Cuba govt set to tighten screws on pri­vate sec­tor

Gulf Times - - LATIN AMERICA -

Ten years after they were first au­tho­rised to do busi­ness in Cuba, pri­vate en­trepreneurs will be sub­jected to tougher re­stric­tions from to­mor­row — a move likely to stall their ex­pan­sion on the com­mu­nistruled 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% 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 150day count­down to im­ple­men­ta­tion that ends to­mor­row, 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 said.

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

The new con­sti­tu­tion, which will be put to a ref­er­en­dum on Fe­bru­ary 24, seemed to prom­ise great new things for en­trepreneurs, as it recog­nises 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 mod­ernise 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 cen­tralised sys­tem, or the state’s monopoly on com­merce,” Cuban econ­o­mist Pavel Vi­dal said.

With eco­nomic growth barely reg­is­ter­ing at 1.1% 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 li­cences, 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 off-the-books em­ploy­ment — in other words, don’t get rich on the back 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.

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