Entrepreneurs: this could be big.
By James Paine
Founder, West Realty Advisors@JamesCPaine
There's a new possible hotspot for entrepreneurship that might surprise
Now that relations between the U.S. and Cuba are warming up, many
entrepreneurs see the island nation as an intriguing choice. When former
President Obama announced that he'd like to open up relations with Cuba,
thoughts of tourism and trade arose.
For entrepreneurs, Cuba could be a land of untapped potential.
Cuba has a struggling economy, but it also has a population of roughly
11 million -- and is a short flight from Florida.
Not long after Obama's announcement, companies started to dip their toe
in the Cuban market. While trade policies have been slightly relaxed,
it's still not a situation where a U.S. company could open up in Cuba.
Tourism rose roughly 20 percent after Obama's 2014 announcement and more
than 94,000 U.S. tourists visited Cuba in the first quarter of 2016, but
it's still a complex web for businesses.
In 2015, American companies such as PepsiCo, Caterpillar, Boeing and
American Airlines were present at the Havana International Fair, an
event usually sparsely attended by the U.S.
However, the hurdles toward building a successful business in Cuba are
endless. In addition to the lack of infrastructure in Cuba (it's still
largely a cash-based society, with little availability for plastic), the
U.S.-Cuba embargo remains in place.
There are still avenues for a determined American entrepreneur, though.
Experts have said that entrepreneurs who visit the island are more
interested in real estate opportunities, the hospitality industry and
establishing small factories in a 180-square-mile "free zone" outside of
Havana. Foreign entrepreneurs are able to own and operate businesses in
that zone, but only after being granted approval from the Communist Party.
Right now, most of the entrepreneurship is happening natively, as Cubans
start to gain more economical power thanks to the influx of tourism
dollars. The country's policies are still very insular, leading
Americans and other foreigners to work more with entrepreneurial Cubans
than trying to curry favor with the Communist Party in order to own a
Still, the seeds are being planted. Largely popular airline Southwest
recently opened up routes to Havana, and Carnival Cruise Lines docks in
the capital city, as well. It may take years for Western companies to
operate out of Cuba, but these are promising steps toward that future.
There are ways for entrepreneurs to gain a foothold within Cuba, but it
takes some coordination and teamwork. Americans are able to go into
business with Cuban entrepreneurs, or cuentapropistas as they are known.
The Cuban government allows these cuentapropistas to operate taxis,
shops and restaurants.
Right now, they are the best conduit for American entrepreneurship in
Cuba. Working with a cuentapropista is a great first step for the
determined entrepreneur wanting to learn more about business operations
in the island nation.
As more tourism comes to Cuba, that revenue could fuel a change in
thinking. Currently, the Cuban government and the Communist Party
strictly prefers that Western business practices stay away from the
island. But with an influx of tourism money, that could change,
especially if Cuba uses this money to build out infrastructure.
While it might be easier now (though still an arduous process) to travel
to Cuba as a tourist, it does not seem that the land is totally open for
The opinions expressed here by Inc.com columnists are their own, not
those of Inc.com.
PUBLISHED ON: JUN 5, 2017
Source: Should US Entrepreneurs Make Their Way to Cuba? | Inc.com -
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1:45 p.m. Monday, May 9, 2016
If the Cuban embargo is lifted, here are nine items, including rum and
cigars, that you may want:
In this Monday, March 21, 2016, photo, Cuban President Raul Castro,
right, lifts up the arm of President Barack Obama at the conclusion of
their joint news conference at the Palace of the Revolution in Havana,
Cuba. One of Cuba's most renowned advocates of economic reform has been
fired from his University of Havana think tank, on Wednesday, April 20,
for sharing information with Americans without authorization, among
other alleged violations.(AP Photo/Ramon Espinosa, File)
Currently, several spirit distributors are prepared for the embargo to
be lifted so that delicious Cuban rum can flow into the U.S. However,
the company that imports it must comply with Alcohol and Tobacco Tax and
Trade Bureau regulations, obtain the necessary permits and pay the
required taxes and tariffs.
Once that happens, it's possible that the price of rum might drop
somewhat as more of the liquor enters the marketplace. The increase in
supply, with a steady demand for rum, would tend to drive rum prices down.
