CUBA NEWS – HAVANA, Cuba’s new Foreign Investment Law went into effect on Saturday in a bid to attract more foreign capital for development.

The law, approved the island’s parliament in March, is among some 300 political and economic reforms spearheaded by Cuban leader Raul Castro to modernize the island’s aging socialist system, and boost efficiency and productivity.

The new legislation, which replaces an earlier one enacted in September 1995 by then government of retired leader Fidel Castro, allows foreign participation in such economic sectors as tourism, and alleviates the economic crisis that hit Cuba following the collapse of the Soviet Union, Havana’s main political and economic ally, in the 1990s.

The law offers investors better tax breaks, including a 50-percent cut of income tax.

It also offers foreign investors more legal protections, such as non-expropriation guarantees, except in the case of public utilities or social interest with due compensation.

“The Foreign Investment Law is a necessity for Cuba if we want to start talking about development, and not just economic growth,” Cuban Vice President Marino Murillo told the parliament in March.

According to Murillo, Cuba spends most of its revenues on meeting domestic consumption needs, leaving little left for investment and making foreign investment a necessity.

The new law goes hand in hand with Cuba’s new economic development zone of Mariel, where a deep-water port and container terminal, partially inaugurated in January, are poised to attract more foreign firms to Cuba.

General Director of the zone’s regulatory office, Maria Teresa Igarza, said in March that her agency had received 72 applications for direct investment, mainly from Spain, Italy, Russia, Brazil and China.

The investment is mainly focused on such sectors as light industry, packaging, chemicals, iron and steel, building materials, logistics and pharmaceuticals.