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 Cuba’s Mariel Port Special Development Zone.
The Dutch-British company left Cuba in 2012 in a dispute over controlling interest in their joint venture. Unilever NV will have a 60 percent stake compared to 40 percent 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 Mariel Special Development Zone 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.
The company was one of the first to establish a venture in Cuba once Communist authorities allowed some Western investment in the 1990s after the fall of the Soviet Union.
Dutch Minister for Foreign Trade and Development Cooperation Lilianne Ploumen said,that “Cuba expressed the need for foreign companies wishing to invest and input new knowledge and technology.” Ploumen also said Dutch companies “should also be able to get started in agricultural and agri-logistics deals.”
Cuba’s Foreign Investment Law
Features of Cuba’s new foreign investment law (Foreign Investment Act 118) include tax cuts, investor protection, and arbitration. Here are the main features of the law:
· The law sets out three vehicles for making investment in Cuba — commercial contracts with Cuban entities, joint ventures with Cuban partners or 100% foreign-owned companies;
· Dispute resolution with ultimate appeal to the arbitration tribunals of the International Chamber of Commerce in Paris;
· Clear conditions under which Cuba could expropriate foreign-owned assets – Cuba has multilateral treaties with 71 countries except with the US (this is a major concern with US claims still unresolved);
· No taxes for the first eight years – 15% profit tax on most entities thereafter;
· Mariel special trade zone will provide investors with even better tax breaks and other benefits than those under the new investment law;