Cuba Outstretches Hand for FDI
Date: 29 Nov 2016 15:05
The leader of the Cuban Revolution is dead. Now all the backlog of change, 50 years’ worth of it, can slowly start. Until he passed the baton to his brother Raul Castro (2008), Cuba had resisted change for almost half a century. After Raul took over, the country started changing slowly but surely. The automatic ‘no’ answers, to anything and everything that involved change, became ‘maybes’ and ‘under certain conditions’. This gave way to laws that permitted private businesses and private property, previously outlawed in Cuba.
Since then, foreign companies have been sniffing around for signs or financial security for their investments. The proof is in the pudding; Cuba has reformed its foreign direct investment (FDI) legislation, permitting investors to establish factories entirely funded by foreign capital – even offering tax deductions. The Cuban regime is pushing forward with plans to attract FDI.
The segment of the economy that has received the most substantial injection of foreign capital is the tourism sector. Cuba is set to have over 3.8m tourists hit its shores in 2016. The USA’s rapprochement with Cuba has led to many other countries now looking at Cuba as a viable investment destination, leading to augmented competition for investment prospects.
Such foreign investment brings money, which in turn helps develop infrastructure and further enhance the image of Cuba, which creates more interest in tourism. It is a positive chain that just needs the first link to build on. Just this year, Unilever agreed to a $35m joint venture to construct a factory and produce toiletries. Other ideas for future investments range from: soybean/soy oil refinery, biotech R&D factories, partnerships with CIMEX to develop wholesale food and industrial supply depots, among others.
The nationalization of foreign commercial and industrial assets (1960) has long cast a dark shadow of doubt over Cuba with respect to FDI. However, Cuba has begun repaying its debt to the 14 wealthy countries that makeup the Paris Club, even making a payment in advance. These types of actions help to restore faith that Cuba is ready to turn the page on Total Communism, and make strides towards becoming like China – a very centralized government quasi one party system that, by contrast, has implemented a sort of free market. As Cuba looks to a bright new horizon, opening up the economy, the skies and the seas one can only wonder when, and not if, ferries will start.
Date: 14 December 2016
A new wave of cruise companies, a total of five, working under either the Royal Caribbean & Norwegian Cruise Lines holdings umbrellas are entering the South Florida – Cuba ferry market. Norwegian will become the only operator headquartered in the USA that will have the entirety of its brands sailing to the once-forbidden island. The three brands, Norwegian Cruise Line, Regent 7 Seas and Oceania Cruises, will sail to the island while acting in accordance with US Department of Treasury regulations. In addition to these three, Azamea Club Cruises and Royal Caribbean will also begin operations from Florida to Cuba. Under the regulations as classified by the Office of Foreign Assets Control (OFAC), passengers would engage in ‘people-to-people activities’.
Date: 06 December 2016
Hardly more could have changed in the US/Cuba dynamic in the last month. With the surprise election of Donald Trump, everything seemed to be reverting to the Cold War period. But after breaking campaign promise after campaign promise, the threats seem less and less viable. Compound that with the recent death of Cuban, Marxist-Leninist revolutionary, Fidel Castro and everything seems up in the air. With the more moderate Raúl Castro now pulling the strings, without any interference from his brother to moderate any advances in economic policy, the possibility for change is there.
Date: 22 November 2016
A collection of big multi-nationals who started planning for life after the embargo will attempt to pander to president-elect Trump’s self-proclaimed superior business acumen. Dozens of companies are either planning to, or have started expanding into Cuba already. Trump threatened to shut the doors on the newly re-opened American embassy in Havana, as well as flirting with reverting to previous Cold War economic relations and travel agreements. However, the Chamber of Commerce will be pushing to maintain the current status quo after Obama’s reform created loads of promising commercial prospects. The strategy is trying to pull at strings that are key pieces to the Trump persona. If an opportunity makes good business sense, then why would a proficient businessman turn it down?
Date: 16 November 2016
Spanish businessmen with pending plans for the island have made no attempt to hide their fear that the first mover’s advantage benefits of certain big American companies could create barriers that will make their entry into the market more difficult. Even though, stateside, the fear is that the politics will revert to the times before the Obama rapprochement two years ago.
Date: 07 November 2016
The new Presidential Policy Directive (PPD) is working already. The PPD, which was enacted last month, is the latest in a course of events in the Cuban Thaw that, through executive action, loosened travel and trade to Cuba. It allows for the import of Cuban medicines to the USA. CIMAvax, an encouraging lung-cancer vaccine, will soon commence Food and Drug Administration (FDA) clinical trials in the USA. As of today, never before has a Cuban drug been run in clinical trials in the USA. At first glance, the shipment of delicate cargo seemed a precarious obstacle. However, after a successful test run to ensure the delicate cargo would arrive intact, shipping a box of water, it seems that the USA are ready to receive the delicate cargo.
Date: 31 October 2016
TripAdvisor has become one of the inaugural American companies given permission by the US government to sell “travel-related services” to Cuba bound travelers worldwide. The US Treasury Department’s license grants TripAdvisor permission to stimulate and support “educational and cultural engagement between global travelers and the Cuban people.”
Date: 27 October 2016
On Wednesday, October 26th, the United States took another massive step towards ending the Cuban Embargo. The US changed its vote from ‘in favor’ to ‘abstain’ for the UN General Assembly’s resolution for an end to the embargo. This marks the first time since the fall of the Soviet Union in 1991 the US has not voted in favor to maintaining the embargo. Normally, several smaller nations vote in line with the USA. However, this time, of the 193 UN member countries, 191 voted against the embargo with just Israel siding with the USA in abstention and nobody opposing the reform.
Date: 20 October 2016
As time ticks down on President Obama’s tenure in office, he has yet again pushed the envelope in the Cuban Thaw. In what has become one of the most significant developments in American foreign policy in the last half century, Obama has, in a new directive, urged for a policy of “positive engagement as opposed to perpetual hostility” as the future of American-Cuban relations, in a bid to make the rapprochement “irreversible”.
Date: 14 October 2016
The President of Baleària, Adoldo Utor, has offered to assist in re-establishing an internal ferry route network in Cuba. This comes after a recent trip to the island to discuss plans, as mentioned in our previous article, for Baleària to be the first ferry company to operate the crossing from Miami and Cuba.