On June 10, our partner, Patricia Guzmán Parra, participated in the panel “Regulatory Framework for Health Tourism: Challenges and Opportunities”, during the International Congress on Health and Wellness Tourism. The panel was moderated by Leonel Melo, from OMG, with the participation of Dr. Servio Tulio Castaños Guzmán, Executive Vice President of FINJUS; Brenda Morales Mejía, Director of the Technical Directorate of the Tourism Development Council (CONFOTUR), and Gilberto Objío Subero, CEO of Medical Law RD.
Guzmán Parra highlighted that the Dominican Republic is the main destination for medical tourism in the Caribbean, the second destination in Latin America (preceded by Costa Rica), and number 19 in the world, according to the Medical Tourism Index 2020.
Regarding the current situation we are going through, Guzmán Parra affirmed that the State has dealt with the pandemic correctly. The vaccination strategies of opening and restarting the commercial activities, and particularly for the tourism sector, have been effective, which has guaranteed that we are recovering steadily.
In terms of health security, the Dominican State has reinforced its health policies and protocols, not only to preserve the health of Dominicans but even to provide tourists with security and confidence.
At this point, he recalled the statements of the Secretary-General of the World Tourism Organization (UNWTO), Zurab Pololikashvili, who affirmed during his visit to the country in February this year that the Dominican Republic is an example in the world of how tourism can be managed. with responsible protocols in the time of COVID-19, managing to attract international tourists with health security.
In terms of hospital infrastructure, the country has come a long way in recent years, especially in the private sector. Just look at the recently inaugurated Diabetes, Obesity and Specialties Medical Center (CEMDOE), in the National District, which will be a fully digitized center, which will focus on strengthening health tourism while attending to chronic diseases.
In the public sector, there is still a way to go, since it is time to change the chip and develop more modern infrastructures that respond to the needs of current medicine. The positive of all this is that as a result of the pandemic, the health architecture has had to be rethought worldwide and our country has not been the exception, on the contrary. An example of this is the creation of the health cabinet chaired by the vice president of the Dominican Republic, Raquel Peña, and the Minister of Health, Dr. Daniel Rivera.
We can also affirm that the main tourist destinations in the country have hospital facilities that respond to the needs of today’s tourists. At this point, add that it is vital that tourist destinations in the making, such as, for example, Pedernales, where it has been stated that between 12,000 and 16,000 rooms should be built within the framework of the development that the government has planned for the next few years. (This was stated by the general director of Public-Private Partnerships in FITUR 2021), since the construction of medical infrastructures that complement the tourist offer in the area should also be considered. The General Directorate of Public-Private Partnerships has already spoken of promoting the Pedernales Airport within the framework of the Pro-Pedernales Trust, in the same way, it should be promoted that the destination has the other complementary tourist offers such as a health center of the first level.
Incentives for Health Tourism
Going a bit to the regulatory issue, it is vital to refer to Law No. 158-01, which establishes incentives to promote tourism development, including, of course, health tourism. In its article 3, numeral six, the law establishes that incentives will be granted for the “Construction and/or operation of tourist infrastructures, such as aquariums, restaurants, golf courses, sports facilities, and any other that can be classifiable as an establishment belonging to tourist activities ”.
This Law provides incentives such as exemption from income tax for 15 years, exemption from import taxes, and other taxes that may be applicable on equipment, materials, and furniture that are necessary for the first equipment and start-up of the tourist facility. that it was; exemption from asset tax for 15 years, exemption from property transfer tax, etc.
In terms of application of the Law, in 2014 Res. 49-2014 was issued, which establishes the requirements demanded of promoters of medical tourism, such as clinics, hospitals, health centers, and others, within which are: a market analysis, marketing plan, operations plan, financial plan and most importantly, what is related to the certification by the Joint Commission International, which will purify the centers with a true vocation in the field of health tourism. This is because the marketing channels for medical tourism are not the usual ones for vacation tourism.
Last year, according to the CONFOTUR database, a definitive classification was approved for several projects focused on health tourism in the country, such as:
Project: UNME Union Medical Center / Promoter: Uprising, S.R.L. / Location: Higüey, La Altagracia / CD Date: 2/20/2020.
Project: Punta Cana Health Center / Promoter: Punta Cana Health Center, L.P. / Location: Higüey, La Altagracia / CD Date: 10/5/2020.
If we compare countries with which we compete in terms of health tourism, such as Panama, for example, we find that recently, in December of last year, Executive Decree # 319 was issued that establishes tax incentives exempting income tax (ISR), import tax, and capital tax on special tourism products, with which they hope to boost tourism investment, thus contributing to the creation of new jobs.
