EY Cuba Presentation - ZED Mariel Open to the World, Nov 2015

1 ZED MariEl: opEn to thE worlD

www.zedmariel.com

OPEN TO THE WORLD zED maRiELzONa EsPEciaL DE DEsaRROLLO maRiEL

November 2015

DiGiTaL VERsiON


contents01. Why Cuba?

02. The Hub to the Americas

03. International Relationships

04. Cuba-US Relations

05. Foreign Trade

06. Doing Business with Cuba

07. Modernization of Economic Framework (2010-2015)

08. Infrastructure

09. Social Indicators

10. La Habana

11. Tourism

12. Artemisa Province

13. TC Mariel

14. ZED Mariel: Overview

15. Legal Framework

16. Fiscal Rules

17. Administrative Procedures

18. Employment Matters

19. Sector A Project Development

20. Priority Sectors

21. 2015 Projects Portfolio

22. Approved Users

23. FAQs

24. Future vision of ZED Mariel

25. EY/CONAS

Construction work is ongoing in Zone A3 where some of the first high-tech companies will be located. This

zone may also have some recreational facilities along the attractive shoreline.

3ZED MariEl: opEn to thE worlD

Zona Especial de Desarrollo Mariel (ZED Mariel) is a long-term visionary project, which is destined to play an important role in Cuba’s economic modernization process.

The total area covered by the ZED Mariel legislative framework is 465.4km2 located in the Northern part of Artemisa province, 45 km West of Havana city. At the center of this area is Sector A, which covers 4,372 hectares on the Western side of Mariel Bay. The modern container terminal, TC Mariel, which opened on January 27, 2014, forms part of Zone A7.

Over the past year major investments have been made in developing the necessary infrastructure in the first zones to be developed within Sector A. This builds on improvements made in past years to the external infrastructure, including upgrades of road and rail links from Havana.

Over 6,000 construction workers have been working to transform this greenfield site into a modern platform where investors will be able to plug into world-class infrastructural and logistical services. Outside of Sector A, land is available for renewable energy projects, hotel, resort and golf course development as well as other forms of real estate.

The ZED Mariel administrative center will be ready in early 2016 and parcels of land are now available for the first international investors to break ground.

The detailed Master Plan of Sector A, currently in its second phase is being undertaken by Bouygues Bâtiment International, which is working with a futuristic vision in the conception and design of its urbanization, in compliance with the best international practices, under the concept of “high environmental quality” (HQE).

ZED Mariel is not a Free Trade Zone fenced off from the rest of the country. Instead, it forms an integral part of the national territory for practical and legal purposes. The development of this area represents an important element of Cuba’s foreign investment approach, which has targeted the attraction of US$ 3 billion annually in new greenfield Foreign Direct Investments (FDI).

It is important to understand the regional context of Cuba, not just in terms of the improving relationship with the U.S., but within Latin America and the Caribbean as well as more globally. Although Cuba has been cut off from the U.S. for the past 50 years, it has never been isolated from the rest of the world and has deep longstanding and multi-faceted relationships with many countries.

ZED Mariel: Open to the World

www.zedmariel.com

This presentation has been prepared by EY & CONAS on behalf of the Oficina de la ZED Mariel. Its purpose is purely informative and is intended to provide a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. We advise that users of this document consult their own legal advisors and professional consultants regarding investment in Cuba. Neither EY nor CONAS accepts any responsibility for any loss arising from any action taken or not taken by anyone using this material.

All photos are subject to copyright ©.

The sobriquet ‘Pearl of the Antilles’ is well deserved for Cuba, not just for the many sites of natural beauty, culture and historic architecture, but also for the achievements made over the past 50 years in areas such as health care, education and sport. These social factors are important in any evaluation of Cuba and are outlined in section 9 of this document.

We have provided economic data and other information regarding international trade and Cuba’s existing regulatory framework as well as the country´s past experience with FDI.

It has been our pleasure putting together this Guide to ZED Mariel on behalf of the Oficina de la ZED Mariel. We would be delighted to receive any feedback or questions which you may have regarding this Special Economic Zone.


Cuba has good political, economic and trading relationships within the region and globally.

Cuba occupies a strategic location in the heart of the Caribbean, ideally located to become the hub to the Americas in shipping and aviation and, in the longer term, as a business and financial center leveraging the unrivalled attractions of living in Havana.

At 1,200 miles long, Cuba is the largest country within the West Indies archipelago. The sobriquet ‘Pearl of the Antilles’ is well deserved There is a level of culture, history, architecture and sites of natural beauty unrivalled within the region.

The ZED Mariel offers a world-class production and logistics platform, which will facilitate a greater level of domestic production reducing import costs, boosting growth, providing employment and facilitating foreign direct investment.

Cuba’s underlying infrastructure is strong in transportation, energy and telecoms. Ongoing investment needs provide opportunities for foreign direct investment going forward.

The Cuban workforce is well educated and highly skilled. Cuba has a high participation rate in tertiary education (62%) and world-class universities especially strong in medicine, engineering and information technology.

There is a stable legal, economic and political framework. Cuba’s reported 4.7% economic growth in the first half of 2015 is amongst the fastest within the region. Inflation was reported at 3.6% in 2014. As the US blockade is further relaxed and ultimately lifted, Cuba is likely to see a significant boost to its ongoing economic growth potential.

An ongoing boom in the tourism sector, evidenced by a 17.2% year on year increase in the 8 months to 31 August 2015, has been partly driven by the relaxation of travel restrictions for US citizens. This is driving demand for investment in hotel capacity and other associated infrastructure and services. The development of a Cuba strategy is a must for regional players in the hospitality sector.

In 2014, the UNDP ranked Cuba 2nd within Latin America & the Caribbean and 44th out of 187 nations on its Human Development Index (HDI). This reflects Cuba’s strong and inclusive health care system as well as other social indicators.

There is a strong fabric of society and social cohesion in Cuba. Low rates of crime, traffic and pollution make Cuban cities attractive places to live.

Old Havana is a UNESCO recognized World Heritage site. Havana has been chosen as one of the world’s seven most remarkable cities (New Seven Wonders), one of the top 10 healthiest cities in the world (CNN) and the safest city in Latin America and the Caribbean (El País).

01. Why Cuba?


“Everyone dreamed of Cuba” Miguel Barnet

Picturesque Valle de los Ingenios was one of Cuba’s most prominent centers of sugar production during the 18th and 19th centuries. The area was declared a UNESCO World Heritage Site in 1988. Photo by Marius Jovaiša, from this book Unseen Cuba (unseencuba.com)


TC Mariel is a world-class container terminal located 45km from Havana with a current capacity of 824,000 TEU. This is one of the best natural harbors in the region, which has ample greenfield development opportunities going forward.

Following the full lifting of the US blockade (specifically the Torricelli Act), TC Mariel is poised to become a major transshipment hub given its almost perfect location within the Caribbean triangle where multiple major commerce routes intersect. For traffic transiting the Panama Canal from Asia to the East Coast of North America, TC Mariel has a low deviation and short distance to final location.

The Guillermón Moncada port in Santiago de Cuba is currently undergoing a modernization as part of a Cuba-Chinese agreement.

Cuba has a much larger domestic market than other countries within the Caribbean region—this makes it attractive for companies to use the island as a platform for exports. In 2014 Cuba imported merchandise goods of US$ 14.7 billion and exported merchandise goods of US$ 5.3 billion.

Cuba is developing three cruise ship terminals in Havana, Cienfuegos and Santiago de Cuba. Carnival Corp has announced plans to start services to Cuba in 2016.

The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury has authorized several ferry operators to establish services from the US to Cuba.

Cuba has developed a world-class marina in Varadero with berths for over 1,000 boats. Several other marina projects are under development throughout Cuba by Cuban public companies as well as additional marinas that will be part of several mega golf course/marina developments.

The Gulf Stream, which passes close to Cuba’s northern coast, sees a massive boating traffic each year. Recent relaxations of measures

6

02. The Hub to the Americas


pertaining to the US blockade make it much easier for US leisure craft to visit Cuba.

Cuba attracts over three million visitors annually arriving at one of its 10 international airports. Over 20 major international airlines fly into Cuba from more than 25 countries offering a range of options for business and vacation travelers. Additional carriers are entering the Cuban market including Iberia which re-established regular flights in the summer of 2015.

Charter airline travel from the US has increased dramatically over the past year with new routes

being added on a regular basis. Scheduled airlines are expected to begin operations soon following changes in US regulations. Jet Blue, Delta and others have all expressed an interest and/or developed partnerships with existing operators.

Havana’s José Martí international airport will be subject to a major renovation over the next few years upgrading its capacity and improving its facilities. In the longer term it offers an ideal hub for the Americas combining transatlantic traffic with intra-American flights. Several European airlines already use Havana’s airport as a cargo hub for Latin America.

Other airports around the country including Varadero and Cayo Santa Maria have also been upgraded over recent years.

No other city in the region comes close to Havana for quality of life. There is a depth of cultural activities, colonial architecture and a booming social life without the social problems, contamination and traffic of other cities within the region. In the longer term Havana is likely to offer a compelling option for the location of regional headquarters for companies with a regional presence.

Panoramic view of the container yard at Terminal de Contenedores (TC Mariel). In the background is Mariel Bay, one of the best natural harbors in the Caribbean.


More than 110 countries maintain embassies in Cuba—the largest number within the region. Cuba has diplomatic relations with 190 countries and international organizations.

Cuba has been a member of WTO since 1995 and a member of GATT since 1948. Preferential trade agreements have been signed with all the countries in Latin America & the Caribbean through ALADI, Cuba-CARICOM and Cuba-MERCOSUR.

Cuba has won widespread plaudits for its leading role in responding to global health crises and natural disasters. Most recently a Cuban medical brigade responded to the emergency caused by the earthquake in Nepal. Previous assistance was provided to help deal with the Ebola outbreak in West Africa (2014-ongoing), as well as to help following earthquakes in Haiti (2010) and Pakistan (2005).

Cuba held the Presidency of the Community of Latin American and Caribbean States (CELAC) in 2013 and in January 2014, successfully hosted CELAC’s 2nd Summit in Havana, which was attended by 31 out of 33 regional heads of state.

Cuba chaired the 6th World Health Assembly, which took place from May 19-24, 2014 in Geneva.

On October 24, 2014, the Financial Action Task Force (FATF) decided to remove Cuba from its monitoring mechanisms, acknowledging the work carried out by the country to prevent money laundering and the financing of terrorism.

April 10-11, 2015 Cuba participated in the Seventh Summit of the Americas held in Panama.

In September 2015. FARC and the Colombian government announced a peace plan following three years of talks held in Havana.

Pope Francis visited Cuba from September 19-22, 2015, (the third visit by a Pope to Cuba in the last 17 years), reaffirming the excellent and uninterrupted relations between the Holy See and Cuba.

Other important visitors to Cuba during 2015 included:

October Penny Pritzker (US Secretary of Commerce), Robert Fico (Prime Minister of Slovakia), Cyril Ramaphosa (South African Vice-President).

September Truong Tan Sang (President of Vietnam), Cristina Fernández de Kirchner (President of Argentina), Juan Carlos Varela Rodríguez (President of Panama).

August John Kerry (US Secretary of State), Nicolás Maduro Moros (President of Venezuela), Tomislav Nikolić (President of Serbia).

July Frank-Walter Steinmeier (German Minister for Foreign Affairs), José Manuel Soria López (Spanish Minister of Industry, Energy and Tourism).

May François Hollande (President of France), Fumio Kishida (Japanese Minister of Foreign Affairs), Salvador Sánchez Cerén (President of El Salvador).

March Federica Mogherini (EU foreign policy chief).

February H.E. Mr. Recep Tayyip Erdogan (President of Turkey).

03. International Relations

Colombia Nears a Peace Deal With FARC Rebels


Japanese Foreign Minister Fumio Kishida makes historic visit to Cuba

José Manuel Soria, Spain’s Industry Minister in Havana, July 2015

SA-Cuba deepen economic ties: RamaphosaFriday 23 October 2015 05:31

Deputy President Cyril Ramaphosa led a high-level delegation to Cuba with the aim of improving trade relations between the two countries (Oct 2015).

France´s Francois Hollande in first Cuba visit

POPE FRANCIS IN CUBAEU and cuba push for closer ties as thaw develops

SA-Cuba deepen economic ties: RamaphosaFriday 23 October 2015 05:31


December 17, 2014. Cuba and the US announce the reestablishment of diplomatic relations. The US relaxes some sanctions and travel restrictions. Measures included an increase of limits for remittances, an easing of licensing conditions for travel to Cuba and certain exemptions for companies providing telecoms services to Cuba or goods more generally to the non-state sector.

