Sustainability and Business in Costa Rica and Cuba

MSc Business students here in University College Dublin recently took a trip to Costa Rica and Cuba to study “Reputation, Business and Society” in these two very different countries. Today they presented their experience of “Eco-tourism in Costa Rica”, “Sustainability in Business” in Costa Rica, “State-owned companies in Cuba” and “Private Business and Foreign Direct Investment (FDI) in Cuba”, wich revealed some fascinating insights.

Eco-tourism is a major industry in Costa Rica, which is the most biodiverse region in the world. 50% of all tourism in the country is eco-tourism and 25% of the country is a preserved area. Costa Rica uses its Certification for Sustainable Tourism programme as a benchmark for hotels and resorts (http://www.visitcostarica.com/ict/paginas/sostenibilidad.asp?tab=1). Some of the hotels the students visited included Eco Termales Fortuna, where the infrastructure is made of recycled waste and melted plastic, and El Faro, the world’s first “container hotel”, constructed from used shipping containers. The students highlighted that the focus on eco-tourism encouraged Costa Ricans to be environmentally conscious themselves, but noted the negative impact of the construction of hotels and resorts on the environment.

El Faro – the “container hotel”

El Faro under construction

To explore “Sustainability in Business”, students visited a number of sustainability-focused enterprises in Costa Rica. At Doka Estate Coffee (http://dokaestate.com/), which now supplies Starbucks, 25% of the land is planted with banana crops along with coffee, to encourage biodiversity. Villa Vanilla spice plantation (http://www.rainforestspices.com/) practices “biodynamic farming”, whereby a farm aims to operate as a “unified sustainable ecosystem” and the ingredients used must come directly from the farm. Reinventing Business For All (http://www.grupo-rba.com/) is a local business consulting firm which aims to bring together the public sector, private sector and communities. What the students did not look at, however, was the environmental implications of the vanilla and coffee products after they leave the plantations e.g. packaged, flown to Europe, disposable coffee cups. This highlights the importance of taking a life-cycle approach when considering the challenges of “sustainable business”, as this article (Lamberton, 2000) shows: http://www.sciencedirect.com/science/article/pii/S1045235499904756.

Doka Coffee Estate

Spices drying at Villa Vanilla

On to state-run business in Cuba, where the students spoke of Cubana Airlines, Havana Club and La Corona cigar factory. They began with some basic facts: 75% of economic activity in Cuba is generated by state-owned enterprises or government investments and spending. This is a decrease from 95% in 1990. As of 2013 there were 73% of Cubans working in the public sector, down from 83% in 2005. The average basic salary is 20-25CUC (Cuban Convertible Pesos) per month, roughly equivalent to US$20-25, and healthcare and education is free. The students noted, however, that workers in the La Corona cigar factory can earned up to 90CUC per month. A dual currency system is in operation in Cuba, with 1CUC equivalent to 24CUP (Cuban Pesos). Locals use CUP, but this is very difficult for foreigners to get hold of, and they usually use CUC.

Preparing tobacco leaf at La Corona cigar factory

The students concluded that not all of the state companies were run in the same way, with employees more empowered to make decisions in La Corona and Havana Club than Cubana Airlines. In relation to the latter, no figures on revenue or employees were available, but the airline does state that it aims to achieve profitability not in excess of its competitors, but “at the same level of our competitors”, a goal which struck the MSc student presenting as “very strange”. (He could do with reading this: https://www.amazon.com/Prosperity-without-Growth-Economics-Finite/dp/1849713235). On that note the students did point out in their summary that among the Cubans they encountered, they observed that “relationships and happiness are more important than money”.

Private Cuban taxi

Benetton shop in Havana

Finally, we learned of private business and FDI in Cuba, with a particular focus on the restaurant and taxi industries. Both industries were reformed shortly after Fidel Castro’s brother Raúl came into power in 2008 and Havana in 2016 has over 2000 private restaurants, as opposed to just 75 in 2010. Only state-run taxis are allowed to transport foreigners, but private taxis frequently risk the fines to do so. Transporting foreigners contributes to making taxi driving a lucrative profession, with some taxi drivers earning up to US$60 per day. FDI in Cuba is still strictly regulated, despite 2014’s Foreign Investment Act. This act provides for joint ventures and Full Foreign Ownership. In the case of the former, generous tax breaks are given i.e. no tax for the first 8 years of operation, while in the case of the latter, there are taxes of 15-50%. Havana Club was given as an example of a joint venture and Benetton as Full Foreign Ownership. Since 25th May 2016, private SMEs have been legalised, but what an SME is or the terms under which it operates have not yet been defined. Interesting times ahead for this man:

Raúl Castro

 

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