Tag Archives: Cuenta-Propistas

20 RECOMENDACIONES PARA DESTRABAR AL SECTOR PRIVADO EN CUBA

Una lista elaborada con el concurso de muchos emprendedores cubanos para sugerir al gobierno cubano pasos concretos que fortalezcan el trabajo por cuenta propia y la pequeña empresa.

Por Oniel Díaz,

en Cuba, enero 22, 2020

Respondiendo a los pronunciamientos del Presidente de la República aquí van 20 recomendaciones para destrabar todo lo que entorpece el desempeño del sector privado en Cuba.

  1. Crear de una comisión integrada por el gobierno, académicos y trabajadores por cuenta propia para revisar las regulaciones vigentes publicadas en la Gaceta Oficial Nº 85 Ordinaria del 6 de noviembre de 2019. Identificar los problemas que lastran el aporte del sector a la economía nacional y elaborar una propuesta de medidas que los solucionen.
  2. Proceder a elaborar, con la participación de cuentapropistas, cooperativistas, empresarios estatales, académicos, juristas y funcionarios, las normas jurídicas que reconocerán las pequeñas y medianas empresas (PYMES) y les definirán deberes y derechos en la economía nacional. 
  3. Retomar la constitución de Cooperativas No Agropecuarias (CNA), en especial, en actividades que puedan ser propuestas por los ciudadanos y no solamente en las que son de interés de las autoridades. Someter a revisión las normas aprobadas para perfeccionar el sistema de gestión de las CNA publicadas en la Gaceta Oficial Ordinaria Nº 63 del 2019.
  4. Eliminar el listado de actividades autorizadas para ejercer el trabajo por cuenta propia y establecer un listado de actividades prohibidas. 
  5. Autorizar la prestación de servicios profesionales de forma individual como cuentapropistas y agrupados en CNA o PYMES en actividades como arquitectura, diseño de interiores, diseño gráfico, contabilidad, abogacía, consultorías, comunicación, publicidad, economía, desarrollador de software, marketing, producción audiovisual, entre otras.
  6. Fomentar y apoyar especialmente los emprendimientos asociados al turismo internacional, la agricultura, el desarrollo de software y otras actividades que puedan tener un impacto en las exportaciones o la sustitución de importaciones. 
  7. Reconocer a los TCP y a las PYMES como sujetos de la ley vigente para la inversión extranjera. Autorizar la participación legal, segura y ordenada de capital foráneo y de los cubanos residentes en el extranjero en los negocios privados. 
  8. Crear mecanismos de abastecimiento mayorista los cuales pueden ser gestionados por empresas estatales, por empresas extranjeras o por entidades mixtas. 
  9. Facilitar los créditos bancarios mediante los bancos comerciales estatales y también dando acceso a plataformas de microcréditos de instituciones y empresas extranjeras. 
  10. Ofertar la contratación de servicios de telecomunicación (telefonía fija, móvil e Internet) especialmente diseñados para cuentapropistas y las PYMES que ofrezcan precios ventajosos y un paquete de servicios a la medida de sus necesidades. 
  11. Facultar a los TCP para importar con carácter comercial, ya sea directamente o a través de empresas estatales autorizadas para tales efectos, materias primas, servicios, tecnología y equipamientos. 
  12. Facultar a los TCP que estén interesados o dispongan de las condiciones adecuadas para exportar sus productos y servicios, ya sea de manera directa o a través de empresas estatales autorizadas para tales efectos. 
  13. Modificar la política fiscal que se le aplica al TCP de manera tal que sea más flexible y ajustada a la realidad y particularidades de los tipos de negocios existentes. Entre otras cuestiones, se deberá permitir la deducción del 100% de los gastos obtenidos, gravar las utilidades en lugar del ingreso total y cambiar establecer una escala progresiva más justa y razonable para la determinación de los impuestos a pagar. 
  14. Eliminar el impuesto sobre uso de la fuerza de trabajo de manera tal que este impuesto no constituya un desestimulo a la formalización de los empleos en el sector y al pago disciplinado de los impuestos. 
  15. Crear una institución estatal que centralice los recursos y esfuerzos gubernamentales para fomentar, regular y apoyar el crecimiento e incorporación ordenada del sector privado a la economía nacional. 
  16. Autorizar la constitución de una asociación de empresarios privados y cuentapropistas que les permita canalizar sus intereses y dialogar con el gobierno de forma ordenada y ser tenidos en cuenta en los procesos de toma de decisiones en lo que a ellos respecta. 
  17. Permitir que los TCP y las PYMES por crear se afilien a la Cámara de Comercio de la República de Cuba, de manera tal que tengan acceso a los beneficios que ello implica y puedan participar en las ferias, eventos, misiones comerciales y delegaciones que ella organiza. 
  18. Establecer mecanismos de licitación transparentes, auditables y confiables en los que los TCP y las PYMES puedan concursar para prestar sus servicios a entidades e instituciones públicas. Transparentar y licitar de manera pública la entrega de locales estatales a TCP y CNA para el desarrollo de sus actividades. 
  19. Eliminar el papel intermediario que juegan algunas instituciones estatales en el caso de artistas, creadores, diseñadores y comunicadores. No constituir nuevas entidades de este tipo para otras actividades que en el futuro de vayan aprobando. A todos, una vez autorizados para realizar sus actividades de manera legal, se les permitirá contratar sus servicios directamente, y sin mediación de terceros, con empresas estatales, extranjeras y con personas naturales, hechos por los que solamente deberán pagar los impuestos correspondientes. 
  20. Crear un mecanismo para denunciar a los funcionarios corruptos que interpretan y aplican las regulaciones vigentes para el ejercicio del TCP con el objetivo de obtener sobornos o coimas. 

