Cuba experiments with private retail enterprise

Cuba experiments with private retail enterprise
By Marc Frank, ReutersMarch 10, 2010 4:02 PM

Cuba's economy minister is pushing for less state intervention in one of
the world's last Soviet-style economies, saying the government can no
longer afford its all-encompassing control and paternalism, Communist
Party sources say.

A man waits for clients at a watch repair shop in Havana March 10, 2010.
Cuba's economy minister is pushing for less state intervention in one of
the world's last Soviet-style economies, saying the government can no
longer afford its all-encompassing control and paternalism, Communist
Party sources say.
Photograph by: Desmond Boylan, Reuters

HAVANA - Cuba nationalized all retail business in 1968, down to the
shoe-shine shops, but in an attempt to stimulate the stagnant economy
and reduce bureaucracy, it is experimenting with giving some of it back
in a form of legal private enterprise.

By leasing some retail services to state employees, the government is
testing cautious change in how the communist country operates
small-scale business.

"We have begun experiments and are working on others to ease the burden
on the state of some services it provides," Economy Minister Marino
Murillo told the National Assembly at the close of 2009, without
elaborating further.

Authorities have remained mum about their efforts, but a number of
experiments are under way or about to be launched in Havana, a source
with knowledge of local government activities, said.

The CubaTaxi office on Palatino Street in the Cerro municipality of the
capital is home to one such experiment.

Thirty of the more than 2,000 state taxi drivers in the capital are
leasing their vehicles rather than working for a wage, a small
percentage of the tips and whatever they can pocket on the sly.

"You pay 595 convertible pesos for the car and then after a month 39
convertible pesos plus 40 pesos a day," said Elio, one of the drivers.

"You are responsible for maintaining the taxi and gas, but can buy parts
and services from the state," he said.

The government pegs the convertible peso at $1.11 Cdn or 24 pesos.

"Overall the drivers are happy. There is still control over what we
charge, but we are freer and earning more," Elio, who began driving a
cab in 1986, said.

"I think this system is also better for the state which is guaranteed a
net income with few headaches," he added.

The project will be evaluated in June, before being applied to other
dispatch offices.

CASTRO FOSTERS DEBATE

President Raul Castro has fostered debate on what to do with the retail
sector since taking over from brother Fidel Castro two years ago, but
has ruled out a shift back to capitalism.

The debate has spilled over into the official media with exposes over
irregular supplies, low wages, employees jacking up prices and pocketing
proceeds, all the while delivering poor service despite layers of
bureaucracy designed to control such activities.

"The government is simply accepting what already exists, adopting new
structures to legalize what was before viewed as theft and instead of
spending a fortune on useless bureaucrats has begun collecting taxes," a
local economist said, asking his name not be used.

In Central Havana and 10 de Octubre municipalities, beauty parlor
employees were recently called to meetings and informed they would be
leased their shops as cooperatives on an experimental basis.

"They said the hairdressers would be leased the premises without the
administration and service employees," a participant said.

"You have to pay rent for the shop, costs such as water, electricity,
materials and the wages of anyone you contract, for example a
receptionist or to clean up," she said.

"You can charge whatever on the basis of supply and demand and have to
pay taxes on your profits," she added.

The project was scheduled to begin this month but was postponed in part
to consider objections and proposals put forward by the beauticians, she
said.

State-subsidized materials arrive sporadically at the parlors and
services cost anywhere from the equivalent of $0.20 Cdn (five pesos) for
a shampoo to between $1.02 and $2.05 Cdn (25 pesos to 50 pesos) for
hair-dyeing.

"We buy shampoo, conditioner, dye or what have you at state foreign
exchange shops with a 240 per cent mark up, or get our friends to bring
it in from Miami or Madrid," another beautician, who also asked her name
not be used, said.

"Then we tell our clients there are no state supplies, but we bought
them ourselves and will have to charge accordingly," she said.

Cuba experiments with private retail enterprise (10 March 2010)
http://www.montrealgazette.com/news/CUBA+REFORM+BUSINESSES/2667197/story.html