The Ministry for Foreign Investment and Economic  Cooperation (MINVEC) with branches in the 14 provinces, is the Central Administration Agency of the Cuban State responsible for governing and controlling the foreign investment process and the development of Free Zones and Industrial Parks. It is also in charge of drafting the relevant Cuban legislation in this field. Its main functions include:

·        Promotion of foreign investment in Cuba, and for Cuban enterprises abroad.

·        Guiding the negotiation process for the establishment of economic associations or any other forms of Foreign Investment;

·        Proposals assessment in the creation of International Economic Associations.

·        Monitoring the implementation of the basis and principles set forth for economic associations between Cuban and foreign entities;

·        Implementation of the economic cooperation policy; as well as governing and controlling the development of the technical assistance provided to and by the country.

·        Preparation, negotiation and signing of agreements and conventions with official foreign institutions dealing with Foreign Investment.

Characterization of foreign investment:

Foreign Direct Investment is regarded as a complement for local development efforts and is, therefore, focused on the search for new external markets, competitive technologies and financing (mainly long-term). This way, the policy applied by our country regarding foreign investment is aimed at granting an adequate  climate of confidence,  security and protection to foreign investors, as well as to give impulse to an important set of standards and disciplines integrated with policies of industrial and technological promotion, including mechanisms and incentives to attract and lead investments so as to achieve determinate goals of economic and social development. This way, projects involving high flows of investments towards national targets of development are being promoted. Current tendency also promotes the development of projects encouraging investment of Cuban enterprises abroad.      

In June, 1992, the Constitution of the Republic of Cuba was amended. Such amendments reshaped the constitutional framework as regard to forms of ownership. On one the hand, it recognizes joint ventures´ ownership and, on the other hand,  it abolishes the irreversible nature of State ownership by permitting partial or total transference aimed at developing the country, not affecting State’s economic, social and political foundations, previous approval by the Council of Ministers or its Executive Committee.   

With the view to foster this process, and from experience gathered from application of Decree-law 50/82, a new  Foreign Investment Legislation (Law No. 77) was passed in 1995. This legislation is  in line with international trends. Some of the regulations thereof are:

·      Foreign investment in Cuba may adopt the form of:  Joint Venture, International Economic Association Contract and Totally-owned Foreign Company. Joint Stock companies are established.

·      Only two main taxes are levied on joint venture companies:  30% net profit tax and 25% payroll tax.

·      Free transfer of dividends( free from any additional tax or duty).

·      Approval for a Foreign Investment Proposal is the exclusive power of the Executive Committee of the Council of Ministers or a Commission thereof. Once the required economic and legal documentation on the proposed business  has been   submitted, the decision  is handed down within a period of 60 calendar days.

Today, there are 342 International Economic Associations, particularly in sectors such as mining, oil prospecting and extraction, tourism, construction and industries (light, food and iron and steel and metalworking, IT and Communications).

In the last few years, foreign investment has expanded to new sectors, showing the qualitative development attained by the process, in business developed within the energy industry, expansion of the town gas supply network to substitute consumption of kerosene, financial sector, marketing of Havana cigars, aqueducts and water supply to the Capital City. More recently, important businesses have been approved to be developed within the cement industry, civil aviation, paint industry, naval repair and bus manufacturing. Also, Joint Ventures have been established for Hotel development in Santa Lucia, Camaguey province and Tourist development in Bacunayagua, Matanzas province, among others.

Foreign partners with higher participation are led by Spain followed by Canada and Italy in terms of higher participation in joint business. From the total International Economic Associations, over 50% involves partners from the European Union, as the geographic area bearing the highest investment presence within the country.

As a result of the dynamics of this process in Cuba from 2000, new forms of foreign investment have been implemented, appart from the ones included in Law 77, within the different sectors and branches of the economy.  They are, indeed, more expedite and flexible contractual forms, particularly favoring the development of the small and medium-size enterprises, and which are just the start of more complex Association modalities as in Law 77.

There are other forms of investments that are included within the Agreement of the Executive Council from the Council of Ministers of the Republic of Cuba (Agreement 3827/00): the Cooperated Production Contract of goods and services and the Hotel or Production Management Contract, defined below.

