Additional information on the Central Bank’s auction system is available at http://www.bch.hn. To date, the U.S. Embassy in Honduras has not received complaints from individuals with regard to converting or transferring funds associated with investments.
In 2008 the Lempira held steady against the dollar at a rate of 18.8993 per 1.00 USD and the government was resisting IMF pressure to devalue the currency.
Expropriation and Compensation
The Honduran government has the authority to expropriate property for purposes of land reform (usually related to a land invasion by farmer groups) or for public use. Disputes related to land seizure actions by the Honduran National Agrarian Institute (INA) are common for both Honduran and foreign landowners. U.S. citizens have experienced land disputes in particular in coastal regions. According to the National Agrarian Reform Law, idle land fit for farming can be expropriated and awarded to landless poor.
Generally, an INA expropriation case begins after squatters invade unprotected property. The squatters then file for the land with the INA under the Agrarian Reform Law. In most cases, claimants have found that pursuing the subsequent legal avenues is costly and time consuming, and rarely leads to positive results. Compensation for land expropriated under the Agrarian Reform Law, when awarded, is paid in 20-year government bonds.
The Honduran government has a poor record of handling investment disputes, due to the outdated commercial code and the weak judicial system. The Honduran Commercial Code is the main legislation that regulates the operations of businesses in the country. This code, however, was written in 1950 and needs to be updated. The application of the Commercial Code and its regulations falls under the jurisdiction of the Honduran civil court system.
Most investment and property disputes are long lasting and arduous. U.S. claimants frequently complain about the lack of transparency and the slow administration of justice in the courts. There are also complaints that the Honduran judicial system caters to favoritism, external pressure and bribes. While some U.S. firms have satisfactorily resolved their cases through the courts, the majority have difficulty navigating the legal system. Many U.S. citizens have also complained about the quality of legal representation they receive from Honduran attorneys.
A new Civil Procedures Code (CPC), approved by the Honduran Congress on January
19, 2007, is expected to transform the entire civil-court system by establishing adversarial proceedings based on open, oral arguments. This will make civil proceedings more transparent, corruption more difficult to conceal, and civil justice more accessible, accountable, and fair. The CPC will provide more effective protection of commercial transactions, property rights, and land tenure. There will also be enhanced efficiency of rulings mandated by foreign courts. The CPC is being reviewed as a model for similar reforms in Guatemala, Costa Rica, and Nicaragua.
CAFTA-DR provides for dispute settlement procedures between the United States and Honduras. Domestically, Honduras’s Conciliation and Arbitration Law (Decree 161-2000) – which seeks to encourage arbitration and clarify the procedures under which arbitration takes place – entered into force in March 2001. In September 2001, Centers for Conciliation and Arbitration were established within the Chambers of Commerce and Industry in Tegucigalpa and San Pedro Sula. Arbitration and conciliation are generally considered swifter and more cost-effective means of resolving disputes between commercial entities, and there may be the additional advantage that the arbitrator or mediator may have specialized expertise in the technical area involved in the dispute.
However, U.S. companies and U.S. citizens who have gone through an arbitration process have expressed disappointment with both the slow pace and lack of transparency of the procedure.
Honduras has been a member of the ICSID (International Center for the Settlement of
Investment Disputes) since March 1989.
Performance Requirements and Incentives
There are relatively few performance requirements in Honduras. The 1992 Investment
Law guarantees freedom to export and import to all foreign investors, and eliminates the requirement of prior administrative permits and licenses, except for statistical registries and customs procedures.
Application procedures for service suppliers in all sectors are generally simple, clear and non-discriminatory. Honduras’ service sector is widely accessible to foreign companies, including current U.S. participation in the Honduran banking, insurance and accounting markets. In both the banking and insurance sectors, the general rule is that foreign companies operate on an equal footing with local companies, so long as the foreign company establishes a branch or subsidiary in Honduras. However, there are restrictions on cross-border services and offshore operations. Insurance may not be offered on a cross-border basis, and a foreign bank wishing to operate offshore must establish a representative office in Honduras, which entails reporting requirements and other procedures which are very cumbersome. Furthermore, a Honduran branch of a foreign bank may only operate based on its capital in Honduras, not on its global or regional capital.
Honduran law prohibits discriminatory or preferential export and import policies affecting foreign investors. In practice, however, the Honduran government has at times used sanitary and phyto-sanitary requirements to prevent imports of U.S. poultry, milk products, pork, feed grains and rice to Honduras. Changes in sanitary and phyto-sanitary requirements are not always reported to the WTO as required, which creates uncertainty among U.S. suppliers and Honduran importers. Under CAFTA-DR, Honduras has agreed to apply the science-based disciplines of the WTO Agreement on Sanitary and Phyto-sanitary Measures, and will move towards recognizing export eligibility for all plants inspected under the U.S. food safety and inspection system.