*Este texto fue publicado originalmente en la cuenta de Facebook del autor.

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The Cuban Economy: Private, Cooperative and Underground

Attached is a Power Point Presentation delivered at Kennesaw State University on October 24, 2019.  Kennesaw Presentation on Cuban Economy, October 24, 2019

 

 

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THE REVENGE OF THE JEALOUS BUREAUCRAT”: A CRITICAL ANALYSIS OF CUBA’S NEW RULES FOR CUENTA-PROPISTAS

ASCE Conference Proceedings 2018

Ted A. Henken 

Original Article: Cuba’s New Rules for Cuenta-propistas

The quantitative expansion of self-employment from150,000 to nearly 600,000 licensed cuenta-propistas between 2010 and 2018 during the presidency of Raúl Castro can be celebrated given its expansion of economic freedom, the provision of job opportunities, greater productivity and efficiency, and a markedly higher quality of goods and services for those who can afford them. However, it is also curious that the Cuban government has embraced the micro-enterprise sector historically only during times of economic crisis when it could no longer provide enough jobs, goods, or services for the people (Mesa-Lago and Pérez-López 2013).

Indeed, this is one of the mantras most commonly repeated in the official press when justifying the downsizing of the state sector and the expansion of cuenta-propismo (i.e., self-employment or literally “on-your-ownism”): The state must “lighten its load” so it can focus on the fundamental sectors of the economy.

Given such a context, Cuban workers can be forgiven for concluding that Castro’s much trumpeted economic “updating,” constant calls for greater productivity and efficiency, and sharp criticisms of Cuba’s “inflated state payrolls, bulky social spending, undue gratuities, and excessive subsidies” (2010) are simply fancy words for the state’s abandonment of its  historic commitment to them under the Revolution.

Indeed, entrepreneurship has an elastic history in revolutionary Cuba and has undergone oscillating phases of relevance, vigilance, legality, and illegitimacy.  In that context, Cuba’s successful cuenta-propistas (the island term that lumps individual freelancers, together with private business owners and their employees, without giving formal, legal recognition to Cuba’s emergent small- and medium-sized enterprises, SMEs) have often found themselves in the frustrating position of being counted on to supplement the moribund state enterprise sector by providing private employment, high quality goods and services, and economic productivity and efficiency, while simultaneously doing without any legal personality or legal standing (personalidad jurídica) as true business enterprises.

This restriction prevents them from opening bank accounts, signing contracts, importing needed inputs, or exporting their goods or services abroad. That is, while Cuba’s cuenta-propistas may be individually licensed to operate as freelancers (i.e.,personas naturales), “Cuban law does not recognize1. In some cases, the expansion of the private sector has also driven down prices. However, because of extensive subsidies and price controls in the state sector, combined with chronic material scarcity and a dual currency system where a good portion of the private sector operates in hard “convertible” currency, prices for most goods and services available in Cuba’s private sector are very high relative to the state sector.

 Continue reading.

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CUBA: PRIVATE, OWNED. New rules make it even harder to do business in Cuba.

The Economist, December 8, 2018

Editor’s note (December 6th, 2018):

Late on the evening of December 5th, after this piece had been edited and fact-checked but before it went to press, Margarita González Fernández, Cuba’s Minister for Work and Social Security, announced last-minute changes to new regulations governing Cuba’s private sector. Happily, the modifications address some of the more unpopular aspects of the new regulations, which were first announced in July. Of greatest significance is the change that will allow Cuban cuentapropistas, or the self-employed, to keep multiple work licences, rather than having to surrender all but one, as previously announced. (Bookshops with attached cafés will no longer be breaking the law.) The percentage of earnings that cuentapropistas must deposit into designated bank accounts has been lowered from 80% to 65% and the rule to prohibit restaurants from seating more than 50 patrons at a time has been dropped. The last-minute modifications are a sign that while the government is far from enabling the private sector to flourish, it is concerned with creating too much discontent and is, if ever so slightly, considering public opinion when making its decisions.

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EIGHT YEARS ago Cuba’s government laid off a tenth of the country’s workforce—some half a million people—and encouraged them to start their own businesses. They did, with gusto. Nearly 600,000 Cubans have become cuentapropistas, or self-employed, opening restaurants, boutiques, repair shops, beauty parlours, bakeries and bars. They have renovated and rented out spare bedrooms in their homes, turned family cars into taxis and poured their savings into design studios, creating an additional 400,000 jobs and a much-needed, if still tiny, tax base. Many now earn much more. The average state wage is 848 Cuban pesos ($33) a month; a taxi driver with a decent ride can make more than ten times that. But new regulations, which run to 129 pages and take effect on December 7th, look likely to damage the country’s nascent private sector. They come at a particularly bad time for Cuba’s economy, which is already suffering from stagnant exports, broke allies and disappointing tourist numbers.

The most devastating new rule is one that makes it illegal for individuals to hold more than one licence to engage in private business. Cuba issues licences in only 123 categories—and if a licence for a job does not exist, neither does that job, at least officially. There is little logic to the system. A single licence does the trick for any computer-related business, allowing a cuentapropista to provide everything from software to online marketing services. Separate licences for massages, manicures and braiding have been consolidated into one, to the delight of salon owners. But other categories are narrower: selling hardbacks and brewing coffee require two separate licences, effectively making bookshops with cafés illegal. Restaurants that double up as bars face the same fate.

