Energy sector was the one with the highest Foreign Direct Investment in the first half of 2023; amounted to US$564.4 million

This MEM release was published using machine translation.

The flow of Foreign Direct Investment (FDI) in energy amounted to US $564.4 million in the first half of this year 2023, positioning itself as the fastest growing sector in this period, according to data extracted from the economic report of the Central Bank of the Dominican Republic.

The Ministry of Energy and Mines (MEM), under the direction of engineer Antonio Almonte, reports that in relative terms the flow of Foreign Direct Investment had an interannual growth of 52.29% compared to the first half of 2022, being higher than that of trade 7.56 % and tourism 6.82%.

“The extraordinary growth of Foreign Direct Investment exhibited by the energy sector in the first semester shows the confidence in the Dominican economy of investors from the main FDI-emitting countries such as the United States, Spain, Germany, British Virgin Islands and Canada. ", says Almonte when commenting on the report.

The minister, through a press release, reports that transparency and respect for the laws and regulations of the bidding processes are cited as main factors in this wave of energy contracting that also leads investments in the sector both in the Caribbean and in central America.

“The formalization of the Punta Catalina Thermoelectric Power Plant as a public company based on law; the issuance of a new renewable energy regulation; The elimination by Law of the CDEEE and the transformation of the Rural Electrification Unit have been signs of institutional strengthening in the sector and that as a whole offers security to both local and foreign investors,” Almonte emphasized.

It adds that according to Central Bank reports, the amount of FDI accumulated in the first semester is equivalent to 74.91% of the total received in 2022, while it almost doubles the amount of investment in 2021, equivalent to US $278.2 million.

Almonte said if this trend continues for the second semester, it is estimated that the flow of FDI could reach one billion dollars, marking a historical milestone in this sector and, consequently, helping to accelerate the energy transition process carried out by out across the country.

Minister Almonte pointed out that “it is important to emphasize the work carried out by the government of President Luis Abinader, since in the period 2010 to 2019, the accumulated Foreign Direct Investment amounted to US$ 1,911.5 million, however, from 2020 to June 2023 , the accumulated amount of FDI is located at US$ 2,026.6 million.”

He stated that the development strategy in the energy sector has been effective and demonstrates that "in less than four years of President Abinader's administration, more Foreign Direct Investment has been received than in the last 10 years of previous governments."

According to the Central Bank report, the percentage represented by FDI in energy with respect to the total flow received in the first semester of 2023 was 26.21%, this is the highest percentage received in a first semester since 2010.

In the same vein, it was reported that the energy sector was positioned as the main recipient of FDI in the first half of the year, obtaining 26.21% of the total investments that entered the country. It should be noted that the participation of the energy sector was greater than tourism (24.73%), commerce (18.11%) and real estate (12.33%).

The importance of the energy sector in the first half of the year is outstanding, since the FDI received is 8 times more than that of the financial sector, 3 times more than that of the free zone sector, 4 times more than the mining sector, 2 times more than the real estate sector and 11 times more than the transportation sector.

FDI dynamics in the first and second quarters of 2023

FDI in the energy sector continued to expand in the second quarter of 2023, growing by 5.91% compared to the first quarter of 2023. In that same sense, the interannual growth of FDI in the second quarter was 31.36% in relation to with the same period of 2022.

As of the first quarter of 2023, an important change is observed in the reception of FDI in the energy sector, accumulating a total of US$274.1, this value is much higher than the average FDI received in the period January-March 2018 to January- March 2022, where the average FDI entered into the country was US$120.86.

The doubling since the beginning of 2023 of the amount of FDI destined for the energy sector caused an interannual expansion of 83.22% and 31.36% compared to the first and second quarters of 2022.

This influx of FDI in the energy sector has allowed this sector to become the leader in the first two quarters of the year, surpassing traditionally leading sectors in obtaining FDI such as tourism, commerce and industry, and free zones.

The energy sector went from representing 25.13% of the total FDI received in the first quarter of 2023 to 27.33% in the second quarter of 2023, increasing its relative importance by 2.20 percentage points in April-June compared to January-March of 2023.