For now, Americans who visit Cuba can bring home up to $100 worth of
tobacco and alcohol. A one-liter bottle of Havana Club rum purchased in
Cuba starts at $5, according to Esquire.com.
Cuban cigars are considered to be among the best in the world.
Currently, Americans can bring $100 worth of tobacco products into the
U.S. A box of Cuban cigars purchased in Cuba can run between $150 and
$775 plus currency exchange fees, according to Fortune.com.
But if further Cuban cigar restrictions are lifted, and more of these
delectable treats for smoking aficionados come into the market, their
prices might fall. Yet, if greater availability causes the demand for
Cuban cigars to grow and outpace supply, prices might remain high. In
fact, some experts predict prices will go up, according to Fortune.com.
Only time will tell how the availability of Cuban cigars will impact the
CUBAN COMPUTER PROGRAMMERS
Cuba has relaxed requirements on its service-oriented entrepreneurs.
This Cuban policy change, combined with the opening of trade with the
U.S., is opening the door for many Cuban services imports. Because
computer programmers often can work from anywhere, this could make Cuba
an option for U.S. companies who are hiring remote workers.
To figure out how additional computer programming work imported into the
U.S. might impact prices, take a look at the cost of living in Cuba.
Rent is 67 percent lower than in the U.S.; excluding rent, the cost of
living is 27 percent lower than in the U.S. The U.S. median computer
programmer is paid $38.24 hourly, according to the most recent pay scale
data from the Bureau of Labor Statistics.
Additionally, the BLS predicts an 8 percent decline in demand for U.S.
computer programmers between 2014 and 2024, exactly because their work
can be easily performed by workers in lower cost-of-living countries
such as Cuba. Therefore, the entrance of Cuban programmers in the U.S.
market might further depress the price of computer programming services.
CUBAN BOOKKEEPING SERVICES
Similar to computer programmers, bookkeepers can work from anywhere.
Importing bookkeeping services - but not accounting services - from Cuba
can be beneficial as it brings more work to Cubans.
This could also have a ripple effect in the U.S. If bookkeeping service
pricing declines, the hiring firm can either lower prices on its
products or keep them the same, which would benefit U.S. consumers.
Cuba's roads are filled with what people in the U.S. consider "vintage
cars." This means that Cuban demand for newer vehicles might impact
prices on used cars in the southeast regions of the U.S.
Mike Arman previously exported U.S. cars to St. Maarten. Arman, who is
currently in another line of work, said that with the pent-up Cuban
demand for newer cars on the tiny island, it's likely that the prices on
later-model, good condition used cars in southern Florida and the
surrounding states will skyrocket. As the demand by Cubans for U.S. cars
grows, the existing prices of these vehicles, already on the upswing,
would trend upward unless more used cars come on the market.
At $38,000 per year, Spanish translator salaries are currently lower
than 34 percent of job postings nationwide, according to job search
website Indeed.com. If the U.S. relaxes its embargo on Cuba, those
salaries are likely to fall.
Cuban entrepreneurs are allowed to offer document translation services
by their government. Thus, with Cuba's lower cost of living and relaxed
trade barriers, companies can hire lower-priced Cuban-English speaking
translators to cut costs. Should this trend grow, it would place further
downward pressure on the already low-salaried translator jobs.
Americans are already drifting into Cuba via Canada, Mexico, Europe and
other countries. If it were easier to visit Cuba from the U.S. via
cruise ships, airline flights and travel packages, this tourism
opportunity might afford adventurous U.S. citizens with greater low-cost
Cuba is only 90 miles off the coast of Florida, a short boat or plane
ride. With Cuba's low prices and beautiful scenery, U.S. tour companies
could profit handsomely by marketing visits to the island. Closer to the
U.S. than the expensive island of Hawaii, U.S. tourists stand to benefit
from lower-priced exotic vacation opportunities to visit Cuba.
Anyone who's tuned in to watch HGTV network's "Caribbean Life" or
"Beachfront Bargain Hunts" understands there is demand for a vacation
home in an exotic location. If buyers who ordinarily would have sprung
for a lower-cost beachfront home on the Texas panhandle or Florida coast
choose a lower-priced option in Cuba, that could cost a sale on U.S.
