CUBA – Who will benefit?
In 1961, relations were completely severed between the US and Cuba. Following two years of negotiations each re-opened its embassy in the other’s capital in July 2015. However, there are still many restrictions on Americans wishing to travel to Cuba, and there is an embargo banning most US companies from doing business on the island, whose economy is worth an estimated £51bn. Cuba claims the embargo is hugely damaging to its economy. But this hasn’t stopped businesses taking interest in the island as relations between the US and Cuba move steadily along the path to a full breakdown of restrictions. These are the five main sectors set to benefit :
Prior to 1961, Eastern and Pan Am were the main US airlines flying to and from Cuba. These two airlines no longer operate, however once US tourists start visiting the island freely there will be opportunities for major airlines to provide flights from the US to Havana. Delta Air Lines and American Airlines are both likely contenders.
Louisiana State brokered a $15m deal in 2005, to boost agricultural exports to Cuba. This was possible because of a 2001 change to US trade embargo that allowed US companies to sell some food products. According to the World Trade Center of New Orleans, Louisiana now accounts for almost 30% of Cuban-bound agricultural exports. Two of the main products it exports there are poultry and rice. So, as restrictions continue to relax, US agricultural companies will start to consider Cuba as an expanding export opportunity.
Cubans have for years been severely restricted in the cars they can buy. The government often opted for an official car supplier with Cubans only being able to buy a car from a single company at any one time. When Cuba this rule is eventually removed, a new market will open up for car-makers, who will are expected to make the most of the mass switch from old to new.
Some US companies have already taken the initial step of establishing themselves on the island since an exception to the US embargo permits telecommunications providers to set up basic infrastructure, so that Cuba has access to essential internet services. It will be easier to take business investment up a notch once the embargo is broken down enough to allow more commercial operations to go ahead there.
Cuba is already a popular holiday destination for many Europeans and is set to be as just alluring for Americans once free travel access is granted. Companies such as Hilton, Marriott and Starwood are thought to be considering some of Cuba’s most beautiful regions. European and South American companies have already developed some hotels in the islands.
What You Should Also Know About Doing Business with Cuba
Cuba may well seem like a lucrative opportunity for US small businesses. But is it? An expert reveals some interesting aspects of the reality vs. dream of doing business with Cuba.
Sources: City A.M, London UK, Industry Week, Huffington Post.
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