• Cooperated Production Contract (goods or services):

It is the association of one or more national partners to one or more foreign partners for the joint realization or cooperation on a production and or services activities. The foreign partner should provide material and  financing resources, as well as technology and market for the production or rendering of services involved in the contract, for which return forms would be established in each case. This modality is implemented, mainly, by cuban companies seeking association, whose small and medium-size contributions to foreign capital would based on their needs and requirements.

• Hotel and Production Management Contract:

In this types of contracts the foreign partner is to contribute know-how, technology or market, based on its industrial and commercial experience in the kind of activity it would manage. Hotel management contracts would be approved and overseen by the Ministry of Tourism; while in the case of production management, they are to be approved and monitored by the Ministry of Foreign Investment and Economic Cooperation.

Taxes, rates and fiscal contributions generated by the implementation of such new forms of foreign investment shall be borne separately by each of the parties according to their respective obligations.  The necessary importations to undertake  the activities under these contracts, as well as the customs duties shall be borne by the Cuban entity that is a party to the contract.

At the end of 2003, 313 Cooperated Production Contracts were operative associated mainly to projects in the Iron, Steel and Metalworking and Light Industries respectively. In the Industrial sector, there are 10 Production Management Contracts and over 50 Hotel Management Contracts.

The following diagram shows the dynamic reached by IEA’s and CPC’s for the production of goods or rendering of services in the last 10 years.

 Internacional Economic Association                Cooperated Production Contract

In 1996, Decree-Law 165, governing the establishment and operations  of Free Zones and Industrial Parks was passed, under which 3 free zones were created and currently functioning in the municipalities of Berroa, Wajay, and Mariel. New proposals are currently under assessment with views to improving these zones, taking into consideration the international trend regarding this activity and the development policy pursued by the country in this regard. That is the reason why all along 2003 no new operators had been approved.

One-stop Shop System for Foreign Investment

The Ministry for Foreign Investment and Economic Cooperation, aware of the need for a more expedite and fast process for starting operations of the International Economic Associations, has put to the disposition of foreign investors the One-stop Shop System.

In this regard, the Free Zone’s National Office has been providing this dynamic service since the year 2001 as a part of the initiatives developed to achieve a most fluid and comprehensive work, reducing procedures terms; turning into the single  point for foreign investment regarding the implementation of all the necessary procedures before consulting institutions and State’s organizations for the functioning of IEA’s.

In order for this system to succeed and guarantees its good functioning, there have been stablished the following representative office within the One-Stop Shop System office. These are:

• Property and Patrimony Registry of the Ministry of Justice.
• Taxpayer Registry from the National Office of Tax Administration (ONAT)
• Registry of vehicles and driver licence.
• Representative office from the Institute of Phycical Planing, to carry out territorial and urban feasibility studies, issueing of permits and authorizations such as certifcates of macro and micro location, as well as work permits.
• Central Commercial Registry, Ministry of Domestic Trade.
• Work Permits.
• Custome Central Registry.

In order to provide investors with other complementary facilities, other representative offices have been established within the Free Zone office:

• Special Notary from the Ministry of Justice
• CONAS, Consulting Office
• CUBAPOST, National and International Courier service
• National Insurance Company, ESEN.

As a work strategy, there have been signed Agreements on Collaboration with ruling institutions in order to shorten the existing procedures of approval and issueing of permits and authorizations in the System. They allow to count on a space before consulting institutions as well as to shorten the periods for the proceedings. These Agreements have been signed with the Ministry of Foreign Trade, the Ministry of Finance and Prices, Ministry of Work and Social Welfare, Ministry of Interior, Ministry of Justice, Central Bank of Cuba, Ministry of Domestic Trade,  Institute of Physical Planing, Chamber of Commerce, General Customs of the Republic, and the National Office of Tax Administration.

There have also been commitments with the different sectorial ministries and other national institutions in this respect. They are the Ministry of Light Industry, the Ministry of Information and Communication, the Iron and Steel Industry, the Ministry of Sugar, the Ministry of Transportation, the Ministry of Agriculture, PESCAVANTE from the Fishing Industry, CORALSA from the Ministry of Food, CUBALSE, CUBANACAN, CIMEX and from the Ministry of Tourism, PALMARES, GRAN ANTILLA, and HORIZONTES HOTELS.

