Private companies, foreign investment, commercial banking: Cuba’s stunning economic U-turn

HAVANA, June 20 — Cuban lawmakers on Thursday adopted nearly 200 free-market reforms in a desperate bid to end a severe crisis and secure the end of a crippling US fuel blockade.

The 176 measures represent the biggest shake-up of the island’s economic model since it began embracing communism six decades ago.

AFP looks at some of the standout measures:

Private enterprise

Small businesses of up to 100 people known as Mipymes were authorised in 2021 and have become an important part of the island’s economy.

With the shelves of state-run shops glaringly empty and public transport drying up, Mipymes and the self-employed now dominate retail food sales and ferry people about – by taxi, rickshaw and motorbike.

The reforms set out by Prime Minister Manuel Marrero go much further in promoting private enterprise.

Large companies, unlimited in size, will be authorised and Cubans will be allowed set up more than one company.

Foreign investors will no longer be required to form joint ventures with the state.

The government will cut red tape for business creation and allow private investors, both Cuban and foreign, to acquire shares in state companies.

State-owned enterprises will be transformed into commercial companies and the state salary scale scrapped in favour of company-level agreements.

Energy

Fuel supplies were a headache for Cuba long before US President Donald Trump cut off imports altogether by imposing a de-facto oil blockade.

To boost supplies, private and foreign investment will be allowed in the purchase and sale of fuel.

Tax breaks will be created for investment in renewable energy, such as solar panels, which have become ubiquitous during the energy crisis.

Property

While Cubans have since 2011 had the right to own a private home, many buildings remain state property.

The reforms would allow Cubans living on and off the island to buy state-owned property, “on a case-by-case basis” and to develop property in areas of high tourist potential.

Banking

Private investment in banking will be encouraged and citizens and companies will be allowed have accounts in foreign currency for the first time.

Remittances from Cubans abroad, a lifeline for many, will no longer be channelled exclusively through the state, and money changers will also be allowed operate privately.

Land

Land will remain in state hands but will be available for use in agro-fishing, forestry, agro-tourism and tobacco production under the usufruct – the right to use and profit from another person’s property – for an indeterminate period. — AFP