by Livia Rodriguez Delis
April 18, 2014 (TSR) – Of special interest in Cuba and internationally is the country’s new Foreign Investment Law, set to enter into effect within 90 days. The legislation was approved by the National Assembly of People’s Power on March 29, as part of the updating of the country’s economic model currently underway, in accordance with Guidelines established by the 6th Congress of the Communist Party of Cuba in 2011.
During a press conference in Havana, Déborah Rivas, foreign investment general director within the Ministry of Foreign Trade and Investment (MINCEX), reported that the law will go into effect this coming June, along with its complementary regulations, and that its primary objective is the attraction of foreign capital, to support the socio-economic development of the country.
She clarified that the law is directed toward all potential international investors interested in different sectors of the Cuban economy, and is intended to promote growth and the generation of wealth, which can ultimately be distributed among all Cuban citizens.
Thus, she explained, external financing is being sought for projects in agriculture, forestry, biotechnology, electronics, pharmaceuticals, tourism, renewable energy and other areas.
“That is to say, it is a broad, inclusive law, since it does not exclude investment in any sector, except those related to medical services, education and national defense, as the law itself makes clear,” Rivas said.
As for the interest generated among Cuban citizens, Déborah Rivas commented that the law does not address national investment, which is to be directed toward non-state forms of economic management, such as cooperatives and specific government authorized cases.
“Our economic model has been developing non-state forms of economic management, and today Cuban citizens are investing,” the official said, adding that the goal of the new law is to attract the external financing which the country is currently lacking, to achieve higher rates of growth than have been possible in the past.
When asked about the issue of Cuban citizens who reside abroad investing in the country, Rivas indicated that the new legal framework does not establish which countries are eligible, or any specific sources of financing. “For example, if there were a company belonging to a Cuban, or which had a Cuban partner, established in another country, with experience in a given sector, which could contribute sufficient capital to a project, of course it could be considered.”
She commented that these desires could be frustrated by the United States’ economic, commercial and financial blockade of Cuba, which with its tangled system of regulations prevent Cubans resident in that country, and companies based there, from doing business with Cuba.
Employment agencies and other considerations
In regards to the employment process, Rivas emphasized that, given the educational level in Cuba, investors should be able to find well-trained staff to provide the services they require. “Employment agencies will locate the ideal human resources to provide the service, and resolve, in an efficient manner, any problem with the workforce which might appear,” she said.
Rivas explained that complementary regulations to guide the process have been drafted to define the role of employment agencies, and procedures to be followed in regards to salaries, compensation and other issues. She explained that emphasis is placed on the expectation that investors will abide by the country’s Labor Code, and that Cuban workers’ security and rights be respected, saying, “This is something the employment agency will guarantee.”
For the first time, the country’s foreign investment law includes a decree defining steps to be followed by investors doing business in Cuba, including how to propose a project as part of the portfolio of opportunities available, and how to modify any aspect of the venture after it has been approved. Included among the group of resolutions approved are directives from the Ministry of Labor and Social Security; the methodology to be used by MINCEX to design a feasible and attractive portfolio of investment options; and regulations to guide the Businesses with Foreign Investment Evaluation Commission, which must respond within 90 days to proposals submitted correctly.
The legal framework also includes two sets of norms for the Central Bank of Cuba, one related to national accounts which will receive capital from abroad to fund a project, and another detailing how personal income is transferred to accounts abroad. Rivas reiterated, “We have regulations which provide investors legal security. It’s not just having the law, but appropriate, transparent regulations as well, which clearly establish procedures to be followed from the very beginning, until the process is concluded.”
As for concerns expressed about the protection of national patrimony and the country’s natural resources, she said, “We are not going to put the country, or the land, or anything up for sale. Certain rights to the land, buildings, equipment may be given, depending on the business proposal.”
