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Cuba government passes law to entice foreign investment

HAVANA -- Cuba's parliament unanimously approved a new law on foreign investment Saturday aimed at boosting sputtering economic growth on the communist-ruled island.

President Raul Castro, who was scheduled to speak to the assembly, has called the bill “crucial” to the Cuban economy, which has so far failed to show gains from his gradual reforms of the Soviet-style system.

The new legislation will go into effect 90 days after it is published.

Although the text has not been made public, officials have said it would offer foreign investors tax breaks and guarantees against expropriation, a persistent fear after the widespread government takeovers in the 1960s.

“The new Foreign Investment Law is the last chance for the reforms to reach the growth goals planned,” said Cuban economist Pavel Vidal of the Universidad Javeriana in Cali, Colombia.

Cuba's vice president in charge of the economy, Marino Murillo, assured the assembly that bringing in foreign investment if done right “is not giving away the country in pieces.”

“It's necessary to reach GDP growth rates on the order of seven percent (a year) and 20 percent rates of investment” for the economy to take off, he said.

Despite reforms pushed by Castro opening up the economy to private enterprise on a small scale, the island's economy grew barely 2.7 percent in 2013, well short of a 3.6 percent target and similar to the anemic growth of recent years.

The new law will replace rules on foreign investment that have been in effect since 1995, passed by Fidel Castro amid a severe economic crisis that followed the Soviet Union's collapse.

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Cuba's Vice-President Miguel Diaz-Canel, center, Cuba's President Raul Castro, left, and First Vice-President of the Council of State Jose Ramon Machado Ventura, second right, raise their hands to vote on the foreign investment law at the National Assembly in Havana, Cuba on Saturday, March 29. (AP)

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