Cuba's past raises skepticism about new foreign investment law
By Daniel Trotta
HAVANA, March 31 (Reuters) - Cuba has declared itself open for business with a new foreign investment law but faces deep skepticism given a history that includes jailing foreign executives and attempting to seize greater control of businesses once they prove successful.
The National Assembly unanimously passed a law on Saturday that embraces foreign capital as crucial to Cuba's development, while disappointing those who had hoped for even more changes, such as allowing foreign ventures to hire Cuban labor freely instead of through the government.
Cut off from U.S. investment by Washington's comprehensive trade embargo, Cuba says it needs $2 billion to $2.5 billion a year in foreign direct investment (FDI) to help reach its target of 7 percent growth a year. Economists estimate current FDI at a few hundred million, and the economy is expected to grow just 2.2 percent this year.
The new law, which will take effect within 90 days, is most notable for cutting the tax on profits in half and eliminating a labor tax while granting new investors an 8-year exemption on the profits tax.
In an economy suffering from chronic underinvestment, foreigners are being enticed. Among the areas in need are agriculture, infrastructure, sugar, nickel mining, building renovation and real estate development.
The law is part of a series of reforms enacted by Cuban President Raul Castro that would have been unthinkable before his brother, Fidel, formally handed over power in 2008.
It appears to be a genuine attempt to join the global economy, although Cuba's past dealings with foreign investors suggest caution. Continuación...