Cuba: economic transformations in the face of the tightening of the U.S. Blockade
For the first time, foreign investment in private companies will be allowed, as well as the extension of economic partnership contracts.
During the Extraordinary Session of the National Assembly, Prime Minister Manuel Marrero presented to the deputies a set of proposals for economic and social transformations that seek to redefine the country's development model, in a context marked by the intensification of the U.S. blockade.
Unprecedented foreign investment
The most innovative measures focus on opening up foreign capital to hitherto restricted sectors. For the first time, foreign investment in private companies will be allowed, as well as the extension of economic partnership contracts. To guarantee greater stability to long-term projects, it is proposed to extend the surface right up to 99 years and the right of usufruct up to 50 years.
On the financial front, foreign investors will be able to open accounts abroad without prior authorization – only with notification – and directly access the foreign exchange market to operate with their currencies. In addition, the mandatory use of employing entities is eliminated, which opens the way to direct contracting schemes.
The regulatory package incorporates the principle of "positive administrative silence", reduces procedures and deadlines, and decentralizes the authorization process. Foreign investment is also allowed in specific areas such as Old Havana, and private companies and cooperatives are authorized to import and export directly, as well as to market trademarks and patents.
Banking and financial reform
The project recognizes the need for a profound transformation of the banking system and includes the possible creation of a private corporate bank under the supervision of the Central Bank. It also proposes the establishment of non-bank financial institutions for microcredits, the elimination of restrictions on payments in foreign currency between foreign suppliers and Cuban counterparts, and the updating of interest rates.
It also contemplates the creation of private exchange houses, a digital exchange market and currency auction systems, as well as the realization of successive devaluations of the national currency to adjust the exchange rate.
Tax reform and pricing policy
In tax matters, value added tax (VAT) is introduced with reduced rates in specific sectors, electronic invoicing is generalized and the tax burden for certain economic actors is reduced. The personal income tax is updated, with a modified progressive scale, fewer brackets and an exempt minimum equivalent to the average salary in 2025. In price policy, approval powers are decentralized and the approach based exclusively on costs is eliminated, moving towards a scheme determined by market correlation.
Social protection and subsidies
The proposals include the digitization of social aid through the Sovereignty platform, and establish that all economic actors contribute to the sustainability of social policies through banking agreements. They provide for the creation of a Social Protection Fund and the transformation of the subsidy scheme, moving from a product-centric model to a model focused on vulnerable people.
Tourism, transport and trade
In the tourism sector, the door is open to new business modalities such as leases, usufructs and sale of real estate, both for Cubans living and abroad. Real estate development is authorized in all strategic tourist destinations, the creation of private travel agencies and the incorporation of tourist guides and managers of local destinations. In transport, restrictions on the acquisition of equipment are eliminated and the import of electric vehicles is encouraged. In commerce, non-state forms of management and foreign investment are prioritized, chains of stores and restaurants are created, with the invitation to foreign franchises.
(With information from Cubadebate)
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