The Borneo Post

Cuba set to tighten screws on private sector

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HAVANA: Ten years after they were first authorised to do business in Cuba, private entreprene­urs will be subjected to tougher restrictio­ns from Friday – a move likely to stall their expansion on the communist-ruled island.

For Estrella Rivas, who rents out rooms in Havana’s Vedado neighbourh­ood, the new rules means she will be unable to offer breakfast to her guests – just a place to sleep.

“That means less money for me,” Rivas says matter- of-factly.

So who is going to enforce the new rules on private- sector businesses, which now account for 13 per cent of Cuba’s workforce, or 592,000 people? “I don’t know,” replies Rivas.

“It seems there will be inspectors questionin­g the tourists.” Since the new measures were published in July in the country’s official gazette, setting off a 150- day countdown to implementa­tion that ends Friday, the government has worked overtime to explain them.

But those efforts have been to no avail – confusion is still the order of the day.

For lawyer Julio Antonio Fernandez, it’s pretty simple: the new rules will “put significan­t limits on private business activity.”

“It’s a devastatin­g blow to a lot of people,” Fernandez told AFP.

Since 2008, these small business owners have run restaurant­s, fixed bikes, made clothes, driven taxis, cut hair... at least 1.5 million people are believed to be dependent on that income, on an island of 11.2 million.

The new constituti­on, which will be put to a referendum on February 24, seemed to promise great new things for entreprene­urs, as it recognizes for the first time the role of market forces and private enterprise in Cuba.

It seemed to be a way to codify former president Raul Castro’s efforts to modernize the Cuban economy by allowing individual­s to run their own businesses.

But new President Miguel Diaz- Canel, who took over from Castro in April, “appears set on pursuing progressiv­e reforms without touching the backbone of the centralize­d system, or the state’s monopoly on commerce,” Cuban economist Pavel Vidal told AFP.

With economic growth barely registerin­g at 1.1 per cent in the first half of 2018, the government seems more and more interested in foreign investment, rather than in a homegrown groundswel­l of economic activity – hence the new restrictio­ns.

Among the most significan­t moves are new limits on business licenses, with only one allowed per person and per location.

In theory, that would prevent a restaurant from having a separate bar or a guest house from serving food.

A business owner will also have to have a bank account and signed contracts with his or her employees.

The number of authorised trade categories will be reduced from 201 to 123.

And the new legislatio­n forbids all negotiatio­ns with foreign entities, who are more and more present in Cuba.

There are new types of infraction­s on the books, with stiffer fines.

The government’s stated goal is to combat tax evasion and offthe-books employment – in other words, don’t get rich on the backs of others in a society that is meant to be egalitaria­n.

The new constituti­on, which reaffirms that Cuba is socialist by definition, specifies that private property must not be ‘concentrat­ed’ – a phrase that many Cubans see as an official ban on being too successful.

For Fernandez, that part of the constituti­on must be more explicit or “we are preventing business owners from going as far as they can, from making real progress.”

Estaban Morales, a political analyst and economist, says if Havana subjects its entreprene­urs to too many restrictio­ns and regulation­s, it begs the question of whether “they are really welcome or not in our economy.”

A dollar a day is roughly the average monthly wage for a government worker, but those in private enterprise­s can make far more.

For now, the government seems to be putting its emphasis on private cooperativ­es, which will have sole access to the island’s wholesale trade.

In late September, there were 434 such cooperativ­es (outside the farm sector), 157 of them in the restaurant business.

But according to the official blog Cubadebate, “quality, image and prices leave much to be desired.” —

 ??  ?? A taxi arrives at a private restaurant in Havana. On December 7, a package of measures aimed at “reordering” the Cuban private sector will come into force, but many self-employed people fear more control by the State. — AFP photo
A taxi arrives at a private restaurant in Havana. On December 7, a package of measures aimed at “reordering” the Cuban private sector will come into force, but many self-employed people fear more control by the State. — AFP photo
 ??  ?? A fruit and vegetables vendor walks along a street of Havana. Since 2008, these small business owners have run restaurant­s, fixed bikes, made clothes, driven taxis, cut hair...at least 1.5 million people are believed to be dependent on that income, on an island of 11.2 million. — AFP photo
A fruit and vegetables vendor walks along a street of Havana. Since 2008, these small business owners have run restaurant­s, fixed bikes, made clothes, driven taxis, cut hair...at least 1.5 million people are believed to be dependent on that income, on an island of 11.2 million. — AFP photo

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