EXCHANGE RATES REMAIN STABLE- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) purchased the U.S. Dollar for 23 Pesos across the country and sold the Convertible Peso, equal to one U.S. Dollar, for 23 Pesos in the city of Havana, resort area of Varadero, central Camaguey Province, and in eastern Santiago de Cuba Province. CADECA purchased the U.S. Dollar across the country for 23 Pesos since the last week of July 1997, while varying the cost of the Convertible Peso from 23 Pesos to 25 Pesos. CADECA began 1997 exchanging the U.S. Dollar for 19 Pesos (buy) and 20 Pesos (sell) in Havana and Varadero, and for 20 Pesos (buy) and 21 Pesos (sell) in the provinces. 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.
DEPARTMENT OF COMMERCE RESPONDS TO USCTEC INQUIRY- The Honorable William A. Reinsch, Under Secretary of Commerce for Export Administration, has informed the U.S.-Cuba Trade and Economic Council that, as a result of the organization's inquiry, the United States Department of Commerce's Office of Strategic Trade and Foreign Policy Controls will develop a "fact sheet" regarding the export of medical items to the Republic of Cuba. The information will be made available through the United States Department of Commerce's Office of Public Affairs, Exporter Counseling Division, and the Bureau of Export Administration's Internet Website at http://www.doc.bxa.gov. "I share your concern that the public should have accurate and complete information about the terms under which U.S. export restrictions on Cuba allow for the export of medical items," Secretary Reinsch wrote. The U.S.-Cuba Trade and Economic Council had written to the Secretary of Commerce, The Honorable William M. Daley, with concern due to an increasing number of United States company representatives and journalists contacting the organization after being unable to obtain information from the United States Department of Commerce regarding the export of medical items to the Republic of Cuba.
USCTEC MEMBER ADVERTISES IN CUBAN PUBLICATION- Last Frontier Expeditions, Inc., a member of the U.S.-Cuba Trade and Economic Council, has placed an advertisement in a Republic of Cuba government-operated publication. One full-page advertisement will appear in each of the November 1997 and December 1997 issues of Record, a monthly magazine focusing on sports, published by Republic of Cuba-operated Cubadeportes, a commercial company under the auspice of the National Institute of Sports, Physical Education, and Recreation (INDER) of the Republic of Cuba. In 1998, two United States-based athletic equipment manufacturers will also begin advertising in Record. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington, D.C., has confirmed that United States companies may provide camera-ready artwork to Republic of Cuba-based publications and make payments to Republic of Cuba-based publications for the placement of advertisements in Republic of Cuba-based publications. The United States government also permits United States companies to produce, deliver, and receive payment for, completed commercials and programing to be aired on Republic of Cuba-based television stations and Republic of Cuba-based radio stations, and to purchase Republic of Cuba-produced programing for use in the United States and other countries.
INTERNATIONAL TRADE FAIR UPDATE- Mr. Abraham Maciques, President of the Palace of Conventions of the Republic of Cuba, said that the island's most important annual commercial event would begin on 2 November 1997 and conclude on 9 November 1997. More than 1,900 companies from 59 countries are expected to participate, having rented more than 23,000 square meters of exhibition space, 17,400 square meters to non-Republic of Cuba companies and the remainder to 300 Republic of Cuba government-operated companies. There are more than 200 companies attending from Spain, while representation of companies from Mexico, Canada, Italy, Germany, France, and South Korea has increased substantially. Mr. Maciques said that the 1996 International Trade Fair had revenues of US$2.6 million and the 2,500 participating business representatives spent approximately US$13 million on the island during the event.
FRANSABANK PLANS NEW INVESTMENTS- Ms. Hiam El Zein, Representative of Fransabank in the Republic of Cuba, said that the bank, one of Lebanon's oldest and most respected financial institutions, plans to increase financing and other operations in the Republic of Cuba and to continue to function as a link between the island and Middle East-based businesses. Fransabank is one of thirteen non-Republic of Cuba government-operated banks with offices in Havana, although the banks are not yet authorized to provide "full service banking" to non-Republic Cuba-based companies, Republic of Cuba government-operated companies, and Republic of Cuba nationals. The other banks include ING Bank NV, Netherlands Caribbean Bank, Banco Exterior de Espana, Havana International Bank Limited, National Bank of Canada, Banco Bilbao Vizcaya, Banco Central Hispano Americano, Banco Sabadell, Banco Nacional de Comercio Exterior, Societe Generale, Inkobank, and Stolichiny Bank of Savings.
