Fund banks on Cuba

[Mika]

Fund banks on Cuba
http://www.miami.com/mld/miamiherald/news/world/cuba/16387035.htm
A Miami-based closed-end fund focusing on companies that
may eventually benefit from trade ties with Cuba produced
high returns, as investors bet change is coming soon to
the communist island.

Miami investment advisor Thomas J. Herzfeld created his closed-end fund for the day -- near or distant -- when political change opens Cuba to investment.

But it's doing just fine in the meantime.

Shares of the Herzfeld Caribbean Basin Fund, which trades on the Nasdaq index under the ticker CUBA, rose 124 percent in the past year, according to the Closed-End Fund Association. That makes the fund the No. 2 performer among 673 peers. Only the Greater China Fund fared better, with a 167 percent return, according to the trade group.

The small fund, which has assets of about $14 million, scouts for companies with ties to Florida and the Caribbean that will do well without a change in Cuba but will likely get a boost once the embargo ends.

''We have no interest in violating the embargo,'' says Herzfeld, chairman of the fund, which he launched in 1994. ``We needed to develop a strategy in the period in between when we raised the money and when the embargo is lifted.''

More at.. http://www.miami.com/mld/miamiherald/news/world/cuba/16387035.htm

[ngant17]

1. Don't get scammed on this fund

The Republic of Cuba has developed its own set of priorities for investments in the island and in the so-called Caribbean Basin.

Some of these investments are in the recycling business, selling bottled water from specific springs in Cuba, landscaping exports, and housing construction in adjacent islands such as the Caymens. And last but not least the deep-sea oil exploration in the Gulf of Mexico.

As for cruise ships, it is known that the Royal Caribbean cruise line has received million-dollar fines from the Coast Guard for dumping pollution and raw sewage into the Caribbean. I don't think this company will be very welcome to dock on or near the shores of Cuba for such reasons. Cuba is very sensitive to its environment. Also, the re-introduction of gambling casinos and prostitution will probably never happen as long as Cuba is a socialist republic. This has nothing to do with Castro. It's a moral and ethical policy that is part of its socialist culture.

There are specific people that you have to contact when dealing with Cuban investments by foreign companies. Herzfield isn't one of them.
He isn't any kind of insider and he has absolutey no pull to make things happen in Cuba.

[Judi Lynn]

2. Glad to know Cubans are organized concerning how they view their future.

The ONLY appropriate situation which should prevail when they lose their beloved leader is that they continue to hold onto that very precious independence of US domination for which they've worked so hard all these years.

[Vogon_Glory]

3. Cuba, Socialism, China, and Mao Tse-Tung Thought

No doubt those who proclaim that socialism is an integral part of the Cuban political patrimony will get to see if post-Castro Cuba adheres to Marxist-style socialism as well as the People's Republic of China has adhered to proper Mao Tse-tung thought instead of becoming capitalist-roaders.

[BayCityProgressive]

4. Cuba will remain

socialist. They have a system that is supported by the majority of Cubans and over the last few years their country has had a growing economy and found favor with many Latin American leaders. I don't think that will change any time soon.

[ngant17]

5. and as South America turns left

it would not be surprising to me in the near future we see Cuba surrounded by many other socialist or socialist-leaning countries in Latin America.

And with the US forces stuck in Iraq for the historical moment, it doesn't appear likely that they can muster enough soldiers for a regime-change in Latin America(i.e., invasion and installation of a puppet dictatorship more favorable to state-monopoly capitalism).

Wall Street and this rightwing fund (which I predict will go nowhere with a socialist Cuba), they will just have go elsewhere and find some impoverished and defenseless country to invade and exploit.

[Vogon_Glory]

6. I've Heard The Same Sing-Song Played To A Soviet Melody

Yeah, suuuuuure. I remember hearing the same sing-song played by starry-eyed admirers of the old Soviet Union. When I opined that the Soviets were going to be economically surpassed by the Chinese, the oh-so-wise pro-Soviet looked at me condescendingly and told me that I didn't know what I was talking about.

