Informacion economica sobre Cuba

A Lot of Noise and Few Investments / 14ymedio, Reinaldo Escobar

14ymedio, Reinaldo Escobar, Havana, 3 November 2016 — Oggún is one of
the orisha warriors of the Yoruba pantheon, but a tractor that bears his
name is losing the battle for the Cuban market. The Cleber firm has
failed to establish itself in Cuba, although a year ago it was heralded
as the vanguard of US investments in the island.

The tractors designed by Saul Berenthal and Horace Clemmons jumped to
the front pages of the newspapers as a symbol of the economic
rapprochement between Cuba and the United States. However, at the
International Fair of Havana (FIHAV) it has been announced that the
project was terminated for not having met “the requirements of
technological innovation” required for the Mariel Special Development
Zone (ZEDM).

In the halls of the fair contrasts abound. Officials dressed in
impeccable guayaberas smile and encourage the exhibitors to showcase
their products. The number of delegations has grown this year and Japan
has come with its sophisticated equipment from Panasonic. But one also
gets the feeling that the trade event is a useless showcase without
concrete results.

What happened with the Oggún tractors recalls other cases in which
expectations of doing business on the island have remained intentions or
headlines. A situation that contradicts the economic emergency in the
country, where the economic growth forecast for this year has fallen
below 1% and there is a need to attract foreign capital at a rate of two
billion dollars a year.

The process of investment is marked by slowness and timidity. So far,
the ZEDM has only laid the first stone of the joint venture to produce
Brascuba cigarettes, formed by Brazil’s Souza Cruz company and Cuba’s
Tabacuba. If they meet their objectives, it will be the end of 2018
before the industry produces 15 billion cigarettes a year.

Among business groups, frustration and impatience is growing. “They
don’t know how to do business, everything goes very slowly and many have
become tired of waiting,” a businessman of Cuban origin based in the
United States commented outside the ExpoCuba fairgrounds, on one of his
occasional visit to Cuba. “I’m about to throw in the towel,” he added.

“They promise a lot, but little has materialized after two years,” he
explained, under conditions of anonymity. He notes that he came looking
for “something more than words.” After several months of exploring the
opportunity to position his firm in the domestic market, the
entrepreneur believes that “it is still cheaper and faster to install a
factory in Mexico or in Jamaica. What would be the advantage of doing it

In his speech to present the new version of the Business Portfolio,
Foreign Trade Minister Rodrigo Malmierca Diaz, was forced to chase away
the fears: “Foreign investment is not a necessary evil, we want it for
the country’s development. It is a sovereign decision of Cuba that no
one is imposing on us, we are doing it because we are committed.”

However, the ideological discourse of recent weeks has risen in tone and
become more belligerent against the US administration. Television
alternates reports in which there is talk about investment, businesses
and joint ventures, with other material in which capitalism is demonized
and the neighbor to the north is accused of “overthrowing” the Cuban system.

“Companies complain, with reason, that the negotiations need to be sped
up,” Malmierca admitted to the investors. However, the slowness is also
established in Guideline 64 approved by the 8th Communist Party
Congress, where it establishes that “who decides is not negotiable” in
international economic relations.

The Cuban officials attending FIHAV can appear to be in the best mood,
with the widest smiles and business cards filled with responsibilities,
but the foreign entrepreneurs know they are powerless intermediaries
without the ability to make any decisions. Their task is simply to
explore the proposals and generate illusions among the people they speak

It is not only bureaucratic sluggishness that makes investors lose
momentum. “The dual currency system and the state monopoly over
payrolls* are discouraging many people,” a Guatemalan businessman
attending FIHAV explained to 14ymedio. “We are not used to not being
able to contract directly* with our own personnel,” added the visitor.

The restoration of relations between Cuba and the United States has been
one of the main causes of the flood of entrepreneurs who have visited
the island in the last two years, but that undeniable push does not
constitute a source of permanent energy. Every day that the Cuban
government fails to take advantage of the momentum from the
rapprochement between the two neighbors, it drags the country towards
economic inertia and sinks it in failure.

*Translator’s note: The Cuban government acts as the employer in this
situation, hiring the workforce, assigning individuals to jobs, and
collecting the wages for their work. In exchange for this ‘service’ the
government retains a large share of the wage income, passing on only
relatively small portion to the workers. International firms are not
accustomed to working in an environment where they have no ability to
choose their own workers or to motivate them through the incentive of

Source: A Lot of Noise and Few Investments / 14ymedio, Reinaldo Escobar
– Translating Cuba –

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