The Government publishes a new decree that increases the restrictions initiated last August
14ymedio, Havana, 5 December 2024 — The Cuban government took another step on Thursday in the restrictions on business freedom initiated with the mega package of measures issued last August . A resolution published in the Official Gazette establishes what is called “the regulation of wholesale and retail marketing by non-state economic actors,” which translates into the obligation for micro, small and medium-sized enterprises (MSMEs) to sell wholesale with the mediation of the State, and the explicit prohibition of doing so by self-employed workers.
These measures are triggering a lot of anger within the private sector. Speaking to 14ymedio, on condition of anonymity, the accountant of a small business that sells some imported foods wholesale expressed his indignation. “Since the new measures were announced in August, we have been preparing ourselves. The honeymoon with MSMEs is over, now the State is showing its true abusive face with private companies. While they are closing us off, they are allowing more and more foreign companies, several of them Spanish, to sell wholesale.”
The only non-state actors that will be able to engage in wholesale trade – that is, as an intermediary between the producer and the consumer, selling to retail entities and also to wholesalers – are “those who have production approved as their main activity.” That is, as long as it is “only their productions” and “after obtaining a commercial license, where this activity is specified.” They will not be able, like other private entities, to market other “national or imported” products.
MSMEs and self-employed workers are allowed to continue selling at retail level “as long as it is approved in their corporate purpose”
MSMEs and self-employed workers are allowed to continue selling at retail level “as long as it is approved in their corporate purpose or project, and they have the commercial license to do so.”
Unlike the usual practice with the legal texts in the Official Gazette, this rule comes into force from the moment it is published, that is, today, which explains the speed with which – also contrary to custom – it has been reported in the official press which, on other occasions, usually takes days to do so.
The “regulation,” it is detailed “will be carried out gradually.” MSMEs and non-agricultural cooperatives (CNA) whose main activity is wholesale marketing will have a period of 90 working days to confirm that “they will continue to carry out wholesale activity with the participation of state entities.” To do so, they must update their corporate purpose and commercial license, a process that the authorities assure “will be done expeditiously.”
Those who do not ratify the resolution will have a maximum of 120 working days to “liquidate their inventories” that were intended for the wholesale trade. They may, according to the resolution, “continue retail sales, if they have defined this in their corporate purpose and have a commercial license.”
Those MSMEs that have wholesale trade as a secondary activity will have up to 120 working days to “settle their merchandise for wholesale purposes.” As previously, they will be allowed to continue selling at retail if it is in their corporate purpose and they have a license. If they want to dedicate themselves to wholesale, they will have to modify their corporate purpose, becoming subordinate to the State (“defining wholesale trade with the participation of state entities as their main activity, according to the established procedures,” the law indicates).
Finally, self-employed workers who are currently engaged in wholesale trade have a maximum of 120 working days to liquidate their wholesale goods, although they can continue to sell them at retail.
The commercial licenses of MSMEs and CNAs that have wholesale as a secondary activity will be revoked, according to the resolution, starting this Thursday. In addition, the Central Commercial Registry “ex officio cancels the registration of the wholesale trade activity of national or imported goods for self-employed workers.”
“The State is positioned as another intermediary instead of competing, raising the price and delaying the process”
Without the “state wholesalers,” wholesale will not be available to private companies. In its educational article, Cubadebate argues that this brings “benefits,” including allowing “non-state economic actors to use the infrastructure, transportation and commercial experience” of state entities, and contributing to the “reduction of transportation and storage costs, impacting the retail prices of products destined for the population.”
However, some commentators have been quick to contradict oficialdom. “Excuse me, but the above is not true,” says an on-line commenter who identifies himself as Preocupado Colorado. “The State positions itself as another intermediary instead of competing, raising the price and delaying the process. It uses the currency of private parties (to whom it does not sell foreign currency) instead of its own.”
And he goes on to list a string of obstacles placed in the way of Cuban entrepreneurs by the government, such as preventing “the possibility of importing directly, in order to introduce state importers and not to have to compete in imports,” and capping private companies “on the prices of key foods, chicken, oil, etc. to discourage their sale while state stores sell them for double the price.”
“In August, they had already reduced the possibility of selling between non-state legal entities, and now they are eliminating it,” continues Preocupado Colorado. “In this way, they are eliminating private competition in large-scale trade, maintaining the monopoly and the same inefficient structures that have led us to the need to be open to non-state actors.” At the same time that they “encourage foreign, Cuban-American investment,” they do not give “the same tax breaks to Cubans from Cuba who would like to invest,” laments the same citizen. “They charge them in foreign currency, they do not sell them foreign currency and they pursue them to find out where they got it from. They take away the CUC [Cuban peso] for the MLC [freely convertible currency], now they are taking things from MLC for the USD.”
What is the next step? he asks. “Eliminate any MSME that competes with a state entity in any way? Is this how the ’socialist’ state company will be efficient, by removing potential competition?” And he concludes bitterly: “I don’t think so. They are defrauding the trust of all those who invested their savings and life projects in this country. Once again.”
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