Havanna. Two months after the Eighth Congress of the Communist Party (PCC), the reform plans are updated released been. Like Economy Minister Alejandro Gil explained, the government is currently working out the new laws for the various economic actors. The set of rules for small and medium-sized enterprises (SMEs) should come into force by September.
In the second half of this year, Cuba wants to put key aspects of the new economic strategy announced in 2020 into practice. The current crisis should be overcome with the accelerated implementation of the economic concepts of the socialist development model decided in 2017 (“Conceptualización del modelo economico y social cubano de desarrollo socialista”), Gil said at the time.
The party congress updated the model again in April, and the changes have now been published. The “Conceptualización” was brought in line with the new Cuban Constitution adopted in 2019 in other areas as well as updates on topics such as institutionalization and science policy. The “Guidelines for Economic and Social Policy” have also been updated for the period from 2021 to 2026 and now comprise 201 points. While resolutions that had already been implemented were dropped, there were innovations amongst other things in the areas of currency and credit policy, social systems, the private sector and digitization. The introduction of SMEs, on the other hand, had been planned in the development model since 2017.
“SMEs are already a reality in Cuba today, but without an appropriate framework,” Gil said during the announcement. There are quite a few private companies with more than a handful of employees. With the currency reform begun in January, the creation of almost the same framework conditions for all forms of property had become possible, which is why it was time “to assign each actor his place,” said the minister.
The rough outline of the new regulation is already known: Anyone who today has between one and ten employees in the private sector will be able to register their company as a micro-enterprise. A company with between eleven and 35 employees is considered a small business. Medium-sized companies have 36 to 100 employees. These figures could be adapted to practical requirements at any time.
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In the future, companies with up to 100 employees will be able to be set up as SMEs in both the state and the private sector. You work under the legal form of a “Sociedad de responsabilidad limitada” (SLR), which roughly corresponds to a German GmbH. This means that private entrepreneurs, who were previously not a legal entity as “workers on their own account”, can interact more easily with other actors and enjoy tax advantages. Without such a legal structure, only small businesses with fewer than ten employees and cooperatives will in future operate in the private sector. “The existence of these actors means advantages for today’s businesses, especially in the area of contracts, access to sources of finance and the separation of assets,” said Vice Minister for Economic Affairs Johana Odriozola
The public sector should benefit equally from the reform. It is part of a reorganization of all economic units in the country, which will result in a new company law next year. The aim is to help state-owned companies become more efficient and competitive by expanding their autonomy. The closer integration of all actors is intended to stimulate exports and replace imports. As a first step in the reform of state-owned companies, the previous restrictions on the payment of bonuses were lifted on January 1st.
In the future, parts of state-owned companies can be converted into a GmbH and thus receive maximum autonomy in management. Large state-owned companies thus have an additional instrument at their disposal to reposition individual divisions and branches. The rules for SMEs in the state and in the private sector should be identical, according to Gil. Corresponding candidates for conversion are already being identified in the various provinces. In the future, mixed SMEs between the state and the private sector are also conceivable. The integration of the private sector into the state economic plan is also being considered.
In the next two months, all the necessary laws are to be drawn up in coordination with other ministries. They should be fixed between mid-August and the beginning of September and the start-up phase can begin, says Gil. At the same time, work is being carried out on the implementation of a compact negative list for professions in the private sector, which will replace the previous listing of permitted activities. The establishment of new service and production cooperatives, so far only possible on an experimental basis, should also become a reality in the coming months.
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