With A New Trade Zone, Cuba Reaches Out To Investors

With A New Trade Zone, Cuba Reaches Out To Investors
OCTOBER 16, 2015 2:43 PM ET
CARRIE KAHN

If you could start selling something in Cuba that would be a sure-fire
money maker, what would it be?

Probably something that hasn't been widely available for more than 50
years in the state-controlled economy. A product for which there's pent
up demand and one that would surely spruce up the place after decades of
neglect.

Mexican businessman Jaime Murow Troice is already selling it: paint.

He has an automated paint factory outside Mexico City, where a giant
injector fills metal cans with basic white primer. About 20 percent of
Murow's current production goes to Cuba.

But come next year he's banking on selling even more, while also saving
shipping costs and import fees. His company is one of the first
companies to be approved as a tenant in Cuba's new Special Enterprise Zone.

"We've been working in the Cuban market for a while, we know it," says
Murow.

When the opportunity came up to manufacture in the free trade zone in
the port of Mariel, Murow says he jumped on it.

A New Image For Mariel

Mariel, 30 miles west of Havana, is probably better known for the mass
boat lift in 1980, when more than 100,000 Cubans were allowed to leave
and headed to Florida.

But today a steady stream of tractor trailers roll into the brand new
port. At a cost of $1 billion, and financed mostly by Brazil, it will
eventually cover 180 square miles and will be able to handle up to 4
million cargo containers a year. And in the free-trade zone, foreigners
can claim 100 percent ownership of their companies and enjoy huge tax
breaks.

"I think it's going to bring a lot of advantages to the country. It's a
grand development," says electrician Roberto Gonzalez Chacon on his way
to work.

Workers now in the port make far more than the average monthly wage in
Cuba of about $20. One crane operator told me he takes home about $300 a
month.

"All this development is going to raise Cuba's standard of living, which
will raise our own purchasing power," says Omar Eveleny Perez, an
economist at the University of Havana.

But he warns that the U.S. embargo remains a major issue. One of the
biggest obstacles to foreign shippers is that if they dock in Cuba's
ports they're then barred from entering the U.S. for six months unless
they get a waiver from the Treasury Department.

There are additional issues making foreigners nervous about taking the
Cuban plunge. There is, for example, uncertainty over how and when the
state will loosen its tight grip on the economy.

A U.S. Visitor

During a fact-finding trip to the enterprise zone earlier this month,
U.S. Commerce Secretary Penny Pritzker told NPR that Cuba's commitment
to freer trade is still an open question.

"I think the Cuban government is in an evolution, and how fast that
change is, or exactly where that change is going, is still not totally
clear," Pritzker said.

Foreign companies are concerned about the cumbersome bureaucracy and
employment rules that say all workers for the free-trade factories must
be hired through a Cuban agency and paid at state-controlled wages.

Enrique Palacios was hired by the Cuban employment firm to run a Mexican
paint company in the free-trade zone. He says foreigners shouldn't doubt
that they'll make profits, but Cuba must benefit too.

"We are not capitalists," Palacio says during an interview in a large
conference room at Devox Paint's Havana headquarters. A huge mural of
Fidel Castro and Che Guevara fill one wall. "We are happily entering
into this new era," he says, but adds, "we will continue to defend our
interests as well."

Source: With A New Trade Zone, Cuba Reaches Out To Investors : Parallels
: NPR -
http://www.npr.org/sections/parallels/2015/10/16/449202460/with-a-new-trade-zone-cuba-reaches-out-to-investors