Some Cuban businesses benefit from new free market capitalism

Some Cuban businesses benefit from new free market capitalism
By Catholic Online
4/13/2011
Catholic Online (www.catholic.org)

Cuban President Raul Castro has opened his tightly-controlled communist
country to a smattering of free-market capitalism over the last six
months, in the most significant change to the island's economy in
decades. Entrepreneurs had taken out more than 171,000 business licenses
since March 8, which are more than two-thirds of the 250,000 goal for
all of 2011.

LOS ANGELES, CA (Catholic Online) - For some, the opportunity to start
their own business has brought prosperity and new hope. For others, it's
been a very rocky road. Some have already closed the door on their
entrepreneurial dreams.

The Associated Press examined some would-be small business owners in
December. Four months later, their experiences reflect both the good and
the bad of the free-market capitalist system.

One of them is Javier Acosta, who is struggling to get customers into
his upscale Havana restaurant. He said he did not make enough in his
first month to even cover the monthly tax of $458, and so had to dip
into his savings to pay the government and his employees. The next month
Acosta did cover his costs, barely, and he is hoping nervously the trend
continues.

Danilo Perez, a 21-year-old bookkeeper who got a license to sell pirated
DVDs, threw in the towel after authorities suddenly quadrupled his
taxes. "Cubans are entrepreneurial people and to the extent they are
allowed to work and make some money, they will," Lorenzo Perez, a former
IMF economist and member of the Association of the Study of the Cuban
Economy says.

Perez added the new enterprises face stiff challenges in a country where
few have business acumen, raw materials are hard to find, tax rates can
be ridiculous and multiple government regulations still restrict basic
activities.

"All over the world, the percentage of small businesses that succeed is
very small, even in the United States," Perez says. "In Cuba, the
difficulties are enormous, because the environment is not very conducive
yet to business ... but that doesn't mean it can't be done."

Dozens of restaurants have opened, some of them remarkably chic for an
island of 11 million people where it can be hard to find such basics as
matching tables and chairs. There has also been an increase in private
apartments have been put on the rental market.

Fears that government inspectors, looking for bribes would undo the free
market drive have not materialized, perhaps because there are not yet
enough to check in regularly on the unexpectedly large number of new
businesses.

The government in the meantime has pushed back indefinitely plans to lay
off 500,000 state workers, acknowledging the move was extremely
difficult and had to be handled with the utmost delicacy. More details
are likely to be announced at a key Communist Party Congress slated to
begin April 16.

http://www.catholic.org/international/international_story.php?id=41020