Officials at the Ministry of Labour and Social Security say that the new regulations are meant to discourage black-market trading and tax evasion, while also reducing inequality. The expansion of private businesses over the past few years has indeed contributed to these problems. But the government’s proposed solutions will either have no real effect—business-owners will acquire licences in the names of friends or family—or exacerbate them.

Take wholesale markets. There is only one on the island. Most businesses must rely on state-run shops, which offer a limited range of goods, or acquire products on the black market. The government’s answer is to require cuentapropistas to open bank accounts so that it can track where they spend their money. Drivers of almendrones—ride-shares that substitute for a functioning public transport system in Havana—will be given magnetic cards with which they are expected to buy a set quantity of “subsidised” petrol every month. But since subsidised fuel costs more than the black-market stuff, many drivers are simply handing in their licences.

Cubans who rent out rooms or run other small businesses, such as restaurants or repair shops, must deposit 80% of their income in a designated bank account. They are understandably loth to do so in a cash-based economy where simple transactions at the bank can take hours. They can withdraw money from this account to cover business expenses and will be given a card that entitles them to small discounts when they buy items for business. But few stores accept cards.

The state has also found a novel way to tackle the concentration of wealth: restaurants are now limited to seating only 50 patrons at a time, ostensibly to keep owners from consuming too many resources. And under a new tax scheme, any cuentapropista who wants to hire more than 20 workers must pay onerous wages for each additional employee. The government is happy for people to start businesses, so long as they do not make too much money.

A few helpful new rules have snuck in among the enterprise-throttling ones. Employers will be required to have formal contracts with their workers. They face the suspension of their licence if they are found to be discriminating on the basis of race, sexuality or disability. And business-owners no longer need to close up shop if they fall sick or have a family emergency; they can appoint an interim manager and take some time off.

Yet the overall effect of the new regulations will be to slow the budding private economy. “Being a cuentapropista is the only opportunity we have at a better life without leaving the country,” says the owner of a modest craft shop in central Havana. Her monthly taxes will triple this week; the new rules impose higher taxes on certain businesses in central Havana. “If they take that away from us, what’s left?”

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“EN VEZ DE SERVIR PARA REGULAR, LA LEY SIRVE PARA CONVERTIR A LA POBLACIÓN EN DELINCUENTES”

Hypermedia, 10 de Diciembre de 2018.

Ted A. Henken & Archibald R. M. Ritter

From Hypermedia, LA LEY…..

Original from the book entitled Entrepreneurial Cuba, The Changing Policy Landscape, Lynne Rienner Publishers, Boulder Colorado.

En el verano de 1992, el gobierno cubano despenalizó la posesión y el uso del dólar estadounidense, legalizando así una actividad realizada por un gran número de personas. Esta medida aceleró el proceso de “dolarización” de la economía y estimuló y legitimó aún más la búsqueda popular del dólar mediantes actividades de la economía clandestina. Posteriormente, el 8 de septiembre de 1993, entró en vigor el Decreto Ley 141 que legalizaba el trabajo autónomo, bajo el término “trabajo por cuenta propia” (Granma). Esto representó un cambio de política decisivo, que permitió a estas microempresas salir de la clandestinidad y funcionar de manera más eficaz, eficiente y rentable.

Con la aparición de la microempresa fuera de la clandestinidad en aquellos años, comenzó a evidenciarse una suerte de jerarquía. El espectro de escala y éxito sería más pronunciado en las escasas ocupaciones de mayor envergadura y dinamismo, especialmente: las casas particulares, los taxis, y los paladares que estaban conectados con la floreciente industria del turismo.

La ley del trabajo por cuenta propia se creó originalmente para aplicarse a los cubanos que ya brindaban servicios a otros ciudadanos, por lo cual la mayoría de las licencias y las tarifas fijas mensuales se pagaban en pesos. Sin embargo, con la expansión acelerada del turismo a lo largo de la isla en la década de 1990, algunas empresas, especialmente en las áreas de los servicios alimenticios, el transporte, y el alojamiento, comenzaron a brindar servicios a extranjeros y a cobrarles en dólares americanos. Como consecuencia parcial, se añadieron algunas modificaciones a la legislación original entre 1995 y 1997, incluyendo la expansión de los servicios alimenticios (1995), el transporte (1996) y el alquiler de casas particulares (1997), en la lista de ocupaciones permisibles, puesto que los cuentapropistas de estos tres sectores, a menudo, brindaban sus servicios a extranjeros y obtenían ingresos en dólares.

Estas tres ocupaciones —el transporte, el alquiler de habitaciones y los servicios de alimentos — se convirtieron rápidamente en las ocupaciones privadas más populares durante el “Período Especial”. Y una vez más reemergieron como las más comunes —junto a los trabajadores contratados—, luego de la reapertura y la expansión significativa del trabajo por cuenta propia después de octubre de 2010.

Para continuar: La Ley…..

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PUNTO FIJO: CUENTAPROPISTAS

El Nuevo Día,  miércoles, 13 de mayo de 2015

por Jorge Duany

En febrero pasado, el gobierno cubano reportó 489,929 trabajadores por cuenta propia, el 9.6% de la fuerza laboral. Dicha cifra representa más del triple de la cantidad registrada inicialmente cuando el gobierno autorizó el autoempleo en 1993, en plena crisis económica bautizada como “Período Especial en Tiempos de Paz”. Conocidos popularmente como “cuentapropistas”, miles de cubanos emprendedores han establecido pequeños negocios privados, especialmente en la elaboración y venta de alimentos, el transporte de pasajeros y el arrendamiento de viviendas.

