Cuba Journal

Investing in Cuba’s ZED Mariel

The Cuban government developed a port and special economic development zone in Mariel called ZED Mariel (Zona Especial de Desarrolo).

Source: ZedMariel.com

ZED Mariel was built in partnership with the Brazilian government and the Brazilian construction company Odebrecht for roughly $900 million. Established on November 1, 2013, the zone’s aim is to create a modern, multimodal trading hub for trade between Cuba, the Caribbean, and the US.

The Port of Mariel is currently managed by PSA International, a Singaporean port operator. CMA CGM, a French shipping company, also formed a joint venture with the Cuban state company Almacenes Universales SA to operate a logistics platform at the Port of Mariel. The operation includes 10,000 square meters of warehouses and 5,000 cubic meters of refrigerated warehouses.

ZED Mariel is expected to boost development by attracting foreign investment in high-tech industries, generating new exports, increasing employment, and encouraging domestic production of goods that are currently imported.b It is divided into 11 zones, each dedicated to a specific industrial or logistical activity, including high technology, agro-food, and logistics. Areas of desired investment include biotechnology, renewable energy, agro-food, and telecommunications.

Twenty of the 326 investment proposals outlined in Cuba’s Portfolio of Opportunities document are specifically proposed for ZED Mariel.

Investment Concessions

Firms that establish within ZED Mariel (when compared to firms outside the area) will face lower taxes, fewer restrictions on hiring labor, and foreign investment protection. ZED Mariel will also offer modern utility infrastructure; a 10-year tax holiday on profits, with the possibility of extension; and no Cuban customs duties on imports of equipment and goods for the project.

Source: ZedMariel.com

To establish a firm in ZED Mariel, investors must provide a comprehensive due diligence report detailing their firms’ mission and objectives, feasibility conditions, expected demands on infrastructure and human capital needs, and market research reports proving the firms’ ability to succeed.

While ZED Mariel users are authorized to process raw materials into intermediate and finished goods, the zone is not intended to become a manufacturing center. And although regulations in ZED Mariel are not as restrictive as in the rest of Cuba, firms must abide by investment laws that have a tight investment schedule, maintain strict records of their activities, present an annual report, and pay dues (0.5 percent of quarterly gross income) to the Projects Zone Development Fund.

The Cuban government determines if a prospective project is viable in a review process reportedly takes approximately 65 days. As of January 2016, nine projects had been approved to operate in Mariel. Richmeat de México, a fully foreign-owned firm, was among the first foreign firms allowed to invest in Mariel, and their facilities will include a meat processing and packaging operation.

Cleber, LLC, an Alabama-based tractor company, is the first known U.S. firm to be approved for operation in Mariel; Cleber received approval from U.S. authorities in February 2016.

Unilever

Unilever Plc will return to Cuba after several years of dispute over joint venture terms.

The joint venture will build a $35 million soap and toothpaste factory at ZED Mariel.

The Dutch-British company left Cuba in 2012 in a dispute over controlling interest in their joint venture. Unilever NV will have a 60% stake compared to 40% for the Cuban state company, Intersuchel S.A.

Cuba’s policy has been to hold a majority stake in joint ventures with foreign companies, but the island nation has become more flexible since opening the ZED Mariel two years ago. It is uncertain whether the joint venture will be required to employ workers exclusively through the Cuban government’s employment agency. Cubans can only be hired via a state employment agency approved by the Ministry of Labour and Social Security that pays locals in a devalued local currency (Cuba peso) while employers pay the agency a much higher rate in Cuba’s convertible currency (CUC).

The factory, due to open by 2018, will make products such as Sedal®, Rexona®, OMO®, LUX® and Close-UP® toothpaste, the company said in statement.

Source: ZedMariel.com, US government

Investing in Cuba’s ZED Mariel was last modified: July 10th, 2016 by