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Foreign investment in Cuba: new opportunities for 2019

| News | Cuban Desk

Ignacio Aparicio writes in El Economista about the new portfolio of opportunities for foreign investment in Cuba for 2019

El Economista | Like every year, the Havana International Fair is the showcase chosen by the Cuban government to present the Portfolio of Foreign Investment Opportunities for the period 2018 - 2019. The purpose of the Portfolio of Opportunities is to inform about those projects of special interest to the authorities that require foreign investment. It describes each of the projects and the estimated amount of investment, the proposed modality of foreign investment, the Cuban counterpart and its contact details.

This new portfolio of opportunities includes 525 investment projects distributed in 16 economic sectors, 45 of them within the so-called Zona Especial de Desarrollo Mariel (hereinafter ZEDM). ZEDM is a project in development with an annual investment of US$ 300 million carried out over the past few years. This area is located 45 km west of Havana and has one of the most important ports on the island.  The ZEDM has its own regulatory framework with significant tax advantages. However, despite the large number of applications to operate on the island, only 43 projects have been authorized to date. A Vietnamese company has recently been granted the concession to build and manage an industrial zone within the ZEDM as a wholly foreign-owned company. Other authorized projects include a Mixed Company (Cuban mercantile companies with national and foreign shareholders) with Unilever's participation, to produce personal hygiene products, as well as another Mixed Company constituted by a British American Tobacco's participation, for the manufacture of cigarettes.

It should be noted that this new portfolio of opportunities contains 69 more projects than planned for the 2017-2018 period, which shows the interest of the Cuban authorities in increasing foreign investment in the island. However, it is also worth mentioning that 115 projects were already included in the portfolio of opportunities of the previous year, so, in a strict sense, we would speak of 410 new projects.

While the diversity of projects reaches virtually all economic sectors, the largest number is aimed at satisfying the agro-food needs of the population and earning income through the tourism and oil sectors, as well as ensuring the country's industrial development.

It is also worth noting, unlike previous opportunity portfolios, the inclusion of several wholly foreign investment projects. These projects include the production of air-conditioning equipment, glass tableware, plastic and glass containers, LED lights, small-format personal hygiene for tourism, mattresses and pillows, electric cables, commercial footwear, dairy products, pasta and sausages, for example.

In addition to totally foreign investment and joint ventures, Law 118/2014 on Foreign Investment allows the possibility to sign international economic association contracts, without constituting a separate legal entity. The latter includes management contracts (hotel, production or services), with and without financing, contracts for the provision of professional services and contracts at risk for the exploration of non-renewable natural resources.

The tourism sector includes both the option of hotel management contracts - or services - and the creation of joint ventures. On the other hand, the productive administration modality is mainly used in the industrial sector. Finally, it should be noted that most natural resource exploration contracts are "at risk".

As it is known, Spain is the largest investor in Cuba -around 45% of foreign investments are Spanish-, so many of the projects included in the current portfolio of opportunities could be of interest to companies in our country. Having said that, the Cuban authorities do not limit the investment offers to the projects contained therein. Proof of this are the possible Spanish investments that have transcended since the recent visit of President Pedro Sánchez to Cuba for the development, among others, of the railway, the remodelling of airports and the island´s telephone connection with the rest of the world.

You could read the article in El Economista.

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