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U.S. Department of State 
1996 Honduras Country Commercial Guide 
Office of the Coordinator for Business Affairs 
 
 
 
                    1996 COUNTRY COMMERCIAL GUIDE 
                            HONDURAS 
 
 
                TABLE OF CONTENTS 
 
I.   COMMERCIAL OVERVIEW                       
 
A.   OVERVIEW OF IMPORT MARKET                    
B.   BRIEF SYNOPSIS OF COMMERCIAL ENVIRONMENT           
C.   HOST COUNTRY BUSINESS ATTITUDE TOWARD THE U.S.        
D.   MAJOR BUSINESS OPPORTUNITIES                    
E.   MAJOR ROAD BLOCKS TO DOING BUSINESS              
F.   NATURE OF LOCAL AND THIRD COUNTRY COMPETITION        
 
II.  ECONOMIC TRENDS AND OUTLOOK                 
 
A.   KEY ECONOMIC INDICATORS                       
B.   MAJOR TRENDS AND OUTLOOK                       
C.   GROWTH, OUTPUT AND EMPLOYMENT                    
D.   INFLATION                                
E.   MONEY, CREDIT AND BANKING                    
F.   FISCAL OPERATIONS                          
G.   BALANCE OF PAYMENTS SITUATION 
H.   THE EXTERNAL DEBT                          
I.   ECONOMIC REFORM AND POLICY ISSUES                 
J.   INFRASTRUCTURE                             
K.   NATURE OF LOCAL AND THIRD COUNTRY COMPETITION       
 
III. POLITICAL ENVIRONMENT                   
 
A.   NATURE OF BILATERAL RELATIONSHIP WITH UNITED STATES    
B.   MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE       
C.   SYNOPSIS OF POLITICAL SYSTEM                   
 
IV.  MARKETING U.S. PRODUCTS AND SERVICES          
 
A.   DISTRIBUTION AND SALES CHANNELS                
B.   USE OF AGENTS/DISTRIBUTORS; FINDING A PARTNER       
C.   FRANCHISING                            
D.   DIRECT MARKETING                         
E.   JOINT VENTURES/LICENSING                      
F.   STEPS TO ESTABLISHING AN OFFICE                
G.   SELLING FACTORS/TECHNIQUES                   
H.   ADVERTISING AND TRADE PROMOTION - LISTING OF MAJOR NEWSPAPERS 
     AND BUSINESS JOURNALS 
I.   PRICING PRODUCTS                         
J.   SALES SERVICE/CUSTOMER SUPPORT                
K.   SELLING TO THE GOVERNMENT                   
L.   PROTECTING YOUR PRODUCT FROM INTELLECTUAL  
     PROPERTY RIGHTS (IPR) INFRINGEMENT 
M.   NEED FOR A LOCAL ATTORNEY                   
 
V.   LEADING TRADE PROSPECTS FOR U.S. BUSINESS        
 
VI.  TRADE REGULATIONS AND STANDARDS             
 
A.   TARIFFS AND IMPORT TAXES                      
B.   CUSTOMS VALUATION                         
C.   IMPORT LICENSES                         
D.   EXPORT CONTROLS                         
E.   IMPORT/EXPORT DOCUMENTATION                   
F.   TEMPORARY ENTRY                         
G.   LABELING, MARKING REQUIREMENTS                
H.   PROHIBITED IMPORTS                         
I.   STANDARDS (E.G. ISO 9000 USAGE)                
J.   FREE TRADE ZONES/WAREHOUSES                   
K.   SPECIAL IMPORT PROVISIONS                   
L.   MEMBERSHIP IN FREE TRADE ARRANGEMENTS             
 
