12/18/2014

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Business

Cuban entrepreneurs gird for ban on import sales

Cuban entrepreneurs gird for ban on import sales
A woman tries on a shoe inside the home of a small business owner in Havana, Cuba.
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HAVANA (AP) - You can find just about anything at El Curita marketplace in gritty central Havana.

Hundreds of entrepreneurs hawk all manner of goods at the bustling bazaar, from watches, shampoos and facial creams to neon-colored tube tops and the striped FC Barcelona soccer jerseys that are increasingly a fashion must.

Three years ago, there was nothing quite like it on this Communist-run island known as much for perpetual scarcity as it is for pristine beaches and world class cigars. And three months from now, it could all be over as authorities begin enforcing a new law banning the private sale of imported goods.

Cuba is in the middle of what it calls a significant opening to limited private enterprise - even as it swears it won't abandon socialism. But for entrepreneurs who have carved out modestly successful livelihoods after investing their life savings to launch import-dependent businesses, the new measure feels like a big step back.

Announced in late September, the law is likely to snuff out some businesses entirely while driving others back underground in a nation where the black market has long flourished. In some markets, crude signs have already started going up advertising "liquidation" sales.

"I never thought that this would happen. I'm desperate," said Barbara Perez, who sells blouses for $13 and jeans for around $15 from her clothing stall. "I can't sleep because I'm constantly asking myself, 'What is going to happen? What am I going to do?'"

Last week, she said, authorities summoned her to hear an explanation of the new rule.

"They treated me well. They read me the new law and they made me sign a paper," Perez said between sobs. She has until Nov. 30 to sell her remaining inventory, and "after that they can confiscate it."

Some 436,000 Cubans are running or working for private small businesses under President Raul Castro's package of social and economic reforms begun in 2010. Among other things, the government has legalized used car and real estate sales and ended the much-detested exit visa required for decades of all islanders seeking to travel overseas.

While critics say the list of nearly 200 approved areas of independent employment is too short, it continues to expand. The same day the ban on selling imports was announced, authorities OKed 18 more professions including blacksmiths, welders and real estate agents.

"Personally, I think the steps so far have been positive," said Josuan Crespo, who can now work legally as a real estate agent. "With this new regulation we can help people with everything to do with buying and selling property."

Perez opened shop three years ago with a seamstress' license, but quickly realized there was no money in making clothing from scratch. For starters, there's no wholesale market offering raw materials to craft new clothes or shoes. When available, fabric can be of dubious quality. And the real demand is for foreign fashions.

"The first 11 days I didn't sell anything. They said my clothes were out of fashion and low-quality," Perez said. "So I decided to sell my sewing machine, my television, my refrigerator, and with the $150 I raised, I bought clothes from a person who brought it from abroad and started selling that."

She and countless other entrepreneurs continue to rely for supply on so-called mules who fly overseas, returning with duffel bags stuffed with underwear, jewelry, auto parts, appliances.

Authorities began taking aim at that sub-industry last year by dramatically hiking customs duties.

Labor Ministry official Jose Barreiro Alfonso recently told Communist Party newspaper Granma that it's necessary to "impose order" in the retail sector, and it will be a crime to "obtain merchandise or other objects for the purpose of resale for profit."

Together, the measures recall previous policies that critics describe as two steps forward, one step back.

In the 1990s, Cubans were allowed to open private restaurants to ease the pain of a severe economic crisis; when the worst had passed, authorities regulated the eateries practically out of existence until they were revived under the recent reforms.

Such policies "create an atmosphere of uncertainty that is not positive, and a level of frustration that will not rise to the level of nationwide protests," said Frank Mora, director of the Latin American and Caribbean Center at Florida International University. "But with this, the government is sending a message to the people that it is maintaining control."

Carmelo Mesa-Lago, a University of Pittsburg professor emeritus of economics, interpreted the new law as an attempt to protect the government's own retail operations.

"It miscalculated" before, Mesa-Lago said. "It thought it could compete with these people who ... sell at a reasonable price while (state-run) stores have very high prices."

After being laid off from his hotel job, Frank Rodriguez, 30, took out a cobbler's license and began selling imported shoes at El Curita. He intends to recover his $3,000 investment one way or another, by selling "here or elsewhere."

"We are living days of complete uncertainty," Rodriguez said. "If they allowed this for three years across the country, why prohibit it now? How, and with what money will I buy food for my daughter?"

Diana Sanchez, who supports herself, her daughter and her retired mother by selling plumbing and household supplies, is considering becoming a manicurist.

"What I sell, I can't make. So they're going to shut me down? You can't do that," Sanchez said. "They allowed this. We had hope, an illusion that things were really going to change. ... We're going to take a step back instead of moving forward."
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