With this decree, which regulates numeral 6 of article 8 of Law 80 of November 8, 2012, that establishes tax incentives, the Tourism Authority of Panama (ATP) and the National Government fulfill a pending commitment for 8 years with the sector, which awaited this regulation since the Law was created in 2012.
Tax incentives range from the exemption of income tax for a period of 15 years on tourist activities and 5 years to taxes or levies on the capital of the company; This applies to what the decree identifies as special tourism products, such as private museums, agrotourism, rural tourism, ecotourism, sports tourism, health tourism, and amusement parks.
Legal or natural persons interested in developing the aforementioned activities and benefiting from the tax incentive must be registered in the National Tourism Registry; Likewise, send plans signed by a suitable architect and by the respective municipality, regional location, architectural plans where the tourist activity will take place, feasibility study of the project, among others.
The foregoing tells us two things: 1. That we have a competitive advantage if we compare the scope of the incentives of both countries and 2. That the DR has had incentives for this subsector for more than two decades, while Panama just debuts after a wait of 8 years, after the approval of the Incentives Law of 2012.
In conclusion, we consider: 1. that it is vital that tax incentives for the tourism sector in our country are maintained and are not affected by possible tax reform and 2. That CONFOTUR continues to implement operational policies that allow the effective application of the regime of the law.
Regulatory framework for Health Tourism: legal guarantee
In line with the foregoing, and as has been stated on multiple occasions, a regulatory framework that establishes clear rules on health tourism is vital, to guarantee transparency and ethics. This piece should promote modernization, competitiveness, and integration of the health and tourism sectors.
This Law must configure a medical tourism policy that encourages public, private, and social investment of national and international origin in projects with a high regional impact that improves competitive conditions. It must include aspects such as those related to certifications, rules for the different agents and players in the sector, required permits, supervision, and control by the competent authorities, among others.
The adaptation of Dominican legislation on tourism is urgent. Our Law dates from 1969, so it should have undergone an update a long time ago, considering that sectoral regulations must be reviewed from time to time because the economic and social conditions of a country are constantly changing.
As the range of possibilities is varied, it could 1. promote the modification of the Organic Law of Tourism of the DR, including, among other issues, what is related to the rules for the Health Tourism subsector or 2. promote the approval of a Law that specifically regulates Health Tourism. In any case, the modification of the Tourism Law is fundamental.
Among the main objectives of this potential regulation, about medical tourism, the following has been suggested:
- Establish mechanisms to concretize the coordination of the authorities and public services in the industry;
- Regulate and encourage digital tourism platforms;
- To encourage the creation of a Classification, Qualification and Certification System, which contemplates promoting the incorporation of high quality and/or safety standards in tourism companies, increasing their competitiveness in comparison with international standards;
- Create a Tourism Promotion Council, of a public-private nature, in charge of advising and collaborating in the formulation of Policies and Strategies for Tourism Promotion of the Dominican Republic at an international level, among others.
- The private sector is required to assume a preponderant role together with the State for the promotion of Dominican tourism, as well as in the design and implementation of strategies to strengthen the industry and its ability to respond to the crisis caused by the pandemic or any other future events that may affect you.
- It is essential to establish a mechanism for the administration of funds for the promotion of tourism that guarantees transparency in its management. As has recently been proposed, a viable and effective solution would be the creation of a trust with the funds from the tourist cards, administered by both the public and private sectors, thus representing a guarantee of the efficient and adequate use of said funds.
Another Law that does not escape a future review and update is the General Health Law No. 42-01, of February 21, 2001. This piece also deserves a comprehensive review, which includes aspects associated with medical tourism, as related to medical tourism service providers, health security, among others.
As the pandemic has forced us to modify many issues related to health services, the time is ripe to promote the modernization of this regulatory framework.
Finally, to limit the importance of the exploitation of the recently enacted Law of Public-Private Partnerships No. 47-20 in the field of health tourism, since the relationship and public-private cooperation in this matter is fundamental.
This Law establishes a mechanism through which public and private agents can associate voluntarily for the provision, management, or operation of goods or services of social interest in which there is a total or partial investment by private agents, tangible or intangible contributions by part of the public sector, distribution of risks between both parties, and remuneration associated with performance.
Supported by the figure of the Trust (art. 51 of the Law), in addition, an alliance between the public and private sectors characterized by transparency and efficiency will be possible.
As we discussed a moment ago, the State has understood the importance of this synergy and has stated this when it refers to promoting areas such as Pedernales through collaboration.
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