VII. INVESTMENT CLIMATE                      
 
A.   OPENNESS TO FOREIGN INVESTMENT                
B.   CONVERSION AND TRANSFER POLICIES                
C.   EXPROPRIATION AND COMPENSATION                
D.   DISPUTE SETTLEMENT                         
E.   PERFORMANCE REQUIREMENTS/INCENTIVES             
F.   RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT          
G.   PROTECTION OF PROPERTY RIGHTS                   
H.   REGULATORY SYSTEM: LAWS AND PROCEDURES             
I.   EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT    
J.   POLITICAL VIOLENCE                         
K.   BILATERAL INVESTMENT AGREEMENTS                
L.   OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS          
M.   LABOR                               
N.   FOREIGN-TRADE ZONES/FREE PORTS                
O.   CAPITAL OUTFLOW POLICY                      
P.   FOREIGN DIRECT INVESTMENT STATISTICS             
Q.   MAJOR FOREIGN INVESTORS                      
 
VIII.TRADE AND PROJECT FINANCING                
 
A.   DESCRIPTION OF BANKING SYSTEM                   
B.   FOREIGN EXCHANGE CONTROLS AFFECTING TRADING          
C.   GENERAL FINANCING AVAILABILITY                
D.   HOW TO FINANCE EXPORTS/METHODS OF PAYMENT          
E.   TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE       
F.   PROJECT FINANCING AVAILABLE                   
G.   LIST OF COMMERCIAL BANKS                      
 
IX.  BUSINESS TRAVEL                      
 
A.   BUSINESS CUSTOMS                         
B.   TRAVEL ADVISORY AND VISAS                   
C.   HOLIDAYS                               
D.   BUSINESS INFRASTRUCTURE                      
 
     APPENDICES                         
 
A.   COUNTRY DATA                            
B.   DATA ON BEST PROSPECTS FOR AGRICULTURE AND INDUSTRY SECTOR EXPORTS 
C.   U.S. AND COUNTRY CONTACTS                   
D.   MARKET RESEARCH LIST                      
E.   TRADE EVENT SCHEDULE                      
 
 
 
                          I.  COMMERCIAL OVERVIEW 
 
A.   OVERVIEW OF IMPORT MARKET 
 
Although a 5-20 percent (of CIF value) tariff covers most products, 
certain items such as grains, poultry, leather and textiles have tariffs 
that range up to 100 percent.  The Government of Honduras eliminated a 
10 percent import surtax on  20,000 products but high surtaxes remain on 
a number of products.  A selective consumption tax is imposed almost 
exclusively on imported luxury type items.  As a result of the 
implementation of progressive policies to dismantle the 
statist/interventionist economy, a traditional preference for U.S. 
products and healthy levels of economic growth, imports from the U.S. 
increased from USD 504 million in 1989 to USD 558 million in 1994. 
 
The immediate response to the implementation of trade liberalization 
policies was a rapid increase in imports of consumer goods.  In recent 
years, capital goods have experienced the highest growth rates.  An 
escalation in construction and infrastructure has fueled the demand for 
construction equipment, building products and hand and power tools.  The 
government's initiatives to modernize and diversify the country's 
economy have  stimulated an increase in the demand for agricultural 
machinery and equipment, forestry and woodworking equipment and 
electrical power systems.  The transportation sector has seen strong 
growth in the importation of used Japanese-made passenger and utility 
vehicles from the U.S., and used school buses that are popular for urban 
transportation. 
 
B.   BRIEF SYNOPSIS OF COMMERCIAL ENVIRONMENT 
 
Several factors combine to make the commercial environment in Honduras 
highly attractive for experienced U.S. exporters.  The proximity of 
Central America to the U.S. market and the best port facilities in the 
region ease logistics.  Several airlines have daily direct flights to 
Miami, Houston and New Orleans, and the Pacific and Caribbean shipping 
routes are well served.  This,  coupled with a history of social 
stability and the recent development of regional economic integration, 
makes Honduras an excellent location to penetrate the Central America 
market.  It is common to find that business and political leaders speak 
English.  Many were educated in the U.S. and travel there frequently for 
business and tourism.  Consumer tastes in Honduras are traditionally 
oriented toward U.S. products.  U.S. dominance of Honduras' foreign 
trade, with about a 50 percent share of the import market, illustrates 
the strong commercial connection between the two countries. A bilateral 
investment treat was signed betwen Honduras and U.S. on July 1, 1995.  
 