In order for the System to be effective, as well as its application and possibilities it offers, hereby there is a definition of all the stages within the investment system. In each of them, all the procedures should be completed.

First Stage

It is conceived as a preliminary stage for the different investment opportunities or joint business performed by the ministries or the development areas. It includes advisory and during it, all the necessary procedures are carried out  for making a decision on its development, including the non-movable assets to contribute and the different studies in matters of planing. All the necessary procedures are carried out for the business presentation and the requests approval.

·        Legalization and legal instrumentation of non movable assets.

·        Defense compatibility

·        Appraisal

·        Cadastral Certificate

·        Urban feasibility.

Second stage

After approval of the joint businesses or any other modalities of foreign investment, by submitting the corresponding authorization. It proceeds to the establishement and Registration. It includes permits requests, licences, authorization required to start operations, guaranteeing the fulfillment of what has been agreed in due periods.

·        Registration in the Mercantile Registry

·        Registration in the Taxpayer registry of the National Office of Tax Management (ONAT)

·        Registration iin the Importer and Exporter Registry of the Chamber of Commerce

·        Registration in the Custom Central Registry

·        Registration in the Commercial Central Registry of the Ministry of Domestic Trade (MINCIN)

·        National Contructors Registry

·        Request of Origin Certification in the Chamber of Commerce

·        Registration for the use of EAN Code of the Chamber of Commerce

·        Request of the Resolution of the Ministry of Foreign Trade for the Import-Export glossary.

·        Resolution of the Ministry of Finance and Prices on the Exemption of Bond and Tariffs payments.

·        Issueing of Banking Licences. Central Bank of Cuba.

·        Registration of Trademarks and Patents. National Archive.

·        Work Licence proceedings.

·        Sanitation Licence

·        Phitosanitary Permit.

·        Transportation Licence

·        Migratory Procedures

·        Work Permits

Third Stage

This is the operation stage for renovations, modifications, amplifications, and revocation of the approved conditions and the obligatory updating of the permits, licences, and necessary authorizations, guaranteeing their duration.

Up to the moment, there are 149 International Economic Associations enjoying the services provided by the One-Stop Shop System.

Industrial Property system.

The Cuban Industrial Property Office (OCPI by its Spanish acronym)attached to the Ministry of Science, Technology and Environment, has the task to grant and register exclusive rights of Industrial Property; as well as to promote, engage and oversee this activity; and to develop the legal provisions and provide specialized services in this matter.

Legal matters comprised in the System of Industrial Property in force in the Republic of Cuba are represented by Decree-Law 68 of 14 May 1983, enacted by the Council of State of the Republic of Cuba, currently in force regulating the registration and protection of inventions; Decree-Law 160 of 10th June 1995, which amends article 39 of Decree-Law 68 and provides for the submission of patent application forms for pharmaceuticals and chemicals for agriculture and Decree-law 203 on Trademarks and other Distinctive Signs, from 24th December 1999; and Decree-Law 228 on Geographic Provissions from February 20^th, 2002.

The existence of industrial property as a property category is established under the exclusive temporary rights over the acts of economic exploitation and the modalities of intelectual creations, protected by these rights, legislation in force in this matter provides as well the norms over the requirements and procedures for the acquisition of rights, their validity and exercice by the entitles. 

Our country is member of the following Arrangements, Treaties and Conventions under the management of the World Industrial Property Organization:

·      Convention that established the World Industrial Property Organization (1967), since 27 March 1975.

·      Paris Convention on Protection of Industrial Property (1892), since 17 November 1904.

·      Stockholm Act (1967), since 8 April 1975.

·      Madrid Arrangement on repression of false or tricky indications or origin of products (1891), since 1^st January 1905.

·      Lisbon Act (1958), since 11 October, 1964.

·      Stockholm Additional Act, since 7 October 1980.

·      Madrid Arrangement on International Trademarks Registration (1981) - Stockholm Act (1967), since 6 December 1989.

·      Protocol of the Madrid Arrangement on International Trademarks Registration, since 26 December 1995.

·      Nice Arrangement  on International Classification of Goods and Services for the International Trademarks Registration, since 26 December 1995.

·      Lisbon Arrangement on Protection of Origin  Denomination and their International Registration (1958), since 25 December 1996.

