The Cuban government has announced that it will allow foreign investment in the domestic wholesale and retail trades for the first time in 60 years to address critical commodity shortages.
The decision could also give a boost to local industry without giving up state control over foreign trade.
“Foreign investment in wholesale and retail trade with government regulation will enable the expansion and diversification of supplies to the population and help the recovery of domestic industry,” Economy Minister Alejandro Gil tweeted, expanding on an announcement made late last night.
According to Deputy Trade Minister Ana Gonzalez Fraga, foreign investors are likely to become full owners of Cuban wholesalers for the first time since Fidel Castro’s 1959 revolution, while retailers could enter into public-private ventures.
Until now, foreign investments were only allowed in domestic goods production and in the service sector.
The move to open up a sector previously controlled by the communist government highlights the difficulties faced by state-owned companies in accessing foreign exchange and raw materials.
This has exacerbated severe shortages of basic commodities such as food, medicine and fuel, sparking growing dissatisfaction with the government that has prompted repeated protests in recent months.
There has also been rapid growth in informal trade in essential products, sparking consumer inflation that ended about 70 percent higher at the end of last year.
– required raw materials –
According to the Cuban economist Mauricio Miranda Parrondo, “the state monopoly on foreign trade is responsible for the shortage of consumer goods in the domestic market”.
Gonzalez Fraga told state television late Monday that the latest measure aims to secure investments in “raw materials, inputs, equipment and other assets that can contribute to the development of domestic production”.
Under US sanctions since 1962, Cuba began a timid opening to private capital in the 1990s before gaining broader approval in 2010, followed by a boom after warming ties with Washington under then-President Barack Obama.
Last August, Havana gave the green light to small and medium-sized businesses to operate on the island.
Months earlier, it had allowed private companies for the first time – albeit limited to individual entrepreneurs, not corporations.
The reforms represent a major ideological shift in a country where the government and its affiliates have monopolized most of the economy for decades.
The country is grappling with its worst economic crisis in 30 years, fueled by tightened sanctions under Donald Trump’s administration and the aftermath of the coronavirus crisis, which has hit Cuba’s vital tourism sector hard.
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