Foreign Investment in Cuba: New Opportunities for the Private and Non-State Sectors

By Aldo Álvarez
“Young Professional” Member of the Cuba Study Group

Any Cuban legal person, state or private, could form an international economic association or joint venture with a foreign investor.

June 29, 2021

During the last twenty-five years in Cuba, foreign investment has been almost exclusively directed toward the state sector.

In accordance with the provisions of Law 77/1995 on foreign investment, the non-state sector could not be considered a domestic investor.[1] Subsequently, Law 118/2013 extended this definition to cover certain legal persons, namely cooperatives.

However, this situation could soon change.

New regulations for the private sector will be published in September or October 2021,[2] so that private sector activity know occurring as de facto micro-, small-, and medium-sized enterprises (MSMEs) for the first time may be organized with the legal form of Limited Liability Company. According to the criteria in the foreign investment regulations, these new private companies could become domestic investors ipso facto.

Moreover, the activity of state-owned enterprises serving as intermediators in the import/export sector for the non-state sector could also become applicable to the foreign investment sector. This would allow self-employed workers (trabajadores por cuenta propia) to receive foreign investment and have legal access to economic and capital flows from abroad, albeit indirectly, but with adequate guarantees, even if they do not chose to organize as MSMEs.

Domestic Investors: Non-State Sector Recipients of Foreign Investment

An analysis of the Cuban Foreign Investment Law and its regulations and norms, leads to the conclusion that the Cuban non-state sector could also qualify for foreign investment.

The definition of who qualifies as a domestic investor[3]  includes the following requirements:

  • Legal person of Cuban nationality;
  • Domiciled in Cuba;
  • Participating as a shareholder in a joint venture; or
  • As a party to an international economic association contract.

This means that any Cuban legal entity, whether state-owned or private, may submit an application to the Ministry of Foreign Trade and Foreign Investment (MINCEX) to form an international economic association or joint venture with a foreign investor. It is also possible that MINCEX will promulgate new regulations to address this new scenario as part of the legislative package planned for September–October 2021.

Currently, the non-state sector is made up of:

  • The cooperative sector: agricultural and non-agricultural cooperatives (the “Cooperatives”).
  • The private sector: Self-Employed Workers (the trabajadores por cuenta propia or TCPs”).
  • MSMEs (which are still in the process of obtaining legal recognition).

Cuban Cooperatives as Potential Domestic Investors

Cooperative property is recognized in the new Cuban Constitution as “supported by the collective work of its proprietary members and in the effective exercise of the principles of cooperativism.”[4]

From a legal point of view, the cooperative sector has separate and distinct regulations by industry, as follows:

Agricultural sector. “An agricultural cooperative is an economic and social organization that is part of the agricultural and forestry production system; its general objective is the production of goods, primarily agricultural, and their commercialization; as well as the provision of services through collective management to satisfy social interests and the interests of the members of the cooperative.”[5]

Other sectors. Non-agricultural sector. “A cooperative is an organization with economic and social objectives that is voluntarily constituted on the basis of the contribution of goods and rights and relies on the work of its members, whose general objective is the production of goods and the provision of services through collective management to satisfy social interests and the interests of the members.”[6]

In both cases, cooperatives already meet the two requirements to be considered potential domestic investors: legal personality[7]and a domicile in Cuba.

Consequently, agricultural cooperatives have been included in the Portfolio of Opportunities for Foreign Investment published by Cuba (Portfolio) since its 2016–2017 edition. Thus far, to my knowledge, no non-agricultural cooperatives have been included as a potential final recipient of foreign investment, or even as a participant in the foreign investment process.

The Portfolio documents[8]establish some general rules to be applied in the event of foreign investment deals with agricultural cooperatives, including the consideration of their direct or indirect participation based on their relationship with the foreign party.

  • Indirect: “a. Contractual relations between agricultural cooperatives and foreign investment modalities; or b. Contractual relations between agricultural cooperatives and state entities, the latter with foreign investment modalities.”
  • Direct: “Direct participation occurs when agricultural cooperatives participate in foreign investment modalities”; that is, when they become the Cuban party to a contract for an international economic association (CAEI), and therefore a domestic investor.

A review of those projects included in the Portfolio reveals a considerable preference for indirect foreign investment through the foreign investor's relationship with state-owned enterprises. In these cases, those enterprises would be considered domestic investors. However, based on the contemplated scenario, this does not necessarily need to be the case in the future.

