Bloomberg: “Cuba Reality Check: Can You Really Do Business There?”

By Gail DeGeorge, David Tweed and Christopher Donville | December 22, 2014

For companies seeking Miami attorney Pedro Freyre’s advice on how to exploit President Barack Obama’s opening to Cuba, two stories may serve as cautionary tales.

One concerns an 18-hole golf course that took a Canadian designer eight years to build near the island’s famed Varadero beaches. The second involves the rooftop cell-phone towers that a Norwegian company has struggled to erect halfway around the world, in Myanmar.

While the embargo is still in place, Obama’s move Dec. 17 to re-establish diplomatic relations “changes the tone of the conversation,” says Freyre, chairmanof the international practice of Akerman LLP. While new opportunities such as in the telecoms industry may be permitted, along with the sale of food and medicine already allowed, he cautions that doing business in Cuba is difficult. “In their heart of hearts, the rulers of the country don’t believe in capitalism,” he says.

For all the attention on Cuba because of its role in the Cold War, Fidel Castro’s out-sized personality and the political clout of Miami’s exile community in U.S. politics, it remains a small-market country of 11 million people. Comparisons with other communist countries where the U.S. has normalized relations — China with its 1.4 billion population and Vietnam with almost 90 million — are tempting. Yet for the challenges of moving into a transition economy, Myanmar may serve as a better example.

Restrictions remain, with U.S. individuals and companies barred from investing or doing business with people with links to the army’s repression of the democracy movement. Among those whose names have been removed from the list are President Thein Sein and parliamentary speaker Shwe Mann, former junta members who have been at the forefront of the new government.

“This is a serious challenge for western investors because not only American companies abide by those requirements,” Romain Caillaud, managing director of Vriens & Partners, a political risk consulting firm, said by phone from Yangon, Myanmar. “It means you need to do a lot of background checks to be absolutely sure who your business partner is.”

Lodged between China and India with a population of about 53 million people, Myanmar has aneconomy that is on track to grow 7.8 percent in the year ending March 31, 2015, according to theAsian Development Bank. The expansion is being propelled by commodity exports, natural gas production and tourism, the ADB said.

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