Inclusive and sustainable manufacturing and assembly of goods

Inclusive and sustainable manufacturing and assembly of goods

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Inclusive and sustainable manufacturing and assembly of goods

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Country

Dominican Republic

Sector

Resource Transformation

Sub Sector

Industrials

Indicative Return

10% - 15% (in IRR)

Investment Timeframe

Short Term (0–5 years)

Market Size

> USD 1 billion

Average Ticket Size (USD)

USD 1 million - USD 10 million

Direct Impact

Responsible Consumption and Production (SDG 12)

Indirect Impact

Industry, Innovation and Infrastructure (SDG 9)

Business Model Description

Expand manufacturing and assembly centers with advanced technology, focused on the production of consumer goods and components for export with a focus on inclusion and sustainability, taking advantage of the country's strategic location and its labor force.

Expected Impact

The adoption of advanced technologies could result in a decrease in the demand for unskilled labor, affecting those who depend on traditional jobs.

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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Disclaimer

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Country

Dominican Republic

Region

Cibao Norte
Cibao Sur
Cibao Nordeste
Cibao Noroeste
Valdesia
El Valle
Enriquillo
Yuma
Higuamo
Ozama

Learn more

Sector

Resource Transformation

Development need
The most evident unsustainable production and consumption patterns have been the destruction of forests, severe damage to rivers as a result of deforestation and aggregate extraction activities, contamination of aquifers by sewage and agrochemical waste, inadequate solid waste management, and sustained dependence on hydrocarbons as a primary energy source (1).

Policy priority
The policy of environmental sustainability and climate change in an island country is aligned with the fourth strategic axis of the National Development Strategy (END), which seeks: "An Environmentally Sustainable Production and Consumption Society that Adapts to Climate Change" (2).

Gender inequalities and marginalization issues
Women and marginalized communities often face limitations in access to resources and economic opportunities. The percentage of poor women has increased compared to men, and this gap has intensified as of 2018 (3). Specific approaches are needed to empower these populations and address systemic discrimination.

Investment opportunities introduction
The country can attract investment in agro-industrial processing and sustainable mining. Investment in sustainable technology and practices in agriculture would increase productivity and product quality. Investment in clean technologies in mining could minimize environmental impact and maximize value added.

Key bottlenecks introduction
Challenges include lack of adequate infrastructure, lack of access to finance for small producers, and the need for technical capacity building.

Sub Sector

Industrials

Development need
The country is seeking to boost industrialization to diversify its economy and generate employment. Dependence on sectors such as tourism and agriculture poses economic vulnerabilities. Industrialization can increase domestic production and reduce imports of manufactured goods.

Policy priority
The executive branch created Decree 588-20, which declares industrialization a national priority and creates and integrates the Presidential Roundtable for Public-Private Industrialization, on October 28, 2020, with the purpose of boosting the competitiveness and productivity of the industrial sector and free trade zones (4).

Gender inequalities and marginalization issues
The representation of women in the industrial sector is still low. According to ILO data, in 2019, women represented approximately 40% of the total number of employees internationally; however, only 28% of employed women were in sectors such as mining, construction, public services and manufacturing (5).

Investment opportunities introduction
Industrialization offers opportunities in the production of consumer goods, advanced manufacturing, and technology with a focus on sustainability and inclusion. Investment in infrastructure, job training, and adoption of modern technologies can boost competitiveness and growth in the sector.

Key bottlenecks introduction
Challenges include lack of adequate infrastructure, shortage of skilled labor, and the need to improve energy efficiency. In addition, bureaucracy, and lack of access to financing can hinder industrial development.

Industry

Containers and Packaging

Investment Opportunity Area

Inclusive and sustainable manufacturing and assembly of goods

Business Model

Market Size and Environment

Market Size (USD)

> USD 1 billion

Critical IOA Unit

The country has 6,920 local manufacturing industries (6).

In terms of foreign investment, the commerce and industry sector contributed 12.6% in terms of Foreign Direct Investment (FDI). Exports from free trade zones represent 55.4% and from local industry, 21.4%. The industrial sector has 9.9% of the employed people (7).