Although not technically an import, the additional supply of beachfront
homes in Cuba might put downward pressure on comparable U.S. beachfront
Today, raw sugar is one of Cuba's largest exports. However, if Cuban
sugar is imported by the U.S., consumers might not see much price benefit.
Sugar prices have been falling for years and are currently as low as
they were in the 1980s. As of January 2016, U.S. producers receive 25.76
cents per pound for unrefined sugar. From 2010 to 2013, U.S. raw sugar
prices fell 50 percent due to the influx of sugar imports from Mexico
flooding the marketplace. This led to a surplus ratio of 20 percent.
Should Cuban sugar enter the U.S. marketplace, this will hurt the U.S.
sugar producers who will be forced to compete with additional cheaper
sugar imports. Although U.S. sugar producers would experience declining
profits if the trend continues, U.S. consumers likely won't feel the
benefit of the lower sugar prices, as grocers and food manufacturers
rarely pass along their price savings.
Source: 9 things you'll want if Cuban embargo ends; rum, cigars and more
| www.palmbeachpost.com -
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U.S. businessman Dee Cross wants to help modernize small farmers'
operations in Cuba.
By Donna Gehrke-White
Nonprofit wants to ship Florida cattle to Cuba
Cuba is trying to re-start its cattle production, now operating at a
sixth of its former size
As the founder of an aircraft charter company, Dee Cross has helped get
supplies to countries devastated by earthquakes, tsunamis and hurricanes.
Now he wants to get Florida cattle to Cuba.
Cross wants to help build the island's agriculture industry under new
U.S. regulations that authorize certain economic and humanitarian
exchanges between the two countries.
His nonprofit, called Cuba/U.S. Agriculture Co-op, is one of the first
businesses to open an account for Cuban transactions through Stonegate
Bank of Pompano Beach, the only U.S. bank authorized to handle the business.
Stonegate last month signed the first U.S. correspondent banking deal
with a Cuban bank in half a century. Stonegate CEO Dave Seleski was in
Havana on Friday as Secretary of State John Kerry formally reopened the
U.S. embassy after 54 years.
Implementing the agreement between Stonegate and Banco Internacional de
Comercio will be a slow process. Both banks are proceeding cautiously.
But Cross is patient. He doesn't want anything to interfere with his
dream of shipping cattle and farm equipment to help small farmers on the
"I really want to help," said Cross, 67, a long-time rancher and owner
of International Charter Brokers, an airline charter company in New
Mexico that has flown relief supplies after U.S. hurricanes, the 2004
Indonesian tsunami and the 2010 Haitian earthquake. "I've always admired
the Cuban people. I would like to support them."
Cross plays to buy hardy Florida cattle that are suitable for a
He figures he would save on shipping because the cattle would be near a
South Florida port where they would be put on a boat to Cuba.
He also hopes U.S. manufacturers will donate farm equipment that the
nonprofit plans to loan or lease until farmers can afford to buy their
own. Much of the farm equipment on the island is nearly a century old,
Cross said he can't ask for donations from the companies or from
individuals until he gets approval from both countries to operate his
The paperwork is almost complete, he said in a series of telephone
interviews. But it's anyone's guess when the Cuban government will act,
Once he gets approval from the Cuban government, then he must go through
U.S. bureaucracy. "You have to be careful of U.S. law," Cross said.
His plans seem to be coming at a good time. The Cuban government has
been working to resurrect its cattle industry, which is operating at
only about a sixth of its pre-revolution level, said John Parke Wright
IV, who has set up a cattle breeding program on the island using
champion bulls from Florida and Texas. Wright has own plans to bring
into Cuba up to 100,000 head of cattle from Florida, Georgia, Alabama
and Texas over the next five years.
"Cuba is blessed with some of the best pasture land," said Wright, who
has talked with the Cuban government about leasing a 15,000-acre ranch
expropriated from the Tampa company Lykes Brothers. Wright is the
great-great-grandson of patriarch Dr. H.T. Lykes.
Wright praised Cross' plans to help Cuba's small farmers and ranchers
modernize their operations to produce more crops, dairy products and
meat. But he warned, "It's going to take a long time."
Cross said he's aware of the challenges. "They're barely raising enough
for their own families," he said. Cuba has hundreds of small farmers who
own their land and many could raise cattle herds — even if it is just a
few head, Cross suggested.
