The Ámbar Highway
The Ámbar Highway
Business Model Description
Public-private partnership for the design, construction, financing, operation and maintenance of transport infrastructures.
Expected Impact
The construction of the Amber Highway will enhance traffic flow and will increased tourism and real estate development.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Cibao Norte
Sector Classification
Infrastructure
Development Need
1) According to the World Economic Forum, the country ranks 79 out of 141 countries in terms of infrastructure quality. 2) The Inter-American Development Bank estimates that the Dominican Republic needs to invest around 5% of annual GDP in infrastructure to close the gap with its regional peers (1).
Policy priority
The country established investment in infrastructure as one of its top policy priorities. Priority projects include the construction of roads, bridges, airports, ports, mass transportation systems, and power grids (2).
Gender inequalities and marginalization issues
The lack of measures to address barriers women face in the infrastructure sector, such as discrimination and harassment, lack of opportunities, education, and training, can limit the country's ability to attract and retain female workers and limit the quality and diversity of perspectives in the sector (3).
Investment opportunities introduction
The government implemented initiatives to encourage private sector participation in the financing and construction of infrastructure, including public-private partnerships and concessions.
Key bottlenecks introduction
Limited availability of financial resources constrain the country's ability to successfully implement projects.
Infrastructure
Development need
For 2021, the Territorial Equity Index indicated that in the Dominican Republic SDG 9: Industry, Innovation and Infrastructure was classified as having a high level of inequality. Where provinces such as Independencia, are with the lowest levels of development with respect to this SDG (4).
Policy priority
The National Development Strategy 2030 establishes as a priority to expand coverage and improve the quality of transport and logistics infrastructure and services, orienting them to the integration of the territory, the support of productive development and competitive insertion in international markets (5).
Gender inequalities and marginalization issues
The lack of infrastructure results in high costs for rural communities, due to the longer distances they must travel to access goods and services. This subsector promotes new businesses and hinders the efficiency of existing ones (6). Currently, the country loses 40 per cent of optimal human development due to existing gender inequalities (7).
Investment opportunities introduction
The National Infrastructure Plan prioritizes investments in the following sectors: Transport, Energy, Water and Sanitation, Solid Waste, Telecommunications, Water Resources and Irrigation, Health and Education, having a total of 1,334 investment programs and projects totaling USD 37,724 million (8).
Key bottlenecks introduction
There are funding constraints, making it difficult for the private sector to participate in infrastructure. Sustainable financing alternatives or funds guaranteed by multilateral institutions (8).
Engineering and Construction Services
Pipeline Opportunity
The Ámbar Highway
Public-private partnership for the design, construction, financing, operation and maintenance of transport infrastructures.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
9,575 km unpaved roads
Of the 18,075 km of the network in 2018, 5,403 km were roads (primary network), 8,672 km were neighborhood roads and 4,000 km were temporary roads and trails. Of the total road network, approximately 8,500 km (47%) are paved and 9,575 km (53%) are unpaved (8).
A total of 171 projects on urban mobility, logistics and connectivity are expected to be executed, representing an investment of a total of US$ $10,153,490,696.00 (8).
The RD VIAL trust managed by the Ministry of Public Infrastructure and Communications has a project de construction of roads and bypasses for a total of 196.1 KMs (9).
Indicative Return
15% - 20%
The DGAPP carried out a prefeasibility analysis of the project's financial model. The results showed that the private sector can recover its investment in 12 years, and reached a maximum IRR of 14.2% in dollars and an internal rate of return of 18.55% within 40 years of use of the road (10).
Investment Timeframe
Long Term (10+ years)
According to the prefeasibility study, the internal return rate to generate return is 14% in 12 years. In addition, the estimated time of the concession contract is up to 40 years (10).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Each year, 3,000 people die in the Dominican Republic because of the traffic, placing the country among the top 5 countries in the world with the highest mortality rates per 100,000 inhabitants. Where 67% of deaths were by users of 2 and 3 wheeled motor vehicles (12).
By December 2020, the vehicle fleet of the Dominican Republic amounted to 4.8 million units, representing an average annual growth of 6.06% (13).
Of the total road network, about 8,500 km (47%) are paved and 9,575 km (53%) unpaved (8).
Gender & Marginalisation
By 2018, only 9.7% of the rural population in the Dominican Republic lives within 2 km of a highway (14).
Expected Development Outcome
Reduce the number of road traffic deaths.
Increase the percentage and mileage of paved roads and venting roads.
Sustainable economic development of the productive sector.
Gender & Marginalisation
Develop sustainable, resilient and quality infrastructure to increase accessibility to safer roads.
Primary SDGs addressed
3.6.1 Death rate due to road traffic injuries
In 2020, the mortality rate due to traffic accidents was 25.98 per 100,000 inhabitants (13).
