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Game Changer: Cuba's Mariel Port

Mariel

Published Jun 9, 2015 9:27 PM by The Maritime Executive

By Milton Vescovacci

Twenty eight miles west of Havana in the northern part of Cuba is one of Cuba’s most promising projects – the Mariel Port and the new Mariel Special Development Zone. With the broadening of the Panama Canal and the new Nicaraguan Canal expected in 2019, the Port of Mariel is strategically located to receive super post-Panamax vessels and their containerized and non-containerized cargo destined for the Caribbean, U.S., South America and Europe. This could be a game changer for Cuba as the Port of Mariel will try to capture more of the high seas traffic and lucrative cargo handling activities away from its nearby competitors.

Quick Facts:

•    Central location near 32 important ports in the Americas
•    Dredged to 59 feet (18m) 
•    Terminal Operator is PSA International 
•    Opened in 1/27/2014
•    Initial annual capacity: up to one million TEU (expected to reach three million TEU)

Plans for the Port of Mariel include a new modern container terminal, general cargo, bulk and refrigerated handling and storage facilities and the Mariel Special Development Zone (MSDZ), one of the biggest construction projects undertaken in decades in Cuba, funded in part from nearly $1 billion pledged by Brazil. 

The MSDZ is not a free trade zone but a special development zone for manufacturing and assembly in key economic sectors important to Cuba (such as biotech, pharma, oil and renewable energy, agro-food, packaging and bottling, construction materials, high tech, telecom, logistics and warehousing, tourism and real estate). The initial area of the MSDZ (Sector A) will comprise 4,581 hectares around the Port of Mariel, and will be connected to Havana and other towns by rail, roads and air.

Decree Law No. 313 and its supplementary rules (Law 313) contain the legal framework for the MSDZ. The Cuban government hopes to attract foreign investment to the MSDZ through incentives provided under the Law 313, such as: 
(1) corporate tax exemption for the first 10 years and then the tax is 12 percent (if exemption not extended), 
(2) tax exemption for reinvested profits and labor force tax, 
(3) tax exemption on sales and services and then reduced to one percent, 
(4) no customs duties on capital equipment imported for investment, 
(5) customs duties on raw materials at established tariffs is refunded upon export of finished goods, 
(6) no tax on exports of finished goods and benefit from most favored nation status on exports with other trade treaty countries, 
(7) personal income tax of 15 percent on non-permanent residents and zero percent on foreign natural persons, 
(8) suit to build facilities with utilities on a standard lot of four hectares, 
(9) no territorial contribution, and 
(10) centralized MSDZ office to secure approvals of foreign investment and licensing, permits and authorizations expeditiously from the Cuban ministries with jurisdiction over related business activities. 

Thus far, only three proposals of an estimated 300 investment proposals have been approved. If their expectations are correct, the new Port of Mariel and the MSDZ could be a game changer for Cuba’s economy.