Cuba Portfolio of Opportunities for Foreign Investment

If you have already read my post on the introduction of the Law of Foreign Investment, you will also already be aware that the Cuban government also produced a document to try and generate interest in one of a number of investment programs.

The government is keen to offer foreign investors, in order to bring in much-needed income into the country.

The result of these efforts is a document, which is known as the ‘Portfolio of Opportunities for Foreign Investment’ document and this I will talk about below.

Cuban Trade Sectors

Before looking at the key points made in the opportunities document, let us take a look at the sectors which, in the last couple of years, have offered the best opportunities for international investors.

Tourism

Tourism has been the key industry in Cuba over the last 10 years and tourism is likely to be the big opportunity in the long term, although it is also likely to be the most competitive.

Visitors from many countries such as Canada, the UK, and South Africa already visit Cuba in their millions each year and the combination of stunning Caribbean beaches such as Varadero and Cayo Coco is always going to attract visitors en-masse.

The chance to see a unique country known also for its foods, love of dance, art, and music, is also a fascinating idea now and will also be in the future, for cultural tourists.

Tourism is already developing into a major industry in Cuba and you can expect this to develop ten-fold in the future.

Energy and Mining

The nickel reserves, in addition to manganese and copper, in and around Cuba, help to make mining a key industry and export opportunity.

Cuba has one of the largest reserves in the world for nickel and this helps Cuba to compete with the likes of Canada and Russia as a major mining nation.

Foods

Those of you who have had the luck to spend time in the stunningly picturesque area of the Vinales Valley in Cuba, on the mainland, will realize that many parts of the country are perfect for agriculture, so much so that over 25% of the land is cultivated.

Crops that are popular include fruits, sugar, rice, and tobacco.

Opportunities Document

Certain sectors appear to offer the best opportunities within Cuba, especially with the Cuban government has recently invited foreign businesses to get help to generate more than five billion pounds sterling, by investing in one of over two hundred pre-approved projects.

The ‘Portfolio of Opportunities’ is a very handy document for getting started if you are looking to analyze the best options for investing in a business that involves Cuba.

To summarise for you though, some of the main options and some points made in the document:

Law 118 gives a breakdown of the options that exist for starting a business in Cuba. These are:

• Joint enterprise business
• Economic association contract
• Enterprise (using 100% capital investment from you as a foreign company)

Special attention needs to be paid to the taxation for each business type in terms of the tax structure. To give an example, if you wish to start an enterprise with 100% of the capital invested by you as a foreign company, the taxes are as follows.

Specific Projects

The government has stated specific areas and projects for which investment is specifically being sought and which provide a great opportunity for foreign businesses with sizeable capital available to invest.

Mariel Port Zone

A special development area zone has been created in the Mariel Port part of Cuba and this is a strategically important location, given its position on the north of the island and the port at which trade would move between the USA and Cuba en-masse if sanctions were lifted.

Less than 400km from the port of Miami, USA, Mariel Port will be important in the future one suspects.

What makes Mariel especially important is that it is a deep water port and thus has the potential to be used in many ways, including as a cruise port.

It is also expected to become the largest port in the Caribbean both for industry and trade in the future.

There has even been talk that the port could one day begin to compete with Miami which is so close, just across the Gulf of Mexico.

The new port was opened in 2014, with investment from the Brazilian construction company ‘Odebrecht’, who financed and invested the new port.

Other areas of the port though are being developed as part of the development zone project (see image below).

Manufacturing Investment

Opportunities exist also for manufacturing and in some cases, developing a plant and production for the following:

• Radial tyres
• Aluminum cans
• Air conditioning equipment
• Glass bottles for beverages
• Glassware production
• Commercial footwear
• Soy processing
• Confectionery production
• Instant dry yeast
• Homeopathic products
• Monoclonal antibodies production plant
• Oral medicines (solids) production plant
• Antiretroviral medicines plant
• Contraceptive products plant
• Blood-based products plant
• Plant to produce injectable medicines
• Produce measured dosage sprays plant
• Cephalosporins and carbapenemas (injectable) plant
• Oral penicillin-based antibiotics plant

What you need to be aware of, if you are interested in any of the investment opportunities above in the Mariel investment zone, is that the size of finance the government is looking for is very substantial.

For the development of a plant to produce injectable medicines, for example, the investment estimate is GBP £100 million.

The plant to run the production of commercial footwear comes with a GBP £13.5 million estimates.

Other investments needed include the production of vegetables, with the development of a plant in the Mariel economic zone for food to be sold and exported from the zone.

There are over 200 key investment opportunities for which the government is actively seeking investment, both in Mariel and in other parts of the island and, as shown in the table above, these include construction, mining, oil, tourism, and renewable energy.

You can email me for further information i.e. specific investment inquiries if you wish to know about a specific industry and the options.