Matt Townsend New York
COMPANIES considering doing business in Cuba will find a country ripe for a modern communications system, lacking consumer goods like Coke and Pepsi, and craving more hotels, earth-moving equipment and even aluminium cans for beer.
That is the bounty potentially awaiting US corporations as President Barack Obama moves to thaw relations with the communist country, loosening restrictions on trade and travel. The bad news: Cuba remains a poor country with an inefficient, sometimes corrupt economy, that could dash capitalist dreams.
“The key word is potential,” said Bill Lane, director of global government affairs at Caterpillar. “Cuba doesn’t need to rebuild its infrastructure. It needs to build an infrastructure. Everything that we make in US is needed in Cuba.”
Obama’s unexpected policy shift is just a first step in allowing US companies to do business in Cuba after a 50 year- long embargo. He would let US businesses export goods such as building materials, farming equipment and communications infrastructure to the island. Ending the embargo totally would require congres- sional approval.
Easing travel restrictions could aid the cruise and airline industries. US financial institutions will be allowed to open accounts with Cuban banks. The thaw could mean new business for companies as varied as Carnival, Nike and Wal-Mart.
US consumers also were thrown a pleasurable benefit. American visitors to the island can bring back as much as $100 (R1 166) of Cuban cigars, a treasure for those so inclined. The US bans all Cuban tobacco imports now.
Normalising relations with Cuba would open a market of about 11 million people – about the same size as a US state like Ohio – that have been longing for US products for decades, according to John Kavulich, a senior policy adviser at the US-Cuba Trade and Economic Council.
Coca-Cola would consider re-entering the Cuban market “at the appropriate time and in accordance with the relevant laws and regulations governing US relations with Cuba”, Ann Moore, a spokeswoman for Coke, said. Coke sells its beverages in all countries except for Cuba and North Korea.
PepsiCo which does business in more than 200 countries and territories, looks forward “to adding the Cuba contingent on business relations becoming normalised”, said spokesman Jay Cooney.
One potentially big area for investment is telecommunications. Only about 5 percent of people in Cuba have access to the web, one of the lowest rates in the world. The new rules allow US companies to export equipment to build an internet infrastructure.
Cuba may also be ripe for automakers because many of the cars in use are decades old. “Anyone who has been to Cuba can attest that in terms of cars, time stood still,” Michelle Krebs, an analyst at researcher AutoTrader.com, said.
– Bloomberg