Cuba to allow foreign investment in wholesale and retail

Havana, Aug 17: The Cuban government will allow foreign investment in domestic wholesale and retail trade for the first time since 1959. The move aims to address critical commodity shortages and boost local industry.

"Foreign investment in wholesale and retail trade, with state regulation, will allow the expansion and diversification of supply to the population and will contribute to the recovery of domestic industry," Cuban Economy Minister Alejandro Gil tweeted on Tuesday, expanding on an announcement made late the previous night.

Deputy trade minister Ana Gonzalez Fraga said foreign investors would be allowed to fully own Cuban wholesalers for the first time since Fidel Castro's 1959 revolution, while retailers could enter into public-private ventures.

Previously, foreign investment in Cuba was only allowed in domestic manufacturing and the service sector.

Shortages trigger discontent

The decision to open up a sector controlled by the communist government reflects the state companies' difficulties in accessing foreign currency and raw materials.

Severe shortages of basic goods such as food, medicine and fuel sparked growing discontent in Cuba, which has led to repeated protests in recent months. Rapid growth in informal trade in essential products triggered nearly 70 percent consumer inflation late last year.

According to Cuban economist Mauricio Miranda Parrondo, "the state monopoly on foreign trade and retail is responsible for the shortage of consumer goods in the domestic market."

Reforms in communist Cuba

The economic difficulties prompted the Cuban government to introduce gradual reforms. In August last year, it gave the green light for small and medium enterprises to begin operating on the island.

Months earlier, it had authorized private enterprise for the first time, but this was limited to individual entrepreneurs, not businesses.

The reforms represent a major ideological shift in a country where the government and its affiliate companies have monopolized most of the economy for decades.

Cuba is mired in the worst economic crisis in 30 years, fueled by tightened sanctions under Donald Trump's administration and the aftermath of the coronavirus crisis, which has hit the critical tourism sector hard.

Source: DW