Cuba opens the door to foreign investment for the first time in 60 years

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Cuba plans to allow some foreign investment in local wholesale and retail trade for the first time since Fidel Castro’s revolution in 1959, the government said Monday night, in an attempt to get out of the worst economic moment on the island.

Commerce Vice Minister Ana Teresita González said on an afternoon television show that foreign investors would be allowed to own local wholesalers for the first time or enter the market through joint ventures. Retail trade would be more restricted, but it also opened the door to some public/private companies in that sector.

The reforms would allow foreign-owned entities to invest in warehousing and back-end logistics operations that supply state and private companiesfor example, by supporting the country’s effort to improve efficiency in its notoriously unproductive retail sector.

Photo: Reuters

González also said that Cuba would allow “selectively” that some foreign investors enter the retail market, provided that the investment contributes to the socialist objectives of the country and reduce prices.

Domestic Trade Minister Betsy Díaz Velázquez said on the same talk show that the state would maintain its dominance in retail but would allow some public-private joint ventures.

“We will prioritize this type of initiatives with foreign investors who are already in Cuba and allied countries“, said.

The incremental measures come as Cuba struggles to redefine its state economylargely closed, after two years of pandemic problems and widespread US sanctions that have hampered recovery.

Growing discontent over long queues for basic goods, the fuel shortage and continuing blackouts have led to government officials communist party to speed up long-delayed plans to reform the Soviet-style state economy.

Both officials said Monday night that the goal was to put more raw materials and goods in the hands of the island’s producers and consumersbut economists and businessmen consulted by Reuters said the measures would probably fall short.

Photo: Reuters

“It is a step in the right direction, but too little and too late“said Cuban economist Omar Everleny.

He said the measures were riddled with caveats and red tape.

“Both ads were full of words like ‘exceptions, control, conditions’as if they did not understand the seriousness of the crisis”.

A foreign businesswoman involved in Cuban trade told Reuters on condition of anonymity that investors will remain wary of any deal involving trade in local currency or debt.

She said the measurements indicated that the government “he refused to break with a failed model”.