PESO EXCHANGE RATES STEADY- Government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to one U.S. Dollar, for 24 Pesos across the country, and purchased the U.S. Dollar for 22 Pesos in the city of Havana, tourism resort area of Varadero, and in the Republic of Cuba's second-largest city, Santiago de Cuba, as it did throughout the month of May 1997. CADECA purchased the U.S. Dollar for 21 Pesos in central Camaguey Province. The unofficial exchange rate continued to be as high as 25 Pesos to the U.S. Dollar in areas distant from CADECA offices. CADECA began the year exchanging the U.S. Dollar in Havana and in Varadero for 19 Pesos (buy) and 20 Pesos (sell) and in the provinces for 20 Pesos (buy) and 21 Pesos (sell). The official international exchange rate of one Peso to one U.S. Dollar, in effect for more than thirty years, remained unchanged. The government maintains a fixed exchange rate for its international dealings and a more flexible exchange rate for domestic use. The Peso and the U.S. Dollar circulate freely in the Republic of Cuba.
ISRAELI JOINT VENTURE PLANNED- The Spanish News Agency, EFE, reported that the Israeli company Pejames Uri Kaplan has established a joint venture valued at US$1,000,000.00 with a Republic of Cuba government-controlled company to produce metal, plastic, and cardboard containers for chemical products. Israeli companies have already established joint ventures in the citrus sector and in real estate development.
ANTI-SMOKING REGULATIONS READIED- H.E. Dr. Carlos Dotres, Minister of Public Health of the Republic of Cuba, reported that draft legislation regulating the sale, advertising, and use of cigarettes was ready for approval by the National Assembly of the Republic of Cuba. Minister Dotres said that the new regulations would prohibit the sale of cigarettes to minors and prohibit the placement of vending machines near schools and other locations where young people gather. He said that smoking within many closed areas would be prohibited, and in particular, within health and education facilities. He said that cigarette advertising, in particular during athletic and cultural events, would be regulated and that cigarette packages would carry a warning that smoking damages health. The Republic of Cuba is ranked twenty-fourth in per capital women smokers and eighteenth in per capital men smokers.
CIGARETTE VENTURE UPDATE- Mr. Sergio Fraga, General Manager of Brascuba, reported that the company produced 77 billion cigarettes during its first year of operations. The company, a joint venture between Souza Cruz, the Brazilian subsidiary of BAT (British American Tobacco), and the Republic of Cuba government-controlled National Union of Tobacco Companies, reported that it would produce 228 billion cigarettes by the end of 1997. Mr. Fraga said that the company initially sought to fulfill domestic demand for U.S. Dollar-priced cigarettes by producing a better quality Popular brand, consumed for many years on the island. He said that the company had now begun producing Continental brand cigarettes, popular in Latin America, and would introduce two additional brands before the end of 1997 for export to Latin American and to Europe.
TOBACCO INDUSTRY UPDATE- Tobacco workers unanimously supported Republic of Cuba government plans to produce 100,000 tons of tobacco and to export 200 million cigars in the year 2000, compared to this year's expected 45,000 tons of tobacco and 100 million cigars. The vote was at the conclusion of the worker's Seventh Congress, during which delegates discussed the growing, curing, rolling, and exporting of cigars. Delegates were informed that the cost of earning one U.S. Dollar declined from US$.65 in 1994 to US$.40 in 1996. The current number of acres sown and per acre yields were reported to be 30% to 60% of potential. Theft was reported to be 30% of the total tobacco crop. An estimated 11,000 new cigar rollers are required to meet the 1998 plans to export 150 million cigars. To date, more than 40 million cigars have been produced, including 1,011,200 of the two million Cohiba brand cigars planned for this year.
NEW CIGAR BRAND- Mr. Francisco Linares, President of Habanos, S.A., the Republic of Cuba government-controlled worldwide marketing company for the island's cigars, announced that the newest cigar brand, Vegas Robaina, would be available in Madrid, Spain, on 6 June 1997. Vegas Robaina will be available in five sizes. The last new brand, Cuaba, was made available in London, England, six months ago. Additional new brands are expected to be announced later this year.
CUBAN PROGRAMS DOMINATE LOCAL TELEVISION- 70% of Republic of Cuba government-controlled television programs are produced within the country, second only to Brazil in the Latin American region. Brazilian soap operas and United States films and series, such as Lassie and Spanish-language subtitled segments from the A&E channel account for the most popular foreign programming. There are two Republic of Cuba government-controlled television stations within the country. Cable television, with 12 channels including CNN, HBO, and the Sports Channel, is available to foreign residents and hotels.
