The New China of the Caribbean? The Rise of the Dominican Republic as a manufacturing hub

In the post-pandemic world, market dynamics are defined by supply chain disruptions and geopolitical tensions, prompting many companies to relocate operations closer to home.

This strategy, known as nearshoring, aims to enhance logistical resilience, reduce costs, and mitigate risks. Latin America and the Caribbean have emerged as key destinations in this trend—and among them, the Dominican Republic stands out.

The country’s free zone regime, in place for nearly 50 years, has been one of the pillars of this growth. Currently, more than 840 companies operate in approximately 90 industrial parks across the country, benefiting from tax incentives and a business-friendly environment.

Prime location and Ssrong logistics network

The Dominican Republic’s strategic location in the heart of the Caribbean is a major competitive advantage. It is just two hours by air from Miami and around two days by sea from major ports on the U.S. East Coast. This proximity enables companies to meet shorter delivery times and respond quickly to market demands—something that is difficult to achieve from distant manufacturing centers like those in Asia.

The country also boasts robust logistics infrastructure, including eight top-tier international airports ensuring excellent air connectivity. On the maritime front, ports like Caucedo Multimodal and Haina Port are recognized for their high operational efficiency and productivity.

Thanks to this network, the movement of goods to and from the country is fast, secure, and reliable—critical for companies operating under just-in-time production models.

Trade agreements

Location is further strengthened by preferential access to the world’s largest market—the United States. The Dominican Republic is part of the DR-CAFTA trade agreement, which eliminates tariffs on the majority of goods traded with the U.S. and Central America.

In addition, the country has trade agreements with the European Union (EPA CARIFORUM-EU) and other regional markets, significantly expanding export opportunities. This enables a manufacturer operating in the Dominican Republic to serve not only the U.S. market but also to export freely to Canada, Mexico, and Europe—solidifying its role as a multi-regional export hub.

This combination of geographic proximity and trade openness positions the Dominican Republic as a natural bridge between the Americas and Europe for manufacturing.

Modern infrastructure and Ccmpetitive industrial parks

The country has consistently invested in improving its productive infrastructure to support the growth of the sector. Today, there are around 90 active free zone parks in different regions of the country. These industrial spaces offer modern facilities, reliable utilities, and amenities such as water treatment, security, and on-site customs. The availability of ready-to-use spaces enables companies to start operations quickly and efficiently.

Tax incentives and free trade zone regime

A key factor in the country’s appeal is its favorable tax incentive regime, especially for companies operating under the Free Trade Zone system. Law 8-90 provides a 100% exemption from virtually all taxes and duties for companies located within these industrial parks, creating a highly competitive environment for investment and operation.

These benefits include full exemption from income tax, import duties on raw materials, equipment, and machinery, as well as municipal taxes, customs fees, corporate formation taxes, capital increases, property registration fees, and VAT (ITBIS). This legal framework allows companies to invest, scale, and adapt to global market demands while securing sustainable growth.

Macroeconomic stability and a favorable business climate

When evaluating a destination for productive investment, political and economic stability are crucial. In this regard, the Dominican Republic offers a rare degree of certainty in the region. With over two decades of stable democracy and market-oriented policies, the country has positioned itself as an attractive jurisdiction for foreign capital.

According to the Central Bank, real GDP grew by 5% in 2024—reflecting the strength and dynamism of the Dominican economy and reinforcing its appeal as a destination for business expansion.

The country also provides a secure legal framework for investors: Law 16-95 ensures equal conditions for foreign investment and allows free repatriation of capital and profits. Contracts and property rights are protected under the Constitution. Altogether, this creates an ecosystem where launching and operating manufacturing processes is profitable, secure, and predictable over the long term.