Este es el tema central del valioso libro del economista canadiense Archibald R. M. Ritter y el sociólogo estadounidense Ted A. Henken, “Entrepreneurial Cuba: The Changing Policy Landscape” (Boulder: FirstForumPress, 2015). Los autores se proponen explicar las causas y consecuencias socioeconómicas del auge del trabajo por cuenta propia durante la era de Raúl Castro (2006–2014).

El estudio se basa en entrevistas a profundidad con 60 microempresarios cubanos, completadas entre 1999 y 2009, así como en extensas observaciones sobre el terreno de varios negocios independientes. Su análisis se concentra en tres sectores  económicos vinculados a la industria turística: los paladares (pequeños restaurantes familiares), las casas particulares (alquiladas a extranjeros) y los taxis privados, incluyendo los “bicitaxis”, “cocotaxis” y “almendrones”, como llaman los cubanos a los antiguos carros americanos. En el 2010, el gobierno cubano anunció el despido de 500,000 empleados estatales “redundantes” como parte de la “actualización” del modelo económico en la Isla. Al mismo tiempo, fomentó la expansión de empleos en el sector no estatal, muchos de los cuales ya se realizaban clandestinamente.

El número de oficios autorizados para el trabajo por cuenta propia incrementó de 55 en 1993 a 201 en el 2013. El grueso son ocupaciones de servicios poco calificados, como aguador, amolador, barbero, jardinero, limpiabotas, mago, masajista, mensajero, payaso, peluquera y productor de piñatas. A la vez, se sigue prohibiendo el autoempleo en los servicios profesionales y técnicos, excepto profesores de idiomas, música y arte, programadores de computadoras y reparadores de equipos electrónicos y de oficina. Según Ritter y Henken, aún persisten numerosas restricciones burocráticas, desincentivos económicos y obstáculos ideológicos al trabajo por cuenta propia en Cuba. Para empezar, las tasas impositivas mucho más onerosas que para la inversión extranjeramantienen artificialmente el tamaño pequeño de las empresas. Más aún, la estigmatización de los cuentapropistas como “macetas” (adinerados, en el argot cubano) niega la legitimidad del motivo de lucro individual. El discurso oficial ni siquiera utiliza los términos “mercado” o “sector privado” al referirse a las pequeñas empresas independientes, sino al “sector no estatal”. El crecimiento del cuentapropismo tiene implicaciones políticas en Cuba, en tanto permite ensanchar un segmento de la población que no depende del gobierno para su sustento. Asimismo, subvierte algunas premisas claves del gobierno, como el monopolio estatal de los medios de producción, la planificación central, la distribución equitativa de los ingresos y la política de pleno empleo.

Los autores de “Entrepreneurial Cuba” recuerdan que la confiscación estatal de todos los establecimientos comerciales privados a fines de la década de 1960 agravó la escasez de productos básicos, infló los precios de bienes y servicios y deprimió los niveles de vida de la población cubana. La intensa antipatía oficial contra cualquier “timbiriche” (pequeña tienda al aire libre) estuvo vigente hasta principios de la década de 1990. Según los autores, las reformas económicas iniciadas por el gobierno de Raúl Castro han impulsado la recaudación de impuestos, ayudando a subsidiar servicios sociales y estimulando nuevas fuentes de ingresos. Sin embargo, Ritter y Henken recomiendan legalizar el autoempleo en todas las actividades económicas incluyendo los servicios profesionales, reducir los impuestos y aumentar la cantidad de trabajadores empleados en cada empresa. Solo entonces podrá el cuentapropismo desempeñar un papel protagónico en la revitalización de la precaria economía cubana.

Jorge Duany

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CUBA IMPOSES MORE TAXES AND CONTROLS ON PRIVATE SECTOR AND INCREASES CENSORSHIP ON THE ARTS

BY NORA GÁMEZ TORRES

Miami Herald, July 10, 2018 07:01 PM

The Cuban government announced that it will start issuing licenses to open new businesses — frozen since August 2017 — but established greater controls through measures intended to prevent tax evasion, limit wealth and give state institutions direct control over the ‘self-employment’ sector

Original Article: TAXES, CONTROLS, CENSORSHIP

The Cuban government issued new measures on Monday to limit the accumulation of wealth by Cubans who own private businesses on the island. The provisions stipulate that Cubans may own only one private enterprise, and impose higher taxes and restrictions on a spectrum of self-employment endeavors, including the arts.

The government announced that it will start issuing licenses to open new businesses — frozen since last August — but established greater controls through a package of measures intended to prevent tax evasion, limit wealth and give state institutions direct control over the so-called cuentapropismo or self-employment sector.

The measures will not be immediately implemented. There is a 150-day waiting period to “effectively implement” the new regulations, the official Granma newspaper reported.

Cubans who run private restaurants known as paladares, for example, will not be able to rent a room in their home to tourists since no citizen can have more than one license for self-employment.

“There are workers who have a cafeteria and at the same time have a manicure or car wash license. … That is not possible. In practice, he is an owner who has many businesses, and that is not the essence and the spirit of the TCP [self-employment], which consists of workers exercising their daily activities,” Marta Elena Feitó Cabrera, vice minister for labor and social security, told the official Cubadebate site.

