ascot Advisory Services in April of 2000, in order to ask some very direct and hard hitting questions about the Dominican Republic as a destination choice for business relocation or retirement.  Mr. Schroder has authored The Dominican Republic Report, and has writen a number of popular articles which can be found in various publications.  He is a regular contributor to Roger Gallo's Escape From America on-line magazine.  Ascot Advisory Services provides assistance with regards to business issues, banking, residency & incorporation services. 
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Why The Dominican Republic ?

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Question.  You were the person that said The Dominican Republic is "The Best Kept Secret" as an investment, retirement or business location.  Why do you say this?
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Answer.  I said that a while ago, you have one heck of a memory.  The honest answer is that it is really a "secret" from the perspective of Americans mostly.  Europeans have been coming here and investing for years.  I do not know why this country has been over-looked before.  Perhaps it is the language barrier (Spanish), perhaps it is simply because there has not been much information or general promotion in the past.
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Why I am very positive on the country overall?  Basically for a few reasons.  The country is appealing both from a general standpoint and also with regards to business opportunities as well.  This country offers some of most affordable real estate in the Caribbean, plus it also has not been spoiled.  Mile for mile it has more virgin beach property than any other island in the Caribbean.  Speaking of islands, it is located on the second largest island in the Caribbean. You might say, "Oh that's nice".  Well, it is nice because it offers some of the most diverse topography also.  The mountain regions of this country are beautiful, plus believe or not, they do get frost up on the top of Pico Duarte.  It is cool enough up in the Constanza region to grow cold weather crops, such as apples and a variety of vegetables.  If you travel up to the Mone Cristi area you would think you are in Aruba, complete with cactus and tumbleweeds.  So, no matter what type of environment you prefer, it is here (including beautiful beaches of course)
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Question.  OK, it offers "something for everyone" regarding topography, but people need more than just that as a reason?
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Answer.  Well, you couple that with one of the fastest growing economies in Latin America, high interest tax-free US Dollar banking, low corporate income tax rates, very reasonable cost of living, the ability to operate your business 100% tax free out of a free zone, modern telecommunications, modern conveniences, direct airline flights to Europe & the US........what am I leaving out?
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Question.  Some people think that the Dominican Republic is some "back water" banana republic. Why do you think this is the case? 
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Answer.  Well, I think the Dominican Republic has not done a very good job in the past regarding self promotion.  In fact, the ironic thing is, that is why the country has remained reasonably priced and unspoiled.  You yourself have made the comment that there is not too much information available in English about the country.  Certainly the tourism sector has attempted to increase awareness as the country for vacation, but the banking and business sectors have not done a great job in highlighting the benefits of doing business here.
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Question.  That still does not answer the "Banana Republic" stereotype.
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Answer.  What would your definition be? There are modern shopping malls with stores such as Tommy Hilfiger, Gap, Pizza Hut, Hallmark Cards, plus all of the other "trappings" of American pop culture.  We get first run movies in English the week after they open in New York.  They have Spanish subtitles of course, but what do you want?  Entertainment?  The local cable companies offer over 70 channels.  HBO, Cinemax, CNN, Sports Channel, CBS, ABC, NBC, all in English.  Clubs, Discos, Restaurants?  What do you want to know? 
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Versace has a boutique in the Zona Colonial.  A fairly new Jaguar & Porsche delearship opened in Santo Domingo not too long ago.  The local telephone companies offer digital cell phone service.  What else?  The local supermarkets rival any supermarket in the US or Europe.  You want Heinz ketchup? You want Haagen Daz ice cream? Supermarket Nacional carries Entemann's baked goods and Hostess cupcakes for god sake.  There is nothing to want for or lacking here in the Dominican Republic.  Plus, to answer your question, they also have bananas here too.  Fresh ones, not the kind that are gassed, which is how the fruit importers artificially rippen them in the US. I did not know that myself, but a client who used to work in the fruit industry told me.  Can you imagine that? 
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Question.  You sound angry?
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Answer.  No, I am not angry.  But, the lack of information or the perception of what life is like here is incredible.  Many Americans believe that life ends at the Florida Keys, or that there is no place like the USA.  Believe me, there are plenty of places that can offer a better lifestyle, with respect to a number of things.  In my opinion, it is sad, but the US Government has forgotten themselves.  Many other countries now have the ideals that the US used to have. 

