On December 17th, the US and Cuba reached a deal to reestablish diplomatic relations and ease trade restrictions for the first time in five decades. It’s a historical move that will leave deep marks on North American culture and change the way the US and the world do business with Cuba.
That’s what we’re being told, at least. But what does the US/Cuba deal really mean for dealmakers who want to start making business ties with Cuba as soon as possible? Despite Obama’s directives, it’s not as simple as flying to Havana and setting up shop – and it might never be.
In order for Americans to start travelling to Cuba and conducting business there, US Congress needs to vote to lift the embargo, and that could take a long time in a Republican-controlled House. Even then, it’s hard to predict what kinds of policies, regulations, and limits the US might put in place once trade and travel are opened. Then there’s the problem of dealing with the Cuban government – a highly corrupt bureaucracy with fickle business laws that recently put one Canadian entrepreneur in jail.
Here are six tips for starting business with Cuba today.
1. Know the law
President Obama’s directives – which themselves are limited to his own executive power – don’t take effect right away. Keep an eye on the US Treasury Department website as the new policies roll out over the coming months. Of course, also keep an eye on Congress for a vote on the embargo.
2. Think consumer goods
As it stands, the new policies will allow trade with “Cuban private companies in building materials for private homes,” and the selling of “goods for entrepreneurs” and “farm equipment for small farmers.” That’s great news for anyone already in the building and agricultural industries, but for others lacking the high overhead to get started, the second opportunity should be most interesting. With most economists identifying a large Cuban marketplace for US consumer goods, and a budding Cuban entrepreneurial culture already in place, it’s time to think about what you can sell to preexisting Cuban businesses.
3. Buy property
This is not easy, but those who have the opportunity should jump on it. Cuban law allows foreigners to buy property under two conditions. They can: 1. Buy from another foreigner, or 2. Buy in the name of a Cuban spouse, family member, or friend. It’s a narrow marketplace – for now – but Cuban property value is sure to go up by a huge magnitude over the coming years. Get into that goldmine if you can.
4. Buy stock
Virtually all Cuba-related stocks soared after the deal was announced, whether they had any real Cuba connection or not. There was the Cuba Beverage Company, for example, which is a US-based company that sells Cuba-themed beverages. More to the point, stocks in Sheritt International and the Herzfeld Caribbean Basin Fund should continue to rise as those groups see more business opportunities in the coming years.
5. Get in position
Businesses in geographical proximity to Cuba, like Carnival and Copa Holdings, also saw a huge boost following the announcement. Even if lifting the embargo takes time, there will be more and more travel between Cuba and the US in the coming months, and anyone close by will stand to profit. Time to open that branch office in Miami?
6. Keep a close eye on Cuban policies
It’s crucial to remember that whatever changes take place in US foreign policy, they have no bearing on Cuban business law. Cuba is still a communist country and they naturally have a certain aversion to private enterprise and property. Recent anti-corruption measures have lead to crackdowns against foreign corporations, and there’s no reason to think this won’t continue. Stay safe by being informed and getting the inside scoop from entrepreneurs and corporations who have experience working with Cuba. For a while to come, it might be a better idea doing business from a distance.