Panama, the New Eldorado for Cubans / Iván García

Store in Panama, a country where it is estimated that in 2017 Cubans spent around $100 million dollars in purchases. Taken from On Cuba News

Iván García, 12 November 2018 — Life always offers you an opportunity. When the father of Hector, a 31-year-old industrial engineer, died that afternoon in May 2015 in Miami, his family in Cuba began suffering material shortages.

“The old man would wire 300 or 400 dollars every month and he would send us clothes and appliances through mules*. The wages of my mother, my wife and mine together amounted to $80. With the money that my father sent, we were able to repair the house and feed ourselves better. When he died, we asked ourselves what do we do now? We could sit idly by or plan some business to get ahead. We opted for the latter”, Hector recalls.

The first thing he did was invest $1,700 that his father had sent to buy a motorbike and then determine how he could import smartphones, flat-screen TVs and name brand clothing from Panama or Mexico.

“Not having a US visa, I opted for the Mexican and the Panamanian ones. With the first purchases I made, including the cost of airfare, lodging, food and customs taxes in Cuba and Panama, I earned $350. I resigned my job and I dedicated myself to ‘muling’,” says Hector.

The migratory regulation approved in the winter of 2013 by the regime of Raul Castro opened a range of initiatives for a broad segment of Cubans. According to official statistics, more than half a million people travel abroad each year. Between 70 and 80 thousand of those travelers dedicate themselves to regularly importing goods into Cuba. It is a buoyant business. All they need is a legal framework. The current status is an authentic legal limbo.

Ana, who travels to Cancun and the Colon Duty Free Zone in Panama 10 times a year, explains the particulars. “The State allows us to travel and import only personal items once a year. All the people who dedicate ourselves to muling transgress the regulatory norms in Cuba. We have triumphed thanks to the inability of the government to supply goods at affordable prices. Look, most of the time we buy in retail markets abroad, sometimes in places as distant as Moscow, we pay the customs duties and even so we sell everything at lower prices than the State, with more variety and quality.”

A recent study by the consulting firm The Havana Consulting Group concludes “that Cuban entrepreneurs took out of their country around $2.39 billion in 2017, more than nine times the foreign capital invested in the Mariel Special Development Zone that year and a figure similar to what the communist government says it needs to revitalize the island’s economy.”

The study details how these funds are distributed: $426 million for airfare, $472 million for lodging, transportation and food, $1.08 billion for purchases and between $52 and $58 million for the agencies that pack and then take care of the logistics to send the goods to Cuba.

That amount of money would place it as the fourth largest national industry behind the export of medical services, family remittances and tourism. Economically it benefits those who are engaged in the movement of goods and also a growing percentage of avid local buyers.

Nicolás, an economist, believes that “due to the lack of wholesale markets, extremely high sales prices and poor quality of the products offered in state stores, I calculate that three to four million Cubans buy items from the mules directly or through e-commerce portals like Revolico. To this must be added the mules that sell wholesale to intermediaries who then market the merchandise at a higher price and, in a new development: sell on installments plans, a mechanism that does not exist in state stores.”

A notable segment of private entrepreneurs order their merchandise from the mules. “I bought the tableware, cutlery, lights and bar equipment from an acquaintance who regularly travels to Panama. The State does not have any institution that offers these services to the self-employed,” says Osmany, owner of a bar south of the capital.

Every year, individuals who import pacotillas (miscellaneous items highly valued in Cuba due to their scarcity) are more creative. Carla, a university student, says that there are people “who sell clothes, toiletries and hair products purchased directly from Amazon.” Perhaps that is the case with Liana, a mule with five years of experience that “thanks to the boom in these sales, I took advantage of the fact that I have a multiple entry visa to the United States; I opened a bank account and I can use a credit card that allows me to buy goods from Amazon and other digital sites and afterwards sell them in Cuba.”

Leonel, also dedicated to the mule business, thinks that “it is a good measure the government of Panama took in granting that travel card valid for thirty days. My concern is that the government considers us illegal. And it tries to stop us with high tariffs and prohibitions that prevent importing large quantities of merchandise. But beginning with that measure, and knowing that thousands of Cubans import products from Panama, they can decree criminal sanctions or high fines for those of us who are dedicated to muling.”

According to diplomatic sources located in Havana, Mexico soon plans to expedite visa procedures. In 2017, El Financiero wrote about the boom of Cuban tourists in Mexico: “The number of registered travelers with the nationality of that Caribbean country totaled 100,251 in 2016. Armando Bojórquez, president of the Confederation of Tourist Organizations of Latin America, explained that they are seeing many Cubans engaged in tourism to shop, in Mexico there are good products and international brands that can be bought in Mexican pesos and that helps.”

Odalys, who has specialized in importing athletic clothing and footwear from Cancun, is of the opinion that “these measures can help curb the growing wave of corruption that exists to obtain a visa at the consulates of Mexico and Panama. Just to get an appointment you have to pay $300 or $400 dollars to an intermediary.”

The inability of the olive green autocracy to raise those billions of dollars that escape abroad is notorious. In Cubadebate, an official website, a commentator with the pseudonym of Liborio Bobo de Abela complained:

“How many millions does the Cuban economy lose because of the blindness of the decision makers? Could not CIMEX, TRD, etc., with more reasonable prices capture the foreign currencies that flow to the Panamanian economy? Can it be that it is cheaper to buy from those who mule from Panama due to the nonsensical 240% tax in the foreign currency stores and an obsolete and absurd pricing policy. Is our economy in a position to disregard this enormous potential? Today it is practically more profitable to buy anything in any place (Haiti included), paying for the passage, the visa, lodging, food and the customs tax than buying in the stores here. Has anyone among so many illustrious brains thought about these issues”, the commentator argued.

Everything seems to indicate that no “illustrious brain” has thought about these issues.

*Translator’s note: Cuban slang for those that travel overseas to buy goods scarce and/or expensive in Cuba to then resell upon returning to the Island.

Translated by Wilfredo Díaz Echevarria