Cuba pushes ahead on reforms but insists island not for sale

July 15, 2013 1:29 pm

Cuba pushes ahead on reforms but insists island not for sale
By Marc Frank in Havana

Cuba's efforts to build a more market-driven economy are moving from
lifting prohibitions on personal property, travel and minor economic
activity to reform of larger state companies.
But one of the most powerful men in the land had bad news last week for
those who might harbour hope of owning a piece of the Caribbean island.
"Life has demonstrated that the state cannot occupy itself with the
entire economy, that it must cede space to other forms of
administration," Marino Murillo, the man appointed to head President
Raúl Castro's reform efforts, told journalists visiting the country last
week.
But Mr Murillo, a member of the politburo and vice-president of the
Council of Ministers, emphasised that it was a transfer of
administration and not a "property of the people" reform.
Since Raúl Castro took over from his ailing brother Fidel Castro in
2008, and first began to institute austerity measures and reforms, the
country's current account has run a surplus, but economic growth has
stagnated at just over 2 per cent annually.
The Cuban Communist Party and government adopted a more than 300 point
plan in 2011 to "update" the country's economic and social model, "but
the party made clear the changes were to take place within the limits of
socialism", Mr Murillo said.
Asked repeatedly about foreign investment opportunities, the officials
offered nothing new at all, repeating stock lines about investment being
complementary to their development schemes and that existing regulations
were flexible and adequate.
Mr Murillo said the government was developing a list of offers that
should be ready by 2014 and were planned to stimulate investment.
The implication was that drawn-out negotiations over control of joint
ventures, duration of the agreements, tax breaks and labour relations
are unlikely to be resolved soon. The possible exception is a special
economic zone in western Cuba expected to open next year and which is
awaiting publication of its rules and regulations.
None of the 190 companies managing and temporarily in joint ventures in
Cuba own any property outright, nor do they have the right to sell
shares except with the authorisation of their partner, the state.
Mr Murillo said agriculture represented more or less what authorities
envision for minor and secondary sectors of the economy.
The country has leased fallow state land to nearly 200,000 would-be
farmers in recent years, loosened the regulation of co-operatives that
were already leasing state land and freed up all agricultural actors to
sell more of their produce (currently 47 per cent) on the open market,
bypassing the state's wholesale and retail outlets.
"Eighty-one per cent of the land is social property owned by the people,
and 70 per cent of the land is administered by co-operatives and small
farmers," he said. Twenty per cent is owned by small farmers and their
private co-operatives.
Cuba has been busy fostering development of small businesses in retail
services, transport, construction and minor production, and allowing
market forces to govern their activities, along similar lines to the
agricultural sector.
The government is leasing taxis and thousands of state shops, with up to
five workers, to its former employees or any takers, and this month
began to transfer larger enterprises with 6 to around 50 workers to
co-operative administrations, 124 to date, with another 71 approved.
Currently, 4m people out of the country's 5.1m-member labour force work
for the state, the remainder occupied in what is called the "non-state"
sector, Mateu Pereira, an adviser to the minister of labour and social
security, told the journalists.
An estimated 1m Cubans of working age do not seek employment.
The co-operatives are the first outside of agriculture since all
businesses were nationalised in 1968.
The government says many more establishments will follow, beginning in 2014.
The co-operatives function independently of the state on the basis of
supply and demand, divide their profit among members and receive better
tax treatment than individually owned businesses, according to Cuban
officials.
A decree law published in December allows for an unlimited number of
members and use of contracted employees on a three-month basis.
Cuba will also begin deregulating state-run companies in 2014 as reform
of the Soviet-style command economy moves from retail services and
farming into its biggest enterprises, the head of the Communist Party's
reform efforts said.
Mr Murillo said the 2014 economic plan included dozens of changes in how
the companies, accountable for most economic activity in the country,
did business.
The reforms will affect big state enterprises such as telecommunications
company Etecsa, tourism corporations, trading company Cimex and sugar
monopoly Azcuba.
Mr Murillo said changes include granting managers more autonomy and
permission to sell excess products after meeting state obligations on
the market, and allowing companies to retain half of their profits after
taxes for such things as minor investment and wage increases.

Source: "Cuba pushes ahead on reforms but insists island not for sale -
FT.com" -
http://www.ft.com/cms/s/0/97eb8858-ed2e-11e2-ad6e-00144feabdc0.html