Cuba Announces Financial Reforms, Opens Up To Foreign Investment

Cuba is ready to open up, its government says. The authoritarian communist country has outlined a plan to deregulate state-owned companies and attract more foreign investment that brings technology, financing and jobs to the island, Vice President of the Council of Ministers Marino Murillo announced on Tuesday.

“We will be working for deep reforms for the rest of the year and well into the next,” Murillo, who is in charge of the reform commission, told Reuters. “The very first step has been to eliminate prohibitions and restrictions.”

Murillo said that the government was planning to give companies more autonomy and give entrepreneurs more freedom to grow. He clarified, however, that “the model of the revolution is based in social propriety, and not private, even though the latter creates jobs.”

The plan is to allow state-owned companies to keep 50 percent of profits, after taxes, and then reinvest them in production. Up to now, all profits went to the government.

News agency Prensa Latina reports that reforms include shutting down all companies that lose money for more than two years. “Our goal is to improve business efficiency and finish with the debt that has been dragging our economy down,” Murillo said.

The other key aspect of the reform is to open the country to foreign investment. “We are aware that our island needs more foreign investment,” Murillo admitted. He specified, nonetheless, that the government will only welcome foreign companies that bring technology, financing and jobs.

There is one particular group of investors the government is hoping to attract: Cubans abroad. Llanio Gonzalez, consul in the Cuban Interests Section in Washington, said that the reforms will make it easier for Cuban families who emigrated to the U.S. to move back or invest in the country from afar.

"Our country is in a process of huge change, not only economic but also political. And in the new foreign investment law, all Cubans are of course included," the diplomat said to a group of expats who have been lobbying against the embargo from exile. Gonzalez met up with several expat groups in Miami on Sunday and exposed the conditions in which the reforms on immigration from 2010 can help them invest in their home country.

Gonzalez sustains that it is not the Cuban government that does not allow the return of Cuban expats, but the U.S. embargo on Cuba. "Cubans living abroad have been included in investment laws, but the embargo laws do not allow you to adhere to [its] provisions," he said.

Havana's new strategy is to turn around the effects of this policies, through an immigration reform that went into effect in January, which allows Cubans living in the U.S. to stay on the island for three months at a time. "Right now, many people live in both places at the same time, they come and go, come and go. We want more expats to join the trend," Gonzalez said.

These may the first stages of a more open Cuba, making its first attempt at foreign investment and private entrepreneurship. The Cuban economy experienced a 2.3 percent growth in GDP in the first half of 2013, according to the Ministry of Economy.

The World Bank does not have an estimate for the Cuban economy due to lack of data.