While he waits for the U.S. and Cuban governments to approve his
nonprofit, Cross is already in the process of opening an office in
Havana. He has two Cuban staffers who are contacting farmers and ranchers.
"We are also arranging our shipping methods by both ocean and air and
confirming animal health regulations and requirements at both ends,"
So far, Cross appears to be on the right track, said Augusto Maxwell, an
Akerman partner in Miami and chairman of the law firm's Cuba Practice.
"He seems to be working within the system," he said, and not violating
laws from either country. Current U.S. policy "seems to favor" Cross'
plans to ship U.S. cattle and equipment to Cuba, Maxwell said. But he
said it's unclear whether Cuba will allow a nonprofit to work directly
with the independent farmers.
If approved, the nonprofit won't have it easy, Maxwell suggested.
In the past, Cuban couldn't afford the upkeep of U.S. herds, including
vaccinations, he said.
Cubans also couldn't afford to buy what beef was available, said Charles
"Charlie" Lykes, president and CEO of Lykes Brothers in Tampa. "There
just wasn't a market," he said.
Still, Lykes said he was interested in Cross' nonprofit. "I'd be
delighted if there are other opportunities" to sell cattle in Cuba, he said.
Staff Writer Doreen Hemlock contributed to this report.
firstname.lastname@example.org or Twitter @donnagehrke
Source: Nonprofit proposes to send Florida cattle, equipment to Cuban
farmers - Sun Sentinel -
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By DAMIEN CAVEFEB. 11, 2014
Launch media viewer
With balconies and air-conditioning, the new apartments for Cuba's
middle ranks are a sign of a hybrid economy in which the state must
compete with private enterprise. Todd Heisler/The New York Times
HAVANA — In the splendid neighborhoods of this dilapidated city, old
mansions are being upgraded with imported tile. Businessmen go out for
sushi and drive home in plush Audis. Now, hoping to keep up, the
government is erecting something special for its own: a housing
development called Project Granma, featuring hundreds of comfortable
apartments in a gated complex set to have its own movie theater and schools.
"Twenty years ago, what we earned was a good salary," said Roberto
Rodríguez, 51, a longtime Interior Ministry official among the first to
move in. "But the world has changed."
Cuba is in transition. The economic overhauls of the past few years have
rattled the established order of class and status, enabling Cubans with
small businesses or access to foreign capital to rise above many dutiful
Communists. As these new paths to prestige expand, challenging the old
system of rewards for obedience, President Raúl Castro is redoubling
efforts to elevate the faithful and maintain their loyalty — now and
after the Castros are gone.
Project Granma and similar "military cities" around the country are
Caribbean-color edifices of reassurance, set aside for the most ardent
defenders of Cuba's 1959 revolution: families tied to the military and
the Interior Ministry. With their balconies, air-conditioning and fresh
paint, the new apartments are the government's most public gifts to its
middle ranks and a clear sign of Cuba's new hybrid economy, in which the
state must sometimes compete with private enterprise.
The housing is just one example of the military's expansive role in Mr.
Castro's plan for Cuba, and it illustrates a central conflict in his
attempts to open up the economy without dismantling the power structure
he and his comrades have been building for more than five decades.
In the short term, analysts and former officers say, he is relying on
the military to push through changes and maintain stability as he
experiments with economic liberalization. Yet his abiding dedication as
a lifelong soldier who was defense minister for 49 years threatens to
further entrench an institution that has often undermined changes
challenging its favored status.
"Raúl knows the military answer is not the answer, but he also knows
that at this time he absolutely needs military loyalty," said Hal
Klepak, a Canadian scholar who closely tracks the Cuban military. "They
are the only ones who will follow him if the reform succeeds, or if it
Mr. Castro and his brother, Fidel, given their guerrilla history, have
always turned to the military in times of need. In the 1960s and early
'70s, as Cuba's professional class fled, officers in fatigues ran
government ministries and nationalized industries. Since the 1990s,
after the fall of the Soviet Union, the armed forces have been slashed
to around 55,000, from a peak of more than 200,000, but they have also
been pushed further into the Cuban economy.
As president, Raúl Castro, 82, has accelerated the growth of what some
scholars have described as a military oligarchy. The chairman of the
Economic Policy Commission, Marino Murillo, is a former officer. Cuba's
largest state conglomerate, Cimex, which processes remittances from
Cubans abroad, among other tasks, is run by Col. Héctor Oroza Busutin.
