WASHINGTON (Reuters) - U.S. companies are expanding and opening new plants in the Dominican Republic as they diversify their supply chains, moves that will help offset the economic impact of the new coronavirus pandemic, the Dominican economy minister said.
Juan Ariel Jimenez told Reuters he expected the Caribbean island nation to boost exports by 5 to 10% in 2021, aided in part by a rise in gold prices, as well as increased production of medical devices and equipment, a key growth sector.
Exports of medical and pharmaceutical products from Dominican free trade zones expanded nearly 4% from January to May, Dominican customs data show, and could expand by up to 10%, according to a survey of 34 companies active in the sector.
Two medical equipment makers, Florida-based Jabil (JBL.N) and the U.S. unit of Italy’s privately-held COSMED, began operations in the Dominican Republic in recent months, said Silvia Cochon of the Dominican National Free Zones Council.
Six others, including Medtronic (MDT.N), are expanding existing operations and adding new lines of business to their work in the Dominican Republic, she told Reuters.
Economy minister Jimenez said he is in talks with two to three additional large U.S. firms in the medical sector about new production facilities, but declined to name them. Positive decisions would add hundreds of millions of dollars to the current foreign direct investment level of over $5 billion, he said.
“We are seeing a lot of interest,” Jimenez said. He said the Dominican Republic was poised to benefit from a global shift to more regional supply chains, given its low labor costs, stable political situation, strong economic fundamentals, good transportation and logistics, and close proximity to the United States.
Many companies in the Dominican Republic, including apparel makers, have shifted gears to produce more N95 face masks and respond to a surge in demand.
Reporting by Andrea Shalal; editing by Grant McCool