April 11, 2015. President Obama meets with Cuban leader Raúl Castro on the sidelines of the Summit of the Americas, the first face-to-face discussion between US and Cuban heads of state in more than half a century.

April 2015. Cuban Vice-president Miguel Díaz-Canel receives Andrew Cuomo, Governor of New York. Cuomo was visiting Cuba with a group of over twenty American businessmen.

May 29, 2015. The US State Department removes Cuba from its list of state sponsors of terrorism.

July 20, 2015. The US and Cuba reopen embassies in each other’s respective capitals. Both had been closed since 1961.

July 22, 2015. Stonegate Bank and Banco Internacional de Comercio(BICSA)sign a commercial correspondent bank agreement.

August 14, 2015. US Secretary of State, John Kerry visits Cuba for the raising of the American flag ceremony over the newly opened US Embassy in Havana.

September 16, 2015. During a meeting with US businessmen, US President Barack Obama urges them to pressure Congress into lifting the embargo against Cuba.

September 21, 2015. The US Treasury Department announces new measures further relaxing some sanctions and travel restrictions. American companies are now allowed to establish certain (primarily telecoms), businesses with Cuban companies, hire personnel and export equipment. New measures also include facilitation of air and sea transportation, an increase of travelers under existing categories, and the removal of limit on remittances.

September 25, 2015. The US Chamber of Commerce launches the US-Cuba Business Council (USCBC) to build strong, strategic trade relations between the US and Cuba.

September 29, 2015. US President Barack Obama meets with his Cuban counterpart, Raúl Castro, at the UN venue in New York in the framework of the 70th Regular Session of the UN General Assembly.

On October 7, 2015, Penny Pritzker (US Secretary of Commerce) visits ZED Mariel and TC Mariel as part of her official visit to Cuba.

On October 27, 2015, there were 191 votes for the non-binding resolution entitled ‘Necessity of ending the economic, commercial and financial blockade imposed by the United States of America against Cuba in the 193-nation General Assembly.

04. Cuba-US Relations

The US Embassy in Havana re-opened on July 20, 2015. The American flag was raised on August 14, 2015.

cuban flag flies at embassy in Washington


US Secretary of State John Kerry with Cuba’s Foreign Minister Bruno Rodriguez during a joint press conference at the Hotel Nacional in Havana, Cuba, August 14, 2015.

Cuba’s Minister of Trade & Investment Rodrigo Malmierca Díaz, US Secretary of Commerce Penny Pritzker, and other governmental representatives at a bilateral meeting in Havana, Oct 7, 2015

Band From Cuba Plays the White House With 1940s Havana Rhythms

Cuba’s Foreign Minister Bruno Rodriguez Parilla, left, with Sen. Pat Roberts, R-Kan, at the Foreign Ministry in Havana, Cuba, Saturday, June 13, 2015. Also pictured are Sen. Jeff Flake, R-Ariz, second left, and Sen. Susan Collins, R-Maine

Tom Donohue, President of the US Chamber of Comemrce with Orlando Hernández Guillén, President of the Cuban Chamber of Commerce, September 2015


SELECTED COUNTRIES RANk 2009 2010 2011 2012 2013 2014% change 2014/13

% of total (2014)

Venezuela, Bolivarian Republic of 1 528 1,717 2,273 2,484 2,266 2,070 -9% 42.6%

Canada 2 431 604 719 551 462 525 14% 10.8%

Netherlands Antilles 7 59 3 29 60 108 76 -30% 1.6%

Brazil 8 63 58 82 108 81 63 -21% 1.3%

Dominican Republic 12 21 23 29 84 46 42 -9% 0.9%

Argentina 22 25 18 19 14 17 22 31% 0.4%

Honduras 24 7 9 16 15 22 19 -14% 0.4%

mexico 26 14 18 25 24 22 16 -27% 0.3%

AMERICAS 1,249 2,545 3,314 3,547 3,276 2,905 -11% 59.8%

Netherlands 3 238 353 655 698 457 468 2% 9.6%

Belgium 5 8 30 37 40 118 213 80% 4.4%

Spain 6 154 161 165 150 171 141 -18% 2.9%

France 9 45 107 23 28 43 61 42% 1.3%

Russian Federation 10 88 57 56 90 20 56 179% 1.1%

Germany, Federal Republic of 11 29 28 40 43 81 55 -32% 1.1%

Croatia 13 0 0 1 0 0 39 11497% 0.8%

United Kingdom 14 7 19 37 22 101 34 -66% 0.7%

Italy 15 29 38 51 33 56 29 -48% 0.6%

Denmark 18 18 1 2 1 0 25 5850% 0.5%

Belarus 19 1 0 14 36 1 23 4362% 0.5%

EUROPE 719 854 1,215 1,280 1,291 1,246 -3% 25.6%

China, People´s Republic of 4 516 681 778 459 344 302 -12% 6.2%

Cyprus 16 44 29 39 33 29 28 -2% 0.6%

Vietnam 17 3 3 5 8 26 27 4% 0.6%

Singapore 20 35 186 27 32 35 23 -34% 0.5%

ASIA 650 959 1,029 614 637 518 -19% 10.7%

TOTAL 2,863 4,550 5,870 5,577 5,283 4,857 -8% 100%

Merchandise EXPORTS from Cuba to country of destination

All figures US$ millions Source: Oficina Nacional de Estadísticas e Información (ONEI) Cuba has a large surplus on its services account, which largely offsets the deficit on the current account.

This services surplus includes significant income from Cuba’s medical professionals, teachers, sports coaches (and others), who work as part of missions to countries including Venezuela, Brazil, South Africa and the Middle East.

05. Foreign Trade


SELECTED COUNTRIES RANk 2009 2010 2011 2012 2013 2014% change 2014/13

% of total (2014)

Venezuela, Bolivarian Republic of 1 2,608 4,302 5,902 6,079 4,802 5,189 8.1% 39.8

Brazil 4 508 444 644 648 614 587 -4.4% 4.5%

mexico 5 323 360 450 487 508 443 -12.8% 3.4%

Canada 6 310 331 479 387 451 408 -9.4% 3.1%

United State of America 8 598 406 434 509 402 389 -3.1% 3.0%

Argentina 9 120 129 149 120 371 336 -9.4% 2.6%

Netherlands Antilles 17 0 39 150 30 1,241 94 -92.4% 0.7%

Panama 24 64 60 87 75 101 57 -43.6% 0.4%

Colombia 25 50 47 68 51 57 55 -4.4% 0.4%

Trinidad and Tobago 26 32 31 45 43 35 51 47.8% 0.4%

AMERICAS 4,834 6,384 8,696 8,667 8,815 7,857 -10.9% 60.3%

Spain 3 752 785 1,020 1,006 1,227 1,025 -16.4% 7.9%

Italy 7 324 292 388 381 460 392 -14.9% 3.0%

Germany, Federal Republic of 10 280 269 286 311 344 323 -6.1% 2.5%

France 12 140 190 344 360 412 277 -32.6% 2.1%

Russian Federation 14 195 227 224 252 183 138 -24.9% 1.1%

Ukraine 15 17 13 44 37 167 115 -31.1% 0.9%

Netherlands 16 68 61 73 94 87 107 23.3% 0.8%

Belgium 19 36 45 62 66 79 79 -0.6% 0.6%

United Kingdom 22 32 50 80 61 67 65 -2.8% 0.5%

EUROPE 2,041 2,158 2,830 2,954 3,365 2,870 -14.7% 22.0%

China, People´s Republic of 2 1,171 1,223 1,281 1,237 1,534 1,334 -13.0% 10.2%

Vietnam 13 276 266 309 190 188 242 29.0% 1.9%

South Korea 18 112 94 129 110 98 88 -9.7% 0.7%

Japan 20 89 78 79 54 71 73 1.7% 0.6%

India 23 51 53 64 62 67 62 0.5% -7.3%

ASIA 1,842 1,832 2,024 1,786 2,127 1,928 -9.3% 14.8%

Algeria 11 169 213 309 331 308 292 -5.0% 2.2%

AFRICA 177 222 328 352 356 307 -13.5% 2.4%

TOTaL 8,906 10,644 13,952 13,801 14,707 13,037 -11.4% 100%

Merchandise IMPORTS to Cuba from country of origin

All figures US$ millions Source: Oficina Nacional de Estadísticas e Información (ONEI)


ITEM 2011 2012 2013 2014% change, 2014/13

% of total, 2014

* PETROLEUM RELATED PRODUCTS 2,682 2,697 2,613 2,327 -10.9% 47.9%

• Nickel (& other ores) 1,465 1,060 768 795 3.6% 16.4%

• Cork and wood 12 20 26 30 16.0% 0.6%

CRUDE MATERIALS 1,480 1,082 796 828 4.0% 17.0%

• Medical and pharmaceutical products 523 554 601 592 -1.4% 12.2%

• Chemical materials and products 37 40 43 52 21.1% 1.1%

• Organic chemicals 15 22 32 29 -11.8% 0.6%

CHEMICALS AND RELATED PRODUCTS 583 620 681 679 -0.3% 14.0%

• Sugar 361 456 432 389 -9.9% 8.0%

• Seafood, fresh and frozen 66 66 71 80 12.3% 1.6%

• Natural honey 15 15 17 23 38.9% 0.5%

• Coffe, cocoa, other 5 8 10 8 -27.4% 0.2%

FOOD AND LIVE ANIMALS 483 570 549 508 -7.6% 10.5%

• Rolled cigars 215 218 232 217 -6.4% 4.5%

• Tobacco leaves 4 5 8 6 -22.6% 0.1%

• Cigarettes 3 1 4 3 -31.5% 0.1%

• Cigars & tobacco 223 224 245 227 -7.4% 4.7%

• Alcoholic beverages (mainly rum) 93 92 154 95 -38.1% 2.0%

BEVERAGES AND TOBACCO 316 317 398 322 -19.2% 6.6%

• Iron and steel 94 83 72 65 -9.7% 1.3%

• Cement 35 40 27 16 -41.7% 0.3%

MANUFACTURED GOODS 145 145 112 94 -16.1% 1.9%

MACHINERY AND TRANSPORT EQUIPMENT 136 105 101 84 -17.0% 1.7%

MISCELLANEOUS MANUFACTURED ARTICLES 46 40 32 17 -48.6% 0.3%

TOTAL vALUE OF ExPORTS 5,870 5,577 5,283 4,857 -8.1% 100.0%

Merchandise EXPORTS from Cuba by classification of product

All figures US$ millions * Petroleum-related products may include some other products not broken down. Source: Oficina Nacional de Estadísticas e Información (ONEI)

Cuba’s exports fell by 8.1% in 2014. This was largely driven by a fall in petroleum related products (-10.9%), nickel & other ores (3%) and sugar (-9.9%). Falling worldwide commodity prices during this period largely drove these falls.


