Deeds, not words: Honduras is prepared to attract more investments (*)
Within the structure of the National Investment Promotion Program, Honduras has defined a new Legal and Institutional framework to attract and protect investments.
By means of this program the country offers to domestic and foreign investors a package of laws among which we find The Law for the Promotion and Protection of Investment and the PPP´s Law.
With The Law for the Promotion and Protection of Investment that has been recently approved by the National Congress and has been signed by the President of the Republic during the event "Honduras is Open for Business," the state declares the promotion of investment as a primary concern.
This law provides new tools that enable investors with exceptional facilities to initiate and undertake their investments such as the "Foreign Investment Single Window" which allows a single point to produce all the information and services needed for investment, as well as the completion of formalities related to the establishment and expansion of endeavors.
The new law is structured in three parts: investment protection, promotions and incentives.
One of the characteristics of the law is that it is generally applicable to both nationals and foreigners, except for some provisions that are strictly applicable to foreigners, for example the issue of legal residence as a foreigner. The law in general covers both large and small businesses.
The law creates mechanisms providing different tax incentives, depending on three factors: the undertaken activity; the region where the investment is located and the state's interest in the particular investment.
Furthermore, the National Investment Board is being established to meet various purposes, including promotion and development of private investment.
The law aims to assure complete legal certainty to the investors by providing full guarantees to property rights in the country.
Another important aspect of the law is the creation of effective, simple and reliable dispute resolution alternatives.
On the other hand, the new Law on Promotion of Public Private Partnership (PPP) which has been adopted in August 2010 allows public-private participation in the implementation, development and administration of public works and services. This law entails an exceptional variety of arrangements for participation and diversity of options in state contributions. This contribution offers a wide array of important business niches for the investor and presents to the government with unique opportunities to participate on its own development.
In line with the reform of the country's legal framework it should be noted that in addition to the indicated 2 laws, the past year the country has adopted the following: i. The Secured Transactions Law, with the consequent establishment of the Register of Security Interests and by which a large number of assets may be pledged as collateral for loans; ii. The law for the Strengthening of the Income and Fiscal Equity, which reformed taxes on income and sales; iii. The National Hourly Employment Law, which establishes special working shift arrangements with limited time for work or services, and introducing, as a novelty, a 20% increase in salary compensation, holidays and social security.
To complement this Strategic National Investment Program, the Government of Honduras, headed by the Foreign Ministry has begun the process of modernizing its Foreign Service, adding responsibilities regarding the promotion of investment and trade, thus making their embassies and consulates remote gateways for investors to approach the "Single Window", we discussed above, in the countries in which Honduras has diplomatic representation.
This package of new laws been enacted in Honduras in order to attract and protect investments, as promoted at the International Forum "Honduras is Open for Business" which took place in San Pedro Sula on May 5th and 6th 2011, event that we had the opportunity to attend and participate.
Attendees representing domestic and international entrepreneurs from over 500 companies, focused in the following areas: energy, infrastructure, agribusiness, forestry industries, assembly processing, services and tourism.
There were over 100 projects compounding 10,000 million dollars and the pertinent information of those projects which have been chosen to be carried out in Honduras and other projects aimed to provide products or services to other countries, are starting to be known.
Among the key speakers, we cannot fail to mention the outstanding participation of Carlos Slim and former president of Colombia, Alvaro Uribe.
Slim said, "The arrears in development, such as lack of infrastructure or electricity, are business opportunities and that investment creates economic activity that all countries need to develop and to procure people´s access to welfare".
Meanwhile, Uribe said "the freedom to invest is a freedom for all" and pointed out the importance of both legal and physical security as a sign of confidence for investors.
Honduras has really taken a big step charting a new legal framework for local and foreign investments. The country has shown, in the eyes of friends and strangers, that it counts with the ability and willingness to carry out, through the domestic and foreign private investment, the great social transformation that the country needs to overcome the lack of development that so far has characterized the country.
We believe that this first major step in the country´s modern history, requires a true follow up, in order to take full advantage of the momentum and that the present and future governments must show through deeds, not words, their unconditional support for this initiative towards a better country for the benefit of all its habitants. –
(*) This article was published in Spanish by the Moneda business weekly newspaper (May 16th, 2011 edition) and by Diario TIEMPO Martes Financiero edition (May 17, 2011).
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