{"id":242468,"date":"2021-08-13T11:27:05","date_gmt":"2021-08-13T15:27:05","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=242468"},"modified":"2021-08-13T11:27:05","modified_gmt":"2021-08-13T15:27:05","slug":"train-of-economic-reforms-in-cuba-picks-up-speed-i","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/economy\/train-of-economic-reforms-in-cuba-picks-up-speed-i\/","title":{"rendered":"Train of economic reforms in Cuba picks up speed (I)"},"content":{"rendered":"

Since the beginning of summer, with the economy declining even further due to the impact of the <\/span>pandemic<\/span><\/a> and the U.S. blockade, there has been a greater impetus on the part of the Cuban government to take measures to boost production and consumption, favoring above all the private sector, farmers and individuals.<\/span><\/p>\n

In the first work of this sequence, I will try to summarize the main measures announced in this context. I will leave for the second an analysis of these measures, as well as the institutional and structural obstacles that still limit their effectiveness and expansion in the country.<\/span><\/p>\n

All the actors of the Cuban economy on stage<\/b><\/p>\n

In June, the Council of Ministers <\/span>approved<\/span><\/a> the \u201cimprovement\u201d of the actors in the Cuban economy, which includes the socialist state enterprise; non-agricultural cooperatives; micro, small and medium-sized enterprises (MSMEs); and self-employment. We will talk about MSMEs later.<\/span><\/p>\n

Cooperatives again<\/b><\/p>\n

On June 20, \u201can innovation proposal for the strengthening and consolidation of agricultural cooperatives\u201d was presented, which includes the creation of a Cooperative Development and Promotion Institute, the consolidation of current entities and the promotion of the birth of new entities, as well as \u201cstrengthening the necessary cooperative-related legislative support.\u201d In addition, <\/span>there was talk<\/span><\/a> of the \u201cpromotion and development, in an experimental way, of second-degree cooperatives, which in this case would be the union of several primary cooperatives in a higher organization.\u201d<\/span><\/p>\n

In August <\/span>it was learned<\/span><\/a> that the Council of State issued the Decree-Law \u201cOn Non-Agricultural Cooperatives,\u201d which regulates the constitution, operation and extinction of this national economy subject. To date, it has not been published in the <\/span>Gaceta Oficial<\/span><\/i> and its content is, therefore, unknown.<\/span><\/p>\n

Also in relation to the exercise of self-employment, the Council of State adopted the Decree-Law \u201cOn the exercise of self-employment,\u201d which <\/span>updates<\/span><\/a> the general provisions for its development, regulates the procedure for processing authorizations through the Office of Procedures created for this purpose, adapts its organization and control system, as well as perfects the responsibilities of the People\u2019s Power local administrations, organs, Central State Administration agencies and national entities in relation to this type of employment. In this case, its publication in the <\/span>Gaceta Oficial<\/span><\/i> is also pending. Recall that in February 2021 the list of possible activities for self-employment was expanded (from 128 to more than 2,000), which includes all those that appear in the National Classifier of Economic Activities except those <\/span>expressly banned<\/span><\/a> for this sector, which appear in the list of \u201cActivities where self-employment is not allowed.\u201d<\/span>1<\/b><\/sup><\/p>\n

New import facilities, retail sales and transportation rental<\/b><\/p>\n

Regarding the expansion of import facilities for the non-state sector, on July 31 it was announced that the state foreign trade entities (COMEX) that provide the import service of inputs and raw materials for non-state forms of management <\/span>would be temporarily exempted<\/span><\/a> from paying customs tax. The express objective of the Resolution is to reduce costs and boost the production of goods and the provision of services, mainly by self-employed persons and cooperatives. Those who import through these enterprises will only have to pay, in addition to the price of the merchandise, logistics and transportation expenses, using their bank accounts in freely convertible currency.<\/span><\/p>\n

Subsequently, the decision <\/span>was announced<\/span><\/a> to \u201cexceptionally and temporarily authorize the import via passenger with accompanying luggage, food, toiletries and medicines\u201d…but insisting that it must be non-commercial. Travelers arriving in the country will be able to import these products without paying taxes, only limited by the costs and amounts imposed by the airlines. The dubious premise that those who import suitcases full of deodorants, toothpaste, soaps and medicines will do so only for their personal and family consumption, and not to sell in the many points of sale that have sprung up in recent years on the island, is maintained. Nor does it speak of the impediment to taking full advantage of this measure as a result of the reduced number of international flights, a measure that is lasting longer than expected due to the worsening of the pandemic.<\/span><\/p>\n