·      Stockholm Act, since 8 April 1975.

·      Patent Cooperation Treaty (PCT) (1970), since 16 July 1996.

·      Strasbourg Arrangement on International Patents Classification (1971), since 9 November, 1996.

·      Vienna Agreement on International Classification of trademark figurative elements (1973), since 18 July 1997.   

·      Budapest Treaty on international acknowledgment of micro-organisms deposits  related to patent procedures (1977), since 19 February 1994.

·      Nairobi Treaty on Protection of the Olympic Symbol, since 21 October 1984.

·      Locarno Arrangement on International Classification of Industrial Designs and Models, since 9 October 1998.

Decree-Law No. 68/83 and legal modifications preceding it, provides for protection to the  following Industrial Property forms:

·      Innovations

·      Scientific findings

·      Industrial models

·      Trademarks

·      Trade names

·      Establishment signs

·      Commercial slogans

·      Origin denomination

·      Origin indications

Standardization, Metrology and Quality

Standardization, metrology and quality activities in Cuba are ruled by Decree Law 182 of Standardization and Quality and 183 of Metrology passed in February 1998.

The Standardization National Office, known as  NC, represents Cuba before the International Standardization Organization (ISO), the International Electronic Commission(IEC), the International Organization of Legal Metrology, the Alimentarius Codex Commission (CODEX), the Pan American Commission of Technical Standards and the Inter American Accreditation  Cooperation (IAAC). Besides, It has the condition of National Competent Institution before the Committee of Technical Obstacles to Trade of the WTO.

National standardization works, the Conformity evaluation proceedings                   (certifications, inspections, essays, among others) and the National Service of Metrology, are carried out from recommendations from the regional and international organizations before mentioned, particularly, from the WTO.

Resolution 1/96 of the Ministry of Economy and Planning, credits NC as certifier in accordance with the systems of quality, products processes and services, with regards to specific requirements of standards, technical rules and other standard documents.   

Cuba as an Investment Market.  Comparative advantages:

In addition to the advantages provided by the legal framework, Cuba has the following comparative advantages:

·      availability of highly qualified labor force;

·      health indicators of the population

·      adequate infrastructure (95% of the national territory is electrified);

·      Social and political stability;

·      Integration of Cuba to the Latin American and Caribbean region (ALADI, CARICOM, AEC)

·      Safety climate to foreign personnel

·      Geographical location in the middle of an expanding market and important commercial routes;

·      Natural resources

·      Availabily and Industrial culture

·      High development and encouragement by the government  of the reearch and development activity, the technological innovations and their applications.

·      Signing of 62 Bilateral Agreements on Promotion and Reciprocal Protection of Investments entered into with 71 countries, and 11 Agreements for the Avoidance of Double Taxation.

Agreements on Promotion and Reciprocal Protection of Investments (APPRI):

The Agreements on Promotion and Reciprocal Protection of Investments are bilateral investment agreements based mainly on the will of the States which, by mutual agreement and on the basis of their sovereign rights, decide to set forth general conditions to encourage and provide guarantees for economic and legal interests of investors from either State investing in the territory of the other Contracting Party.

These Agreements define the interests of both States pursuant to their respective national legislation.  Their provisions are binding on both Contracting Parties, and create a much safer and legally stable environment by stipulating important concepts such as the definition of investor, natural and legal persons, territory, etc.  They also contain provisions  allowing each Contracting Party to know in advance the applicable treatment, in accordance with both legal provisions for nationals and the International Law applied to investors in the territory of the other Contracting Party.   

Other important provisions refer to the facilities for the transference of after-tax dividends and profits which had been generated by investments. It is also important to mention as one of the most important guarantees to foreign investment in Cuba the issue of compensation in case of expropiation, which can only take place under certain and pre-established circumstances and shall be supported by the corresponding legal procedure.

On the other hand, these Agreements establish the forms for the settlement of any disputes between an investor and a Contracting Party or between both Contracting Parties, giving the possibility to the parties involved in the dispute to, before the failure from either Contracting parties, implement the corresponding procedures among the different variants provided by the Agreement.  

Countries with which Cuba has entered into Agreements on Promotion and Reciprocal Protection  of Investments: