Very Few Spanish Companies Are Willing To Invest in Cuba

The Island doesn’t have any of the advantages offered by Mexico, Colombia or Chile

Although Cuba has a high percentage of investment from Spain, it is not attractive enough for Spanish entrepreneurs / EFE

14ymedio bigger14ymedio, Madrid, April 11, 2024 — Although Spain is one of the main sources of foreign investment in Cuba, things change if the situation is turned around. Only 2% of Spanish companies with a presence in Latin America invested in Cuba in 2023, and the main reason is the Island’s “deficient infrastructure.”

The data appear in a report on the Spanish Investment Panorama in Ibero-America 2024, presented this Wednesday at Casa de América (Madrid) and prepared by IE University, Auxadi and Iberia. It shows that the Island is at the tail end of countries in Europe that receive investments from large Spanish companies and private entrepreneurs. The list is headed by Mexico, with 82%, followed by Colombia (75%), Chile (63%), Peru (55%) and Brazil (53%).

The outlook for this year is not encouraging, since Cuba and Venezuela are once again “among those that will experience a more complicated economic situation” in the opinion of the Spanish businessmen, who have added Ecuador to that group, due to the outbreak of violence in the country in the last two years. The Island is, in this case, ahead of Venezuela, with a 2.4 out of 5 in confidence in improvement.

The outlook for this year is not at all flattering, since Cuba and Venezuela are again “among those that will experience a more complicated economic situation”

Argentina improves its perspective with a 2.77 rating because of the “expectations of change that the new administration has generated, although the coming adjustment will make the next quarters very difficult.” But Mexico (3.6) and Chile (3.4) are still in the lead.

To prepare the report, entrepreneurs have been asked what are the main threats or risks that their companies face in Latin America. The majority (84%) have pointed out political instability, an area in which Colombia, Peru and Argentina stand out. This is followed by the exchange rate, where the same three countries also rate poorly, and citizen insecurity, especially in Mexico, Ecuador and Brazil. They are also concerned about legal uncertainty, especially in Venezuela, Mexico and Argentina, and the economic slowdown in Brazil, Venezuela and Costa Rica.

Finally, 18% pointed out deficient infrastructure, where Cuba appears, accompanied by Peru and Colombia.

The Island doesn’t have any of the advantages that entrepreneurs have found in the other countries. The list highlights an attractive domestic market (67%), especially in Brazil, Mexico and Colombia, and a qualified workforce (Colombia, Argentina and Chile). In addition, there is access to raw materials (Bolivia, Peru and Argentina), free trade agreements with third countries (Mexico, Argentina and Uruguay), competitiveness in the region (Mexico, Colombia and Chile) and an advantageous geographical location, which Cuba could fit perfectly. However, businessmen have preferred three of its neighbors: Panama, Mexico and the Dominican Republic.

For advantageous geographical location, businessmen prefer three of Cuba’s neighbors: Panama, Mexico and the Dominican Republic

The Island reappears in the report when complexity of the tax framework is compared to the Spanish one. Brazil, Argentina and Venezuela have, for entrepreneurs, greater complexity, while Cuba is ranked 13 out of 19, after respondents rated the difficulty of its system at 2.6 out of 5, with Honduras (2.2) and Uruguay (2.4) being the most accessible.

The main conclusion of the document, in general terms, is that 76% of the companies plan to increase their investments in Ibero-America, 22% will maintain them and only 2% will reduce them compared to last year.

The report indicates that, after the pandemic, a terrible economic situation was feared, aggravated by the war in Ukraine, which in Spain, as part of the European Union, threatened a fuel emergency that didn’t happen. The economy, in general, has slowed down on the continent, but – thanks to the European Central Bank’s monetary policies – the feared economic crisis has not materialized.

Although there was no positive outlook in Latin America either, US monetary policy – due to its influence in the region – has contributed to stabilizing the business environment, and economic activity is expected to grow above what was predicted by the International Monetary Fund.

More than 80% of companies believe that, in the next three years, their Ibero-American investments will increase, compared to the forecasts for the EU, US and Canada (stable at 60%) and Asia, (above 50%). The perception of Chinese influence is also striking, which, although its presence on the continent has considerably increased, is not perceived as a “threat” by the Spanish. Seventy percent believe that China is not a significant competitor, compared to the remaining 30%, which is divided equally (15% and 15%) between those who see it as one more competitor and those who consider it “quite important” competition.

Seventy percent believe that China is not a significant competitor, compared to the remaining 30%, which is divided between those who see it as one more competitor and those who consider it “quite important” competition

As for the location of the main headquarters, Mexico City is, for the ninth consecutive year, the favorite. The second place, which was traditionally Miami, has become Bogotá, followed by Santiago de Chile, which stands out for its safety, its business climate and the quality of family life.

The main investments of Spanish companies in Cuba are traditionally concentrated in tourism, although food also occupies an important place. The EU reports indicate that Spain is, by far, the largest investor on the Island, although France and Germany also have a certain presence. However, it is impossible to determine accurately who the largest investors are due to the opacity of Havana’s data.

The most recent report of ICEX (Spanish public entity that promotes international investment) inJanuary 2024 states that “the Cuban Administration does not detail the identity of foreign investors to protect them from US actions, and therefore the available data are only indicative.” The agency cannot compile a table of the flow of foreign investments by countries and sectors because “Cuba does not provide this information.”

Translated by Regina Anavy


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