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

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS Roundtable Discussion Conclusions GROUP 1 – BREAKING DOWN BARRIERS TO TRADE 1. The recently established Pro-Committee, CEIMSA (Comisión Especial Interinstitucional para el Modernización de Servicios Aduaneros, or Special Interinstitutional Commission for the Modernization of Customs Services) provides an excellent opportunity for cooperation between the public and private sectors. This body should be used to expedite customs processes and accordingly improve trade. Generally speaking, cooperation between the public and private sectors must continue and improve. Policies should be developed in a consensual manner so that government efforts more closely meet private sector demands and all parties feel ‘ownership’ of the processes. 2. While technological advances have been made in Honduras with respect to customs and trade processes, it is important that these continue to be used and developed in order to eliminate certain barriers such as delays and corruption. The use of technology creates greater transparency and accountability, which is needed to improve processing. 3. As a result of currently established political practices, the majority of customs and other relevant trade officials are replaced every four years with the change in administration. As a result, trade processing is hampered as new personnel are brought up to speed. In order to combat this, greater continuity must be provided for with the creation of a permanent and highly professional staff. 4. There is a lack of knowledge and information regarding procedures and requirements, both for export and import, in other countries, such as with respect to sanitary and phyto-sanitary standards. There needs to be a greater exchange of information in this regard between Honduras and its trading partners, and in particular the United States, so that this barrier can be removed. GROUP 2 – BUILDING FUNDAMENTALS OF PRIVATE ENTERPRISE: THE NEW LAW ON PROPERTY. There seems to be support, in general, for the new law on property, but because there are questions as to its constitutionality – which is being considered in the Honduran courts – support for its implementation has been inconsistent. Relatedly, while there is a sentiment that given the law’s recency it should be given an opportunity to succeed, the mechanisms to be employed in the transition from the old to the new law are unclear. For example: Attachment 2 - 3
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS • The new law creates the Institute of Property to act as the equivalent of a national registry. The Institute has the potential to regularize the status and processes of property ownership in Honduras. However, the transition to the Institute from the Supreme Court, which currently acts as the property registry, has not gone smoothly to this point as the Supreme Court is falling behind in preparing the materials to effect the transition. Given the recent and similar transition in El Salvador, however, expectations must be kept realistic. Sufficient funds have been allocated to the Institute in order for it to be a success. • There is uncertainty as to how or if there will be any continuity among those officials who are directly responsible for the work of the registry/Institute. • There is concern that the information contained in the property cadastre and the registry (or soon to be Institute) is not the same, although it should be, and there is a lack of clarity on how this information will be harmonized. • Previous corruption in this area will continue but there is a belief that the new law will provide a basis through which this can be overcome. A modernized registry is currently functioning in the city of Comayagua, and can serve as model for the rest of the country. As the majority of property implicated by the new law is in Tegucigalpa and San Pedro Sula, those are the locations where the greatest efforts should be made to ensure proper implementation of the law and the Institute of Property. Other steps and laws are currently being considered and others are needed to ensure that the new law is successful. One such law is the law on movable property guarantees (i.e. inventory, vehicles) which is currently before Congress and was drafted with the help of the Organization of American States and other Latin American countries. A better law in this regard will help businesses secure credit and spur growth, as well as facilitate foreign capital and investment entering the country. Other laws should be reformed as well. Laws with respect to company formation must be simplified in order to encourage small and medium enterprises to enter the formal sector. Additionally, the Code on Civil Procedure should be modified to ease administrative procedures. Lastly, training should be undertaken for officials in the Institute to ensure that they are not only technically savvy but also of the highest integrity. GROUP 3 – ENHANCING THE BUSINESS CLIMATE IN HONDURAS VIA JUDICIAL REFORM The process for the formation of a company must be improved and made consistent throughout the country. For example, currently it takes far less time to register a company in San Pedro Sula than in Tegucigalpa as a result of both form and material inconsistencies. ● Requirements should be standardized from municipality to municipality in order to secure, for example, a “permiso operación.” ● In addition, costs of registration should be reduced, both at registries and for those intermediaries involved in the process, such as notaries. Moreover, costs should be standardized from municipality to municipality to the greatest extent possible. Attachment 2 - 4
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