About 9,000 people, half in Havana, are affected by the measure, said the official.

In addition, all private sector workers must open an account in a state bank to carry out all their business operations. And the boteros, those who work as private taxi drivers, must present receipts to justify all their deductible expenses. Other measures curb the hiring of workers in the private sector, which currently employs 591,456 people, or 13 percent of the country’s workforce.

The government also stated it would eliminate the tax exemption for businesses that have up to five employees and would instead impose a sliding scale that increases with each worker hired. It also ordered an increase in the required minimum monthly taxes of businesses in various categories.

Government officials quoted by Granma said that the measures will increase tax collection and reduce fraud. But economists have warned that more taxes on hiring employees could dramatically hamper the development of the private sector at a critical moment. A monetary reform — which could bankrupt nearly half of the state companies, potentially leaving thousands unemployed — is expected to happen soon.
The new measures also maintain a halt on new licenses for things such as “seller vendor of soap” and “wholesaler of agricultural products,” among others.

One significant provision states that those who rent their homes to tourists and nationals may also rent to Cuban or foreign companies but “only for the purpose of lodging.” That would presumably prevent renters from subletting units.

The “rearrangement” of self-employment, as the new measures were framed in the official media, reduces licenses by lumping together various elements of one industry while limiting another. For example, while there would be only one license for all beauty services, permits for “gastronomic service in restaurants, gastronomic service in a cafeteria, and bar service and recreation” were separated — meaning that one can own a restaurant but not also a bar.

To increase controls, each authorized activity will be under the supervision of a state ministry, in addition to the municipal and provincial government entities, which can intervene to set prices. The level of control reaches such extremes that the Official Gazette published a table with classifications on the quality of public restrooms and the leasing rates that would have to be paid by “public bathroom attendants,” one of the authorized self-employment categories. Some public bathrooms are leased by the state to individuals who then are responsible for upkeep and make their money by charging users a fee.

The regulations are the first significant measures announced by the government since Miguel Díaz-Canel was selected as the island’s new president in April. But the proposed regulations had been in the making for months by different government agencies, according to a draft of the measures previously obtained by el Nuevo Herald. The announcement comes just as the Cuban economy is struggling to counter the losses brought by the crisis in Venezuela — its closest ally — and the deterioration of relations with the United States.

The new measures could also have a significant impact on the cultural sector. The decree may be used by the Ministry of Culture to increase control over artists and musicians and impose more censorship in the country.

Decree 349 of 2018 establishes fines and forfeitures, as well as the possible loss of the self-employment license, to those who hire musicians to perform concerts in private bars and clubs as well as in state-owned venues without the authorization of the Ministry of Culture or the state agencies that provide legal representation to artists and musicians.

Many artists in urban genres such as reggaeton and hip-hop, who have been critical of the Cuban government, do not hold state permits to perform in public. However, many usually perform in private businesses or in other venues.

Painters or artists who sell their works without state authorization also could be penalized.

The measures impose sanctions on private businesses or venues that show “audiovisuals” — underground reggaeton videos or independent films, for example — that contain violence, pornography, “use of patriotic symbols that contravene current legislation,” sexist or vulgar language and “discrimination based on skin color, gender, sexual orientation, disability and any other injury to human dignity.”

The government will also sanction state entities or private businesses that disseminate music or allow performances “in which violence is generated with sexist, vulgar, discriminatory and obscene language.”

Even books are the target of new censorship: Private persons, businesses and state enterprises may not sell books that have “contents that are harmful to ethical and cultural values.”

Some CuentaPropistas:

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BOOK REVIEW, ENTREPRENEURIAL CUBA: THE CHANGING POLICY LANDSCAPE

Boulder, CO: First Forum Press, 2015. 373 pp.

By Archibald R. M. Ritter and Ted A. Henken

Review by Sergio Díaz-Briquets,

Cuban Studies, Volume 46, 2018, pp. 375-377, University of Pittsburgh Press

The small business sector, under many different guises, often has been, since the 1960s, at the center of Cuban economic policy. In some ways, it has been the canary in the mine. As ideological winds have shifted and economic conditions changed, it has been repressed or encouraged, morphed and gone underground, surviving, if not thriving, as part of the second or underground economy. Along the way, it has helped satisfy consumer needs not fulfilled by the inefficient state economy. This intricate, at times even colorful, trajectory has seen the 1968 Revolutionary Offensive that did away with even the smallest private businesses, modest efforts to legalize self-employment in the 1979s, the Mercados Libres Campesinos experiment of the 1980s, and the late 1980s ideological retrenchment associated with the late 1980s Rectification Process.

Of much consequence—ideologically and increasingly economically—are the policy decisions implemented since the 1990s by the regime, under the leadership of both Castro brothers. Initially as part of Special Period, various emergency measures were introduced to allow Cuba to cope with the economic crisis precipitated by the collapse of the communist bloc and the end of Soviet subsidies. These early, modest entrepreneurial openings were eventually expanded as part of the deeper institutional reforms implemented by Raúl upon assuming power in 2006, at first temporarily, and then permanently upon the resignation of his brother as head of the Cuban government.

In keeping with the historical zigzag policy pattern surrounding small businesses activities—euphemistically labeled these days as the “non-state sector”—while increasingly liberal, they have not been immune to temporary reversals. Among the more significant reforms were the approval of an increasing number of self-employment occupations, gradual expansion of the number of patrons restaurants could serve (as dictated by the allowed number of chairs in privately owned paladares), and the gradual, if uneven, relaxation of regulatory, taxing, and employment regulations. Absent has been the authorization for professionals (with minor exceptions, such as student tutoring) to privately engage in their crafts and the inability to provide wholesale markets where self-employed workers could purchase inputs for their small enterprises.

