Cuba legalizes small and medium private companies: they will be able to import and receive foreign financing

Thousands of private companies will be able to join the Cuban market in the coming months. This reform becomes one of the most important measures taken by the Government of the island in the last 60 years .

In this way, President Miguel Díaz-Canel will allow micro, small and medium-sized enterprises (MIPYMES) to have the character of private companies. Thus, the Cuban leader has taken a step forward regarding self-employment, allowing the creation of new businesses , which may also be mixed.

Companies will have to compete to survive According to Cuban economists, this initiative allows certain economic activities to be decentralized and, in addition, that those that are subsidized begin to be profitable. In the hospitality sector, for example, thousands of companies financed by the Government will have to close or, failing that, will have to become cooperatives or private companies to stay . That is, those activities that until now survived thanks to a state subsidy will begin to play it in the market taking the character of private company to compete with the rest of the sector, which will maintain certain public companies, according to a manager involved in the process interviewed by Reuters .

During 60 years, most of the Cuban economy fell into the hands of the Government, except for a reform that was made in the decade of 1990, which approved the creation of small companies strongly regulated by the State . An initiative that has achieved that, currently, a third of the 4.9 million Cubans employed are under the umbrella of the private sector.

A reform to alleviate the impact of the coronavirus This reform by Díaz-Canel responds to the bad moment he is passing the island, economically demolished by the pandemic. The creation of a private sector, which will allow setting prices, importing, exporting, receiving foreign capital and basically playing with the rules of the free market, will serve to attract to Cuba the resources that it does not have right now , such as food, medicine and other basic goods. Resources that perhaps could not be obtained from the public sphere due to the economic and commercial blockade of the island.

“It is a starting point for a new stage in the diversification of the economy and its development, in order to make the most of its potential “, Economy Minister Alejandro Gil, who also added that the reform would boost employment and allow the economy to grow stronger as the pandemic progresses.

Entrepreneurs will have certain restrictions It should be noted that, despite the freedom that entrepreneurs and businessmen will enjoy Cubans with respect to the past decades, will have two important restrictions. other sectors have reached a social and economic power that the Government is not willing to endow them with, Cuban administrators have prohibited these companies from having more than 100 workers . Furthermore, entrepreneurs may not own more than one company .

“With this opening, in a few years the non-state sector will represent more than 50% of employment total of the economy, “said Pavel Vidal, a former Cuban central bank economist who teaches at the Pontificia Universidad Javeriana de Cali in Colombia.


1-Business – Wikipedia

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A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities. The term “business” also refers to the organized efforts and activities of individuals to produce and sell goods and services for profit.