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

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TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS ♦ The Honduran chambers of commerce have proposed a reduction in the number of bureaucratic steps required to notarize powers of attorney granted from abroad, thus reducing the transaction costs borne by foreign investors. Steps have not been taken, however, to reduce or simplify these procedures. ♦ Most Honduran lawyers and judges are not well versed in international business transactions, leaving many foreign businesses unable to access sound local legal representation and unsure of trial outcomes. ♦ A perception of corruption and over-politicization in various commercial law and traderelated institutions affects foreigners’ interest in investing in Honduras. Thus, future reform efforts, in addition to considering the interests of SMEs, should make the concerns of foreign investors a matter of continuous, cross-cutting concern. E. CENTRAL AMERICA′S PREPAREDNESS Continued progress in economic development and poverty reduction requires greater economic growth and productivity gains throughout Central America. Greater trade and investment provide an opportunity for stronger economic growth, and the Central American Free Trade Agreement can be a key part of this opportunity. Working together, the countries of the Central American market can achieve economies of scale. Central America’s prior efforts, through the Central American Common Market, provide a foundation on which CAFTA-related efforts can build. To fully benefit from freer trade under CAFTA, member countries must face institutional, regulatory, and operational changes covering a range of critical issues, such as macroeconomic concerns, trade policy, education, health, environment, agriculture, trade facilitation, and the commercial environment. Without a favorable business environment, domestic entrepreneurs and interested foreign investors cannot seize new opportunities. Without a more efficient and secure trading system, these entrepreneurs and investors cannot efficiently and securely move their goods and services. As detailed in this report, Honduras needs to better prepare some of its sectors, such as business and agriculture, for implementation of CAFTA. Examples include the following: ♦ Private sector representatives in Honduras claim that the government has not been active enough in modernizing and reforming the practices that diminish the relative competitiveness of Honduras. Although there seems to be significant political will to change, more urgency should be given to reform. More dynamic initiatives to decrease bureaucratic procedures and decentralize decision-making are required. ♦ Exporters could be better organized as a unified constituency. The export community appears splintered and polarized into various organizations. The lack of a single, representative organization inhibits the presentation of an effective collective voice on policy and procedures affecting the export community, particularly because there is little communication between the groups. II-6
TRADE AND COMMERCIAL LAW ASSESSMENT DECEMBER 2004 HONDURAS ♦ Honduran people-flow institutions need improvement. Honduras could do more to simplify its system for handling highly skilled visitors seeking longer stays. Work permits now require more than 12 pieces of paperwork and involve five or more government agencies. ♦ Most of the private, and even the public sector, lacks a clear idea of what CAFTA is and what it will require of them. One significant way in which Honduras can improve is through an ongoing effort to integrate regional practices and harmonize its laws with those of the other CAFTA countries. Although this report proposes solutions to various problems as they apply in their national context, the suggestions are all made against the vital backdrop of regionalism. That is, without harmonization of better commercial legislation and practices throughout the region, neither home-grown businesses nor outside investors will be able to seize the economic opportunities presented in this emerging market region of 36 million people. II-7
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