NEW BANK GROUP INCREASES DOMESTIC FINANCING- Mr. Jose Julio Rodriguez, President of Republic of Cuba government-operated Grupo Neuva Banca, said that associated Republic of Cuba government-operated banks and financial companies lent US$400 million tom domestic producers in 1996, earning a net profit of approximately US$20 million. Mr. Rodriguez said that the new banks and financial companies had emerged in response to the decentralization of the economy, emergence of market mechanisms, and growth of the private sector. He said that the majority of the loans were in the form of trade credits and other short-term credits. Mr. Rodriguez said that the Grupo Neuva Banca controlled the Banco Internacional de Comercio (established in 1994 to operate in all types of banking), Banco Metropolitano (established in 1996 to provide personalized banking services), Banco de Inversiones (established in 1995 to focus upon investments within the island), Casas de Cambio S.A., known as CADECA (established in 1995 to provide domestic currency exchange services), Financiera Nacional S.A. (established in 1995 to provide short-term financing), and Compania Fiduciaria S.A. (established in 1996 to provide trust and other confidential services).
NEW BANK GROUP OFFERS FINANCIAL SERVICES- Republic of Cuba government-operated Grupo Nueva Banca announced the publication of the daily "Hoy en el Mercado" ("The Market Today"). The financial service provides daily international currency exchange rates, interest rates, and commodity prices, and includes weekly and monthly data analysis. The service is available for US$300.00 per year.
PESO BUDGET REVENUES UPDATE- Mr. Joaquin Cambara, Director of the National Tax Administration Office of the Republic of Cuba, said that revenues from January 1997 through September 1997 were 9,224,200 Pesos, 76% of the estimated budget revenues for 1997. Mr. Cambara said that efforts to collect taxes due, and the increased sales of Peso-priced beer and other products versus U.S. Dollar-priced beer and other products, would insure that overall revenues reached 12,143,000 expected by the end of 1997. H.E. Dr. Carlos Lage, Vice President of the Council of State of the Republic of Cuba, and H.E. Jose Luis Rodriguez, Minister of Economy and Planning of the Republic of Cuba, recently stated that the Peso budget would have a deficit of approximately 2% of the Gross Domestic Product (GDP). The U.S. Dollar budget, for which no official information is published, is expected to continue to remain seriously in deficit do to this year's poor sugar harvest, increased cost of short-term and medium-term credits, and the increase of the prices of imported commodities such as oil and food.
SELF EMPLOYMENT UPDATE- Mr. Joaquin Cambara, Director of the National Tax Administration Office of the Republic of Cuba, said that the number of registered self-employed was 167,326, a decrease of 3,509 from one month ago. He said that the number of self-employed would decline further as individuals involved in transportation, such as the rental of cars and trucks, would now be under the regulation of the Ministry of Transportation of the Republic of Cuba. Mr. Cambara said that since regulations went into effect in August 1997 requiring small landlords to register with the government and to pay both a monthly fee and annual income tax, 3,042 individuals had registered, the majority in the city of Havana, and that US$300,000.00 plus 100,000 Pesos in fees were collected. From January 1997 through September 1997, the self-employed had paid 201.9 million Pesos in taxes and fees, 54 million Pesos above that during the same period in 1996.
