Posted February 09, 2015 by publisher in Cuba Business.
Excerpted from Cuba Foreign Trade magazine, a publication of the Cuba Chamber of Commerce
A Strategic Project for Cuban Foreign Trade
The Special Development Zone Mariel (ZEDM), is expected to be the main port of entry and exit for Cuban foreign trade and a major development pole located in the center of trade in the Caribbean and the Americas.
The Zone should become an economic engine for Cuba. Its installment is part of a process of updating the Cuban model of development. The port will have a capacity to receive three million containers a year and offer new opportunities for foreign investments, guarantees for business, free transference abroad for utilities and a fiscal regime with tax incentives.
The explanation was made by the Cuban Minister of Foreign Trade and Investment Rodrigo Malmierca Díaz closing the 9th Brazil-Cuba Meeting for Economic and Commercial Affairs, that he presided by the Cuban side. The details not only landed brought in the capital from the colossal South American nation, but also in Porto Alegre, Río Grande do Sul, Sao Paulo and Río de Janeiro, in an international launching that previously had occurred in Vietnam, China, Russia and Cuba during the third day of FIHAV 2013.
That November 5 the protagonist per excellence of the Fair was a conference about the business opportunities in ZEDM, delivered by Malmierca and Ana Teresa Igarza, general director of the Office in charge of administration and control of national and foreign investments and directing the Program of Development and Business.
In the theater of EXPOCUBA, with a large presence of directors and business executives of Cuban and foreign entities as well as ambassadors of several countries, they offered a panoramic view of the mega project that covers 465,4 km², almost center in the port of Mariel (strategically located in the middle of commercial networks between Asia, Latin America and Europe) and entails several municipalities of the province Artemisa, one location due to the existence there of railway infrastructure, roads and others as well as the proximity to Havana, the principal government institutions, several science centers and the José Martí International Airport.
Malmierca stressed the advantages of investing in Special Development Zone Mariel, the existence of a defined legal framework and to contribute to sustained development of the Island with investments that bring technological innovation and industrial concentration, is the key pillar supporting the creation of the Zone. He announced the priority sectors and activities of this first phase that includes bio technology, the pharmaceutical industry, agro food, packaging as well as renewable energy an explained the fiscal, tax and legal incentives of the Zone that will be ruled by special policies to boost the presence of foreign capital.
The Zone should become an economic motor. Its installment is part of a process of up dating the Cuban model of development.
The port will have a capacity to receive three million containers a year for Cuban foreign trade This will be the main door of entrance and exit of foreign trade in the island for the coming years. Shortly it will receive big ships with a large draft President Raúl Castro accompanies former Brazilian president, Lula da Silva during his visit to the zone in February 2013
Referring to the activity of the Office of the Zone, Igarza stressed that the single window will process faster and with more efficiency the applications, in a period not exceeding 90 days and that have no place investments that do not use sustainable technologies for the environment.
Both officials answered questions, mostly referring to hiring of labor force. National employment agencies will select persons with professional experience and salaries will depend on the agreement between them and the foreign companies.
Meanwhile, at the entrance of the central pavilion a simple and efficient stand of ZEDM began to receive foreign business persons. More than fifty companies from Spain, France, Italy and Brazil showed interest in business and investments in the area. Also confirmed was that the first phase of the project of the new terminal of containers that will be inaugurated in January 28 of 2014, before the opening of the expansion of the Panama Canal. Quite a sight to see Bright under the sun of the Caribbean, satellite images reflects well defined and harmonious installations. If we zoom in we can see large trailer trucks, 300 feet high cranes, containers lined up, roads, railroads, buildings in different construction phases; conclusively an advance of a well prepared plan. When we close up to the almost concluded works that will soon be inaugurated and their protagonists, the workers looking like busy bees with their colored helmets on gigantic platforms of the port busy in all sorts of constructions.
Even in photographs is appreciated the quality and transcendental value of this ambitious project, whose legal framework came into force November 1st. It refers to the Decree Law, its Regulation and six complementary resolutions. On stamping his signature September 19 in a meeting of the Council of State, Army General Raúl Castro Ruz, President of the Council of State and Ministers of Cuba justly qualified the Zone as a work for the present and future of the country.
The first of its kind in the Island and living example of an economy in evolution, ZEDM is an industrial platform for imports, production and sale for the internal and foreign market, linked to a modern mega port that will assume sea trade being developed in Havana, that villa of relations with the international market since that the 16th to 18th centuries in which docked ships from the Flotas de Indias (Fleet of the Indies) then grandiose for its almost one thousand tons of displacement, many filled with spices, gems and different riches taken from other colonized lands and stored in the Key of the Gulf until embarkation to Spain.
