Wednesday, February 28, 2007

Conciliatory tone of acting Cuban President prompts US firms to consider investing there

Conciliatory tone of acting Cuban President prompts US firms to consider investing there
22 Hours,14 minutes Ago

MIAMI: With President Fidel Castro in declining health, a growing number
of companies in the United States are making plans to do business in Cuba.

This is due in part to Acting President Raul Castro's apparent
conciliatory tone toward the US.

In Miami, business leaders and investors are closely watching
developments in Cuba.

Many view potential political change there as an opportunity.

Investment adviser Thomas Herzfeld has established a portfolio of
American companies set to benefit if the US embargo against Cuba is lifted.

Said Thomas Herzfeld of Thomas J Herzfeld Advisors: "From early on, we
decided that once the trade was resumed with Cuba, Cuba being the most
important of the island countries in size and population, there would be
a boom in that country - one that we believe would proliferate
throughout the region, and we always focused on Cuba. But of course
being a US investor and a US citizen, we can't invest directly in that
country. So we have invested in companies that we believe will do well
even if trade is not resumed with Cuba, but also in companies that would
benefit once trade is resumed."

Herzfeld's Caribbean Basin Fund is a small one.

Its assets are worth US$14 million and it is being traded on the Nasdaq
with the ticker symbol CUBA.

It is a closed-end fund. So, unlike a mutual-fund, its share price is
determined by the demand on market rather than the value of the fund's

The value of the fund's stock has risen 120 percent in the past year,
making it the top performing fund of its kind in America.

Herzfeld says Raul Castro's recent comments give business cause for

Said Herzfeld: "For those of us who've been listening to Raul since he
took over power last August, he's taken a much more conciliatory posture
towards the US. Now, how far will he go towards free elections,
releasing the political prisoners, compensation for confiscated
property, return to capitalism, how far will he go and how soon will he
do it? That would be the key, in my view, towards the US resuming trade
with Cuba and we'll just have to see."

In Cuba, infrastructure is crumbling and, Herzfeld says, the country
needs 40,000 new homes.

The Caribbean Basin Fund includes US construction, railroad, water,
telecommunications and tourism companies.

Traditional Cuban industries such as rum, sugar, tobacco, mining and
fisheries also present foreign investment opportunities.

Camilla Gallardo, who is from the Cuban American National Foundation,
said: "They're going to need a lot of investment into the country and a
lot of help in reconstruction and certainly, we encourage companies that
are looking and dealing in a post-Castro Cuba to do just that, I mean,
as they would anywhere else. And certainly that would be of great
assistance to helping create jobs and industry in Cuba that don't exist

But in Miami, some Cuban-Americans doubt that American business can
flourish on the island.

Alvaro Fernandez is among them.

He campaigns against the US embargo, but he believes that American
industry will be at a disadvantage once trade is resumed.

"There is an opportunity and the United States of America will come in
late. Anybody who follows what is going on in Cuba will realise that
they are starting to do business with the rest of the world - China,
Europe, Italy, Spain, Mexico, you name it, they've got something going
with them," said Alvaro Fernandez, president of the Cuban American
Commission For Family Rights.

But others, like Thomas Herzfeld, are less concerned.

He thinks non-US companies already in Cuba will be shunned in the future
for doing business with the Castro government.

He also denies his efforts are helping to erode the US embargo.

Herzfeld is now meeting with hundreds of businesses on joint ventures,
and plans to invest directly in Cuba once the US embargo is lifted.

No comments: