In a four-hour extraordinary session on March 29 attended by President Raúl Castro Ruz, the 612 deputies in Cuba's unicameral National Assembly of Popular Power voted unanimously to approve a new law governing foreign investment. Replacing a measure put in place in 1995 under then-president Fidel Castro, the Foreign Investment Law will allow foreign companies to operate in Cuba independently, rather than in joint ventures with state enterprises, according to a report in the Cuban daily Juventud Rebelde published shortly before the legislation was passed. Most foreign companies will be required to pay a 15% tax on profits, half the current rate, the article said, and they will enjoy a tax moratorium for the first eight years of their operations in Cuba. Rates may be higher for companies that exploit natural resources, such as nickel or fossil fuel.

The new policy includes guarantees that foreign property won't be nationalized, as happened after the 1959 Revolution, except when national interests are involved, and in these cases the owners will receive compensation.

Vice President Marino Murillo, who is in charge of the economic sector, told the National Assembly that the country needs to have its gross domestic product (GDP) reach a 7% annual rate of growth, with accumulation or investment rates of 20%, and that this will only be possible with outside investment. The new investment will be oriented toward priority sectors, such as agriculture, forestry, wholesale trade, industry, tourism, construction, energy, mines and transportation, according to Foreign Trade Minister Rodrigo Malmierca. The law will allow investment by Cubans living abroad, but Malmierca noted that the Cuban American community based in Miami would still be restricted from investing because of the US government's trade embargo against Cuba.

The new law is to go into effect in 90 days. It follows other moves by the Cuban government since September 2010 to build up the private sector at the expense of state enterprises. (La Jornada, Mexico, March 29, from AP, AFP, DPA, March 30 from Reuters, AP, AFP, DPA)

From Weekly News Update on the Americas, March 30.