Cuba: Why a Foreign Investment Law and not an Investment Law?April 7, 2014 | Print |
By Jorge Gomez Barata (Progreso Weekly)
HAVANA TIMES — Because of the style of parliamentary debate in Cuba, it is impossible to know if any of the more than 600 deputies present at the National Assembly asked: “Why a Foreign Investment Law and not an Investment Law?”
It is difficult to understand why, in the midst of a process of change that has vindicated entrepreneurial economic activity, coined the formula “non-state economic activities” and eliminated prohibitions that excluded Cubans, a law is passed that deprives the natives of the right to invest in their own country on an individual basis, establishing contractual ties with a foreign partner or relative living abroad.
The exclusion is all the more inexplicable when, in the midst of a climate of bold openness and expectations of democratization, we return to eras past and sanctify a solution that presents the natives’ lack of solvency as a property of the system, turning disgrace into virtue.
Moreover, it is necessary to point out the paradox that the same State that depenalized the holding of foreign currency, facilitated the inflow of remittances, created conditions for the operation of open farmers’ markets, allowed Cubans to hold bank accounts in other currencies, and recently allowed the sale of second-hand cars for 50,000 dollars and more, now assumes that the natives lack the investment capacity to establish small and medium businesses (PYMES) in association with foreign capital.
The argument that the presence of foreign capital is pertinent only in large investments overlooks the fact that, according to the scale of the Cuban economy, the scant production of manufactured goods, the deterioration of the services network, the low levels of income and other factors, the small and medium businesses are best suited to produce results in the short term, among other reasons because they require lesser capital and are technologically more viable.
It is true that there is hardly a Cuban on the island who holds million-dollar resources, but it is not impossible for one to have enough to set up a small or medium business and do it like the foreigners do: choosing his partners, with his money, at his own risk, and in accordance with the law.
It could also happen (and I hear it does) that Cubans on the island — with financial, logistic and managerial support from relatives abroad — can establish small businesses. Why didn’t the Law not deal with these situations and, instead of limiting, favor the flourishing of micro and midsize businesses, especially stimulating those engaged in the production of consumer goods and services that are indispensable and in great demand?
The Law’s drafters and the legislators could have decided that those Cubans with resources who qualify as investors in small and medium businesses in association with foreign capital should receive government support, soft credit, tax incentives and the consideration due to those who contribute to the growth of our economy.
It is true that, as explained, exceptionally there might be a national investor, but he would have to invest exclusively through a cooperative and, if that occurred, the State should be present to prevent “the concentration of property.”
I understand that the emergence of national elites more or less wealthy (which already exist) could be a problematic element, but so is the presence of transnational companies and foreign magnates, who are assumed to be not a necessary evil but a positive element in the nation’s economic growth and development, and the people’s welfare.
With the greatest respect, I believe that never again in Cuba should a law be passed or a practice allowed that excludes Cubans or places them in a position of inferiority to foreigners. There is still time.