The authors of this volume, an economist and a sociologist, have combined their talents and carefully documented this ever-changing policy landscape, including the cooperative sector. They have centered their attention on post–Special Period policies and their implications, specifically to “evaluate the effects of these policy changes in terms of the generation of productive employment in the non-state sector, the efficient provision of goods and services by this emergent sector, and the reduction in the size and scope of the underground economy” (297).

While assessing post-1990 changes, Entrepreneurial Cuba also generated a systematic examination of the evolution of the self-employment sector in the early decades of the revolution in light of shifting ideological, political, and economic motivations. Likewise, the contextual setting is enhanced by placing Cuban self-employment within the broader global informal economy framework, particularly in Latin America, and by assessing the overall features of the second economy in socialist economies “neither regulated by the state nor included in its central plan” (41). These historical and contextual factors are of prime importance in assessing the promise and potential pitfalls the small enterprise sector confronts in a changing Cuba.

Rich in its analysis, the book is balanced and comprehensive. It is wide ranging in that it carefully evaluates the many factors impinging on the performance of the small business sector, including their legal and regulatory underpinnings. The authors also evaluate challenges in the Cuban economic model and how they have shaped the proclivity for Cuban entrepreneurs to bend the rules. Present is a treatment of the informal social and trading networks that have sustained the second economy, including the ever-present pilfering of state property and the regulatory and transactional corruption so prevalent in Cuba’s centralized economy.

While none of the above is new to students of the Cuban economy—as documented in previous studies and in countless anecdotal reports—Ritter and Henken make two major contributions. First, they summarize and analyze in a single source a vast amount of historical and contemporary information. The value of the multidisciplinary approach is most evident in the authors’ assessment of how the evolving policy environment has influenced the growth of paladares, the most important and visible segment of the nonstate sector. By focusing on this segment, the authors validate and strengthen their conclusions by drawing from experiences documented in longitudinal, qualitative case studies. The latter provide insights not readily gleaned from documentary and statistical sources by grounding the analysis in realistic appreciations of the challenges and opportunities faced by entrepreneurial Cubans. Most impressive is the capacity of Cuban entrepreneurs to adapt to a policy regime constantly shifting between encouraging and constraining their activities.

Commendable, too, is the authors’ balanced approach regarding the Cuban political environment and how it relates to the non-state sector. Without being bombastic, they are critical of the government when they need to be. One of their analytical premises is that the “growth of private employment and income represents a latent political threat to state power since it erodes the ideals of state ownership of the means of production, the central plan, and especially universal state employment” (275).

This dilemma dominates the concluding discussion of future policy options. Three scenarios are considered possible. The first entails a policy reversal with a return to Fidel’s orthodoxy. This scenario is regarded as unlikely, as Raúl’s policy discourse has discredited this option. A second scenario consists of maintaining the current course while allowing for the gradual but managed growth of the non-state sector. While this might be a viable alternative, it will have limited economic and employment generation effects unless the reform process is deepened by, for example, further liberalizing the tax and regulatory regimes and allowing for the provision of professional services.

The final scenario would be one in which reforms are accelerated, not only allowing for small business growth but also capable of accommodating the emergence of medium and large enterprises in a context where public, private, and cooperative sectors coexist (311). As Ritter and Henken recognize, this scenario is unlikely to come to fruition under the historical revolutionary leadership, it would have to entail the resolution of political antagonisms between Washington and Havana, and a reappraisal by the Cuban government of its relationship with the émigré population. Not mentioned by Ritter and Henken is that eventual political developments—not foreseen today—may facilitate the changes they anticipate under their third scenario.

In short, Entrepreneurial Cuba is a must-read for those interested in the country’s current situation. Its publication is timely not only for what it reveals regarding the country’s economic, social, and political situation but also for its insights regarding the country’s future evolution.

…………………………………………………………………………….

Table of Contents

 Table of Contents,

 List of Charts and Figures

Chapter I Introduction       

Chapter II      Cuba’s Small Enterprise Sector in International and Theoretical Perspective

Chapter III    Revolutionary Trajectories, Strategic Shifts, and Small Enterprise, 1959-1989

Chapter IV    Emergence and Containment During the “Special Period”, 1990-2006

Chapter V        The 2006-2011 Policy Framework for Small Enterprise under the Presidency of    Raul Castro

Chapter VI    The Movement towards Non-Agricultural Cooperatives

Chapter VII  The Underground Economy and Economic Illegalities

Chapter VIII  Ethnographic Case Studies of Microenterprise, 2001 vs. 2011

Chapter IX  Summary and Conclusions

APPENDIX                                                              

GLOSSARY                                                                                                                         

BIBLIOGRAPHY

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TOURISM BOOMING IN CUBA DESPITE TOUGHER NEW TRUMP POLICY

Published 1:15 PM ET Fri, 19 Jan 2018, The Associated Press

Original article: Tourism Booming In Cuba

  • 2017 was a record year for Cuban tourism, with 4.7 million visitors pumping more than $3 billion into the island’s otherwise struggling economy.
  • But the tourism dollars from big-spending Americans seem to be heading into Cuba’s state sector and away from private business.
  • That’s largely due to tougher Trump policy requiring “people-to-people” travel to take place only in tour groups, which depend largely on Cuban government transportation and guides.

