Cuba: Green light for first foreign capital investment in retail and wholesale trade
- German Trade and Investment Promotion Office in Cuba
- Project Specialist
The Cuban Ministry of Internal Trade (Mincin) has approved the creation of the Gran Ferretero S.A. joint venture. It is the first company with foreign capital to emerge as a result of the change in policy for foreign investment in wholesale and retail trade, according to official Cuban media.
The new company plans a large store for the sale of domestic and industrial items, and construction materials of all kinds. Operations are expected to begin in the first quarter of 2023, according to the newspaper Granma. The items will be marketed both wholesale and retail to the various players in the Cuban economy.
The new mixed company is the result of an international business partnership between the pure Cuban trading company Albus S.A. and a Spanish company, whose name remains unnamed in the report.
Raúl Delgado Rodríguez, technical and development director of OSDE Grupo Comercializador de Productos Industriales y de Servicios, a group of companies responsible for the marketing of industrial products and services, assured the media that in the project "the integration of national production is foreseen, in this case, for example, aluminum profiles, cable manufacturing and sanitary fittings." For this purpose, offers from state and non-state economic actors would be examined. "The foreign side has agreed to the inclusion of national production, as this also brings benefits and reduces the cost of transporting goods," he said.
Gran Ferretero's facilities will be located at Fábrica 12 in the municipality of La Habana Vieja. The investment process to renovate the warehouses is underway.
In addition, Granma reports that Albus S.A. has partnered with Italian company Farmaventa to operate a new e-commerce platform for the online sale of food, toiletries and other products. The joint venture will operate under the name Faibus.
Delgado Rodríguez clarified that these companies, operating with foreign capital, will conduct their business, including sales, in freely convertible currency (MLC) until equilibrium is reached in the Cuban foreign exchange market. According to him, the revenues generated by the Cuban side from the operation of these establishments would be used to replenish the domestic market in Cuban pesos and improve the supply of goods to the population.
Until recently, wholesale and retail trade on the island was prohibited for foreign investment of all its varieties; however, this policy has been made more flexible with the aim of improving the supply of goods in the Cuban market. Foreign companies are expected to invest in Cuban domestic trade. In August, the Cuban government expanded the scope of foreign investment in trade to improve supplies to the population. Cuba is counting on foreign investment to reactivate trade. In retail, for example, the way has been paved for joint ventures with foreign partners. In wholesale, international business associations and companies with 100 percent foreign capital are possible, in addition to joint ventures.
Since the approval, contacts have been made with businessmen from several countries, including the United Arab Emirates, Vietnam, Russia, India, Italy, Uruguay, Argentina, Chile and Mexico, according to the report. Among the proposals already in the works is the establishment of a wholesale center with a network of retail stores that will provide a stable supply of fabrics, haberdashery and accessories, among other things. There are also plans to promote a storage and distribution center for food products that need to be preserved or frozen, with logistics adapted to the characteristics of each product, without interrupting the cold chain.