December 2003

Cuba's Investments Abroad

An Information Service of the Cuba Transition Project. Institute for Cuban and Cuban-American Studies, University of Miami. Staff Report. Issue 50. December 17, 2003. Posted on Thu, Dec. 18, 2003 in The Miami Herald.

In an increasingly difficult domestic environment for alluring and retaining foreign investors, Cuba's Ministry for Foreign Investment and Economic Cooperation (MINVEC) is now promoting Cuban investments overseas in an effort to offset a diminshing flow of foreign capital entering the island in recent years.(1) According to the Cuban government's own figures, in 2002 the island attracted US$100 million in foreign direct investment (FDI). However, of the 24 new foreign-invested ventures authorized by Havana during 2002, 10 were outside of Cuba proper. Moreover, some 20 percent of Cuba's 403 active business partnerships with foreigners are incorporated or operating abroad.(2)

In 2003 MINVEC published a new guide on opportunities abroad for Cuban state-owned enterprises which "encourages Cuban industries to analyze their prospects for working in other lands." Targeting neighboring markets in Latin America and the Caribbean as well as the developing world at large, Cuba's new global investment strategy seeks to "establish companies in [developing] countries [employing] Cuban high technology, specialists, and know-how with native manpower." From MINVEC's perspective, the new emphasis on 'working in other lands' will "facilitate the internationalization of Cuban enterprises and increase exports."(3)

While the Cuban government continues to solicit FDI for key sectors of the island's economy, particularly in tourism, nickel/cobalt mining, and oil exploration and extraction, as of the end of October MINVEC had approved only 6 (six) new FDI projects in 2003.(4) Cuba's policy of promoting overseas investments bespeaks a tacit acknowledgment that the current economic climate within Cuba is less than attractive for many firms, including those owned and run by the Cuban state itself.


As is the case in the island, the Cuban government's tourism and entertainment holdings have played a leading role in establishing ventures with foreign partners in other markets.

Grupo Cubanacan S.A., (US$330 million turnover in 2002), Cuba's largest state-owned leisure industry conglomerate with about a 40 percent share of international tourist hotel rooms in Cuba (5), has quietly expanded its foreign presence in the past few years. In Mexico, Cubanacan holds an "unspecified" stake in the Paradisus Riviera Hotel in Cancun in partnership with Spanish hotelier Sol Melia S.A., itself the Cuban government's top strategic partner in the island's tourism industry.(6) On nearby Cozumel Island, Cubanacan also manages the "independently owned" Hotel Cozumel & Resort. According to Juan Jose Vega, until recently the group's CEO (7), as of 2003 Cubanacan is the managing partner of no fewer than three Mexican hotel properties.(8) On the other side of the Pacific, Cubancan and China's Suntine International-Economic Trading Co., Ltd., are partners in a jointly owned 5-star, 700-room hotel under construction in Shanghai's Pudong district.(9) In the first quarter of 2003, a Cubanacan subsidiary, Palmares S.A. (US$42 million turnover in 2002) which owns and operates culinary establishments throughout Cuba, opened its first "La Gloria Cubana" Cuban-themed restaurant in Shanghai as a joint venture with the Shanshan Group. Palmares had previously franchised "La Gloria Cubana" in Porto, Portugal as well as its Tocororo restaurant in Milan, Italy and its Daiquiri Scabrous in Panama City, Panama. (10)

Another major Cuban government tourism holding, Grupo Hotelero Gran Caribe S.A., has also been successful by offering a 'taste of Cuba' abroad. Through a subsidiary of its own, FTB (Floridita-Tropicana-Bodeguita), Gran Caribe has franchised Havana's famed "La Bodeguita del Medio" restaurant-bar worldwide. With five locations in Mexico alone and a presence in diverse cities including Dubai, Paris, Prague, and Warsaw, Gran Caribe also requires that its franchisees serve products made in Cuba such as Havana Club rums exclusively.(11)


"We are not crazy about the patent system," a senior Cuban scientist has admitted.(12) However, despite the fact that the Cuban government developed the island's pharmaceutical industry by more than once violating the international patent system, today Cuba carefully protects its own intellectual property rights with some 500 patents registered around the world. It does so, in part, because technology transfers to foreign partners for the production of generic medicines as well as original Cuban biotechnology products allow Cuban biotech enterprises to form joint ventures, enter new markets, and ultimately turn a profit with a minimum expenditure of hard currency.

