Cuba seeks over $8 billion in foreign investment

Cuba seeks over $8 billion in foreign investment
BY MICHAEL WEISSENSTEIN AND ANDREA RODRIGUEZ THE ASSOCIATED PRESS
11/04/2014 6:19 AM 11/04/2014 6:19 AM

HAVANA
Cuba asked international companies on Monday to invest more than $8
billion in the island as it attempts to kick-start a centrally planned
economy starved for cash and hamstrung by inefficiency.

Foreign Commerce Minister Rodrigo Malmierca Diaz announced a list of 246
potential projects that would cost $8.7 billion to build, from a pig
farm to an auto plant. The menu of possible investments is a key step in
a push for foreign capital that includes the relaxation of investment
restrictions and the creation of a special trade zone around a new
deep-water port west of Havana.

"Cuba is pushing strongly to take advantage of the benefits associated
with foreign investment to stimulate development," Malmierca said.

Despite the push, foreigners at Havana's International Fair, the
country's main economic promotional event, described Cuba as a place
that still makes investors deeply nervous. Many basic supplies are
lacking and simple decisions take weeks or months for approval from
overlapping government agencies.

The Cuban government remains opaque, refusing to release basic
information like current levels of foreign investment. Malmierca told
The Associated Press that the figure could be misused by the United
States, which maintains an embargo on Cuba that the Caribbean country
blames for much of its economic misfortune.

Cuba is "in an economic war with the world's primary power," he said.
"We don't give out that data."

The call for foreign investment is part of a four-year-old reform
process meant to energize the economy by introducing private enterprise
and foreign capital into a socialist model characterized by low wages,
insufficient investment, crumbling infrastructure and persistent shortages.

The country says it needs to drive foreign investment to more than $2
billion a year to help raise an economic growth rate not expected to
exceed 1 percent this year. It's looking to push growth to 5 percent
annually, but the reform effort appears to have had few results so far.
Cuba has yet to announce any foreign investment projects for the Mariel
trade zone nearly a year after the port opened with $600 million from
Brazil — two-thirds of the project's cost.

Chinese executive George Yan said he asked in May for permission to
build a $1 million plant at Mariel that would employ 100 Cubans to
assemble energy-saving LED lights. Despite receiving initial approval
three months later, he has not been shown potential sites for the
factory or received other indications the project can proceed.

In China, he said, "this would take 24 hours."

"The Cubans have a certain fear that if they go fast they can't reverse
any decision, so they prefer to go more slowly and do all the studies,"
he said.

Yan nevertheless said he was optimistic Cuba would move faster in the
coming year.

"Many people complain about the time in which we do things, but
everyone's got their own pace," Malmierca said. "We're going to do this
our way and we want to do it well."

The project list itself contained telling details about the lack of
basic inputs for potential new businesses in Cuba. Among the enterprises
Cuba wants funded is a $70 million plant producing bottles for drinks
including Havana Club rum, a well-regarded joint venture between the
Cuban government and French beverage conglomerate Pernod Ricard. In
other words, a country looking to launch industries as complex as
light-auto production today can't produce something as basic as glass
bottles for its rum.

Apart from the slow pace of doing business and lack of materials,
foreign executives complain they have to hire Cuban employees through a
state agency, limiting their ability to directly choose employees and
promote them.

And the September sentencing of a Canadian automobile executive to 15
years in jail has made many worry that the routine practice of making
payoffs to Cuban officials, ranging from cash to free meals, could
result in the prosecution of businessmen who fall out of the
government's favor.

The Ontario-based automotive company Tokmakjian Group says the charges
against its chief executive were an excuse to seize the automotive
firm's $100 million in assets in Cuba.

Source: Cuba seeks over $8 billion in foreign investment | The Miami
Herald - http://www.miamiherald.com/news/business/article3542596.html