Cuba falling short of for­eign in­vest­ment goals

Jamaica Gleaner - - BUSINESS - – AP

CUBA IS fail­ing to meet its self-im­posed for­eign­in­vest­ment tar­gets two years af­ter de­tente with the United States set off the great­est surge of busi­ness in­ter­est in the coun­try since its 1959 so­cial­ist revo­lu­tion, of­fi­cials said on Tues­day.

For­eign com­merce min­is­ter Ro­drigo Malmierca told for­eign busi­ness peo­ple and diplo­mats at the coun­try’s an­nual trade fair that Cuba has ap­proved 83 for­eign in­vest­ment projects worth more than US$1.5 bil­lion since the pas­sage of a new for­eign in­vest­ment in March 2014.

That puts the coun­try at about a third of the an­nual flow re­quired to meet its goal of at­tract­ing US$2 bil­lion a year in for­eign in­vest­ment.

Even that fig­ure may be op­ti­mistic: The list of 83 projects in­cludes many that are in very early stages or have yet to be­gin con­struc­tion.

“We aren’t ad­vanc­ing, I re­peat, at the rhythm that we want,” Malmierca said. “We need to keep work­ing hard for deals to be­come re­al­ity with­out prob­lems, with­out un­nec­es­sary de­lays.”

He said Cuba was work­ing to ease the flow of in­vest­ments with new mea­sures like al­low­ing for­eign busi­nesses to in­vest in in­fras­truc­ture projects and in the agri­cul­tural co­op­er­a­tives that pro­duce much of the coun­try’s food.

“Our gov­ern­ment is will­ing to re­solve the prob­lems that still hin­der the com­ple­tion of these ob­jec­tives,” he said.

Cuba blames most of its eco­nomic prob­lems on a US em­bargo that lim­its in­ter­na­tional trade with the is­land de­spite new US reg­u­la­tions de­signed by the Obama ad­min­is­tra­tion to ease what Cubans call ‘the block­ade’. In­ter­na­tional busi­ness peo­ple and in­creas­ingly Cuban of­fi­cials them­selves say the is­land’s slow-mov­ing and risk-averse bu­reau­cracy is a ma­jor ob­sta­cle, with im­por­tant doc­u­ments often tak­ing Cuba’s min­is­ter of for­eign trade, Ro­drigo Malmierca (right) watches as vice-pres­i­dent of Cuba’s Coun­cil of Min­is­ters Ri­cardo Cabrisas Ruiz (left) cuts the rib­bon at the open­ing of the 34th Trade Fair in Ha­vana, Cuba, on Mon­day, Oc­to­ber 31, 2016. A week­long event of com­merce is un­der way with par­tic­i­pants from 75 coun­tries. Even though this is the coun­try’s largest gen­eral-in­ter­est trade fair, the Cuban gov­ern­ment main­tains a monopoly on im­port­ing and ex­port­ing and on vir­tu­ally all sales of prod­ucts in­side the coun­try, mak­ing the state bu­reau­cracy the fi­nal ar­biter of what busi­ness gets done.

months to move from one of­fi­cial’s desk to an­other.

In­vest­ment from Euro­pean com­pa­nies ap­pears to be pick­ing up steam, with Cuba in Au­gust grant­ing state-backed French firm Aero­ports de Paris a con­ces­sion to ren­o­vate and op­er­ate Ha­vana’s José Martí air­port.

For­mal trade be­tween the United States and Cuba re­mains at a trickle de­spite a few mar­quee deals for big brands, in­clud­ing air­lines start­ing com­mer­cial flights to Ha­vana this month.

The mood was subdued among US com­pa­nies ex­hi­bi­tion Mon­day at the In­ter­na­tional Fair of Ha­vana, the is­land’s

big­gest gen­eral-in­ter­est trade ex­po­si­tion. As Cuba trum­peted new deals with Rus­sia and Japan, US cor­po­rate rep­re­sen­ta­tives staffing stands at a pav­il­ion shared with Puerto Rico said they saw lit­tle im­me­di­ate prospect for do­ing busi­ness with Cuba.

WITH­OUT EX­PLA­NA­TION

Re­tired soft­ware en­trepreneurs Saul Ber­en­thal and Ho­race Clem­mons made world­wide head­lines by win­ning Obama ad­min­is­tra­tion per­mis­sion to build the first US fac­tory in Cuba since 1959. Cuban of­fi­cials lauded their plans to build small trac­tors in the

Mariel free-trade zone west of Ha­vana. But af­ter more than a year of courtship, the Cuban gov­ern­ment told Ber­en­thal and Clem­mons to drop their plan, with­out ex­pla­na­tion, Ber­en­thal said on Mon­day.

A month and a half ago, their first trac­tors started rolling off their as­sem­bly line in the town of Fyffe, Alabama, with pop­u­la­tion about 1,000.

“Pro­duc­ing the trac­tors in Mariel was not go­ing to hap­pen,” Ber­en­thal said.

He said the com­pany is al­ready sell­ing trac­tors to cus­tomers in the US and Aus­tralia and has had in­quiries from Peru, Cuba’s Min­is­ter of For­eign Trade Ro­drigo Malmierca makes the open­ing speech for the 34th Trade Fair in Ha­vana, Cuba, Mon­day, Oc­to­ber 31, 2016.

Mex­ico and Ethiopia. He also still hopes to sell to Cuba.

Obama has en­acted six rounds of reg­u­la­tions punch­ing holes in the trade em­bargo, al­low­ing im­ports and ex­ports, sales to the so­cial­ist gov­ern­ment and limited US in­vest­ment on the is­land. Cuba has al­lowed Airbnb, Star­wood Ho­tels and US air­lines, in­clud­ing Amer­i­can and JetBlue, to set up op­er­a­tions.

STAG­NANT STATE

Observers note that Cuba’s small but grow­ing pri­vate sec­tor has been able to flour­ish and pro­duce tens of thou­sands of new jobs de­spite the stric­tures of the em­bargo. Un­told mil­lions of dol­lars have flowed into Cuba over the last two years, fund­ing thou­sands of new pri­vate bed and break­fasts and dozens of new restau­rants in the cap­i­tal as de­tente with the US sets off a boom in tourism to the is­land.

Some see the stag­nant state of of­fi­cial trade with the US as a

con­scious de­ci­sion by the Cuban gov­ern­ment to limit com­merce to a few high-pro­file bites of the ap­ple while fun­nelling most busi­ness to­wards Euro­pean and Asian com­pa­nies, in or­der to keep the US busi­ness com­mu­nity hun­gry for more and push­ing Congress to do away with the em­bargo.

“The Cuban gov­ern­ment is us­ing the in­ter­est by US com­pa­nies as bait to en­tice the in­ter­est of com­pa­nies in other coun­tries,” said John Kavulich of the US-Cuba Trade and Eco­nomic Coun­cil, a pri­vate group that pro­duces mostly scep­ti­cal analy­ses of the prospects of USCuba trade.

“The Cuban gov­ern­ment is say­ing, ‘Let’s not give any more than ab­so­lutely nec­es­sary to US com­pa­nies’, so that the com­pa­nies will con­tinue to sali­vate to­wards il­lu­sory po­ten­tial op­por­tu­ni­ties. There’s far more in­spi­ra­tion and as­pi­ra­tion than re­al­ity.”

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