Business

HAVANA — Cubans hoping to snap up imported cars last week after the relaxation of restrictions dating back half a century had a shock with prices way out the reach of anyone but the elite.

The communist regime s easing of ban on car imports, marked the end of an era that made icons of Cuba’s vintage automobiles.

Opening Cuba’s domestic car market to imports was expected to have fateful consequences for the lovingly maintained 1950s Chevys, Fords and Pontiacs that have survived a 50-year-old US embargo.

But there was anger and disappointment when prospective buyers in Havana laid eyes on the prices of new and used vehicles, AFP reporters said.

A swish Peugeot 4008 SUV was going for $239,500 at the Sasa dealer in the capital — nearly five times what it costs in Europe.

Used vehicles were also available in the capital, but at prices that most people in Cuba can only dream of.

A 2010 Hyundai Sonata was going for $60,000 and a Volkswagen Passat in the same year had a price tag of $67,500.

“I was thinking of buying a car, and I had about $20,000 to spend, but it’s impossible,” one disappointed buyer, Dorian Lopez, said, staring incredulously at a Sasa price list.

“With these prices, I not only cannot buy, but I cannot even dream,” lamented the Cuban musician Alfred Thompson, at another dealer, in the west of Havana.

The official newspaper Granma said last month that the imported cars would be sold at market prices, a step designed to gradually free up retail sales of all manner of vehicles — automobiles, vans, trucks and motorcycles — and end the practice of granting some Cubans special permission to bring in vehicles as a privilege.

The changes are a long-awaited element of President Raul Castro’s attempts to gradually liberalise Cuba’s Soviet-style economy.

“It is monstrous. They say that the cars are for sale in Cuba, but it is a lack of respect for the people, no one can buy at this price, it’s impossible,” said Bernardo Garcia, 35.

No official figures are available on Cuba’s automobile fleet, but experts believe there are around 60,000 American cars still circulating on the island.

Mixed in with them are Soviet-made Ladas and Moskvich cars made in the 1970s and ‘80s and more modern, usually Asian-made, vehicles imported by the government.

The new legislation also eliminates the “Letters of Authorisation” issued each year to a few thousand privileged Cubans to enable them to buy a car.

“We were miserably deceived, it is an abuse, it has been two years since I have the letter but that is for millionaires, not the people,” said Mayra Echarpe, 57, of the national centre for popular music in Havana.

Separately, privately-owned small retailers in Cuba are defying a government order to stop selling imported clothing or face stiff fines.

Imported clothing is in high demand in Cuba because foreign apparel is cheaper and of higher quality than threads sold in state-run stores.

“We have been here for three years selling without a problem and abiding by the law, and now they say that this is over?” asked Nadia Martinez, 32. “We are not going to close our business.”

Martinez has a government licence to work as a seamstress, but in practice runs a modestly successful business selling imported clothes on Galiano Street, one of Havana’s busiest commercial avenues.

The clothes are not imported by the government, but rather brought in by Cubans traveling to places like Ecuador, Mexico, Spain and the United States.

Until now, the government had seemed to look the other way as she stretched the scope of her legal employment. But it now appears it may regulate away her economic success story.

Castro expanded the list of government-approved self-employment occupations in 2010 as part of a very gradual reform of its Soviet-style economy.

Castro announced that over the following years he would also be slashing the country’s five-million strong bureaucracy — this on an island with a population of about 11 million — as a cost-cutting measure.

Today more than 430,000 Cubans work for themselves or in small businesses. Authorised job categories include restaurant owners, barbers, electricians, plumbers, mechanics and other skilled trades.

Privately owned beauty salons and family-owned restaurants known as “paladares” proliferated, often operating from the back of people’s houses.

The government, however, remains the country’s largest employer, and central planners still try to control the cash-strapped economy.

Deputy Labour Minister Marta Elena Feito recently announced that the government would fine businesses and people found selling imported apparel or re-selling clothing that originated in state-run stores.

Authorities have long tolerated the clothing vendors, and even though Feito said the measures would be enforced “immediately”, no vendor has been forced to shut down.

“We’re waiting for them to come explain the unexplainable to us, because closing us down cannot be a solution,” said Ledibeth Sanchez, 29, another Galiano Street vendor.

A few blocks away Carlos Medina, 44, works at the “Fashion Passions” boutique on Dragones Street. The well-stocked store sells jeans, blouses, T-shirts and imported dresses.

“Everything was going very well and suddenly they change it all,” said Medina. He remarked that vendors and store employees are fretting about being potentially being forced to shutter.

“Nobody has notified us, but if they give us the order to close, we’ll close,” he said in a resigned tone.

Omara Cambas, 46, a former Communist Youth national leader, opened the “Catwalk Workshop” clothing boutique in the Havana neighbourhood of El Vedado few months ago.

“This measure would affect us a lot — the fact is, I’d be without work,” said Cambas.

A key reason so many people have joined the ranks of self-employed — aside from state job cuts — is that state salaries average around $20 a month. Though people may not have to pay for housing here, that is not enough for most to put food on the table for their families or buy clothing.

Since 1962, Cuba has been under a full US trade embargo. But US goods routinely move through third countries or are resold by people traveling into Cuba.

AMMAN –– Trading in the Kingdom’s real estate market surged by 15 per cent from JD5.6 billion in 2012 to JD6.3 billion in 2013, official figures showed Sunday.

According to Department of Land and Survey (DLS) report, released Sunday, government revenues from the sector went up by 11 per cent to JD354 million last year from JD319 million in 2012.

The DLS figures showed that a total of 30,380 residential apartments were sold last year, a 19 per cent increase over the 25,434 units sold in 2012.

