New Restrictions Holding Back Cuba Private Sector

From December Cuba’s small business owners can open new stores again. But there is skepticism about what will really change as increased bureaucracy, longer authorization procedures and more controls are imminent.

On July 10, the government announced that it would resume business licensing for traders, room rental and restaurants in early December. “That’s good news,” says Roberto Navarrete, a resident of Havana. He had bought and furnished an apartment in the Havana district of Centro Habana at the beginning of last year, with the idea of renting it out as a holiday apartment, DW reported.

This latest announcement comes after the government had surprisingly suspended new business licenses in the summer of last year over concerns about tax evasion and illegal procurement of building materials. And like Navarrete, many were suddenly in limbo.

 New Regulations

As a result of the renewed awarding of permits, a series of new regulations will come into effect. Many of the previously permitted activities—usually basic services and trades—are now grouped into new categories. Instead of the current 201 occupational fields, there will only be 123.

There are new licenses for the operation of certain businesses, while real estate agencies, language schools, art schools and gyms have more restrictions. But the owners of these companies may not hire any workers and can only carry out their duties themselves.

These are often businesses that have operated for years, and now they’re suddenly hitting them with restrictions.

In the future, the granting of licenses, particularly for the most requested economic activities, will require a written request, including an affidavit stating the origin of the funding and the investment necessary to start the business.

In addition, Cubans will be allowed to pursue only one private economic activity. “There are some workers who run a cafeteria and at the same time have a manicure or car wash business or make shoes, which won’t be possible,” said deputy labor minister Marta Elena Feito to the state online portal  Cubadebate.

The reasoning behind the measures, which Feito claims will affect around 9,000 self-employed workers, appears to be the prevention of the concentration of wealth.