Cuba eyes new port as eco­nomic life­line

Lead­ers hope Mariel could be­come strate­gic com­mer­cial cen­ter

The Washington Times Daily - - Business - BY AN­DREA RO­DRIGUEZ

MARIEL, CUBA | Life still moves slowly in this small, dusty ham­let with squat homes lin­ing nar­row streets, where some walk slowly with para­sols to ward off the pound­ing trop­i­cal sun.

Best known as the launch point of a mass mar­itime ex­o­dus to the U.S. in 1980, the 40,000-per­son town of Mariel has prac­ti­cally no traf­fic and young­sters play freely in the streets without wor­ry­ing their par­ents. But all that’s about to change with the rise of a huge, mod­ern, $900 mil­lion port and spe­cial com­mer­cial zone in and around the town’s for­merly sleepy har­bor.

The is­land na­tion’s Com­mu­nist au­thor­i­ties have high hopes that Mariel could be­come a strate­gic eco­nomic cen­ter — es­pe­cially if the U.S. lifts its 51-year-old em­bargo and starts send­ing con­tainer ships south. Oth­ers sus­pect the port’s im­pact on Cuba may be more mod­est, re­flect­ing the coun­try’s long-stag­nant econ­omy.

Plans to over­haul the Port of Mariel be­gan in 2009 when of­fi­cials de­ter­mined the coun­try’s main har­bor in Ha­vana is too shal­low for big­ger, deeper-draft “postPana­max” ves­sels, which start­ing in 2015 will be­gin cross­ing through an ex­panded Panama Canal and carry an in­creas­ing share of re­gional cargo.

“The Port of Mariel could ... con­trib­ute to a re­vival of Cuban for­eign trade, more so if there are im­prove­ments in re­la­tions with the United States,” said Ar­turo LopezLevy, an econ­o­mist and lec­turer at the Univer­sity of Den­ver.

Dur­ing a re­cent visit by The As­so­ci­ated Press, or­ange-clad, hel­meted work­ers in the port zone were build­ing what looked like a large ware­house while trucks ar­rived loaded with con­struc­tion ma­te­ri­als. Hun­dreds of yards of docks ap­peared nearly com­pleted, ahead of the port’s ex­pected open­ing early next year.

The abil­ity to take in deeper-draft ships would let Cuba keep pace with global ship­ping in­no­va­tions and ac­com­mo­date more cargo. Hopes are equally high for the ad­ja­cent, 180-square-mile in­dus­trial park and spe­cial de­vel­op­ment zone, which of­fi­cially launched Nov. 1.

Au­thor­i­ties hope to at­tract for­eign com­pa­nies to in­vest and set up shop in the de­vel­op­ment zone, with a pri­or­ity on in­dus­tries such as food, biotech, re­new­able en­ergy, pack­ag­ing and telecom­mu­ni­ca­tions.

For­eign com­pa­nies that an­swer the call will be ex­empted from pay­ing taxes on la­bor, prof­its and sales and ser­vices, at least at first. Tax rates will rise to 12 per­cent on prof­its af­ter a decade of op­er­a­tion and 1 per­cent on sales and ser­vices af­ter 12 months.

“It will be a world-class spe­cial zone,” said Ana Teresa Igarza, di­rec­tor of the of­fice over­see­ing the de­vel­op­ment zone dur­ing a pre­sen­ta­tion about the port last week.

At the pre­sen­ta­tion, some at­ten­dees ex­pressed skep­ti­cism about rules pro­hibit­ing for­eign com­pa­nies from hir­ing em­ploy­ees di­rectly, in­stead forc­ing them to con­tract with work­ers through a state-run em­ploy­ment agency.

One diplo­mat who at­tended said the in­abil­ity to choose em­ploy­ees in­de­pen­dently makes do­ing busi­ness harder and wor­ried that the zone could suf­fer from the same cum­ber­some bu­reau­cracy that plagued pre­vi­ous, smaller de­vel­op­ment zones in Cuba.

Some com­pa­nies will no doubt be hes­i­tant to set up shop know­ing that U.S. em­bargo rules would al­most cer­tainly pro­hibit them from sell­ing their prod­ucts in the United States and that their Cuban op­er­a­tions could com­pli­cate any trade they do with Un­cle Sam. Em­bargo rules pro­hibit ships from dock­ing in the United States for six months af­ter call­ing in Cuban ports.

Cuban of­fi­cials are bet­ting Mariel will be at­trac­tive enough to over­come those prob­lems.

Brazil, which is Cuba’s No. 2 eco­nomic part­ner in Latin Amer­ica af­ter oil bene­fac­tor Venezuela, is pro­vid­ing credit to pay two-thirds of the project’s costs.

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