Puerto Duarte in Arroyo Barril and its surroundings
Puerto Duarte in Arroyo Barril and its surroundings
Business Model Description
Establish a Public-Private Alliance through the contracting of a Private Agent with the capacity to prepare studies and design, rehabilitate and construct, finance, operate and maintain the Duarte Port and a complementary tourist facility and services in its surroundings.
Expected Impact
Promoting tourism and investment in Arroyo Barril will improve infrastructure, drive economic growth, create jobs and alleviate poverty in the region
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.
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 (3).
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 (4).
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 (5). Currently, the country loses 40 per cent of optimal human development due to existing gender inequalities (6).
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 (7).
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.
Engineering and Construction Services
Pipeline Opportunity
Puerto Duarte in Arroyo Barril and its surroundings
Establish a Public-Private Alliance through the contracting of a Private Agent with the capacity to prepare studies and design, rehabilitate and construct, finance, operate and maintain the Duarte Port and a complementary tourist facility and services in its surroundings.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
1.3 million passengers traveling by ship per year
Every year, more than 6 million visitors visit the Dominican Republic. Despite the fact that the majority of them come in the country by airplane. The number of cruise passengers coming in to the country by sea reached 1.3 million passengers in 2022 (13).
Indicative Return
10% - 15%
The estimated income from the business model comes from the dockage fee charged to the cruise lines and the projected demand for passenger arrivals (14).
It is estimated that income from cruise line payments will reach US $5.7 million for the first year after start-up, and the estimated price charged per passenger is US$10.00 per passenger, which would represent 42% of total income (14).
Investment Timeframe
Long Term (10+ years)
According to the project evaluation report, the expected construction period of the project is 1.5 years, with a total concession contract term up to 40 years. In the case of an optimistic investment, the return on investment will be 10.3 years (14).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Volatile
Impact Case
Sustainable Development Need
80% of international trade is carried by sea and container traffic is increasing. But 84% of the movements are made in the ports of the southern region, while 7.6% in the northern region (7).
The Dominican Republic's volume capacity ports for containers are 1,894,225 TEUs, with a year-on-year variation of growth for 2019 of -3.9%, ranking it ninth among Latin American and Caribbean countries (16).
According to the Logistic Performance Index of 2019, the Dominican Republic was positioned in the 88th range of countries with a score of 2.6 (17).
Gender & Marginalisation
The average unemployment rate in Samaná is 11% below the national average (15%), being higher in women representing 20.4% than in men with 6.9%. (18).
11.9% of the population from Samaná lives is in extreme poverty (18).
Expected Development Outcome
Increase the number of passengers by sea and container traffic movements in the northern region of the Dominican Republic.
Increase the volume capacity of containers in the country.
Develop sustainable, resilient and quality ports infrastructure.
Gender & Marginalisation
Reduce the unemployment rate, specifically of women by the creation of new direct and indirect jobs in the seaport and tourism sector.
Reduce the percentage of the population of the province of Samaná that is in extreme poverty through access to new business opportunities and jobs.
Primary SDGs addressed
9.1.2 Passenger and freight volumes, by mode of transport
In 2022, the Dominican Republic received a total of 7,942,710 passengers by air. While only 1,325,442 passengers carried by sea (13)
Increase logistic performance index score logistics performance index score from 2.66 a 2.88 (2)
Reverse the 69% drop in tourist arrivals by sea, reaching pre-pandemic levels and grow 26.9% from the recovery (2)
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Outcome Risks
Risk of habitat and ecosystem degradation of the environment caused by port activities such as marine life harms, loss of habitat and waste (20).
Risk to substantial disruptions on port operations due to hurricanes, storms and sea levels changes.
Gender inequality and/or marginalization risk: Affecting local small-scale fishing actors gaining access to coastal fishing spaces causing economic losses and exclusion.
Impact Risks
Affecting local small-scale fishing actors gaining access to coastal fishing spaces causing economic losses and exclusion.
Large cruise tourism projects can worsen the local population's well-being by affecting their basic needs, food access, and the environment.
Impact Classification
What
It enables the promotion of economic development in the productive sectors of the area.
Risk
Budget overruns may hinder the progress of projects. It is crucial to address and minimize the negative environmental impacts of tourism and port construction and operations
Contribution
Develops a cruise terminal, leveraging the existing infrastructure with necessary improvements while also supporting community through training and assistance.
Impact Thesis
Promoting tourism and investment in Arroyo Barril will improve infrastructure, drive economic growth, create jobs and alleviate poverty in the region
Enabling Environment
Policy Environment
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 (4).
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 (7).
Law No. 16-95 on Foreign Investment establishes the principle of national treatment for foreign investors and the free repatriation of capital (21).
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 (25)
Fiscal incentives: Not applicable.
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 (25).