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Question.  What do you mean by that?
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Answer.  I will give you an example.  You probably did not know that the Dominican Republic was one of the few countries to take in European Jews fleeing persecution during World War II.  That is why you will find a number of synagogues up in the Sosua and north coast areas, which is where many had settled.  You did not know that, did you?  More recently, you know about the  war and problems with refugees in countries making up the former Yugoslavia. CNN had news reports everyday about the war and what was going on.  I would bet you did not know however, that the US decided to close its doors to refugees trying to flee the recent Yugoslav war, or whatever you want to call it.
That is something they did not tell you on the news.  This was a war the average hard-working citizen did not want, nor wished to participate in.  The US, land of liberty & freedom, reversed an existing policy regarding visas for citizens of these countries, and in fact refused to offer visas of any kind to holders of Yugoslav passports.  Land of liberty my %&*!@#. 
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The Dominican Republic did not do that. In fact, the Dominican Republic is one of the few places where these people can enter without a visa.  This was the case before, and it is the case now.  Many of these people are highly educated and have high level technical skills.  You decide which of these two countries is demonstrating the ideals of "liberty", "freedom" or whatever you want to call it.
To say you are a "free" country upholding certain ideals is one thing, to actually do it in practice is another.  It is important to me what is done in practice and not just cheap lip service.  So what you have is a Spanish speaking country doing the things the US used to be "famous" for, namely taking in those that need safe refuge.  Ironic, isn't it?
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Question.  So, are you saying that the Dominican Republic is, in a way, the new "America" ?
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Answer. I did not say that. You said that.  But, considering I do believe one can honestly live "free-er" here than in the US, and that one has the opportunity for the type of lifestyle that used to exist in the states, I will not challege you on it. Plus with regards to the legal system and other things, to me, this country makes sense.  Or at least it makes more sense than what is going on in the states regarding taxation, lawsuits in the courts, and a number of other things.
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Question.  Let us get away from politics, but stay with this general theme if we can.  Why do you think there is an interest for Americans to relocate to the Dominican Republic?
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Answer.  Well, let us look at general demographics and what is important to most people.  For starters, there are a number of people in the "baby boom" generation at a point where they would like to retire, but cannot do so in the US due to simple economics.  I mean, many people are at the point where they have accumulated US $ 100,000 - US $ 200,000 or much more with regards to assets.  If you count sale proceeds on your home (after you pay down your mortgage), IRA accounts, 401K plans, etc. many people are in this ballpark.
In addition to this, when you consider that many people also are tired of the
"rat race" and want to simplify things, this is another very compelling reason.
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Now, ask yourself a question.  Can you retire or at least live off the interest on
US $ 100,000 or even US $ 200,00 in the US right now?  The answer is no, but you can do it in the Dominican Republic.  Everything is a function of what kind of lifestyle you want of course, but it is safe to say that you can enjoy a comfortable lifestyle on US $ 2,000 per month.  Not a lifestyle of the "rich and famous", but you can certainly have a better life on this right now in the DR than in the US for the same monthly income.  Plus, you have a number of other benefits that I guess we can cover with some of your other questions.
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Question.  You mentioned that real estate was reasonable and that housing is affordable.  Can you be more specific? 
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Answer. Well again, many of these questions can only be answered with a question to the client with regards to what they want.  The meaning is, you will certainly find higher priced properties marketed in English to the tourists or foreigners. In many cases, these are "upper end" apartments or homes that Dominicans think would only appeal to "wealthy foreigners".  For some people that want this type of property at that type of price tag, it is here.  What is also available are some very nice homes and apartments than can be purchased in the US $ 70,000 range.  If you are an American coming from a part of the US with similar real estate prices, this may not seem like a bargain.  However, Santo Domingo is a capital city with over 3 Million people in population.  Plus it has all the things one would expect from a capital city.  An international airport, all sorts of business services, shopping, the fine arts, theaters and museums.  So, if you use Chicago, San Francisco, Boston, Salt Lake City or any other major city as a point of reference, then you can understand the comparison or at least why I say it is a "bargain".
