I am shocked, I tell you, shocked!
Cuba struggles to attract investors despite reforms
Cuba has yet to attract new foreign investors despite launching two major initiatives in the past year, a sign of the lingering caution over doing business with the communist government and its own hesitancy to follow through on free-market-style reforms.
Cuba last November opened a China-style special development zone, including a new container terminal at Mariel Bay. It also passed a new foreign investment law in March, saying it needed more than $2 billion a year in foreign direct investment to spur growth.
But despite cutting taxes and lowering customs barriers in line with other investment regimes in the Caribbean, Cuba has yet to overcome the disadvantages associated with the U.S. economic embargo as well as its Soviet-style economy.
“Cuba has a ways to go in learning how to react with agility to business opportunities,” said Pedro Freyre, who heads the international practice at the Miami-based law firm Akerman LLP, which closely follows the reforms under way on the island.
The new foreign investment law, which took effect at the end of June, cut the tax on profits in half, eliminated a labor tax and granted new investors an eight-year exemption on a profits tax.
Though potential investors welcome the tax cuts, some remain wary over Cuba’s legal regime, especially after the recent jailing of a handful of foreign executives and the seizing of their businesses over corruption allegations.
Investment proposals under negotiation, which still must be approved at the highest level of the Cuban government, include projects in light manufacturing, packaging, alternative energy, pharmaceuticals and warehouse shipping logistics, according to officials.
Consumer goods giant Unilever , which left Cuba in a dispute over who would have the controlling stake in a joint venture with the government, is said to be negotiating a return to Mariel.
Two other companies considering operations in Mariel, according to diplomats, are in joint ventures with the Cuban government: French beverages company Pernod Ricard and cigarette maker BrasCuba, part of the Brazilian subsidiary of British American Tobacco.
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