The Honduran government requires that sanitary permits be obtained from the Ministry of Health for all imported foodstuffs, and that all processed food products be labeled in Spanish and registered with the Division of Food Control (DFC) of the Ministry of Health. Some U.S. businesses have complained that delays in the process of granting these permits hamper their ability to import products into Honduras. U.S. companies have also reported that these regulations are not always strictly enforced for Honduran companies. This may place U.S. companies that comply with the regulations at a disadvantage.
Additional import restrictions, based mainly on public health, public morality, and national security grounds, remain in place. For example, restrictions are imposed on the importations of firearms and ammunitions, toxic chemicals and pornographic material.
U.S. citizens wishing to travel to Honduras do not need a visa prior to arrival. Foreigners interested in working in the country must obtain a resident visa from the Honduran Ministry of Government and a work permit from the Ministry of Labor. To process a request for a resident visa and work permit may take up to three months.
In 1999, the Honduran National Congress passed a Tourism Incentives Law, which offers tax exemptions for national and international investment in tourism development projects in Honduras. The law provides income tax exemptions for the first ten years of the project and permits the duty-free import of goods needed for the project, including publicity materials. In June 2002 a reformed law was passed, offering the same basic incentives, but with a narrower definition of who may qualify for the incentives. For example, restaurants were included as a duty-free tourist activity in the 1999 law, but removed in the 2002 law. This change is due in large part to the current saturation of the fast food and restaurant market, since many franchises established locations in Honduras under the duty-free incentives of the 1999 law. Other enterprises now excluded from the law’s benefits are casinos, nightclubs and movie theaters. In addition, a requirement was added that a business must be located in a designated tourism zone in order to qualify for tax exemptions and duty-free status. For information on investment incentives offered in Free Trade Zones, please see the section on Foreign Trade Zones/Free Ports below.
Right to Private Ownership and Establishment
The 1992 Investment Law guarantees both local and foreign investors the right to own property, subject to certain restrictions established by the Honduran Constitution and several laws relating to property rights. This guarantee includes the right to free acquisition, profit, use, disposition and any other right attributable to property ownership. The major exception is the constitutional prohibition of foreign ownership of land within 40 kilometers of international borders and shorelines, although Honduran law now permits foreign individuals to purchase properties in designated “tourism zones” (see section on Land Rights below.)
Investors have the right to freely establish, acquire and dispose of interests in business enterprises at market prices, under freely negotiated conditions and without government intervention. However, in several instances since 2006 the government of Honduras arbitrarily established de facto or de jure price controls on products being sold by private firms, and in the case of fuels considered nationalizing all imports and closing the market to competition. Although this debate has disappeared from the GOH agenda, international fuel importers claim revenue loss from the fixed price formula used to determine their profit on fuel sales. Private enterprises compete on an equal basis with public enterprises with respect to access to markets, credit and other business operations.
Protection of Property Rights
Intellectual Property Rights:
Although Honduras does not host large-scale in-country optical pirating, pirated goods are imported from neighboring countries, and the piracy of books, sound and video recordings, compact discs and computer software is widespread. Confiscations have steadily increased with new CAFTA-DR ex-oficio powers, although the sale of pirated goods continues unabated. The illegitimate registration of well-known trademarks has also been a problem. Success in protecting intellectual property rights (IPR) rests primarily on the government of Honduras’ ability to effectively implement its current laws, rather than a need for further legislation. The Property Institute (IP) handles protection of intellectual property rights.
Honduras largely complied with the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement by the January 1, 2000, deadline. In December 1999, the Honduran Congress passed two laws to correct deficiencies in previous legislation concerning copyrights, patents and trademarks. The Copyright Law added more than 20 different criminal offenses related to copyright infringement and establishes fines and suspension of services that can be levied against offenders. The Law of Intellectual Property, which covers both trademarks and patents, included modifications on patent protection for pharmaceuticals, extending the term from seventeen to twenty years to meet international standards. In 2006 the Honduran Congress passed legislation governing the designs of integrated circuits and plant variety protection as a measure to bring it into compliance with its CAFTA-DR commitments. However, in the case of plant variety protection practical implementing measures – such as the establishment of an office dedicated to the matter or the training of officials – has yet to be completed.
In early 2006, Honduras strengthened its legal framework for the protection of intellectual property rights (IPR) with the passage of new laws in preparation for the entry into force of CAFTA-DR. The laws provide stronger deterrence against piracy and counterfeiting by, for example, requiring Honduras to authorize the seizure, forfeiture, and destruction of counterfeit and pirated goods and the equipment used to produce them. They also provide the establishment of statutory damages for copyright and trademark infringement, to ensure that monetary damages can be awarded even when losses associated with an infringement are difficult to assign. CAFTA-DR also requires Honduras to protect undisclosed test data submitted for the purpose of product marketing approval of pharmaceutical and agricultural chemical products against disclosure and unfair commercial use. However, as of the end of 2008, implementing regulations for these laws were still under development.
