CubaIndustria2018 aims to encourage foreign investment on the island

Entrepreneurs attend government fair in search of opportunity

HAVANA ā€“ The Cuban government is hosting a fair this week to encourage foreign entrepreneurs to invest on public and private businesses on the island.Ā About 130 companies from more than 30 countries have a presence at theĀ CubaIndustriaĀ 2018.

Gabi and Sofi, aĀ Varadero-basedĀ toy maker, had a booth and the cooperative's president, Ariel Balmaseda, was there to talk about the beloved characters who inspired his products and the cooperative's potential for growth.

"It is the most important event in the industry in Cuba," Balmaseda said about the opportunities available to connect with investors and new business partners.

After the 1959 revolution, Cuba hasĀ remainedĀ a highly centralized, state-run economic system. Since the 300-point overhaul in 2011, Cuba has continued to changeĀ its economic model only slightly with a very small and controlled private sector.Ā 

WithĀ the U.S. economic embargo on Cuba, which was imposed in the early 1960sĀ to cut off U.S. investment, the Cuban government has been pushing to raise its GDP with the help of billions of dollars in direct foreign investment from Europe, China and Russia.Ā 

"Foreign investment is important," Balmaseda said adding that he was exploring opportunities to partner with a European company.

Some investors believe Cuba's economic model and legal system needs to continueĀ changing and as it stands they are mistrustful of the Cuban government and consider the risk of doing business with the Cuban government high.

During the presidency of Raul Castro, although Cuban officials focused on foreign direct investment to reach economic growth goalsĀ some foreign executives were jailed when his new administration moved to tackle corruption.

Prominent Canadian businessman Cy TokmakjianĀ spent three years in jail after he was convicted of bribery and was sentenced to 15 years in prison. He was able to return to Ontario in 2015.Ā 

Stephen Purvis, a development director for a British investment and trading company, focused on finding joint venture opportunities with the Cuban government. He was jailed in 2012 and he told The GuardianĀ thata golf project he had been working on was given to a Chinese company.

Ā "As a British passport holder, you have this sort of warm, fuzzy feeling that HM Government will look after your back," Purvis told The Guardian last year while working in Maynmar. "And then you find it doesn't."

In 2014, Cuba's National Assembly passed a law offeringĀ foreign investors incentives for joint ventures with the Cuban state. Some of the perks included aĀ tax cutĀ from 30 to 15 percent, an initial 8-year tax exemption and ownership rights.

The change from former U.S. President Barack Obama's defiance of the U.S. embargo to President Donald Trump's tightening of the sanctions didn't slow down foreign investment in tourism and energy with Cuba's main trading partners Russia, China and Spain, according to Cuban officials.

Some of the adventurousĀ foreign investors who have taken the risk to do business in Cuba say they have faced challenges adapting to theĀ economic system and the collectivization of labor in Cuba.

AgustoĀ Nicolau runs a plastics company out of Portugal. In terms of the island's work force, NicolauĀ believes there is a need to offer workers more incentives and rewards. He is planning to set up shop in the special MarielĀ Special Development Zone, a business hub that is adjacent to a container terminal at the port of Mariel, just west of Havana.Ā 

"There have been some difficultĀ moments and some better ones," Nicolau said about adapting to doing business on the island. He remains hopeful.Ā 


About the Authors:

In January 2017, Hatzel Vela became the first local television journalist in the country to move to Cuba and cover the island from the inside. During his time living and working in Cuba, heĀ covered some of the most significant stories in a post-Fidel Castro Cuba.Ā 

The Emmy Award-winning journalist joined the Local 10 News team in 2013. She wrote for the Miami Herald for more than 9 years and won a Green Eyeshade Award.