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: 20 March 2017
Contrary to the popular belief that nothing has changed in Cuba since the Thaw, The Port of Mariel Special Development Zone has approved another 5 projects, taking the total to over 20 projects, from a dozen countries, with investments totaling over $900m. The Special Development Zone was built only a few years ago by Brazilian construction giant Odebrecht, and is reputedly one of the “most modern container ports in the Americas”.
Date: 20 February 2017
Cuban emissaries recently traveled to the Florida port cities of Palm Beach and Tampa to negotiate trade deals between Cuba and the two ports in question, as recent demand has continued to increase. There was much acclaim about such possibilities. A hype that was quickly shut down by menacing threats to “withhold funds for port improvements to any ports that expand trade with Cuba”, from Florida Governor, Rick Scott.
Date: 09 February 2017
Some things are destined to happen. Sometimes you can only keep things under wraps for so long. Maritime travel between the USA and Cuba has long been outlawed. However, due to developments over the previous years, cruise liners managed to get their foot in the door in 2016. Since the inaugural Fathom sailings in May 2016, the numbers of cruises to Cuba has increased.
Date: 02 January 2017
Although it concluded the year, one must start with the death of Fidel Castro, Cuba’s totalitarian leader for the last half a century. It is never good to wish harm upon anyone. But, sometimes when people become used to a way of life, only a drastic event, a shock to their system, will cause a spark that can lead to a blaze of change. Will it be out with the old and in with the new? Only time will tell. But, this has been a year of firsts. Leading to the belief that Cuba could turn the page on the 1950s once and for all and progress into the 21st Century. All else will follow.
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?