All commercial banks in Honduras are privately owned and have 
correspondent relationships with U.S. banks.  Loan rates start at 36 
percent, which is considered high by any economic observer, and 
inflation is currently running at about three percent a month.  As of 
June 21, the Lempira traded at 9.3 to one dollar. 
 
Honduras' legal system does not function on precedent, lacks codified 
laws and does not offer the option of a jury trial.  As a result, 
international investors often find themselves caught up in a nasty web 
of contradictory laws and regulations.  Frequently, those who believe 
they have followed prescribed legal procedures find they do not receive 
clear and timely adjudication of their cases.  The 
Honduran legal system is undergoing reform, including important 
contributions from the U.S. Agency for International Development's 
Democratic Initiative project.  Commercial cases are settled in the 
civil courts.   
 
C.   HOST COUNTRY BUSINESS ATTITUDE TOWARD THE U.S. 
 
Most Honduran businessmen are at ease with U.S. business practices.  
Traditionally, many Honduran families, both from the elite and middle 
class, send their children to the United States for education, and 
private bi-lingual schools (English/Spanish) abound, so it is common to 
find local businessmen and professionals who speak English and have had 
some experience with U.S. culture.  That familiarity, as well as the 
dominance of U.S. media in markets such as cable and network television 
and radio broadcasts, also strengthens the Hondurans' taste for U.S. 
consumer products and culture.  Many Honduran firms have enjoyed 
longstanding relationships with U.S. suppliers and trading patterns have 
been formed by the proximity to the U.S. market.  Most Honduran 
businessmen consider U.S. companies and U.S. products reliable. 
 
D.   MAJOR BUSINESS OPPORTUNITIES 
 
Electrical generating systems:  Honduras is experiencing a severe energy 
crisis caused by rising electricity demand and output shortfalls.  A 
Presidential Decree issued in April 1994 authorizes the National 
Electric Company (ENEE) to engage in direct contract negotiations with 
firms that offer thermal electric generating systems.  Over the next two 
years, the U.S. Embassy estimates investment in this area will reach USD 
150 million. 
 
Telecommunications:  In 1993, the Honduran Telecommunications Company 
(HONDUTEL) awarded two contracts, collectively valued at USD 155 
million, for the installation of 220,000 telephone lines.  HONDUTEL also 
awarded a USD 30 million leasing arrangement for private cellular 
telephone services.  The Government of Honduras has announced that the 
privatization of HONDUTEL will take place in the next few years. 
 
Road Construction:  While the Reina administration is not likely to 
continue to invest heavily in major infrastructure projects, the 
Ministry of Communication, Transportation and Public Works (SECOPT) 
plans to upgrade approximately 2,000 kilometers of secondary roads, 
which are part of Honduras' 14,000 KM official road network.  This 
upgrading involves widening and repairing the gravel surfaced roads that 
connect small towns to the main road system. 
 
Social Housing:  The government has announced plans to implement a 
program for the construction of low cost housing.  The estimates are 
between 30-50 thousand units of social housing.  The project will be 
executed in the next three years.  The Central American Bank for 
Economic Integration (CABEI) has ventures between foreign and local 
construction companies.  The project will consist of blocks of between 
200-500 units. 
 
E.   MAJOR ROAD BLOCKS TO DOING BUSINESS 
 
Impediments to increased U.S. exports stem mainly from the small size of 
the market, the low purchasing power of the majority of Hondurans, lack 
of financial resources, and a constricted supply of local financing.  
Bank interests rates are high, running 36-40 percent, repayment periods 
of one year or less are common, and external financing is limited.  
While Honduras imports a wide variety of products, few product markets 
have much depth.  Significant barriers include: tariffs, taxes and fees, 
foreign exchange shortages, discriminatory government procurement 
practices, IPR infringements, poor administration of justice, investment 
disputes and a deficient agricultural distribution system.  
 
