Cuba puts foreign investment on front burner to cheer up its economy

With as many as $6 billion committed to over 400 international joint ventures and partnerships –lots of them in the tourist industry- Cuba is turning to foreign investment in an effort to rekindle its economy amid an unpredictable international scenario.

The island nation’s government seeks to draw other modalities such as contracts for partnered productions, totaling 270 so far according to a detailed report issued by Cuba’s Ministry of Foreign Investment and Cooperation (MINVEC).

However, delayed replies to proposals made by foreign investors interested in doing business with Cuba (almost 40 days) and long negotiation schedules for each and every joint venture (over 10 months) are two snags in the way of fast-paced cash flow.

Cuba’s Minister of Foreign Investment, Marta Lomas, said her government gave the green light to 24 businesses from 13 countries for a lump sum of $100 million. Ten of those businesses settled down overseas, while the remaining 14 joint ventures set up shop on the island.

Increasingly dependent on its own tourist industry and trapped in the staggering prices tagged on its major exports, let alone a huge budget deficit, Cuba has lured several foreign companies, even some from the Old World.

After the downtrodden sugar industry became a lame duck for outlandish businessmen, Cuba now needs that kind of financing in the face of a cash-strapped local economy that barely grew 1 percent in 2002 and points to an equally meager 1.5 percent growth this time around.

Cuba’s top priorities as far as foreign investment is concerned are tacked on the development of tourism, biotechnology and information technology, according to a report put out in Granma International, a weekly publication.

Around 56 percent of the 403 joint ventures (with 20 percent of them stationed overseas) hail from the European Union that recently announced the opening of an embassy in Havana.

Spanish autonomies are on the top of the list with a grand total of 105 joint ventures, followed by Canada (60), Italy (57), France (18), the U.K. (14), Mexico (13), China (12), Panama (10), Germany (9) and the Netherlands (8).

The amount of money poured into those joint ventures tallies over $5.9 billion, though the report issued by MINVEC refrained to point out how much of that figure is in the country and what the total investment portfolio actually is.

In a sector-by-sector breakdown, official stats indicate that tourism –a field the island nation is blessed with superb conditions- is taking up the largest chunk of invested capital with 77 joint ventures, with the Basic Industry trailing just by one with a grand total of 76 joint ventures.

Building (47), foodstuffs (27), livestock breeding (22) and the non-heavy industry (17) are the other sectors that have gotten a shot of fresh cash investment in the arm, penciled in by the government as a complement to a much bigger national effort.