Cuban Government Laments its Failure to Attract Foreign Investment

Hotel built by Gaesa on the corner of 3rd Ave and 70th Street, in Playa, Havana (14ymedio)

14ymedio bigger14ymedio, Madrid, 21 December, 2021 — Troubled by covid-19, the last two years were catastrophic for foreign investment, according to the Minister of Trade, Rodrigo Malmierca Díaz, who admitted that during that time they had approved only 47 business proposals, of which barely 25 had been set up.

There were no surprises in his appearance this Monday before the deputies, since he had nothing much else to say besides what he told the Council of Ministers last month, when he said: “The level of external investment is a lot less than what the country needs”. This Monday he repeated his recognition that “in spite of the actions we took, we haven’t achieved what we wanted,” and he presented the supporting statistics.

In the seven years since the External Investment Law was passed, 285 businesses were authorised, of which 29 were reinvestments. Out of a total of 302 companies, with external capital, 104 are mixed, 54 purely external, and 144 contracts with international economic associations, related to tourism, food, energy and light industry sectors.

Malmierca didn’t hesitate to drag out the old excuse of the blockade (i.e. the US embargo) to justify the situation, although he also used the new one of the pandemic. Nevertheless, he also owned up to his own mistakes – something quite unusual for our national authorities. He admitted that there had been errors in the conceptualising of the projects, little opportunity preparation, and little planned and effective promotion. Up to here, self criticism.

Among the external factors complicating outside investment, in the minister’s view, is the categorisation of Cuba as a high-risk country. Malmierca blamed this situation on bad relations with the US, as well as the island’s high debt-level , but he missed out the bit about the government’s responsibility. Fidel Castro led various moves which have left Cuba outside of the markets. In 1964 he ordered the exit from the International Monetary Fund, and, in 1987, carried the banner for Third World countries reneging on their external debts.

The minister also referred to the peculiarities of the Cuban economy which make the country less attractive, including “convertibility problems” with the currency, the uncompetitive prices of goods and services, the scarce construction capacity, the absence of an internal finance market, and poor connectivity hampering  automation development.

Also, Malmierca drew attention to other issues which are important for Cuba, and which conflict with the interests of potential investors, including the obligation to contract personnel through state agencies(versus hiring them directly), the impossibility of transferring property ownership, problems of financial guarantees, difficulties facing foreign employees in acquiring property, restrictions on participation in the retail market, as well as business validity terms, and limitations on participation in activities capable of generating foreign currency income. In summary, the Cuban business environment is at odds with the international one.

In referring to the errors attributable to Cuba, the minister mentioned various causes derived from lack of preparation, drawn-out negotiations, bureaucracy and documentation errors, among others.

In any case, the authorities continue to have confidence in their own appeal, including new initiatives (banking-finance, hydraulic and sanitary networks, telecommunications, culture, audio-visual and insurance), and the elimination of restrictions on tourism, biotechnology and wholesale commerce, as well as those which existed on opening an external bank account or on permission to invest in agricultural cooperatives.

The minister referred to some other changes, such as the eliminatinon of dual currency and process simplifications, as more than sufficient ot attract outside capital to Cuba, in blissful unawareness, apparently, of the list of reasons he had delivered a few minutes before for companies not wanting to have anything to do with putting their money in the one-stop-shop island.

Malmierca confirmed this when he said that there are “political questions which call for the adoption of consistent decisions”, a thought completely invalidated by him saying in the same address: “The attraction of investment cannot be achieved at the expense of sovereignty or the  abandonment of the essence of the socialist model.”

The minister also explained that the Committee for Management and Approval  of Programmes and Projects for Cooperation Received by Cuba, created in May, has approved 50 projects for a value of 137.7 million dollars, in the agriculture, hydraulic, health, energy and environment sectors.

He added that Cuba “offers its cooperation” in 74 countries, where it has sent 29,954 team members, while 8,599 overseas students are learning in the island. Mind you, he did not detail what income was generated by these programmes, and how most of it went to the moneyboxes of the government, which manages their salaries, and that those working overseas get paid only a tiny part of what is paid to the government for their services. In the case of the sanitation workers, the percentage they receive is scarcely a miserly 10%.

Translated by GH


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