Merchandise IMPORTS from Cuba by classification of product

ITEM 2011 2012 2013 2014% change, 2014/13

% of total, 2014

* PETROLEUM RELATED PRODUCTS 6,370 6,475 6,343 5,619 -11.4% 43.1%

• Cereals (rice, wheat, corn) 906 756 822 838 1.9% 6.4%

• Dairy products and eggs 220 192 214 289 34.6% 2.2%

• Meat and meat preparations 284 311 322 283 -11.9% 2.2%

• Animal feed (not including unmilled cereals) 198 158 208 220 6.1% 1.7%

• Vegetable oils (soybean oil) 146 165 120 147 22.9% 1.1%

• Leguminous vegetables and fruit 113 91 120 123 3.1% 0.9%

• Beverages and tobacco 37 28 50 55 8.6% 0.4%

FOOD & DRINK 2,047 1,838 2,018 2,120 5.0% 16.3%

• Herbisides/insectisides 223 215 242 231 -4.7% 1.8%

• Plastics 230 207 224 194 -13.4% 1.5%

• Fertilizers 212 227 189 215 14.0% 1.7%

• Medicinal and pharmaceurical products 149 150 169 166 -1.8% 1.3%

• Essential oils (toiletries and cleaning products) 107 114 132 149 12.4% 1.1%

• Seeds and oleagenous fruits 88 117 124 128 2.7% 1.0%

• Paints (& other) 100 95 113 90 -19.7% 0.7%

CHEMICALS AND RELATED PRODUCTS 1,451 1,464 1,598 1,444 -6.1% 11.1%

• Manufactured metals (cans/bolts etc.) 298 321 378 301 -20.5% 2.3%

• Iron and steel 372 279 333 200 -40.0% 1.5%

• Rubber (tires/transmission belys) 198 232 195 175 -10.5% 1.3%

• Nom-metallic (tiles/bottles, etc.) 158 190 178 156 -12.1% 1.2%

• Yarn, fabrics, textile 127 137 150 125 -16.7% 1.0%

• Paper, cardboard, other 146 154 152 107 -29.8% 0.8%

MANUFACTURED GOODS (by material) 1,396 1,415 1,503 1,134 -24.5% 8.7%

• Industrial machinery (pumps, bearings, parts, etc) 544 496 675 504 -25.3% 3.9%

• Electrical machinery (batteries, lamps, transformers, etc) 427 451 563 477 -15.3% 3.7%

• Motor vehicles & spare parts 282 306 331 245 -26.0% 1.9%

• Telecoms (other) 80 86 112 94 -16.0% 0.7%

• Office machinery 56 56 70 62 -11.8% 0.5%

MACHINERY AND TRANSPORT EQUIPMENT 1,954 1,940 2,525 1,978 -21.7% 15.2%

• Professional, scientific, instruments 146 145 162 203 25.1% 1.6%

• Footwear 115 116 123 103 -16.4% 0.8%

• Apparel and clothing 87 77 91 80 -11.5 0.6%

MISCELLANEOUS MANUFACTURED ARTICLES 732 667 776 741 -4.5% 5.7%

TOTaL VaLUE Of imPORTs 13,952 13,801 14,707 13,037 -11.4% 100.0%

All figures US$ millions * Petroleum-related products may include some other products not broken down. Source: Oficina Nacional de Estadísticas e Información (ONEI)

Cuba’s Imports fell by 11.4% in 2014. This was largely driven by a fall in petroleum related products (-11.4%), which was due to lower global prices.

Manufactured goods and machinery and transport equipment imports fell by 24.5% and 21.7% respectively, across virtually all categories of imports. Food & drink products increased by 5%.


Double taxation agreement entered into

force

Preferential Trade Agreement

Agreement for Reciprocal Promotion & Protection of

Investments (ARPPI)

Government export credit facility available

Barbados 17 Mar 2000 CARICOM Feb 19, 1996 -

Brazil - LAIA Jun 24, 1997 BNDES

China Oct 17, 2003 Jan 1, 2001 Apr 20, 1995 EXIM Bank China

France - - Apr 25, 1996 COFACE

Germany - - Apr 30, 1996 HermeS

Italy - - May 7, 1993 SACe

Japan - Aug 1, 1971 - NEXI

mexico - LAIA May 30, 2001 Bancomext

Panama - LAIA Jan 27, 1999 Yes

Portugal Jul 5, 2003 - Jul 8, 1998 -

Russia Nov 15, 2010 Jan 1, 2010 July7, 1993 Yes

Spain Dec 31, 2000 - May 27, 1996 CESCE, COFIDES S.A.

Switzerland - Mar 1, 1972 Jun 28, 1996 -

Venezuela May 6, 2005 LAIA Jun 28, 1996 Yes

Vietnam Jun 26, 2003 - Mar 22, 1996 Yes

UK - - Oct 10, 1995 -

The Republic of Cuba has agreements with:

Agreements for the avoidance of double taxation and the Reciprocal Promotion and Protection of Investments (ARPPI) are in place with 12 and 63 countries respectively. The table (see right) shows the agreements in force with a selection of Cuba’s trading partners.

Cuba has preferential trade agreements with CARICOM, MERCOSUR and the Latin America Integration Association (LAIA)

• African, Caribbean, and Pacific Group of States (ACP)

• Community of Latin American and Caribbean States (CELAC)

• Financial Action Task Force on Money Laundering in South America (GAFISUD)

• Food and Agriculture Organization (FAO)

• Group of 77 (G77)

• International Atomic Energy Agency (IAEA)

• International Chamber of Commerce – national committee (ICC)

• International Civil Aviation Organization (ICAO)

• International Criminal Police Organization (Interpol)

• International Federation of Red Cross and Red Crescent Societies (IFRCS)

The Republic of Cuba is a member of:• International Labour Organization (ILO)

• International Maritime Organization (IMO)

• International Mobile Satellite Organization (IMSO)

• International Olympic Committee (IOC)

• International Organization for Standardization (ISO)

• Nonaligned Movement (NAM)

• Organization for the Prohibition of Chemical Weapons (OPCW)

• Permanent Court of Arbitration (PCA)

• United Nations (UN)

• UNICEF

• United Nations Conference on Trade and Development (UNCTAD)

• United Nations Development Program (UNDP)

• United Nations Educational, Scientific, and Cultural Organization (UNESCO)

• United Nations Industrial Development Organization (UNIDO)

• United Nations Institute for Training and Research (UNITAR)

• World Customs Organization (WCO)

• World Federation of Trade Unions (WFTU)

• World Health Organization (WHO)

• World Intellectual Property Organization (WIPO)

• World Tourism Organization (UNWTO)

• World Trade Organization (WTO)


REFERENCE CUBA COSTA RICA COLOMBIADOMINICAN

REPUBLIC JAMAICA MExICO PANAMA

Population Million 11.2 4.8 46.4 9.38 2.71 121.7 3.8

Nominal GDP US$ Billion 80.6 50 378 64 14 1,283 46

GDP per person US$ 7,186 5,952 4,549 5,101 5,562 8,626 20,884

PPP per person US$ 6,789 10,415 7,903 6,147 5,290 10,230 11,948

GDP growth, 2014 % 1.3% 3.5% 4.6% 7.3% 2.4% 2.1% 6.2%

GDP growth, Jan-Jun 30, 2015 % 4.7% 3.8% 3.3% 5.1% 1.7% 3.0% 6.1%

Merchandise imports US$ Billion 13.0 17.1 64.0 17.8 5.8 399.9 13.7

Merchandise exports US$ Billion 4.6 11.2 54.8 9.9 1.5 397.5 818.2

REFERENCE CUBA COSTA RICA COLOMBIADOMINICAN

REPUBLIC JAMAICA MExICO PANAMA

UNDP Human Development Index (HDI)

Ranking out of187 countries

44 68 98 102 96 71 65

Life Expectancy Years 79.3 79.9 74 73.4 73.5 77.5 77.6

Infant Mortality Deaths per 1,000 live births 4 9 15 23 14 14 16

Maternal mortality rate Deaths per 100,000 live births 73 40 92 150 110 50 92

Physicians Physicians per 10,000 people 67.2 n.a. 14.7 n.a. 4.1 19.6 n.a.

Literacy rates % aged 15 and above 99.8 96.3 93.6 90.1 87 93.5 94.1

Mean years of schooling Years 10.2 8.4 7.1 7.5 9.6 8.5 9.4

Pupil teacher ration Number of pupils per teacher 9 17 25 25 28 28 23

% Enrollment in tertiary education

% of tertiary school-age population 62 47 45 33 26 28 42

UDP Gender Inequality Index (GII)

Ranking out of 149 countries

66 63 92 105 88 73 107

Benchmarking Cuba within the region

Sources: World Bank or IMF reports except for Cuba, which is based on *ONEI figures. *The ONEI figures are consistent with World Bank figures. The exchange rate used to convert Cuban Pesos into USD is 1:1, (again consistent with the treatment followed by the World Bank for Cuba).

Source: 2014 UNDP Human Development Index report


Cuba opened up to foreign investment in the 1990s following the collapse of the Soviet Union. Since then, over 400 joint ventures and International Economic Associations have been signed.

Cuba imported US$ 13 billion of merchandise goods in 2014. Of this, US$ 5.6 billion was non-oil-related. This makes Cuba one of the largest markets within the region and an important export market within certain targeted sectors.

As part of the ongoing process of updating Cuba’s economic model, the government has taken the following steps with regards to Foreign Direct Investment (FDI):

• A review of policy towards FDI.

• An annual target of US$ 3 billion in FDI for Greenfield projects.

• The creation of the Mariel Special Development Zone.

• The passing of Law No. 118/2014, a new, more attractive framework for foreign investment, which replaced Law 77/1995.

• On November 3, 2015 Cuban Foreign Trade and Investment Minister Rodrigo Malmierca launched the second edition of the Portfolio of Opportunities for Foreign Investment. This included 326 projects with a total investment value of US$ 8.2 billion. The 2014 version contained 246 projects.

Odebrecht, Bouygues Bâtiment International and other leading international construction firms have experience in building infrastructure, developing hotels and other projects in Cuba.

In-Bev (beer), Souza Cruz (cigarettes), Unilever (cleaning products) and Nestle (soft drinks, confectionery) have all developed products (predominantly) for the Cuban market.

Pernod Ricard and Tabacalera (owned by Imperial Tobacco) have helped develop Havana Club and Habanos S.A., respectively, into world leading brands.

Sherritt International has developed extensive mining, oil & gas, and energy interests in Cuba since the early 1990s. Several other major oil companies have performed exploratory work both on-shore and off-shore, including Repsol, ONGC, Petronas, PDVSA, Sonangol and Zarubezhneft.

Many of Cuba’s hotels are managed by one of the more than 18 foreign hotel groups operating in the country. The largest, the Meliá Group, manages 28 properties in Cuba. Other groups include the Canadian group Blue Diamond (13 properties) and Iberostar (9 properties).

Corporación Andina de Fomento (CAF) held its first international seminar in Cuba on April 28, 2015. Executive President Enrique García said CAF had “genuine interest in strengthening its ties with Cuba.”

June 9, 2015. Moody’s sees the US removal of Cuba from its list of terror-sponsoring nations as “credit positive.”

06. Doing Business with CubaItalian boutique clothing company Paul & Shark store in Old Havana’s beautiful Plaza Vieja.


China Beijing Enterprises Holdings Ltd. is planning to build a golf & real estate development called Bellomonte, just east of Havana, which will include a five-star hotel.

During 2015, Beijing authorities signed 11 agreements to be implemented between 2015 and 2017. These agreements were signed by the chairman of state holding BioCubaFarma, Carlos Gutiérrez Calzado, and Ren Zhiwu, deputy director of the Department of High Technology at the National Commission of Development and Reform.

France May 10-12, 2015. President Hollande visited Havana with French business executives from Air France, Accor, Orange, Soufflet and Pernod Ricard (amongst others).

Coface raised the limit of its line of export credit to €90 million ($98.8 million) in late 2014.

Italy July 7, 2015. Italy’s Deputy Minister for Economic Development Carlo Calenda announced that SACE and Turin-based Intesa Sanpaolo S.p.A. would provide a rotating line of credit of Euro 80 million to back exports to the island. This news was made during a bilateral business forum in Havana with 140 Italian participants.

Japan April 30-May 3, 2015. Fumio Kishida (Japanese Foreign Minister) said that Japan will begin “cooperation on a grand scale,” during a four-day trip to Havana with 30 businessmen. The group included executives from Mitsubishi Corp., Mazda Corp. and Hino Motors Ltd., trading companies Itochu Corp., Sumitomo Corp., Marubeni Corp. and Toyota Tsusho Corp., heavy machinery maker Komatsu Ltd., as well as Bank of Tokyo-Mitsubishi UFJ, Ltd. Nippon Export and Investment Insurance (NEXI) restarted a short-term export guarantee program in 2013.

korea February 2015 K-sure signed an MOU with the Central Bank of Cuba for trade insurance of up to Euro 60 million.

Russia October 22, 2015 Cuban Vice President of the Council of Ministers Ricardo Cabrisas, and Russian Vice President Dmitri Rogozin sign six bilateral co-operation agreements. These include Euro 1.2 billion of financing from Russia for the development of four 200MW thermo-electric units at Mariel’s Máximo Gómez (1) and Santa Cruz del Norte’s Este Habana (3) to be constructed by Russian Inter RAO. Other agreements included investment to modernize the José Martí steel plant as well as a co-operation between Heber Biotec and Pharmaco.

In March 2015 Foreign Minister Sergey Lavrov announced that the construction of a cargo airport on the premises of a Cuban airbase southwest of Havana.

Uralvagonzavod (UVZ) is making a $26 million investment in a rail logistics hub. It is also modernizing and expanding a rail maintenance and assembly plant in Santa Clara.

