Trade and Commercial Law Assessment - Honduras - Economic ...

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS is important to note that the region has yet to come to terms with a harmonized plan for recovering international termination costs for calls between Central American countries. Curren tly, the providers initiating the calls retain all revenues. This practice creates inequities in recovering costs depending on the ratio of outgoing to incoming calls between the Central American countries. It is highly recommended that support be provided for identifying and evaluating solutions for harmonizing the international telecommunications industry. g. To facilitate trade, Honduras should consider the following recommendation for its telecommunications infrastructure: ♦ Trade Facilitation Issues to Address Continue efforts to privatize Hondutel. The government-run telecommunications provider is one of the nation’s major sources of revenue and is a highly profitable organization. However, interviews indicate that the high profitability of the company has come at the expense of investment in the nation’s telecommunications infrastructure. Consequently, the profit margins are somewhat misleading. Efforts should be made to fully understand the financials of the company, identify investment requirements, and consider privatization of segments of the company to increase the service levels of the sector. As a government entity, Hondutel lacks the ability to operate as a private company, limiting its ability to provide high-quality, cost-competitive services. As indicated above, efforts are under way to expand the network through private sector participation. These efforts should be supported and expanded following expiration of Hondutel’s exclusivity provisions. 3. Supporting Institutions a. Trucking Companies Private trucking companies operate throughout the country, with significant capacity provided at seaport and inland distribution terminals. Trucking companies provide drayage and inland distribution services for all international trade. The quantity and quality of the trucking companies available within Honduras are considered adequate and sufficiently scalable to facilitate trade. b. Airlines Honduras’s airport infrastructure is served by almost all of the major airlines currently providing services to the region. Major carriers also provide air cargo service. Air service is considered adequate and sufficiently scalable to facilitate trade; however, terminal capacity constraints exist at Tegucigalpa, and government services are provided inconsistently to meet peak demands. c. Ocean Carriers Honduras serves a significant number of international ocean carriers, which call at regular intervals. Services include containerized cargo, break bulk, neo-bulk, and liquid bulk cargoes. Private sector stevedoring companies provide vessel stevedoring. Private sector transportation companies provide landside transportation. The supporting institutions participating in the maritime activities of Honduras are sufficient. XV-15
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS d. Railways Railway service is currently unavailable within Honduras. Considering the economics of rail transportation, as well as Honduran geography and landmass, a Central American regional approach is necessary if investment in rail service for the nation is to be justified. e. Power Distribution Power distribution from private sector generating plants is provided through a number of private generation companies, with a large percentage of power generated from fossil fuel thermal systems. International transmission capacity is inadequate to accommodate future demands. Consequently, either upgrades of international transmission capacity or capacity building at local power generation plants will be necessary in the future. . f. Wireless telecommunications and Internet services are provided through private sector concessions in an open market and competitive environment. This environment provides users with a number of technologies and reliable services from which to choose. Further private sector participation is being implemented in the area of fixed-line communications. Efforts to open the telecommunications market should be supported going forward. D. Telecommunications and Internet Providers RECOMMENDATIONS ♦ Implement key capacity upgrades to roadways. The Honduran roadway network will require capacity upgrades along key corridors to provide seamless connections between production/consumption zones and international gateways. Targeted improvements include full realization of the nation’s improvement plan for the roadway from Tegucigalpa to the Atlantic coast. ♦ Honduras is working on a key corridor development project that would link El Salvador’s proposed Cutuco port facility on the Pacific coast, to the nation’s Atlantic coast. This 100-kilometer stretch has the potential to be a key logistics corridor, providing opportunities for development of value-added services and jobs. Technical support with regard to the area’s transportation economics will be required to realize the benefits of this important project. ♦ Increase nongovernmental management and operation of Puerto Cortez. Honduras’s seaport facility requires separation from government control to realize its capacity building program. The existing facility has seen little investment over recent years despite its importance to the nation and the region. Revenues are not fully maintained by the port, nor can they be allocated at the discretion of port management for capital program initiatives. Efforts should be made to decentralize government involvement in port operations. Technical support will be required for implementation of privatization best practices to realize the full potential of this important facility. ♦ Upgrade the international airport at Tegucigalpa. Honduras’s international airport facility at Tegucigalpa is reaching the limits of its operational capacity. The facility will need to be rationalized against development of a new international airport facility located XV-16
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