BEIRUT: A recent agreement between the United States and Cuba to restore diplomatic ties by the end of July has further bolstered interest among U.S. investors who started scrutinizing business opportunities in Havana as soon as the country was crossed off the U.S. terrorism list almost a month ago.
But U.S. investors are not alone in looking to benefit from the improvement in ties between the two countries. Investors worldwide are anticipating a boom in the tourism and real estate sectors in Cuba once the 53-year old trade embargo imposed on the country by the U.S. is lifted.
Although U.S. President Barack Obama has relaxed the embargo in terms of restrictions on imports and telecommunications, Americans are still banned from traveling to Cuba. Sanctions that remain in place also limit banking transactions, making it enormously hard for Cubans to access overseas financial markets and do business with the international community.
Almost a year ago, the flow of foreign investments into Cuba rose after the government passed a more relaxed foreign investment law in 2014, easing restrictions on foreign investments and providing tax incentives to attract overseas funds.
Among the newcomers were a number of Lebanese businessmen who are now looking to capitalize on the warming relations between the U.S. and Cuba, says Ali Kazma, president of the newly formed Lebanese Cuban Business Council.
The LCBC, an organization affiliated with the Beirut Chamber of Commerce, Industry and Agriculture, was established in May with the aim of promoting Lebanese investment in Cuba.
The council, which brings together 20 businessmen, kicked off its activities with a visit to Havana in early June.
During their visit to Cuba, Lebanese business leaders met with their Cuban counterparts and government officials to review investment and business opportunities in the Caribbean country.
“The visit culminated in the signing of several agreements between the Lebanese Chamber of Commerce and its Cuban counterpart,” Kazma says.
Discussions between Cuban officials and the Lebanese delegation, which included a representative from the Economy Ministry, also touched on the amendment of a trade agreement signed between the two countries in 1998.
While several members of the LCBC are already invested in Cuba, Kazma says the council is particularly looking to capitalize on Havana’s overture to foreign investments against the backdrop of improving Cuban-U.S. ties.
Investment opportunities cover a variety of sectors, including tourism, hospitality and infrastructure development. Kazma says some 254 business opportunities across Cuba have been outlined in a booklet prepared by the LCBC based on information provided by the Cuban government. To further shed light on these business opportunities, the council is preparing for the Lebanese-Cuban Economic Forum that will take place in Beirut on Sept. 29.
Belal Malas, vice president of the LCBC, says the council is working to actively engage businesses through sustained outreach, regular meetings, active communication platforms and networking forums.
“At present, we are working on strengthening relations with potential investors and working to attract new investors,” Malas adds.
The Lebanese-Cuban Economic forum will provide an opportunity to introduce businessmen to investment laws in Cuba, Kazma says.
“The Cuban government is wisely opening up its economic system to foreign investments as new laws and regulations have been passed to create a more favorable business environment,” LCBC treasurer Marwan Dimas says.
Cuba’s new foreign investment law allows 100 percent foreign ownership, eliminates labor tax and cuts the tax on profits from 30 percent to 15 percent for most industries.
In addition to foreign ownership, foreign investments in Cuba can take the form of joint ventures with the Cuban state or associations between foreign and Cuban companies. Investors in joint ventures get an eight-year exemption from all taxes on profits.
Of the many interesting ventures that the Cuban government has embarked on is the creation of the first Special Development Zone in Cuba, known as ZED Mariel.
Dimas explains that ZED Mariel, which retains its own favorable tax laws, has succeeded – thanks to its business-friendly environment – in attracting numerous investments since its establishment in 2013.
Every year, the government establishes a portfolio of foreign investment opportunities across Cuba.
The latest portfolio issued by the state covers 11 sectors open to foreign investment and comprises a total of 246 business opportunities including 25 projects in the special economic zone of Mariel.
Lebanese businessmen are hoping to secure some of those deals by the end of 2015, says Kazma, who is currently in talks with Cuban officials to launch a boutique hotel and Lebanese restaurants in Havana. “Hopefully, the deal over the hotel will be secured by the end of the year,” he adds.