On a sweltering early summer afternoon in Miami’s Little Havana, President Donald Trump told a cheering Cuban-American crowd that he was rolling back some of Barack Obama‘s opening to Cuba in order to starve the island’s military-run economy of U.S. tourism dollars and ratchet up pressure for regime change.

That doesn’t appear to be happening. Travel to Cuba is booming from dozens of countries, including the U.S. And the tourism dollars from big-spending Americans seem to be heading into Cuba’s state sector and away from private business, according to Cuban state figures, experts and private business people themselves.

The government figures show that 2017 was a record year for tourism, with 4.7 million visitors pumping more than $3 billion into the island’s otherwise struggling economy. The number of American travelers rose to 619,000, more than six times the pre-Obama level. But amid the boom — an 18 percent increase over 2016 — owners of private restaurants and bed-and-breakfasts are reporting a sharp drop-off.

“There was an explosion of tourists in the months after President Obama’s detente announcement. They were everywhere!” said Rodolfo Morales, a retired government worker who rents two rooms in his home for about $30 a night. “Since then, it’s fallen off.”

The ultimate destination of American tourism spending in Cuba seems an obscure data point, but it’s highly relevant to a decades-old goal of American foreign policy — encouraging change in Cuba’s single-party, centrally planned system. For more than 50 years, Washington sought to strangle nearly all trade with the island in hopes of spurring economic collapse. Obama changed that policy to one of promoting engagement as a way of strengthening a Cuban private sector that could grow into a middle class empowered to demand reform.

Cuba’s tourism boom began shortly after Obama and Cuban President Raul Castro announced in December 2014 that their countries would re-establish diplomatic relations and move toward normalization. U.S. cruise ships began docking in the Bay of Havana and U.S. airlines started regular flights to cities across the island. Overall tourism last year was up 56 percent over Cuba’s roughly 3 million visitors in 2014.

While the U.S. prohibits tourism to Cuba, Americans can travel here for specially designated purposes like religious activity or the vaguely defined category of “people-to-people” cultural interaction.

Obama allowed individuals to participate in “people-to-people” activities outside official tour groups. Hundreds of thousands of Americans responded by designing their own Cuban vacations without fear of government penalties. Since Cuba largely steers tour groups to government-run facilities, Americans traveling on their own became a vital market for the island’s private entrepreneurs, hotly desired for their free spending, heavy tipping and a desire to see a “real” Cuba beyond all-inclusive beach resorts and quick stops on tour buses. The surge helped travel-related businesses maintain their role as by far the most successful players in Cuba’s small but growing private sector.

Trump’s new policy re-imposed the required for “people-to-people” travel to take place only in tour groups, which depend largely on Cuban government transportation and guides.

As a result, many private business people are seeing so many fewer Americans that it feels like their numbers are dropping, even though the statistics say otherwise.

“Tourism has grown in Cuba, with the exception of American tourism,” said Nelson Lopez, a private tour guide. “But I’m sure that sometime soon they’ll be back.”

While Trump’s new rules didn’t take effect until November, their announcement in June led to an almost immediate slackening in business from individual Americans, many Cuban entrepreneurs say. The situation was worsened by Hurricane Irma striking Cuba’s northern coast in September and by a Cuban government freeze on new licenses for businesses including restaurants and bed-and-breakfasts. Cuban officials say the freeze was needed to control tax evasion, purchase of stolen state goods and other illegality in the private sector, but it’s had the effect of further restricting private-sector activity in the wake of Trump’s policy change.

Cuban state tourism officials did not respond to requests for comment.

Trump’s policy changes did not touch flights or cruise ships. Jose Luis Perello, a tourism expert at the University of Havana, said more than 541,000 cruise ship passengers visited Cuba in 2017, compared with 184,000 the previous year. Even as entrepreneurs see fewer American clients, many of those cruise passengers are coming from the United States, he said.

Yunaika Estanque, who runs a three-room bed-and-breakfast overlooking the Bay of Havana, says she has been able to weather a sharp drop in American guests because a British tour agency still sends her clients, but things still aren’t good.

“Without a doubt our best year was 2016, before the Trump presidency,” she said. “I’ve been talking with other bed-and-breakfast owners and they’re in bad shape.”

A Great Casa Particular, my Home for Cuba visits from 1997 to 2017, undoubtedly still thriving due to its excellence.

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Slim pickings. CLUELESS ON CUBA’S ECONOMY

HAVANA. The communist regime can no longer rely on the generosity of its allies. It has no idea what to do

The Economist.  Print edition | The Americas. Sep 30th 2017

GABRIEL and Leo have little in common. Gabriel makes 576 Cuban pesos ($23) a month as a maintenance man in a hospital. Leo runs a private company with revenues of $20,000 a month and 11 full-time employees. But both have cause for complaint. For Gabriel it is the meagre subsistence that his salary affords. In a dimly lit minimá (mini-mall) in Havana he shows what a ration book entitles one person to buy per month: it includes a small bag of coffee, a half-bottle of cooking oil and five pounds of rice. The provisions cost next to nothing (rice is one cent per pound) but are not enough. Cubans have to buy extra in the “free market”, where rice costs 20 times as much.

Leo (not his real name) has different gripes. Cuba does not manufacture the inputs he needs or permit enterprises like his to import them. He travels abroad two or three times a month to get them anyway. It takes six to eight hours to pack his suitcases in such a way that customs officials don’t spot the clandestine goods. “You feel like you’re moving cocaine,” he says.

