SANTO DOMINGO, (forbescustom.com). -The U.S. believes that links with the Dominican Republic can help widen investment and trade in the region.

As the country with the strongest economy and second-largest population in the Caribbean, the Dominican Republic has become increasingly important to the U.S.

Not only have U.S. exports doubled to the D.R. in the past ten years, but, under the guidance of President Leonel Fernández,, the country has also become an attractive investment destination and has established valuable trading links with its Latin American and Caribbean neighbors.

Washington hopes to benefit from these links and believes the D.R. can play a leadership role in broadening investment, trade and commerce in the region.

Fernández has responded positively to the request by Secretary of State Hillary Clinton in April that he should act as a bridge between the U.S. and other regional leaders, some of whom are less sympathetically inclined to the U.S. It was an honor, he said, to be considered a mediator between the U.S. and the region.

Fernández has good credentials for the task. From 1996 to 2000, in the first of his two nonconsecutive terms as president, he initiated trade talks with Costa Rica, Guatemala and Panama and participated – through contacts with the U.S. – in the creation of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA).

Since his reelection in 2004, when the Dominican economy was in a critical condition, he has presided over a recovery that has stabilized inflation, brought unemployment under control, created strong exports and, as a consequence of the free trade agreement, attracted a record amount of direct foreign investment.

“What is fundamental in terms of the government’s strategy for attracting foreign investment is to show economic credibility,” says Juan Temístocles Montás, the secretary of Economy, Planning and Development.

The nation has achieved this, he explains, by being consistent in its fiscal, monetary and exchange policies. It has enabled the government to guarantee economic stability, which has been its main objective.

“The D.R. is the country that has made the highest number of structural reforms in Latin America,” he says. “I believe we are the first destination in the Caribbean in terms of foreign investment. This is because we have created trust and a legal market that reassures people.”

In sharp contrast to impoverished Haiti, with which it shares the island of Hispaniola, the D.R. has survived the global economic slump relatively well. It is expected to have positive economic growth this year and return next year to the high growth it experienced from 2005 to 2008, which averaged 8.5%.

President Fernández points out that the D.R.’s inflation rate of 4.5% last year was the lowest it had been in seven years and lower than that of any other Latin American nation.

Sailing Over The Credit Crunch

Buoyed by bank reforms, the Dominican Republic has successfully navigated its way to financial stability and investment opportunity.

Following the collapse of several banks in 2002, the Dominican banking sector fortified itself against the worst effects of the current global economic crisis by adopting control measures.

Guarocuya Félix Paniagua, the superintendent of securities at the supervisory board of the Dominican Stock Exchange, says the deep reforms undertaken have reinforced economic and financial management. This has enabled the country to “maintain the stability of the principal macroeconomic indicators and, consequently, of the investment climate.”

The August edition of the World Bank’s report Doing Business listed the Dominican Republic as one of the ten best-reformed countries in terms of the regulation of its commercial activities.

In the first three months of this year, the D.R.’s stock market grew in value by 140% compared to the same period last year. Félix says it will continue to be an interesting place in which to invest – an attractive, professional destination that is continually expanding and remains very solid.

“We represent an excellent business opportunity for investors, as well as for businessmen who want to create their company and finance themselves through the local market.”

The supervisory board for the stock exchange was established in 2004. Since then, the exchange has authorized 34 public offerings with a total value of $1 billion.

According to Félix, “One very positive aspect is that the issues have been done by companies in various sectors of the economy, contributing to the diversification of the stock market and a reduction of the risk.”

Over the past four to five years, the exchange has seen constant growth, not only in the number of companies but in the volume of the market. The total capital that has moved through the stock market has reached $2.35 billion.

Public institutions such as the Central Bank and the Finance Secretariat have registered their issues with the Superintendence of Securities. “Between the public and the private sectors, the Superintendence of Securities has registered some 590,000 million pesos [$16.5 million],” says Félix.

The medium-term objective is to converge with the most-developed markets in terms of the regulation and instruments on offer.

“We are now working to introduce a variable-yield funds market,” says Félix. “Our main goal is for people to view the stock market as an alternative to the traditional methods of financing and as an investment opportunity.”