Indicative Return

IRR

10% - 15%

The economic and political stability, geographic location, openness, and incentives for foreign direct investment, make it possible for a manufacturing and assembly company in the country to obtain an Internal Rate of Return (IRR) between 10 and 20% on average.

Investment Timeframe

Timeframe

Short Term (0–5 years)

Companies in the industrial sector require 3 to 5 years to generate financial returns. This implies that they must obtain public permits, develop infrastructure, supply chains and personnel training (8).

Ticket Size

Average Ticket Size (USD)

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

High initial costs to design and develop infrastructure for the value chain of the manufacturing company that wishes to set up in the country.

Market - High Level of Competition

This business model operates in a market with multiple players offering similar and competitive alternatives, so cost reduction strategies will be key to maximize the profitability of the business models.

Sustainable Development Need

Reducing waste and environmental pollution: Traditional manufacturing generates a significant amount of waste and pollutants. The adoption of sustainable assembly practices and the use of recycled materials can reduce waste generation and pollution.

Unemployment and socioeconomic inequality: Lack of employment and economic opportunity affects diverse communities in the country. A business model that includes training and employment for people in vulnerable situations can contribute to reducing unemployment and social inequality.

Threats to biodiversity and natural resources: Unsustainable exploitation of natural resources and environmental degradation threaten biodiversity and long-term sustainability.

Gender & Marginalisation

Manufacturing and assembly of sustainable goods can provide employment and training opportunities for women and marginalized groups in rural and urban areas.

Youth participation: Incorporating youth in the sustainable manufacturing and assembly process not only addresses the lack of employment opportunities, but also fosters a more sustainable outlook in the next generation.

Expected Development Outcome

Increased the percentage of companies that recycle their waste from 30% to 39% and have become more efficient in the use of water and energy in industrial processes.

Generated employment for women, youth, and marginalized communities, reducing the unemployment rate.

Gender & Marginalisation

Provided employment and training opportunities for women, increasing their participation in the labor force, improving their financial stability, and promoting gender equity in the workplace.

Increased the participation rate of young people in productive activities.

Primary SDGs addressed

8 - Decent Work and Economic Growth

8.5.2 Unemployment rate, by sex, age and persons with disabilities

Current Value

According to data from the National Statistics Office, the unemployment rate for women in 2021 is 12.10% and 3.9% for men.

Target Value

Increased the percentage of companies that recycle their waste from 30% to 39%

12 - Responsible Consumption and Production

10.2.1 Proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities

Current Value

According to data from the National Bureau of Statistics, as of 2022, women have been more affected than men, 14.30% and 12.50% respectively with respect to indicator 10.2.1. below 50% of median income, broken down income, broken down by sex, age and sex, age and persons with disabilities

Secondary SDGs addressed

5 - Gender Equality

9 - Industry, Innovation and Infrastructure

15 - Life on Land

Directly impacted stakeholders

People

An inclusive and sustainable business model can provide employment and training opportunities for women and youth, improving their economic participation.

Gender inequality and/or marginalization

Marginalized groups such as rural communities can gain employment and training, helping to reduce the economic and social gap.

Planet

The adoption of sustainable assembly practices can benefit local ecosystems by reducing pollution and resource exploitation. This impacts the health of biodiversity and water quality.

Corporates

Companies generate profitability through their sustainable and inclusive business models.

Public sector

Foreign direct investment captured in taxes.

Indirectly impacted stakeholders

People

Workers in the manufacturing industry can experience improved working conditions and safety in a sustainable assembly model.

Corporates

The business model can benefit suppliers of recycled and sustainable materials by increasing demand for these inputs in the supply chain.

Public sector

The public sector can benefit from job creation and positive impact on the economy through the promotion of sustainable business models.

Outcome Risks

If adequate control measures are not put in place, competitors could emerge that do not adopt sustainable and inclusive practices.