Well, we saw what happened under Gorbachev and Yeltsin. These days the Russian Federation risks becoming a neo-colony of the surging Chinese economy.

I suspect that you, other dialectical materialists, Ptolemaicists, and Flat-Earthers are going to find yourselves equally disappointed by what will happen in post-Castro Cuba. Whatever power structure might be in place now, Marxist-style socialism has discredited itself on the island, and Cuba's economy will develop a larger, healthier private sector, howbeit one with closer and stronger ties to the EU than the US.

[robcon]

7. Agreed, Vogonglory. The U.S. embargo has screwed it up

That misguided embargo will haunt our relations with the capitalist Cuba, IMO.

[Vogon_Glory]

14. Thanks To The Embargo, Cuba Won't Be A US Neo-Colony

Thanks to the US embargo, I doubt that Cuba will become a US neo-colony after Fidel's Marxist socialist policy goes. While I suspect that those of the Cuban exile community who make their peace with the Cuban revolution will be allowed to return and a few might even get some of their properties back, I suspect that post-Castro Cuba will be more oriented towards Brussels and Berlin rather than Wall Street. The hard-liners in Miami will find themselves frozen out, and it will be because of their actions.

I shouldn't be too surprised if some of the massive Cuban debt owed to Russia is parlayed by the Russian oligarchy into resort and bio-tech development.

[ngant17]

19. Cuba policy on housing

is such that if the current occupant abandons it for any reason, such as leaving to the US), it immediately reverts back to possession by the government who makes the final decision on who the next person will occupy it.

If any Cuban-American exile wants to return to Cuba, they can't jump ahead of the line looking for housing in Cuba. They will have to rent a place or stay with relatives. There is no way an immigrant or exile returning to Cuba will get preferential treatment for housing. Doesn't matter how rich he or she was in the US. They have to wait in line like everyone else.

Beside, if it they bring any money into Cuba, they have to convert it into CUCs, and also it is illegal to leave Cuba with more than $200 CUCs, the rest will be confiscated by aduana at the airport it it has not be converted back into a foreign currency before exiting the country.

I am not aware that Cuba owes Russia any money.

[Mika]

20. For Cubans in Cuba the rent for living qtrs is capped at 10% of income.

Plus, in Cuba, if someone loses their job they still receive their full pay - so they can still pay rent and take care of their needs - as well as receive, at no cost, training for another occupation.

[Vogon_Glory]

21. The Debt From Uncle Leonid's Soviet Union

<<I am not aware that Cuba owes Russia any money.>>


Cuba owes the Russian Federation somewhere around $35 billion US dollars from the Cold War period and Soviet loans. I believe that that debt is still outstanding, and that neither Vladimir Putin nor his successors are going to forgive Cuba's debt to the Russian Federation at the behest of North American-based Fidel Castro-admirers.

<<Beside, if it they bring any money into Cuba, they have to convert it into CUCs, and also it is illegal to leave Cuba with more than $200 CUCs, the rest will be confiscated by aduana at the airport it it has not be converted back into a foreign currency before exiting the country.>>

And Cuba is going to continue to keep the same political and economic structure that it has had since 1968, eh? I don't think that the Fidelistas get it--even those of us who wish Cuba well have had to face the sad fact that Cuba just isn't that economically important either in the world scene or even in the Caribbean; without Cuba making itself an attractive place to invest capital, prosperity will continue to pass Cuba by, just as it has been doing since the 1960's. That means that a lot of the laws that you and your playmates have been touting are likely to be modified or repealed, or Cuba will remain as the OTHER poorhouse of the Antilles.

Enjoy the next decade, kiddo, you'll find it very entertaining, if not necessarily pleasing.

:evilgrin:

[ngant17]

22. Cuba's debt to Russia is debatable

http://www.caribbeannetnews.com/cgi-script/csArticles/articles/000034/003448.htm
dated Sept. 2006.

"...Russia says Cuba still owes it some $20 billion from the Cold War days when Soviet trade and subsidies to Cuba topped $10 billion per year. However, the diplomat said, "The old debt is not on the table," for the current visit.

