Multiquímica Dominicana was one of the first Dominican companies that went out abroad. Its president, Celso Marranzini, talks to Worldfolio about his successful business story
Multiquímica Dominicana started up in 1985 and rapidly became a leader in the local market. How did local companies like yours contribute to the growth of the Dominican Republic?
The possibility of growth for a country depends on how strong the alliance between the private sector and the governmental sector is. Our geographic position is enviable and we enjoy privileged sales possibilities in the US. A positive vision should always be maintained; we have often encountered a systematic confrontation between the public and the private sectors and that moves us away from the development of a strong political and productive class, which is precisely the one that would lead us to conquering markets and creating jobs. We still have a high rate of unemployment in the Dominican Republic considering all the potential that we could develop in the tourism sector, in industry and in the free trade zones. We have a population of 10 million people, our proximity to the US offers us multiple advantages over other countries, thanks, amongst other things, to CAFTA-DR. Compared to other countries, we have encountered fewer difficulties in attracting investment, and that undoubtedly brings additional benefits. In these last few years, we have built up political and economic stability. Also, after the banking crisis of 2003, we were consolidated as one of the most solid financial systems of the region. In fact, during the crisis of 2008-2009, we maintained a 7% rate of growth. The new government needs to concentrate in consolidating the relationship between the public and the private sectors, not only the ruling party but also the opposition: the vision as a country has to involve everyone. The time has come to see ourselves as one team. If each one plays individually, we are condemned to failure. Just as what occurs in soccer, if every player doesn’t perform adequately, a goal will not be scored. We have challenges to face of course: education, energy, etc; but while we are sure of what our strengths and weaknesses are, we can win. It doesn’t help at all thinking that we have a perfect nation; we always need to keep improving. This country can take advantage of all these benefits: we receive 5 million tourists; we have an enviable geographical location and synergies with Latin America, North America and Europe. We have it all to go ahead.
What factors have contributed to placing Multiquimica as a regional leader?
Being an island makes us go outside to look for sales. That was our first idea in ‘92 when we expanded to Haiti and Puerto Rico. From there, we started with Central America, where we bought a plant from Clariant, the multinational company, located in Guatemala; this helped us to access Mexico, Venezuela and Colombia, where there was no Free Trade Agreement and we were bound to pay taxes. It facilitated our expansion and one day we became the major exporter to Central America. Now, 60% of our production goes to our export markets in Haiti, Central America, the US and the Caribbean Islands.
What benefits does being located in a free zone bring to your company?
Undoubtedly, a company that exports cannot be liable to local market taxes, as it wouldn’t be competitive. To be competitive, you need to act in equal terms. Central American companies of free zones don’t pay duty or taxes; to be able to enter these markets we need to be on an equal basis.
Do you think CAFTA-DR could have been better used?
For years, we entrepreneurs, have not taken the maximum advantage of this agreement. Operating with an insular state of mind prevented us from taking advantage quicker. We got used to the internal market; the entrepreneurs of the free zones were the ones who realized that it was necessary to go abroad to reach more markets and to compete with other international agents. Even though these agents enjoyed better conditions regarding economy of scale, they didn’t count on the advantage of the geographical location.
How could the US and the Dominican Republic cooperate to develop a common market?
There has always been an excellent relationship. They are our biggest market and for years we enjoyed an agreement signed by President Reagan. This agreement allowed Dominican companies to enter the US without paying taxes, but it didn’t exempt the US companies from paying taxes if they wanted to sell in our market. After signing the CAFTA-DR, this advantage disappeared and harmed our trade with the US, and we had to be more aggressive and more competitive in the international markets. But I believe that we have taken steps ahead and there are Dominican products distributed successfully all over the world like bananas, cocoa and coffee. It’s at this point where an important alliance with the government should take place, to establish national agreements, to involve unions, civil society, the church and the political class in this common project.
The two main strategic successes of Multiquímica have been the partnership with the Spanish company Synthesia and the purchase of the production plant, Clariant, in Guatemala. How did these events affect the technological and productive development of Multiquímica?
The technological development came from Synthesia. They brought us new technology. Another strategic moment was the purchase of the Dow Corporation plant in Puerto Rico, which we dismantled and brought to the Dominican Republic to reduce personnel costs. Afterwards, we purchased the Clariant plant in Guatemala. And now we are negotiating an agreement with HB Fuller to develop raw materials for the production of their adhesives. All these steps have diversified our production away from traditional sectors. We are pioneers in the production of raw materials for paints and polyurethane for shoe soles. Nowadays we have a product range with more than 40 items. Moreover, we have our own R&D department which is in charge of supplying our clients with the raw materials that are most suitable to the climate and to the use and needs of each client. However, our advantage is that we offer our clients a service with very little bureaucracy which makes us different from the big multinationals.
How does a company which produces chemical products, such as Multiquímica, maintain sustainable and environmentally friendly activities?
We had the advantage of applying European environmental measures when we partnered with Synthesia in 85. There was no Environment Ministry in the Dominican Republic at that time. We were the first to apply the environment standards of California at our chemical products terminal. We have never had problems concerning the environment; we follow a strict control under the Environmental Compliance Reports. Being the only chemical industry in The Dominican Republic, probably all eyes should be on us, but we can proudly assert that we are at the disposal of the environmental authorities, who in fact, are surprised with our clean production. At this moment, we are planting trees around the factory to eliminate CO2 emissions. That means we are one of the few chemical companies taking these kinds of measures.
What kind of Corporate Social Responsibility programs are you carrying out?
We are cleaning ravines, we are carrying out education programs and home repairs, and we supply the children in the Haina zone with school equipment. We are trying to concentrate our social action in this zone. We are thinking of opening a free dental clinic next year. And we are part of the National Network of Enterprise Support for Environment Protection (Red Nacional de Apoyo Empresarial para la Protección del Medio Ambiente), which is the branch of the entrepreneur sector that controls environmental rules.
What route will the country follow in order to boost real social and economic development?
We have a dual society: a part has access to all it needs, but unfortunately the other part lives in shameful poverty. The government and the private sector have to work on that. Spending has to be earmarked for those who need it most; jobs have to be created; whereby the productive sectors such as tourism, local industries, free zones, telecommunications, power and agro industries have to be promoted. Education has been another of our big Achilles’ heels due to the lack of continuity in educational policies, something that the government will try to solve with an investment of 4% of GDP. I don’t think this will solve the core issue, unless it can translate to an improvement in the quality of teachers; teachers should learn to use something as fundamental as a computer. Learning English is another fundamental issue nowadays; otherwise it relegates a citizen to a lower level regarding education. The Dominican Republic needs to form a big national alliance in this matter. Irrespective of which government is in power, policies on a long-term basis have to be maintained.
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