A much-anticipated expansion of the private sector in Cuba will not include a wide range of professional services, wholesale trade or major industries like sugar and tobacco and prohibits the creation of media outlets, according to a list of banned activities published Wednesday.
The government will also not allow competition with the state in other vital sectors such as health care, education and communications, according to the document published by the official website Cubadebate. Although bed and breakfasts are still authorized in the tourism sector, the creation of travel agencies will not be allowed. Most are currently run by companies controlled by the military.
The list comes days after Cuba's government announced it would increase the number of business fields where self employment is allowed from 127 to more than 2,000, a move that generated high expectations that the state-controlled economy was moving toward a major opening.
The expansion of self-employment and small private businesses had been planned since last year as part of a series of reforms to confront the island's economic crisis. Cuba's GDP contracted 11% as the coronavirus pandemic, Trump administration sanctions, and the crisis in Venezuela exacerbated the problems of Cuba's long-beleaguered state economy. The measure also seeks to create jobs for about 300,000 state workers that authorities estimate will be unemployed when the government stops subsidizing inefficient companies.
While praised as an important step, economists noted that the expansion's impact would be limited if small and medium-sized private companies are still not authorized. A law to give these companies legal status was postponed until 2022.
"As positive as this new measure by the Cuban government to expand the list of authorized activities for the self-employed sector may seem, it is still an incomplete measure if it is not accompanied by the legalization of small and medium enterprises in Cuba," said Havana entrepreneur Camilo Condis.
"Small and medium-sized companies would not only solve most of the legal and tax difficulties that the private sector currently faces in Cuba, but they are essential for the recovery and progress of the Cuban economy," he added.
According to the list of barred activities, the government will maintain control of most sectors of the economy. Authorities also prohibit activities until now tolerated, such as creating independent media outlets. Though not formally outlawed under Cuban law, journalists who do not work for state agencies have been subject to routine harassment.
According to the document, the "editing and layout of books, directories, newsletters, tabloids, newspapers and magazines in any format or medium is prohibited." Printing them is also not allowed.
The Minister of Labor and Social Security, Marta Elena Feitó, said Tuesday that the current list of 127 authorized activities would be eliminated because it was very restrictive. Those who wish to open small businesses will be allowed to present a project related to the more than 2,000 activities listed in the so-called National Classifier of Economic Activities, an official list of all job categories in the country.
The list includes 80 sectors of the economy that are divided in great detail. The agricultural field, for example, is split into different categories of crops, a piecemeal approach that explains why the apparent number of activities is so high.
Among the professional activities that will be authorized are software programming and veterinary medicine, but only for the care of family pets, two long-running demands by Cubans on the island. Many programmers have offered their services to companies abroad but without any legal backing.
The authorization of small veterinary businesses, announced Tuesday by Economy Minister Alejandro Gil, comes after pressure from animal rights activists, who protested a recent decree that banned these services.
Economist Carmelo Mesa Lago said that the expansion of self-employment was "a positive step" that many had been advocating for over the years but he cautioned it still remains to be seen what the final regulations say.
"The devil is in the details," he said, recalling how the government announced last year that self-employed workers could export and import products, only for authorities to later say it could only be done through state enterprises.
Some decisions are difficult, he added: "If you allow architects to practice privately, they will leave the state sector."
Architects, engineers, doctors, and scientists are left out of the expansion. So are music and audiovisual producers, who for years have been fighting to get legal status.
Feito said self-employed workers will be able to have more than one business. All currently self-employed workers will have to re-register, she said, and those seeking to open new businesses will have to submit their projects for authorization.
"A country and an economy do not fit into one regulation," said the minister, in reference to the narrow list of 127 authorized activities. Among the changes, she mentioned that those who rent rooms to tourists can now add other services like providing meals and transportation without requiring multiple licenses.
Despite an initial push to reform the economy during Raúl Castro's government, authorities have pushed back on the expansion of self-employment, limiting it to 123 activities that excluded most of the professional services. Some of the allowed activities, such as "button liner" or "palm trimmer" exemplified how limited the focus was.
Even so, thousands of Cubans opened small authorized businesses in their homes: cafes, hostels, "paladares" or restaurants, and beauty parlors. Others left their state jobs to become taxi drivers. The most successful could generate thousands of dollars. For most, the nascent private sector allowed them to survive outside the state economy.
According to government figures, more than 600,000 Cubans are owners or employees in these small businesses.
Although the expansion of authorized private sector activities was a measure that many Cubans have advocated for inside and outside the country, experts believe that it will not be enough to improve the island's economy, which is also experiencing the impact of a monetary reform that has generated inflation.
The development of wholesale trade, the elimination of bureaucratic hurdles, and the granting of loans are other measures that, together with the law recognizing private companies, must be taken "quickly, without obstacles or disincentives," wrote Mesa Lago in a recent report for the Elcano Royal Institute think tank in Spain.
Other experts doubt that the announcement will have an immediate effect on a sector that has been heavily affected by U.S. sanctions and restrictive measures imposed to combat the pandemic. In the announcement, some see a nod to the administration of President Joe Biden, which has promised to review policy toward Cuba and roll back limitations on travel and remittances.
The new U.S .administration could look favorably upon Cuban government efforts to complete the monetary unification that began this year and promote "energizing opportunities for small businesses to operate independently," said John Kavulich, president of the U.S.-Cuba Trade and Economic Council.
"If the Biden administration believes the (Miguel) Diaz-Canel government is prepared to do what is difficult, maintain the processes despite challenges, then is far easier for Washington to create opportunities for engagement," he said.
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