Mariel – building for the future

I was pleased to be able to visit Cuba’s new ‘Special Development Zone’ in Mariel recently. Mariel is a central element in the Cuban government’s plan to attract more much-needed foreign investment and seeing it first-hand is something I have wanted to do for a while. Several British businessmen, interested in investing in Cuba, have asked me about my impressions.

What’s immediately striking as you drive in is the ambitious nature of the project. The area set aside for the zone is huge – 466 square km – with plans that include logistics facilities for offshore oil exploration and general cargo and bulk foods facilities. Not much has been built yet but I imagine building Varadero in the 1990s into the successful tourist centre it is today also took time. Getting it right, not the speed of development, is what matters.

The container port is already up-and-running. This is brand new and seems to be operating well; PSA International from Singapore are in charge. A new railway brings freight by rail into the port and lorries truck in containers on a new road. As Cuba currently imports about 60% of its food – much of it from the US despite the embargo – many of the containers coming in are full of rice, cereals or powdered milk. The majority of the containers going out are empty but that’s not surprising as Cuba exports services rather than goods.

Work is going on to prepare the zone for the first foreign companies that should set up there in early 2015. There are, apparently, more than 100 companies who have expressed an interest with the first projects likely to be approved by the end of the year. Deadlines are tight as those companies coming to Mariel will need efficient services – for example, water, sewerage, electricity and high-speed internet – to be able to operate.

The thinking behind Mariel makes a lot of sense. Ships are getting bigger and the channel into Havana’s old port isn’t deep enough to receive them. It couldn’t be dredged as the tunnel under the harbour, connecting the centre of Havana to the beaches and cities to the east, is in the way.

So building Mariel, deeper, wider and with more capacity than Havana, will allow Cuba to receive the new generation of ships –known as New Panamax and Post New Panamax. It’s not quite ready for these bigger ships as the channel is still being dredged (to a depth of 18m rather than the current 9.75m) and the entrance widened. Some of Cuba’s neighbours, and competitors, have already expanded their ports in preparation for this new generation of ships.

Mariel offers investors a special tax regime, quick decisions on projects and the possibility of 100% foreign ownership, all of which will be important to investors. What’s important now is that decisions are taken quickly on the projects under consideration – that will give confidence to investors, raise Mariel’s profile and attract more interest.

This guide from UKTI explains how to do business with Cuba.