Cuba says currencies of the former Soviet bloc no longer exist and those nations unilaterally ended agreements under which the credits were granted.

The dispute raged throughout the 1990s into the first few years of this century as trade dropped to just $200 million by 2005.

"We are negotiating payment of the $160 million debt to the government that Cuba has accumulated since 1993 and that's all," the diplomat said, "along with fresh credit guarantees."

The amount of Cuba's debt to private Russian creditors was not clear."

[ngant17]

9. your projections of a future in Cuba are highly speculative

For Cuba to return to capitalism after Castro, it would require the dismantling of the Cuban constitution, which has socialism embedded into it.

There isn't anyway a counter-revolution like that could happen in Cuba, all the anti-communist gusanos left a long time ago and live in the US, primarily S. Florida. These aging exiles are waiting for the good ole days of Cuba, but those days are buried and gone forever. Just like they are going to be gone and buried soon.

Now instead of whining about "In Cuba, Castro had my father shot", it's "In Cuba, Castro had my grandfather shot" or "Castro had my great-grandfather shot". It gets kind of boring and pathetic to hear of this. I hear it often enough in Florida. Hey, no one cares anymore. Those are old wounds. You have to let it go sometime. Besides, there was likely a very good reason your dear old Cuban grand-daddy was put against the paredon in Havana and shot. And it wasn't because he was jay-walking to the Malecon.

A 'flat earther' is someone who actually believes that Cuba will change substantially by going capitalist after Castro departs from the scene. Such people are commonly found in S. Florida. I mean, how do you dismantle the Cuban Communist Party? By a decree from Miami? By a CIA-sponsored invasion? It's already been done before and it hasn't worked.

Cuba isn't the Soviet Union. It's part of Latin America which BTW is inclining toward socialist-leaning philosophies these days.

[robcon]

11. Of course the constituion will go.

The constitution is Fidel, and Fidel is the constitution.

They made the personality cult for 47 years. They'll pay for it like Ceaucescu, IMO. The current constitution won't survive 2 years after Fidel, IMO.

ngant17 "I mean, how do you dismantle the Cuban Communist Party? By a decree from Miami? By a CIA-sponsored invasion? It's already been done before and it hasn't worked."

You don't dismantle it. You just allow people to organize any way they want to, and see what's left of the party apparatus. Cf: Eastern Europe.

[ngant17]

12. the National Assembly in Cuba

"You don't dismantle it. You just allow people to organize any way they want to, and see what's left of the party apparatus."

But it seems like it never ends, the old slanders and distortions and outright lies against the Cuban political system.

FYI the Cuban people have long since organized for themselves a truly democratic political system, it's called the National Assembly of People's Power. This electoral process includes the nomination process as well as the actual elections which take place at all levels and there is always accountability to the citizens. BTW it is illegal to accept campaign donations in Cuba, and for your election has to be done on your own free time. It is far superior to the corrupt US election process. And all votes are hand counted.

There has never been a personality cult of Fidel. Period.

I am disappointed to run into people who champion the right of Cuba to exist as an independent nation, who don’t want Cuba to become a neo-colony under Bush’s imperio-fascist empire, but they are under the impression that there is not any kind of working democracy in Cuba. So once Fidel is gone, the whole process can begin. It's a shame that people are so confused or misinformed about this issue.

Canadian Arnold August traveled to Cuba a few years ago and studied this question of democracy in Cuba in detail. Before anyone slanders the Cuban people and their democracy anymore, I recommend you begin to educate yourself on Cuban democracy with his book, "Democracy In Cuba and the 1997-98 Elections". Amazon should have it. It is currently being published by Editorial Jose Marti, ISBN: 0-9685084-0-5, with a $24.95 list price.

[Mika]

13. Cuba has three levels of parliamentary process..

http://www.poptel.org.uk/cuba-solidarity/democracy.htm

This system in Cuba is based upon universal adult suffrage for all those aged 16 and over. Nobody is excluded from voting, except convicted criminals or those who have left the country. Voter turnouts have usually been in the region of 95% of those eligible .

