ECONOMIC EYE ON CUBA©

ECONOMIC EYE ON CUBA© Index

22 February 1999 to 28 February 1999
 
 
Peso Down One Point Against The U.S. Dollar-1
Former Cola-Cola Executive, Now Potential Presidential Candidate, Visits-2
Milk Processing Joint Venture Has United States Ties-2
Wheat Import Update-2
Health Care Update-2
Color Television Production Expanding-2
Fiber Optic Cable Production Planned-3
New US$5 Million Citrus Processing Plant-3
Citrus Production Update-3
US$7 Million Joint Venture In Vietnam To Produce Rodenticide-3
Energy, Oil, And Gas Update-4
Sugar Production Update-4
Sugar Sector Update-4
Cubalse 1998 Report-5
Chinese Defense Minister Visits-5
Cigar Dinner Raises More Than US$1 Million-5
December 1998 United States Exports To Cuba-5
 Speaking Schedule-6
Editor’s Note: Mr. Curtis L. Carlson-7
 Article From El Nuevo Dia Newspaper
Enclosure: 1999 Directorio Turistico de Cuba
Enclosure: February 1999 Business TIPS on Cuba
 

PESO DOWN ONE POINT AGAINST THE U.S. DOLLAR- Republic of Cuba government-operated Cajas de Cambio S.A. (CADECA) sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 21 Pesos.  CADECA had sold the Convertible Peso, equal to US$1.00, for 21 Pesos and purchased the U.S. Dollar for 20 Pesos from 13 January 1999 to 18 February 1999.  CADECA purchased the U.S. Dollar for 21 Pesos and sold the Convertible Peso for 22 Pesos from 26 November 1998 to 12 January 1999.  CADECA purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 21 Pesos from 15 July 1998 through 25 November 1998. CADECA purchased the U.S. Dollar for 19 Pesos and sold the U.S. Dollar for 21 Pesos from 1 April 1998 to 14 July 1998.  CADECA purchased the U.S. Dollar for 20 Pesos and sold the U.S.  Dollar for 22 Pesos from 12 March 1998 to 31 March 1998.  CADECA purchased the U.S. Dollar for 21 Pesos and sold the U.S. Dollar for 23 Pesos from 11 February 1998 to 11 March 1998.  CADECA purchased and sold the U.S. Dollar for 23 Pesos from August 1997 through 10 February 1998.  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 government does not fluctuate the value of the Peso for commercial transactions regardless of any fluctuation with the value of the U.S. Dollar or other currencies on the international market.  The Peso and the U.S. Dollar circulate freely in the Republic of Cuba.

FORMER COCA-COLA EXECUTIVE, NOW POTENTIAL PRESIDENTIAL CANDIDATE, VISITS- His Excellency Vicente Fox Quesada, Governor of the State of Guanajuato, Mexico, and expected to be the candidate of the Democratic Action Party for the presidency of Mexico, visited the Republic of Cuba from 21 February 1999 to 24 February 1999.  Governor Fox led a delegation of business executives from the State of Guanajuato.  Governor Fox is a former president (he departed in 1980) of the Coca-Cola Export Corporation Sucursal de Mexico, a subsidiary of Atlanta, Georgia-based The Coca-Cola Company (1998 revenues exceeding US$18 billion).

MILK PROCESSING JOINT VENTURE HAS UNITED STATES TIES- Asturia, Spain-based Penasanta S.A. (Capsa) has announced the establishment of a joint venture with the Ministry of Food Processing of the Republic of Cuba.  The joint venture will initially only process and bottle powered milk imported from Spain.  Capsa is controlled by Asturia, Spain-based Central Lechera Asturiana (66.6%) and Viroflay, France-based Bongrain S.A. (33.4%).  Bongrain S.A. owns New Holland, Pennsylvania-based Bongrain Cheese USA; New Holland, Pennsylvania-based East Smithfield Farms; Louisville, Kentucky-based Fischer Packing Company; and Granada Hills, California-based Penguin’s Industries.  The United States representative of the company is City of Industry, California-based Alta-Dena Certified Dairy.

