Tuesday, May 29, 2007

Entrepreneurial spirit alive for small minority in Cuba

Entrepreneurial spirit alive for small minority in Cuba
By Mike Williams
Palm Beach Post-Cox News Service
Tuesday, May 29, 2007

HAVANA — It's nothing but a simple shed with a counter stuck in the
front yard under a shade tree. The menu, a tiny chalkboard hung from a
rusty nail on the wall, offers only two items: pizza and ice cream.

But the small food stand Esperanza Perez has owned and operated in
Communist Cuba for the past 13 years has been life changing for her.

"Before this, my life was very difficult," she said. "My husband died
and I had to face life. I had my disabled mother and my daughter to
support. This business is not making us rich, but we are surviving."

Perez was part of a new wave of Cubans allowed to open private
businesses in the 1990s, when Cuba's economy was devastated by the
collapse of the Soviet Union and the loss of about $6 billion a year in

The decision to allow privately owned enterprises was a dramatic
departure from Cuba's long commitment to socialism, a doctrine adopted
by Fidel Castro after his 1959 revolution.

But as Cuba's post-Soviet crisis eased in the late 1990s, Castro became
uncomfortable with the threat posed by private profit in a state where
riches are considered a sin.

Cuban officials in recent years have clamped down on the tiny private
sector, raising fees, cutting back the number of licenses issued and
increasing inspections.

The number of private entrepreneurs - called "cuenta propistas," or
"people working on their own account" - dropped from around 200,000 in
1996 to about 150,000 today, according to news reports.

The question on many minds is whether Cuba will continue to rein in
private opportunity or open its economy further.

Although Castro remains firmly committed to socialism, the 80-year-old
leader has been sidelined the past nine months by a serious illness. He
officially turned over power to his 75-year-old brother, Raul, in July.

Raul, head of Cuba's military, is said to be a pragmatist open to the
idea of limited private enterprise. Cuban officials also are candid
about the need to improve the living conditions of the Cuban people,
most of whom earn only $12 to $15 a month.

The cuenta propistas will be a part of Cuba's future, Economics Minister
Jose Luis Rodriquez insisted insisted during a recent press briefing.

"There is not a policy to destroy private businesses," he said.
"Legally, people are allowed to do this. The state never thought of
private business as a menace."

That is good news to the business owners, many of whom say they enjoy
the challenge of running their own enterprise.

"It's a good business that enables me to maintain my house, to sometimes
drink a beer and to maintain my cars," said Miguel Gonzales-Carbajal, a
Cuban physician who has run a "casa particular," renting rooms to
tourists, for seven years.

"With just my salary, it was hard to make ends meet," he said.

He charges $25 for a small room and $35 for a larger room that are
clean, air-conditioned and have private bathrooms. For this privilege,
he pays the state the equivalent of about $325 a month.

"There is risk because if I have no customers, I still have to pay the
license fee," he said. "But if we have a month we believe will be slow,
we don't have to pay the fee but then we cannot rent the rooms."

The concept of risk is new to many Cubans, but some of the business
owners seem to thrive on it. "I really enjoy it," said Lazaro Ordonez,
44, who with his mother Elisa, 62, has run Los Amigos, a tiny paladar or
private restaurant, out of their home for 12 years. "You have to work
more, but in the end, you have a compensation, a better life."

Cuban law allows the businesses to hire only family members. The cost of
the licenses varies. Perez, who charges the equivalent of about 30 cents
for a small pizza and 13 cents for an ice cream cone, pays the
equivalent of about $116 each month for her license and two family workers.

Entrepreneurs also pay 10 percent of their profits in yearly income tax.

Cubans are loath to speak of how much they earn, but a Cuban
professional who researched the private sector with thoughts of opening
a business estimated that a stand such as Perez's might earn $200 a
month in profit.

Also thriving are private markets, where farm cooperatives and
individuals pay fees to sell goods and produce. The private markets
often have higher-quality produce than state-run markets, although
prices are also higher.

"The vendors pay 5 percent of sales in taxes and 5 percent to rent their
stalls," said Orlando Valdez, manager of a market in Havana's Vedado
neighborhood. "The prices are set by supply and demand, but if a vendor
is charging very high prices, we try to convince them to lower them."

Prices seem cheap by American standards, with a pound of tomatoes
costing the equivalent of about 20 cents, while chicken and pork sold
for about $1 a pound in Cuban pesos.

Other vendors sell at a street fair that takes place once a month in Vedado.

"I buy this stuff from the state and pay 10 percent of each sale in
taxes," said Roberto Garcia, 28, who sold mops, brooms and detergent at
the fair. "I do OK because my prices are cheaper than in the state
stores. I sell soap for 5 pesos (about 20 cents), while in the state
stores, it's 15. I'm not getting rich, but I'm surviving."

Most of the Cuban entrepreneurs say the same thing. But most also say
they would never go back to their state jobs because they would miss the
pride of running their own affairs.

At the Ordonez family's paladar, there is almost always a long line
outside waiting for a chance to eat a typical Cuban meal of pork or
chicken, rice and beans. With a beer or two, the meal costs the
equivalent of about $7, or roughly half the average Cuban's monthly wage.

But the place is wildly popular and filled mostly with Cubans, not tourists.

"This is good for us and good for the country," said Lazaro Ordonez. "We
support our economic system, but we hope they will allow more of these
private businesses."

No comments: