3.2.4.- Honduras
The evaluation of the seventeen key aspects to determine the business competitiveness of Honduras is given in the table below.
1. Political aspects (3). Honduras has had a stable political climate over the last decade. Economic policies and social programs (education) are the main reasons for more recent political stability.
2. Social aspects (2). Honduras has a highly unionized workforce and industrial action is common. Most large-scale strikes and demonstrations pass off peacefully, but the risk of mass protest turning to violence and disrupting business operations remains high.
3. Safety (1). Safety is one of the biggest concerns in Honduras. Although anti crime-campaigns have been set up, crime levels in Honduras are extremely high. Especially homicides rates are still increasing. Street gangs are responsible for an increasing amount of crime, and are often linked to drug trafficking.
4. Economic aspects (3). Although the economy in Honduras is one of the least developed in Latin America it is growing steadily (growth of GDP in 2006 was 6%). Total exports have increased and the external debt has been reduced. Honduras has an economy not only based on the traditional agricultural products but has diversified to non-traditional products, manufacturers and tourism. The main source of income is still the remittances from Hondurans abroad.
5. Fiscal aspects (3). Honduras has a favourable tax system and applies a system for Regimen for Temporal Imports which provides tax exemption for the agricultural sector.
6. Investment capital (2). Availability of investment capital is one of the weakest points in the competitiveness of Honduras. In general the banking system is considered as weak and required guarantees are high.
7. Infrastructure (local, 2). Local infrastructure along the central north-south axis of Honduras (corridor of development) is developed but deviating to areas further away the infrastructure is less developed. Honduras can also be regarded as a country having a ‘business capital’, San Pedro Sula, and an official and legislative capital, Tegucigalpa.
8. Infrastructure (export, 3). Maritime infrastructure is considered to be good because of the harbour ‘Puerto Cortes’ which has an international certification of the Container Security Initiative (CSI) promoted by the US government. Export structure at airports should be improved, mainly at the airport Palmerola in Comayagua, the centre for vegetable exports.
9. Communication (2). Telephone communication is regarded as acceptable although the service tends to fail. Access to internet is still very low and the costs are high.
10. Trade agreements (3). Honduras has signed the DR-CAFTA with the United States which gives the country opportunities to increase their exports. Until today the agricultural sector hasn’t benefited sufficiently from these new opportunities. Agricultural policies of the Honduran government are more focussed on the national food security and rural development than on exports of agricultural produce.
11. Climate and natural resources (3). Honduras has three main climatic zones and therefore offers a variety of climates. Honduras has no real area of higher elevations for crops like specific cut flowers, leather leaf and vegetables. Honduras lies within the hurricane belt, and the Caribbean coast is particularly vulnerable to hurricanes or tropical storms that travel inland from the Caribbean. Land is available, good and affordable.
12. Agricultural sector organization (2). An effective agricultural sector organization is lacking in Honduras mainly due to the small size of the agricultural business. Mainly larger private companies operate in the agricultural export business and require less support like small sized farms do. FPX is the only agricultural sector organization that represents exporting companies in Honduras but depends on international funds for the execution of their programmes. The organization has a strong link with the Secretary of Agriculture and Livestock but is mainly focussed on technical support.
13. Phytosanitary service (3). The phytosanitary service is regarded as good in Honduras due to the organization of OIRSA that supports both administrative and technical functions.
14. Agricultural supplies (3). Agricultural supplies are available in Honduras at reasonable prices but technical information and high tech supplies are lacking.
15. Labour (unskilled, 3). Unskilled labour is available in all parts of the country, although there is competition of the manufacturers and migration to the United States from the rural areas. Labour is relatively cheap which makes Honduras competitive for labour intensive activities.
16. Labour (management, 3). Medium and higher educated agricultural and administrative people are available, although practical experience and knowledge is frequently lacking.
17.Subsidies (2). There is little support for the exporting agricultural business. Government programs are focussed on rural development rather than export. Honduras is included in the list of countries that can apply for the Dutch investment promotion program PSOM, matchmaking facility and PESP program.
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