The US recently struck Cuba from the ‘State Sponsors of Terrorism‘ list and eased economic restrictions. This provides many new business opportunities and has contributed towards a major perception change about the country. These moves are naturally predicted to boost international trade and improve foreign investment in Cuba.
In the year 2014, the Cuban government presented a docket titled ‘The Cuba Portfolio on Opportunities for Foreign Investment’. This report included 246 projects that require over 15 billion USD in capital investment.
Where to invest in Cuba?
We have been seeing some of these plans manifesting as various forms of foreign investment have been approved in Cuba over the past few years in the following sectors:
The Cuban government has been pro-actively working towards the development of its pharmaceutical industry. An example of this would be an allocation of 9% of Cuba’s GDP in public health services for its people. It may benefit prospective investors to note that in Cuba, a majority of medical equipment parts are imported.
Cuba’s discovery of several dozens of extra-heavy oil fields, other light, medium and very light oil reserves will ensure that Cuba meets its target of achieving 25% renewable energy by the year 2030.
The light manufacturing industry in Cuba is a potential market for investors as Cuba is looking to modernize its existing technology with a dual aim of covering the local market and generating exports.
The Cuban Tourism sector thrives on new building projects, hotels, accommodation facilities which is why Cuba is keen on foreign partnerships. A need for tie-ups with renowned hotel chains across the globe is a major driving force behind Cuba’s interest in foreign capital investment.
Information communication technology
Government owned monopoly providers of mobile, internet and fixed line services have proven to have poor market penetration. Cuba looks forward to improving and launching several new services and email access even to places like Havana.
Agriculture, food and beverage
Reduction of imports of food items and exports diversification have created opportunities for investors who are equipped to strengthen Cuba’s sugar cane industry by rehabilitating its existing mills.
Opportunities and risks of investing in Cuba
Easing of economic restrictions and a new law for foreign investment present a world of opportunity to invest in Cuba.
However, some associated risks are:
- High economic and social costs due to delay in unifying two co- existing official currencies
- Rationed and state-driven economy perpetrating risky political climate
- Non-payment risk in the short run
Cuba Investment promoting policies
The recent years have seen concrete steps taken to lift the embargo on Cuba and promote foreign investment. These are the most important steps taken:
- A drop in travel and economic restrictions between Cuba and the USA as announced by President Obama and President Castro in 2014.
- The January 2015 discussion in Havana between the US and Cuban officials to lift the embargo.
- In February 2015, Cuba took off the ‘State Sponsor of Terrorism’
- Between 2016-2018 the economic embargo is to be completely lifted.
Hence, we see a new Cuba emerge due to reformed ideology which seems like a second chance for the nation to regain its economic stance. This is a good time to get involved with renewed focus on Cuba as the US is currently in the process of engaging this market.
Plan your market entry into this budding economy and occupy a profitable space within its opportunity-filled sectors. For details, it would be beneficial to obtain market research reports to aid your business plans in Cuba.