Spain April 16, 2015. Forty-five company executives accompanied Spain’s State Secretary for Trade Jaime García-Legaz on a visit to Cuba. The group, heavy on tourism, construction and energy, also included the president of CESCE, Álvaro Bustamante, as well as Joaquín Gay de Montella, Vice-President of the Confederación Española de Organizaciones Empresariales (CEOE), and Modesto Piñeiro, Vice-President of the Spanish Chamber of Commerce.

Compañía Española de Financiación del Desarrollo (Cofides) created a Euro 40 million line of credit for Spanish investments in Cuba during 2015. CESCE resumed export guarantee credit for Euro 25 million in 2014.

Uk April 27-30, 2015. Lord Hutton led a 45-member British trade delegation to Havana. Concluding this visit, London & Regional Properties Ltd. signed an agreement to develop the US$350 million Carbonera golf real estate project near Varadero. Havana Energy, a subsidiary of Esencia Group, committed to a $150 million biopower project connected to Cuba’s sugar industry. Cuba Mountain Coffee Co. Ltd. agreed to invest $4 million in private coffee farms in eastern Cuba.


July 2010 Amendment to the Civil Code allows the granting of surface rights for 99 years and in perpetuity to joint venture companies in real estate projects.Decreto-Ley No. 273 del 19 de julio de 2010 del Consejo de Estado

April 2011 The 6th Congress of the Communist Party of Cuba adopts new economic and social guidelines.

September 2011 Self-employment permits expanded to 181 categories. Decreto-Ley No. 284, modificativo del Decreto-Ley No. 278

September 2011 Cubans allowed to buy and sell post-1959 privately owned motor vehicles. Decreto No. 292 del Consejo Ministros

November 2011 Real estate markets liberalized, allowing Cubans to buy and sell private property.Decreto-Ley No. 288, modificativo de la Ley No. 65 del 23 de diciembre de 1988: Ley general de la vivienda

December 2011 Central Bank of Cuba adopts a new credit policy providing access to credit to cooperatives and self-employed persons.Decreto- Ley 289 y Resoluciones 99/2011 y 100/2011 del Banco Central de Cuba

2011 Restrictions relaxed on small businesses including the lease of state-owned commercial premises to self-employed persons. Resolución 516/2011 del Ministerio de Comercio Interior, Resolución 409 del MFP y Resolución 46/2011 del Ministerio de Trabajo y Seguridad Social

January 2012 The requirement for an exit permit to leave the country is lifted.Decreto-Ley No. 302, modificativo de la Ley No. 1312: Ley de migración

November 2012 New legislation passed related to experimental non-agricultural cooperatives. Decretos-Ley No. 305 y 306 del Consejo de Estado

November 2012 New tax code established. Ley No. 113/2012 del Sistema Tributario

January 2013 Greater flexibility granted to Cuban entities regarding the establishment of pricing. Resolución 38/2013 Ministerio de Finanzas y Precios

May 2013 Greater flexibility granted to Cuban entities regarding their secondary social objectives. Resolución No. 134/2013 del Ministro de Economía y Planificación (MEP)

May 2013 ETECSA implements a system for internet connectivity in 118 commercial offices around the country.Resolución No. 197/2013 del Ministerio de Comunicaciones

September 2013 The Council of State adopts Decree Law 313 on the “Special Development Zone of Mariel”.

October 2013 State-owned tourism companies authorized to enter into direct contracts with self-employed private owners and pay in CUC.Resolución 145 de 2013 del Ministerio del Turismo

07. Modernization of Economic Framework (2010-2015)


December 2013 Agricultural cooperatives, state farms, and private farmers are authorized to enter into direct sale contracts with hotels and other tourism related outlets.Resolución 581/2013 del Ministerio de la Agricultura, Resolución 352/2013 del Ministerio de Finanzas y Precios y Resolución 137/2013 del Ministerio del Turismo.

2013 Various decentralization measures occur, including the creation of various groups of companies, formerly under the authorities of various Ministries, such as Gecomex, Azcuba, BioCubaFarma, Azcuba, Quimefa.

January 2014 Cuban State entities begin the sale of cars to the general public. Decreto No. 320 del Consejo de Ministros

March 2014 Rules relaxed on cellphone data services for Cuban nationals. Resolución 8 de 2014 del Ministerio de Comunicaciones

March 2014 Salary for doctors and dentists raised by over 100% and 70% respectively. Resolución No. 11/2013 del Ministerio de Trabajo y Seguridad Social

March 2014 Foreign Investment Legislation published to establish a new legal framework for foreign investment in Cuba.Ley No. 118 de la Inversión Extranjera; Decreto No. 325/2014: Reglamento de la Ley de la Inversión Extranjera, Resolución 128 y 129 del Ministerio del Comercio Exterior y la Inversión Extranjera, Resolución 46 y 47 del Banco Central de Cuba, Resolución 16 del Ministerio del Trabajo y Seguridad Social

April 2014 Employment incentives announced for ZED Mariel. A *coefficient of 10 is established for Cuban workers hired through employment agencies to provide services to entities operating in the zone. Resolution 14/2014 del Ministry of Labor and Social Security

April 2014 Increased autonomy provided to Cuban companies in making investment and other decisions. Resolución 203/2014 Ministerio de Finanzas y Precios

April 2014 Flexibility given to Cuban state companies to determine salary levels including incentive payments for staff.Resolución 17/2014 del Ministerio del Trabajo y Seguridad Social

July 2014 The Council of Ministers approved new, higher salaries for sportspeople, trainers and other sports professionals.Resolución 22/14, 23/14 y 24/14 del INDER

July 2014 Two Cuban baseball players officially hired by the Japanese Major League. Salaries in millions of US dollars. July 2014 Cuban State entities begin the sale of cars to the general public. Decreto No. 320 del Consejo de Ministros March 2014 Rules relaxed on cellphone data services for Cuban nationals.Resolución 8 de 2014 del Ministerio de Comunicaciones

* The co-efficient is the ratio of Cuban Pesos paid to the employee by the State Employment agency for every Cuban Convertible Peso charged paid by the company to the employmemt agency.

November 2014 Employment incentives announced for Cuban employees of joint ventures and other foreign investment vehicles. The co-efficient is changed from one Cuban Pesos for each Convertible Peso charged to two Cuban Pesos for each Convertible Peso charged. Resolution 42/2014 del Ministerio del Trabajo y Seguridad Social

17 December 2014 Cuba and US announced the reestablishment of diplomatic relations. The U.S. relaxes certain sanctions and makes travel to Cuba easier.

June 2015 Reported that the largest Cuban state companies will be overseen by boards of directors made up by representatives of social organizations, experts and academics appointed by the Council of Ministers.

June 2015 Banco Popular de Ahorro offers online banking services to the non-public sector.

July 2015 ETECSA opens up 35 Wi-Fi hot spots throughout the country at a rate of CUC 2 per hour.

2015 Plan announced for over 10,000 coops to be established from 2015-2017 by converting state enterprises (including all existing state restaurants) into democratically managed cooperatives.


Cuba has an extensive network of over 10 airports able to receive international aircraft. Havana’s José Martí international airport will be subject to a major renovation over the next few years upgrading its capacity and improving its facilities. In the longer term it offers an ideal hub fortheAmericascombiningtransatlantictrafficwithintra-Americanflights.SeveralEuropeanairlines already use Havana’s airport as a cargo hub for Latin America.

Cuba’s road network connects all areas of the country. Several investment initiatives are ongoing to ensure that these are adequately maintained.

The newly built railway spur linking Mariel to the national rail network now enables individuals to commute easily by train from Havana to Mariel as wellasprovidinganefficientalternativetoroadtransportation for containers.

Significantinvestmentshavebeenmadeoverrecent years to upgrade the water network within the country; Cuba has many natural aquifers includingfivewithintheZEDMarielarea.

ETECSA, the national telecoms monopoly, has embarkedonamajorfive-yearinvestmentprogram that will enable the company to meet regional norms in terms of internet and mobile connectivity. Measures have been taken in recent years to reduce the cost of communications to and from Cuba.

Unión Eléctrica (UNE), the national utility provider, has an ambitious plan to provide 25%

of the energy needs of Cuba from renewable energy sources by 2030. This plan calls for the development of 755 MW of biomass plant, 700 MW of solar photovoltaic parks and 633 MW of

wind projects.

Existing thermo-electric power stations mostly burn Cuban domestic crude oil that is extracted from (mostly) on-shore or shallow

water platforms.

A major new project was recently announced to invest approximately Euro 1.45 billion to

build four new thermoelectric 200 MW units at Mariel’s Máximo Gómez (1) and Santa Cruz

del Norte’s Este Habana (3). This work will be done by Russian Inter Rao as part of an overall

co-operation agreement signed between the two countries in October 2015.

The 30-mile Pedraplén causeway cuts through Buena Vista Bay, linking mainland Cuba to the Cayería del

Norte cays in Villa Clara Province.

Photo by Marius Jovaiša, from this book Unseen Cuba (unseencuba.com)

08. Infrastructure


Cuba has universal health care free at the point of delivery that has produced First World health indicators. Cubans have a life expectancy of 79.3 years, infant mortality rates of 4 per 1,000 live births and 67 physicians per 10,000 population.

The Escuela Latinoamericana de Medicina (ELAM) was established in 1999 as part of Cuba’s humanitarian and development aid strategy. ELAM is one of the largest medical schools in the world by enrollment with approximately 19,550 students from 110 countries enrolled in 2013. All those enrolled are international students from outside Cuba and mainly come from Latin America and the Caribbean as well as Africa, Asia and the US

Cuba has Universal education with a literacy rate of 99.8%. The mean years of schooling is 10.2, with 62% entering tertiary education. The pupil-teacher ratio is 9 pupils per teacher. Each year over 10,000 Cubans graduate with information technology degrees from one of Cuba’s technical schools.

A high percentage of the workforce (71%) has advanced educational qualifications. There is also a high participation of women in the workforce.

Within the Havana catchment area are the University of Havana, Instituto Superior Politécnico José Antonio Echevarría (CUJAE), Instituto Superior de Tecnologías y Ciencias Aplicadas, Instituto Superior de Ciencias Médicas de La Habana, Universidad Agraria de La Habana, Universidad de las Ciencias Informáticas (UCI), Universidad de Artemisa and Escuela Latinoamericana de Medicina.

The Biotechnology cluster (pole) in Western Havana contains several world-renowned research institutions that have developed many groundbreaking medical treatments.

In June 2015, WHO’s director general Margaret Chan highlighted Cuba’s success in becoming the first country to eliminate mother-to-baby HIV transmission.

There are low levels of crime, violence and drug use in Cuba, which provides for a safe and secure environment.

Cuba is the most progressive country in the region on issues related to gender equality and same sex marriage.

Cuban international sports teams have an incredible track record at the Olympics and other international competitions. In sports as diverse as athletics, baseball, boxing, fencing, judo, shooting, volleyball and boxing, Cuban talent and coaching is widely respected.

Cuba has encouraged mass participation domestically in sport. The Annual Terry Fox run has a countrywide participation of approx. 2 million people (20% of the population).

Cubans have very strong family relationships and ties.

Cuba has a strong sense of national identity and limited ethnic, religious or racial cleavages.

09. Social Indicators


Kids walking home from school in Baracoa, Guantánamo province

Even in remote rural areas, you will see Cuban kids

with their school uniforms kept immaculately and

worn with pride

The World Bank and UNDP consistently classify Cuba alongside First World countries in educational and health benchmarking reports.

24


In December 2014, New Seven Wonders Foundation chose Havana as one of the

world’s seven most remarkable cities. CNN includes Havana within its top 10

healthiest cities worldwide.

“Havana is the safest city in Latin America and the Caribbean.”Guía de El Viajero, published by El País.

(Population 2,141,913)10. La HabanaView of the entrance to Havana harbour. Old Havana is in the

foreground, right and “complejo Morro Cabaña”, foreground left. Photo by Marius Jovaiša, from this book Unseen Cuba (unseencuba.com)


Cuba attracted 3 million visitors in 2014 generating US$ 2.55 billion in revenues. Looser OFAC restrictions have led to strong growth from US visitors, which increased by an estimated 35% in the first half of 2015. Other markets have also seen strong growth averaging 17.2% (up to August 31, 2015). If this rate of increase continues, Cuba will welcome 3.5 million visitors for the complete year.

This increase has been helped by global factors including turbulence in North Africa and a strengthening global economy but really driven

by Cuba’s increasing appeal both to American and non-American visitors alike.