Finally, CAFTA-DR provides that authorities are able to confiscate pirated goods and investigate intellectual property cases on their own initiative. Honduran government prosecutors have engaged in a series of raids against producers and vendors of pirated goods. This renewed emphasis on enforcement marks a notably positive shift towards greater anti-piracy efforts. Honduras became a member of the World Intellectual Property Organization (WIPO) in
1983, and became party to the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonogram Treaty (WPPT) in May 2002. Honduran law protects data exclusivity for a period of five years, and protects process patents, but does not recognize second-use patents.
U.S. citizens should exercise extreme caution before entering into any form of commitment to invest in property, particularly in coastal areas and the Bay Islands. Honduran laws and practices regarding real estate differ substantially from those in the United States, and fraudulent deeds and titles are common. There is no title insurance in Honduras. In addition, the Honduran judicial system is weak and inefficient, often prolonging disputed cases for many years before resolution. Approximately 80 percent of the privately held land in the country is untitled. Americans have spent thousands of dollars in legal fees and years of frustration trying to resolve property disputes, even in cases in which local attorneys and Honduran and U.S. real estate agents had given assurances to the investor. There have been claims of widespread corruption in land sales and the registry and dispute resolution process, including claims against attorneys, real estate companies, judges and local officials. Property registration often is not up to date, nor can the results of title searches be relied upon. Violence has been used against Americans involved in disputed property cases. Potential investors should engage competent local legal representation before making any commitments. Investors should thoroughly check references of attorneys and real estate agents. The purchase of land in Honduras by foreigners should be undertaken only with great caution.
Article 107 of the Honduran Constitution prohibits foreign ownership of property in Honduras that lies within 40 kilometers (25 miles) of the Caribbean Sea, the Gulf of Fonseca, international borders, or on any of the islands and cays belonging to Honduras. However, recognizing that the constitutional prohibition of foreign property ownership in Honduras was a barrier to development of tourism and the economic potential of Honduras’ coastal and island areas, the Honduran National Congress passed a law in 1990 to allow foreigners to purchase properties in designated tourism zones established by the Ministry of Tourism in order to construct permanent or vacation homes. This law was challenged as unconstitutional in 2004, but in January 2005 the
Supreme Court upheld the new law, thus permitting foreigners to continue to own littoral and frontier property.
Foreigners or foreign companies seeking to purchase property in designated tourism zones exceeding 3,000 square meters in size or for tourism or other development projects must present an application to the Honduran Tourism Institute at the Ministry of Tourism. In addition to providing the requested personal information, the potential buyer must also prove that a contract to buy a specific property exists and that it is registered with the Honduran Tourism Institute. The buyer must also present feasibility studies and plans about the proposed tourism or economic development project.
According to the 2009 World Bank’s Doing Business Index (DBI), registering property in
Honduras requires seven procedures, takes 23 days, and costs 5.5 percent GNI per capita.
A summary of procedures is as follows:
Transparency of the Regulatory System
The Honduran government does not publish regulations before they enter into force and there is no formal mechanism for providing proposed regulations to the public for comment. Regulations must be published in the official government Gazette in order to enter into force. Honduras lacks an indexed legal code, and lawyers and judges must maintain and index the publication of laws on their own. Procedural red tape to obtain government approval for investment activities is very common. Foreign market participants who are represented locally and are members of connected private sector groups essentially have access to the same information as their Honduran counterparts. The lack of a formal notification process excludes most non-governmental groups, including foreign companies, from commenting on regulations.
The Honduran legal system is not efficient or transparent: U.S. claimants frequently complain about the lack of transparency and the slow administration of justice in the courts. There are also complaints that the Honduran judicial system suffers from favoritism, external pressure and bribes. While some U.S. firms have satisfactorily resolved their cases through the courts, the majority have difficulty navigating the legal system. Many U.S. citizens have also complained about the quality of legal representation they receive from Honduran attorneys.
Efficient Capital Markets and Portfolio Investment
There are no government restrictions on foreign investors' access to local credit markets.
However, the local banking system is conservative and generally extends only limited amounts of credit. Interest rates have been steadily declining for several years, but remain high. As of November 2008, the average lending rate for a loan in Lempiras was 17.95 percent, up from 13.10 percent a year earlier, and for a loan in dollars was 10.42 percent, up from 8.25 percent a year earlier. Local banks should not be considered a significant source of start-up capital for new foreign ventures, unless they use specific business development credit lines made available by bilateral or multilateral financial institutions, such as the Central American Bank for Economic Integration.
Loans from banks tend to be short-term, with substantial collateral and/or guarantee requirements. Several regional and international banks acquired new operations or expanded existing operations in Honduras in 2006, including Citigroup, HSBC, and GE Capital. Increased competition and higher standards overall have led to more competitive lending practices and an expansion of credit that could benefit potential investors.