The most controversial of such transfers of Cuban biotechnology has been with Iran. In May 2001, Fidel Castro himself visited a new research and production center under construction outside Tehran as part of an ongoing joint venture between Iran's Pasteur Institute and Havana's Center for Genetic Engineering and Biotechnology (CIGB). Described by the official Cuban press as "the largest and most modern [facility] of its type in the Middle East," the investment is valued at US$60 million.(13) However, as is the case with virtually all such partnerships, the Cuban government's equity comes from the transfer of the technology itself and the know-how provided by Cuban scientists, rather than in any substantial infusion of cash.

Less notorious but perhaps more profitable for Cuba are similar joint ventures established with biotech firms in other markets, particularly in developing nations. For example, in October 2002 Malaysia's Bioven Holdings Sdn Bhd and Heber Biotec S.A., the marketing subsidiary of Havana's CIGB, formalized the creation of a biotech joint venture firm, Heber Bioven Sdn Bhd. The new company will eventually manufacture in Malaysia Cuban biotechnology products for Southeast Asian markets. In exchange for contributing the technology, the Malaysian partner granted Cuba's Heber Biotec a 30 percent equity stake in the new company. (14)

In at least one instance, however, Cuba's lucrative foreign ventures have run into regulatory obstacles. After an agreement was reached in 2002 between Bangalore-based Biocon India and the marketing subsidiary of Cuba's Center for Molecular Immunology (CIM) for the formation of a joint venture to produce and market Cuban anticancer drugs in India (with the Cuban firm receiving a 49-percent stake in the jointly-owned Biocon Biopharmaceuticals Pvt. Ltd.), New Delhi's Foreign Investment Promotion Board rejected the proposed 'investment' in January 2003 because the "share allocation [for the Cuban partner] is on the basis of technology transfer...and there is no money coming in."(15) Though the decision was ultimately reversed after lobbying by Biocon, India's largest biotechnology company, the process revealed Cuba's growing dependence on its intellectual capital to compensate for a lack of hard currency.

In Africa, where healthcare provided by Cuban physicians has already won Havana much political capital, Cuba is now set to reap financial gains as a supplier of generic drugs. In July 2003, Namibian authorities approved a joint venture between the Cuban government and Namibia's Zenith Enterprises Inc. for a pharmaceutical plant in Ondangwa. The venture is scheduled to begin production in 2004 of basic pharmaceuticals, ranging from penicillin to pain medications, and will also export Cuban anti-retroviral formulations for HIV/AIDS from Namibia to other African countries at a later stage. In return for the transfer of its pharmaceutical know-how and training of Namibian technicians in Cuba, the Cuban state obtained a 30-percent share of the estimated US$20 million venture.(16)


While biotechnology transfers gain the Cuban government much recognition in the developing world, Cuba's foreign investments also include licensing the manufacture of more mundane, if profitable, products. In June 2003, Namibia and Cuba also ratified a new joint venture to craft typical "Cuban Guayavera (sic) shirts" with private financing.(17) Meanwhile, as of 2003, Cuba's Coppelia ice cream is being produced in Ipoh, Malaysia in a joint venture with Jawala Corp. (18)

Whatever the nature of the product or service involved, Cuban investments abroad are growing in importance for the critically cash-strapped Castro regime. The Cuban government's own tentative figures for 2003 reveal that only 360 ventures financed with foreign capital were active as of the end of October. Of this number, 80 are said to be operating beyond Cuban shores.(19) With more than 20 percent of FDI now directed toward business activities and joint ventures outside of Cuba, and a neglible net inflow foreign capital within Cuba itself (20), Cuba's state-owned entrprises have realized that they too can obtain a better return on investment elsewhere.