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What I am talking about are often new homes in some of the residential sections of the city.  In the case of home or apartment rentals, you can find some very nice two or three bedroom homes for rent in residential sections for US $ 300.  You can also find very nice two or three bedroom apartments in a "luxury" building for US $ 700 or so.  Take it a step further, and you can certainly find "luxury" apartments marketed for rent in English with price tags of US $ 2,000 per month.  Do you want to pay the $2,000 or are you happy renting a nice home in a residential neighborhood for much less?  Once again, everything is in direct relation to what you want.  But the point is that just because the rent is "low", it does not mean such a home or neighborhood is not a very nice place to live.  In fact, the opposite is true.
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Question.  Why the large difference in rents?
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Answer.  Very simple, everything costs more in English.  Look, there are properties marketed to tourists or foreigners and there is the local market. The real market is very different.  Many people in this country would be happy enough to even earn the equivalent of US $ 2,000 per month - let alone pay this in rent.  There are some very, very wealthy people in this country.  But believe me when I tell you that the average middle class family cannot afford to pay US $ 1,000 or more in rent.  The problem many Americans have is, they contact Remax or one of these other real estate franchises, that may have information on the Internet or elsewhere is English.  Then they see the rental rates quoted and think that this is the market.  There is a development out in Juan Dolio where you can buy a home on the golf course for US $ 300,000 or more.  I think they are selling the building lots in the US $ 75,000 range - and I am not talking about a great deal of property either.  Its more like a postage stamp.  If this is what you want, then go ahead.  But this is not typical of the local middle class or even "upper" middle class housing market.  With regards to rentals, the aggregate average is the US $ 350 to US $ 500 range.  And these are nice living accommodations.
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Question.  What do you have against Remax?
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Answer.  I have nothing against Remax or any other company.  In fact, I wish them well.  The point simply is, if they or anyone else are marketing in English, who are they marketing to?  Plus they work off of commission.  There is no incentive to show the lowest priced apartment or home to a client.  The incentive is to show the higher priced properties because the commission in higher. This is the way things are anywhere you go.
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Question.  Is it not true that the power goes out all the time?
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Answer.  The power used to go out everyday and it still happens, but it is getting better.  In fact, that is one factor I did not mention regarding apartment rentals.  The "luxury" or higher priced apartments will most likely be in a building that offers a 24 hour backup generator system, 24 hour security, etc.
If you rent a single family home in a residential section, you will want to get an
"invesor" or battery inverter system for the house.  They cost about US $ 1,500 or so and can mean the difference of having electricity on a permanent basis or not.  In my opinion, even if you have to buy such a system, over time you are still saving money in comparison to a "luxury" rental that comes with an independent generator for the building. 
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The problem in the past was that the power utility was government owned.  It has very recently been privatized and I have already seen a difference.  The reason why there are "brown outs" is that the proper investment into new higher capacity electrical generating equipment was not made.  Santo Domingo uses approximately 55% to 60% of the country's output, yet they were using the same equipment as before when the city population was half of what it is today.  I think, as we have seen with other government owned utlilties in other countries, it is far easier to view the utility as a cash cow to support revenues than it is to view it as a business than requires reinvestment.  But, things continue to get better and I am very happy with my initial instincts regarding the future for this country.
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Question.  You said something about 24 hour security should you rent in a luxury building.  Does someone need security? Is there a crime problem?
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Answer.  If you think any city in the world with 3 Million people in it has no crime, you are kidding yourself.  I am not going to tell you that crime does not exist.  It exists, but I feel safer here than many other places.  I know of someone that spent time in San Juan, Puerto Rico - - and they will take Santo Domingo over San Juan any day.  Its funny, but there is a sort of rivalry between Puerto Ricans and Dominicans.  Puerto Ricans look down on Dominicans, but the truth is they cannot hold a candle to them.  Puerto Ricans should take a good look in the mirror.  San Juan is no comparison to Santo Domingo.  The minute you leave...What do they call it?...The Condado or Coronado area where the luxury apartments are located?  Anyway, the minute you leave this area you take your life in your hands.  I have never, ever felt this way in Santo Domingo. You can walk around Santo Domingo's "Old Town", the Zona Colonial without a problem.  If you leave San Juan's "old town" with your wallet still in your pants pocket, consider yourself lucky.
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Question.  What brought up the topic of Puerto Rico?  What is this about Puerto Rico vs. The Dominican Republic?
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Answer.  Well, I brought it up just as a comparison.  We are here to talk about the Dominican Republic. 