Nearly 90 per cent of the housing units were purchased by Jordanians, the report indicated, noting that non-Jordanian residents bought only 3,180 apartments valued at JD269 million.

Kamal Awamleh, president of Jordan Housing Developers Association, said the volume of trading was in line with investors’ expectations as demand for residential apartments was strong last year.

“2013 was a very good year for the housing sector,” Awamleh said, adding that prices of residential properties remained stable during the year.

He expects the sector to keep its strong performance in 2014 if prices do not go up sharply, indicating that increases in cement prices over the past five months may hurt the industry as developers may be burdened by higher costs.

Higher demand for small apartments

The department’s figures show homebuyers in Jordan still prefer relatively small-sized residential units.

Nearly two thirds of the apartments sold in 2013 were sized less than 150 square metres (sq.m.) each. Awamleh attributed the demand for such properties to the fact that buyers wanted to benefit from government incentives.

According to government regulations, a buyer of an apartment sized 150 sq.m. or less does not pay registration fees and taxes on the first 120 sq.m. of the property.

The DLS statistics revealed that out of the 30,380 apartments sold last year, 20,084 were sized 150 sq.m. or less.

Land transactions down

Other data pointed to a sharp drop in land purchases in the Kingdom last year, going down by 21 per cent when compared with 2012.

While a total of 86,778 land transactions were registered in 2012, the official data showed that 68,201 transactions were made last year.

Mohammad Muhyeddine, manager of a real estate agency in Amman, attributed the decline in demand for land to rising prices across the Kingdom, and not only in the capital.

Land prices in Amman have gone up by nearly 40 per cent between 2012 and 2013, he pointed out, indicating that land values in other cities also increased by almost 15 - 20 per cent.

RIO DE JANEIRO — Brazil has imposed a hefty 6 per cent increase on the surcharge paid by its citizens when making credit cards purchases overseas.

The increase raised the tax from 0.38 per cent to 6.38 per cent.

The tax also applies to cash withdrawals from overseas bank machines and purchases made when using travellers checks.

The measure is expected to add some $205 million to government coffers this year.

The tax also aims to reduce the amount that Brazilians spend overseas, thereby bolstering domestic industry and reducing a budget deficit which the O Globo daily said stands at $72.7 billion.

According to government figures, Brazilians spent $23.1 billion overseas between January and November of 2013, a 14 per cent increase over the same period in 2012.

Brazil may have cut the number of people living in poverty in recent years but inequality persists and better education is needed, according to the Organisation for Economic Cooperation and Development (OECD).

“Successful policies to spread the benefits of economic growth more widely have substantially reduced poverty and income inequality,” the OECD said.

In a new report, the OECD added: “Wider access to education has allowed more Brazilians to move into an expanding number of better-paid jobs.

“However, the quality of education has not kept pace with the impressive expansion of the system. There are severe shortages in physical school infrastructure,” it indicated.

Recent years of growth and the introduction of the Bolsa Familia social welfare programme has helped to lift around 40 million people out of poverty in a decade.

But the OECD lamented that the country still had to reform its bureaucracy and fiscal policies to deal with a “fragmented” tax system.

“The tax system... is characterised by a low degree of progressiveness which limits its redistributive impact,” the organisation said.

It added that barely half of the population worked in the formal economy and had access to credit.

The organisation, grouping the world’s 34 most industrialised countries, concluded: “There remains much to do. Brazil still has one of the highest levels of inequality in the world” and would take two decades to reach where the United States is today.

Separately, Brazil will shun creative accounting as it bolsters its fiscal situation in 2014 and increases transparency, Finance Minister Guido Mantega was reported as saying.

Brazil is seeking to bolster sagging growth which has suffered in the global downturn of recent years while also combating above-target inflation and low competitiveness.

But Mantega said in an interview that the government expects its fiscal position to improve as it hikes taxes.

“We did not violate any regulations but let’s say it was blurry, even confused,” Mantega told Estado de Sao Paulo newspaper.

Brazil had had to raid its sovereign fund to stay inside the limits as it struggled to respect budgetary rules in 2012.

“This is going to change. It has already changed,” Mantega said regarding the country’s accounting practices.

“All governments take measures such as ours,” by stretching the boundaries where possible as the accounting year ends and, for example, including expected dividends from state-owned firms.

“Was it wrong? No, but it was forced. So we are going to lay bare everything we are doing,” Mantega said.

Brazil was the subject of a mid-year sovereign credit downgrade warning.

But Mantega said he believed ratings agencies would maintain Brazil’s rating of BBB, the second-lowest investment grade level, even if that was placed on negative watch in 2013 by Standard & Poor’s.

Agencies are expected to hold fire pending the outcome of next October’s presidential election, which leftist incumbent Dilma Rousseff is favoured to win.

“My hypothesis is that our data will be favourable to maintain our rating,” said Mantega.

Asked if the government had the market’s confidence Mantega said Brazil had struggled to achieve a primary surplus in 2013, but would hit a $31.5 billion surplus.

A primary surplus means the government spending less than its overall revenue, albeit exluding interest payments on government debt.

Despite struggling with creaky infrastructure, “the Brazilian economy is becoming more competitive”, Mantega insisted, while noting the global crisis of the past six years had knocked growth off course everywhere, including China, with Brazilian growth of 6.1 per cent in 2007 sliding to around 2.5 now.

In the hope 2014 will see the World Cup hosts’ economy move ahead, Mantega said some taxes could rise, including the country’s Programme for Investment, allowing a scaling back of subsidies from the treasury to the state development bank.