There are direct elections to municipal, provincial and national assemblies, the latter represent Cuba's parliament.

Electoral candidates are not chosen by small committees of political parties. No political party, including the Communist Party, is permitted to nominate or campaign for any given candidates.

BTW, I was in Cuba during the entire 97-98 election season. I saw the process from candidate selections, campaigning, nominations, elections, to the paper ballot counting on the day of the elections.

A much more open process than most any election I've seen in Miami.

[robcon]

16. I think that you're more than mistaken, ngant17.

It would take a true believer, and a fact-ignorer, to say "the Cuban people have long since organized for themselves a truly democratic political system, it's called the National Assembly of People's Power."

This "truly democratic political system" elected 660 people without opposition - no one was allowed to be on the ballot except those whom the communist party cells nominated. Cuba under Castro is a notorious one-party state, like Syria under Assad and now his son, Chile under Pinochet, Zimbabwe under Mugabe, etc.

[ngant17]

17. I assume you are voicing an opinion

based on the typical rightwing progaganda against Cuba.

I can refer you to a serious of lectures by Arnold August in RealAudio format, pertaining to democracy in Cuba and the book I mentioned in previous post, but I suspect you've already made up your mind about the issue.

To be nominated as a candidate in Cuba, it is not a decision by "communist party cells" (unless you are confusing ordinary workers as a member of such groups). Rather, it is my understanding that he or she must be nominated by a number of his or her fellow Cuban citizens, the ones who live in the same neighborhood where he or she wishes to campaign. If some of those neighbors are affiliated with the CDRs or the local party "cells", that is simply coincidental to the nomination process itself. I repeat, you do not have to be a member of the PCC to nominate a candidate in Cuba.

[Vogon_Glory]

15. Post-Castro Cuba And The Currents of History

<<For Cuba to return to capitalism after Castro, it would require the dismantling of the Cuban constitution, which has socialism embedded into it.

There isn't anyway a counter-revolution like that could happen in Cuba, all the anti-communist gusanos left a long time ago and live in the US, primarily S. Florida. These aging exiles are waiting for the good ole days of Cuba, but those days are buried and gone forever. Just like they are going to be gone and buried soon.>>

I suspect that history's against you. The Russian Federation privatized hundreds of state-owned properties after 1991. The Russian Federation hardly had anything like the Miami exiles cheering them on, either. Most of the old Tsarists and Kerensky supporters had died of old age decades before Boris Yeltsin stopped the Communist-supported takeover of the Kremlin in its tracks.

I suspect that the Fidelistas are just going to have to live with the fact that post-Castro Cuba is going to go through at least some of the same market reforms China and the Democratic Republic of Vietnam went through.

I hope that on the other side of the age of Fidel, Cuba will prosper and avoid the corruption and the massive inequalities it suffered through from Independence to the second fall of Batista.

[ngant17]

18. Cuba isn't the Soviet Union or Russia

so if you want to predict history based on past events, and there is nothing wrong with that, but to predict events in this way, you need a different model for reference. Cuba isn't Russia or China.

I don't think the large tracts of property in Cuba can or will ever be privatized again. For one thing, it's an island, land is limited to begin with, you just can't do things like that as they did on the scale of Russia after the end of the Soviet Union. Maybe if Cuba was the size of Australia it could be possible to privatize some lands out in the boondocks somewhere.

"Market reforms" have already been done elsewhere in Latin America. NAFTA and all the free-trade deals, they are a bad word over there. The workers get shafted everytime. It simply won't happen in Cuba. The Cuban people have socialism and that isn't going to be negotiable under any circumstance.

[Vidar]

8. Here's hoping many gusamos & Wall Street fatcats lose their

shirts on this venture.

