Cuba says it will open its economy to majority-owned foreign investments
Cuba has announced it will open its centralized Soviet-style economy to foreign investments with Cuban minority participation, a key change because, until now, Cuba has insisted on keeping a majority of the shares when foreign companies build hotels and other projects on the island.
“We are, no doubt, facing what is probably one of the most relevant structural changes in the Cuban economy, especially because it leaves Cubans without participation in a process that the regime wants to put under its control,” said Cuban-Spanish economist Elías Amor Bravo.
Foreign companies will be able to have majority shares in businesses such as tourism, biotechnology, the pharmaceutical industry and in wholesale trade. According to the government, the new measure will eliminate the previous restrictions as part of “general adjustments to give more
flexibility” to investments.
Cuba will also allow “the participation of investment funds,” a financial instrument that in the past has been demonized by the ruling Communist party. Companies with 100 percent foreign capital can be allowed to take part in technology development areas, such as the one that already exists in Havana.
Cuba’s foreign trade minister, Rodrigo Malmierca, said the potential investment portfolio in Cuba is valued at $12 billion.
However, the country’s ability to attract foreign investment remains in question. The Mariel Special Development Zone, Cuba’s flagship foreign investment project, has been a failure judging by official figures. The government’s forecast when it opened the zone at the end of 2013 was that it would raise at least $2.5 billion annually and a total of $12.5 billion in its first five years. At the end of that five-year period, the zone had raised less than 10 percent of its goal, a total of $1.19 billion.
“Cuba, in foreign investment, does not amount to anything. Compared to its neighboring Dominican Republic, it doesn’t come close. The Dominican Republic, even in times of pandemic and crisis, has received $3 billion in investments,” said Amor.
For Omar Everleny Pérez, an economist who worked for the Center for Studies of the Cuban Economy at the University of Havana, Malmierca’s statements are positive.
He said the government has recognized its complex economic situation and that it’s necessary “to change the existing mentality if it is to attract foreign capital”