Improved conditions to achieve road safety (road infrastructure (road infrastructure, road education, road signs and signals) (2).
9.1.1 Proportion of the rural population who live within 2 km of an all-season road
9.7% of the proportion of the rural population in the Dominican Republic lives within 2 km of a road (15).
Reduce the traffic accident mortality rate from 13.8 to 6.9 per 100,000 people (2).
11.2.1 Proportion of population that has convenient access to public transport, by sex, age and persons with disabilities
In 2017, the supply of transportation capacity regulated by the technical office of land transport is a total of 210,902 available spots (16).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Outcome Risks
Extreme Weather Conditions: Construction delays, infrastructure damage and increased costs due to weather events such as hurricanes and storms.
Economic Fluctuations: Sudden changes in prices of construction materials and interest rates, affecting the financial viability of the project.
Changes in Political Priorities: Sudden political decisions that could halt or restrict the project, generating uncertainty as to its continuity and success.
Gender inequality and/or marginalization risk: Possible lack of inclusion and equitable participation of gender and marginalized groups in project planning and benefits.
Impact Risks
Environmental Damage: Possible degradation of the natural environment and local habitats due to road construction and operation.
Change in Social Dynamics: Alterations in local social structures due to the opening of new routes and access to previously isolated areas.
Inequality of Access: Possible improvement in connectivity and access to services for some areas, while others remain marginalized.
Gender inequality and/or marginalization risk.
Impact Classification
What
Businesses in the region will have increased opportunities to offer their products in the local market and competitively engage in the global economy.
Who
It will benefit the hotel development in the Cibao region, as well as the private sector involved in agriculture, manufacturing, and free trade zones.
Risk
The risk of budget overruns may hinder the progress of projects. It is crucial to address and minimize the negative environmental impacts of road construction and its other life cycle stages.
Contribution
Developing high-quality infrastructure to improve accessibility to safer roads, fostering the growth of the productive sectors and contributing to overall sustainable development.
How Much
Increase the tourist offer, reducing the duration in transit which will lower the emission of greenhouse gases.
Impact Thesis
The construction of the Amber Highway will enhance traffic flow and will increased tourism and real estate development.
Enabling Environment
Policy Environment
National Infrastructure Plan 2020-2030: instrument for the preservation of public and private investment with a view to serving as the main tool in decision-making (8).
National Development Strategy 2030: includes the exercise by the national and local public sector of its functions of regulation, promotion and production of goods and services (5).
Law No. 16-95 on Foreign Investment establishes the principle of national treatment for foreign investors and the free repatriation of capital (19).
Financial Environment
Financial incentives: Foreign investors, whether natural or legal persons, have the right to remit abroad, in freely convertible currencies, without the need for prior authorization (19).
Other incentives: Residence Permits for Investment Program, through an agreement with the General Directorate of Migration, having as a prerequisite the Certificate of Registration of Foreign Direct Investment (19).
Regulatory Environment
Law No. 16-95 on Foreign Investment establishes the principle of national treatment for foreign investors and the free repatriation of capital (19).
Law No. 47-20 on Public-Private Partnerships that establishes the regulatory framework that regulates the initiation, selection, adjudication, contracting, execution, monitoring and termination of public-private partnerships throughout the national territory (20).
Law No. 344-43 on Expropriations, which grants the Executive the power to authorize the expropriation of property for duly justified reasons of public utility or social interest (21).
Law No. 64-00 on Environment and Natural Resources which seeks the protection of natural resources, the reduction of their vulnerability, the reversal of recurrent losses due to improper use of the environment and natural resources (22).
Law No. 63-17, on Mobility, Land Transport, Traffic and Road Safety that regulates and supervises mobility, land transport, transit and road safety in the Dominican Republic (23).
Marketplace Participants
Private Sector
Trust Reserve RD Vial and the hired company
Government
General Directorate of Public-Private Partnerships, and Ministry of Public Infrastructure and Contracting.
