CUBA-ECONOMY: Duty-Free Zones Planned

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Mar 18 1997 (IPS) - Cuba will soon take another major step forward in opening up its economy by granting concessions to establish duty- free zones – the first four within the next month, according to government officials.

The first concessions could be granted in April, said Ibrahim Ferradaz, Cuban Minister of Foreign Investment and Economic Collaboration, after a delay because of studies made on environmental impact and urban planning. Some business circles, however, believed at least two applications should be approved by the end of this month.

“Havana in Bond”, founded in 1992 east of Havana, could become the first duty-free industrial, commercial and services area in the country on Mar. 31, according to a company representative. .

“We offer complete services for the business community and commerce,” including banking, transport firms and customs agencies, Victor Pena, the firm’s general manager, said in a TV interview.

More than 60 firms currently operate together with Havana in Bond, which will have to increase its storage capacity to meet 119 other applications and 20 industrial firms interested in operating within the company.

A decree approved in June 1996 by Cuba’s Council of State regulates the creation of duty-free commercial and industrial zones to attract foreign capital, as part of the government’s opening of the economy, based on a September 1995 law on foreign investment.

The law defines duty-free zones as areas with no resident population that can freely import and export goods, and in which industrial, agricultural, technological and services activiites enjoy customs, banking, tax, labour, immigration, public order, investment and foreign trade facilities and incentives.

Investors enjoy a 12-year tax exemption covering tariffs and other customs duties and the payment of public utilities and labour benefits.

“There are several firms interested in operating in our future duty-free zone,” Miguel Teruel, general manager of the Cuban firm ‘Almacenes Universales’, said. “One of the first to settle in should be the British company ‘Eurolatina’, which will operate a soft-drink company.”

A study carried out late last year by the Cuban corporation CIMEX ishowed that the number of duty-free zones worldwide climbed from some 130 in 1970 to more than 2,500 in 1996. The net contribution by commercial duty-free areas to the host nation was calculated at from six to seven percent of the gross value of exports, while that proportion reached 20 to 30 percent in the case of industrial parks.

The CIMEX study reported that by 1992, duty-free zones were already generating more than 2.3 million direct jobs, 43.6 percent of which were concentrated in Latin America and the Caribbean, where 98 such areas were operating.

Duty-free zones are aimed at increasing and diversifying imports and exports, training the labour force, capturing technologies, creating jobs and establishing links with foreign companies, officials say.

Executives of ‘Almacenes Universales’ and Havana in Bond expect the presence of foreign investors on the island to grow once the first such areas begin to function.

The Cuban government has more than 260 economic associations with foreign firms, 17 percent of which were clinched since the U.S. Helms-Burton law was enacted in March 1996, according to sources at the Cuban Ministry of Economy and Planning.

Foreign Commerce Minister Ricardo Cabrisas said that Cuba’s trade turnover rose 22 percent last year. “While in 1995 the country traded with 11 nations, that number soared to 132 a year later.”

Local authorities and analysts say the Helms-Burton law, which stiffens the 36-year embargo against Cuba, has affected the local economy, but has been unsuccessful in blocking the inflow of foreign capital.