14ymedio, Madrid, 29 August 2022 — The discrete opening to foreign market investment announced by the Cuban government this month has piqued the interest of Spanish businesses, according to the economic daily Cinco Días.
On Monday, the Spanish daily published an article which mentioned that the businesses which market raw materials, food, equipment, machinery, replacement parts, inputs for the development of local industry or inputs for the development of renewable energy will benefit the most, according to Hermenegildo Altozano, a partner in the Bird&Bird law firm, which provides legal advice related to operating on the island.
The specialist warned, however, that it all depends on the weak point of investing in Cuba: legal security. “Cuban operators must comply fully and precisely with the commitments made to foreign operators and they must be assured that there will not be restrictions or conditions on foreign transfers in freely convertible currency,” he explained.
Ignacio Aparicio, an partner at Andersen’s Cuban Desk, another legal advising company specializing in Cuba, believes that the measures of the executive branch are pending additional details, but he considers them of interest to foreign business owners. “Participation of foreign investors had not been possible until now, which limited the posibility of international brands of various products entering the Cuban market. They always had to access these channels through third-party, state-owned companies, which made it difficult to correctly implement their marketing policies such as price setting, sale pricing, and protecting their brand,” he told Cinco Días.
According to that outlet, the companies with the most options are those that have already been exporting to Cuba, such as those that sell equipment, which in 2021 made up 37% of sales to the Island, valued at € 235 million in machinery, mechanical or electronic devices.
Food, especially preserved meat and fish, represented 19% (€ 117 million), and plastics 8% (€ 49 million).
But the information is also suggestive of a possible arrival of textile giant Inditex, which has a presence in every country in the world except on the Island. “Companies view it as good news due to their affinity for Cuba and the acceptance of these brands in that region of the world, but at the same time, have some reservations due to the uncertainty and the lack of legal security,” said Eduardo Zamácola, president of the National Association of Retail Fashion (Acotex).
The business owner, who through Acotex represents more than 800 companies, believes that if these obstacles can be overcome it will open up a business opportunity for Tendam (which owns Spanish Cortefiel, Springfield, Pedro del Hierro, Women’secret and Fifty); Mango, which had two stores in Havana though only one remains; and Inditex. The Spanish textile empire created by Amancio Ortega includes many popular brands, among which the most well-recognized is the original, Zara.
The article highlights the “successful” Spanish presence in Cuban tourism through hotel management. According to data from Icex (the Spanish government agency that promotes international investment), there are 100 hotel administration contracts on the Island of which 70 are with Spanish companies. Meliá and Iberostar, with 33 and 18 hotels, are among those with the largest numbers, although the activation of Title III and IV of the Helms-Burton law resulted in legal trouble for both of them, especially the first; the final legal decisions are pending.
Furthermore, Icex revealed that three Spanish groups, Globalia, Atlantic Group Investment and La Playa Golf and Resort, are developing large-scale real estate projects associated with golf courses: El Salado (Artemisa), Punta Colorada (Pinar del Río) and La Altura.
Foreigners will be able to invest in wholesale commerce through mixed enterprises, international economic association contracts, or through the creation of an affiliate in Cuba or a franchise that is 100% foreign-owned. In contrast, for retail, the only modality will be through a mixed enterprise.
This measure is intended to ease the scarcity of goods on the Island, which has worsened in the last year, but although investors are eyeing Cuba, the warnings are the same as usual and it all depends on the fine print in the norms.
Translated by: Silvia Suárez
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