Cuban Port Of Mariel May Change Country’s Economy

By Finance

At about twenty-eight miles west of the city of Havana in Cuba’s northern part is one of the country’s most potentially fruitful projects – the new Mariel Special Development Zone and the Mariel Port. Given the expectations for the new Nicaraguan Canal along with the expansion procedures made to the Panama Canal that are both to be completed in 2019, the Mariel Port has quite the strategic position to accommodate super post-Panamax ships and their respective containerized and no-containerized cargo that is designated for the U.S. the Caribbean, Europe and South America. This might potentially change the whole marine industry in Cuba, given as how the Mariel Port is going to put all its effort into luring away a larger amount of the high seas traffic and profitable cargo handling operations from its competitors.

Cuban Port Of Mariel May Change Country’s Economy

Some Quick Facts:

  • centrally located in close proximity to 32 of the Americas’ major ports
  • Dredging level of 59 feet (18m)
  • PSA International in the role of Terminal Operator
  • Became operational on January 27th, 2014
  • An initial yearly capacity of approximately one million TEU (expectations for it to reach three million TEU)

Some of the plans regarding the Mariel Port feature a brand new modern container terminal, general cargo, bulk and refrigerated facilities for the purposes of handling and storing goods and the Mariel Development Zone (MSDZ), which is among the largest building projects to be initiated in Cuba in decades, with being partially funded by Brazil with a pledged investment of $1 billion.

The MSDZ is not classified as being a free trade zone but rather a special development zone for the purposes of manufacturing and assembly operations in integral economic sectors that have a high level of importance for Cuba like agro-food, construction materials, packaging and bottling, telecom, high tech, logistics and warehousing, real estate and tourism, biotech, oil and renewable energy, pharma etc.) MSDZ’s initial area that is Sector A is going to comprise of approximately 4,581 hectares around the vicinity of Mariel Port, and is going to have an established connection to Havana and some other towns via roads, rail and air.

Decree Law № 313 along with its accompanying rules (Law 313) feature MSDZ’s legal framework. The government of Cuba has hope of attracting foreign investors for the MSDZ project via incentives that are going to be provided under the stipulations of LAW 313.

Some of them being:
(1) for the first 10 years there is to be an exemption of all corporate tax duties and after that the tax is to be fixated at a rate of 12% (in case the exemption period is not prolonged)
(2) tax exemption regarding all the reinvested profit and labor force tax
(3) sales and services tax exemption followed by a tax level of 1%
(4) capital equipment imported for investment purposes to be relieved of customs duties
(5) customs duties regarding raw materials at fixated tariffs to be refunded once finished goods are exported
(6) free-tax regime regarding export of finished goods and benefits from top favor nation status on exports with other countries of the trade treaty
(7) 15% level of personal income tax regarding non-permanent residents and 0% on foreign natural persons
(8) suitable status for constructing facilities with utilities for a standard 4-hectare lot
(9) no territorial contribution
(10) a MSDZ centralized office for the securing of approvals regarding foreign investments and licensing, permits and authorization procedures expeditiously from Cuba’s ministries and jurisdiction over related business operations

As of the moment, just 3 proposals of roughly 300 investment proposals have received the necessary approval stamp. If expectations are on point, the all new Mariel Port and the MSDZ may change Cuba’s whole maritime industry and economy in general.