Making Money

Before talking about investment opportunities, let's take a brief look at Cuba's economy to get an overall picture of what is happening there. This will help you better understand the investment climate of the country.

 Before the Cuban Revolution U.S. companies virtually owned Cuba. Most of the sugar industry, mining and telephone and utility services were run by U.S. Companies. When Castro took power everything was nationalized.

 Since then the economy languished and been characterized by once economic crisis after another. For many years the Soviet Union managed to keep Cuba afloat pouring millions of dollars into the country and buying up to 80 percent of its foreign exports. This all changed when the Soviet Union collapsed.

 Until recently sugar had always been the mainstay of the Cuban economy but subject to world sugar prices and competition from other countries.

 Because of Cuba's soil and climate sugar thrives here like no place else in the world. At one time sugar accounted for 70 percent of the country's export revenue. The zafra is the sugar cane harvest that runs from November through May. The country produces around 10 million tons of sugar a year.

 Tobacco has traditionally been the second most important agricultural product. Cuba's Vuelta Abajo region is the best place in the world to grow tobacco for cigars.  

 Cuba's soil and climate are also perfect for growing good coffee. Coffee is grown in the mountains of eastern Cuba. Most of the country's small coffee production is exported to France and Japan.

 In general, agriculture production has been diversified but is inefficient to meet domestic needs. Cuba's rice, grains and other staples have to be imported.

 Cuba has a large reserve of minerals that are exported-especially nickel. About 40 percent of the world's nickel reserves are found in Cuba and the country is the sixth-largest producer in the world. Nickel has traditionally been Cuba's second foreign exchange earner. However, most of the country's minerals have yet to be exploited. Cobalt, copper and iron are other minerals found on the island.

 After sugar and nickel, fishing is the country's third most important industry. In the last few years the pharmaceuticals and biotechnology industries have grown and will possibly be an increased source of exports and revenue in the not too distant future. However, most industry in Cuba basically exists for the production of products for domestic consumption.

 Cuba does have oil deposits oil which help some of its domestic needs. Cuba Petróleo Union, known by the trade name CUPET, is the state-owned Cuban oil company responsible for the country’s oil and gas industry. In addition to operating a chain of filling stations that sell gasoline, the company is involved in refining and distributing the country’s petroleum products. Currently about 80,000 barrels of heavy crude oil are produced daily by Cuba.

At the present time more and more countries, companies and individuals are making profitable investments in Cuba. Cuba has business relationships with more than 3000 foreign companies from about 100 countries with many of them having branches in Cuba. Companies understand that Cuba is potentially the largest market in the Caribbean. They are aware of the inland's strategic geographical position for expanding business to many countries in the region. Law 77 (see the last section on this site) or the Cuban Investment Act of 1995 was enacted to promote foreign investment through joint ventures and partnerships. Cuba has proceeded to establish free zones and industrial parks to foster foreign investment. More joint partnerships are being formed every day.

The second Cuban Revolution in the last fifty years has begun except this one is capitalistic not communist. The changes are slowly taking root. This phenomenon is somewhat akin to what is happened in Russia, Vietnam and China but not nearly at the same pace. What we are presently seeing are small economic reforms preceding political reforms. Cuba cannot afford to not participate in the mainstream of the global economy. The country can no longer be isolated and backward a la North Korea. Free market ideas are beginning and will eventually take root in Cuba.

However, the government, or rather its military, which will continue to look out for elite interests and operate as a constraint to more widespread economic reform. “Senior figures within the Revolutionary Armed Forces (FAR) have significant business interests in the country’s most important sectors, including sugar, tourism, and cigar production. In fact, the military’s holding company, GAE, reportedly employs 20 percent of Cuba’s workers and includes the island’s largest tourism corporation, real estate, retail, and warehouses, as well as the Mariel special trade zone, which is run by Castro’s son-in-law.”

Bilateral trade between Cuba and the U.S. will increase in the future given events that have transpired recently. Cuba is so ripe for doing business that many U.S. corporations who had property confiscated in Cuba are probably willing to relinquish claims to what they previously owned just for the chance to "get their foot in the door". Rumor has it that many deals have already been cut behind the scenes. In fact, many U.S. business executives and representatives have visited Cuba in the last couple of years.

 A number of factors make investments in Cuba attractive:

1. Its geographic position and proximity to the United States. Someday you will be able commute to Cuba if necessary.
2. Cuba is accessible from all parts of the world by air or sea.
3. A communications system, which includes phone, fax, Internet and telex services, links Cuba to the rest of the world.
4. Political stability, little corruption when compared to other countries in the region.
5. A banking system,
6. Mass communication (radio, T.V. and cell phones and some internet),
7. Highway and rail systems in place
8. A telecommunications network that is antiquated but being improved.
9. A postal system, international courier systems, and public transportation.
10. A highly educated and affordable work force. Workers' wages are low when compared to other countries due to Cuba's low wage scale. Cubans who are employed by the government or in joint ventures earn only about $20 monthly. However, there are a lot of people earning more under the table.
11. Unspoiled beaches and other tourists locations, hotels, resorts all combine to make up a well entrenched infrastructure necessary for foreign investment.
12. All things considered, the country's infrastructure is adequate despite current economic problems. Cuba has more than 10 international ports with full service and shipping operating.

There is a double-tiered economy with Cubans who work in tourism or other “underground” activities earning dollars. This has created much inequity. Current monthly salaries are low, so there are thousands of people yearning to earn decent wages if given the chance. You have to pay a social security tax of about 35 percent for each worker you hire. Self-employment is now legal in many sectors of the economy.

 Combine these factors with the country’s natural beauty and good weather and you have a land ripe for investment someday. Since Cuba has been isolated from the capitalist mainstream for such a long time, the country is virgin for many business opportunities. Enterprising foreigners will have the chance to start previously non-existent businesses someday. Cuba is ready for innovative people willing to take chances. The country will attract adventurous entrepreneurs looking for a window of opportunity to establish themselves.