Cuba approves projects for development zone, considers U.S. proposals

November 2, 2016 7:17 PM EDT

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By Sarah Marsh

HAVANA (Reuters) - Cuba approved 11 business proposals for its Mariel special development zone over the last year in its quest to boost foreign investment, a senior official said on Wednesday, and two U.S. projects are among those currently under review.

The Communist-ruled island created the zone, which offers firms significant tax and customs breaks, three years ago, as part of President Raul Castro's broader plan to jump start Cuba's anemic economy.

Speaking on the sidelines of Cuba's annual trade fair, Mariel Coordination Director Wendy Miranda Borroto said the aim was both to attract investment and to replace imports with home-manufactured goods.

"We have been growing gradually but surely," she said, adding that 19 ventures have been approved so far for the zone in Mariel Bay, just west of the Cuban capital. Four are joint ventures, while the rest are 100 percent foreign-owned or Cuban.

The service providers are already operating. Belgian company BDC Tec will shortly become the first company to start production in the zone, building temperature sensors and electrical panels, Miranda said.

Other manufacturing companies are in the early planning phase or starting construction. Global consumer products company Unilever Plc will lay the first stone of its new soap and toothpaste factory's foundation on Friday.

Many of the approved companies have been exporting to Cuba for many years.

"We used to export products to Cuba, but now, with the zone's attractive policies, it makes more sense to produce here," said Vi Nguyen Phuong of Thai Binh, a Vietnamese company building a nappy and washing powder factory, citing cost savings on transport and storage and time savings on getting goods to retailers.

The Mariel zone had received applications from three U.S. companies, despite the trade embargo, Miranda said.

Since agreeing a detente with Castro nearly two years ago, President Barack Obama has used his executive powers to broaden commerce with Cuba.

Of the three requests received, Mariel was still considering two, Miranda said. It had turned down a proposal of Alabama-based Cleber LLC to produce tractors because the factory would not have used enough high technology.

Cleber, which had a stand at the trade fair in the U.S. pavilion, will instead seek to export tractors to Cuba, Cuban-born co-owner Saul Berenthal said.

"They want us to talk directly to the people and the agencies that would be the end users and then do the importation through their import-export agencies," he said. "It's a little bit complicated here."

(Editing by Leslie Adler)



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