Monday, April 22, 2024

Cuba seeks billions in foreign investment


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HAVANA (AP) – Cuba asked international companies on Monday to invest more than $8 billion in the island as it attempts to kick-start a centrally planned economy starved for cash and hamstrung by inefficiency.

Foreign Commerce Minister Rodrigo Malmierca Diaz announced a list of 246 potential projects that would cost $8.7 billion to build, from a pig farm to an auto plant. The menu of possible investments is a key step in a push for foreign capital that includes the relaxation of investment restrictions and the creation of a special trade zone around a new deep-water port west of Havana.

“Cuba is pushing strongly to take advantage of the benefits associated with foreign investment to stimulate development,” Malmierca said.

Despite the push, foreigners at Havana’s International Fair, the country’s main economic promotional event, described Cuba as a place that still makes investors deeply nervous. Many basic supplies are lacking and simple decisions take weeks or months for approval from overlapping government agencies.

The Cuban government remains opaque, refusing to release basic information like current levels of foreign investment. Malmierca told The Associated Press that the figure could be misused by the United States, which maintains an embargo on Cuba that the Caribbean country blames for much of its economic misfortune.

Cuba is “in an economic war with the world’s primary power,” he said. “We don’t give out that data.”

The call for foreign investment is part of a four-year-old reform process meant to energize the economy by introducing private enterprise and foreign capital into a socialist model characterized by low wages, insufficient investment, crumbling infrastructure and persistent shortages.

The country says it needs to drive foreign investment to more than $2 billion a year to help raise an economic growth rate not expected to exceed 1 percent this year. It’s looking to push growth to 5 percent annually, but the reform effort appears to have had few results so far. Cuba has yet to announce any foreign investment projects for the Mariel trade zone nearly a year after the port opened with $600 million from Brazil – two-thirds of the project’s cost.

Chinese executive George Yan said he asked in May for permission to build a $1 million plant at Mariel that would employ 100 Cubans to assemble energy-saving LED lights. Despite receiving initial approval three months later, he has not been shown potential sites for the factory or received other indications the project can proceed.

In China, he said, “this would take 24 hours.”

“The Cubans have a certain fear that if they go fast they can’t reverse any decision, so they prefer to go more slowly and do all the studies,” he said.

Yan nevertheless said he was optimistic Cuba would move faster in the coming year.

“Many people complain about the time in which we do things, but everyone’s got their own pace,” Malmierca said. “We’re going to do this our way and we want to do it well.”

The project list itself contained telling details about the lack of basic inputs for potential new businesses in Cuba. Among the enterprises Cuba wants funded is a $70 million plant producing bottles for drinks including Havana Club rum, a well-regarded joint venture between the Cuban government and French beverage conglomerate Pernod Ricard. In other words, a country looking to launch industries as complex as light-auto production today can’t produce something as basic as glass bottles for its rum.

Apart from the slow pace of doing business and lack of materials, foreign executives complain they have to hire Cuban employees through a state agency, limiting their ability to directly choose employees and promote them.

And the September sentencing of a Canadian automobile executive to 15 years in jail has made many worry that the routine practice of making payoffs to Cuban officials, ranging from cash to free meals, could result in the prosecution of businessmen who fall out of the government’s favor.

The Ontario-based automotive company Tokmakjian Group says the charges against its chief executive were an excuse to seize the automotive firm’s $100 million in assets in Cuba.




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