Cuba is in the news and in fashion. Whether it’s a new visit to Cuba by this President or that Prime Minister it seems that the whole world is coming to town. Anthony Boudain and Conan O’Brian recently did shows from Havana. Beyonce and Jay Z, Mick Jagger, Paris Hilton, Naomi Campbell and Katy Perry have all visited in 2015. The 2015 Havana Biennial in May received global coverage and was the largest ever. The Rolling Stones are planning to perform in March 2016, in Havana’s Latinoamericano Stadium.

Services and facilities offered to tourists are continuing to improve as a virtuous circle of booming demand is driving investment in the state and non-state sector which in turn increases demand.

In the 1950s, 85% of tourists to Cuba came from the US. Various studies have estimated that, once Americans can visit Cuba without restriction, the island could expect to see demand for more than ten million tourists annually.

26

11. Tourism


Studies which have looked at Cuba’s potential to receive this many tourists emphasize that, while obviously massive investment will be needed, Cuba does have the potential in terms of geographic size (110,860km2/43.6% of the Caribbean), miles of coastline (5,746km) and population (11.2 million/31% of the Caribbean) to meet this demand.

Over the last 25 years, the island grew from 18,565 hotel rooms in 1990 to 62,700 hotel rooms (68% of which are 4 and 5 stars) at the beginning of 2015. By 2020, the total number of hotel rooms should be 85,000 according to Tourism Minister Manuel Marrero.

MINTUR estimates that Cuba has a total potential capacity of 273,500 hotel rooms, which is more than four times the current number.

Currently, more than 60 tourism projects are being developed with companies from Canada, China, Germany, Spain, Italy and others. These projects are aimed not just at building new hotels and resorts, but also the development of amusement and water parks, together with logistical support and the expansion of water sports.

The 2014 Investment Opportunity Brochure identified 16 hotels (totaling 5,412 rooms) open for foreign investment through joint ventures as well as a further 35 hotels (16 current and 19 new properties) available for management by international hotel groups.

At FITCUBA in May 2015, Grupo Islazul S.A., which operates 106 one- to four-star hotels with close to 10,000 rooms, announced it is seeking marketing and hotel administration partners.

The Northern Keys are virgin areas which have been developed into some of Cuba’s much luxurious tourism resorts. This beach in Cayo Coco is simply spectacular.

“If I get lost look for me in Cuba” Federico García Lorca .


The planned tourist development will require construction materials and accessories as well as supplies to run their post-opening operations.

MELIÁ manages 28 hotels in Cuba, with a total of 12,244 rooms. In 2013, it opened the 731-room, 1,000-berth Marina Varadero. Future plans include the 900-room Meliá Internacional in Varadero (2015) and the Paradisus Cayo Santa María (2015).

BLUE DIAMOND, the subsidiary of Canadian Sunwing, has quickly established a major presence with 14 hotels and 8,771 rooms in Cuba.

IBEROSTAR, the Spanish group currently manages 9 properties in Cuba, totaling 3,843 rooms. The family-run group has various development plans on the island.

ACCOR currently manages 2 hotels in Cuba. It has agreed to manage the Pullman Cayo Coco (opens November 2015) and Sofitel So La Habana (under construction).

Warwick INTERNATIONAL HOTELS and RESORTS will enter the Cuban market in 2015, administrating the Warwick Cayo Santa Maria and Naviti Varadero.

NH HOTELS opened the newly renovated NH Capri in 2014.

Other Spanish groups operating in Cuba include H10, HOTELES C, BE LIvE (part of Globalia), HUSA, HOTUSA and ROC. The Jamacian groups SUPERCLUBS and SANDALS both manage properties.

kEMPINSkI is set to manage the 246-room Manzana de Gómez, currently under construction in Old Havana.

At least 12 major golf courses, marina and real estate development projects are under discussion. Five have reached an advanced stage. These are Carbonera (Varadero), Bellomonte (Playas del Este), Camarioca (Matanzas), El Salado (Artemisa) and Punta Colorado (Pinar del Rio). These projects have projected capital costs of US$ 300-600 million each.

28


RANk 2009 2010 2011 2012 2013 2014 *2015 %CHANGE 2015/14

% OF TOTAL 2015

Canada 1 914,884 945,248 1,002,318 1,071,696 1,105,729 1,175,077 1,340,763 14.1% 38.1%

United States 6 52,455 63,046 73,566 98,050 92,348 91,254 123,193 35.0% 4.1%

Venezuela 7 28,657 30,965 34,096 36,373 45,943 78,839 110,769 40.5% 3.1%

mexico 8 61,487 66,650 76,326 78,289 84,704 82,820 102,448 23.7% 2.9%

Argentina 10 48,5436 58,612 75,968 94,691 90,084 68,849 82,688 20.1% 2.3%

Chile 11 18,205 17,521 23,527 27,551 35,952 38,500 50,743 31.8% 1.4%

Colombia 14 21,287 20,624 24,873 33,343 34,828 37,403 33,925 -9.3% 1.0%

Peru 17 14,708 16,049 15,188 19,737 18,528 19,536 24,811 27.0% 0.7%

Brazil 18 13,498 14,367 14,507 16,174 17,573 19.513 24.216 24.1% 0.7%

Panama 24 9,677 9,656 10,347 12,298 12,765 13,277 15,561 17.2% 0.4%

Uruguay 27 4,585 5,128 7,009 7,910 8,294 10,258 12,022 17.2% 0.3%

other n-a 35,696 37,574 39,552 41,634 43,825 45,446 53,263 17.2% 1.5%

Cuban Émigré 312,318 378,560 401,723 389,254 373,427 361,228 408,678 13.1% 11.6%

TOTAL AMERICAS 1,536,000 1,664,000 1,799,000 1,927,000 1,964,000 2,042,000 2,383,078 16.7% 67.7%

Germany 2 93,437 93,136 95,124 108,712 115,984 139,138 170,444 22.5% 4.8%

UK 3 172,318 174,343 175,822 153,737 149,515 123,910 159,100 28.4% 4.5%

France 4 83,478 80,470 94,370 101,522 96,940 103,475 134,518 30.0% 3.8%

Italy 5 118,347 112,298 110,432 103,290 95,542 112,076 129,336 15,4% 3.7%

Spain 9 129,224 104,948 101,631 81,354 73,056 77,099 101,848 32.1% 2.9%

Russia 12 37,391 56,245 78,472 86,944 70,401 69,237 42,788 -38.2% 1.2%

Holland 13 33,123 31,787 32,4023 35,284 32,165 33,491 40,725 21.6% 1.2%

Switzerland 16 15,339 16,095 18,143 20,254 20,992 23,880 31,545 32.1% 0.9%

Austria 19 12,004 11,486 11,803 13,250 15,201 16,923 19,834 17.2% 0.6%

Poland 20 13,501 12,793 13,972 13,035 13,395 16,569 19,402 17.1% 0.6%

Belgium 21 15,722 13,049 14,266 14,414 14,098 15,895 18,613 17.1% 0.5%

other 114,116 103,350 105,563 107,563 113.011 135,307 158,580 17.2% 4.5%

TOTAL EUROPE 838,000 810,000 852,000 839,000 810,000 867,000 1,026,733 18.4% 29.2%

ASIA & PACIFIC 45,000 47,000 54,000 59,000 62,000 76,000 88,310 16.2% 2.5%

MIDDLE EAST+AFRICA 11,000 11,000 11,000 13,000 15,000 18,000 21,096 17.2% 0.6%

TOTaL 2,429,809 2,531,745 2,716,317 2,838,607 2,852,572 3,002,745 3,519,217 17.2% 100.0%

b

C

* Annualized estimate based on results to August 31, 2015 (A) 2013 & 2014 figures based on work by Faculty of Tourism at Havana University. Other years’ figures estimates based on balancing numbers required for global figures. (B) Projected based on reported increase of 35% in first half of 2015. (C) General increase of 17.2% assumed.

Visitor arrivals to Cuba, 2009 to 2015

C

C

A

C

C

C


Jardines de la Reina National ParkCoral reefs, sand islands, wildlife, original vegetation.

Desembarco del GranmaNational ParkMarine terraces, forests.

TurquinoNational ParkRainforest, endemics.

Baconao-Gran PiedraEndemics, forests,landscapes diversity.

Tunas deZaza

BanaoEcological reserve

Loma de CunaguaWildlife sanctuary

Lanzanillo-Cayo FragosoWildlife sanctuary

Cayo CruzWildlife sanctuary

Río MáximoWildlife sanctuary

Cayo Ana MaríaWildlife sanctuary

NuevitasWildlife sanctuary and mangrove belt

Cayo FrancésNatural reserve Cayo Coco

Natural reserve

Caguanes National ParkForests, caves,aboriginal paintings

MaternillosEcological reserve

Bahía NuevasEcological reserve

CaletonesEndemics

Delta del CautoWildlife sanctuary,wetlands.

Cerro GalanoNatural reserve

El GuasoRainforests

La Mensura

Sierra CristalEstablished in 1930

MaisíMarine terraces,xeromorphic forest

Southeastern coastNatural reserves,protected landscapes,terraces, forest, wildlife.

Alejandro de Humboldt National ParkMountain rainforests,hundreds of endemics.

Sierra MaraguánWildlife sanctuary

Buena EsperanzaProtected landmark:coral reef in muddy waters.

Reserve (natural, ecological) Protected landscape

Area managed for conservation

Protected natural landmark

Wildlife sanctuary

National park

CUBA´S NATURE RESERVES AND PROTECTED AREAS, 2014

Map compiled by Caribbean Professional Services Ltd from various public sources. It is indicative only.

Guanahacabibes PeninsulaWell preserved forestsEndemics.

Viñales National ParkCultural and natural landscapes, endemics.

Sierra del RosarioMountain rainforest.

Isle of Youth southern plainWell preserved originalcoastal forests and swamps.Invasive exotic animals(hogs, cows, deer, alligators)have turned into pests.

Los Canarreos ArchipielagoCoral reefs, sand islands, original vegetation. IncludesCantiles National Park and several natural sanctuaries.

Ciénaga de Zapata National ParkThe largest wetland in theCaribbean (1.7 million acres).Includes a special protection zone at Playa Girón shoreline,Las Salinas wildlife sanctuaryand parts of the ocean shelf.

Cabo de San Antonio Cabo Corrientes

Playas del Este

Cabo Cantiles

Playa GirónLas Salinas

CIÉNAGA DE ZAPATA

AgabamaCayo Largo

Cayos de San FelipeEndemic

Las CayamasMigratory birds

Los PretilesEndemic

Mil CumbresHigh diversity endemic

Galindo hillsEndemic flora

Cayo Mono-GalindoEcological reserve

Bibanasí hillsWildlife sanctuary

JumaguaEcological reserve

CubanacánEcological reserve

Pico San JuanEcological reserve

Las Picúas-Cayo CristoWildlife sanctuary

Cayo LeguasMigratory birds

Biospherereserve

Cayos Los Indios


ZED Mariel encompasses an area of 465.4 km², partially covering six municipalities within the province of Artemisa. This area encompasses many sites of natural beauty as well as an attractive topography.

Land is available for renewable energy projects as well as for hotel, resort and golf course development outside of Sector A (but still within the area covered by the ZED Mariel legislative framework).

Playa El Salado and Playa Baracoa offer attractive beaches and over 15 dive sites offshore. Only 23km West from Havana, El Salado has great potential for tourism

development and currently is the location for Cuba’s best go-karting track.

San Antonio de los Baños hosts the world-renowned Escuela Internacional de Cine y TV founded in 1986 with the help of the late Gabriel García Márquez. The respected Latin American School of Medicine (ELAM) graduates thousands of medical students from all over the world each year.

Artemisa is known as Villa Roja (Red Town) or the Jardín de Cuba (Garden of Cuba) for the famous fertility of its soil, which still yields a rich annual harvest of sugarcane, tobacco and bananas.

The immediate catchment area for workers in ZED Mariel includes:Mariel (Pop: 14,000) Artemisa (Pop: 82,917) Guanajay (Pop: 28,750) San Antonio de los Baños (Pop: 49,942).

12. Artemisa Ernest Hemingway and Cuban poet Nicolás Guillén were attracted to spend time in the town of Artemisa that boomed on coffee and sugar in the 19th century. It maintains a country charm today.

The University of Artemisa opened in October 2012 and now has 3,000 undergraduate and graduate students in 18 schools.

Just outside of the boundaries of ZED Mariel to the West lies the UNESCO Biosphere Reserve Sierra del Rosario, which includes Las Terrazas. This is one of Cuba’s premier destinations for eco-tourism. Stunningly beautiful and often twinned with the lovely Soroa, this is a place to appreciate nature and escape from city life.