WHEAT IMPORT UPDATE- The Republic of Cuba imported wheat from 1 January 1999 to 17 February 1999 from the port of Rouen, France, as follows:
 

Total Imports Of Wheat (in tons)
Reporting Period (running totals)
73,142
1 February 1999 to 17 February 1999
62,080
1 January 1999 to 13 January 1999
49,580
1 January 1999 to 6 January 1999

HEALTH CARE UPDATE- The Ministry of Public Health of the Republic of Cuba (MINSAP) reported that physicians performed 900,000 operations in 1998.  Not reported were the number of major surgeries, minor surgeries, etc.  The Republic of Cuba has a population of 11.1 million. MINSAP also reported that in 1999 children would be vaccinated against 13 common ailments, one more than in 1998, due to the addition of a flu vaccine.

COLOR TELEVISION PRODUCTION EXPANDING- Atec S.A. a subsidiary of the Ministry of Steel, Mechanical, and Electronics Ministry of the Republic of Cuba (SIME), announced that the company had begun production of color televisions in association with People’s Republic of China government-operated Camc Electronics, which is providing technology and financing for the production.  Components for the color televisions are also being purchased from Paris, France-based Thompson-CSF S.A.  Mr. Jose Forcada, Director of Atec S.A., reported that the color televisions (with a three-year guarantee) would be sold in Republic of Cuba government-operated U.S. Dollar retail stores for less than comparable models produced by Tokyo, Japan-based Sony Corporation; Osaka, Japan-based Matsushita Electric Industrial Company, Limited; and Amsterdam, The Netherlands-based Royal Philips Electronics.  Atec S.A. also plans to sell the color televisions to Republic of Cuba government-operated hotel companies, which is consistent with the government of the Republic of Cuba’s import substitution program.  Atec S.A. also plans to export some of the production to Caribbean Sea-area countries.  Seoul, South Korea-based LG Group has been assembling color televisions within the Republic of Cuba for several years in association with Atec S.A.  The company also assembles color televisions with components produced by Seoul, South Korea-based Daewoo Corporation.  Atec S.A. reported that it sold 83,712 color televisions in 1998, and plans to sell 120,000 in 1999, including 50,000 produced by Atec S.A.  The company has sixty service centers in the Republic of Cuba.

FIBER OPTIC CABLE PRODUCTION PLANNED- Eleka S.A., a subsidiary of the Ministry of Steel, Mechanical, and Electronics Industry of the Republic of Cuba (SIME), said that it was installing technology purchased from European companies to produce fiber-optic cables within the Republic of Cuba.  Production is expected to commence by July 1999.  Eleka S.A. will import fiber to produce the cables, to be sold to Republic of Cuba government-operated Empresa de Telecomunicaciones de Cuba S.A. (ETECSA), to other Republic of Cuba government-operated communications companies, and for export.

NEW US$5 MILLION CITRUS PROCESSING PLANT- A fourth citrus processing plant was inaugurated in Contramaestre, Santiago de Cuba, 850 kilometers east of the city of Havana.  The plant, reportedly constructed at a cost of US$5 million and 3 million Pesos, has a capacity to process 60,000 tons of fruit annually and will produce frozen concentrate, juices, and extracts for export to countries in Europe.  The plant has equipment from companies in Germany and companies in Spain. A fifth citrus processing plant is under construction in Pinar del Rio Province, west of Havana, with financing provided by Citrus International Corporation S.A., a joint venture established by Republic of Cuba government-operated Citricos Caribe S.A., and Luxembourg, Belgium-based Olex S.A. Two citrus processing plants are located at Empresa Citricola Victoria de Giron, in Matanzas Province 100 kilometers east of Havana, and a third citrus processing plant is located on the Isla de la Juventud, 200 kilometers south of Havana.  The three citrus processing plants are operated with Tel Aviv, Israel-based Grupo BM.

