Honduras: A Little Known Gem

April 1, 2011 - PRLog -- By Prospero Castellano

University of Miami LLM Candidate

Honduras is traditionally regarded as the ugly step sister to Costa Rica and even Panama in Central America, and it rarely makes the news in the United States unless it is due to political turmoil, the exploits of their World Cup-qualifying soccer team, or as a diving enthusiast’s haven.

However, one little known fact about Honduras is that it is one of Miami’s largest trading partners, according to World City.  It is definitely punching above its weight class.  Its annual import/export volumes with Miami are bigger than not only Costa Rica and Panama, but also much larger countries such as Germany, the U.K., and Italy, for example.

What makes Honduras an attractive potential place to do business?  Simply put, opportunity.

Foreign investment is more than welcome in Honduras, and a wide range of benefits are available. Honduras has the sea port with greatest amount of traffic in Central America.  Additionally, the “Canal Seco” — a high capacity highway that is going to join the Pacific and Atlantic Oceans for commercial and trade purposes — is under construction.

The United States is already Honduras’ chief trading partner and the largest investor in Honduras; however, taking these facts into account, Honduras’ climate for the coming years is increasingly promising.

Honduras provides an array of advantages, such as:

a.            Geographic location (access to the Pacific and Atlantic Ocean).

b.            Natural beauty, having the world’s second largest Coral Reef system.

c.            The Mayan Ruins, tropical weather, or the biodiversity of its species.

With the purpose of promoting foreign investment, the Honduran government has stimulated development by ratifying treaties like the DR-CAFTA and by creating a wide variety of legislation such as the Investment Laws, Free Zones Laws, and Tourism Incentives Laws, among others.

DR-CAFTA

The Central American Free Trade Agreement was signed in 2004 by the United States with Honduras, El Salvador, Nicaragua, Guatemala, Costa Rica, and the Dominican Republic.

DR-CAFTA eliminates tariffs and other barriers to trade in goods, services, agricultural products, and investments.  Additionally, CAFTA is expected to solidify democracy, encourage greater regional integration, and provide safeguards for environmental protection and labor rights.

Free Zones Law  (Decreto No.356)

National and international commercial and industrial companies that are dedicated to exports can operate within free zones that give them benefits such as: exemption of payments of duties, internal consumption taxes, import and export of equipment, materials and all other resources necessary to start operating the business.

Tourism Incentives Law (Decreto No.314-98)

Providing permanent income tax exemption, exempts taxes in importing goods and equipment required for the construction and initiation of a project, motor vehicles, aircraft, and boats, depending on the business activities.

Judicial Security

One of the major concerns when doing business in Honduras could be the administration of justice due to the congestion of the Court system, making it tedious and time-consuming.

However, the country has recently adopted different forms of dispute resolution with the purpose of removing the judicial deficiencies. For instance, arbitration is recognized in the Honduran Constitution as a mechanism for resolving conflicts. Also, Honduras has ratified the New York Convention.  In other words, arbitration has been “Constitutionalized” in Honduras, and the enforceability of foreign awards should not be an issue.

If you compare Honduras with other countries in the Region, you might observe several benefits that are unique in the entire Region, with the added value of an ideal geographic location in the center of Central and Latin America. For all these reasons Honduras is definitely open for business.

If you’re looking for an underdeveloped opportunity with a solid business partner, look a little closer at Honduras.  You might just find Cinderella.