March 30, 2018 / 11:56 AM / 6 months ago

Cuba grants Vietnamese company concession at special development zone

HAVANA, March 30 (Reuters) - Cuba on Thursday granted Vietnamese developer and building supplies corporation Viglacera a concession to administer and market part of a Chinese-style industrial park just west of Havana.

The area, named the Mariel Special Development Zone, is adjacent to a modern container terminal at the port of Mariel 28 miles (45 km) west of the Cuban capital.

Cuba says it is currently spending about $300 million per year to develop the area, which has so far signed up 34 clients. Most of the companies are 100 percent foreign owned and involved in infrastructure and service development for the zone. A handful are building factories to produce everything from diapers and cigarettes to cold cuts and personal hygiene products.

Cuba created the zone four years ago to attract foreign capital with tax and customs breaks to boost its anemic economy.

Cuba hopes the zone and others it plans for the future will “increase exports, the effective substitution of imports, (spur) high-technology and local development projects, as well as contribute to the creation of new jobs,” according to reform plans issued by the ruling Communist Party.

The signing ceremony took place as the head of the Vietnamese Communist Party Nguyen Phu Trong visited the Caribbean island.

Phu Trong has advocated for market reforms during his visit, and Viglacera is certainly an example, the government having gradually shed its stake in the company.

The concession, which leases for 50 years a bit more than half a square mile (160 hectares) to Viglacera, is the first granted by the development zone.

Mariel was much visited by U.S. politicians and businessmen under a fragile detente begun by former U.S. President Barack Obama but has been declared off limits by the Trump administration due to its connection with a military business conglomerate.

A Chinese company is close to signing a similar deal, according to a foreign businessman who works in the zone and who asked for anonymity.

“These concessions are designed to pick up the pace of development and bring in new clients at a time when Cuba is experiencing financial difficulties and they involve experienced developers who can attract new business,” he said.

Local state-run media quoted Ana Teresa Igarza, director of the zone, as stating Viglacera would develop infrastructure over a five-year period for its own use and to lease to third parties.

She said the company, operating through its wholly owned subsidiary ViMariel S.A., would produce bathroom fixtures, tiles, glass panes and other building materials. (Reporting by Marc Frank Editing by Bill Trott)

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