doing business with cuba - Caribbean Export Development Agency

5. INVESTMENT POLICY
With the exception of defense, public
health care and education, all other
sectors of the Cuban economy are
opened to Foreign Direct Investment.
Provision for FDI is made under the
country’s Foreign Investment Act of
1993 which outlines broad areas of
investment promotion and incentives for
foreign investors. The areas identified
for FDI are tourism, manufacturing,
nickel and mining, agriculture,
information technology,
pharmaceuticals, and
telecommunication.
These areas where foreign investment is
being invited are among a list outlined
by the Cuban Ministry of Foreign
Investment and Economic Cooperation
and other official agencies of
Government.
The aims of the policy are to diversify
the economy, moving it away from
being dominated by agriculture, and to
earn foreign exchange. The country has
signed Bilateral Investment Treaties with
other countries to promote investment
and to protect investors. There are no
limits on repatriating profits by foreign
investors and foreign investors are given
protection and special safeguards.
Financing is provided at concessionary
rates and joint ventures are also pursued.
5.1 Export Processing Zones
Since 1997 Cuba has in place export
processing zones. Decree Law 165
makes provision for the EPZs which are
located on approximately 1 250 hectares
of land. Considered the largest in the
DOING BUSINESS WITH CUBA
16
Caribbean and even surpassing those of
Panama, the Cuban EPZs are located in
Havana, Cienfuegos, and in the Berroa
Valley.
The genesis behind setting up EPZs is to
attract foreign direct investment and to
increase exports, cited a United Nations
Discussion Paper authored by Larry
Willmore. Through Decree Law 165, the
Cuban authorities have granted attractive
concessions for investors wishing to
participate in the EPZs. Investors are
allowed to retain full ownership of their
operations which is different from other
forms of investments are based on joint
ventures with public enterprises.
Investors with plants in the processing
zones are exempted from Cuban income
tax and taxes on labour utilization for a
period of 12 years to be followed by a 50
percent exemption for another three
years.
While EPZs are primarily designed to
promote exports Cuba allows some
plants limited sales to the domestic
market.
Products that incorporate at least 50
percent Cuban value added are exempted
from the payment of duty. No other
country in the Caribbean Basin offers
such incentives for EPZs sales to the
domestic market.
5.2 Cuba – Caribbean Relations
In 2000 Cuba and CARICOM signed a
Trade and Economic Cooperation
Agreement. The agreement which has
since been ratified provides for the duty
free entry in each other’s markets of a
list of approved goods. In the meantime,
CARICOM countries have a list of items