Badly In Need Of Cash, Cuba Opens A Wider Door To Foreign Investment
In a major shift for the island's communist government, Cuba has announced it will finally let foreign investors hold majority ownership of businesses.
In its official newspaper "Granma," Cuba’s communist regime said this week it will allow foreign investors to have majority ownership in businesses — after six decades of insisting the government always have majority control.
The regime will still retain majority ownership in sectors like public services and mining. But foreign capital may now have majority stakes in critical industries like tourism and biotech. In certain cases, such as technology development, a business may even be completely foreign-owned.
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Because of its tightly centralized, Soviet-style economic management, Cuba attracts little foreign investment. Last year it received less than $2 billion, or about 1 percent, of Latin America’s total foreign investment. A new special economic development zone in Mariel, Cuba, has taken in only a tenth of what was anticipated.
Cuban officials said this week they believe they can raise that to $12 billion. And it's perhaps never been more important. The unusual effort to score more foreign investment suggests how desperately Cuba’s ailing, threadbare economy needs hard currency — especially given the difficult economic challenges the island is facing now, such as the COVID-19 pandemic that has siphoned all-important tourism revenue and stricter U.S. economic sanctions, and those it has ahead of it.
For example, Cuba currently uses two currencies, one for locals and another for foreigners. Economic pressures have forced the government to unify them soon — but in the process it must sharply devalue the local currency – leaving Cubans even poorer.