JAMAICA PLANS INCREASED COOPERATION- H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, and H.E. Percival James Patterson, Prime Minister of Jamaica, signed an Investment Protection and Promotion Agreement and pledged to increase political, economic, and cultural relationships. The two governments also eliminated visa requirements for diplomats and business representatives, eased customs procedures, and signed cooperation agreements in the areas of trade promotion and sports. The Prime Minister, during his 28 May 1997 to 1 June 1997 visit, visited tourism (Varadero where Jamaica's Super Club operates a joint venture hotel) and industrial zones, and toured scientific research centers. Air Jamaica plans to establish direct flights between the two countries. Beginning 1 September 1997, Jamaica will upgrade its Consulate to an Embassy with a resident Ambassador. Prime Minister Patterson is the current President of the Caribbean Economic Community. In April 1997, H.E. Keith Mitchell, Prime Minister of Grenada and current President of the Association of Caribbean States, visited the Republic of Cuba. Within the next three months, the Prime Ministers of Barbados, St. Vincent, and the Grenadines are expected to visit the Republic of Cuba. President Castro is expected to visit Jamaica in 1998.
MEXICAN BUSINESSES SEEK INCREASED OPPORTUNITIES- Mexican business executives reported that they wanted increased opportunities to import (pharmaceuticals and medical equipment) and export Republic of Cuba-produced products during the XIII meeting of the Mexican-Cuban Bilateral Committee. Specific mention was made about operating within the Republic of Cuba's new free trade zones and other investment-related projects. Twenty-seven executives from twenty-two companies participated in the 28 May 1997 to 29 May 1997 gathering. Mr. Michael Vazquez, Director of Latin American Trade for the Ministry of Foreign Trade of the Republic of Cuba, reported that his government had presented a new draft trade agreement to replace the current accord, in effect since 1985. Mr. Vazquez said that the draft trade agreement, if enacted, would reduce tariffs, protect intellectual property (the Republic of Cuba is a member of the World Trade Organization), but was not a free trade agreement. He said that the two countries were also discussing the implementation of an Investment Protection and Promotion Agreement. Mr. Carlos Fuentes, the Republic of Cuba-based representative of Mexican government-controlled Bancomext, said that the trade bank had provided US$400 million in soft credits to the Republic of Cuba since 1992, payable between the years 2000 and 2006. Trade between the two countries was US$361 million in 1995 and US$341 million in 1996, of which US$318 million was Mexican product exports and US$23 million Republic of Cuba product imports. The Republic of Cuba imports large quantities of Mexican oil, as well as, consumer products, construction materials, chemicals, and products for the tourism industry (cleaning materials, furniture, food, textiles, etc.). Mexico imports Republic of Cuba-produced rum, cigars, pharmaceuticals, and artisan products.
RUSSIAN ECONOMIC DISCUSSIONS BEGIN- H.E. Ricardo Cabrisas, Minister of Foreign Trade of the Republic of Cuba, arrived in Moscow as the leader of a large investment and trade delegation. Minister Cabrisas and H.E. Serguei Shoygu, Minister of Civil Defense of the Russian Federation, will convene the first working meeting of the Intergovernmental Commission on Trade, Economic, Scientific, and Technical Cooperation, scheduled for 3 June 1997 to 6 June 1997. Minister Shoygu and 30 officials visited the Republic of Cuba in January 1997. Republic of Cuba-Russian Federation bilateral trade was US$500 million in 1996, mainly in the form of sugar and oil. The discussions in Moscow are to focus on the status of the previously-unfulfilled eight economic agreements signed on 15 October 1995, and unresolved plans to complete twelve projects which were underway when the U.S.S.R. was dismantled in 1991. Of particular importance is the 1996 to 1998 oil-for-sugar protocol. The protocol required the Republic of Cuba to export 500,000 tons of raw sugar to Russia in 1996, 1.5 million tons in 1997, and 1.75 million tons in 1998. Russia was required to export 3 million tons of oil per one million tons of sugar received. Sources have reported that Russia exported 1.5 million tons of oil, out of the 1.5 million tons required in 1996, and received 450,000 tons of sugar out of the 500,000 tons required in 1996.
SUGAR INDUSTRY UPDATE- H.E. Nelson Torres, Minister of Sugar Industry of the Republic of Cuba, reported that the industry would emphasize efficiency over increased production. He said that resources would be targeted toward those sugar mills that had proved to be most efficient during the recent harvest. Sources have reported that as many as 40 sugar mills may be closed after the 1996-1997 sugar harvest is completed at the end of June 1997. This year's harvest is expected to be approximately 4.2 million tons, compared to 4.446 million tons in 1995-1996.
