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The new pricing system for construction in Cuba, known as PRECONS III, could become more of an obstacle than a development tool, warned Cuban entrepreneur Yulieta Hernández Díaz, head of the small and medium-sized enterprise Pilares Construcciones, after thoroughly analyzing Resolutions 153 and 173 from the Ministry of Finance and Prices (MFP) and the Ministry of Construction, issued on May 12.
These regulations set clear limits: a maximum profit of 15% over direct costs, wage rates up to five times the current rates, and limits on indirect expenses (a coefficient of 1.0 at most on the cost of direct labor and 0.3 on equipment usage).
PRECONS III also requires operations to be conducted exclusively in Cuban pesos, without access to foreign currencies, in an economy where 60% of inputs are purchased in USD or EUR. Furthermore, costs must be verifiable and auditable.
This means that "it is not feasible for private construction companies to work with the State without incurring losses," reflected Hernández in an extensive analysis published on his Facebook account.
The businesswoman also warned about the impact that the forced banking system and the absence of a formal currency market have on the sector's operations. Unable to acquire foreign currency through the official system, private builders depend on the informal market, where the dollar is valued at 370 CUP (compared to the official rate of 120 CUP), significantly increasing costs in a de facto dollarized economy.
In his analysis, Hernández also denounced that the new model prevents covering the real costs of skilled labor, which has migrated to the informal market or abroad due to the impossibility of sustaining itself under outdated salary scales. While a tiler earns more than 150,000 CUP monthly in Havana, the official figures place him at just 3,000 CUP.
But the criticism goes beyond just the economic aspect. Hernández highlights the structural contradiction: the State needs to build, but it obstructs the only sector with operational capacity.
“Public construction companies (state-owned) lack materials, tools, equipment, protective gear, and human resources. Private construction companies find it unfeasible to build for the public (state) with these resolutions. Who will build the hospitals and schools?”, asked the CEO of Pilares Construcciones.
He also mentioned the web of limitations that surround sectors such as tourism and real estate. The government maintains an apartheid that excludes private Cuban construction companies from hotel projects, while foreign architecture is contracted that does not fit the Cuban context.
Hernández also lamented the absence of national competitions that would allow Cuban architects and engineers to design projects tailored to the local reality.
The young entrepreneur proposed concrete measures such as relaxing cost limits, allowing private construction companies to participate in state projects, opening financing channels and access to credit, and acknowledging the role of independent architects and engineers.
It also suggested a model for rehabilitating deteriorated properties with private investment, in which the builder provides a portion to the State and can sell the remainder to cover costs and achieve a reasonable profit. These reforms aim to stimulate investment, optimize resources, and promote more sustainable growth without relying on a high level of direct state investment.
According to Hernández, “Cuba is facing a crisis of public infrastructure, part of a structural polycrisis, with a pricing system that does not reflect the economic reality of the country. Without deep reforms, national infrastructure will continue to be a statistical illusion. Urgent changes are needed to prevent the collapse of the sector.”
PRECONS III, which will come into effect in 60 days, in July, was introduced by the authorities as a legal update aimed at organizing the construction sector in Cuba, “correcting distortions,” and curbing the unjustified increase in budgets for state projects.
Although the IMF considers it "a key tool to combat inflation in construction services, promoting a more favorable environment for project development," its real effect is aimed at driving out small and medium-sized enterprises and private builders from the public sector, who are unable to operate under a scheme that does not even allow them to cover their basic costs.
The Cuban government announced this Wednesday a substantial increase in the wholesale prices of national cement. According to the authorities, the measure aims to ensure the financial sustainability of the industry, even as it is implemented in a context marked by a severe economic crisis, rampant inflation, a shortage of materials, and a growing unmet housing demand.
This increase will equally affect state-owned companies, private construction firms, and citizens attempting to build or repair their homes. The rising cost of cement links expenses throughout the entire construction chain, from public works to private projects.
The collapse of housing construction in Cuba clearly reflects the magnitude of the economic and social crisis that the country is experiencing. In 2024, 5.5 times fewer homes were built than in 1984 and 15 times fewer than in 2006. Even in 1992— a critical year of the Special Period— almost three times as many houses were constructed as last year, according to economist Pedro Monreal.
Only 1,344 homes were built in the first quarter of 2025, which represents just 12.4% of the official plan of 10,795. This figure confirms not only the collapse of the state construction program but also the structural crisis of the sector and the government's inability to address one of the population's most urgent needs.
In parallel, statistics from recent years show a clear trend: since at least 2014, investments in tourism have gained importance within the national budget, to the detriment of key sectors such as housing or social infrastructure.
Such investor priorities, despite the economic stagnation and widespread deterioration in sensitive areas like public health or nutrition, highlight an increasingly deepening disconnection between the priorities of the Cuban government and the actual needs of the population.
Frequently Asked Questions about PRECONS III and MIPYMES in Cuba
What is the PRECONS III system in Cuba?
PRECONS III is a new pricing system for construction in Cuba, designed to streamline the construction sector, correct distortions, and curb the rising budgets of state projects. However, it has been criticized for imposing restrictions that hinder the participation of small and medium-sized enterprises (mipymes) and private contractors in public projects.
How does PRECONS III affect SMEs in Cuba?
PRECONS III imposes economic restrictions that make it difficult for small and medium-sized enterprises to work with the government without incurring losses. The regulations limit profits, require operations to be conducted exclusively in Cuban pesos, and do not allow access to foreign currency, which makes it unfeasible in an economy where most supplies are purchased in dollars or euros.
Why do Cuban mipymes face difficulties operating under the new system?
SMEs face challenges due to price restrictions, lack of access to foreign currency, and rising input costs. Additionally, forced banking and the absence of a formal currency market compel private builders to turn to the informal market, driving up costs and making operations unsustainable under the new regulations.
What criticisms has PRECONS III received from private entrepreneurs in Cuba?
Private entrepreneurs criticize that PRECONS III imposes unsustainable barriers for small and medium-sized enterprises and private builders, limiting their ability to participate in state projects. They denounce the caps on salaries, profits, and expenses that make any commercial relationship with the State unfeasible, as well as the lack of a formal currency market that increases construction costs.
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