There are a limited number of credit instruments available in the local market. The only security exchange operating in the country is the Central American Securities Exchange (BCV) in Tegucigalpa (http://www.bcv.hn). (Another securities exchange, the Honduran Securities Exchange (BHV) in San Pedro Sula, ceased operations in 2004.) The Central American Securities Exchange is supervised by the National Banking and Insurance Commission (CNBS). Instruments that can be traded theoretically include bankers’ acceptances, reposition agreements, short-term promissory notes, Honduran government private debt conversion bonds and land reform repayment bonds. However, in practice, the market is nearly 100 percent composed of short-term government securities, and no formal secondary market for these bonds exists. No private firms currently sell commercial paper or corporate stock on the exchange. Any private business is eligible to trade its financial instruments on the exchange, and firms that participate are subject to a rigorous screening process. Historically, traded firms generally have had economic ties to the different business/financial groups represented as shareholders of the exchange, which has led to lax risk management practices and an enduring loss of public confidence in the institution. Supervision of the exchange has traditionally been inadequate, even though a new law regulating security exchanges was passed in 2001.
Investors should exercise caution before putting money into the BCV. There is no regulatory body for the accounting profession in Honduras. The Association of Public Accountants is responsible for certifying practicing professionals. In general, Honduran businesses adhere to international Generally Accepted Accounting Principles (GAAP). These principles are normally applied per guidelines from the Ministry of Finance's General Directorate for Taxation. The Honduran financial system is comprised of commercial banks, state-owned banks, savings and loans and finance companies. There are currently 17 commercial banks operating in Honduras. Of these 17 banks, 10 have majority foreign ownership, accounting for 50.1 percent of total bank capital (as of November 2008). There is limited off-shore banking in Honduras.
The Honduran banking sector recently experienced a wave of consolidation. Between 1999 and 2002, four Honduran banks either collapsed or were liquidated, including the collapse of Bancorp in 1999, and Banhcreser in 2001In 2002, the CNBS forced the liquidation of Banco Capital, and placed another bank, Banco Sogerin, under the supervision of the national Deposit Insurance Fund until it was sold in 2003. In 2005-2006, HSBC purchased BanIstmo, GE Capital purchased 49 percent of BAC and Banco Mercantil, and Citigroup purchased Banco Cuscatlan and Banco Uno. Each of these was a regional bank with limited exposure in Honduras. BAC merged with Bamer in 2007.
In September 2004, at the insistence of the IMF, the Honduran Congress passed a set of four financial sector reform laws that have lead to reasonable improvements in supervision of the banking system. The four laws reformed the Deposit Insurance Fund, the Central Bank, the National Banking and Insurance Commission, and the general system of financial supervision. A fifth law, passed in December 2004, established new and stronger penalties for financial crimes including bank fraud. The major challenge to implementation of these laws four years later appears to be a lack of random selection in the auditory process.
Honduras has not experienced major problems with domestic political violence. Political demonstrations do occur sporadically, and they can disrupt traffic, but they are generally announced in advance and are usually peaceful. Most major demonstrations occur in downtown Tegucigalpa. Travelers should avoid areas where demonstrations are taking place, and they should keep informed by following the local news and consulting hotel personnel and tour guides.
While political violence is not a major concern, levels of crime and violence are high, and do represent a major constraint on investment. In a World Bank survey conducted in 2002 of both Honduran and foreign firms operating in Honduras, one in three firms surveyed reported having suffered a criminal attack in the previous year. These attacks led to a loss of 0.9 percent of annual sales, and expenses devoted to security measures (hiring security guards, installing alarms, etc.) represented another 3.6 percent of annual sales. Total losses due to a lack of security therefore added up to 4.5 percent of sales - a significant proportion, second in the region only to Guatemala.
Reinforced by the media and several political watchdog organizations, concerted efforts to protect human rights and civil liberties continue. Organized labor represents approximately 8 percent of the work force and its economic and political influence continues to decline.
Two codes regulate justice and provide for penalties against corruption: the Criminal
Procedures Code (CPC) and the Penal Code (PC). In 2002, a reform of the CPC entered into force, changing the criminal judicial system from a traditional written inquisitorial trial system to an adversarial, oral, and public trial system. The new CPC is improving justice and accountability in a number of ways, including increased transparency in the criminal process.
The main responsibility for fighting corruption lies with the Public Ministry, under the direction of the Attorney General (Fiscal General). In 2002, the Government created a new control entity, the Superior Accounting Tribunal (TSC) which brought together the Comptroller General of the Republic (CGR), the Directorate of Administrative Probity (Ethics office) and the Office of State Assets under one roof and under the direction of three members selected by Congress. While the TSC has undertaken numerous investigations, it has had no noticeable effect in limiting or reducing corruption in Honduras. However, during 2008, the TSC on numerous occasions publicly criticized certain high-profile government contracts.