Question.  Lets get back to the DR. So you think that Santo Domingo is a safe city? There have been comments made about the Dominican Republic on the topic of crime.
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Answer.  Well, where did you read it?  Who did you hear it from? Puerto Ricans? The US State Department "warning notices" about foreign travel?  I want to know who writes these things. Some bearaucrat who has never traveled or even been to the country being written about.
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Look, tourism is one of the current mainstays of the local economy.  From my experience, Dominicans generally go out of their way to make sure that tourists are well treated.  This is in stark contrast to Jamaica.  If any country should be flushed off the map, it is Jamaica.  Of all the countries in the world I have been to, Jamaica has got to be the worst place with regards to crime against tourists and the general treatment you receive.

Is there crime in the Dominican Republic? Sure there is crime, but anyone I know of that has had a problem admittedly did something foolish.  That is always my first question when I hear about someone that was robbed or whatever.  Why is it that people loose their common sense when on vacation or when visiting a foreign country?  Of all the expats that have told me stories of being robbed, and believe me it is only a few, in all cases it was the same story. Drunk, walking around someplace 2:00 or 3:00 AM in the morning in a neighborhood that they were not familiar with.  I have been to London a few times and generally consider London to be safe city, but I would not go walking around Picadilly Circus 3:00 AM blind drunk either.
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Question.  What is the story with banking and investments in the Dominican Republic?
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Answer.  That's a very open ended question.  What do you want to know?
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Question.  What type of accounts are available? What are the minimums? Is it safe to bank in the Dominican Republic? 
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Answer.  Well, the country does have their own currency, the Dominican Peso, which is converted freely on the open exchange market.  So, of course, one may open a savings or checking account in Pesos.  The real benefit however are the US Dollar savings accounts, bank certificates of deposit and 90-day commercial paper.  Most people do not know that US Dollar interest rates are higher in the Dominican Republic, plus interest from such investments is tax-exempt. 
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As an example, it is not difficult to find a 90 day time deposit in US Dollars paying about 10% or more.  Couple that with the fact that the interest is tax-free, and you can easily see where the appeal is for investors. 
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Depending on what type of account you open, most banks have a minimum opening balance of US $ 500 for a Dollar savings account and 1,000 or 2,000 Pesos for a Peso account (about US $ 100 or so).
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Question.  What about checking accounts in Dollars?  How does someone access their funds?
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Answer.  US Dollar checking accounts are not available at the moment, with the exception of one bank we work with.  Some of the other banks that we have spoken with are in the process of putting together a program to offer US Dollar checking accounts in the near future.  There are mechanics involved in doing this, which I will not bore you with, but this is something in the works.
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With regards to having access to funds; clients can obtain US Dollar checks which are drawn from a US Dollar correspondent account in the US, they can arrange for a wire transfer, and they can access their funds via a Bank ATM debit card.  The ATM cards are tied into the clients Peso account, but this simply means having funds moved over as they need it.  This is not a problem, and the ATM cards can be used at any "PLUS" or "CIRRUS" teller machine world-wide.
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Question.  What about the safety of the banking system?  Is there account insurance protection? 
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Answer.  This is the number one banking question I get from Americans.  Many people are hung up on FDIC insurance.  If you going to compare the banking systems of two countries, then you need to compare "apples to apples".  First of all, there is no formal depositor insurance program in the DR. There is no formal governmental deposit insurance in most countries.  However, FDIC insurance is not what you think it is either.  Remember the "Savings & Loan" nonsense a few years back in the US.  Remember FSLIC, the "sister" US government insurance program which was meant to protect depositors?  What happened?  How many banks actually failed? Less than 20% of all the savings & loans in the country?  Yet FSLIC could not handle it.  The government had to issue special zero-coupon bonds called "REFCO" bonds, and merge the FSLIC into the FDIC.  Who is paying for that? The American tax-payer, along with the other 5 Trillion Dollars worth of US government debt.  The same people you trusted to run the government FSLIC insurance program are responsible for FDIC.  As a physically sound insurance company, it is a joke.  As a phychological security blanket to prevent people from making a "run" on the bank, it is a huge success.
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Question.  You think the US banking system is not sound?
