Dominican Republic – Vietnam Commercial Trade Center
Trans International Group is launching a commercial trade center in the Dominican Republic as a centralized point of sourcing & distribution for the Caribbean countries for all Vietnam’s manufactured products, which will serves as the preliminary step to establishing official trade relations and possibly diplomatic relationship between the Dominican Republic and Vietnam.
The Dominican Republic is a country located on the eastern side of the Antilles, which shares its border with Haiti, on the island of Hispaniola. The country has a population of nearly 11 million people, with deep cultural heritage, rich scenic landscapes and some of the most beautiful beaches in the world.
The history of Dominican Republic dates back to when Christopher Columbus landed there in 1492, making its Capitol, Santo Domingo, the oldest permanent European settlement in the Americas and Spanish its predominant language used today. Dominican Republic is the 2nd largest country in the Caribbean by land area and 3rd largest in terms of population. However, the country is the most visited tourist destination in the region.
The Dominican Republic has a credit rating of Ba3 with Stable Outlook (*1) as of July 2017, according to Moody’s. Its total GDP is 71.58 USD Billion with a 15,200 USD GDP per capita (*2) for the year of 2016. Up until the second half of 2017, Dominican Republic had seen an average GDP growth rate of 7% for three years straight. Currently, GDP growth is at 3% (*3). The current inflation rate is 4.2% (*4) and interest rate is 5.2% (*5) as of January 2018.
Throughout history Dominican Republic’s economy primarily depended on agriculture as its main source of revenues, with sugar, coffee and tobacco being its main source of exports. However, in recent years the service industry has overtaken agriculture to become its economy’s largest employer due the growth in tourism, construction and development of its free trade zones (*6).
Since Dominican Republic’s entry into the Central America Free Trade Agreement (CAFTA-DR) in 2005 with its Central American neighbors and the United States, the country has been experiencing steady economic growth. The United States is the Dominican Republic’s biggest trading partner, accounting for over 65% of its exports. Exports in Dominican Republic averaged 578.72 USD Million from 1997 until 2017, with a record low of 282.80 USD Million in January of 1997 and reaching an all time high of 968.10 USD Million in March of 2017 (*7).
Due to its strategic advantage being the only Caribbean country to be part of CAFTA-DR, Dominican Republic has since played the role of being the central point of distribution to the surrounding countries in the region. Dominican Republic’s imports have also steadily increased over the years to supplement for materials needed for productions to export as the country’s economy continues to develop.
Imports in Dominican Republic averaged 1.04 USD Billion from 1997 until 2017, with a record low of 445.10 USD Million in February of 1997 and reaching an all time high of 1.69 USD Billion in July of 2008 (*8). Although Dominican Republic did experienced a decline in its economy during the 2008 crisis due to its heavy trade dependency with the United States, the country has since recovered and continues experiencing stable economic development.
Learning from the economic crisis of 2008, Dominican Republic realized in order for it to sustain prosperous economic growth, the country will have to expand its horizon and seek further trade relations with China, Japan, South Korea and other key partners in Southeast Asia. The goal of the Dominican Republic government is to become the supply chain hub of the Caribbean, like what Singapore accomplished in Southeast Asia. With that in mind, Dominican Republic is very receptive towards business proposals that are in alignment with the country’s agenda to expand trade relations and facilitate the country becoming the “Singapore” of the Caribbean.
TRANS INTERNATIONAL GROUP
Trans International was founded on February 2014, as a strategy advisor and business execution & management company on international trade and development, specializing in the US, Latin America, China and Southeast Asia markets. Our team has over 50 years of combined experience in international business development, with focus expertise in industrial & agricultural commodities, infrastructure development, supply chain solution, technology and cross border education.
Trans International’s involvement with the Dominican Republic began on December 2014, when we led a delegation of over 20 business people from US and China to visit and meet with the Dominican Republic government and private sectors to explore potential business investments in various sectors like trading, real estate, tourism, hospitality, mining, tobacco, infrastructure and manufacturing. As a result, Chinese companies are now looking to source cigars and tobacco derivatives from the Dominican Republic through Trans International for their own private labels in China. In addition, Trans International has since formed many key strategic partnerships with dominant local businesses to expand its influence within the Dominican Republic.
Trans International’s CEO, Mr. Ban Tran and SVP, Mr. Guillermo Molina also serve as members of the Advisory Board of University of Southern California Global Supply Chain Management Department (USC GSCM) (*9). In 2017, Trans International was able to successfully facilitate the establishment of joint-academic and joint-research between USC GSCM and Dominican Republic’s top international university, Pontifica Universidad Católica Madre y Maestra (PUCCM). Both universities have signed the MOU to begin joint-research for the feasibility study of the expansion of Puerto De Manzanillo, one of Dominican Republic’s key strategic ports by the Northern border of Haiti, which will be the first of many seaports in Dominican Republic Trans International and its local partners will work on with USC GSCM and the Dominican Republic government.
