Cuba to Legalize Small and Medium Sized Businesses

Date: 27 May 2016 11:01

One of the world’s last communist countries has finally started to embrace capitalism. On Tuesday, May 26th, Cuba announced that it will legalize Small and Medium Size Enterprises (SMEs). The move has given wings to a section of the economy that, up until now, has been prohibited and non-existent, at least legally.

The reform leaves business owners and economists optimistic that the change will permit private companies to import wholesale raw materials and export finished goods to foreign countries for the first time. Finally, removing a massive hurdle in private business sector growth.

This indicates a change in policy after decades of being hypercritical of the free market, labeling it as a ‘tool of American imperialism’. Raul Castro, once again proving that his more lenient take on reforms is benefiting the Cuban economy and, most importantly, the people. The Cuban government now realize that the economy will not progress without a private sector.

Since 2010, the government has permitted its citizens be self-employed. This has led to around a third of Cuba’s workforce, approximately 1.6 million people, moving to work in the private sector. The new modifications extend legal rights to small business owners. This goes in line with Raul Castro’s claims in 2008, where he stated that he eventually foresaw 40% of the workforce in the private sector. Cuba looks like it is evolving much the way China did, maintaining a Communist government but opening up a capitalist economy.