Saturday, March 29, 2014

Cuba approves law aimed at attracting foreign investment

Cuba approves law aimed at attracting foreign investment
By Daniel Trotta

HAVANA (Reuters) - Cuba's National Assembly passed a new foreign
investment law on Saturday that aims to bring badly needed capital to
the communist economy by offering steep tax cuts and promising a climate
of investment security.

The assembly voted in a special session to approve the law, state
television reported without providing a vote tally. It will become valid
within 90 days.

The new law halves the profits tax from 30 to 15 percent and exempts
investors from paying it for eight years, though it also appears to
withhold many of the tax benefits from companies that are 100 percent
foreign-owned. Those incentives are reserved for joint ventures with the
Cuban state and investments linking foreign and Cuban companies.

Analysts and Cuban-based diplomats have expressed skepticism over the
law, uncertain whether the one-party state has undergone a genuine
change of heart and truly wants to attract foreign investors on
international terms.

Areas such as agriculture, infrastructure, sugar, nickel mining,
building renovation and real estate development are considered ripe for

Cuba needs to attract $2 billion to $2.5 billion in foreign direct
investment per year to reach its economic growth target of 7 percent,
minister for foreign trade and investment Rodrigo Malmierca said on
Cuban state television on Friday night.

Cuba does not publish figures on FDI, which economists estimate to be
several hundred million dollars a year at most. Cuba's gross domestic
product is expected to expand 2.2 percent this year, compared with 2.7
percent growth in 2013.

"If the economy does not grow at levels around 7 percent ... we are not
going to be able to develop," Malmierca said.

"We have to provide incentives in order for them to come," Malmierca
said of foreign investors.

Cuba is cut off from U.S. investment by a comprehensive trade embargo
and has failed to meet its investment targets for each of the past five

The new investment law continues the structural economic reforms under
way in Cuba since President Raul Castro took over from his ailing
brother Fidel in 2008. It has been anticipated since 2011, when Cuba
enacted a 300-point overhaul of its domestic economy to encourage more
private enterprise.

(Additional reporting by Nelson Acosta, Rosa Tania Valdes and Marc
Frank; Editing by James Dalgleish)

Source: Cuba approves law aimed at attracting foreign investment - Yahoo
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