[ngant17]

10. Foreign investing in Cuba

FYI, here is a recent and legitimate source for investing in Cuba, from my friend Oscar who works in the Havana office of Foreign Investments which is near the Univ. of Havana and Vedado area. Additional info can be supplied on request:
--------------------------------------------------------------------
BUSINESS IN CUBA-LEVELS OF APPROVAL

The basic structures for business of foreign enterprises in Cuba are classified in six, with different procedures according with the sector of the economy to which the business is directed and to the priorities of the Government related to the development of the sectors interested. These structures are as follows :

1 – Commercial export / import entities.
2 - Schemes of cooperated production.
3 - Administration contracts.
4 - International economical associations ( Namely : Joint Ventures ) ( J.V. )
with mixed capital ( Cuban and foreign ) .
5 - Business with 100% foreign capital.
6 - Commercial or productive entities established in Free Zones.

In general, the spectrum of activities and / or participation related to the different modalities is the following :

As to No. 1 : The entities involved, once obtained the license from the Chamber of Commerce of the Republic of Cuba, act within the profiles considered in the license, allowing the possibility to open office branches in the country, contract personnel for the administrative and technical work, have access to all the legal and banking infrastructure of the State, permitting the expatriation, partial or total, of the incomes from the resulting activities, through the banking system of the country where operative accounts can be fixed. The steps for the establishment of the entities, that can be either import dealers or export dealers, or both, requires the approval of the Chamber of Commerce of the Republic of Cuba, subject to the application presented to same.

As to No. 2 : These cooperation schemes are effected both for productions directed to the internal market in currency and for exportation. The foreign partner supplies the technology, raw material and materials and the technical-administrative supervision as well as the control of the quality of the production. The income of the foreign part is obtained through a percentage increase on the prices of his supplies, promotion and sale in the internal and external markets, or simply by paying the manufacturing costs to the Cuban side and selling directly the production obtained. This type of business can also be settled on Free Zones with the advantage that all the materials and products imported enter the country free of taxes. The level of approval for these businesses corresponds to the Ministry of the economic branch to which they are related. In the case of using the free zone, also participates the Ministry for the Foreign Investments and Collaboration ( MINVEC ) which is the State organism that leads the policy of development of the Free Zones and Industrial Parks of the country .

As to No. 3 : These are applied to businesses where it is required the administrative action of international entities of well known prestige and economical success in the sector in which they are involved. In this modality the Cuban side renders a determined objective which is completely administrated by the foreign partner. The percentage share on the incomes depends on the agreements reached between the parties. This modality is used mainly in the branches of tourism and biotechnology requiring a strong promotion and commercialization of global level made by world known enterprises. Even though for the tourism the level of approval depends on the Ministry of Tourism ( MINTUR ). In other branches, such as the strategical biotechnology, the approval can reach the Council of State, being the application and channeling of same through MINVEC.

As to No. 4 : The International Economical Associations are settled to give answer to the commercialization of the most important natural resources of the country which not only require important capitals for investment or modernization of the existing facilities, but also a strong promotion and sale of raw materials, sub-products or finished products. In the practice, there are two basic variants for these associations, according with the percentage of the distribution of the incomes as result of the sales of the goods involved, which can be equal for both parties, or in majority for the foreign partner. The J.V. requires of the approval of MINVEC and in very specific cases, such as the energetic branch, it is needed the authorization of the Council of State, carried through the MINVEC .

As to No. 5 -This modality is only approved for top priority sectors that require strong investments and advanced technologies. So far, it has only being applied on the branches of the basic industry, and within this, regarding the electric generation and oil prospection at risk of the investor . In this modality, the foreign partner covers l00% of the required investment, as well as the exploitation and maintenance. The State grants to him the ownership of 100% of incomes during approx. 50% of the utility life period of the investment. In the case of the electricity generation, the Cuban State pays the service of the electricity generated during the agreed period of time. The approval is at the level of the Council of State, carried through the MINVEC.

As to No. 6 - According with the Law for the Free Zones and Industrial Parks, the Cuban State renders through the proper applications of the entities involved, the possibility of operation in frontier, with all the prerogatives that the exception of taxes on the imports and exports of the goods produced under this modality involve. In the case of the commercial firms, they effect the commercial transactions without the supervision of the control organisms of the State. Both the entities producing goods and the importers and distributors have the status of Free Zone Operators rendered by the mentioned law. All the legalization activities of the entities requesting to be established in the Free Zone are conducted by the Administration Offices of the Free Zones, belonging to MINVEC.


