Dominican Republic To Host New Financial Centre

by Mike Godfrey, Tax-News.com, Washington

05 April 2006

The Dominican Republic, which saw some notable banking scandals in the past few years, will be the home for a US$850m purpose-built, private international financial centre - The Independent Financial Centre of the Americas.

Mr. Gaetan Bucher, President of the Centre, announced last month that it will have a new legal framework and an independent regulatory structure served by state-of-the-art information architecture. The Centre will house private and
commercial banks and an electronic exchange, called LAIFEX, to clear and settle emerging market debt and other tradable products.

Commented Mr Bucher: 'The Independent Financial Centre of the Americas is being purpose built from the ground up: the legislation, regulation, operating systems and physical infrastructure have been meticulously planned and researched. We are applying the best practice of other financial centres, to create a new model for the 21st century, which responds positively to greater regulatory scrutiny and appeals to market participants operating in an increasingly innovative
marketplace.

'The Government of the Dominican Republic appreciates the benefits our model will generate for the country. It also understands that success is dependent on the dynamism and adaptability of a private enterprise.

'The Centre will support a range of banking services. The Regulatory Authority will grant licenses for other regulated financial services business including investment, commercial and private banking as well as asset management. The IT platform has been designed to underpin all banking transactions to increase the speed and cost efficiency for institutions and their clients.

'The Centre will house a state-of-the-art settlement and clearing centre, called LAIFEX: the Latin American International Financial Exchange. LAIFEX will facilitate primary and secondary debt trading both regionally and
globally. It is a private exchange where members can apply for seats. The custom-built IT platform for the Centre could also support a regional stock exchange.

' The rationale behind the clearing and settlement centre is the USD 2.94 trillion of Latin American and Caribbean debt traded across the globe in 2004, accounting for 63.2 % of total emerging markets debt traded worldwide that year (source: EMTA survey). Currently, there is no central platform to clear and settle locally denominated trades in Latin American debt.

The Congress of the Dominican Republic is being asked to approve a new legal framework which will allow the formation of a new jurisdiction in 2006.

Mr Bucher says that the Dominican Republic was selected for the Independent Financial Centre of the Americas due to its strong economic and cultural links with Latin America, the United States and Europe; its political stability and economic resurgence; well-developed infrastructure and connectivity; and high quality lifestyle.

'Following the 2003 banking crisis and change of Government, President Leonel Fernandez has earned an international reputation for zero tolerance of corruption, and is credited with rebuilding the economy and fostering strong international relations -- all of which provide a solid backdrop for the Independent Financial Centre of the Americas.'

The Dominican Republic, not to be confused with Dominica, has a 9m population. The Republic lies 1,000 kilometres east of the southern tip of Florida, in the same time zone as New York City. The
capital, Santo Domingo, is the oldest city in the new world, where Christopher Columbus arrived in 1492 and the settlement of the Americas began.

The Republic has experienced real annual GDP growth of 6.5% between 1992 and 2000, and growth of 5% forecast in 2006. Growth in 2005 is said to have been 9.3%. Tourism is the country's primary industry and the major source of hard currency -- in 2004 a record 2.9 million visitors generated more than USD 3.18 billion.

The Dominican Republic is a signatory to CAFTA - the Central American Free-Trade Agreement.

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