Still not easy to do business in Cuba

STARBUCKS can move to Cuba, but it still cannot sell lattes there.

The US on Friday tore down barriers to American companies doing business on the communist-ruled island just south of Miami, but plenty of regulatory and legal roadblocks remain on both sides of the Florida Straits.

Airlines and cruise ships will see less meddling with their schedules, although the new rules approved by President Barack Obama will not lead to a significant boost in visitors, as US law still prohibits most Americans from travelling there.

But Starbucks could still not sell prepared drinks like a latte or a cappuccino, only packaged coffee, said John Kavulich, the president of the US-Cuba Trade and Economic Council.

The new rules of engagement have opened the door for internet companies, but a Cuba government-owned company has the local monopoly on web services. The prospects for retailers and restaurants are murky. Cuba’s mostly poor population of 11 million has limited spending power and remaining US law tightly restricts what can be sold to the former Cold War foe. And then there is the biggest wild card of all: the Cuban government, which will have the final say on who is licenced to do what.

“You don’t just go down to Cuba and hang up your shingles. That’s not how it operates,” said Kirby Jones, the head of Alamar Associates, which has advised companies on business in Cuba since the 1970s.

Starbucks, for one, said it had no plans to enter Cuba. To be sure, executives described the relaxing of US rules as an important step towards opening up the Cuban economy to US investment in a wide range of industries.

United Parcel Service said it “welcomes the opportunity to provide logistics services in and out of Cuba as regulations are changed”. A spokeswoman for Archer Daniels Midland, which has exported goods to Cuba under existing regulations, said the agribusiness group “will be ready to adapt to new opportunities as they arise”.

US telecoms Verizon Communications and Sprint last week said they planned to offer cellphone roaming in Cuba.

But other companies showed a more cautious tone. Both WalMart Stores and Home Depot said they were focused on growing in their existing markets.

While the regulations will allow US firms to open retail outlets, there are limits on what can be sold based on US trade law enacted in 2000. – Reuters