Until a few weeks in Cuba many services and goods that could have found interested customers, willing to pay for them, they would never be available or become a source of income. The margins of the rules which consigned the “social purpose” of a company or an entity were too strict to be changed. The “raison d’être” of a corporation, limited the use of its resources to a small number of basic functions that were not only mandatory, but of exclusive compliance.
So, an institution dedicated to no matter what, but with a conditioned space for recreational activities, for example, could not agree to rent it because it was hardly included in their “social purpose” if it didn’t belong to the Trade service company.
The repair shop that once met the needs of particular entity which is not running anymore was not allowed to charge for services to third parties and thus have additional income because its sole mission was to meet the demands of that business, and nothing more. Not only should it resign to miss opportunities to be useful, but passively observe the depreciation of a machine or a service required by potential customers.
A printing company that didn’t have it expressly permitted, had to discard kilograms of leftover paper from its editorial productions, before been able to put it to use in making dissimilar ticket stubs that other companies needed.
Thus, rather than a definition of the primary mission of a corporate structure, so far the so-called “social purposes” worked in the Cuban economy as a statement of all that we couldn’t do, even when conditions exist.
It is logical that in a centrally planned economic system, such as Cuba, where companies usually have a monopoly of the market and the supply is limited, mechanisms exist to ensure that the entity responsible for the fulfilling of specific function will just do it, but why did it have to be on exclusive basis of any other benefit that it could provide?
What reasons suppoeted, until today, that an entity will not increase its profits with the use of the remnants of his fundamental work, leasing an area or maximizing unused or under-exploited technology?
Resolution 134
“The social purpose of a company exists in the world and has to do especially everywhere for registry and tax effects, as there are many activities that are prioritized or higher taxes are placed according to the social work carried out by the entities. But to limit the performance of a company because something “is not in the social purpose”, because it was designed in a narrow and ineffective way, clashes with the efforts of employers to achieve better economic performance of their organizations. ”
This was how Johana Odriozola, legal director of the Ministry of Economy and Planning analyzed it, at the press conference in which the ministerial authorities reported on the adoption of a new standard for defining the institutional “what for”.
Finally, from the political will to make the socialist state enterprise the main form of the national economy (Guideline 2), to demarcate the state of the business functions (Guideline 6), and to define the powers and instruments of companies to direct the production of goods and services and deploy their full potential (Guideline 13) they approved the legal rule that allows to make more flexible the social purposes: Resolution 134 of the Ministry of Economy and Planning, published on Monday, May 20 in the Official Gazette of the Republic.
The legal instrument establishing the social purpose “is the set of major production, trading and services activities that make business transactions through which an entity conducts a business, plays the role for which it has been created “.
The decree recognizes, therefore, the existence of other non-core activities that complementary the purpose of its creation, the company may develop.
These are the “secondary” type (derived from its purpose), “support” (mainly related to idle capacity that can be of service to others) and “possible”, as decided by the management of the economic entity to certain circumstances.
Another interesting element is that this category will have only those legal persons whose mandate shall be to perform production, trade and services activities. Budgeted units (except those that perform some business function) are not to declare purpose, either political, social and mass organizations.
To implement this decision, and with the guidance of the Ministry of Economy and Planning, they will develop a review process of social purposes in most financial institutions this year, therefore they will have them updated by 2014.
“Now comes the process of reviewing all these social purposes, which is complex, but it is very important that these changes have been approved, for even since the implementation of the Guidelines within the enterprise system, this is one of the first steps of great extent that we are taking, and which has been demanded and well-received by all levels from the start, “said Odriozola.
This no doubt is the latest attempt to free the shackles of state company and put in a position to be more for results than a “solution”, the fundamental productive structure of the Cuban economy.
But already many knots have long “legally untied”, and practice continue to suffer from the inertia of the tether. Such luck has run, for example, the opportunity to hire self-employed for the production of a good or providing a service when they prove to be more efficient than a state agency.
This possibility, freed from the entry into force of the associated bank resolutions Decree-Law 289 which removed the limit of one hundred dollars that was to be paid to these workers-found reluctance among many managers that once defended the advantages of a more flexible recruitment, for now, with the possibility to choose, it also expands the risk of error, and it is not the same complain about the lack of autonomy that, once obtained, dare to use it.
Such is the expectation that this new MEP legislation opens, whether the business entities with the same zeal they defended it, decide to add to the fulfillment of the new social purpose the challenge to impose them, and reach higher goals.
It all depends, obviously, on the creativity and willingness to assume risk by a groups of companies, but also undoubtedly the ability to demonstrate the new scenarios to accelerate the conversion of collective contributions into individual benefits.