GOVERNMENT TIGHTENS CONTROLS ON SELF EMPLOYMENT- Mr. Luis Francisco Suero, Deputy Director of the National Tax Administration Office of the Republic of Cuba, announced that the self-employed would receive special receipts upon the purchase of materials for their businesses, which they would then be required to retain for a period of five (5) years. Mr. Suero explained that the new system would improve the accounting practices of the self-employed and would control the illegal purchase of goods. Republic of Cuba law restricts the self-employed from purchasing any materials for their business unless purchased from a Republic of Cuba government-operated retail store or the Peso-priced produce markets. There are no wholesale stores. The self-employed may only deduct 10% of gross revenues as costs for tax purposes. For example, self-employed coffee vendors must purchase their coffee and sugar from Republic of Cuba government-operated retail stores for U.S. Dollars, the only location where legally available, and where the wholesale price to retail price mark-up is 240% (as it is for almost every product sold at Republic of Cuba government-operated retail stores). Many coffee vendors, however, often purchase their coffee beans on the unofficial market and purchase sugar from friends and family for about 10% of the cost at the Republic of Cuba government-operated retail stores. The vendors then use product purchase receipts given to them by friends and family, or purchased from workers within the Republic of Cuba government-operated retail stores, in order to comply with the regulations. The new product purchase receipts are designed to eliminate the unofficial practices, thus earning more revenue for the government, and to limit (some of the self-employed would argue eliminate) the number of self-employed that compete with Republic of Cuba government-operated operations.
U.S. DOLLAR RETAIL STORE PRODUCT UPDATE- H.E. Jose Luis Rodriguez, Minister of Economy and Planning of the Republic of Cuba, said that Republic of Cuba domestically-produced products accounted for approximately 35% of all product sales at Republic of Cuba government-operated retail stores thus far in 1997, compared with approximately 30% during the same period in 1996. Republic of Cuba government-operated retail stores began operating in 1993, soon after the government authorized the use of the U.S. Dollar for transactions within the island. The approximate 1,000 retail outlets reported gross revenues of US$640 million in 1996. Wholesale price to retail price mark-up is normally 240%. Republic of Cuba government-operated companies produce food products, cosmetics (Peso-priced toothpaste does not contain fluoride while U.S. Dollar-priced toothpaste does, both being produced by Republic of Cuba government-operated Suchel, which has a joint venture to produce products with the Anglo-Dutch conglomerate, Unilever, including Pepsodent toothpaste, which has fluoride), cleaning products, and footwear, among other products.
SHIPBUILDING VENTURE OUTLINES EXPORT PLANS- Damex S.A., the joint venture shipbuilding company owned by Holland-based investors and the Santiago de Cuba-based, Republic of Cuba government-operated El Nispero Naval Yard, reported that it had completed construction of the 400-ton Bertina cargo ship which will be sold to a company in Chile. Mr. Ben Van Dam, Chief Executive Officer of Damex S.A., reported that construction would soon begin on a 2,500-ton capacity fuel tanker for a Curacao-based company. Damex S.A. has also constructed five small tankers to transport honey and other food products; and two tugboats, for Republic of Cuba government-operated companies.
JAMAICA GRANTS US$3.5 MILLION TRADE CREDIT- H.E. Omar Davis, Minister of Finances of Jamaica, has signed a trade credit for the Republic of Cuba valued at US$3.5 million. Ms. Pamela McLean, Director of the Import-Export Bank of Jamaica, recently said that the credit would assist with Jamaican exports of transformers, paints, fertilizer, and food products to the Republic of Cuba. Bilateral trade between the two islands was approximately US$7 million in 1996, compared with approximately US$6.75 million in 1995, and approximately US$590,000.00 in 1994.
