When we hear about a non-state economic actor venturing into import and/or export operations, almost automatically our mind associates such activity with agro-industrial products, equipment, accessories, raw materials….

But one of the positive elements of regulations published in August of 2020, which opened the doors to this type of foreign trade via specialized state companies, is that the option is not limited to self-employed workers or non-agricultural cooperatives, but is available to the entire non-state sector, and that services and goods as varied as the market itself that can be placed in the international arena.

This is well understood by self-employed worker, Bernardo Romero, founder of Ingenius Cuba, a micro-company offering computer and electronic solutions that has already signed three export contracts through state enterprises, two via Softel and one through Desoft.

“We do not export a product, but rather a service that could be defined as software development tailored to the client’s needs. Thus far, we have only signed small scale agreements, as we are just starting, but the goal is to continue growing and positioning ourselves in a foreign market that is competitive and demanding.”

Although Romero states that the experience of exporting has been positive and he is grateful for the specialized support provided by government agencies, he adds, “There are many elements that can be improved and could be changed in order to move forward with this policy, which can be of great benefit to non-state forms of management and to the country as a whole.”

Data recently provided by the Ministry of Foreign Trade and Investment (Mincex) indicate that through the first half of January 2021, 4,450 non-state forms of management had approached the specialized companies, while 2,081 have firm intentions to establish some type of operation.

Since the regulations were published five months ago, 863 contracts have been signed: 42 for exports and 821 to import. The negotiations have entailed transactions totaling 22 million dollars.

When analyzing the data, readers may wonder why the number of agreements signed for importing goods is higher than those related to exports.

According to Vivian Herrera Cid, Mincex general director of Foreign Trade, the entire Cuban economy as well as non-state economic actors tend to resort to imports to meet their needs, a tendency that must be reversed to the extent that national industry is able to meet the growing demand of all producers and service providers.

Along with the negotiations, she explained to Granma, a survey has been conducted in all provinces to identify potential exports, since every product or service that can be placed on the world market, even on a small scale, provides access to hard currency.

The dearth of these initiatives, she said, along with the technological obsolescence of Cuba’s industrial stock, management inertia and and excessive number of regulations, are among the causes that have led to the decline in exports. The country has now begun to remove obstacles and the results, sooner rather than later, should be positive, Herrera stated.

“Nonetheless, it must also be borne in mind that exporting is no simple matter. In addition to complying with a series of technical requirements and meeting international standards, negotiations are required to allow an exportable product can be placed in a market, where it will be competing with other recognized brands,” she added.

These are procedures that are often unknown or not fully mastered by non-state management, but which foreign trade companies can handle efficiently, since they have the experience to facilitate the processes and even make the operations less costly, since Cuba is a signatory of several trade agreements, which include benefits in tariff matters, she explained.

Although some have questioned why commercial import and/or export activity must be conducted through specialized state companies – currently there are 41 – reality has shown, in the words of Herrera, that “such facilitation is necessary, taking into account the dissimilar regulations in existence, as well as the importance of knowing the clients, their financial capacity.”

A similar opinion is shared by Orelvis Bormey, who describes as “satisfactory and essential” the advice provided by Cubaexport during the entire process, which allowed his peanut candies to make the long journey from Villa Clara to Italy.

“Initially, as part of testing the market, we exported 5,000 peanut nougats bars in a 75-gram format, including 2,000 fully ground and 3,000 ground with some nuts. Cubaexport had established working relations with the foreign entity and this provided a safe environment for commercial transactions,” he told Granma.

For Bormey, formally marketing his products for international consumption has been “an excellent experience that gives results, encourages and rewards work and dedication.”

In addition, he said, exports provide income in hard currency, which can boost the finances of the new forms of management and those of the country. “This income, in turn, allows us to make imports that will guarantee the incorporation of technology, which contributes to greater efficiency of processes and lowers production costs, which then define sales prices.”

Bernardo Romero, another self-employed worker, considers the advice of the intermediary companies valuable, since they are well organized and have access to the experience of lawyers and marketing specialists, but also believes that regulations governing the export process for small scale, rapid delivery services should be reviewed.

We are not talking about exporting containers of avocados, pineapples or charcoal, he said, but about services like software and IT solutions, which are obliged to go through an excessively long process, when foreign clients requesting this type of service are looking for operability, speed and efficiency.

This does not mean that intermediary companies are not necessary, he said, but rather that analysis is needed to determine what services can be managed in a different way, given their nature.

Experiences such as those of Orelvis and Bernardo show that it is possible, and feasible, for non-state forms of management to make inroads into foreign trade, and that the path is gradually being cleared of the initial uncertainties and fears, although there remains a long way to go and much room for improvement.

