By Marc Frank | Reuters
HAVANA - The number of foreign companies engaged in joint ventures with Cuba fell by 15 percent last year, state-run media said Saturday, as a political squabble with Europe and increased economic regulation took their toll.
The decline, the first reported by the communist nation in more than a decade, comes as the government struggles with a foreign exchange shortage that has slowed economic growth.
“Currently there are 342 active economic associations (joint ventures), and the most important foreign partners in these businesses are Spain with 98, Canada with 52 and Italy with 51,” the Communist Party’s daily, Granma, said, reporting on the annual meeting of the Ministry of Foreign Investment and Economic Cooperation.
The ministry reported 403 ventures at the close of 2002, of which Spanish companies accounted for 105, Canadian companies 70 and Italian companies 57.
Minister of Foreign Investment and Economic Cooperation Marta Lomas said at the meeting that seven joint ventures were formed last year compared with 24 new joint ventures in 2002.
Lomas also said there were 313 cooperative production agreements, an increase over the 270 reported a year ago.
Such agreements involve investors selling on credit raw material, technology, and know-how to a Cuban partner in exchange for a fixed sum per product produced, or purchasing the finished product outright for export.
Since the collapse of its former benefactor, the Soviet Union, threw Cuba’s economy into crisis in the early 1990s, Havana has allowed foreign investment under strict government control.
Western diplomats said the introduction of foreign exchange controls last year, increased regulation and the sentencing of 75 dissidents to long prison terms, which led to a freeze in relations with top investor the European Union, have poisoned the investment climate.
“Cuba has always been a difficult place and increased regulation and political problems are making it worse,” a European diplomat said.
Foreign businessmen often complain about Cuba’s excessive labor regulations, a lack of information on business laws and their discriminatory application against foreign companies, and excessive utility costs due to the state monopoly on services.
Nevertheless, joint ventures control key exports such as cigars and rum, and a portion of others such as nickel and sugar. They also are heavily involved in the tourism industry.
Lomas blamed Cuba’s woes on the long-standing U.S. economic embargo on the Caribbean island nation and on a lack of interest in the region.