The Cuban regime, through the Council of Ministers, published Decree 107 this Monday, which establishes new restrictions for micro, small, and medium-sized private enterprises (Mipymes), non-agricultural cooperatives, and self-employed workers.
The regulation, which repeals and replaces Decree 49 of 2021, identifies a total of 125 activities that these economic actors are not authorized to engage in.
Among the most notable activities that are now prohibited for the private sector are the manufacturing of pharmaceutical products, financial intermediation, book editing and layout, television programming and broadcasting, telecommunications activities, as well as various forms of transportation and storage.
In addition, traditionally sensitive sectors such as defense, public security, and the administration of social services are also banned.
Decree 107 reflects the regime's strategy to maintain centralized control over key sectors of the economy, but it could have adverse effects in terms of economic growth, job creation, and social welfare.
According to the prominent economist Pedro Monreal, the regulation "confirms the marginalization of private activity and the market as part of state measures to supposedly 'correct distortions and re-boost the economy'."
“The decree 107/2024 consists of ‘raining on wet ground’, expanding the prohibitions and restrictions that were already contained in the previous regulation (Decree 49/2021), many of them derived from a narrow political reasoning and with questionable economic rationality,” the specialist stated.
In his brief analysis published on social media, the economist highlighted that "almost half of the prohibitions (9 out of 19) are concentrated in two key productive sectors - agriculture and industry - which present severe limitations in terms of supply capacity and directly impact the material shortages of the citizens."
"47.8% of the restrictions are concentrated in trade, an activity that in the context of the current crisis has functioned as a 'lifeline' for many private entities registered under a different 'business name' that have not been able to operate effectively," Monreal pointed out.
In addition, he emphasized that "approximately another third of the prohibitions (6 out of 9) are established for activities intensive in human capital and that, in turn, are crucial for the development of human capital: education and artistic activities."
In conclusion, the economist stated that "the new restrictions imposed on the wholesale trade of MIPYMES and non-agricultural cooperatives will likely take away a 'lifeline' from several entities, but could also favor wholesale concentration in state-connected MIPYMES and CNAs."
The restriction of 125 activities for private actors highlights the tensions between state control and the urgent need for greater economic openness to address the severe crisis facing the country.
The entry into force of this decree could increase uncertainty among Cuban entrepreneurs, who will have to redirect their efforts toward the few unrestricted areas, which could limit the possibilities for innovation, foreign and national investment, and the expansion of the private sector in Cuba.
Economic and social impact
The implementation of this decree represents a considerable challenge for the development of the private sector in Cuba, as it limits the diversification and growth of new economic initiatives in strategic areas.
In a context where the state sector faces significant limitations, the barrier preventing private actors from accessing these sectors could perpetuate the lack of competitiveness, innovation, and efficiency in the Cuban economy.
The decree also establishes restrictions in sectors that could have directly benefited local development and employment, such as the production of audiovisual media, transportation management, and the provision of technological services.
This could result in a lower supply of services and products, which in turn would negatively impact the well-being of the population.
The tightening of restrictions could also discourage foreign investment and the participation of Cubans in the diaspora in the national economy, thus limiting financing opportunities and the influx of foreign currency that the country desperately needs.
Miguel Díaz-Canel: "It's time to take action"
"It's time to take action!" With this phrase, the Cuban ruler Miguel Díaz-Canel confirmed the shift of the Cuban regime in its policy of timid economic opening and reaffirmed his willingness to subject the activities of the "new economic actors" to state guidelines and the centralized planning of the economy.
“It is time to move beyond diagnoses and take action,” said Díaz-Canel at the end of July during his closing speech of the third ordinary session of the X Legislature of the National Assembly of People's Power (ANPP).
The process of "debate and exchange" with the owners of micro, small, or medium-sized enterprises (Mipymes) to convince them of the need to cap prices on essential goods that the State cannot sell through the regulated family basket has concluded. And the result is yet another example of the repressive and coercive nature of the Cuban totalitarian regime.
Despite insisting that the government has not started a "witch hunt" against the Mipymes, the Cuban leader emphasized the intention to rein in the commercial activities of the "new actors" that he himself promoted.