CITRUS PRODUCTION UPDATE- The government of the Republic of Cuba reported that the country’s 15 citrus orchards would produce 800,000 tons of fruit during the 1998-1999 harvest (July to July), compared to an estimated 650,000 tons (or less) produced in 1997-1998, and 690,000 tons produced in 1996-1997.  The Republic of Cuba’s two most important orchards, Victoria de Giron (accounting for more than 50% of total annual production) and the Isla de la Juventud (location of the country’s largest grapefruit orchards) are operated with Tel Aviv, Israel-based Grupo BM.  The thirteen other fruit orchards are operated by Republic of Cuba government-operated Corporation National del Citrico (CNC).  Oranges account for 60% of the total citrus production; grapefruit 30% of total citrus production, and limes and tangerines a combined 10% of total citrus production.  The majority of the annual citrus production is processed into orange frozen concentrate (65 degree Brix) and grapefruit frozen concentrate (58 degree Brix), other types of frozen concentrate, juices, and oils for export to countries located in Europe, and to Mexico and Canada.  Approximately 50,000 tons of fresh fruit, mainly grapefruit, is shipped to countries in Europe, The Americas, and to Canada. The Republic of Cuba was the world’s largest citrus exporter, producing one million tons of fruit during the 1988-1989 harvest, 800,000 tons of which was exported to the former U.S.S.R. and former U.S.S.R.-dominated countries.

US$7 MILLION JOINT VENTURE IN VIETNAM TO PRODUCE RODENTICIDE- Republic of Cuba government-operated Empresa de Productos Biologicos y Farmaceuticos (Labiofam) has reported the establishment of a joint venture, Bioasia, with a government of Vietnam-operated company to produce the rodenticide, BIORAT, a natural product that has proved effective in reducing rat populations within the Republic of Cuba and in some countries in The Americas.  The rodenticide is reportedly harmless if consumed by other animals or human beings.  Bioasia plans to begin production in Vietnam in April 1999.  The joint venture is has received financing from London, United Kingdom-based Beta Funds Limited.

ENERGY, OIL, AND GAS UPDATE- Republic of Cuba government-operated Cuba Petroleum S.A. (Cupet), reported that the country would generate 40% of its energy requirements in 1999 using domestic oil and gas, compared to 28.6% in 1998, and 20% in 1997.  Cupet reported that domestic crude oil production would increase from 1.678 million tons (10.5 million barrels) in 1998, to 2 million tons in 1999.  Cupet reported that Energas S.A., a joint venture established between Cupet S.A. and Toronto, Canada-based Sherritt International Corporation, would be fully operational in 1999, burning 465 million cubic meters of natural gas (the equivalent of 400,000 tons of oil), compared to 100 million meters in 1998.  Cupet S.A. reported that 270 wells were producing 35,000 barrels of oil per day, compared to 31,000 barrels of oil per day in 1998.  Cupet S.A. reported that 90% of domestic crude oil was of poor quality with a high sulfur content, suitable for use only in modified power and cement plants.  100% of crude oil extracted from fields in Matanzas Province and in Havana Province, just northwest of the capital, where increased production was expected, has a high sulfur content.  Cupet S.A. also reported that oil refining, currently operating at less than 20% of capacity, would increase to produce 700 tons per day of kerosene for cooking, lubricants (accounting for 70% of the Republic of Cuba market), and high octane gasoline.  Non-Republic of Cuba-based companies, in particular Sherritt International Corporation, have been introducing modern extraction technology to the oil industry.  Sherritt International Corporation, Courbevoie, France-based Elf Aquitaine, and other non-Republic of Cuba-based companies have been working with Cupet to use natural gas to generate electricity and to use natural gas as cooking fuel.  The government of the Republic of Cuba reported that it imported 85% of its fuels for all uses in 1997, with total consumption reported at 8.23 million tons.  The government of the Republic of Cuba reportedly imported between 80% and 85% of its fuels for all uses in 1998.

SUGAR PRODUCTION UPDATE- The Ministry of Sugar of the Republic of Cuba’s 1998-1999 sugar harvest (December to May) is expected to achieve its 3.6 million ton target, said H.E. General Ulises Rosales del Toro, Minister of Sugar of the Republic of Cuba.  He said that production had reached one million tons of raw sugar by the end of January 1999, compared with producing one million tons of raw sugar at the end of February 1998, and producing one million tons of raw sugar on 10 February 1997.  Production reportedly exceeded 1.5 million tons of raw sugar this week, approximately 500,000 tons of raw sugar more than at the same time in 1998.  The 1997-1998 sugar harvest was paralyzed repeatedly by El Nino-related rain, resulting in a 50-year low production of 3.2 million tons of raw sugar.  The 1998-1999 sugar harvest has had good weather, which is expected to continue through March 1999.  Minister del Toro reported that the 1999-2000 sugar harvest is expected to be 4.03 million tons of raw sugar.