F.   NATURE OF LOCAL AND THIRD COUNTRY COMPETITION 
 
The U.S. is Honduras' primary trading partner.  Approximately 50 percent 
of the country's total trade is with the U.S.  Hondurans continue to be 
partial to U.S. products.  While the U.S. enjoys a dominate position in 
most sectors, competition varies on a sector-by-sector basis.  In recent 
years Asian and European firms have made inroads in the Honduran market. 
 
Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact stat-USA at 1-800-
STAT-USA for more information.  To Locate Country Commercial Guides via 
the Internet, please use the following worldwide WEB address:  WWW.STAT-
USA.GOV.  CCGs can also be ordered in hard copy or on diskette from the 
National Technical Information Service (NTIS) at 1-800-553-NTIS. 
 
 
II.   ECONOMIC TRENDS AND OUTLOOK 
 
A.    KEY ECONOMIC INDICATORS 
 
(Est.)                              1994        1995      1996   
 
Population (millions)                 5.4         5.6        5.8 
Population growth (percent)           2.9         2.9        2.9 
Real GDP (millions of 1978 LPS.)  5,898.0     6,133.9        N/A 
Real GDP growth (pct. chg.)           1.4         4.0        N/A 
Per Capita GDP (pct. chg.)            3.2         0.6        N/A 
Consumer Price Index (pct.chg.)/1    28.9        33.2       15.0 
Labor Force (thousands)           1,520.0     1,610.8    1,657.5 
Unemployment (pct.)/2                16.1        16.0       15.8 
Underemployment (pct.)/2             38.0        38.0       38.0 
Government Deficit (pct. chg.)        7.5         4.0        3.0 
Government Spending as a % of GDP    27.0        27.0            
 
Balance of payments (USD millions): 
 
Exports (FOB)                  866.7      1,124.4           N/A 
Imports (CIF)                1,014.7      1,208.5           N/A 
Trade Balance                  148.0         34.1           N/A 
Current Account Balance       -215.4       -129.0           N/A 
Overall Balance                  0.0        300.0           N/A 
Foreign Exchange Reserves/3    110.9          0.0           N/A 
Foreign Debt (USD millions)  3,248.2      3,868.2       3,925.4 
--As Pct. of GDP               115.8        111.5         105.1 
--Debt Service                 428.5        465.2         105.1 
--As Pct. of Exports            37.0         29.8          29.9 
 
Foreign Exchange Rate (LPS./USD): 
--Average Market Rate            8.4          9.3           N/A 
--Year-end Market Rate           9.4         10.2           N/A 
 
U.S.-Honduran Trade (USD millions): 
Exports To U.S. (FOB)            450.1        N/A         N/A 
Imports From U.S. (CIF)          558.0        N/A         N/A 
Bilateral Trade Balance         -107.9        N/A         N/A 
U.S. Share of Honduran imports    45.8        N/A         N/A 
U.S. Assistance (fiscal years)    37.4       25.7         N/A 
 
/1/  Year-end values 
/2/  GOH Ministry of Labor estimates 
/3/  Preliminary 
 
 
B.  MAJOR TRENDS AND OUTLOOK 
 
The Honduran economy was in the grips of stagflationary conditions in 
1994.  An unprecedented energy crisis, declining output of key 
agricultural products (basic grains and bananas) and a depressed 
construction industry led to a 1.4 percent slump in real GDP, or a 4.3 
percent decline in per capita terms.  A ballooning fiscal deficit caused 
by the extravagant public investment policies of the former Callejas 
government triggered a major inflationary surge with consumer prices 
jumping from 13 percent (in 1993) to 28.6 percent (in 1994).  A strong 
rebound in coffee export receipts was mostly erased by a weak banana 
industry with total merchandise exports rising a meager 2.5 percent.  
Although merchandise imports declined 6.7 percent, Honduras continued to 
run large deficits in the current account of the balance of payments.  
The Honduran economy is saddled by an external debt which exceeds GDP 
and debt service-to-export ratios of close to 30 percent. 
 
