Accept the functions of small and midsized businesses

HAVANA — On Saturday (Aug. 5), Cuba’s Official Gazette published the first of the measures announced by President Raúl Castro to delve deeper into the control and organization of private enterprise on the island.

The most diverse opinions have been offered in the past week, most of them focusing on the fact that the move is a step backward, although the functionaries who have made statements and the state media insist on saying the opposite.

Beyond the question of whether the steps go forward or backward, the impact of the resolution issued by the Ministry of Labor and Social Security on the population — especially among the so-called “cuentapropistas” [self-employed entrepreneurs] — increases the perception of insecurity upon viewing the future and the fear for the personal investments of time, efforts and money.

Citing ‘deviations,’ Cuba stops issuing licenses to some self-employed workers

This feeling of uncertainty is also justified by the lack of clarity in the information put forth. Also by the awareness of the little faith of numerous public functionaries in accepting the private sector and the scant evidence of political support for the development of the small and midsized businesses in Cuba given by the authorities, beyond the speeches of the Cuban President.

With the new regulations, the authorities have paralyzed the granting of a group of licenses for private work. Among other modifications, they propose to unify a group of similar activities and eliminate others outright.

Omar Everleny, who holds a Doctor’s degree in Economic Sciences, points to the scant economic impact of the aforementioned resolution, given that “the pace of new, approved businesses was paralyzed, but they were not producing economic results at that time. Speaking as an academician and with some rigor, what has happened is that the State halted the new licenses but didn’t shut down the existing activities; in other words, there is no significant economic impact.”

“I do believe that the process should have followed its normal rate of approval,” he continues, “while simultaneously drafting, discussing and approving new norms or procedures, with an implementation deadline of one or two months. Meanwhile, those that were in the pipeline would be approved. Once the obligations change, all the existing entities and those in formation should comply with them.

“This does not mean, as I see it, that the process will be a years-long affair, if people work with common sense and moderation. The process should end later this year and be enforced in January of 2018. This is only an example of what I would do, because I don’t think that so much time is necessary to approve a document of this kind.”

The specialist also coincides with our opinion survey about the political background for this process.

“There was evidence at the latest Party Congress that the State won’t allow the concentration of wealth, although it wasn’t clear — in real terms — how this can be measured,” he said. “To know that one is incurring in concentration [of wealth] or in enrichment, people need to know the limits they may reach. This issue should not remain at the level of subjective decisions or personal beliefs.”

On the other hand, Everleny insists on the need “to look at China and Vietnam, countries that have not spent time investigating people who are wealthy or increase their wealth. They should look at what they can do, so that all society may participate in the growing well-being, which leads to the well-being of the nation in general.”

What’s your opinion about the activities that were temporarily suspended? 

“They were the activities that were obtaining the greatest economic results, among them food and lodging, and others that involved productive supplies. Because the State had trouble providing these supplies in a legal manner, the black market prevailed.

“And that’s logical. If activities are approved and no wholesale supply markets are created, the producers look for suppliers without worrying about the legality of their purchases.

“Economy is a science where everything is linked. If the number of tourists to Cuba increases, it’s logical to think that those activities that serve them should be expanded: private restaurants, vintage cars, rented homes, etc. I could mention other examples.

“As I have also explained, the State should make a list of the rejected activities, not approve every activity and make huge lists. The idea is to clarify what may be disallowed, and leave to the initiative of the entrepreneurs what activity they would like to perform, paying taxes for the income declared.

“In addition, activities should be created that reflect the educational level of the Cuban population, so that an architect who quits the State sector and becomes a waiter or moves abroad doesn’t have to resort to that. That’s also the case with accountants, lawyers, engineers and so on.”

What is the effect of indefinite temporality? 

“Although the Deputy Minister [of Labor and Social Security, Marta Elena Feitó Cabrera] was somewhat evasive in her initial intervention, in later statements she has been a bit more precise by saying that we’re not talking about years.

“I thought that the population welcomed the clarifications made recently on several programs by a commentator of the National Newscast of Cuban Television, in which he said he hoped that the Cuban authorities would take only months to do the necessary documentation to restart this process.

“If Cuba wishes to welcome growing numbers of tourists in the next several years, to greet more than 4.5 million visitors in 2017 and continue like that in the future, it will have to allow new food businesses, because the State infrastructure is weak in that sense, with a quality far exceeded by that of private businesses. The same applies to other activities, such as lodging and transport.

“Besides, we must stop using euphemisms and acknowledge that a person who hires manual labor is not a self-employed worker but a micro-entrepreneur or an entrepreneur. For that reason, the activity he directs is a legal entity and should have the same rules of operation as a business with those characteristics anywhere else in the world.

“The small and midsized businesses have already been recognized in the conceptualization of the model. What remains is to accept their functions.”