March 15, 2010 / 5:59 PM / 9 years ago

Cuba says foreign ventures slightly up after long decline

* Joint ventures number 218, up seven over 2008

* Not clear if increase is result of policy change

By Marc Frank

HAVANA, March 15 (Reuters) - Cuba registered a slight increase in the number of foreign investment projects last year, the first rise since authorities began winnowing out foreign ventures they deemed ineffective or corrupt in 2003, according to a government report seen by Reuters on Monday.

The report by the Foreign Trade and Investment Ministry said the country was involved in 218 joint ventures, compared with 211 in 2008, and had 69 hotels under foreign management, up from 63 the previous year.

The increase was the first reported since 2002. After that Communist authorities began closing many of the 404 ventures and 313 cooperative production agreements then in existence, mainly with Western partners, alleging they did little for the economy and were often corrupt.

The report said there were currently just 14 cooperative production agreements, where an investor receives part of the profit or product produced, but holds no shares.

The increase in foreign investments came despite a severe financial crisis and just a year after President Raul Castro formally took over from his ailing brother Fidel Castro in 2008. But local economists said it was too early to say if the change was the result of a change in government policy.

Hurricanes, the international financial crisis, U.S. sanctions and a sluggish state-dominated economy left Cuba short billions of dollars in 2009.

Foreign Trade and Investment Minister Rodrigo Malmierca told the National Assembly in December that 46 of the investment agreements with foreign companies were abroad, many of them in Venezuela, China and Angola.

Cuba has pharmaceutical ventures in Iran, India, China, Brazil and other countries, works construction in Angola and Vietnam, operates a hotel in China, and is involved in numerous projects in Venezuela, whose President Hugo Chavez is a top ally.

Inside Cuba, Malmierca said joint ventures were predominantly with investors from Spain, Venezuela, Canada and Italy, in sectors such as tourism, oil exploration, communications and mining.

Details of many joint ventures were not disclosed, but official media reported during 2009 deals for two hotel projects with Qatar, a fishing venture and four oil exploration contracts with Russia, an electronics assembly plant with China, and a paper venture with a Spanish firm.

U.S. law — long aimed at isolating Cuba — bars American companies from investing on the island, though they may hold a minority stake in foreign firms with less than 50 percent of their operations in Cuba.

Since the collapse of its former benefactor, the Soviet Union, threw Cuba’s economy into deep crisis in the early 1990s, Havana has allowed some foreign investment under strict government control.

Cuba opposes privatization on principle and views foreign investment as merely “complementary” to the state-run economy, with foreign investors adding technology, management skills, financing and markets. Joint ventures are with Cuban state partners that usually hold 50 percent or more shares at home and a minority stake abroad.

Editing by Jeff Franks and Frances Kerry

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