Cuba approves legal status for private companies

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Cuba has approved reforms that include a long-awaited legal status for private companies that have been recognized for decades as simply “independent workers,” Cuban state media reported on Wednesday.

Senior officials have said for months that they are planning changes to sort out the rules for state-owned enterprises, private cooperatives and businesses so that they can operate on an equal footing in the communist-ruled country.

The Cabinet approved the measure in its last closed-door session, state media wrote, without specifying when it would become law.

The reform would provide legal status to thousands of private sector businesses, from restaurants and garages to construction and beauty salons and cooperatives.

“With this decision, we approve the way to organize the actors of our economy, which goes well beyond the simple recognition of some of them”, declared the leader of the Communist Party and President Miguel Diaz Canel.

Unlike Communist Party-ruled China and Vietnam, Cuba has been slow to implement market reforms in its Soviet-style ruled economy.

But the government has picked up the pace in the face of a severe economic crisis and food, drug and other shortages that it attributes in large part to US sanctions and the COVID-19 pandemic, while admitting that the failure reforms is also in question.

Yet Prime Minister Manuel Marrero Cruz stressed that the state would remain the dominant economic player, insisting that “we are not privatizing the economy”, according to the report.

Private farmers and cooperatives have operated for decades in Cuba in agriculture. Meanwhile, the “self-employed” sector – which includes businesses, their employees, tradespeople, and others such as taxi drivers – has expanded over the past decade to include more than 600 000 workers.

Thousands more work in non-agricultural cooperatives, a new category authorized in 2012. The authorities had suspended the issuance of new licenses for these cooperatives, but under the new reform they will resume issuing them.

In total, the private sector now represents about a third of the 6 million Cuban workforce.

Oniel Diaz, co-founder of private business consultancy AUGE, said the approval signaled that further private sector expansion was on the way, but it could still take some time.

“The wait continues,” he tweeted.


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