Cuba’s economic transition is creating a lot of interest from suppliers and exporters eager to capitalize on a recently opened society.
The island nation’s large modernization needs in infrastructure, stagnating investment rates, low agricultural output, a lack of internal supply in consumer segments and a booming tourism industry create a wide variety of export opportunities in virtually all sectors of the economy.
Cuba’s economy remains largely state-controlled, so only dedicated import firms can import from outside Cuba.
The import regime can be described by the following:
- Only public entities can import and companies need to be licensed by the Ministry of External Trade and Foreign Investment (MINCEX).
- Sales involve an elaborate administrative procedure, similar to public sales in other countries. Before bidding in a public tender for a sales contract, products and suppliers need to be registered in a product and suppliers’ registry (nomenclatura).
- Ultimately, sales volumes, the selection of products/suppliers and payments depend on the availability of annually fluctuating hard-currency reserves and their allocation according to a complex administrative process in which some sectors are privileged.
One main characteristic of Cuba’s economy is a state monopoly on all import operations. As a result, your business partner has to be a public entity, either in the form of a fully state owned enterprise (empresas estatales, SOE) or a joint venture (empresas mixtas) between a Cuban SOE and a foreign company. Joint venture firms, usually present in strategic sectors such as nickel mining, oil and tourism, tend to have a greater degree of autonomy in purchasing their own supplies in a direct and autonomous fashion.
Import operations are centralized for each productive sector under the authority of the ministry responsible for this sector. Under each ministry, one or several import firms (empresas importadoras) centralize purchasing operations. These are the only counterparts mandated to sign contracts and will be the Cuban counterpart liable to contractual obligations. Each sector or product segment has at least one import firm to purchase supplies.
The capacity of each Cuban company to purchase from foreign suppliers depends on the country’s annual foreign exchange earnings and the country’s allocation process. Each year, a committee formed by the Cuban Central Bank and the Ministry of the Economy and Planning (Ministerio de Economía y Planificación, MEP) endows each ministry and government entity with an annual allocation of foreign exchange to pay for imports.
Within each sector, the responsible ministry assigns their allocation to import firms and state-owned enterprises according to government priorities and sector needs. Ultimately, all potential Cuban business partners need to be considered in this process to be effectively able to process and pay for imports.
Product Registration with Cuba’s Registry of Suppliers (Cartera de Proveedores y Clientes)
Before entering a purchasing agreement with a Cuban firm, your company and product need to be registered in the Registry of Suppliers of the relevant import firm. For this, your business is expected to present the following documents:
- Certificate of incorporation;
- Certificate of the company’s entry in the commercial register (chamber of commerce);
- Bank guarantee;
- A document, certified by the Cuban embassy, which authorities travel for representatives of your company to sign contracts on the company’s behalf;
- Sometimes certain documents need to be translated and certified by the Cuban Embassy;
- Some import firms might require additional documentation including certificates of the existence of a valid bank account, used currency, etc.;
- For animal or vegetable products, additional documentation may be required.
Upon registration, a Cuban firm can contact your company to participate in a tender for a public sales contract. Registration is valid for three years – renewal is necessary thereafter. Some importers operate on the basis of an ‘open nomenclatura’ giving them exceptional flexibility to choose a supplier.
According to existing regulations, import firms need to base their purchasing decision on a comparison of three offers from at least three suppliers. The buyers set of criteria include price of the product, shipping costs, insurance, payment terms, packaging, and others. However, the most important variable for Cuban business partners is financing.
Being able to offer flexible payment facilities is usually what makes the difference in purchasing decisions. For example, a recent sale of rice from Vietnam to Cuba was made possible by two-year payment terms offered by the Vietnamese.