Open for Business by Richard Feinberg

Author:Richard Feinberg
Language: eng
Format: epub
ISBN: 9780815727682
Publisher: Brookings Institution Press
Published: 2016-05-23T00:00:00+00:00

Table 6-2. Authorized Private Enterprise

Entrepreneurship in Cuba Today

In 2010 the government authorized private enterprise in 181 designated activities, which it expanded in September 2013 to 201 designated activities. For tax purposes the authorities have divided these activities into seven groups, plus an additional group that benefits from a simplified tax regime.13 Some of the listed occupations, such as “artisan,” are very broad, while others are comically bureaucratic in their specificity, such as “Benny Moré dance couple.” These subdivisions, with a partial list of specific designations, are outlined in table 6-2.

So far, the most popular choices have been restaurants and snack shops, followed by B&Bs, transportation (taxis and trucks), construction, street vending of agricultural products, music sales (DVDs), recycling, and repair of household appliances. 14 This last one is a popular category probably because it benefits from the less burdensome tax regime. Enterprising Cubans are exploiting these opportunities with a growing variety of services and beginning to expand into small-scale production. Municipal authorities are empowered to grant the licenses in most cases, which are generally approved within a week or so. Authorities have incentives to act expeditiously: approved licenses are an immediate source of fiscal revenue and create employment and services for the local community.

To encourage Cubans to enter the private sector, the 2010 regulations and subsequent official announcements removed restrictive clauses that had previously governed private sector activities and added numerous incentives:15

• Government entities, including state-owned enterprises, can engage in commercial exchanges with TCPs.

• Some categories of TCPs can hire an unlimited number of employees (and not just family members, as had previously been the case).

• TCPs are eligible to enroll for social security benefits.

• TCPs are allowed access to bank financing and accounts and may rent government or third-party premises (as opposed to just operating out of a home).

• Restaurant seating capacity was increased—from 12 to 20, and then to 50—and the rental of an entire home as part of a B&B business is now permitted.

• Importantly, public sector employees are allowed to work in the private sector, legalizing the GESPI practice.

These reforms have opened exciting opportunities for aspiring entrepreneurs. Yet not all of these promises have fully materialized, and important restrictions remain.

Conversations with Entrepreneurs

To ascertain the impact of these new rules of the game, my assistant Collin Laverty (then a graduate student, now president of Cuba Educational Travel) and I conducted in-depth on-the-record conversations with 25 entrepreneurs. We also conducted informal conversations (“participant observations”) with many more Cubans working in a wide range of activities in Havana and Cienfuegos, including restaurants and cafeterias, bed and breakfast establishments, entertainment and personal services, retail trade, construction, and transportation. These conversations were conducted between March 2012 and April 2013, each lasting at least 30 minutes and often much longer. Although semi-unstructured and open ended to allow the TCPs to express their views without excessive prompting by questions that might color their responses, the conversations did emphasize financial questions; the responses to those appear in table 6-3. As noted, I conducted follow-up interviews with the highlighted TCPs during 2014–15.

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