Domingo, 4 de Diciembre de 2016
04:25 CET.
Economy

Much ado about nothing

The Mariel Special Development Area, Foreign Investments Law, legal amendments, portfolios of opportunities, promotional trips to many countries, yet another new portfolio of opportunities, and another Feria Internacional de la Habana, etcetera. Many activities and paltry results. There is only talk of eight approved projects initiating their investment processes, without specifying which ones.

Cuban authorities today acknowledge that that the country needs foreign investment for its development, without which it will be impossible.

Investors, whatever country they are from, care little about the social system of the country where they intend to invest: they do not care whether they are democratic or totalitarian, or whether or not they respect citizens' freedoms and rights. Investors are interested, however, in the legal security of their investments, earning quick profits, and recovering the capital they have invested in the shortest time possible.

These conditions do not currently exist in Cuba. Moreover, there are restrictions that make investing decidedly unenticing: the investor cannot directly hire workforces, but rather must do so through a government contracting agency, to which he gives the funds for wages, paid in foreign currency, with the agency paying the workers in devalued Cuban pesos, at a rate of 2x1, when the official rate is 24x1; 70% of production must be commercialized in the country, in a depressed market where the population has limited financial resources because it receives measly wages; and they must export 30% to highly competitive markets where major brands have been established for years.

And, as if that were not enough, disputes arising between foreign investors and the Cuban Government must be settled in the Cuban courts.

At the recent International Fair in Havana the potential comprehensive export of goods and services for health and sustainable agro-industrial development were proposed, with great added value promised. The proposal seemed almost a bad joke in a country where health services for citizens are seriously deficient, and agro-industrial development is conspicuously absent, unable to meet the country's food needs via domestic production, with many products having to be imported.

It is striking how little has been published about whatever actually came of the letters of intent or commercial agreements signed at the edition’s previous 32 editions. Apparently little ever came of them. It would be healthy for the country if, after this 33rd edition, this phenomenon were not repeated and yielded more than attendance figures, without tangible results.

With all these limitations it is very difficult to get foreign investors (Cubans are still excluded) to risk their capital. The rules of the game must be significantly changed, and the Cuban government must finally understand that it cannot control everything. In its present form, this policy of attracting foreign investment is doomed.

Some signs of this are already are visible.