On the policy side, in 1994 the new Reina government was slow to come to 
grips with the economic crisis.  Later in the year, the GOH did succeed 
in getting Congress to ratify an IMF-supported fiscal deficit reduction 
package.  In January 1995, the IMF Board of Directors approved the 
second of a three-year enhanced structural adjustment facility (ESAF) 
for Honduras.  The ESAF paves the way for possible major IDB and World 
Bank Club debt rescheduling terms.  We expect a booming coffee sector, 
an improved energy panorama and the restoration of fiscal discipline to 
restore the economy to growth and ease inflationary pressures.  However, 
the GOH's adoption of austere fiscal and monetary policies combined with 
declining living standards has proven politically costly. 
 
C.  GROWTH, OUTPUT AND EMPLOYMENT 
 
In 1994, the Honduran economy plunged into recession on the back of the 
most severe energy crisis in the nation's history.  Three consecutive 
years of drought weather conditions caused a precipitous decline in 
water levels at Honduras' primary hydroelectric energy facility -- the 
Francisco Morazan (El Cajon) dam.  Accounting for roughly 50 percent of 
the nation's energy output of 500 megawatts, El Cajon's energy 
generation declined steadily, reaching a low production of 70 megawatts 
of its total 300 megawatt capacity by mid-August 1994.  The energy 
rationing which began with several hours per day in February, peaked at 
14 hours per day from mid-August until mid-December.  Overall, the 
energy sector's contribution to GDP declined 4.3  percent in 1994.  A 
steeper decline was offset by major industrial and residential purchases 
of thermal generators and major increases in fuel purchases for new 
generating capacity. 
 
The energy crisis has had a devastating across-the-board impact on 
economic activity.  The energy shortages punished the manufacturing 
sector with Honduran factories losing entire production shifts on a 
daily basis for most of the year.  The manufacturing sector, which in 
1992 and 1993 registered impressive gains of 6.1 percent and 6.3 
percent, respectively, tumbled 2.9 percent in 1994.  Services, 
particularly travel, restaurants, movie theaters and many retail 
operations were badly affected by the blackouts.  Overall, services 
declined 2.8 percent.  The volatile construction industry was also badly 
hit by the energy crisis.  Cement shortages sparked by massive cement 
outflows to El Salvador where prices are higher, and rising interest 
rates' dampening of demand for commercial and residential units 
compounded the construction sector's woes, with production plunging 17.2 
percent in 1994. 
 
The contraction in the agricultural sector was caused by a variety of 
factors.  First, drought weather conditions in the period June-September 
ensured major crop losses to basic grains (corn, beans, rice and 
sorghum) production in bad areas of the country.  Also, the banana 
sector was hurt by the European Union's maintenance of protectionist 
import policies, slack world price conditions, and a crippling five-week 
worker strike at plantations owned by the U.S. fruit multinational, 
Chiquita Brands.  A rebound in the coffee industry and continued strong 
growth of such non-traditional industries as shrimp cultivation and 
melons prevented a stronger downturn in the strategic agricultural 
sector. 
 
The GOH's adoption of tight fiscal policies, which successfully slashed 
the fiscal deficit from 10.6 percent of GDP (in 1993) to 7.3 percent (in 
1994), also imposed additional drag on the economy.  The GOH deficit-
cutting policies were primarily achieved by slashing public investment 
outlays and defense expenditures.  The public sector's contribution to 
GDP dropped a steep 10.9 percent.  The fiscal deficit problem forced the 
Honduran Central Bank to tighten monetary policy as an anti-inflationary 
tool.  This was principally achieved by raising commercial banks' 
reserve requirement which triggered a major increase in commercial bank 
interest rates further slowing consumer and investment demand. 
 