SUGAR SECTOR UPDATE- H.E. General Ulises Rosales del Toro, Minister of Sugar of the Republic of Cuba, said that the sugar sector was “open to all idea’s, all proposals.”  Minister del Toro reported that there were a total of ten joint ventures and economic associations currently operating within the sugar sector, reportedly in machine building and by-products, and one mill management agreement.  The Republic of Cuba’s sugar sector, with 156 mills, more than 300 by-products plants, and hundreds of supply facilities, has been in crisis for most of the decade.  Raw sugar production has averaged less than 4 million tons during the last five years, compared to an average production of 7.5 million tons in the late 1980’s.  Gross revenues from sugar by-products production was reported to be US$10 million in 1998, compared to US$100 million in 1989. Minister del Toro said investors were needed to provide capital, to provide technology, and to provide markets.  The government of the Republic of Cuba has resisted permitting non-Republic of Cuba-based companies to establish joint ventures, or to have management contracts, within the area of raw sugar production.  However, with continuing production difficulties, with other countries being far more cost-efficient, with raw sugar prices continuing to be stagnant, and with an increasing use of corn syrup instead of sugar cane, the government of the Republic of Cuba reportedly will authorize the establishment of joint ventures and the establishment of economic associations with non-Republic of Cuba-based companies for raw sugar production.  Only during the last two years have opportunities within sugar by-products and opportunities within machine building been available to non-Republic of Cuba-based companies.

CUBALSE 1998 REPORT- Republic of Cuba government-operated Cubalse S.A. reported gross revenues of US$266.6 million in 1998 and gross profits of US$87 million in 1998, compared to gross revenues of US$248 million reported in 1997.  Cubalse S.A. reported that US$14 million of its profits (not stated whether gross profits or net profits) were paid to the U.S. Dollar account of the government of the Republic of Cuba. Cubalse S.A. provides housing and other services to non-Republic of Cuba nationals, including the ownership of U.S. Dollar retail stores and ownership of real estate companies.  Cubalse S.A. estimates that gross revenues will increase 39%, to US$370.57 million, in 1999, due mainly to the operation of eight real estate joint ventures and to increased sales at U.S. Dollar retail stores.

CHINESE DEFENSE MINISTER VISITS- H.E. Chi Haotian, Minister of Defense of the People’s Republic of China, visited the Republic of Cuba from 25 February 1999 to 28 February 1999, as a part of tour of countries including the United Kingdom, Pakistan, and Mexico.  Minister Haotian was the first Minister of Defense of the People’s Republic of China to visit the Republic of Cuba.  On 1 March 1999, H.E. Roberto Robaina, Minister of Foreign Affairs of the Republic of Cuba, met in Beijing, People’s Republic of China, with H.E. Jiang Zemin, President of the People’s Republic of China.

CIGAR DINNER RAISES MORE THAN US$1 MILLION- More than US$1 million was raised at the 26 February 1999 “Habanos on the Threshold of the Year 2000” cigar dinner attended by a reported 800 guests.  US$750,000.00 was raised from an auction of five specially built humidors and from dinner ticket proceeds.  The funds are to be directed to healthcare within the Republic of Cuba.

DECEMBER 1998 UNITED STATES EXPORTS TO CUBA- The Foreign Trade Division of the United States Bureau of the Census of the United States Department of Commerce in Washington, D.C., reported that the value of United States exports (defined as products exiting the borders of the United States whether sold or donated) to the Republic of Cuba in December 1998 was US$736,394.00.  The reported values are on an F.A.S. (Free Along Side Ship) basis- the cost of freight is excluded:
 

HS Code
Description 
District
December 1998 Value 
In US$ 
Year-To-Date Value 
in US$
3004200060 Other Antibiotics NESOI (Not Elsewhere Specified Or Indicated), Not for Veterinary  Miami, Florida 00.00  3,000.00
3004909090 
 