Historically, many U.S. firms and citizens operating in Honduras have found corruption to be a serious problem and a constraint to successful investment. In a World Bank survey conducted in 2002 of both Honduran and foreign firms operating in Honduras, corruption was identified as the single largest constraint to economic growth. In its 2008 corruptions perception survey of businesspeople, Transparency International named Honduras as the seventh-most corrupt country in the Western Hemisphere, calling its level of corruption “rampant.” Corruption appears to be most pervasive in government procurement, government permits, and in the buying and selling of real estate (land titling). With considerable U.S. help, the government is reforming Honduras' judicial system and reducing elite immunity and corruption, though serious problems remain in these areas. Bribery is a criminal act in Honduras and, depending on the degree of the offense, is subject to fines or incarceration. A bribe to a foreign official is also a criminal act under U.S. law (the Foreign Corrupt Practices Act).
Bilateral Investment Agreements
On July 12, 2001, a Bilateral Investment Treaty (BIT) between the U.S. and Honduras entered into force. The Treaty provides for equal protection under the law for U.S. investors in Honduras and permits expropriation only in accordance with international law standards and accompanied by adequate compensation. U.S. investors in Honduras also have the right to submit an investment dispute to binding international arbitration. The U.S.-Honduras Treaty of Friendship, Commerce and Consular Rights (1928) provides for Most Favored Nation treatment for investors of either country. The U.S. and Honduras also signed an agreement for the guarantee of private investments in 1955 and an agreement on investment guarantees in 1966. Honduras signed a Tax Information Exchange Agreement with the U.S. in 1992. Provisions for investment are included in bilateral commercial treaties between Honduras and Costa Rica, El Salvador, Guatemala, Panama and the Dominican Republic. Honduras also has bilateral investment agreements with the United Kingdom and Spain.
CAFTA-DR not only liberalized bilateral trade between the United States and the region, but also furthered integration efforts among the countries of Central America, removing barriers to trade and investment in the region by U.S. companies. CAFTA-DR also requires the countries of Central America to undertake needed reforms to alleviate many of the systemic problems noted above, in areas including protection of intellectual property rights, openness of government procurement, financial services market access and protection, alleviation of sanitary and phyto-sanitary barriers, and others.
OPIC and Other Investment Insurance Programs
The U.S. Overseas Private Investment Corporation (OPIC) provides loan guarantees, which are typically used for larger projects, and direct loans, which are reserved for projects sponsored by or substantially involving U.S. small businesses and cooperatives. OPIC can normally guarantee or lend from USD100,000 to USD250 million per project. OPIC also offers insurance against risks of currency inconvertibility, expropriation and political violence. In July 2004, OPIC concluded a new bilateral investment treaty with Honduras. The agreement updates one signed in 1966, and should streamline OPIC support for U.S. investment in Honduras. For additional information on OPIC financing, insurance, and other programs for assisting U.S. businesses invest overseas please visit http://www.opic.gov.
Other countries, including Germany, the United Kingdom, Taiwan, Spain, Italy, Switzerland and Japan provide insurance and guarantees for their companies doing business in Honduras. In addition, Honduras is a party to the World Bank's Multilateral Investment Guarantee Agency (MIGA).
Honduras has a significant availability of labor for industries with a demand for relatively low skilled workers, given the low average education level of its population. There is a limited supply of skilled workers in all technological fields, as well as in medical and high technology industries.
In general, Honduran labor laws are good. There are several concerns, however, in enforcement, and inefficiency in the courts – Honduras has the lowest caseload in the region – makes it difficult for workers to seek rulings on their claims. The maquila sector has made great strides in eliminating the worst forms of labor violations. Union officials remain critical of what they perceive as inadequate enforcement by the Ministry of Labor (MOL) of workers' rights, particularly the right to form a union and bargain collectively, and the reinstatement of workers unjustly fired for union organizing activities. Through cooperation within the bipartite and tripartite commissions (unions, MOL, private sector) and other venues, MOL inspectors' access to maquila plants to enforce the labor code has improved, and MOL has continued to work to increase its effectiveness in enforcing worker rights and child labor laws.
The labor law prescribes a maximum 8-hour workday and 44-hour week. There is a requirement for at least one 24-hour rest period every week. The Labor Code provides for a paid vacation of 10 workdays after one year, and of 20 workdays after four years. The Constitution and Labor Code prohibit the employment of persons under the age of 16, except that a 15-year old may be permitted to work with the written permission of parents and the MOL. All persons under 18 years of age are prohibited from night work, dangerous work and full time work.
