Cuba lauds subcontracting to private sector

Cuba lauds subcontracting to private sector
Thu Jun 21, 2012 2:24pm EDT

* Official daily says results of contracting impressive
* Practice seen stimulating small business
* Construction, landscaping and other services benefit
By Marc Frank

HAVANA, June 21 (Reuters) - Cuba praised state contracting of
landscaping, construction and other services to the private sector on
Thursday, in another sign a recent opening to small business is gaining
momentum.

A long article in the communist party daily, Granma, focused on the
recently created western province of Artemisa, a pilot project for
reform of local government and state business administration under
President Raul Castro.

"One of the most important benefits of this mechanism (subcontracting)
is the rapidity and quality with which jobs are done," "Miguel Angel
Quijano, economic director of Artemisa, told Granma.

The newspaper said subcontractors were being used in public landscaping,
housing construction and state office renovation with ""impressive" results.

"Small businesses have been part and parcel of the birth of Artemisa,
spurring the strengthening of food and other services in which the
self-employed have been key, Granma said.

Havana province was divided into the rural provinces of Artemisa and
Mayabeque in 2010 and both were declared experiments for downsizing
government, moving local businesses out of local government and other
reforms.

There has been little official coverage until now of the reforms
underway in Artemisa, with a population of 500,000. The province has
some minor industry located on its eastern border with Havana, and to
the west bordering Pinar del Rio, accounts for up to 50 percent of the
wrapper leaf for the country's famous cigars.

Castro is encouraging private sector growth to create jobs for the one
million employees he hopes to slash from bloated government payrolls
over the next few years. His goal is to strengthen Cuban communism to
assure its future.

More than 370,000 Cubans are now self-employed, more than double the
number of two years ago, although most are small operations based in
homes and 30 percent of the figure represents private sector employees.

But the ability of small businesses to grow has been hindered partly by
a lack of capital and access to government business, which is
significant because the state controls most of the economy.

That changed in December when new credit and banking regulations took
effect, allowing small businesses for the first time to obtain loans
and, along with private farmers, to open commercial accounts, a
prerequisite for doing business with the state.

The measures also lifted a 100 peso (roughly $4) cap on business between
state enterprises and private individuals.

The Granma report was just the latest to appear in the official media in
recent months praising subcontracting.

""This kind of positive coverage was unimaginable and these transactions
would have been illegal just a few years ago," Phil Peters, a Cuba
expert at the Virginia-based Lexington Institute said.

""This is one more sign that the government wants the private sector to
grow to boost productivity and to give laid-off government workers a
place to go," he said. (Editing by Tom Brown and David Adams)

http://www.reuters.com/article/2012/06/21/cuba-reform-idUSS1E85K00A20120621