Target Locations
Cibao Norte
References
- (1) WEF, 2019. The Global Competitiveness Report 2019: https://www.weforum.org/reports/how-to-end-a-decade-of-lost-productivity-growth/?DAG=3&gclid=CjwKCAjwrranBhAEEiwAzbhNtQLtqatLOGe5D2X8Wqg3FbaHiq1hAezZfeg-pUSfUsTRHIH3IANTshoCqNIQAvD_BwE
- (2) National Multiannual Public Sector Plan 2021–2024. https://mepyd.gob.do/publicaciones/plan-nacional-plurianual-del-sector-publico-2021-2024/
- (3) UNOPS. 2018. Género e infraestructura: más mujeres en el sector de la ingeniería. https://www.unops.org/es/news-and-stories/insights/gender-and-infrastructure-can-we-get-more-women-into-engineering
- (4) MEPYD, 2023. Equity and territorial development gaps: Dominican Republic 2021. https://mepyd.gob.do/publicaciones/equidad-y-brechas-territoriales-de-desarrollo-rep-dom-2021 5 ) Law 1-12 National Development Strategy 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (6) JOY 2010. Women in infrastructure works: promoting gender equality and rural development. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_176254.pdf
- (7) UNDP, 2019. In DR persist the inequalities, according to the Human Development Report 2019. https://www.undp.org/es/dominican-republic/news/en-rd-persisten-las-desigualdades-seg%C3%BAn-informe-de-desarrollo-humano-2019
- (8) MEPYD & IDB, 2020. National Infrastructure Plan 2020-2030. https://mepyd.gob.do/publicaciones/Plan-nacional-de-infraestructura-2020-2030/
- (9) MOPC, 2023. Projects MOPC – Fiducia RD Vial. http://rdvial.gob.do/media/1227/proyectos-de-la-fiducia.pdf
- (10) DGAPP, 2021. Evaluation report for declaration of public interest Amber Highway project. https://dgapp.gob.do/wp-content/uploads/2021/04/Informe-de-Evaluacion-para-Declaracion-de-Interes-Publico-Proyecto-Autopista-del-Ambar.pdf
- (11) Road concession Northeast highway: Atlantic tourist boulevard. https://docplayer.es/179025218-Concesion-vial-autopistas-del-nordeste-boulevard-turistico-del-atlantico-republica-dominicana.html
- (12) WHO, 2018. Global status report on road safety 2018. https://www.who.int/publications/i/item/9789241565684
- (13) OPSEVI, 2021. Road Safety Situation in the Dominican Republic, 2020. https://opsevi.intrant.gob.do/wp-content/uploads/2021/12/INFORME-SITUACION-SEGURIDAD-VIAL_2020.pdf
- (14) SDG Commission Dominican Republic, 2023. Indicator 9.1.1 Proportion of rural population living within 2k of a year-round road. https://ods.one.gob.do/Indicador/Index/110?fromMenu=True
- (15) SDG Commission, 2021. Voluntary National Report: Growth with equity and respect for the environment. https://ods.one.gob.do/Publicacion/DownloadDoc/249
- (16) OTTT, 2017. Statistical summary of passenger transport April 2017. https://intrant.gob.do/transparencia/phocadownload/Estadisticas/2017/Resumen%20Ejecutivo%20-%20Estad%C3%ADsticas%20a%20Julio%202017.pdf
- (17) SIUBEN, 2013. Infographic of the Northern Macro Region or Cibao of the Third Socioeconomic Study of Households 2013. https://transparencia.siuben.gob.do/document/Download?id=3736
- (18) SIUBEN, 2023. Analysis of MSMEs in DR a gender approach of the ENHOGAR 2022 module. https://www.one.gob.do/publicaciones/2023/analisis-de-la-mipyme-en-rd-un-enfoque-de-genero-del-modulo-enhogar-2022/
- (19) Law No. 16-95 on Foreign Investment. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-16-95-sobre-Inversion-Extranjera.pdf
- (20) Law 47-20 on Public-Private Partnerships. https://dgapp.gob.do/wp-content/uploads/2020/09/LEY-47-20.pdf
- (21) Law No. 344-43 on Expropriations. https://drlawyer.com/espanol/leyes/ley-344-de-1943-que-establece-un-procedimiento-especial-para-las-expropiaciones-intentadas-por-el-estado-el-distrito-de-santo-domingo-o-las-comunes/
- (22) Law No. 64-00 on Environment and Natural Resources. https://ambiente.gob.do/marco-legal/
- (23) Law No. 63-17, on Mobility, Land Transport, Traffic and Road Safety. https://intrant.gob.do/phocadownload/SobreNosotros/MarcoLegal/Leyes/MARCO%20LEGAL-LEY%2063-17%20SOBRE%20TRANSITO,%20TRANSPORTE,%20Y%20SEGURIDAD%20VIAL.pdf
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- (25) Dominican Republic Senate, 2008. 05203-APPROVAL OF THE AGREEMENT Autopista del Nordeste. https://memoriahistorica.senadord.gob.do/items/26454e12-5fa5-40a0-990a-955612ae44bc
- (26) Welde, M. et al, 2020. Road investments and the trade-off between private and public funding. https://www.sciencedirect.com/science/article/pii/S0739885920300731#sec5
- (27) Kanwal, S., Rasheed, M. I., Pitafi, A. H., Pitafi, A., & Ren, M. (2020). Road and transport infrastructure development and community support for tourism: The role of perceived benefits, and community satisfaction. https://www.sciencedirect.com/science/article/abs/pii/S0261517719302122