The Children's Code (September 10, 1996) prohibits a person of 14 years of age or less from working, even with parental permission, and establishes prison sentences of 3 to 5 years for individuals who allow children to work illegally. An employer who legally hires a 15-year-old must certify that the young person has finished or is finishing compulsory schooling. The MOL grants a number of work permits to 15-year-olds each year. Document fraud is prevalent among minors interested in working. Many violations of the children’s code occur in the agricultural sector and informal economy. Additional information about Honduran labor legislation, including copies of the laws themselves, can be found (in Spanish only) at www.leylaboral.com.
Foreign Trade Zones/Free Trade Zones
There are no known export subsidies provided by the Honduran government. The Temporary Import Law (RIT) allows exporters to introduce raw materials, parts and capital equipment (except vehicles) into Honduras exempt from surcharges and customs duties if the input is to be incorporated into a product for export (up to five percent can be sold locally). Export processing zones can be established anywhere in the country, and companies operating in export processing zones are exempt from paying import duties and other charges on goods and capital equipment. In addition, the production and sale of goods within export processing zones are exempt from state and municipal income taxes for the first ten years of operation. Companies operating in an export processing zone are permitted unrestricted repatriation of profits and capital and have access to onsite customs facilities. However, companies are required to purchase the Lempiras. needed for their local operations from Honduran commercial banks or from foreign exchange trading houses registered with the Central Bank.
Most industrial parks and export processing zones are located in the northern Department of Cortés, with close access to Puerto Cortés, Honduras’s major Caribbean port, and San Pedro Sula, Honduras’s major commercial city and a transportation crossroads. Industrial parks and export processing zones are treated as offshore operations. Subsequently, customs duties must be paid on products manufactured in the parks and sold in Honduras. In addition, if Honduran inputs are used in production, they are treated as exports and must be paid for in U.S. dollars. While most companies that operate in these parks are involved in apparel assembly, the government and park operators are beginning to diversify into other types of light industry, including automotive parts and electronics assembly.
Privately-owned tourism zones may be established to promote the development of the tourism industry in Honduras. The law allows the free importation of equipment, supplies, and vehicles to businesses operating in designated tourism zones, with certain restrictions (see the description of the tourism law in section A.5, above). Additional information on Honduran FTZs and export processing zones is available from the Honduran Manufacturers Association at http://www.ahm-honduras.com.
Foreign Direct Investment Statistics
Foreign Direct Investment (FDI) in Honduras has achieved sustained growth since 2002, reflecting increased efforts towards macroeconomic stability and increased investor confidence. According to Central Bank data, FDI flows to Honduras in 2007 totaled US $929.3 million (a 37 percent increase over 2006). The U.S. continues to be a dominant source of FDI in Honduras (with 53.8 percent of all FDI inflows during 2007). Other countries and regions currently maintaining high levels of investment are: Canada and South Korea (textiles); Mexico (telecommunications and consumer trade); Central America (mainly Panama and El Salvador, in the financial services sector, real estate, and development of commercial projects); and UK/Holland/Spain/Italy (construction, electrical power, and agro-industry). Direct Foreign Investment in 2007 accounted for 6.14 percent of Honduran GDP, with 7.1 percent estimated for 2008. Major FDI flows for 2008 are foreseen for the telecommunications, financial and manufacturing sectors.
