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Honduras Presses Ahead for ZEDE Liftoff in June

By: Belén Marty - @belenmarty - May 13, 2015, 8:52 am

EspañolThe Honduran government will begin building the first Zones for Employment and Economic Development (ZEDE) in the Central American nation in June, fulfilling a campaign promise made by President Juan Orlando Hernández, according to government sources.

The town of Amapala is set to host one of Honduras's first ZEDEs. (Flickr)
The town of Amapala is set to host one of Honduras’s first ZEDEs. (Flickr)

The idea behind the project is to create a pole for investment and development in designated locations, exempt from certain regulatory and tributary burdens, where natives and foreigners can live and work, creating engines for economic prosperity.

The initial crop of zones will be developed on the Pacific coast of Honduras, covering the municipalities of Alianza, Nacaome, Amapala, and the adjacent Isla del Tigre. The government plans to install megaports, facilities for different kinds of industries, and agricultural laboratories, among other projects.

In 2013, Honduras’s Congress ratified Decree 120, which established ZEDEs under Honduran law. While the zones are allowed to stipulate their own public policies, the legislation states that they are an inalienable part of national territory.

The legislation aims to “facilitate the conditions to allow the insertion of Honduras into global markets under highly competitive and stable rules.” The country is the first in Latin America to pass legislation pertaining to ZEDEs.

A feasibility study commissioned by the government and being drawn up by a group of South Korean experts will be published at the end of May, establishing exactly where the zones are to be located. Initial plans have indicated that each ZEDE will be granted 10 square kilometers of territory with no existing population.

The study will indicate whether the selected lands are publicly or privately owned. In case of the latter, the existing landholder will have the option to become a partner in the initiative or sell the land, with expropriation available as a last resort.

“We are waiting for the feasibility plan for investors to be part of the pilot project; we understand that the government is making efforts to get a loan from the World Bank,” René Osorio Canales, presidential advisor for sovereignty, defense, and security, told press.

Next month will also see the government “placing the first stone of the logistic center,” he added.

Nevertheless, locals have raised fears over expropriations under ZEDE legislation. Amapala Mayor Santos Cruz told local media that residents are worried about the powers and exemptions from state authority the new districts will possess.

His district has no “empty lands,” he added, saying that the authorities will have to negotiate with local landholders before acquiring the relevant territories.

George Colindres, a legal analyst with the Eléutera Foundation in Honduras also told the PanAm Post that construction is not likely to begin in earnest for some time. Nevertheless, he highlighted the potential for job and wealth creation that the ZEDEs could bring to his country.

“Under ZEDE territory, there will be a cap on taxes. For example, on income tax the cap will be 12 percent, and on sales tax, 5 percent. They could even have 0 percent tax,” he noted, arguing that the new economic zones could help the country become the most competitive jurisdiction in the region.

“When a company is looking to settle in Central America, it will have no choice but to settle in Honduras,” he concluded.

Belén Marty Belén Marty

Belén Marty is the Libertarian Latina, a journalist based in Buenos Aires, Argentina. She has lived in Guatemala, Jordan, the United Arab Emirates, and the United States and is a former candidate for local office with Argentina's Libertarian Party. Follow @BelenMarty.