Countryside near Quiebra Hacha (Artemisa)

Artemisa Province is one of the two new provinces created from the former La Habana Province, whose creation was approved by the Cuban National Assembly on August 1, 2010, the other being Mayabeque Province. The new provinces were enforced on January 1, 2011

31


Terminal de Contenedores de Mariel, S.A. (TC Mariel) is a world-class container terminal located 45km from Havana with a current capacity of 824,000 TEU. This is one of the best natural harbors in the region, which has ample greenfield development opportunities going forward.

TC Mariel opened in January 2014 and is operated by Singapore-based PSA. With the capacity to receive Post-Panamax shipping, this port is being developed into an important regional logistics hub.

Following the full lifting of the US blockade (specifically the Torricelli Act), TC Mariel is poised to become a major transshipment hub given its almost perfect location within the Caribbean triangle where multiple major commerce routes intersect. For traffic transiting the Panama Canal from Asia to the East Coast of North America, TC Mariel has

a low deviation and short distance to final location.

With a population of 11.2 million, Cuba is the largest country in the Caribbean. Given a large and growing tourism market, this implies a large domestic market relative to other countries in the region that gives Cuba an advantage over other smaller islands within the Caribbean.

Mariel is a deep-water port, enabling the operation of a 702-meter jetty covering an area of 27.7 hectares. It has in operation four ship to shore cranes (STS)and twelve patio cranes.The current capacity is 824,000 twenty-foot equivalent units (TEUs) annually.

The entrance channel has a depth enabling the operation of Post-Panamax vessels, which are capable of carrying as many as 12,500 TEUs (compared to the current maximum of 3,500 TEUs).

Contact details:

Terminal de Contenedores de Mariel, S.A. Carretera a Quiebra Hacha, Km 8 ½. Municipio

Mariel, Artemisa, Cuba Tel: (5347) 397100 [email protected]

http://www.tcmariel.cu

An administrative center is already in place. Warehousing and distribution centers are being developed to meet the current ongoing needs generated from the container traffic that is entering the port.

A future expansion to meet transshipment demand in a post-US blockade scenario could see the jetty increased to 2,400 meters over an area of 128 hectares, which would increase the potential annual capacity to over 3 million TEUs.

13. TC Mariel: A Regional Logistics Hub


MEXICO

U.S.A.

HONDURAS

COSTA RICA

PANAMA

VENEZUELA

COLOMBIA

JAMAICA

DOMINICAN REPUBLIC

PUERTO RICO

EL SALVADOR

NICARAGUA

Houston

Altamira

VERACRUZ

Puerto Barrios

Puerto Brito

Puerto Aguila

New Orleans

Jacksonville

Puerto Cortés

Puerto Cabello

La GuairaPORT-OF-SPAIN

San Juan

KingstonSanto Tomás

Miami

*TC MARIEL

CAUCEDO

GUATEMALA

1.95 0.45

1.42

0.500.761.98

3.36

5.20

10.95

1.702.804.80

0.601.202.202.62

4.42

1.05

0.570.38

0.60

0.49

0.90

Port Everglades0.93

0.92

CARTAGENA

1.051.503.50

1.151.252.45

0.871.003.00

0.300.832.00

1.501.502.50

BAHAMAS

FREEPORT

COLON CLUSTER

LIMON MOIN

Nicaraguan Canal

Incoming traffic, 2013 Current capacity, 2013 Capacity after expansion Million TEUs

KEY

CONTAINER TRAFFIC THROUGHPUT IN THE REGION, 2013 (MILLION TEU)

*TCMarielisestimatedtohavetrafficofapprox.310,000TEUin2015,itsfirstfullyear of operation. Its current capacity is 824,000 TEU.

33


MEXICO

U.S.A.

COSTA RICA

PANAMA

VENEZUELA

COLOMBIA

JAMAICA

DOMINICAN REPUBLIC

PUERTO RICO

BAHAMAS

EL SALVADOR

NICARAGUA

Houston

Altamira

Veracruz

Puerto Barrios

NewOrleans

Jacksonville

Puerto Cortés

Puerto Limón Puerto Cabello

La Guaira

Port-of-Spain

San Juan

Río HainaKingstonSanto Tomás

Miami

Cartagena

Caucedo

GUATEMALA

Port Everglades

Freeport FTZ

Colón

Balboa

HONDURAS

ASI

A T

O E

CN

A +

CEN

TRA

L A

MER

ICA

& C

AR

IBB

EA

N

TC MARIELEUROPE TO US GULF COAST + CENTRAL AMERICA & CARIBBEAN

Planned NicaraguanCanal

ECSA TO ECNA + US GULF COAST + CENTRAL AMERICA & CARIBBEAN

CUBA, HUB TO THE AMERICAS(FUTURE OPPORTUNITIES)

34


Mariel Special Development Zone (ZED Mariel) is Cuba’s first Special Development Zone, created in November 2013 by Decree-Law 313. It covers a total area of 465.4 km², located in the Northern part of Artemisa province, 45 km West of Havana.

ZED Mariel is not a Free Trade Zone; it is an area of the national territory regulated by special regimes and policies, designed to attract investment in the production of goods and services with added value, using knowledge and innovation, clean technologies and generating

industrial concentration to replace imports, boost exports, and create new sources of employment. This is being done in co-ordination with the rest of the domestic economy.

ZED Mariel is open to Cuban and foreign companies. Its incentives are universal, more attractive than those provided by Law 118 and apply to all companies based in the Zone.

Products and services generated in ZED Mariel are Cuban products, which can be traded with other Cuban companies outside Mariel or exported without quotas.

Exports from Cuba are customs tariff exempted.

ZED Mariel has a fast approval process, ranging between 35 and 65 days, with only two levels of decision: the General Director of the Office of ZED Mariel and the Council of Ministers for those cases explicitly listed in the law.

View of the sector A8 (Food and agricultural processing zone). In the background trucks leave TC Mariel.

Overview14. ZED MARIEL


Cabañas

SIERRA DEL ROSARIO

PlayaBaracoa

La Boca

PlayaEl Salado

Canto de Santa Fe

HAVANA

Caimito

Bauta

Las Terrazas

CandelariaSan Cristobal

SAN ANTONIODE LOS BAÑOS

ARTEMISAAlquízar Quivicán

Bejucal

ARTEMISA

MA

YA

BE

QU

E

San Antoniode los Baños Airport

Escuela Internacionalde Cine y TV

Guanajay

AUTOPISTA HABANA PINAR DEL RIO

CARRETER

A CEN

TRA

L

Cayajabos

JOSÉ MARTÍINTERNATIONAL AIRPORT

Guira de Melena

PuntaBrava

Bahía de Cabañas

EmbalsePinillo

Embalse El Mosquito

PresaLa Coronela

CARRETERA PANAMERICANABaracoaAirport

Mariel La Molina

EmbalseSan Francisco

Total area available for development as part of ZED Mariel

45 Km

TC MARIEL

ZONES A1-A11

New/renovated railway

New 4-lane Mariel connecting highway


The two-track railway started operations in July 2014, transporting cargo and passengers to and from the

Zone. In total, 58km of railway double track has been laid and a further 30.5km of single track. Four railway

stations have also been built.


Details the general tax rules for all economic activities in Cuba, including for Cuban/non-Cuban nationals and Cuban/international companies.

The previous tax law, Law 73 continues to apply to international companies that have invested in Cuba to the extent that Decree-Law 313/2013 or Law 118/2014 does not contradict it.

The National Assembly (Parliament) adopted Law 113 of 2012 on the Taxation System dated July 23, 2012. The following complementary regulations were also adopted

• Council of Ministers Decree No 308/2012 on General Rules and Tax Procedures

Taxation Act Law 113/2012

Establishes a special regime for investment in the area of 465.4 km² within the province of Artemisa, which pertains to ZED Mariel.

The Council of State adopted Law 313 of 2013, dated September 23, 2013 (the “Special Development of Mariel”).

In addition, the following complementary regulations were adopted:

• Council of Ministers Decree No 316/2013

• Banco Central de Cuba Resolution No 82/2013

• General Customs of the Republic of Cuba Resolution No 278/2013

• Ministry of Science, Technology and the Environment Resolution No. 150/2013

• Ministry of Finances and Prices Resolution No. 384/2013 and 149/2014

• Ministry of the Interior Resolution No. 14/2013

• Ministry of Labor and Social Security Resolution No. 49/2013

This sets out the principal legal structures for the implementation of foreign investment projects in Cuba, including investment protection and the general rules relevant to foreign investors. Supersedes and repeals previous Law 77/1995.

The National Assembly (Parliament) adopted Law 118 of 2014 on Foreign Investment dated March 29, 2014. The following complementary regulations were also adopted:

• Council of Ministers Decree 325/2014 (“Decree 325”) dealing with procedural rules

• Central Bank of Cuba Resolutions 46/2014 and 47/2014

• Ministry of Foreign Trade and Foreign Investment Resolutions 128/214 and 129/2014

• Ministry of Labor and Social Security Resolution 16/2014 dealing with labor matters

Special Development Zone of Mariel Decree Law 313/2013

Cuban Foreign Investment Law 118/2014

15. Legal Framework


16. Fiscal Rules

*Companies located in ZED Mariel must pay 0.5% of the gross income earned in each quarter to the ZED Mariel Development Fund.

APPLICABLE TAX REGIME TAXATION ACT 113/2012 FOREIGN INVESTMENT LAW 118/2014 ZED MARIEL DECREE LAW 313 & 316/2013

TYPE OF FOREIGN INVESTMENT COMPANY 100% FOREIGN OWNED COMPANIES & BRANCHES JOINT VENTURES / IEA ALL COMPANIES IN ZED MARIEL

Income tax (on net profits)

35%. May be increased up to 50% when involving natural resources (oil/minerals). Exemptions may be negotiated on a case-by-case basis.

Exempt for first 8 years as of date of incorporation, then taxable at 15%. May be increased by 50%(up to 22.5%) when involving natural resource. Profits reinvested are tax exempted.

Exempt for first 10 years then taxable at 12%. Exemption may be extended. Profits reinvested are tax exempted.

Social security (employer)

Law 117 on the State Budget for 2014 establishes a rate of 14% payable by the employer.

Payroll tax 12% in 2015, will be gradually reduced to 5% in 2017.

None None

Personal Income Tax (Non-Cuban residents)

15% of all income obtained or generated as a result of economic activity in Cuba. Dividends are exempt from taxation. Payable within first 20 calendar days following settlement period.

Services tax (Gross receipts tax)

10% of gross sales valueGradual application.

Exemption during first year of operations. Payable at 50% of the rate (10%) established by law.

Exemption during first year of operations. 1% flat rate established.

Sales tax 2% gross sales value for wholesale and 10% for retail sales. Gradual application.

Exemption during first year of operations. Payable at 50% of the rate (2%) established by law on wholesales.

Exemption during first year of operations. 1% flat rate established.

Goods tax Certain goods intended for use or consumption such as alcoholic beverages, cigarettes, luxury goods, etc. Taxable goods and rates established in the Law on the State Budget/Resolution of the Ministry of Finance & Prices (MFP).

Territorial contribution 1% gross income. Raw materials for industrial production & goods for export exempt.

Exempted during investment recovery period. * None

Environmental protection taxes (beaches, fauna etc.)

Defined in The Law on the State Budget annually.

50% reduction during investment recovery period.

50% reduction during investment recovery period.

Customs duties Exemptions may be negotiated on a case-by-case basis on capital investment.

Not payable during development period. Not payable on capital equipment imported for investment.

Customs duties are payable in accordance with the established tariffs for raw materials. Existing scheme in place to exempt goods subsequently re-exported.

Land Transportation & Document Tax

Rate is dependent upon type of vehicle/document– amounts are relatively low.

Advertisement Tax Applies to the public display of commercial announcements and advertising signs – rates are dependent upon dimensions of sign and location.


ZED Mariel is open to Cuban and foreign companies, as well as cooperatives and individuals.

Companies may act as a concessionaire or as a user of the zone.

Concessionaires need to obtain approval from the Council of Ministers, which will grant an administrative concession for the temporary management of a public service, execution of public works or exploitation of government property, for up to 50 years, which may be extended.

The Mariel Special Development Zone Office is an entity attached to the Council of Ministers and commissioned to administer the Zone, control its activities, prepare and conduct the Development and Business Program, process all applications, licences, permits and authorizations carried out or needed by concessionaires and users of the Zone or by those interested in becoming established in it, by means of an efficient one-stop-shop system.

