When Raul Castro took over from his brother as President of Cuba
in 2008, he began a long-anticipated process of political and
economic reform. As a result of his strategy, the stagnant economy
has been gradually coming to life, galvanised by a fledgling
private sector. Diplomatic advances have been made, animosities are
thawing and, slowly but surely, relations with the USA are being
restored. With this sea change comes the possibility of direct
foreign investment, a prospect historically laden with regulatory
obstacles and risks – from both sides.
Past forays into Cuba by enterprising persons have resulted in
success for some and misfortune for others. The adoption of the
Foreign Investment Law in April 2014 has reduced some of the risks,
establishing and fixing the goal-posts, but the legal and
regulatory framework is still in its infancy and it will take time
for familiarity and confidence to grow.
For those with the appetite to venture into the Cuban market, a
company incorporated in an IFC such as the British Virgin Islands
(BVI) can be an invaluable vehicle. IFCs play a vital role in
moving capital from developed to developing countries, many of
which would not be able to benefit from foreign capital without the
stability and neutrality that can be provided by an investment or
holding company in a responsive, well-regulated jurisdiction. The
inclusion of an IFC company in a cross-border structure can provide
a reliable degree of corporate governance and legal certainty;
important factors when making the decision on whether to invest in
a potentially volatile market.
While the Cuban economic and political landscape is adapting and
adjusting, some potential investors may form the view that the
challenges outweigh the opportunities. Others will take the chance
to play a part in the development process. As a leading
international law firm with expertise in BVI, Bermuda, Cayman
Islands, Cyprus and Anguilla law and a reputation for innovation,
Harneys is well-placed to advise forward-thinking sponsors on the
IFC aspects of their investment structures.
In order for a company to survive in this rapidly evolving global economy, it must eventually expand at least a portion of its business operations overseas or across borders, to become a more lean and cost-efficient organization.
Uruguay has open and solid financial and banking systems and offers a business-friendly environment. No wonder why the country and its more than 10 free zones are attractive for many multinationals and investors.
Cuba adopted a new foreign investment law earlier this year that abolished duty-free zones and industrial parks while expanding areas for investment.
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