A few local entrepreneurs have tested Cuba's market, tapping into the potential of that country's population of over 11 million people. But even with its huge possibilities, the opportunities in the Cuban market remain largely unexplored and large-scale trade relations are yet to develop between Jamaican companies and their socialist neighbour, a mere 90 miles to the north.

The most updated trade data from the Statistical Institute of Jamaica (STATIN) paints a daunting picture. In 2007, Jamaica imported US$16.7 million in merchandise from Cuba, while it exported just US$5.8 million. Some of the main exports to Cuba are food items, chemicals, non-metallic minerals such as aggregates and metallic items, which include scrap metal.

There is no consensus on the primary constraint that has faced would-be exporters to the Cuban market.

GraceKennedy director and former head of the Caribbean Association of Industry and Commerce (CAIC), James Moss-Solomon, says Cuban bureaucracy was an overriding concern for local companies when Grace did business on the island, back in the 1990's. Grace shipped processed foods such as vienna sausages and bottled hot sauces to Cuba.

"The economy was a controlled economy; there was no private sector, really, to trade with because everything was government owned," notes Moss-Solomon. "It was a bit difficult to deal with the bureaucracy, in terms of getting paid, so that's the first thing that turned everybody off."

Government's promotional agency, Jamaica Trade & Invest (JTI), said in a written statement to Sunday Finance, "Our export activity to Cuba, over the years, has been constrained by a combination of factors including the language barrier, a lack of adequate trade financing and also the difficulty in negotiating firm export contracts with our business counterparts in Cuba."

However, there is also an overriding belief that the half-century US embargo against Cuba is a major factor behind the anaemic business interests.

"While one may not be able to link the embargo directly (with Jamaica), the trade between the two countries is not as active as it would have been had there been trading without the fear of anyone looking at you as breaking the rules or putting you in a compromising position," opines Senator Norman Grant, president of the Jamaica Agricultural Society (JAS). "We support the rapid lifting of the embargo because we think it will certainly create tremendous market space for not only Jamaican products, but regional products."

The John Issa-owned SuperClubs chain of hotels, for example, in 2004, pulled the plug on managing two Cuban properties, after the then Bush administration invoked a section of the 1996 Helms-Burton Bill that penalises those who do business in the communist island.

Against that background, Jamaican fascination with the Cuban market may have turned into active pursuit since the Barack Obama US administration said it would ease embargo restrictions on the island. In April, Obama announced reduced travel restrictions for Cuban-Americans travelling to their home of heritage and the US Congress will soon vote on wholly lifting the ban. On the other side of the political fence, Cuban President Raul Castro and his brother, former Cuban leader Fidel Castro, have both expressed willingness to hold discussions with the US.

Milton Samuda, President of the Jamaica Chamber of Commerce (JCC), says, from a business perspective, these are positive developments. Local companies, he adds, should have an eye out.

"Coming at a time when we don't have a hostile US government (towards Cuba), it is the best time to make a move," notes Samuda. "If you look at what it is that they need, we can supply it."

The JCC president, and other experts, have generally identified telecoms, tourism and agriprocessing as the sectors with the most potential for Jamaican businesses.

Expansion into Cuba's underdeveloped market would be a major move for any telecoms firm. Currently, state-owned ETECSA is the only operator able to serve the domestic Cuban telecoms market, therefore no foreign companies have a physical presence on the island.

But local players still laud the island's enormous market potential.

"With the biggest population in the Caribbean, and underdeveloped telecoms markets, Cuba clearly represents a significant opportunity for operators with an appetite for investment and growth - this includes LIME," notes LIME's regional vice-president of Corporate Communications Errol Miller. "There is a large potential demand for services in Cuba, which could represent several hundred million US dollars in revenue annually - and that includes landline, Internet and entertainment as well as mobile, which is the primary focus of many interested players."

Miller says LIME is "watching" the political developments in Cuba closely but emphasises that that is the most it can do.

"Whilst the recent White House move to relax restrictions for US carriers is an important first step, it is just that - a first step," notes Miller. "The Cuban market is still controlled by Cuban government regulatory bodies, and will only be opened up to outsiders as, and when, the government chooses to do so."

It has been reported, however, that both LIME and Digicel were attempting to secure a phone-service carrier contract between Jamaica and Cuba.

Miller says that these reports were in regards to a cable system being installed by a Cuban-Venezuelan joint venture company, which runs from Venezuela to Cuba and on to Jamaica.

"This represents the first cable system running into Cuba and will have a major impact on that market," explains Miller. "We are obviously aware of the project and are looking at it closely."

LIME has a strong working commercial relationship with the Cuban mobile and fixed-line operator ETECSA. The company was the first operator in the Caribbean to enter into a commercial carrier agreement with ETECSA and has well-established mobile roaming agreements. Digicel confirmed that it has existing business relationships in Cuba, in terms of terminating some of its traffic, but declined to comment further.

The potential of Cuba's tourism industry is tremendous. Two million tourists visit Cuba each year and that is expected to double if the US allows all Americans to travel to the island. Some local commentators feel that Cuba's potentially robust tourism industry is a threat to Jamaica's, but the Jamaican government and the Jamaica Hotel and Tourism Association (JHTA), in response, says that Jamaica would actually benefit, as it would offer increased airlift and hotel expansion opportunities. Wayne Cummings, the JHTA president, noted earlier this year that Jamaica can develop code-sharing arrangements to work with airlines that go to Cuba but don't come to Jamaica, such as those from Continental Europe and Eastern Block countries.

Moss-Solomon notes that there has always been an opportunity for local agroprocessors in the Cuban market, but said his company encountered beaucratic challenges when it attampted to expand into Cuba.

"When we were in the market, in the early 1990's, we weren't being allowed to sell in the store where the little Cuban man was buying," says Moss-Solomon. "People going in to Cuba when I did were trying to get into that consumer market of 11 million people, which hadn't happened and still hasn't happened... most of the products are like diplomatic stuff."

JAS' Grant acknowledged that agroprocessing is indeed an area of interest in the Cuban market.

"We are looking at that market to possibly export fresh-produced and agroprocessing foods, as soon as the embargo is moved," says Grant.

Grant has also been proactive in spearheading the country's efforts to benefit from Cuba's agricultural expertise via an alliance. A Memorandum of Understanding was signed on May 26, between the JAS and Cuba's National Association of Small Farmers.

"One of the commitments that I gave to the farmers, when I presented myself for leadership in the agricultural sector, was that I would seek to expand local and international alliances that will help to empower the farmers and create an enabling environment," says Grant, who led a delegation to Cuba last year. "The National Association in Cuba is an impressive organisation... some of the technologies that they use are basic and simple but they work... during the next 12 months you will see a very active farmer exchange programme and this will be the beginning of a relationship of tremendous development for over 200,000 Jamaican farmers."

The JTI notes that the private sector in recent years has managed to make some inroads in the Cuban market through the use of interpreters; the line of credit which exists between the Banco de Nacional in Cuba and the National Export Import Bank of Jamaica (EXIM); and the export facilitation efforts supported by the GOJ through Jamaica Trade and Invest (JTI), the Embassy in Cuba and local private sector stakeholders such as the Jamaica Manufacturers' Association (JMA). Whether this will lead to maximisation of the potential of Cuba's much sought-after market, one will have to wait and see.

Source: Jamaica Observer