Cuba relaxes foreign investment rules to ease supply shortages

August 18, 2022
Craft shop in Cuba
Cuba will “selectively” allow some foreign investors into the retail market, provided the investment contribute to the country’s socialist goals and lowers prices to consumers. Photo: Wikimedia Commons

To increase the supply of goods, especially food, Cuba is allowing more foreign investment in local wholesale and retail trade for the first time since 1959.

Beginning in 1960, the United States economic blockade seeks to “weaken the economic life of Cuba … denying money and supplies … [to] bring about hunger, desperation and overthrow of government”.

Cuba is currently experiencing its worst economic crisis in decades. The COVID-19 pandemic has made worse the deleterious effects of the blockade. There are widespread shortages of food, medicine and fuel throughout the Caribbean nation.

Ana Teresita Gonzalez Fraga, deputy head of the foreign trade and investment ministry said foreign investors will be able to invest in, and even fully own, local wholesalers as well as backend logistics operations supplying state-run and private businesses.

Foreign investors will also be able to enter the local wholesale market through joint ventures.

The reforms will allow foreign-owned entities to invest in warehouse and back-end logistics operations supplying state-run and private businesses, for example, supporting the country’s effort to improve efficiency in its notoriously unproductive retail sector.

Foreign investment in the local retail trade won’t be open to international investors without scrutiny, however. A “state market has to prevail,” said foreign trade minister Betsy Díaz Velázquez.

Gonzalez also said Cuba would “selectively” allow some foreign investors into the retail market, provided the investment contributed to the country’s socialist goals and lowered prices to consumers.

The creation of state-owned micro, small and medium-sized enterprises (MSMEs) will continue for the development of foreign trade.

The government hopes the reforms will expand and diversify the supply of goods to ordinary Cubans and help domestic industry recover from the current economic problems.

However, as long as Cuba remains on the US list of state sponsors of terrorism, it is extremely difficult for nations and private entities to invest in, or trade with Cuba, for fear of US retaliation.

US President Joe Biden can remove Cuba from the list with a stroke of a pen. So far, he has not shown any preparedness to do so, despite many representations made to him to remove Cuba from the list.

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