Cuba’s Private Sector: Recognition of Legal Personality as a Prerequisite to be Considered a Domestic Investor

Self-employed workers (TCPs). Self-employment could be defined as “work that is not subordinate to the administration of a labor entity, but assumes the risks of that activity that it carries out independently, as it deems convenient and appropriate, with the elements and raw material necessary to carry it out.”[9]

Considering that many Cuban TCPs are stable participants in the market and carry out a business activity with the intention of obtaining benefits, they should be treated as business owners. Further, since its revitalization in 2010, the TCPs have developed into a wide network of de facto MSMEs, despite the lack of due recognition as legal persons. This network has been, to date, a net generator of employment[10] and is destined to satisfy, albeit on a complementary basis of the productive necessities and services in the country.[11]

Commercial transport ship with cranes on a aqua colored bay with a blue sky and white clouds

However, the legislature has not yet granted the Cuban private sector the ability to organize as independent legal entities.  Acquiring such legal recognition would automatically allow them (unless expressly prohibited otherwise by regulation) to formally become domestic investors and, therefore, potential recipients of foreign investment in Cuba.

But not all entrepreneurs legally classified as self-employed workers will choose to become MSMEs. Some will maintain their current legal form as TCPs.

In those cases, a possible solution may be found in the import-export sector,[12]in which state-owned enterprises are authorized to mediate relations between the TCPs and their potential international suppliers, in the case of imports, or their customers, in the case of exports. In the case of tapping foreign investment, the legislature could apply similar legal principles for relationships between TCPs and potential foreign investors.

However, let us not speculate and await the publication of the new regulations.


On June 2, 2021, the Cuban press announced that the Council of Ministers[13] had approved the “improvement of the actors in the Cuban economy,” which included MSMEs.[14] Then, on June 18th, it was announced that MSMEs would take the legal form of Limited Liability Companies.

Taking that into account—and except for express regulation to the contrary that would not be in keeping with the current spirit and political will—MSMEs should be considered as domestic investors and should be able to tap foreign investment in the same way as other actors in the Cuban economy.

In any case, the most appropriate thing would be to wait for the publication of the regulations on these issues, including the regulations detailing the involvement of MINCEX in this regard.

Closing Thoughts

According to the legislative schedule provided by the National Assembly and the Council of State[15], both the Companies Law and the Commercial Companies Law must be published by July 2022, which, in addition to the aforementioned Decree-laws for Cooperatives, and regulations for TCPs and MSMEs, would complete the legal framework for the private sector and the non-state sector.

According to a previous version of said timetable[16], the next Foreign Investment Law is broadly scheduled for consideration sometime between 2023 and 2028. Therefore, we understand that the current Law 118/2013 must apply to this new regulatory scenario.

MINCEX will face many challenges, such as responding to the need for faster and less complex approval processes for a private sector that is much more dynamic than the state sector, and which tends to establish many smaller operations instead of fewer large operations.

In any case, there is no doubt that soon there will be new opportunities for foreign investment in Cuba and this time the private sector could be at the fore. We therefore recommend keeping up to date on these issues.

[1]  Law 77/1995, Article 2.n. “Inversionista Nacional: Empresa o Entidad Estatal con personalidad jurídica, sociedad anónima u otra persona jurídica…”

[2] al-la-creacion-de-las-mipymes-y-otros-temas-economicos/

[3]  Law 118/2014 “Foreign Investment Law.” Article 2, subsection m.,2.

[4]  Constitution of the Republic of Cuba, Title II Economic Fundamentals, Article 22, Subsection b.

[5]  Decree-Law No. 365/2018 “De las Cooperativas Agropecuarias”.- Article 2.

[6]  Decree-Law No. 305 “De las Cooperativas No Agropecuarias”.- Article 1.

[7]  Civil Code.- Artículo 39; Decree-Law 365/2018 “De las Cooperativas Agropecuarias”.- Article 3; Decree-Law No. 305 “De las Cooperativas No Agropecuarias”.- Article 2.

[8]  Portfolio of Opportunities for Foreign Investment (Editions 2016-2017; 2017-2018; 2018-2019), “Inversión extranjera con participación de cooperativas agropecuarias”.



[11] stion-no-estatal-1/ 



[14] Not only applicable to the private sector, but conceptually to all the sectors of the Cuban economy.




Hombre con barba corta mirando a la cámara y portando lentes

Aldo Álvarez is a Havana-based attorney and analyst who provides U.S. and other transnational companies with legal advice, business intelligence, and Cuba market entry planning.  Mr. Álvarez works with U.S. law firms to guide their clients through the Cuban market's unique legal and bureaucratic challenges in the following industries: travel, online platforms, consumer goods, financial services, shipping and logistics, as well as organizers of live events (Major Lazer – 2016) and sports leagues, among others. He has also advises individuals on estate matters and the procurement of official documents in Cuba.

Mr. Álvarez is a graduate of the University of Havana's school of law and holds a master’s degree in corporate law from Carlos III University of Madrid.  Following completion of his master’s degree, Mr. Álvarez practiced law for six years in Madrid, Spain at the law firm of Interjuris.  In addition to his office in Havana, he maintains a presence in Madrid through his company, Mercatoria S.L.  Mr. Álvarez is proficient in English.