Cuba, Unilever start work on joint soap and toothpaste factory

By Sarah Marsh

HAVANA, Nov 4 (Reuters) - Communist-ruled Cuba and global consumer products company Unilever Plc (NYSE: UL - news) on Friday started work on their new $35 million soap and toothpaste factory, a joint venture in the Mariel special development zone west of Havana.

The factory, due to begin production in 2018, reflects a surge of investor interest in Cuba since President Raul Castro took over from his brother Fidel in 2008 and started on a path of structural reform to update the centrally-planned economy.

Among the reforms were a new foreign investment law and creation of the Mariel zone, which offers companies significant tax and customs breaks and is centered around a giant container terminal.

"Our (planned) new and sustainable installations demonstrate our commitment to invest in the long-term growth of the Cuban economy," Unilever Chief Executive Officer Paul Polman said at a ceremony in Mariel, where he and Cuban Industry Minister Salvador Pardo laid the first slab for the factory's foundation.

Unilever had announced its joint venture with Cuban state company Intersuchel S.A, which will be called Unilever-Suchel SA, last January.

The factory, which will make products such as Sedal shampoo, Rexona deodorant, Omo detergent, Lux soap and Close-Up toothpaste, marks a symbolic return of the Dutch-British company to the island.

Unilever was one of the first companies to establish a venture in Cuba once it allowed some Western investment in the 1990s after the fall of former benefactor the Soviet Union.

It left in 2012 over a dispute over who would have the controlling interest in a joint venture. Now (Frankfurt: 11N.F - news) it will have a 60 percent stake, with Intersuchel SA holding 40 percent.

At the time of the dispute, Cuba had preferred that the state hold a majority stake in joint ventures with foreign companies, but Cuba has since become more flexible and investor-friendly.

"We are witnesses to the start of a new phase," Polman said.

Unilever is the best known company to have so far received approval to operate at Mariel. Cuba has given the green light to 19 business proposals in total, some joint ventures, other Cuban or 100 percent foreign-owned.

Many are still in the early stages of planning or construction and the zone, which covers the 180 square miles (466 square km), looked deserted on Friday, a largely empty, wind-swept, sandy area by Mariel Bay. (Reporting by Sarah Marsh; Editing by Leslie Adler)