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Honduras: Good Potential

A closer look at the key benefits and challenges of doing business in Honduras, the second-largest Central American exporter to the US.


Thanks to key factors such as CAFTA, reforms aimed at making investment easier and growing investments in infrastructure, foreign and local investors are generally optimistic about the outlook for Honduras.

"In general, the business outlook is very promising," says Mario Vargas, Country Manager, DHL Express Honduras. Coca-Cola - another major foreign investor in Honduras - agrees. "We are very confident in the future of the Honduran economy," says Pablo Largacha, a Costa Rica-based director of public affairs and communications for Coca-Colas Latin Center Business Unit.


Local Honduran business executives are also bullish. "Theres been more liberalization and more incentives," says Juan M. Canahuati, the president of Grupo Lovable, a major textile and apparel exporter and one of the largest employers in Honduras. "The government has helped construct infrastructure and communications, improve port facilities [and] made it easier for investors through simplified steps for complying with requirements and the necessary permits to open a business in the country."

Thanks to growing exports, foreign investments and local activity, Honduras economy is growing strongly. Last year, the countrys GDP expanded by 6.0 percent, its highest level in 13 years, according to IMF data. The local sectors that grew most were finance (by 16.5 percent), mining (16.1 percent) and construction (14.9 percent), according to the Central Bank of Honduras.  "We see a lot of construction going on, and this is always a good sign for investors," Largacha says. 

And both manufacturing and agriculture - the largest sector of the economy - grew at high levels as well, expanding by 10.6 and 11.4 percent, respectively. Textile manufacturing is the cornerstone of the Honduran economy. Honduras is the largest Central American exporter of textiles to the United States and the second-largest Latin American textile exporter (after Mexico), according to the US Census Bureau. Its textile exports to the U.S. market are almost as large as those of El Salvador and Guatemala combined.


Apart from CAFTA, Honduras offers several other benefits for local and foreign companies. They include free trade agreements with Mexico, Central America, Dominican Republic, Panama, Taiwan and Colombia, says Yusuf Amdani, CEO of Karim’s Group, a diversified group of textile, real estate, tourism and media holdings.  

Other benefits include proximity to the U.S. market (a two hour flight from/to...

Keywords: CAFTA, corruption, Puerto Cortes, corruption, ENEE, Hondutel, Semir Kawas, textiles


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