As the Mincex general director of Foreign Trade admits, the entry into effect of new regulations governing this activity has imposed a challenge these processes have customarily been conducted.

In the new scenario, state companies – which include meticulous planning of imports and/or exports in their daily routine – are facing a novel work dynamic, undertaking tasks that demand greater immediacy and are of a smaller scale, and this has not yet been fully achieved, she pointed out.

“For example, importers such as Tiendas Caribe, Cimex and Sasa are accustomed to purchasing large volumes of homogeneous products and then selling them on the market. They initially found the new dynamics strange, and this created ‘bottlenecks’ that slowed the procedures, in addition to other deficiencies such as lack of communication with non-state management and resistance to change.”

Regarding imports specifically, several customers have indicated their dissatisfaction with delays in the arrival of their orders.

“Although thus far I have received all the items with the agreed upon quality and price, it would be helpful if the specialized entities kept certain products in stock, which would allow us to buy them when needed and without delays,” stated Caridad María González Guerra, a self-employed food services provider, who has imported raw materials to make ice cream.

Many workers in the non-state sector do not have access to large amounts of hard currency to pay for significant purchases in advance and, on the other hand, the U.S. blockade and the epidemic have made importing more complicated, leading to delays in the delivery of orders of up to two or three months, she said.

According to Herrera, these delays occur when the goods are not available within the country on consignment and buyers must wait for their arrival from abroad. However, she clarified, more than 50% of contracted orders have been processed through the consignment or bonded warehouse modality, which allow goods to be delivered immediately.

Another concern raised by non-state management is related to the possibility that specialized companies could suggest types of markets or possible clients to the non-state sector, which would optimize operations, since they would involve known, reliable foreign entities with which, in many cases, commercial relations have been previously established.

We cannot forget that this type of foreign trade activity began only a few months ago, and non-state management as well as specialized companies are immersed in a continuous process of learning as they work. This is the time to perfect how they function, to together ensure that imports contribute to improving the quality of services, and that the Cuba trademark conquers the international market.

(Taken from Granma)

This is the news reported to Granma by Vivian Herrera, General Director of Foreign Trade at the Ministry of Foreign Trade and Investment (Mincex), who emphasized the commitment of 37 state enterprises authorized to conduct this activity, as well as other entities and organizations involved, in the interest of offering new opportunities for the export and import of goods and services by the non-state sector.

Of the 1,056 letters of intention we have received, she said, 732 are from self-employed producers, 119 non-agricultural cooperatives and 205 private workers, including independent farmers, artists, writers and other intellectuals.

She reported that five contracts for export activities have been concluded. The first, she recalled, was signed by the non-agricultural cooperative La Concordia, from Matanzas, and recently, through the Empresa de Frutas Selectas, private farmers have also begun to export Persian lime and avocado to Spain.

In the final stages of negotiation are another 71 export contracts for a variety of products including charcoal, fruit, fresh and canned vegetables, natural chemicals, sustainably managed timber, honey soap, computer services and software, among others.

“In the case of imports, 35 trade agreements were signed and another 159 are in the process of revision, focused mainly on the acquisition of raw materials such as pesticides, fertilizers, chemicals, automotive spare parts, paints and graphic supplies.”

In terms of the principal concerns noted during the process of launching these new commercial relations, she cited the guarantee that non-state economic actors have to access the hard currency generated by their export activity upon request.

Regarding this issue, Lourdes Aintzane Delgado, head of the Central Bank of Cuba’s Systems Development Department, explained that for individuals there is no prohibition on withdrawing funds from their accounts in freely convertible currency, although this does depend on availability of the currency requested in the particular bank branch, at the time of the operation.

Another frequently asked question concerns the mechanisms established that allow non-state forms of management to obtain foreign currency and conduct import and/or export operations.

According to the Central Bank’s Resolution 112/20, she noted, income is received through bank transfers to other freely convertible currency accounts in Cuban banks, as long as the funds come from commercial activity and legally authorized services, transfers from Fincimex for remittances, or through cash deposits.

In the case of commercial activities involving exports, she indicated, individuals can open a bank account without an initial deposit, at least during the first six months, to facilitate the start-up of their operations.

The ministry’s General Director of Foreign Trade clarified that the import services provided by Cuban entities authorized to support the non-state sector do not limit imports by individuals, as long as the goods are of a non-commercial nature. This activity, she said, will continue to be carried out through the usual channels, that is, by travelers or via shipments, with the payment of customs duties as established for these types of imports.

(Taken from Granma)