Cuba "Streamlining" Approval Process For Agriculturally-Focused Economic Associations With Foreign Capital. Still No Regulations For U.S.-Sourced MSME Private-Sector Foreign Investment/Financing
/From Cuba Heute: “The implementation of some projects with foreign capital should be faster in Cuba in the future. With the "Acuerdo 9374", which appeared in the Law Gazette on April 3, the approval of international economic associations ("Asociación Económica Internacional") is shifted from the level of the Council of Ministers to the individual ministries. LINK TO DOCUMENT
In agriculture and tourism in particular, this should speed up the often lengthy approval processes. "The internal process of analyzing and approving business proposals involving foreign investments must be adapted to the new realities of the country," the law's explanatory statement reads. Especially in the case of food production, the mechanism of economic association promises a better inflow of capital.
The Ministry of Agriculture is now encouraged to target this form "as a modality for foreign investment to increase agricultural production in the country". So far, economic associations were mainly known in the context of hotel management contracts in tourism. In order to speed up the procedures, the ministries of agriculture, finance and tourism will in future be able to decide independently on the approval of projects in their area of responsibility.
Previously, all projects had to be approved “by hand” by the Council of Ministers, which investors and economists repeatedly criticized because of the length of the process. Furthermore, the term of corresponding contracts can be extended in the future at the level of the Ministry of Finance. The reform will come into force on May 3rd.
In the context of the current crisis, Cuba is currently looking massively for foreign investors to develop its economy and has removed several hurdles to this end in recent months. In principle, investments are now possible in all sectors, and small-scale projects by medium-sized companies are also welcomed.
Only recently was the tender catalog expanded in the areas of the food industry and agriculture. The two sectors are among the country's three main priorities, alongside the expansion of renewable energies.
With the election of the Council of Ministers on April 19, long-serving Foreign Trade Minister Rodrigo Malmierca, who has recently been criticized for his lack of success in reducing bureaucracy, was replaced by Cuba's chief foreign debt negotiator, Ricardo Cabrisas.”
Background
On 10 May 2022 the Biden-Harris Administration (2021- ) through a two-year license issued by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury authorized the first direct investment in and direct financing to a privately-owned company in the Republic of Cuba owned by a Republic of Cuba national. The OFAC license application was submitted on 10 June 2021.
LINK: Biden-Harris Administration Approves First Equity Investment Since 1960 In A Private Cuban Company May 10, 2022
LINK: With U.S. Government Authorization For First Direct Equity Investment Into A Private Company In Cuba, Here Is Important Context And Details. About The Parties; About The Message. May 16, 2022
LINK: Biden Administration Will Use Cuba's Authorization Of SMSE's As Means To Expand Support For Cuba Private Sector- U.S. Investments And Loans May Be Next June 02, 2021
In 2023, after nearing three years, Denver, Colorado-based Western Union Company (2022 revenue US$4.5 billion) recommenced electronic transfers from the United States to the Republic of Cuba through an agreement with Republic of Cuba government-operated Orbit S.A. which in February 2022 received authorization from the Central Bank of the Republic of Cuba as a “non-banking financial institution to process money transfers.” Electronic transfers may be sent from more than 4,400 locations in the United States “receivers with bank and debit card accounts” at these three Republic of Cuba government-operated financial institutions: Banco Popular de Ahorro, Banco Metropolitano S.A., Banco de Credito y Comercio (Bandec).
Western Union Company and Orbit S.A. have not yet authorized electronic transfers for commercial transactions by Micro, Small, and Medium-size Enterprises (MSMEs) and to authorize U.S. Dollar electronic transfers from accounts in the Republic of Cuba to recipients in the United States.
LINK: Western Union Goes National For U.S. Transfers To Cuba.... When Will Cuba Permit U.S. Investment And Financing For MSMEs In Cuba? No Excuse For Delays. Mar 3, 2023
In April 2023, Republic of Cuba government-operated financial institutions again accepted U.S. Dollar currency deposits. “It is very useful for us as a company and more than now we need a lot of capital injection to face the crisis with the purchase of professional machinery. This gives us the possibility of having currency input that currently could not be exchanged into currencies other than USD.” Owner of an officially-registered MSME located in the Republic of Cuba and owned by a Republic of Cuba national.
Wholesale marketplaces are re-opening in the Republic of Cuba, some constructed and operated by companies located in Argentina, Italy, Spain, and potentially Russian Federation, where owners, managers, and employees of MSMEs may purchase inputs. The existence of a wholesale marketplace for MSMEs is a required component for a private sector- the distance between the price of a product purchased by an MSME and the price of the product and service produced and sold by the MSME is the profit- which hopefully the government of the Republic of Cuba will not seek to tax and fee to minimize as such would harm the ability of MSMEs to expand- both revenue and employees.
On 17 November 2022, the Biden-Harris Administration approved a license application submitted on 22 October 2022 by Columbia, Maryland-based Premier Automotive Export, Ltd. (PAE) to the Bureau of Industry and Security (BIS) of the United States Department of Commerce to export electric vehicles and chargers to republic of cuba nationals with the “ULTIMATE CONSIGNEE: Privately owned companies in the Republic of Cuba owned by Cuba Nationals.” The BIS license is valid until 30 November 2026.
LINK: Ten Months After Denial, Biden-Harris Administration Approves Exports Of Electric Motorcycles, Electric Scooters To Cuba Nationals And To Privately-Owned Companies In Cuba October 05, 2022
On 28 September 2022, the BIS issued a license to PAE for the export of electric scooters and electric bicycles to Republic of Cuba nationals and to MSMEs.
On 15 December 2021, the BIS denied a license application submitted on 30 September 2021 by PAE to export electric vehicles and chargers to republic of cuba nationals. From the license application: “Specific End Use- Ordinary Cuban Nationals would be the specific End User and purchasing electric vehicle for their own personal transportation.”
LINK: Home Delivery For Electric Scooters To Cuba: As Biden-Harris Administration Expands U.S. Export Opportunities, A U.S. Company Responds Quickly To Customer Requests. Next Correspondent Banking? December 04, 2022
Potential customers of PAE have inquired about installment payments for the purchase of EVs. As monthly payments would be minimal in value, the cost for sending the funds through a third country financial institution would be larger than the installment amount. Flexibility to provide installment payments will further enhance the cashflow of an MSME and further connect the MSME with the United States-based company.