Similarly, on July 28 it was announced that Cuba will authorize for individuals the import of photovoltaic systems for non-commercial purposes: \u201cIndividuals are exempt of paying Customs taxes for the import for non-commercial purposes of equipment that use renewable sources of energy and energy efficiency, their fundamental parts and pieces.\u201d<\/span>2<\/b><\/sup> This import may be carried out by accompanied or unaccompanied baggage and through the established COMEX enterprises authorized to do so, in freely convertible currency. The document itself <\/span>explains<\/span><\/a> that \u201cthe individual is responsible for the installation of the photovoltaic system and its sustainability, as well as for the recontracting of the electricity service to the Electricity Conglomerate and that the latter certifies compliance with the requirements for installation and guarantees the meter for measuring the energy generated by the photovoltaic system.\u201d It is not clear if \u201cthe recontracting of the electricity service to the Electricity Conglomerate\u201d implies that the latter is going to pay people for the electricity they contribute to the grid, or if the purchase rate will be higher than the sale rate to encourage private generation of electricity, a measure that has been successfully adopted in places like Ontario, Canada.<\/span><\/p>\n

An attempt is also being made to make the forms of retail sale more flexible. Recently, the Ministry of Domestic Trade <\/span>approved<\/span><\/a> garage sales as a modality of eventual retail marketing, and established the regulations for its realization. The people who carry out this activity will not require a commercial or self-employment license, and the items to be sold must be for domestic and personal use, recycled, pre-new and new.<\/span><\/p>\n

Also on July 31, Cuba <\/span>authorized<\/span><\/a> the leasing of underutilized vehicles from state entities to legal entities that carry out passenger and cargo transportation, and individuals who present a project of social or local interest in the territory. This could help transport agricultural produce and other cargo to markets and, through competition, lower the costs of private transportation, which until now was the only option for many.<\/span><\/p>\n

Market opening and incentives for agricultural producers<\/b><\/p>\n

The most daring of the measures taken in recent days is, without a doubt, the <\/span>new marketing policy<\/span><\/a> for agricultural products. It is supported by a package of legal norms that include a Decree of the Council of Ministers,<\/span>3<\/b><\/sup> and a Resolution of the Ministry of Finance and Prices (MFP).<\/span>4<\/b><\/sup> It is \u201ca very practical, flexible policy that was built together with many producers,\u201d said the minister of agriculture.<\/span><\/p>\n

All state and non-state marketers, enterprises, agricultural and non-agricultural cooperatives, and agricultural producers (farmers) may participate in the commercialization of agricultural products. They can lease trucks, spaces, refrigeration, warehouses, weights and any other input that supports the commercialization. The director of marketing of the Ministry of Agriculture (MINAG) explained in this regard:<\/span><\/p>\n

\u201cBefore, there were bottlenecks with regard to supplies from the self-employed. Today all those wholesalers can supply non-agricultural non-state forms of management (such as restaurants). All variants are made <\/span>more flexible<\/span><\/a> to encourage production. It is a stimulus for the producer who can manage his market or point of sale,\u201d said the minister at the time, and commented that a month and a half after the policy was approved, \u201centerprises like this have already been born, well-received by the population.\u201d<\/span><\/p>\n

\u201cThe producer can even rent a space in a market for a day to sell production that has no outlet.\u2026 Likewise, he can sell to tourism, other sectors\u2026. Or take production to industry. There is flexibility so that products are not lost,\u201d added the director of marketing of MINAG. In this way, it is expected that the unfortunate images of quintals of mangoes rotting in the fields or tomatoes unharvested due to lack of packaging, transport or collection management will disappear.<\/span><\/p>\n

Taking into account the increase in real cost, and seeking to stimulate the producer, the centralized maximum prices are also eliminated. They will be established by agreement between institutions and producers. The MFP annulled the limit on the growth of retail prices (price caps) of agricultural products, in force since February 2021.<\/span>5<\/b><\/sup> The effect was immediately seen in an increase in the selection and in prices in the supply and demand markets of the country\u2019s capital. On the other hand, this measure also annulled the maximum prices for collection agencies and wholesalers of agricultural products destined for social consumption.<\/span><\/p>\n

Will these measures produce the significant increases in food production and marketing that are needed for a real food sovereignty? Will the generation of renewable energy be promoted by individuals with the corresponding savings in electricity and fossil fuel by the State? Will the availability of food, medicines and toiletries increase \u2014 thanks to free imports by travelers \u2014 despite the shortage of flights and the risks of traveling due to the pandemic? Will the new import facilities for the non-state sector help lower costs and increase production? Will the leasing of underutilized vehicles from state entities to legal entities and individuals take place despite the bureaucracy? Will it boost and lower the cost of freight and passenger transportation that is so badly needed?<\/span><\/p>\n

Finally, MSMEs are approved<\/b><\/p>\n

After a long wait and great expectation, on August 6 it was reported that the Council of State <\/span>issued<\/span><\/a> eight Decree-Laws \u201cwithin the framework of the expansion, recognition and strengthening of the work of the different economic actors, and of other programs of national interest,\u201d for the \u201cimprovement of three important actors in the Cuban economy\u201d: micro, small and medium-sized enterprises (MSMEs), non-agricultural cooperatives and self-employed persons. The first is the Decree-Law \u201cOn micro, small and medium-sized enterprises,\u201d pending publication, which we will comment on below.<\/span><\/p>\n

Cuban MSMEs will be state, private and mixed ownership and will be classified according to the number of employed persons (workers and partners) that comprise them:<\/span><\/p>\n