UNITED STATES OF AMERICA
REST OF L.A.
REST OF EUROPE
REST OF THE WORLD
REST OF THE WORLD
|Industry Sectors reporting positive variations:|
|• Banking & Insurance 20.1 percent|
|• Private construction 19.3 percent|
|• Transport & Communications 12.9 percent|
|• Public Administration 9.5 percent|
|• Commerce 8.6 percent|
|• Miscellaneous Services 6.1 percent|
|• Power & Water 5.4 percent|
|• Manufacturing Industry 3.1 percent|
|• Agriculture, Forestry & Fishing 2.4 percent|
|1||LIVE ANIMALS; ANIMAL PRODUCTS||7,673.7||11,146.1||8,875.8|
|3||ANIMAL OR VEGETABLE FATS AND OILS||1,103.0||3,208.0||5,181.8|
|4||PREPARED FOODSTUFFS ||39,025.0||55,708.0||52,724.8|
|5.1||FUEL & LUBRICANTS||54,789.2||64,766.6||140,065.7|
|5.2||OTHER MINERAL PRODUCTS||1,711.7||4,440.0||1,702.8|
|6||PRODUCTS OF THE CHEMICAL OR ALLIED INDUSTRIES||55,569.3||63,666.2||91,888.4|
|7||PLASTICS AND RUBBER||27,187.9||29,693.0||33,337.2|
|8||RAW HIDES AND SKINS, LEATHER, FURSKINS||1,168.1||1,461.5||1,598.2|
|9||WOOD, CHARCOAL & CORK ART. THEREOF||1,709.1||1,478.7||2,930.6|
|12||FOOTWARE & HATS||5,803.9||7,588.2||7,293.0|
|13||ROCK, PLASTER, GLASS, CEMENT & ALLIEDS||5,338.6||7,822.6||7,833.5|
|14||PEARLS, PRECIOUS STONES, METALS AND OTHERS||477.8||342.4||330.1|
|16||MACHINES, APPLIANCES AND ELECTRICAL EQUIP.||61,174.5||91,957.9||130,465.9|
|18||OPTICS, PHOTOGRAPHY, CINEMA, MEDICAL & OTHERS||3,665.1||5,677.9||5,367.8|
|19||GUNS & AMMUNITIONS||146.6||28.7||173.4|
|20||MERCHANDIZE AND VARIOUS PRODUCTS||7,962.4||12,888.6||14,255.3|
|21||ART & COLLECTIBLES||29.9||14.5||33.0|
|TOTAL WITHOUT FUEL||319,060.7||441,108.6||529,909.8|
Source: Information based on CIF Import Statistics- Honduran Central Bank
|Agriculture & Fishing||7.8||3.0||4.0||4.5|
|Services to Corporations||22.9||30.7||11.7||17.3|
|Investor||Country||Type of Investment|
|American Airlines ||U.S. ||Airline services|
|America's Favorite Chicken ||U.S. ||Fast food|
|American Home Assurance Co.||U.S. ||Insurance services|
|American International Group||U.S. ||Insurance services|
|Americatel ||U.S. ||Telecommunications|
|Applewoods ||U.K. ||Cosmetics and Toiletries|
|Applebee's ||U.S. ||Restaurant|
|Astaldi ||ITA ||Engineering|
|Azucarera "La Grecia" ||Guatemala||Sugar|
|BAC (Banco de América Central Honduras)||Nicaragua||Financial services|
|Banco Lafisse||Nicaragua||Financial services|
|Banco Uno||Nicaragua||Banking services|
|BAT Industries PLC ||U.K. ||Tobacco products|
|Bay Island Fish Co. ||U.S. ||Seafood|
|Benneton ||ITA||Casual clothing|
|Best Western ||U.S. ||Hotel|
|Bojangles ||U.S. ||Restaurant|
|Breakwater Resources Corp. ||CAN/U.S. ||Mining|
|Bristol Myers Squibb ||U.S. ||Beauty products|
|Budget Rent a Car ||U.S. ||Car rental|
|Burger King Inc. ||U.S. ||Fast food|
|Candy Bouquet ||U.S. ||Candy Store|
|Cargill, Inc. ||U.S. ||Animal feed, poultry & meat processing|
|Castle & Cooke, Inc. ||U.S. ||Bananas and other agricultural products; bottling and brewing|
|Caterpillar Tractors ||U.S. ||Spare parts, accessories|
|Cerveceria Hondurena, S.A. ||South Africa ||Soft drinks and beers|
|Chestnut Hill Farms ||U.S. ||Agricultural products|
|Chili's||U.S.||Franchise Casual Dining |
|Chiquita Brands International ||U.S. ||Bananas and other agricultural products|
|Church's Chicken ||U.S. ||Fast food|
|Cinemark ||U.S. ||Entertainment|
|Citigroup ||U.S. ||Banking services|
|Citrus Development Corp. ||U.S. ||Citrus production and processing|
|Colgate-Palmolive ||U.S. ||Personal care products|
|Congelados Holanda ||Mexico ||Ice cream|
|Continental Airlines ||U.S. ||Airline services|
|CPC International||U.S. ||Corn starch|
|Crowley American Transport ||U.S. ||Ocean freight services|
|Cultivos Marinos ||U.S. ||Shrimp farms|
|Cybex ||U.S. ||Health & fitness|
|Daimler Chrysler Corporation ||U.S. ||Cars|
|Demahsa ||Mexico||Corn flour|
|DHL ||U.S. ||Air freight services|
|Dickies||U.S.||Textiles and apparel|
|Dippin Dots||U.S.||Franchise Ice Cream |
|Domino's Pizza ||U.S. ||Fast food|
|Dos Pinos ||Costa Rica ||Ice cream and milk products|
|Dry Cleaning USA ||U.S. ||Dry cleaning services|
|Dunkin' Donuts||U.S.||Fast food|
|Empacadora Cortes, S.A. ||U.S. ||Meat production; packing|