SUGAR DIFFICULTIES STRAIN NON-SUGAR AGRICULTURE- The Republic of Cuba government-controlled National Information Agency (NIA) reported that this year's sugar production difficulties placed additional pressure on non-sugar agriculture to export more products and to supply the tourism industry. U.S. Dollar-based inputs for the non-sugar agricultural sector are mostly paid for by the sugar harvest's cash flow and by the cash flows from other export crops (citrus, coffee, honey, ornamental plants, pine resin, etc.), all of which met production plans for the first quarter of 1997. NIA reported that other non-sugar agriculture products such as natural veterinary pharmaceuticals, geese, seeds, and various crops for the tourism industry were behind first quarter production plans for 1997.
DROUGHT CONTINUES- There has yet to be any relief from the six-month-old drought in parts of central and eastern Republic of Cuba. Camaguey Province reported that the area's most important reservoir which supplies the country's third-largest city, Camaguey, had 230,000 square meters of water, compared to its seven million square meter capacity.
NICKEL CONFERENCE UPDATE- More than 100 Republic of Cuba and non-Republic of Cuba executives met 26 May 1997 to 28 May 1997 to review the development of the Republic of Cuba's nickel plus cobalt industry. The conference was sponsored by Germany's Heinz Pariser. The Republic of Cuba has three operating plants, one a joint venture with the Canadian company, Sherritt International Corporation. A fourth plant is under construction and reportedly will be finished through the establishment of a joint venture. Australia's Great Western Mining Company plans to construct a fifth plant and refinery with an investment previously estimated at US$400 million to US$700 million. The nickel plus cobalt industry is located in Holguin Province, 734 kilometers east of Havana, where the conference was held. The industry produced 54,000 tons of nickel plus cobalt in 1996 and plans to produce 70,000 tons in 1997, with production increasing to 100,000 tons by the year 2000.
TOURISM PRODUCT FAIR RESULTS- Organizers of this year's Tecnotur '97 reported that dozens of contracts worth millions of U.S. Dollars were signed. More than 350 companies, 150 non-Republic of Cuba-based, participated. The Republic of Cuba's tourism products market includes an estimated US$1.3 billion to be invested in construction during the next four years and more than US$1 billion in operating expenses. Companies from the Republic of Cuba, Spain, Italy, Germany, and Panama dominated Tecnotur '97. The Italian company San Marco plans to produce thousands of cabins for the tourism industry in one of Havana's new free trade zones. Another Italian company, the San Pellegrino Group, which has produced bottled water and soda water through a Republic of Cuba-based joint venture for three years, announced that it would invest an additional US$12 million to establish a second joint venture to produce bottled water for the domestic market. The Spanish company Girbau, which sells heavy laundering equipment to many Republic of Cuba-government-controlled companies, reported that it had signed a contract to sell equipment to a number of hotels currently under construction. The Spanish company Roca, with materials placed in more than 40 Republic of Cuba hotels, signed contracts to supply construction materials for a large number of hotels under construction or in the design stage. Other contracts signed include those for the importation of vehicles, motorcycles, industrial kitchens, and bathroom fixtures.
TOURISM CONVENTION RESULTS- The Ministry of Tourism of the Republic of Cuba reported that the XVIII Tourism Convention, held 12 May 1997 to 17 May 1997, was successful as 150,000 rooms were booked for the coming season and more than US$600,000.00 owed to Republic of Cuba government-controlled companies was collected. The Ministry reported that 1998's convention will be held 11 May 1998 to 15 May 1998 in the city of Havana.
NATIONAL ASSEMBLY REVIEWS TOURISM- The Services Committee of the National Assembly of the Republic of Cuba held a public hearing on the development of the tourism industry and its social impact. Experts told the lawmakers that the number of tourists visiting the island increased 33.5% from 1990 through 1996, five times the average for Caribbean Sea-area countries. The experts said that more than 2,000,000 tourists would visit the Republic of Cuba in the year 2000, twice the number of tourists as received in 1996. They said that the tourism industry was now the island's largest U.S. Dollar earner and employed 130,000 people. The lawmakers agreed that the nation's economy depended upon the accelerated development of tourism, but expressed concern about some negative social problems it has fostered, such as prostitution and crime. The Services Committee concluded that the nation should work to insure a sustainable and environmentally- friendly leisure industry, do more to substitute imports, and to insure that visitors come into contact with the more "altruistic" sectors of the population.
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