On the plus side, the transport sector, buoyed by the ongoing expansion 
of Central American Common Market trade, posted solid growth of 5.3 
percent.  The financial sector, blessed by deregulated interest rates, 
grew 5.6 percent.  Finally, rising property prices contributed to a 3.5 
percent rise in real estate's contribution to GDP.  The small but 
potentially significant mining industry grew 4.7 percent due to several 
major exploration investments being carried out by U.S. - Canadian and 
British mining interests. 
 
We are predicting a recovery in 1995.  First, while Honduras should 
experience some energy rationing in 1995, the problem will not be as 
severe as in 1995.  The fact that Honduran businesses have invested 
heavily in back-up thermal power makes the private sector far less 
vulnerable to rationing than in 1994.  Also, booming coffee prices and a 
bumper 1994-95 harvest will boost real GDP.  Current projections are for 
1995 coffee exports to more than double to close to USD 400 million.  
The coffee bonanza for the country's 80,000 coffee farms will have a 
positive multiplier effect on the entire economy.  We also project a 
mild recovery in the banana industry from its dismal 1994 performance.  
Finally, foreign investment in Honduras'  maquila industry is again on 
the rise, as U.S. firms seek to gain a windfall from the likely approval 
by the U.S. Congress of NAFTA parity legislation for the Caribbean Basin 
nations.  We project a 4 percent increase in real GDP in 1995. 
 
D.  INFLATION 
 
Honduras' inflation rate climbed from the lowest in Latin America in 
1992 (at 6.5 percent) to 28.9 percent in 1994.  Rigid monetary/fiscal 
policies were decisive factors in controlling inflationary pressures in 
1990-92.  By contrast, an expansion in public sector expenditure levels 
in 1993 and a weak currency led to a doubling of inflation to 13 percent 
on the year. 
 
In 1994, continued monetization of the fiscal deficit, further slides of 
the lempira and the energy crisis' and drought's impact on production 
levels further aggravated inflation.  Inflation (on a point-to-point 
basis) more than doubled to 28.9 percent.  Measured on a average basis, 
food prices led the inflationary prices, also increasim 27.4 percent, 
followed by education (23.5 percent), personal care (21.1 percent), 
housing (18.4 percent), beverages and tobacco (17.3 percent), transport 
(13.3 percent) and clothing (11.5 percent). 
 
Although the GOH adopted austere deficit reduction policies in late 
1994, in the first four months of 1995 inflation has been higher than 
anticipated.  Through April 30, cumulative inflation is more than 13 
percent, exceeding the IMF program target for all of 1995.  In the past 
12 months, as of April 30, 1995, inflation has reached 33.5 percent.  
This is attributable at major cost-push pressures caused by the rise in 
bus fares, gasoline prices and electricity tariffs.  Also, the Honduran 
Central Bank has been unable to sterilize the rapid growth in money 
supply caused by the jump in coffee export receipts. 
 
We expect the impact of the fiscal deficit reduction measures and 
Central Bank open market operations (sale of bonds), aimed at reining in 
money supply, to slow inflation in the second half of 1995.  We are 
currently projecting 1995 inflation of 20-25 percent. 
 
