Manuel Marrero, the Prime Minister of Cuba, has stood by the recent adjustments in the regulations governing micro, small, and medium businesses (SMBs) on the island. He argues that the aim is not to ban these operations but to restructure wholesale and retail trade within the non-state sector.
During his address to the National Assembly of People's Power, which is concluding its extraordinary session today, Marrero elaborated on how some of the initially sanctioned business structures with specific goals began shifting their focus. They turned to the import and sale of containers on the streets—a venture far more profitable than originally intended.
"Numerous non-state entities were green-lighted with the promise of fostering activities that benefit the country, but they realized that selling containers on the street yielded more income than agreed upon," Marrero remarked.
The Prime Minister indicated that this shift led to a "distortion" of the original objectives, prompting the government to impose measures to reorganize and regulate such practices. He clarified that self-employed individuals with licenses permitting wholesale trade could continue their operations, provided this activity is authorized within their business scope. However, those lacking such approval must adhere to the new guidelines and refrain from wholesale trade.
Marrero emphasized that the government's policies are not aimed at hindering private business activities but at ensuring that SMBs contribute to the country's economic growth within the established framework. He noted that the Cuban government has approved over 11,000 SMBs, showcasing its support for this sector, albeit within the confines of the centralized planning system.
These statements follow the Cuban regime's recent resolution, published in the Official Gazette, which automatically revokes wholesale trade licenses for many SMBs that had them as a secondary activity. Under the new regulation, these businesses must now form alliances with state entities to continue operating in this domain. According to the regime, the measure seeks to "organize" wholesale trade and compel the integration of the private sector with the state, steering the Cuban economy toward increased regulation.
The decision has sparked concern among private entrepreneurs, as it forces SMBs to swiftly adapt to new conditions if they wish to persist in wholesale trade. The revised regulation also establishes deadlines for updating commercial licenses and sets penalties for non-compliance with the new requirements.
Understanding the Impact of New SMB Regulations in Cuba
What prompted the Cuban government to change the SMB regulations?
The Cuban government altered the SMB regulations to address a shift in business activities, where some companies began focusing on importing and selling containers on the street, a more profitable venture than their original objectives.
How will the new regulations affect SMBs in Cuba?
The new rules require SMBs to form partnerships with state entities to continue operating in wholesale trade, imposing deadlines for updating licenses and penalties for non-compliance, thus pushing for a tighter integration with the state sector.