Cuba's foreign investment invitation may hide potholes

[flamingdem]

http://www.cnbc.com/id/101531473

* To me what's of interest is whether the Cuban government will continue to insist on owning 51% of joint ventures. This is the same policy as they had in the 90s and not likely to attract the business they seek. It seems like they are open to changing this policy, but it's unclear at this point.


Theoretically, fully foreign-owned businesses have been permitted, but were never actually approved. Until now, the government insisted on joint ventures, in which they were the controlling partner with a more than 50 percent stake. Inability to control an investment has been a large hurdle to foreign direct investment.

In private conversations in recent years, government officials told CNBC this would change when the new law was implemented. It remains to be seen whether or not they will actually allow it to occur.

The law also seeks to dramatically lower taxes. Currently, the few foreign firms doing business in joint ventures with the government must pay taxes of 30 percent on all profits and 20 percent on labor. Under the proposal, the mining profit tax will drop to 22.5 percent from 45 percent. The labor tax would be eliminated and the tax on profits will drop to 15 percent.

The Cuban parliament will vote on the proposed new foreign investment law Saturday.

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