Cuba Looks for Investors Ready to Take Risks

This Monday Díaz-Canel inaugurated the 36th edition of the International Fair of Havana (Fihav). (EFE)

14ymedio bigger14ymedio, Havana, October 30, 2018 — “Now it’s a high-risk investment but I hope that in five years everything changes for the better.” That’s the hope expressed by an Italian businessman who has invested in the Island, stumbling over the habitual difficulties of doing business in Cuba.

“Since I first became interested until I was finally able to start work here, two and a half years passed,” laments the investor who has opted for the sector of hygiene and skincare products. “This isn’t a market for people who come trying to do business quickly, and you have to use the official language very well,” he specifies.

With the 36th edition of the International Fair of Havana (Fihav), the authorities want to present the image of a country open to foreign capital in the middle of an especially complicated panorama for the Cuban economy, which faces once again the challenge of attracting a greater number of foreign investors to the Island to solve the liquidity crisis.

After the approval of a foreign investment law in 2014, businessmen have been very timid and, instead of the $2 billion annually that the Government was expecting, only $1.3 billion had come at the end of 2016.

In 2017 authorities announced that $2.3 billion in investment had come in during that exercise, but not even the arrival of that capital managed to lift up the economy suffering from the cuts in petroleum shipments from Venezuela and the inflated debts with numerous creditors.

The slowness in the approval of investments burdens the arrival of cash, to which is added a complex bureaucracy in which “there are many civil servants of the third or fourth level who don’t decide anything but waste a lot of time,” continues the Italian businessmen who prefered to remain anonymous.

The businessman insists that, right now, the Cuban side owes him “hundreds of thousands of dollars” in late payments, but that he has continued importing merchandise to the Island in the hopes of being able to recoup his money and remain in the country with his sights set on the future.

In an interview with the official press, the Minister of Foreign Business and Investment in Cuba, Rodrigo Malmierca Díaz, insisted on the protection of sovereignty in the policies of investment. “We, nevertheless, are not going to sell the country. We are going to develop this process in agreement with our laws, and with our policies,” he warned.

Malmierca urged that people not despair in face of the slow results of the ZEDM and clarified that “it is conceived for a long-term development” and is “a project for 50 years of development.” His declarations have increased skepticism among Cubans, tired of waiting for the economy to experience an upturn.

The signature work of ex-president Raúl Castro, the Special Zone of Development of Mariel (ZEDM), has also not offered the expected fruits. Until now the place anticipates investments from 15 countries and 37 approved business projects, much less than projected.

The increase in shortages of food, the rise in prices of agricultural products, and the new restrictions for the private sector complicate still further the internal scene of the Island.

Expocuba, created as a showcase in the 80s during the greatest closeness with the Soviet Union, now takes in 2,500 businessmen from more than 60 countries and also the presence of the mandatory Miguel Díaz-Canel, who made the inaugural speech and has developed an intense agenda of meetings with representatives from delegations, among them the Venezuelan Vice President Tareck El Aissami, and Yuri Borisov, Vice Prime Minister of the Russian Federation.

Spain is the most-represented country in Fihav with 112 businesses, 63 of them grouped in the official pavilion, 29 in the Basque country pavilion, and 20-something distributed among the rest of the exposition’s perimeter. The Spanish presence is also accompanied by the recently named ambassador, Juan Fernández Trigo, and in a few days the president of the Spanish government, Pedro Sánchez, will come to the Island.

The Cuban economist Elías Amor, settled in Spain, has a very critical opinion on Fihav. “If the Cuban economy wants to export more, it must forget about parties and fairs and dedicate itself to increase productivity,” he says in his blog Cubaeconomía.

For the specialist, the Island “needs to increase its exports of products if it wants to correct the grave deficit in its external accounts,” but since 2011 the number of sales abroad “has done nothing more than fall” in a nominal drop of 59%.

Amor recommends that to raise exports, Cuba must “produce better and know how to sell what is produced, they have to train the working population, introduce modern technologies, and do things well and not more cheaply.”

The mammoth state socialist business continues dominating the economic landscape of the Island, where the existence of two currencies also slows down many interested in investing. Failure to pay and judicial insecurity are some of the other motives that dissuade foreign businessmen from putting their money in the country.

For the economist Omar Everleny Pérez, more flexible legislation to favor the arrival of foreign capital is not enough, but rather Cuba needs “a new mentality in orientation of the economic policymakers and of the risks that need to be taken for Cuba to join the international circuits of business and investment.”

Recently the Havana Government made a small payment of the third installment of a renegotiated debt of 2.6 billion to 14 countries. The initial amount of 11.1 billion was restructured to be paid until 2033, of which $60 million has already been paid in 2017 and close to 70 in 2018 so far.

Fihav is also developing amidst the debates in neighborhoods and workplaces in which the project of constitutional reform is discussed. One of the most-questioned points in the text has been, exactly, that which doesn’t include nationals among the businessmen who can invest in the Island.

Numerous voices have been raised across the country to demand recognition of the right of Cubans living inside and out of the country to invest in industry, tourism, services, and other key sectors.

Translated by: Sheilagh Carey


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