Consistent sourcing of recycled or sustainable materials could be dependent on third-party availability and pricing, which could result in instability in the supply chain.

Gender inequality and/or marginalization risk: The adoption of advanced technologies could result in a decrease in the demand for unskilled labor, affecting those who depend on traditional jobs.

Impact Risks

If business models fail to generate sufficient sustainable jobs, unemployment and economic inequality could be perpetuated, especially among marginalized groups and youth.

If sustainable practices are not implemented correctly, there could be a negative environmental impact, such as the inappropriate use of recycled materials or the generation of polluting waste.

If the sustainable value proposition is not adequately communicated to consumers, they may not recognize the benefits and may not change their consumption habits.

The adoption of sustainable practices and inclusion could face cultural or institutional resistance in society, which could limit the acceptance and success of these business models.

Impact Classification

B—Benefit Stakeholders

What

Reducing social and environmental inequalities through sustainable manufacturing and assembly practices and inclusive employment.

Who

Women, youth, marginalized communities, manufacturing workers, families in rural areas.

Risk

Persistent unemployment, marginalization, unfair competition, dependence on external resources.

Contribution

Gender equality, reduction of inequalities and climate action.

How Much

Increased female employment, reduced youth unemployment and increased income in marginalized communities.

Impact Thesis

The adoption of advanced technologies could result in a decrease in the demand for unskilled labor, affecting those who depend on traditional jobs.

Policy Environment

National Multi-Year Public Sector Plan 2021-2024: redesigns the planning process since the main objective of public policies must be to improve the quality of life of the people (9).

Institutional Strategic Plan 2021-2024 of the Ministry of Industry, Commerce and Mipymes: planning instrument that constitutes a guarantee that in the MICM we have a clear work route to create public value in the sectors we want to impact in the medium and long term (10).

Roadmap as an accelerator of the 2030 Agenda for Sustainable Production and Consumption: provides a strategic framework for the implementation of the Sustainable Production and Consumption accelerator (11).

Financial Environment

Financial incentives: Multiple banks and savings associations offer financing at market rates for social inclusion projects, facilitating investment, if it is a formal enterprise.

Fiscal incentives: Law No. 12-21 which creates the Special Zone for Integral Border Development and a regime of incentives, covering the provinces of Pedernales, Independencia, Elías Piña, Dajabón, Montecristi, Santiago Rodríguez and Bahoruco. G. O. No. 11010 of February 23, 2021 (18).

Other incentives: The government makes offers through the public procurement system for the acquisition of goods and services that can be offered by local industries and free trade zones, promoting fair competition, and ensuring short and medium-term contracts according to need.

Regulatory Environment

Law 1-12 of the National Development Strategy: Establishes the development of a manufacturing sector that articulates the national productive apparatus, environmentally sustainable and integrated to global markets with increasing escalation in value chains (12).

Law number 8-90, on the Promotion of Free Zones, dated January 15, 1990, with the objective of promoting the establishment of new free zones and the development and growth of the existing ones (13, 14).

Law number 392-07, on Competitiveness and Industrial Innovation, dated December 04, 2007 (15).

Law number 37-17, which reorganizes the Ministry of Industry, Commerce and Mipymes, of February 3, 2017 (16).

Law Number 688-16 on entrepreneurship of the Dominican Republic: its purpose is the creation of the regulatory and institutional framework that fosters the entrepreneurial culture and promotes the creation and permanence of enterprises formally incorporated into the economy (17).

Private Sector

Asociación de Industrias de la República Dominicana (AIRD), Confederación Dominicana de la Micro, Pequeña y Mediana Empresa (CODOPYME), Asociación de Industriales de la Región Norte (AIREN) and Asociación de Industrias y Empresas de Haina.

Government

Ministry of Industry, Commerce and MSMEs, PRODOMINICANA, Ministry of Higher Education, Science and Technology, National Council of Free Zones, Customs Directorate, Internal Tax Directorate and Center for Industrial Development and Competitiveness.

Multilaterals

Inter-American Development Bank (IDB).