1. Interview with Anaiza Rodriguez, head of MINVEC's Center for the Promotion of Investments (CPI), in official Cuban press. See Marta Veloz, "La inversion extranjera en la Feria de La Habana," Havana, Opciones, 2 November 2003.(Return)

2. Raisa Pages, "Ascienden a 270 contratos de producciones cooperadas," Havana, Granma Internacional, 3 February 2003. (Return)

3. Cf. Note 1 above. (Return)

4. Tentative 2003 figures as published in official Cuban press. Cf. Note 1 above.(Return)

5. Cf. Grupo Cubanacan S.A.'s official website, [], and Carlos Batista, "Cuba denies corruption prompted ouster of tourist agency chief," Havana, AFP, 8 December 2003. (Return)

6. U.S.-Cuba Trade and Economic Council, "Cubanacan S.A. Has Hotel Investment with Sol Melia S.A. of Spain in Mexico," Economic Eye on Cuba, 28 January 2002. For Cozumel venture, see Hotel Cozumel & Resort website at (Return)

7. Cf. Carlos Batista, "Cuba denies corruption...," Note 5 above.(Return)

8. Interview with then Cubanacan president Juan Jose Vega in official Cuban press. Cf. Minerva Hernandez Basso, "Dieciseis anos fundado," Havana, Opciones, Oct. 2003.(Return)

9. Cf. "Inician construccion de hotel chino-cubano en Shanghai," Havana, AIN, 15 December 2003.(Return)

10. U.S.-Cuba Trade and Economic Council, "Palmares S.A. Reports 2002 Gross Revenues of US$42 Million," Economic Eye on Cuba, 10 March 2003. Also see Directorio Turistico de Cuba (DTC), "Cuban restaurant opens in Shanghai," Beijing, DTC News, 7 April 2003.(Return)

11. Alberto Pozo, "La Bodeguita del Medio hacia otras latitudes," Havana, Granma Internacional, 20 March 2001, and A. Pozo, "Lessons of La Bodeguita," Havana, Granma Internacional, 3 October 2001. Also see, "Nueva franquicia en Mexico del legendario bar cubano La Bodeguita del Medio," Havana, Caribbean News No. 195, 11 December 2003. (Return)

12. Quoted by Patrick Michael Rucker, "Cuba to capitalise on biotech," Havana, The Financial Times, 4 December 2002.(Return)

13. U.S.-Cuba Trade and Economic Council, Economic Eye on Cuba, 7 May 2001, and Elson Concepcion Perez, "Fidel in Iran," Granma Internacional, 9 May 2001. (Return)

14. Liew Lai Jing, "Bioven, Cuban firm in biotech joint venture," Kuala Lumpur, The Star, October 2, 2002; and "Chua: Cuba can play a big part in Bio Valley," Kuala Lumpur, The Star, October 2, 2002. (Return)

15. Ambarish Mukherjee, "Biocon venture with Cuban co hits FIPB hurdle," New Delhi, The Hindu Business Line, 1 January 2003; A. Mukherjee, "Biocon gets nod for tech-equity swap,"New Delhi, The Hindu Business Line, 12 March 2003.(Return)

16. Hugh Ellis and Christof Malestsky, "Namibia, Cuba Push On With Pharma Plans," Windhoek, Tha Namibian, 7 July 2003. Also see, Brigitte Weidlich, "Joint venture with Cuba," Professional Management Review (South Africa), February 2003.(Return)

17. Government of Namibia, Nambia-Cuba 7th Joint Commission Communique, "Namibia-Cuba Joint Continue Cooperation," Windhoek, 24-30 June 2003.(Return)

18. Paul Gabriel, "Cuba aims for stronger trade ties to Malaysia," Kuala Lumpur, The Star, 24 November 2003.(Return)

19. Cf. Marta Veloz, "La inversion extranjera...," Note 1 above.(Return)

20. Net FDI in Cuba in 2002 was a mere US$1 (one) million according to United Nations statistics. Cf. ECLAC/CEPAL, "La inversion extranjera directa en America latina y el Caribe, 2002 (Santiago de Chile), p. 28, (Return)


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