Regulatory Environment
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 (21).
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 (22).
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 (23).
Regulation No.1673 on the Provision of Services of the Dominican Port Authority (APORDOM) (24).
Marketplace Participants
Private Sector
Maritime and logistics companies such as Carnival, Princess, Norwegian Cruise Line (NCL) and Holland America Line (HAL) and tourism sector (hotels, services, and others).
Government
General Directorate of Public-Private Partnerships and Dominican Port Authority (APORDOM), Ministry of Tourism, Ministry of environment and natural resources, and Ministry of Infrastructure and Communications. General Directorate of Customs
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) MEPYD, 2023. Equity and territorial development gaps: Dominican Republic 2021. https://mepyd.gob.do/publicaciones/equidad-y-brechas-territoriales-de-desarrollo-rep-dom-2021 4 ) Law 1-12 National Development Strategy 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (5) 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
- (6) 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
- (7) MEPYD & IDB, 2020. National Infrastructure Plan 2020-2030. https://mepyd.gob.do/publicaciones/Plan-nacional-de-infraestructura-2020-2030/
- (8) UNCTAD, 2022. Port Management Volume 10: Case studies. https://unctad.org/system/files/official-document/dtlkdb2022d1_es.pdf
- (9) German, N.J., 2014. Economic Impact of Cruises in Santo Domingo Tourism. http://www.competitividad.org.do/wp-content/uploads/2016/05/Impacto-Econ%C3%B3mico-de-los-Cruceros-en-el-Turismo-de-Sto-Dgo-J.pdf
- (10) APORDOM, 2023. Annual Statistic Report 2022. https://portuaria.gob.do/wp-content/uploads/sites/2/2023/02/REPORTE-ANUAL-Estadisticas-APORDOM-2022-.pdf
- (11) Delfin Ortega, O. V., 2020. Relationship of port performance and economic development: a theoretical approach. https://link.gale.com/apps/doc/A690285117/IFME?u=anon~6be65ad0&sid=googleScholar&xid=478735dc
- (12) Acosta Guzman, J.A., 2017. Economic impact of cruise tourism: Dominican Republic case. http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S1870-90362017000200035&lng=es&tlng=es
- (13) Central Bank of the Dominican Republic, 2022. Tourism Statistics 2022. https://cdn.bancentral.gov.do/documents/publicaciones-economicas/estadisticas-turisticas/documents/turisticas2022-12.pdf
- (14) DGAP, 2021. Evaluation Report for Declaration of Public Interest of private initiative project construction, exploitation, use and operation of Puerto Duarte, in Arroyo Barril, as well as a theme park called Mangani Jungle. https://dgapp.gob.do/wp-content/uploads/2021/08/Informe-de-Evaluacion-para-Declaracion-de-Interes-Publico-Puerto-Duarte.pdf
- (15) APORDOM, 2023. List of Dominican Commercial Ports, Tourist Terminals, Anchorages, Docks and Marine. https://portuaria.gob.do/listado-de-puertos-comerciales-dominicanos-terminales-turisticas-fondeaderos-muelles-y-marinas/
- (16) ECLAC, 2019. Data collected on port activity in Latin America and the Caribbean in 2019. https://www.cepal.org/sites/default/files/news/files/movimiento_portuario_lac_2019_vers20julio2020.pdf
- (17) ARVIS, Jean-François, et al, 2023. Connecting to Compete 2023: Trade Logistics in an Uncertain Global Economy-The Logistics Performance Index and Its Indicators. Https://lpi.worldbank.org/sites/default/files/2023-04/LPI_2023_report_with_layout.pdf
- (18) MEPYD, 2016. Plan for the development of local economic of the province of Samaná. https://mepyd.gob.do/mepyd/wp-content/uploads/archivos/planificacion/planes-para-desarrollo/samana.pdf
- (19) SIUBEN, 2018. Third Socioeconomic Household Survey 2018. https://transparencia.siuben.gob.do/document/Download?id=3761
- (20) OECD, 2013. The Port and its environment. https://www.oecd.org/cfe/regionaldevelopment/publicationsdocuments/The%20Port%20and%20its%20Environment.pdf
- (21) Law 47-20 on Public-Private Partnerships. https://dgapp.gob.do/wp-content/uploads/2020/09/LEY-47-20.pdf
- (22) 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/
- (23) Law No. 64-00 on Environment and Natural Resources. https://ambiente.gob.do/marco-legal/
- (24) Regulation No.1673 on the Provision of Services of the APORDOM. https://portuaria.gob.do/wp-content/uploads/sites/2/2021/10/Decreto-1673-80-REGLAMENTO-DE-PRESTACIONES-DE-SERVICIOS-1.pdf
- (25) Law No. 16-95 on Foreign Investment. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-16-95-sobre-Inversion-Extranjera.pdf