Lower cost production base will attract American investors

Closer links with U.S. firms will help promote greater transparency in Honduras and act as another reassurance for investors

Honduras has a lot to gain from the CAFTA trade talks. The transformation of its industrial and agricultural economy has placed it in an enviable position, ready to capture a bigger slice of intra-regional trade, and develop its links with the United States. High productivity levels, a skilled workforce, and improving infrastructure suggest a rapidly advancing economy.

The government is understandably willing to foster the growing links among the CAFTA member states. President Ricardo Maduro says past differences are being put aside, with initiatives like the customs union and the harmonization of tariffs creating a strong sense of unity. He says the U.S. – which receives 40% of Honduran exports and makes up over two-thirds of all inward investment – is taking notice. “The region is coming together and moving in a uniform way which is much more powerful.”

Norman Garcia, Minister of Industry and Commerce, is leading the country’s CAFTA negotiations. He says the implementation of the trade agreement will pave the way for greater foreign investment, as new firms seek access to the U.S. market. It will also give American investors a lower cost production base. “For the U.S. textile industry to survive it either comes to Central America or it will disappear, because in 2006, China is going to invade with its textile products.”

Honduras occupies a privileged geographical location, amid a stunning natural landscape, and, with four international airports, Miami is just a short flight away. It is an ideal platform for manufacturers seeking to trim costs without compromising quality.

NORMAN GARCIA Minister of Industry and Commerce

According to Jesús Juan Canahuati of the Honduran Association of Maquiladoras, CAFTA offers the chance to build on the positive developments that have already taken place in the country. He says the opportunity has always been there but it is only now starting to be discovered.

The Honduran American Chamber of Commerce promotes bilateral business through its 430 member companies, which include several multinationals. Beatriz Valle, General Manager of the Chamber of Commerce, agrees that U.S. firms should pay close attention to Honduras. She thinks closer links with the U.S. will help promote greater transparency in the country, another reassurance for investors. “We’re going to have to play by the same rules.”
Among the local financial community, the feedback is equally upbeat. Banco Uno is pioneering the regional outlook, offering an identical service in all countries where it operates. René Becerra, General Manager of Banco Uno, says free trade is only the start. The long-term aim must always be to build sustainable growth.