During the last three years working with the Dominican Republic, Trans International realized that due to the country’s limitation as an island state, the Dominican Republic relies heavily on imports in order to sustain its economy and lifestyle. Although the majority of imports are coming from US and China, we are starting to see many products made in Vietnam enter the Dominican Republic, but only through Panama and not directly from Vietnam. Given the scope of work Trans International is already doing with USC GSCM in infrastructure and supply chain solution for the country, we feel there is a major opportunity for us to create a Dominican Republic – Vietnam Commercial Trade Center (DR-VCTC) to compliment our projects.
The purpose of the DR-VCTC is to consolidate and provide a one-stop-shop solution to the Caribbean market for direct access to all Vietnam manufactured products. Trans International and our local partners/stakeholders have the strategic advantage of already controlling the existing distribution channels to successfully execute the project. We are also willing to invest into establishing a centralized warehouse/showroom in one of the Free Trade Zone in Santiago (the industrial and manufacturing hub of Dominican Republic) to display and directly source all Vietnam manufactured products to be sold in Dominican Republic and the rest of the Caribbean market. This commercial trade center will serve as a pilot model, which once proven successful, will be replicated throughout other countries in Latin America.
|Phases||Description of Work||Timeline|
|Phase 1||Aggregate manufacturers from Vietnam with export capacity to participate in the project by sending samples for display, starting with top 50 most feasible products.||February, 2018|
|Phase 2||Grand Opening and Launch of the DR-VCTC (over 500 local business owners, governments and VN manufacturers will attend the ribbon cutting ceremony).||August, 2018|
|Phase 3||Once we are successful with the preliminary list of products, we can expand on the existing product lines to include everything else Vietnam can export.||January, 2019|
|Phase 4||Once successful and using the DR-VCTC model as proof of concept, we begin replicating the same structure with other countries in Latin America.||January, 2020|
|Phase 5||Utilizing existing successful track records from DR-VCTC, we begin establishing official free trade agreements between both countries on a government level.||January, 2021|
|Phase 6||Once both countries are more familiar with each other and have grown accustom to trading, we can begin diplomatic relationship between Dominican Republic and Vietnam.||January, 2022|
Below are the top 30-product categories Dominican Republic imported in 2016 (*10). The reference link below offers more in depth breakdown of product categories beyond the ones listed. The order listed below is based on imported value in USD.
|14%||Mineral fuels, oils, distillation products||$2.43B|
|10%||Machinery, nuclear reactors, boilers||$1.80B|
|8.4%||Electrical, electronic equipment||$1.49B|
|7.9%||Vehicles other than railway, tramway||$1.41B|
|2.6%||Articles of iron or steel||$466.07M|
|2.5%||Paper and Paperboard, articles of pulp, paper derivatives||$451.00M|
|2.4%||Pearls, precious stones, metals, coins||$421.30M|
|2.1%||Iron and steel||$367.72M|
|1.8%||Optical, photo, technical, medical apparatus||$325.91M|
|1.6%||Tobacco and manufactures tobacco substitutes||$284.69M|
|1.4%||Essential oils, perfumes, cosmetics, toiletries||$241.06M|
|1.3%||Furniture, lighting signs, prefabricated buildings||$226.15M|
|1.2%||Beverages, spirits and vinegar||$221.54M|
|1.1%||Animal, vegetable fats and oils, cleavage products||$195.06M|
|1.0%||Dairy products, eggs, honey, edible products||$182.32M|
|1.0%||Flour, starch, milk preparations and products||$179.97M|
|1.0%||Miscellaneous edible preparations||$178.79M|
|0.99%||Miscellaneous chemical products||$176.48M|
|0.99%||Manmade staple fibers||$175.52M|
|0.96%||Footwear, gaiters and the like||$170.69M|
|0.96%||Meat and edible meat offal||$170M|
|0.94%||Wood and articles of wood, wood charcoals||$167M|
|0.83%||Residues, food wastes, animal fodders||$147M|
|0.78%||Articles of apparels, not knit or crocheted||$139M|
With the strategic advantage of Dominican Republic’s Central America Free Trade Agreement and the country’s goal to be the supply chain hub of the Caribbean, there is a huge opportunity for Vietnam to capitalize by facilitating the establishment of the DR-VCTC. In addition, with the existing local partnerships Trans International already formed in collaboration with USC GSCM to design and expand Dominican Republic’s ports and infrastructure network, collectively we can influence the trade commerce between both countries. The major benefits to Vietnam for cooperating will be:
- Increase exports, which will add to the country’s GDP.
- Ability to utilize Dominican Republic as a platform to establish presence in the Caribbean and Latin American market.
- Ability to leverage off of Dominican Republic’s free trade agreement in the future to assemble and finish products there to ship duty free to USA and other member states of the CAFTA-DR.
Trans International and our local partners have the capacity to handle everything on the Dominican Republic and Latin America side. The roles of the Vietnam side will be:
- Vietnamese manufacturers will provide exclusive distributorships to DR-VCTC in the region for opening up the market.
- Vietnamese manufacturers will provide samples for display in the DR-VCTC for marketing.
- Vietnamese manufacturers will facilitate fulfillment once the orders have been placed through DR-VCTC by our customers.
- Vietnamese government will support the project and enforce all agreements signed between DR-VCTC and Vietnamese manufacturers to ensure both parties fulfill their obligations.
With the right partnership, support and execution, the DR-VCTC has the potential to greatly impact both Dominican Republic and Vietnam’s economy.