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Answer.  I did not say that.  But when you take this discussion about FDIC insurance out of the picture, and compare direct government oversight of the banking industry, then you have a true comparison.  When discussing the general topic of "offshore banking" or simply any banking outside the US, some people do have misconceptions.  First of all, It is not so easy to get a banking license in this country.  Take that in comparison to other English speaking Caribbean Islands where they seem to just give banking licenses away.  Most people that have experienced problems or have lost money regarding an "offshore" bank, were people involved with banks or firms in places like Montserrat, Antigua and other English speaking jurisdictions.  I do not want to paint every country or even every situation with the same broad brush, to do this is not fair.  But the point is that Americans especially think banking is better or safer in a certain jurisdiction simply because the local language is English. This is foolish, and history proves otherwise.

Second, make a comparison to how the central bank monitors banking and to what kinds of maintenance deposits are required. 
 


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Question.  What about corruption?  What is it like to do business in the DR?
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Answer.  Let us take these two issues separately.  First, let me make a comment about corruption, which is again the same nonsense published on these US State Department "alerts". 
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The city council and local business leaders of Salt Lake City, Utah were recently caught trying to bride the Olympic selection committee so Salt Lake would win the bid as "host city" for the Olympic games.  You remember?
There was a very popular mayor in Erie, PA they used to call "Mr. ten percent".
As it turned out, if you had a project that required the approval of the mayor's office, you needed to pay 10% of the projects "value" or contract value to the mayor's wife.  More specifically, you needed to pay the wife's "promotion" or "public relation" firm.  No payoff, no approval.  The wife of a top US military officer, sent to "fight the war on drugs" in Columbia, was caught smuggling cocaine to the US through the US embassy's diplomatic mail bag.  Of course the military officer knew nothing about it (I guess he also smoked pot with Clinton, but did not inhale either).  There is a US Embassy employee I know of that sells visas, and don't even ask what embassy or what country this person is located in because I will not tell you. In any event, the going rate is about
$20,000 for a US multiple entry visa.  Apparently he feels the government retirement pension he is due will not be enough, so he is funding his retirement this way.  US government or local government employees each and every one of them.
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So, the point is, why don't you ask me if the Dominican Republic is as corrupt as the United States?  I do not have a definititive analysis, but I would guess about the same.  How's that for an answer.
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With regards to doing business, I do think this country offers some of the best opportunities available anywhere.  Many Americans have a tough time in Latin America because they do not understand one basic thing about Latin Americans.  Europeans understand quite a bit better.  That basic premise is this:  Family and reputation is more important than money.  It's that simple.
Latin Americans do not care how much money you have, where as the only thing Americans care about is money.  That is not to say Dominicans do not like making money, everyone wants to make money no matter what country you are in.  But there are certain social factors at work which you must understand.
If you are in Japan and you want to do business with the Japanese, understand what is important and the local business culture.  If you are doing business in Latin America, then understand their business culture.  It is not better, it is not worse, it is just different.  Just understand it and you will do fine. 
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Question.  Why are you so enthusiastic about business in this market?  You seem to do a better job selling this country for business than the government.
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Answer.  Well. the truth of the matter is, I really do not have to sell anything.  All you have to do is look at all of the stores and businesses that have opened within the last two years alone to get an idea of what is going on.  The local economy is doing well, there is a growing middle class, and the government is spending money on new roads and infastructure.  There are even plans for a new monorail system in Santo Domingo.  How's that for a "Banana Republic"!  A monorail system.  Spanish construction firms, French companies and other European companies are coming in here full force.  Why aren't they going to Puerto Rico or elsewhere?  Why are they coming to the DR?
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If you do not have an interest in the local market, you have the opportunity to set up a business in one of the free zones.  The Dominican Republic is an ideal geographic  location for exporting, plus your free zone business has a twenty exemption on taxation.  Where in the world can you start a new business or relocate an existing one and enjoy low labor costs, low operating costs and tax free business profits.  So, what is there not to like about this country as a place for business?  Plus, the people are actually nice to you here.  Some other countries have free zones.  The Cayman Islands has free zones, but the costs are double what they are here.  Do you want to speak English and pay double, or do you want to learn Spanish and pay less than half?
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Question.  So basically.....You like this country?
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Answer.  Yes...... You could say that. 
Interested in hearing more about how you can move your business to a tax-free zone or earn high tax-free interest in a US Dollar account?  Contact Ascot Advisory... info@ascotadvisory.com    Tel. 809-334-5387   or   809-756-1917
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