why do you think companies investing in cuba put up with such limitations? course hero

Should you invest in Cuba?

If you do choose to invest, it might be wise to limit exposure. Cuba's significant risks, not to mention the politics that are involved, make Cuban investment speculative at best.

Why are there so many entrepreneurs in Cuba?

Having spent decades under embargoes and restrictions, both foreign and domestic, Cuban entrepreneurs have had to jerry-rig their way to success. Rest assured that as a result, the country is home to some of the most ingenious creators and entrepreneurs on the planet. In Cuba, lateral thinking is a way of life.

What are the risks of starting a business in Cuba?

Despite recent improvements, there are still many unknowns for scaling startups and technology businesses in Cuba. Legal uncertainty is your largest risk: It’s unclear how quickly Internet access will be expanded, what types of business models will be allowed or how big your business can get before other obstacles come into play.

What is the best legal structure for a quasi-corporate business in Cuba?

‘Cooperatives’ are the best bet for a quasi-corporate legal structure. Cooperatives are worker-owned business structures that have legal standing in Cuba. They also offer significant tax incentives over being self-employed.

What percentage of Cuba's GDP is fixed capital?

Lack of capital investment. Fixed capital investment in Cuba represents just 10% of GDP, which is half the regional average. This likely won’t change until the embargo is lifted, as that would facilitate the arrival of significant new foreign capital. Cuba currently requires billions of dollars in investment in communication infrastructure, ...

What is the growth rate for Cuba in 2016?

My company, Frontier Strategy Group, is now forecasting expansion for Cuba to be 3.1% in 2016. While this figure might look especially attractive when compared to the average Latin America regional growth rate of -0.4%, there are still various challenges making Cuba’s untapped sales potential largely inaccessible.

When did Obama visit Cuba?

When President Obama visits Cuba on March 21, it will have been a little more than 57 years since the end of the Cuban revolution and slightly less than 55 years since the initial implementation of the U.S. embargo. Amid this historic trip and the flood of regulatory and diplomatic changes (including a new decision to ease some additional travel ...

Can American banks open accounts with Cuban counterparts?

In addition to lifting some travel restrictions, American financial institutions can establish accounts with their Cuban counterparts and telecommunication firms can export to and install equipment on the island.

Does Cuba have a dual currency system?

Cuba desperat ely needs to do away with its dual currency system. It uses two currencies, the convertible Peso (CUC) valued on par with the dollar and fully tradeable, and the Cuban Peso (CUP) valued at a rate of 24:1 with the dollar, which creates severe constraints for the development of Cuba’s export sector.

What does it mean to start a company in Cuba?

Regardless of what country you are from, starting up a company in Cuba means collaborating with the Cuban government and restrictions on how you hire workers. The foreign investment law allows for 100 percent foreign-owned companies, but the tax treatment, approval process and other restrictions means that it’s not practical. Most companies with foreign capital are 49/51 percent joint ventures with the government having control.

What is cooperative business in Cuba?

Cooperatives are worker-owned business structures that have legal standing in Cuba. They also offer significant tax incentives over being self-employed. They can range from farmers to beauty providers and auto repairs shops to business consultants.

How do Cubans work?

Cubans work around this regulatory restriction by working together as "contractors" on a startup idea. They can be located in the same workspace, work under a single brand and collaborate as if they were a company, but they do not have legal standing as a corporate entity.

Is Cuba serious about Cuban developers?

Yes, we’re serious. This is a top request from many Cuban developers...something that many of us take for granted. But if your career pays you to sit and be productive, you know how discomfort can break your flow.

Is Cuba outsourcing?

IT outsourcing is one of Cuba’s most promising short term industries. Despite poor Internet access, some are likening Cuba to the next India due to its strong, affordable developer talent. The country graduates over 4,000 IT engineers a year but there are too few state jobs to absorb this supply. As a result, many graduates enter IT consulting or start businesses. Cuba’s much more reasonable time zone (GMT -4) and its physical proximity to the U.S. are added bonuses for American outsourcers.

Is Cuba a good time zone?

Cuba’s much more reasonable time zone (GMT -4) and its physical proximity to the U.S. are added bonuses for American outsourcers. 17. Cubans are well educated. Cuba has a very well-educated population in general, with a 99 percent literacy rate and excellent engineers stemming from universities across the country.

Can a cooperative accept foreign capital?

Certain cooperatives can accept investment. To date, this has occurred only with agricultural cooperatives. Non-agricultural cooperatives can, in theory, accept foreign capital but this has not been approved in a specific case. 12.

The Trade Embargo

Further Complications

Investing in Cuba

The Bottom Line

• If you do choose to invest, it might be wise to limit exposure. Cuba's significant risks, not to mention the politics that are involved, make Cuban investment speculative at best. If you’re correct, you make a little money that has the potential to compound on itself over the long haul with the aid of dividend payments, but there appear to be smart...

See more on investopedia.com