Cuban government clears top 32 private companies

Half a century after the nationalization of all private companies by Fidel Castro, the micro, small and medium private enterprise (MSME) is once again operating in Cuba, a long-awaited structural reform that could radically change the rules of the game of economic centralization of the island, according to experts. On Wednesday, just ten days after the law came into force and the first demands were made, the government approved the first 35 MSMEs, including 32 private and three public, the majority focused on food production (13), manufacturing ( 6), recycling activities of a technological nature and local development projects. New private companies can have up to 100 workers, they must be incorporated as limited liability companies (SRL) and will have the right to access credit and sources of finance, but their import and export activities must be carried out through a Crown corporation. The law also imposes limits on professional activities. Accountants, lawyers, architects and engineers, among others, cannot team up and form companies to provide their services, which is widely criticized by economists.

The government took ten years to implement this key reform, which was legally possible since the Sixth Congress of the Communist Party (2011) but which was delayed for unexplained reasons and which stem from the authorities’ fear of losing control and to the state’s monopoly on the economy. Although looking at the recently approved laws, some see the glass as half full and others half empty, most economists consider this to be a “positive step”, aimed at increasing production and to promote a mixed economy, in which the initiative The private sector is called upon to play an increasingly important role. “This is a new vision, and I think it can be very beneficial for the country,” said economist Omar Everleny, one of those who has advocated for the approval of SMEs for years.

Everleny highlights the symbolism of “the acceptance of small private enterprise nearly 54 years after all these enterprises were nationalized during the revolutionary offensive.” It was in 1968, during a speech at the University of Havana, that Fidel Castro attacked the owners of private companies who survived the revolutionary triumph of 1959. Following this offensive “against the vestiges of capitalism ”, 55,636 were confiscated. small businesses, many of which are run by one or two people. Among them 11,878 food stores (cellars), 3,130 butchers, 3,198 bars, 8,101 food establishments (restaurants, donuts, cafes, etc.), 6,653 laundries, 3,643 hairdressing salons, 1,188 shoemakers, 4 544 automobile mechanics workshops, 1,598 crafts and 3,345 carpentry workshops. The “pragmatism” of returning to SMEs is “a step in the right direction,” says Everleny, but notes that there are still many limitations and restrictions that can slow down and hamper the work of new economic players, weighing down the positive effect. of measurement. “There is no time, the country does not have time to ensure that present and future generations see the benefits, but it acts as if time is endless. The State must have greater flexibility, not to continue working as in the past ”.

“In any case, thinks the consultant Oniel Díaz, a new scenario is created. “This is a historic step: finally, a space is opened to Cuban men and women so that they can legally own private companies, which will also be able to carry out their work in a very wide range of commercial and monetary forms.” For six years, Díaz has offered consultancy services to Cubans who, under the limited conditions of so-called self-employment (TCP), have attempted to start a business. “If with the many restrictions that TCP had [legalizado en 1994] people took advantage of the opportunities and today the self-employed make up over 33% of the country’s workforce, now with clearer regulations and greater legal possibilities the results must be much better ”.

In recent weeks, he says, more than 100 people interested in joining the new MSME law have approached him. “We have seen a new reconfiguration taking place in the private sector, business ideas stop focusing exclusively on the demand of international tourism [bares, restaurantes, casas de alquiler] and they begin to reflect on the national demand and to cover the spaces and the needs generated by the scarcity that we currently have in the national economy ”. He points out that there have been “very frequent projects focused on food production, technology-based construction companies, related to renewable energies and the production of goods and the marketing of various products, an activity that has been released in its most important lines. important “.

Díaz does not hide the negative aspects of the reform. Micro (up to 10 employees), small (between 11 and 35 employees) and medium-sized enterprises (from 36 to 100 employees) will have to resort to a state enterprise to import and export, they will not be able to do so directly . A foreign investor cannot be a partner of an MSME either, although it is not excluded that the Cuban owner of an SME can make a joint venture with a foreign company, but for this he must go through the cumbersome formal state approval process for any association with a foreign counterpart. There is, in addition, the prohibition to exercise more than 100 activities that the State reserves for itself (telecommunications, tourism, health, etc.), and the impossibility that a Cuban can be a partner of two SMEs at the same time. time, together excluding many professional services.

On what will be the true scope of the measure and when will they see the results, Oniel Díaz indicates that the start of this crucial reform coincides with a “very difficult” economic moment, made worse by the pandemic and the increase in American sanctions during the Trump Administrative. “The combination of these factors and the imperfections that the implementation of a reform like this in Cuba brings naturally, which we hope corrected, will lead to visible results in the medium term.” Rare are those who remember the hesitations of the past and declare themselves disbelievers, but Díaz is optimistic: “For there to be wealth, one must first work, and that is what corresponds now.

Abel Bajuelos is 42 years old and is a musician by training, but this is nothing new today for a song. Bajuelos is one of the first Cubans to whom the Ministry of Economy and Planning on Wednesday authorized the creation of a six-person micro-enterprise called Addimensional. His thing is technology, especially digital fabrication with 3D printers, something he had already done successfully as a freelance (with a “foundry” license) but will now turn into a legal company, with legal personality and aspiration. to become a leader. in Cuba in its sector.

“I think this is a very important change and that there is no turning back,” says Bajuelos, although he has suffered firsthand in the past the mistrust of the authorities and the vagaries of private initiative. In 2011 he set up an arcade room and it was very successful, but one morning in 2013 he woke up to learn that this activity had been banned. “As leaving the country was not an option for me, I had to retrain, and that’s how this adventure was born. Abel jokes about the 3D of his business, which is precisely what entrepreneurs have had to contend with in their relationship with the state all these years, he explains. “The D of ignorance, mistrust and backwardness.” Today, he says, appreciates the dramatic changes. His small workshop, in which he has five 3D printers, was visited by various ministers, and his MSME application, submitted on September 20, was approved in just nine days. He is not naive, he knows that the way to realize his dream will not be easy and that he will have to face obstacles and difficulties. But he thinks the wheel has started to move. “For me, SMEs in today’s environment are like a spark plug that explodes in the middle of a creative fuel that is Cuban society and that moves a much bigger piston.”

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