GENERAL NAMED MINISTER OF SUGAR INDUSTRY- The Council of State of the Republic of Cuba has named Division General Ullses Rosales del Toro to replace H.E. Nelson Torres, the current Minister of Sugar Industry of the Republic of Cuba. General del Toro had been First Deputy Minister of Defense of the Republic of Cuba and Chief of the General Staff. Sources said that appointment was a signal to foreign investors that the government was determined to increase the production of sugar cane, as the announcement coincided with a number of current discussions regarding financing of the current sugar harvest and future sugar harvests, and the thirty-fifth anniversary celebration of Republic of Cuba government-operated Cubazucar, the island's exclusive sugar exporter, during which more than 200 sugar industry representatives met in the city of Havana. The Republic of Cuba produced 3.3 million tons of raw sugar in 1994-1995, 4.445 million tons in 1995-1996, 4.2 million tons (compared to 5 million tons planned) in 1996-1997, and the 1997-1998 production is expected to be approximately 4 million tons (compared to the 5.5 million tons to 6 million tons planned). Dr. James Fry, Managing Director of LMC International Limited, a United Kingdom-based commodities broker, said that the Republic of Cuba sugar industry had two major problems. "First, they have a huge capacity producing half of what it used to, running up their costs to well over US$.20 a pound even while the market trend is toward lower prices. Second, their yields are very low, in part because of financing, and in part because of poor organization of the resources they have." He said that the island's ability to obtain a required US$300 million to finance an industry-wide recovery would not be simple, and could be extremely costly in terms of interest rates. The Ministry of Sugar of the Republic of Cuba recently announced that thirty to forty of the island's 156 mills would not operate during the 1997-1998 harvest.
EL NINO UPDATE- The National Weather Institute (NWI) of the Republic of Cuba has predicted that the global weather phenomenon, known as El Nino, could result in nearly twice the quantity of rainfall in western Republic of Cuba from November 1997 through April 1998, and significant increases in rainfall throughout the remainder of the country. The NWI also reported that temperatures would be 2.5 degrees Celsius above the norm from November 1997 through January 1998. The Republic of Cuba's rainy season is May through October, the dry season is November through April. The dry season brings cooler temperatures. Agricultural experts said that the El Nino could result in damage to food crops, the most serious threat being to the sugar harvest (November to May), as sugar cane's glucose content increases with dry, cool weather, and that increased rainfall could also delay the sugar harvest. The potato crop, which also depends upon dry, cool weather, along with the tobacco crop, and vegetable and root crops, could suffer. A lesser, and more even, increase in rainfall across the country would benefit agriculture as the island lacked adequate irrigation for more than 50% of its sugar cane crop and non-sugar cane agricultural lands.
PRODUCT DEVELOPED TO KILL COCKROACHES- The National Plant Health Research Institute (NPHRI) of the Republic of Cuba has announced the development of a fungus to control cockroach infestation. Researchers said that after two years of trials using the Entomopatogeno M-1N4 fungus, the product was 80% to 100% effective in homes, 85% effective in apartment buildings, and nearly 50% effective in industrial buildings. The fungus, applied as a bait, is less costly than other chemicals and, according to the NPHRI, harmless to humans and to animals. The Republic of Cuba also produces Biorat, a natural pesticide exported to Latin America and to Vietnam, to eliminate rats.
JOHN F. KENNEDY JR. VISITS- Mr. John F. Kennedy Jr., Editor-In-Chief and Co-Founder of George magazine, visited the Republic of Cuba from 23 October 1997 to 27 October 1997. He was scheduled to interview H.E. Dr. Fidel Castro Ruz, President of the Republic of Cuba, and to meet with numerous other officials of the government. He stayed at the Melia Cohiba Hotel in the city of Havana, owned by Republic of Cuba government-operated Cubanacan, and managed by the Melia Group of Spain. The visit by Mr. Kennedy has been planned for more than one year.
WEEKLY READERSHIP OF THE EEOC ESTIMATED AT MORE THAN 3,000- The results of a survey commissioned by the U.S.-Cuba Trade and Economic Council, the largest nonpartisan business organization within the United States focusing upon the Republic of Cuba, estimates that the weekly readership of the ECONOMIC EYE ON CUBA© is approximately 3,000 senior-level executives of United States-based and non-United States-based companies, and hundreds of government officials and journalists. The weekly readership survey estimate excludes the thousands of individuals from throughout the world who access the U.S.-Cuba Trade and Economic Council's Internet address http://www.cubatrade.org and view selected issues of the ECONOMIC EYE ON CUBA©.
USCTEC SPEAKING SCHEDULE UPDATE- On 5 November 1997, Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, will be a featured speaker before The Chicago Council on Foreign Relations, one of the largest (7,000 members) international affairs organizations of its kind in the United States. On 5 November 1997, Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, will be meeting with the Editorial Board of The Chicago Tribune, the largest circulation newspaper in the city.
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