Medicaments In Measured Doses For Retail Sale, NESOI (Not Elsewhere Specified Or Indicated)  Miami, Florida 00.00  20,453.00
9802100000 Commingled Food Products, Donated, Relief/Charity  Ogdensberg, NY 00.00  17,500.00
9802100000 Commingled Food Products, Donated, Relief/Charity  Miami, FL 3,224.00  45,334.00
9802200000 Medicinal & Pharmaceutical Products, Donated  Miami, FL  6,876.00  200,814.00
9802200000 Medicinal & Pharmaceutical Products, Donated  Houston/Galveston, TX 4,726.00  4,726.00 
9802200000 Medicinal & Pharmaceutical Products, Donated Washington, D.C. 245,086.00  245,086.00
9802300000 All Wearing Apparel, Donated For Relief/Charity Miami, FL  44,506.00  269,808.00
9802400000 Articles Donated For Relief Or Charity, NESOI (Not Elsewhere Specified Or Indicated)  Ogdensburg, NY 00.00  85,860.00
9802400000 Articles Donated For Relief Or Charity, NESOI (Not Elsewhere Specified Or Indicated)  Buffalo, NY  300,000.00 300,000.00
9802400000 Articles Donated For Relief Or Charity, NESOI (Not Elsewhere Specified Or Indicated)  Detroit, MI  00.00  21,000.00
9802400000 Articles Donated For Relief Or Charity, Nesio (Not Elsewhere Specified Or Indicated)  Miami, FL  135,200.00  2,236,767.00
9809005000 Shipments Under US$20,001.00, Not Defined By Kind  Miami, FL  00.00  4,650.00
TOTAL US$ US$736,394.00 US$3,454,998.00

 

 Speaking Schedule

15 March 1999- Mr. John S. Kavulich II, President of the U.S-Cuba Trade and Economic Council, has been invited to give a presentation at The Cuba Conference with Updates On The Reconstruction Of Central America, the Caribbean, and Colombia at the Center for Strategic and International Studies in Washington, D.C., on 15 March 1999.  The conference is being sponsored by Washington, D.C.-based The Center For Reconstruction & Development, a division of Washington, D.C.-based Equity International, Inc.  For additional information about the conference, contact telephone (202) 429-2024, facsimile telephone (202) 775-5921, and Internet: http://www.rec-dev.com

18 March 1999- Mr. John S. Kavulich II, President of the U.S.-Cuba Trade and Economic Council, is tentatively-scheduled to give a presentation at “Cuba Sommet ‘99” at the Chateau Frontenac Hotel in Quebec City, Quebec, Canada, on 18 March 1999 and 19 March 1999.  The conference is being sponsored by the Chamber of Commerce and Industry of Metropolitan Quebec and the International Trade Center of Eastern Quebec.  For additional information about the conference, contact telephone (418) 694-0226, facsimile telephone (418) 694-2286, and Internet: http://simnet.gmc.ulaval.ca/cuba99
 
 

Editor’s Note: Mr. Curtis L. Carlson

On 19 February 1999, Mr. Curtis L. Carlson, founder and chairman of the Board of Directors of Minneapolis, Minnesota-based Carlson Companies, Inc., died at a hospital near his home.  He was 84 years old.  In 1938, Mr. Carlson, with a borrowed US$55.00, started the Gold Bond Stamp Company, which, by 1973, had become Carlson Companies,Inc., with global revenues of US$20 billion and 150,000 employees located in 140 countries.  Today, Carlson Companies is known for its many brands including: Radisson Hotels, Regent Hotels, T.G.I. Friday’s restaurants, Radisson Cruise Line, and Carlson/Wagonlit Travel (the second-largest travel agency in the world).

Carlson Companies, Inc., has been a member of the U.S.-Cuba Trade and Economic Council since 1996.

On behalf of the staff of the U.S.-Cuba Trade and Economic Council, we extend our condolences to Mr. Carlson’s family.  Mr. Carlson never backed away from using his resources to advance positions about issues.  He made a difference.
 
 

1999 Directorio Turistico de Cuba

Within the package containing this issue of the ECONOMIC EYE ON CUBA©, you will find the 1999 Directorio Turistico de Cuba, which is provided annually to members of the U.S.-Cuba Trade and Economic Council.
 
 

 

ECONOMIC EYE ON CUBA© is published each Monday for members of the U.S.-Cuba Trade and Economic Council, the largest nonpartisan business organization within the United States focusing upon the Republic of Cuba. The organization is a private, not-for-profit corporation which does not take positions with respect to United States-Republic of Cuba political relations. All rights reserved. Material may not be reproduced without written permission.
 
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