In Cuba will new rules mean new markets?

In Cuba will new rules mean new markets?
The Mark News Mar 20, 2012 – 9:00 AM ET | Last Updated: Mar 20, 2012
10:46 AM ET
By Nicholas Ward

At the centre of Old Havana, the crests of 48 American states, painted
on the ceiling moulding of a wood-panelled room, hearken back to a
bygone era. In the 1930s, this room was the private club of the American
business elite in Cuba.

Today, it houses a restaurant named El Gijones, one of the first private
enterprises operating in Cuba since reforms were introduced last year.
The reforms made it legal for Cubans to start micro businesses, and
triggered a surge of entrepreneurial activity.

"The Cuba of today is barely recognizable from the Cuba of a year ago,"
says Gregory Biniowsky, a British Columbia native and Havana-based
consultant to the law firm Heenan Blaikie.

Cuban President Raul Castro first instituted limited economic reforms in
2008, after taking over the presidency from his ailing older brother,
Fidel. But these reforms were widely perceived to be inadequate to
address Cuba's considerable economic challenges, and, in 2011, the
younger Castro announced a new set of regulations that went much further
than the reforms of three years earlier.
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Licences have now been issued for more than 360,000 small businesses,
more than double the number that existed prior to the reforms. The
buying and selling of homes and cars, illegal for decades, is now
permitted. Most state-owned farmland is being transferred to
co-operatives, and several hundred thousand state jobs will be phased out.

As Rafael Hernandez, editor of the Cuban news journal Revista Temas,
suggests, any domestic efforts to grow the economy will be stunted by
the U.S. embargo imposed more than 50 years ago: "We can't sell one
cigar, one bottle of rum, one Cuban vaccine in the United States. We
have zero access to that market."

But U.S. President Barack Obama has relaxed restrictions on travel and
cash remittances to Cuba, allowing Cuban Americans to send much-needed
capital to invest in their families' small businesses back home.

Larger-scale foreign investment is still restricted, but investors and
observers in Cuba predict a relaxation of the rules in the near future.

Hugo Pons, vice president of Cuba's National Association of Economists
and Accountants (ANEC), is optimistic that Cuba will become more open to
foreign investment, specifically in the biotech and mining industries.

"Cuba has the knowledge and capabilities to develop new technologies.
[But] to do that, Cuba needs capital, and [the government] is open to
[listening] to proposals of mutual benefit," he says.

The Canadian government and Canadian business leaders have cultivated
close ties with Cuba. Many Canadian companies are also actively
exploring business opportunities there, hoping to be ready when and if
the market opens up.

While it is uncertain how quickly Cuba will implement any new reforms,
it is unlikely to retreat from the ones already introduced. "I don't
think anybody or anything can stop this process," says Marc Frank,
correspondent with the Financial Times. "The changes they're making and
the way they're making them … it is not reversible."

http://business.financialpost.com/2012/03/20/in-cuba-will-new-rules-mean-new-markets/