Cuban Parliament OKs New Foreign Investment Law Cuba Standard
go to original April 1, 2014

The media have been given few details of the new law approved by parliament on Saturday (Associated Press)

Hoping to boost lagging GDP growth after three years of economic reform, on March 29 the National Assembly approved a new foreign investment law that promises less government control, more flexibility — including 100-percent ownership by foreigners — lower taxes, and more guarantees to foreign investors.

The Cuban economy needs more than $2 billion in foreign investment every year in order to achieve a necessary 7% growth rate, Marino Murillo, chief coordinator of reforms, told the Assembly in its extraordinary session at the Palacio de Convenciones in Havana.

Foreign investment is not only “the most expeditious option” but also “the last opportunity of the reform to move growth closer to the goal” for the five-year period that ends in 2016, said former Central Bank economist Pavel Vidal in a recent Cuba Standard Economic Report. The government has missed its investment goals by an average 20% over the past four years, according to Vidal.

The foreign investment law now allows investors to set up 100-percent foreign-owned companies on the island as well as joint ventures and operating agreements with privately owned cooperatives, in addition to joint ventures and operating agreements with state companies. (see ‘Key Features’ list below)

While the law itself sets the tone, it is the specifics and execution that will make the music. The text of the law, consisting of 34 general principles and 11 segments about different economic sectors, will not be published until the end of June when the law becomes effective, according to a summary of the draft bill that circulated in the days before the vote.

Read the rest at Cuba Standard

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