Some Private Companies in Cuban Begin Exporting without the State’s Involvement

Persian limes, known locally as lemons, are one of the island’s most exported products according to officials. (Cubadebate)

14ymedio bigger14ymedio, Madrid, 21 September 2022 — Small and medium-sized companies in the technology and renewable energy sectors may now export their products and services without having to rely on the state as an intermediary. The news was buried near the end of an article published on Wednesday in the the official online daily Cubadebate. The article dealt with foreign trade involving “forms of non-state management,” a euphemism that avoids using the words “private sector”.

Authorities had already announced in August that they would allow private entities to do this “under the control of the Ministry of Foreign Trade and Investment.” That time has now come. Vivian Herrera Cid, director-general for this program, states that the technology sector was chosen because it had the “simplest operations” and the renewable energy sector because of “the country’s energy situation.”

Herrera notes that these businesses will be subject to the same controls and supervision as state-run entities. Companies which are already engaged in foreign trade do not seem to be convinced the process will work, however. One such skeptic is Bernardo Romero Gonzalez, head of the mid-sized software firm Ingenius SRL.

The Cuban businessman is trying to take advantage of this option but fears that the experience will be similar to the one with which he is already familiar. “This could work as long as the procedures are more flexible,” he tells Cubadebate. As an exporter, he has been hampered by the slowness of the system, pointing out that, though a state company can afford such delays, every week spent waiting for approvals means money lost for a small company. Imports have also faced long delays.

Though the article contains data that should come as no surprise to anyone given the country’s heavy dependence on imports, the numbers are startling. Of the 15,497 contracts private businesses have finalized with overseas companies through the state, 15,101 (97.4%) were for imports. Only 396 were for exports.

Since these businesses were converted to small-size businesses, and to a lesser extent new ones were created from scratch, 1,092 have been involved in imports and only six in exports.

In the article, Herrera blames several factors to justify the low level of foreign trade in the private sector. On one hand, she cites the pandemic, which has drained the island’s few resources and hindered the flow of exchange between countries. Then there is Russia’s war against Ukraine as well as the rise in freight costs and of products in general.

She points out that officials have tried measures intended to encourage foreign trade. These include consignment sales, the sale of imported merchandise already stored in government warehouses and the creation of small state-owned enterprises dedicated exclusively to foreign trade to supply the private sector.

In the latter example, this involved creating another government intermediary: Solintel. The company has set up an online store to sell technology as well as retail stores in several provinces that its customers can access. She therefore feels that, despite inconveniences, “inaction by some companies is not justified.”

But Romero Gonzalez refutes this, pointing out that the Cuban economy, especially foreign trade, remains burdened with bureaucratic hurdles.” The problem is in the regulations,” he says bluntly, emphasizing that it is even more confusing when it comes to online sales with no freight charges.

The businessman, who has worked with Solintel, explains that, after negotiating with the client, he contacted the company. It handed him “a sheaf of papers” required by the Ministry of Foreign Trade. “They tell you if you’ve missed a comma, or that where it says ’client’ when it should say a ’buyer.’ Things like that. We’ve spent up to three months in this process before being able sign a contract,” he complains.

Romero Gonzalez, who has thirty employees, admits that sometimes he has had to provide services without having signed a contract or received payment, putting everything at risk. “What we cannot do is tell clients, ’Wait two months for the paperwork to be completed,’ because we would lose them.”

Romero admits that he has been able to export and to be paid in hard currency but says things cannot go on as they have, especially when it involves long-term contracts.

Harrera says her ministry is aware of the complaints and is revising and modifying more than seventy regulations dealing with foreign trade. “It’s not a matter of  getting rid of permits but of simplifying the steps required by authorities, not throwing out all regulations,” she explains.

She adds that businesspeople must understand that they are not individuals making purchases on Alibaba, that international sales follow procedures that address border security, health and other concerns and involve cumbersome procedures. She insists, however, that there will be changes “so that, when direct export is authorized by small and medium-sized businesses, they can operate under the same conditions as socialist state companies.”

Among the largest number of exports are charcoal, agricultural products (lima beans, avocados, chile peppers, turmeric, bananas and pineapple), technical support services, web platforms, furniture and decorative accessories. Meanwhile, imports include food, footwear, construction materials, paint, automobile spare parts, home appliances and an endless number of other products.

Herrera also mentions the single, one-stop system that should simplify the paperwork process, which in any given instance can now take between 50 to 60 days. “This process, in which several agencies and institutions are involved, requires a lot of permits. These are necessary, however, because they are intended to protect people, plants, animals, the broadcast spectrum and national security,” she points out.


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