Raúl Castro's son-in-law, Gen. Luis Alberto Rodríguez, is the top
executive at the military's holding company, known as Gaesa, which is
estimated to control 20 percent to 40 percent of the Cuban economy.
And its role is expanding. In 2011, a financial arm of the company
bought out Telecom Italia's 27 percent stake in Cuba's
telecommunications company for $706 million. Gaesa also has a network of
hundreds of retail stores selling everything from food to appliances. It
is a growing force in tourism, too, controlling fleets of luxury buses,
a small airline and an expanding list of hotels. And one of its
subsidiaries is overseeing the free-trade zone built alongside Cuba's
largest infrastructure project in decades — the new container port in
The military's interests bestow the privileges of business on a chosen
few, especially senior military officials. "They live better than almost
anyone in Cuba," said Brian Latell, a former C.I.A. officer who worked
But in the lower and middle ranks, experts say, esteem and relative
wealth have eroded. Career officers in Cuba are now more likely to have
friends or relatives who live abroad, or who visit Miami and often
return with iPhones or new clothes unavailable at the state's musty stores.
Meanwhile, military members must report all remittances they receive,
and they are not allowed any "unauthorized contact" with foreigners or
Cubans living abroad — limiting access to the money that other Cubans
use not just for purchases, but also to improve their homes and open
"It's producing an exodus of talented people from the state to the
private sector," said Jorge Dámaso, 75, a retired colonel who writes a
blog often critical of the government. "Most people in the military have
seen their quality of life fall compared to a bartender or someone who
has a small business. They can see that they are at a disadvantage."
The new housing, a basic necessity in extremely short supply across the
island, looks to many Cubans like another attempt at favoritism.
According to government figures, the military's construction budget has
more than doubled since 2010. When combined with the Interior Ministry
(often described as a branch of the military), the armed forces are now
Cuba's second-largest construction entity.
Project Granma — named after the boat Fidel Castro took from Mexico to
Cuba to start the revolution — is one of several new military housing
developments around the country. Its equivalent in Santiago de Cuba,
where the Castro revolution began, has come under fire from Cubans
struggling in rickety homes damaged by Hurricane Sandy. But as an
attempt to match the private sector, or life in other countries, it is
perhaps no accident that the colors and architecture of the Granma, in
the same neighborhood that Raúl Castro calls home, give it the feel of a
Florida condo complex.
At its edge, there is a baseball field. Inside the gates, streetlamps
resembling classic gaslights line the sidewalks, while cars, another
perk, fill lots.
At a building with rounded archways, where a movie theater, market and
health clinic are meant to go, one of the project's engineers said
several thousand people would eventually call Granma home. Sweating in
green army fatigues, he praised the plan, noting its imported,
prefabricated design that allowed walls to be assembled quickly, like
puzzle pieces. He failed to mention what a security guard had pointed
out: Most of the workers painting were prison inmates.
Several residents said they were thrilled to live in what Mario Coyula,
Havana's former director of urbanism and architecture, called "the first
gated community in Cuba since the 1950s." Some said they had been living
in cramped quarters with generations of family.
Support for Raúl Castro's economic changes seemed strong here among
those willing to talk. "It's necessary," Mr. Rodríguez, the official
among the first to arrive at Granma, said as he sat outside with a
cigarette. "If you're cold, you put on a coat; it's just what makes sense."
But in the push and pull that has defined Cuba's economic policies over
the last two years, the government has often struggled with when to let
the market function and when to protect the Communist establishment. The
authorities, for example, recently cracked down on private vendors
selling clothes and other items, widely seen as an effort to help the
state's own retail network.
Mr. Dámaso, who spent 32 years in the military, said that the country's
leaders, while longing for economic improvement, mainly want to preserve
the Cuba they know.
"If you have a business run by military officers, when there's a
transition, you're not going to get rid of all these people," he said.
"This is a way to maintain a space for established powers in a future
Source: Cuba's Reward for the Dutiful: Gated Housing - NYTimes.com -
http://www.nytimes.com/2014/02/12/world/americas/cubas-reward-for-the-dutiful-gated-housing.html?_r=0 Continue reading