From then to today’s commercial activity has evolved to the point of needing ships of unforeseen sizes. A ship of Panamax class, designed for the maximum size allowed
by the Panama Canal displaces 65 000 tons, The post-Panamax reaches between 150 000 and 170 000 tons and can transport up to 12 thousand containers. They are so huge that to get them to do the crossing expansion works were executed in that waterway.
Post-Panamax is changing trade transportation of merchandise and world economic management: while more containers are transported in ships costs of transportation are lower. The shipping companies calculate: that a ship in 2015 will cross the Canal transporting from Asia to the northern coasts of America 8 000 containers saving in a year 19% in costs of transportation.
Mariel, a pocket or bottle neck bay as also referred to, can receive all kinds of ships. From the beginning of the 20th century it was planned to adapt it for trade of large ships of the Special Articles time. The mouth of the Mariel River was dredged; workshops, docks were built and customs office was set in the port, which is linked with Havana through the Pan American highway that borders the northern coast. Mariel has been, for a long time, an important economic center, with shipyards, factories, a power station as well as a base for containers.
Mariel railroad as seen on December 30, 2014
The construction today of new docks, warehouses, highways, railroads and so many works, to move all sea trade from the port of Havana to Mariel, is just part of the total project of ZEDM, that was born through the agreements of the 6th Congress of the Communist Party of Cuba, that in its Guideline 103 promotes “the creation of a Special Development Zones that would allow increase of exports, effective imports substitution, developing projects of top technology and for local development as well as contributing to generate new sources of employment”.
Consequently Decree Law No. 313 published in the 26th Extraordinary Issue of the Official Gazette of the Republic of Cuba of September 23 2013 disposed the creation of the Zone and regulates its function, norms and objectives. Its first chapter expresses that it should contribute to national development and, in addition to the above mentioned, it should promote the transference of advanced technology and know how and capabilities for business management; attract foreign investment; it should generate long term financing; promote environmental sustainability, develop the necessary infrastructure to contribute to economic progress; create a logistical system that allows high levels of efficiency in the processes of import, export and distribution; stimulate the establishment of foreign and national companies and guarantee articulation to the rest of the economy.
The Infrastructure of mega port Mariel have been carried out since 2010 by Compañía de Obras de Infraestructura (COI), an independent subsidiary of the Odebrecht Group, the largest engineering and construction company of Brazil and the Cuban investor Zona de Desarrollo Integral of Mariel for a cost of 900 million dollars. Of this total 640 million were supplied by Brazil and the rest by Cuba. The investment includes areas for containers, warehouses, freezers, fuel supply, distribution of food and other shipping services. The terminal of containers will be administered by the company PSA International of Singapore, one of the most experienced port operators in the world.
By January 2015 the Zone will have a dock of 700 meters that can simultaneously receive two large merchant ships. Aimed to be the main port of entrance and exit of Cuban foreign trade, for the described installations of the modern mega port other services and infrastructure will be added in successive steps: port terminals, logistic support facilities, centers of distribution of merchandise and industrial parks and services.
Also set up was the network of water and electricity supply, plants for the treatment of residues, commercial centers, exhibition halls, recreation areas and installations with accommodations, among others of this large bet by Cuba to be a regional center of logistics of merchandise.
Cuba is prepared to take advantage of the scenario approaching in 2015 when, already expanded, the Panama Canal will allow a larger circulation of mega ships. The ZEDM by then will be more than strategically, enviably located in the middle of a zone in the planet with the largest port activity and world trade.
Its port terminals will be able to receive ships of merchandize for transfer to other ports in the Caribbean and Latin America and around three million containers a year.
ZDEM is therefore an interesting opportunity for foreign capital. In his presentations on September in Vietnam and China and in October in Russia, Malmierca referred to reasons, advantageous, legal conditions, favorable environment and potential sectors for investment. Intention is to create a special climate in which foreign capital will have better conditions than in the rest of the country he explained to the auditorium. Also the ZDEM is undoubtedly, the industrial and services zone of more importance for the economic future of Cuba.
The minister has said that Cuba does not fear that the U.S. blockade will limit the entrance of foreign investors in the Zone that has awakened the interests of many of them, and foreign enterprises and entrepreneurs will continue coming from many countries. What this means, in the long run, is that the United States will have no possibility of investments in the ZEDM despite the interest of many U.S. companies. “I believe that their blockade harms them”, Malmierca said.
The objectives of the ZEDM are to generate exports, sources of employment and financing, technological transferences and logistic systems, as well as attracting national and foreign companies In July four giant cranes arrived from China, built in Shanghai for the mega port
What you should know about the ZEDM
What is the Zone?