"As for our responsibilities in the uncertain and complex field of the economy, it is necessary to recognize that in the eagerness to comply with the guidelines of the economic and social policy of the VIII Congress of the Party, by unlocking processes and promoting the creation of Mipymes, we were not sufficiently firm in the requirement to create norms that are robust and comprehensive enough to guide the functioning of this form of management that was already operating in the economy, but without formal recognition," he noted.
The lack of regulation for Mypimes, according to the ruler, has caused chaos in the Cuban economy, driving up inflation and exacerbating inequality in the country.
That is why "we must ensure that what has been approved is fulfilled, clearly defining the objectives, better preparing the implementers of each measure, fostering political, communicational, material, and financial support, organizing the actions with an implementation schedule so that they do not remain just words. And above all, exercising control over corrections and adjustments with the necessary feedback."
"The subsequent controls have shown that many of these businesses did not respond to the trust of the State with the honesty and transparency demanded by a minimally organized society. Consequently, no violator of the treasury and legality in general can challenge the demands arising from the analysis of the errors and distortions of the process. As has been said at this time, law and order must prevail if we want all forms of economic management to succeed and strengthen," he added.
“It is time to take action” is the new slogan of the regime that has been in power for 65 years, but Díaz-Canel does not want to scare off emerging entrepreneurs. “I want to reiterate that there is no and will not be a witch hunt against private Mipymes, as some claim, manipulate, or suggest.”
According to the also first secretary of the Communist Party of Cuba (PCC), "the confrontation will be against the lack of control, illegalities, tax evasion, speculation, and fraud, regardless of where they come from, whether they are non-state... whether they are non-state or state enterprises."
"This is a battle against illegality and not against forms of property and management," concluded the leader appointed by General Raúl Castro to take the reins of "continuity" and implement the economic measures stemming from the VIII Congress of the PCC that led to the failed "ordering."
"The 'step to action': A predicted move by the Cuban regime"
"Remember that we are all here to save the Revolution and socialism," Díaz-Canel warned at the beginning of July during the meeting of the Council of Ministers, reaffirming once again the centrality of the socialist model in Cuba's economy.
Recently, during his report to the Economic Commission of the ANPP, the Cuban leader announced a "restructuring" plan for the private and state sectors, due to the "irresponsible manner" in which some of these institutions are managed, he pointed out.
In that regard, he insisted that this is not a "witch hunt" against a specific form of management or ownership. However, the official discourse has been attacking Mipymes for months, especially those that import finished products or do not comply with the price caps.
"What we are proposing here is an arrangement so that there is the largest number of offers of goods and services at fair prices for the population, and that everyone contributes everything they have to contribute," he affirmed.
So far, the "step to action" has resulted in the withdrawal of the import license from almost a third of the private businesses that were authorized to do so. According to Prime Minister Manuel Marrero Cruz, "it was decided to close this capacity for 24 of the 73 companies approved to import, due to low levels of activity and poor performance."
"In the analysis we conducted, there were many absurdities, errors..." said Marrero Cruz days ago in front of the members of the ANPP. "The document resulting from the work done by MINCEX allowed us to reach the conclusion that this faculty needed to be closed for 24 companies, due to low levels of activity and poor performance," emphasized the Prime Minister while announcing significant changes in the regulations for Mipymes and self-employment (TCP).
There is no "witch hunt," but recent days have seen the Minister of Finance and Prices in Cuba, Vladimir Regueiro Ale, warn the owners of Mipymes that it is a "serious crime" to hide merchandise and not sell it to the population.
The official appeared on Cuban television to explain the initial control measures that the regime has agreed upon following the recent implementation of Resolution 225, which imposes a price cap on six essential products in the country.
Regueiro emphasized that hiding goods and obstructing trade can be considered serious crimes or offenses.
"We are alerting, and where we have identified these cases, we have called on municipal governments and the economic actors who are involved," he stated. The owners of Mipymes are summoned to government offices to receive guidance on the measures to follow in each situation.
"In many cases, we have had to order forced sales of merchandise. Until July 13, we had ordered 151 forced sale actions of products," he said. He also specified that the largest violations are in the marketing of chicken and oil.
In an intensive operation carried out between July 12 and 13, the Cuban government shut down 53 private businesses after conducting 891 inspections across the country.
Marrero Cruz reported that during these inspections, more than 4,000 violations were detected and fines exceeding 13 million pesos were imposed on Mipymes. Among the main violations identified are the concealment of products behind the price cap imposed by the government and the sale of goods at unregulated prices.
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