Initial contact made by the investor with the Mariel Special Development Zone Office

A preliminary assessment is made of the project to clarify whether it fits within the overall eligibility criteria for ZED Mariel and a written reply is conveyed to the investor.

The investor is required to prepare a file, which includes legal and financial documents, as well as a feasibility study in accordance with the relevant Cuban norms for ZED Mariel.

Once the Mariel Special Development Zone Office has received the file, a response will be given on the project’s approval within 30-60 days, depending on the level of approval.

Investors have to contract an authorized entity to perform a valuation of the land usage rights

Ministry of Finance & Prices (MFP) certifies the valuation of the land usage rights

The feasibility study may be performed internally by the company or contracted out to a Cuban or international consulting firm. In either case, it must conform to the template laid out by ZED Mariel, which may be downloaded at www.zedmariel.com

17. Administrative ProceduresLegal status of users/concessionaires

Administration of ZED Mariel

Cuba has signed Agreements for the Reciprocal Promotion and Protection of Investments (ARPPI) with over 63 countries (page 16).

Cuba is a member of the International Court of Arbitration with headquarters in Paris.

The Foreign Investment Law 118/2014 provides for protection against expropriation and ensures the free transfer abroad of dividends, profits or other income associated with the realization of the Foreign Direct Investment (FDI) project.

Foreign investments in ZED Mariel enjoy the same level of protection as foreign investments elsewhere in Cuba as regulated by Law 118/2004.

Investor Guarantees

The Mariel Special Development Zone Office is able to provide all of the necessary approvals for a new project including all licensing, permits and authorizations from other Cuban State entities. From an investor perspective, there is only one point of contact and the process functions as a One-Stop-Shop.

Application & approval process


AgenciesThere are eleven employment agencies that provide services to companies located within ZED Mariel. These agencies may charge a maximum of 20% commission for the provision of the following services:

• Recruitment and selection of appropriately qualifiedpersonnel

• Payroll processing, including payment of social security and income tax contributions on behalf of employee and employer

• Resolution of labor-related disputes

• Relevant proceedings in relation to occupational accidents, etc.

• Administrative processing of residency and work permits for expatriates

This commission is applied to the salaries of the Cubans employed.

Workers for one of the state-employment agencies receive theirsalarieswithaco-efficientof ten. This implies that they will receive ten times the amount in Cuban pesos that the employment agency charges the company for salaries in US dollars. This provides a significantlevelofincentiveforCuban staff.

18. Employment


EMPLOYMENT AGENCY MAIN PROFESSIONS AvAILABLE CONTACT

Almacenes Universales S.A. Professional, technician and skilled worker in the field of logistics (warehousing, transportation and port activities)

Desamparados No. 166 e/ Habana y Compostela, La Habana Vieja, La Habana Tel: 7-861-3402 ext. 131-178 mail: [email protected]

AGEMPORT [Ministry of Transport]

Mechanic, driver, heavy/light equipment operator, industrial maintenance technician/worker, technologist, painter, sheet-metal worker, assistant.

Desamparados No. 201 esquina a Compostela, La Habana Vieja, La Habana Tel: 7-862-1940, 7-862-1909, 7-862-1935 mail: [email protected]

BIOCUBAFARMA [Biotechnology and Pharmaceutical Industry]

Chemical & industrial engineer, pharmacy, chemistry, biology and microbiology professionals, technicians in biological processes, industrial chemistry and industrial pharmacy technicians.

100 y Boyeros, Edificio B, Boyeros, La Habana Tel: 7-265-3749 mail: [email protected]

CUBATABACO[Ministry of Agriculture]

Skilled agricultural worker, and technician and engineer in any field. Calle Nueva No. 72, e/ Universidad y Pedroso, Cerro. Tel: 7-879-0250 to 7-879-0256 mail: [email protected]

CUBARON[Food Industry]

Chemical engineer and professional; microbiology, biology and food science professional; food technology technicians.

Calle 22 No. 310 y 312 e/ 3ra y 5ta, Miramar, Playa Tel: 7-204-2427, 7-204-6231, 7-204-2566 mail: [email protected]

DELTA [Ministry of Communications]

IT engineer, telecommunications engineer, IT professional, cybernetics and mathematics professional, IT technician

Neptuno, No. 108 e/ Prado y Consulado. Centro Habana Tel: 7-863-6495, 7-862-9300 ext. 105 y 230 mail: [email protected]

MICONS[Ministry of Construction]

All occupations in the field of construction (construction, assembly, design and construction materials) in addition to other occupations linked to other fields

Factor No. 5, e/ Masó y Ayestarán, Cerro, La Habana Tel: 7-879-9567 or 7-879-9614 mail: [email protected]

PETROEMPLEO[Oil Industry]

Assistant in all oil-related activities, technician in oil refining processes, oil well supervisor, oil treatment professional, technician in drilling fluids, drilling experts, oil extraction worker, drilling logistics expert, turbine repairman

Massip No. 14 206 e/ San Francisco y Vía Blanca, Guanabacoa, La Habana Tel: 7-784-1154, 7-699-2749, 7-699-2743 mail: [email protected]

SIECSA [Unión Eléctrica]

Electric, mechanic and automation engineer, as well as the entire technical and managerial staff required operating and maintaining solar parks, wind farms and any other power generating facility connected to the grid.

Calle N, Edificio ENE, 8vo piso, e/ 21 y 23, El Vedado, La Habana Tel: 7-839-7700 ext. 6204 or 6200, 7-831-8473 mail: [email protected]

TECNOSIME [Ministry of Industries]

Manager, technician and skilled worker in industrial processes Calle 36 A No. 712 e/ 7ma y 42 Miramar, Playa, La Habana. Tel: 7-202-1344 ext. 117 and 7-206-5644 mail: [email protected]

EMPLEATUR [Ministry of Tourism]

Duly trained personnel in all technical aspects, with working knowledge of the required languages to work in hotel and restoration activities.

Calle D No. 520 e/ 21 y 23, El Vedado, Plaza de la Revolución, La Habana (Margarita Rodríguez Infiesta) Tel: 78333024 and 78364715 mail: [email protected]


A1607 (ha)Reserve Zone

A2299.7(ha)Western Ecopark

A3459.5 (ha)High TechnologyIndustrial Area

A5386.6 (ha)Logistics Zone

A4241.6 (ha)Industry & oil service logistics

A91040.0 (ha)AgriculturalDevelopmentZone

A11478.6 (ha)Mangrove Area

A8 239.8 (ha)Food and Agriculture Processing Zone

A7262.8 (ha)Port Zone

Ensenadade Laza

Ensenadade Angosta

BAHÍA DE MARIEL

A10313.8 (ha)TECHNOPARK

A6

250.2 (ha)Transporation Activities Zone

MARIEL

The detailed Master Plan of Sector A, currently in its second phase, was contracted to French Bouygues Bâtiment International, which is working with a futuristic vision in the conception and design of its urbanization, in compliance with the best international practices, under the concept of “high environmental quality” (HQE)

The Development Programme for Sector A will have three phases:

1. Short-Term Development. In response to the present needs for the establishment of industrial, logistic and construction activities.

2. Medium- and Long-Term Development. Aimed at positioning Cuba in the international standards of added value activities.

3. Long-Term Development. A phase of great flexibility that shall adapt to the predominant strategic needs of the development process.

19. Sector A Project Development

Sector A (an area covering 4,372 hectares closest to Mariel Port) has been subdivided into eleven zones devoted to high-tech, industrial, logistic and agricultural activities. Commercial real estate projects including for industrial and commercial properties may be developed in several of the zones.

Over the past year major investments have been made in developing the necessary infrastructure in the first areas to be developed, primarily Zones A3 (high-tech industry), A4 (industry and oil service logistics) and A5 (logistics). TC Mariel forms part of the Port Zone (A7).


Access Motorway and roads linking Sector A with the rest of the national territory. Work is underway in the construction of the North Road and other secondary roads.

Railway infrastructure. The two-track railway started operations in July 2014, transporting cargo and passengers to and from the Zone.

Stable supply of drinking water and electric power.

Fiber optic info-communication system and a redundant radio link.

Infrastructure & logisticsPlans are in place to develop options for the supply of natural gas to the area.

The first Logistic Block, which started operations in August 2015, has a storage capacity of 10,000m² for dry cargo and 5,000m³ for refrigerated cargo. It also provides modern cargo management and handling services.

Construction is under way of the First Business Centre. Other users of the zone will also develop facilities to house offices, banks, shopping centres, and warehouses, among other various services.

Construction volumes executed to date:

• Railway: 58 km of double track – 30.5 km of single track

• Roads: 14 km of 4-lane motorway - 16 km of 2-lane roads

• Bridges: 14

• Railway stations: 4

• Railway stops: 3

• Water supply pipelines: 25.3 km

• Sewerage pipelines: 15 km

• Rainwater collection network: 7.1 km

• Electric lines: 280 km

• Communication lines: 78 km

contact details:

Servicios Logisticos Mariel S.A. Calle 132, no 8910

Entre 89 y Final Municipio Mariel

Tel: (047) 398-225

View of newly built warehousing and logistics buildings in Zone A5. The administrative building of

ZED Mariel, currently under construction may be seen in the background, (center left).


High tech industry (A3) Biotechnology, pharmaceutical projects should be negotiated with BioCubaFarma. Cuba has world-class research and medical institutions.

Industry & oil service logistics (A4) This area will be used to locate investors developing production activities prior to the Technopark (A10) being developed in a subsequent phase.

Food production (A8 & A9) The domestic market and booming hospitality sector has significant unmet demand.

Real Estate & infrastructure developments Commercial real estate projects including for industrial and commercial properties.

20. Priority Sectors Projects should meet the

following general objectives: • Generate exports/promote import

substitution;• Use modern, environmentally-friendly

technology;• Provide employment;• Generate added value using knowledge

and innovation; • Develop links with the wider Cuban

economy outside ZED Mariel.

Packaging & packing Cuba has significant domestic requirements including paper products, cans, bottles and other areas.

Construction materials Cuba has an enormous need for all types of construction materials and hardware for retail sales and to meet investment needs in infrastructure projects and hotel development.

Renewable energy (Outside Sector A)ZED Mariel is attractive for photovoltaic solar projects.


OUTSIDE OF SECTOR A

Manufacture of: Description of project Investment type Cuban Partner of: Investment Cost, US$

1 Photovoltaic Solar Farms Installation and operation of photovoltaic solar parks with capacities between 5 and 15 MW. All the energy delivered to the grid will be purchased by Unión Eléctrica through a PPA (Purchase Power Agreement).

100% Foreign Company

Unión Nacional Eléctrica (UNE)Contact: Pedro Barbachan Bagés [email protected]

1.5–2 million by MW of installed capacity

Renewable Energy

Twenty projects have been developed by the relevant Cuban companies for development within ZED Mariel with foreign participation. Foreign investors are in no way limited to the selection of the projects detailed in the Cartera de proyectos. They may prefer to develop their own projects in line with the guidelines and priorities outlined in the previous section.

ZONE A10


1 Radial tires Manufacture of 1.2 million radial tires, 56% for light automobiles and 44% for heavy transport. For the domestic market and export (400,000 units).

Joint venture Grupo Empresarial de la Industria Química (GEIQ) Contact: William Marrero Chi, [email protected]

223 million

2 Aluminum cans Intended to replace imports of aluminum cans for beverages (beer, soft drinks, malt drinks, juice, etc.) at levels of over 600 million units per year

Joint venture Grupo Empresarial de la Industria Sideromecánica (GESIME) Contact: Carmen Herrera Prieto, [email protected]

40 million

3 Air conditioning equipment Air conditioning equipment for central systems, commercial and home air conditioning equipment and the production of parts, spare parts and accessories and post-sale and warranty service.

Joint venture Grupo Empresarial de la Industria Sideromecánica (GESIME) Contact:Carmen Herrera Prieto, [email protected]

15 million

4 Light automobiles Assembly and manufacture of a minimum of 10,000 light automobiles per year, for the domestic market and exportation


To be negotiated

Industry Projects

21. 2015 Projects Portfolio



5 valves for pressure bodies Valves for pressure bodies such as extinguishers, gas cylinders, oxygen and acetylene tanks, etc., in order to replace imports.