It is a zone in which are established a regime and special policies intended to promote sustained economic development through the attraction of foreign investment, the technological innovation and the industrial concentration to boost an increase of exports, effective substitution of imports and generate new sources of employment, in constant articulation with the internal economy. It promotes and protects enterprises, industrial projects, agriculture and metal industries as well as tourism and all forms of activities allowed by Cuban law that use clean technologies and produce goods and services of added value based on knowledge and innovation.
Office of the Zone
It is a national entity under the Council of Ministers in charge of its administration, control their activities, prepare and conduct the Program of Development and Business, process all applications, licenses, permits and authorizations, which are carried out by concessionaires and users of the zone or those interested in settle in it, through a single window system, in an effective and efficient manner.
Mission: develop, manage and control national and foreign investment, with high-level technology and advanced services and productions in the special development zone
of Mariel, with the aim of contributing to the nation’s development.
Vision: be a special zone of world class, with high-level technology services and productions, a multi-modal logistics services provider, which provide support, protection and excellent services to the users and concessionaires, based on the renowned experience of the human capital, a modern, effective and efficient organizational performance and the privileged geographical position of the island.
Single window office: Through the Office the requests are received for the establishment of concessionaires and users, as well as the relative ones to licenses, permissions and authorizations that are granted by the different organs, organisms and institutions for the achievement of the activities that are approved. From the presentation of the documents needed for the establishment of concessionaires and users, the corresponding approvals are expressed in a term between 45 and 90 days.
How to contact:
Desamparados No. 166 e/ Habana y Compostela, La Habana Vieja,
Establishment: National entities or any modality of foreign investment under the Law, from its establishment as concessionary or user.
Concessionary: Foreign natural or juridical person with domicile abroad and foreign capital or national juridical person. The administrative concession is granted by the Council of Ministers of the Republic of Cuba for management of a public service, the achievement of a public work or exploitation of a government property, of a temporary way for a term of up 50 extendable years.
User: Foreign natural or juridical person with domicile abroad and foreign capital, national juridical or natural person with residence in the national territory.
- Decree Law No. 313 of the Council of State
- Decree Law No. 316 of the Council of Ministers
- Resolution No. 82/2013 of the Central Bank of Cuba
- Resolution No. 278/2103 of the General Customs of the Republic
- Resolution No. 150/2013 of the Ministry of Science, Technology and Environment
- Resolution No. 384/2013 of the Ministry of Finances and Prices
- Resolution No. 14/2013 of the Ministry of the Interior
- Resolution No. 49/2013 of the Ministry of Work and Social Security
- Law No. 77/1995
Foreign Investment Objectives
- Contribute to national development
- Generate exports and promote substitution of imports
- Promote transference of advanced technology and know how and abilities referred to management of businesses
- Attract foreign investment
- Generate new sources of employment and long term financing
- Promote environmental sustainability
- Develop the necessary infrastructure to contribute to economic progress.
- Create a logistical system that allows high levels of efficiency in the process of importation, exportation and distribution.
- Stimulate the establishment of national or foreign companies
- Guarantee articulation with the rest of the economy.
Advantages of investing
1. Strategic location: In the center of trade in the Caribbean and American region where 32 of the most important ports are located in 17 nations of the region, with coverage for expanding operations considering the expansion of the Panama Canal.
2. Existence of infrastructure (modern port terminal to operate medium size and large ships, zone of logistic activities, roads, railroads, availability of water, electricity and systems of communication).
3. Special fiscal system with tax incentives
4. More agile process of approval of businesses
For more information, visit the official Cuban government website for the port of Mariel in English
Visit the official Cuban Chamber of Commerce website
——————————Havana Journal Comments——————————
I was fortunate to travel to Mariel on December 30, 2014 and took the photos above of the sign posted at the border to Mariel and the photo of the railroad.
On the way to Mariel, I saw a Crowley container on a truck so it was comforting to happen to see that. The chance sighting confirmed that not only was the port active right at that moment but also to see that another container of good ole US food was on it’s way into Cuba.
As part of this trip, I went to Mariel in the evening and was pleasantly surprised to see the port facilities completely lit up and apparently in full operation. One never knows about business in Cuba. I would not have been surprised to see the port closed in the evening.
I have to say that my guide unexpectedly revealed his personal tragedy about the Mariel boatlift from 1980. Mariel is a powerful word in Cuba from many years ago. Perhaps it will be a powerful word in a positive way in the many years ahead.
In October of 2013, the Havana Journal posted an article featuring 100 Questions and Answers about the Special Development Zone.
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