Cuba reduces obstacles in its business system
HAVANA – Special Issue 40 of the Official Gazette on Friday published Resolutions 641 and 471 of the ministries of Economy & Planning and Finances & Prices, which will allow several business companies to use, on an experimental basis, a new concept of State Assignment.
This means that the directors-general of a group of companies involved in the experiment are authorized, once the contracts have been fulfilled, to sell, at wholesale prices, to legal persons, the surplus of selected productions and authorized service, bearing in mind the demands of the market, covering all the costs, expenses and taxes, according to the daily Granma.
The experiment constitutes a preview of what will be applied gradually in the country’s business system starting on January 2014.
About 20 companies have been incorporated into this initiative, some of them as important as the José Martí Steel Mill (Antillana de Acero), which produces bars of corrugated steel, and the cement factories in Artemisa and Sancti Spiritus.
The surpluses to be sold may have been created by cancellation of contracts due to the client’s noncompliance, increases of production due to greater productive efficiency than expected, as well all any other licit source that may have generated them.
The wholesale prices will be established according to the correlation between offer and demand, in either of the two currencies (CUP or CUC), and discounts may be given because of quality, conditions of delivery and commercialization, sale in large volume, or other commercial reasons.
As reported, the launching of this experience will allow the companies to increase their sales and revenues, which constitutes a source for their recapitalization and an increase in income for the workers.
Some directives of Plan 2014
Marino Murillo, head of the Commission on the Implementation and Development of the Guidelines to actualize the Cuban economic model, has stressed that the directives of the Plan for the Economy for next year include a call to liberate the productive forces of the business system. One of the most urgent and complex tasks, he said, is to start removing all obstacles before the business system so it may unleash its potential to the utmost.
For example, Plan 2014 provides that, if an organization has 200 million in liquidity capacity – the equivalent to the ability to engage in imports for that value – and needs something that a nearby producer is capable of doing, he can come to an agreement with him and pay him with that liquidity. Today, doing that requires permission, but next year it won’t be necessary. The philosophy is to encourage the producer to search for whoever has liquidity capacity.
To give the business system a chance to capitalize itself, beginning in 2014 the companies will not provide the amortization. They will be able to retain 50 percent of the revenues after the payment of taxes.
As is known, the inventories in Cuba’s economy are much higher than desirable and tend to grow even more despite the lack of liquidity in hard currency, that is why a law-decree will be imposed for the sale of idle or slow-moving inventories, which will be unfettered, with prices agreed upon by the seller and the buyer.
Another element to release the potential of state-run companies will be the flexibilization of the social objects. “It is not possible to develop a business system like ours if all the obstacles before the social objects of our companies are not flexibilized and removed,” Murillo has said.
Last July, Vice President Miguel Díaz-Canel declared that “now comes the most difficult stage” of the dynamics of actualization of the economic model. He was referring to the elimination of the currency and change dualities, the salaries-and-prices reform, and the task of “making the socialist state enterprises efficient.”
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