Making things easier for entrepreneurs like Leo would ultimately help people like Gabriel by encouraging the creation of better jobs, but Cuba’s socialist government does not see it that way. In August it announced that it will stop issuing new licences in two dozen of the 201 trades in which private enterprise is permitted. The frozen professions include running restaurants, renting out rooms to tourists, repairing electronic devices and teaching music.

This does not end Cuba’s experiment with capitalism. Most of the 600,000 cuentapropistas (self-employed workers), including restaurateurs, hoteliers and so on, will be able to carry on as before. But the government mistrusts them. Their prosperity provokes envy among poorer Cubans. Their independent-mindedness could one day become dissent. Raúl Castro, the country’s president, recently railed against “illegalities and other irregularities”, including tax evasion, committed by cuentapropistas. He did not admit that kooky government restrictions make them inevitable. The government “fights wealth, not poverty”, laments one entrepreneur.

A Santeria Message

Trump’s mouth, Irma’s eye

The clampdown on capitalism comes at a fraught time for Cuba. Mr Castro is due to step down as president in February. That will end nearly 60 years of autocratic rule by him and his elder brother, Fidel, who led Cuba’s revolution in 1959. The next president will probably have no memory of that event. Relations with the United States, which under Barack Obama eased its economic embargo and restored diplomatic relations, have taken a nasty turn. President Donald Trump plans to make it more difficult for Americans to visit the island. Reports of mysterious “sonic attacks” on American diplomats in Havana have further raised tensions.

Hurricane Irma, which struck in early September, killed at least ten people, laid waste to some of Cuba’s most popular beach resorts and briefly knocked out the country’s entire power system. With a budget deficit expected to reach 12% of GDP this year, the government has little money to spend on reconstruction.

These are blows to an economy that was already in terrible shape. Cuba’s favourite economic stratagem—extracting subsidies from left-wing allies—has had its day. Venezuela, which replaced the Soviet Union as its patron, is in even worse shape than Cuba. Their barter trade—Venezuelan oil in exchange for the services of Cuban doctors and other professionals—is shrinking. Trade between the two countries has dropped from $8.5bn in 2012 to $2.2bn last year. Cuba has had to buy more fuel at full price on the international market. Despite a boom in tourism, its revenues from services, including medical ones, have been declining since 2013.

Bound by a socialist straitjacket, Cuba produces little else that other countries or its own people want to buy. Farming, for example, is constrained by the absence of markets for land, machinery and other inputs, by government-set prices, which are often below the market price, and by bad transport. Cuba imports 80% of its food.

Paying for it is becoming harder. In July the economy minister, Ricardo Cabrisas, told the national assembly that the financial squeeze would reduce imports by $1.5bn in 2017. What appears in shops often depends on which of Cuba’s suppliers are willing to wait for payment. GDP shrank by 0.9% in real terms in 2016. Irma and the drop in imports condemn the economy to another bad year in 2017.

The government does not know what to do. One answer is to encourage foreign investment, but the government insists on pulling investors into a goo of bureaucracy. Multiple ministries must sign off on every transaction; officials decide such matters as how many litres of diesel will be needed for delivery trucks; investors cannot freely send profits home. Between March 2014 and November 2016 Cuba attracted $1.3bn of foreign investment, less than a quarter of its target.

Faced with a stalled economy and the threat of shortages, the government is trying harder to woo investors. It has agreed to let food companies, for example, repatriate some of their profits. But anything more daring seems a distant prospect. Cuentapropistaslike Leo are waiting impatiently for a planned law on small- and medium-sized enterprises. That would allow them to incorporate and do other sorts of things that normal companies do. It will not be passed anytime soon, says Omar Everleny, a Cuban economist.

An even bigger step would be a reform of Cuba’s dual-currency system, which makes state-owned firms uncompetitive, keeps salaries in the state sector at miserable levels and distorts prices throughout the economy. Cuban pesos circulate alongside “convertible pesos” (CUC), which are worth about a dollar. Although for individuals (including tourists) the exchange rate between Cuban pesos and CUC is 24 to one, for state-owned enterprises and other public bodies it is one to one. For those entities, which account for the bulk of the economy, the Cuban peso is thus grossly overvalued. This delivers a massive subsidy to importers and punishes exporters.

A devaluation of the Cuban peso for state firms is necessary for the economy to function properly. But it would bankrupt many, throw people out of work and spark inflation. Countries attempting such a devaluation usually look for outside help. But, because of American opposition, Cuba cannot join the IMF or World Bank, among the main sources of aid. Fixing the currency system is a “precondition for further liberalisation”, says Emily Morris, an economist at University College London.

It is unlikely to happen while Cuba is in the throes of choosing a new leader. The process has sharpened struggles between reformers and conservatives within the government. Mr Trump’s belligerence has probably helped the latter. Most Cuba-watchers had identified Miguel Díaz-Canel, the first vice-president and Mr Castro’s probable successor, as a liberal by Cuban standards. But that was before a videotape of him addressing Communist Party members became public in August. In it, Mr Díaz-Canel accused the United States of plotting the “political and economic conquest” of Cuba and lashed out at media critical of the regime. Perhaps he was just pandering to conservatives to improve his chances to succeed Mr Castro. If those are his true opinions, that is bad news for Leo and Gabriel.

State Food Distribution Center:  the rationing system. (2015)

Mobile Self-employed Food Vendor.  (2015)

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