Joint venture Grupo Empresarial de la Industria Sideromecánica (GESIME)Contact:Carmen Herrera Prieto, [email protected]

To be negotiated

6 Glass bottles for beverages Glass bottles for beverages (beer, foods, rum) for medicines and food conserves, at over 210 million units yearly


70 million

7 Glassware items Manufacture of various assortments of tableware, glassware, goblets, water jars


10 million

8 Medical items (expendable) Manufacture of medical items for medical tests. Approximately 87 million disposable syringes, 8 million needles, 6 million saline solution and serum kits, and 800,000 blood injecting kits, amounting to US$ 4.7 million, are sold annually in Cuba.

Joint venture Company associated with Industria Electrónica del Grupo de la Electrónica, Ministerio de Industrias. Contact: Jorge Luis Hernández Garnelo, [email protected]

5 million

9 Engineering and technological projects company

Develop engineering, supplies and construction job management projects, setting up and starting up industrial, agro-industrial, wastewater treatment and renewable energies projects as well as post-sale services for the domestic market and the export of services.


To be negotiated

ZONE A8


1 Soy Processing (Refined Oil Factory)

Project to mill 500,000 tons of soy beans per year to obtain 85,000 tons of refined oil and 375,000 tons of soy flour for animal consumption.

Joint venture Corporación Alimentaria S.A. (CORALSA)

Contact: [email protected]

149 million

2 Instant dry yeast Production of 6,000 tons per year of instant dry yeast for tourism, the domestic market and export.

Joint venture Corporación Cuba Ron S.A. Contact: [email protected]

14.5 million

Agro food industry


ZONE A3


1 Monoclonal antibodies Monoclonal antibodies for therapeutic use in cancer and other chronic diseases (capacity of 100 kg per year), from the active pharmaceutical ingredient right up to the final product.

International economic Association

CIMAB S.A. Contact: Dr. Agustín Lage Dávila, [email protected]

90 million

2 Biodrugs to treat cancer and other chronic diseases

New facility to produce recombinant proteins for treating cancer and other chronic diseases, from the active pharmaceutical ingredient (10 kg/year capacity).


CIMAB S.A.Contact: Dr. Agustín Lage Dávila, [email protected]

70 million

3 Oral biodrugs Oral biological medicines with a fermentative capacity of 500 L, for manufacturing anti-salmonella vaccines and cholera probiotics.


Laboratorios DALMER S.AContact: Dra. Blanca Rosa Hung Llamo, [email protected]

To be negotiated

4 Blood-based products plant Process 100,000 liters of plasma per year, with an efficiency of 18 grams of protein per liter of plasma. Incorporation through technological transfer of factors VIII and IX of blood coagulation.


Empresa de Sueros y Productos Hemoderivados Adalberto PesantContact: MSc. Marbelys Cayíz Díaz, [email protected]

113 million

5 Enteral medications (tablets, caplets and capsules)

Building a plant to produce solid forms from natural products. For the Cuban and Latin American markets.


Laboratorios DALMER S.A.Contact: Dra. Blanca Rosa Hung Llamo, [email protected]

40 million

6 Injectable cephalosporins and carbapenemas, and oral penicillin-based antibiotics

Injectable cephalosporins and carbapenemas, and oral penicillin-based antibiotics with a capacity to obtain up to 21 million ampules, 500 million capsules and 20 million flasks for suspension, produced from imported active principles.


Empresa Farmacéutica 8 de MarzoContact: Lic. Nancy Oña Aldana, [email protected]

120 million

7 Auxiliary services • Metrology and validation of measuring equipment laboratory and production areas

• Specialized engineering services workshop for refrigeration, water treatment systems, diagnostics for maintenance systems, etc.

• Specialized treatment plant for solids, liquid and gas waste• Water and steam treatment service plant• Logistics services for warehouses for imported products and

moving import/export loads


BioCubaFarma

Contact: MSc. Jorge Sotolongo Peña, [email protected]

To be negotiated

8 *Biomaterial plant Joint venture Produce biomaterial-based products under NC-ISO 13485 and NC-ISO 14971. The facility us expected to produce 640,000 bulbs of TISUACRYL, 75 kilograms of BIOGRAFT-G and 125 kilograms of APAFILL-G on a yearly basis. Production will be basically for export.

Joint venture Centro de Biomateriales, BIOMAT

Contact: Vicerrectoría de Investigaciones, [email protected]

1.5 million

Biotechnological Sector: developing and producing medicine


The Biotechnological and Pharmaceutical Industries Group (BioCubaFarma)is a Cuban entity that executes strategies and develops technologies and products to help in the prevention, early diagnostics and timely treatment of several disorders; from pre-conception to those of the elderly.

BioCubaFarma has 16 large enterprises that maintain 78 manufacturing facilities that employ more than 21,000 people. The group produces and exports 1,099 products, including generic and innovative. It has more than 800 marketing approvals abroad and exports to more than 50 countries all over the world.

Within the biotechnology sector, several entities are developing 91 product projects to target infectious, oncology, diabetes and cardiovascular diseases. The Intellectual Property Rights of other products developed by BioCubaFarma have been recognized in the more than 1,700 patents granted abroad.

BioCubaFarma has developed a network of partnerships internationally and has incorporated joint venture companies in several countries including China and Singapore.

BioCubaFarma offers comprehensive health programs that include drugs and equipment designed to achieve a high social impact. These include:

• Disease prevention programs with prophylactic vaccines;

• Programs for early diagnosis and treatment of different cancer pathologies (including therapeutic vaccines)

• Monitoring and treatment programs for diabetes and its complications, such as diabetic foot ulcers;

• Diagnostic and monitoring programs of different diseases (cardiology, neurology, etc.) with novel medical equipment;

• Programs for the detection of malformations and metabolic hereditary diseases.

BioCubaFarma uses various business models including License Agreements, Representation and Supply Agreements, and Technology Transfer Agreements.

The group is open to foreign investment in Cuba and is looking to expand its manufacturing capacities through the development of joint ventures to be located within ZED Mariel.

Cuba’s biotech industry “is the best established compared to all developing nations.”

U.S. journal Nature, 2011


22. Approved Users

TERMINAL DE CONTENEDORES DE MARIEL S.A.

Cuban entity managed by PSA International from Singapore

RICHMEAT DE CUBA S.A Food processing 100% Mexican capital

PROFOOD SERVICE S.A. Food processing 100% Spanish capital

BDC LOG S.A. Logistics 100% Belgian capital

BDC TEC S.A. Electronics 100% Belgian capital

SERVICIOS LOGÍSTICOS MARIEL Logistics 100% Cuban company

BRASCUBA Cigarette production Cuban-Brazilian Joint Venture.

DEVOX CARIBE S.A. Devox General Paint S.A 100% Mexican capital


Q1: Is ZED Mariel a Free Trade Zone?

• No. The area of ZED Mariel is considered part of Cuban national territory. There are no restrictions governing the sale or purchase of goods and/or services between companies operating within ZED Mariel and other areas of Cuba (although there may be some regulatory or taxation differences). Practically, there is no fence around the area of ZED Mariel and no customs restriction between goods entering or leaving ZED Mariel from/to other areas of Cuba.

• Raw materials that are processed in ZED Mariel will be subject to the same customs duties as a facility located in another part of Cuba, except in cases of export sales (see below).

Q2: Can customs duties be reclaimed for export sales?

• Yes. Capital goods and machinery (the investment cost) are fully exempt from any customs duties regardless of the destination of sales. A process will also be established through which it may be possible to negotiate a rebate on customs duties paid for raw materials corresponding to the proportion of sales made outside of Cuba.

Q3: Can sales of goods be made to the domestic market?

• Yes. There is no specified percentage of exports that a company located in ZED Mariel must make. Theoretically, a company could make 100% of its sales to the domestic Cuban market. The projected distribution of sales domestically and internationally should be included in the feasibility study presented to the Office of ZED Mariel. Only government corporations currently carry out retail commerce in Cuba.

Q4: Will service companies based in ZED Mariel be able to provide services to the Cuban domestic market?

• Yes. Tax benefits provided to users of ZED Mariel will be applied on sales made outside of ZED Mariel to the rest of Cuba.

Q5: Will it be possible to establish a bonded warehousing facility in ZED Mariel to service the Cuban market?

• No. ZED Mariel is intended to be a productive area where value added is added to inputs whether through assembly, manufacturing or processing. As part of Cuban national territory, customs duties must be paid at the point when goods enter the area.

Q6: What is the contribution to the Zone’s Development Fund?

• The contribution to the Zone’s Development Fund is the way in which concession holders and users contribute a percentage of their income (and in the absence of income, a fixed fee) to the formation of a fund for the maintenance of the Office and the Zone’s common areas.

• This contribution is established in Article 44 of Decree Law No. 313 and is implemented through Resolution No. 384/2013 of the Ministry of Finance and Prices.

• This non-tax contribution is made through quarterly payments of 0.5% of the gross income earned in each quarter in the concession holders’ and users’ operational currency. If concession holders and users do not earn any income during a fiscal year, they will make an annual contribution to the Fund in the amount of 600 Cuban Convertible Pesos (CUC) or 600 Cuban Pesos (CUP) if they operate only in the latter currency.

23. Frequently asked questions (FAQs)


24. Future vision of ZED Mariel53

54 ZED MariEl: opEn to thE worlDFuture vision of ZED Mariel. 54


• We are the main Cuban professional services firm with over 140 well qualified professional staff specialized in audit, business consultancy, services for foreign branches and professional development.

• In addition to our main Havana head office, we maintain five regional offices in Matanzas, Cienfuegos, Camagüey, Holguín and Santiago de Cuba, which allows us to provide services throughout the island.

• We provide professional services to over 300 clients including the most prestigious state-owned companies as well as the leading international companies developing investment opportunities in Cuba.

• We assist our clients through consultancy and auditing services based on a competitive approach. Our multidisciplinary, integrated and innovative team will meet the expectations of interested parties.

• We maintain a strong relationship with EY. Working with an integrated CONAS/EY team on clients, we are able to prepare complimentary deliverables that meet both local regulatory and international requirements.

HIGHLIGHTS

Consultores AsoCiAdos s.A.The consulting firm of choice for foreign investment and international business

CONTACT DETAILS

Consultores Asociados S.A. 5ta. Avenida No. 2201, esquina a 22, Miramar, Playa, La Habana Telf.: (+53) 7204-2988, 7204 4116 www.conas.cu

Dr. Elvira Castro Cossío General Director [email protected]

Juan Carlos vázquez Avila Audit Director [email protected]

Armando Cordovés Yera, Business & One-Stop-Shop Director [email protected]

Anneleisy Azcuy Robaina, Business Consulting Director [email protected]


Building a better working world for companies doing business in cuba

• We have over 20 years of experience assisting clients doing business with Cuba. During this time we have developed an extensive pool of knowledge and understanding of the Cuban market. We have also helped many of the most prestigious Cuban state-owned entities implement international standards and to apply best international practices.

• We maintain a strong relationship with the main Cuban audit & consulting company, Consultores Asociados S.A. (CONAS). Working with an integrated CONAS/EY team, we are able to prepare complementary deliverables that meet both local regulatory and international requirements.

• We have a team of twelve experienced international staff dedicated full-time to assisting clients with their Cuba-related business interests and an established infrastructure on the island.

• As well as maintaining the largest audit portfolio of any Big 4 firm in Cuba, we have performed market and feasibility studies for several major new projects in Cuba, and have provided tax, regulatory and other advice to many of the leading international companies doing business with Cuba.

• EY Caribbean Professional Services Ltd (EY CPSL) works closely with other EY offices both regionally and globally to ensure that our clients receive an integrated service in accordance with EY’s Vision 2020.

HIGHLIGHTS

EY [CUBA] EY CARIBBEAN PROFESSIONAL SERVICES LTD

CONTACT DETAILS

EY Caribbean Professional Services Ltd Miramar Trade Center. Edificio Jerusalén. Cuarto Piso, Oficina 412. Miramar, Playa. La Habana, Cuba. Tel: (+53) 7-204-4658 matthew Pickles Country Managing Partner [email protected]: (+53) 5-268-9547

alejandro GagoPartner, Audit [email protected]: (+53) 5-284-7300

German matkinPartner, Audit [email protected]: (+53) 5-263-8115


Oficina de la Zona Especial de Desarrollo Mariel Desamparados No. 166 entre Habana y Compostela, Oficina 303, Habana Vieja, La Habana, Cuba

Teléfonos: +53 7-864-4240 to 47 email: [email protected] www.zedmariel.com

Thank for your interest. Please get in touch with us if you are interested in learning more.


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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

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EY Cuba Presentation - ZED Mariel Open to the World, Nov 2015

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Transcript of EY Cuba Presentation - ZED Mariel Open to the World, Nov 2015