The permissions and licenses that offer the different levels of the State to the foreign entities interested in the modalities shown above, vary in the period of validity depending on the magnitude, financial characteristics and strategical importance of the business requested. The period of time ( always renewable consecutively by no less than one third of the initial concession ) vary for the different modalities and it covers between 10 to 50 years. If the foreign partner wishes, can withdraw from the business or transfer his share to other entity, previous communication to the Cuban side as established by the current law.




SUMMARY

In general, the approvals of licenses for the settlement of foreign firms as commercializers, participants in schemes of cooperated productions, administrators of economic objectives, investors, operators and concessionaries of Free Zones, and participants in international economical associations, are approved within a lapse of time of between 45 and 90 days counting from the date of presentation of the application, including the required documentation according with the different modalities above mentioned.

These applications presented to the Chamber of Commerce, MINVEC, or the Business Office of the Ministry that rules the economic branch involved, should be accompanied with a translation into Spanish of the Constitution Act ( Deed ) of the applicant firm, duly certified by an international homologated entity, and warranted by signature and seal of the Consulate of the Cuban Diplomatic Representation in the country of registration. Considering the absence of a Diplomatic Representation in the country, the Constitution Act should be approved by the Cuban Consulate having jurisdiction in the geographic area where the soliciting firm is based.



ECONOMIC PRODUCTIVE SECTORS OF INTEREST TO THE STATE FOR THE
FOREIGN INVESTMENT.


Due to the privileged geographical position of Cuba, its natural resources, administrative and social-political system and high educational level of its inhabitants, is bound to play a very outstanding roll in the area as the biggest sister of the rest of the Antilles, in which the economical integration is each time more necessary as the only way to adequate the common interests of these islandx. During the last years, the Cuban State has developed a policy of integration that ends with the joining of Cuba to the CARICOM.

Among the sectors that this country is interested in developing through any of the forms of foreign investment, are the following :

1 – Tourism .
Construction of hotels and touristic objectives of different categories
Development of areas and installments regarding the Nature tourism (Ecological ), for which this country has exceptional conditions. Cuba owns 18 national parks and ecological reserves including 3 that has been declared by UNESCO, Natural Heritage of The Humanity.
Establishment of companies for the service to he touristic industry, mainly to render integral maintenance and environmental cleaning.
Establishment of companies operating light aircrafts for the interconnection between the reception airports and the touristic resorts and sites of principal interest. ( Commuter Lines ).
Conformation of agricultural associations for the production of high quality goods for the touristic infrastructure, exportation and internal demand.
Settlement of enterprises for the construction of synthetic fiber vessels (boats) for the touristic use .
Establishment of international lines of fast ferries both for passengers and cargoes. This service, practically non-existing actually, has a great demand due to the growth of the modality of the multi-destiny tourism in the area, and the service of transportation of merchandises that due to its characteristics require a fast handling .


2 - Basic Industry .

Constitution of entities for the generation of electricity using alternative methods ( mainly natural gas, solar and wind power energy ).
Establishment of economical associations for the industrial exploitation of beds of silex sand ( related to the production of high technology electronic components ).
Development of investments at risk related to the off-shore oil
prospection.

3- Real Estate

Construction of apartments buildings of different levels for sales and rent.
Construction Associations having point technology for the erection of all types of civil objectives .

4 - Other possibilities .

Constitution of economic associations for the production of ships,
mainly, of medium and small size, including barges of different
capacities and auxiliary boats.
Establishment of an association for the recycling of urban waste and left-overs of all kind for their use in the production of various articles and goods. Cuba, due to its geographical position can easily be the center for processing the urban wastes of the near-by islands, duly classified and separated as most of them are in lack of procedures and conditions to solve this problem, thus in help of the environmental cleaning .


Elaborated by Lic. Oscar Díaz Muñoz 01 / 30 / 2004