|Elektra ||Mexico ||Household goods/appliances|
|Ernst & Young International ||U.S. ||Accounting & auditing services|
|Exxon ||U.S. ||Petroleum products marketing|
|FEDEX ||U.S. ||Air freight services|
|Five Star Mining ||U.S. ||Mining exploration|
|GE Capital||U.S.||Financial Services|
|G.B.M. de Honduras ||U.S. ||Computer services|
|Glamis Gold, Ltd. ||U.S./Canada ||Gold mining|
|Global One Communication ||U.S. ||Telecommunications|
|Gold's Gym ||U.S. ||Health & fitness|
|Grupo Granjas Marinas ||U.S. ||Shrimp farms|
|Hansa World||Sweden||Administration software|
|H.B. Fuller ||U.S. ||Adhesives; paints|
|Hertz Rent a Car ||U.S. ||Car rental|
|Holiday Inn Hotel||U.S. ||Hotel|
|Hotel Real Inter-Continental||El Salvador ||Hotels|
|Hotel Princess ||Guatemala||Hotel|
|House of Windsor||U.S.||Tobacco|
|Industrial Engineers, Inc. ||U.S. ||Repair & construction, naval vessels|
|Kentucky Fried Chicken||U.S.||Fast food|
|Kimberly-Clark ||U.S. ||Paper products; Pharmaceutical products|
|KPMG Peat Marwick ||U.S. ||General business consultants|
|La Fragua ||Central America||Consumer Trade|
|Lear Corporation||U.S.||Electronic Automotive Harnesses|
|Little Caesar's Pizza ||U.S. ||Fast food|
|Lloyds TSB (Cuscatlan)||El Salvador||Banking services|
|Mail Boxes, etc. ||U.S. ||Courier services and copy center|
|Marriott Hotels and Resorts||U.S. ||Hotel|
|Martinizing ||U.S. ||Dry cleaning services|
|Mayan Gold, Inc.||U.S.||Mining|
|McDonald's Corporation ||U.S. ||Fast food|
|McCann Erickson ||U.S. ||Advertising; publicity|
|Midas International ||U.S. ||Automotive parts & Services|
|Motorola ||U.S. ||Telecommunications|
|Moore Business Forms ||U.S. ||Business forms|
|Multiplaza (Grupo Roble) ||El Salvador ||Shopping center chain|
|Nestle Products ||Switzerland||Food products|
|New York Pizza||U.S.||Franchise Casual Dining |
|Office Depot||U.S.||Office supplies|
|Pakmail ||U.S. ||Packaging and Courier Services|
|Pan Bimbo ||Mexico ||Bread products|
|Pan American Life Ins. Co. ||U.S. ||Life insurance|
|Parker Tobacco ||U.S. ||Cigars|
|Payless Shoe Source||U.S.||Footwear|
|Paysen ||Germany ||Pharmaceutical products|
|Peat, Marwick, & Mitchell ||U.S. ||Accounting and auditing services|
|PheLempiras-Dodge ||U.S. ||Electric wire & Cable manufacturing|
|Pizza Hut International ||U.S. ||Fast food|
|Pollo Campero ||Guatemala ||Fast food; animal feed; poultry processing |
|Popeye’s ||U.S. ||Fast food|
|Price Smart ||U.S. ||Warehouse stores|
|Price Waterhouse ||U.S. ||Accounting & auditing services|
|Quick Internet ||U.S. ||Telecommunications, internet services|
|Radio Shack ||U.S. ||Electrical Appliances|
|RJR-Nabisco ||U.S. ||Food products|
|Ruby Tuesday's ||U.S. ||Restaurant|
|Russell Corporation||U.S.||Textiles and apparel|
|Scott Paper, Inc. ||U.S. ||Paper products|
|Seaboard Marine Corp. ||U.S. ||Winter fruits & vegetables; aquaculture; ocean freight services |
|Sears||U.S.||Consumer Household goods|
|Select ||U.K. ||Convenience stores|
|Shell ||U.K.||Petroleum products marketing|
|Smith-Kline Beecham ||U.K. ||Pharmaceutical|
|Sprint ||U.S. ||Telecommunications products|
|Standard Fruit (Dole) ||U.S. ||Tropical fruits|
|Star Mart ||U.S. ||Convenience store|
|Stewart & Stevenson ||U.S. ||Electricity generation|
|Subway ||U.S. ||Fast food|
|TAHSA ||U.K. ||Tobacco|
|TACA ||El Salvador ||Airline services|
|TCBY ||U.S. ||Fast food|
|Technology Research Corp. ||U.S. ||Electrical supplies|
|Texaco ||U.S. ||Petroleum products marketing|
|TGI Friday's ||U.S. ||Restaurant|
|3M ||U.S. ||Office supplies|
|Tony Roma's ||U.S. ||Restaurant|
|Tropical Gas Company ||U.S. ||Appliance and other equipment|
|Unilever ||U.K./Holland ||Cleaning Products, Beverages, Food|
|United Marketing (Unimerc) ||U.S. ||Marketing services|
|United Parcel Services (UPS) ||U.S. ||International Courier |
|United Technologies Automotive ||U.S.||Automobile electronics assembly|
|U.S. Tobacco ||U.S. ||Cigars|
|Van Ommeren-Ceteco ||Netherlands ||Trading/retailing|
|Wellington Hall Caribbean, Inc.||U.S. ||Furniture|
|Wendy's ||U.S. ||Fast food|
|Witten International ||U.S. ||Apparel |
|Xerox||U.S. ||Business machine sales & services|