Is It Time To Invest In Cuba?

On Tuesday, President Barack Obama told Congress that he was planning to take Cuba off the list of state sponsors of terrorism in an effort to restore diplomatic relations between the US and Cuba after decades of tension. Congress will have 45 days to review the decision and decide whether or not to block it, but most are expecting that the removal will happen. The improving relations between Obama and his Cuban counterpart, Raul Castro, mark an important turning point for the Caribbean nation's economy and gives investors a reason to look to the island for new opportunities. Investment In Cuba Taking Cuba off the terrorism sponsor list is only the first step in a long process of diplomacy, but some are already gearing up for new investment opportunities. Thomas Herzfeld, who manages the Herzfeld Caribbean Basin Fund CUBA, is now setting up a private equity fund that will invest directly in Cuba. Herzfeld told CNBC that the fund will invest in sectors expected to grow with improving US relations like tourism, construction and telecom. Risks Although the lack of foreign investment in Cuba makes it an interesting opportunity for aggressive investors, the nation still carries a high degree of risk. For one, the effects of an improving relationship with the US are unlikely to make any real impact on the Cuban economy for quite some time. Additionally, the country's small population and low wages make it a difficult place to start a business.