E.  MONEY, CREDIT AND BANKING 
 
In recent years, Honduran bank earnings have been bolstered by a series 
of financial reforms.  Beginning in 1990, the Central Bank began to 
promote more efficient financial intermediation by gradually phasing in 
interest rate deregulation.  Interest rate ceilings were gradually 
removed, and in 1992 the Central Bank moved to a free interest rate 
regime.  Another positive development was the creation of stock 
exchanges in San Pedro Sula (1990) and Tegucigalpa (1993).  These stock 
exchanges have quickly matured into an active market for the trading of 
debt instruments and offer future prospects for the raising of equity 
through the issuance of publicly traded shares.  On the down side, 
Honduran commercial banks have faced steep reserve requirements, which 
in 1994 hovered in the 36-42 percent range.  The onerous reserve 
requirement and rising inflation have kept nominal bank loan rates 
hovering above 30 percent for most of the year.  The Central Bank 
initiated a gradual program to reduce the reserve requirement, currently 
at 36 percent.  In May 1995, the GOH also submitted a financial sector 
reform law for Congressional ratification.  Although watered down 
somewhat during negotiations between the Central Bank and the National 
Association of Honduran Banks (AHIBA),  the law does strengthen the 
regulatory authority and imposes stricter controls on bank lending to 
related companies and bank directors.  IDB disbursement of a USD 65 
million multi-sectoral loan is riding on  Congressional ratification of 
the financial sector reform package. 
 
In 1994, the weak fiscal accounts were reflected in the monetary 
aggregates.  M1, (currency in circulation and demand deposits) grew an 
expansive 36.9 percent.  M2 (M1 and time deposits) grew at a somewhat 
slower pace of 27.6 percent.  Meanwhile net bank credit to the public 
sector was up 19.7 percent, while net credit to the private sector rose 
by 24.7 percent.  These buoyant monetary numbers have been critical 
variables driving up wholesale and consumer prices. 
 
F.  FISCAL OPERATIONS 
 
The significant deterioration of the fiscal accounts in 1993 represents 
the principal threat to macro-economic stability in HOnduras.  The 
fiscal crisis was induced by the adoption of highly expansionary 
expenditure policies during the last year of President Rafael Leonardo 
Callejas' administration.  In 1993, public sector investment nearly 
doubled to 2.5 billion lempiras.  Surging capital account outlays and a 
24 percent increase in current account spending (due to lavish wage 
hikes for public sector employees) ensured a 40 percent rise in total 
expenditures.  The consolidated public sector deficit -- as a percent of 
GDP-- jumped from 4.3 percent in 1992 to 10.6 percent in 1993.  Honduras 
badly missed the IMF program target of cutting the consolidated public 
sector deficit to 3.8 percent of GDP in 1993. 
 
In 1994, the public sector continued to bleed from the massive fiscal 
deficit.  The new government of President Reina, however, was successful 
in reimposing a measure of fiscal discipline by slashing public 
investment.  Overall, in 1994, the fiscal deficit was reduced by 3-4 
percent of GDP to 7.5 percent.  In October 1994, the Honduran Congress 
approved an IMF blessed deficit reduction package that included the 
creation of one percent tax on net assets, the expansion of the income 
tax base on services and the liberalization of the customs exchange rate 
(the exchange rate used to value the payment of import tariff duties).  
In late 1994 and early 1995, petroleum taxes, domestic telephone rates 
and bus fares rose.  On the expediture side, the GOH also committed to 
reducing public sector employment by 10 percent in 1995.  In response to 
the credible GOH effort to cut the deficit, in January 1995 the IMF 
Board of Directors approved the second year of a three-year enhanced 
structural adjustment facility (ESAF) for Honduras and disbursed USD 15 
million in blance of payments support. 
 
So far, as of the first quarter of 1995, the GOH has exceeded IMF 
program revenue targets.  The GOH has also dismissed more than 4,000 
public sector employees.  While program performance has been good, a 
congressionally-mandated one-month increase in public sector wage levels 
will raise spending 70 million lempiras above program ceiling levels.  
The GOH will also need to adopt controversial increases in electricity 
tariff rates in June-July to remain in full compliance with program 
conditionality. 
 
G.  BALANCE OF PAYMENTS SITUATION 
 
Honduran export performance was mixed in 1994, with total merchandise 
exports rising a modest 2.5 percent to USD 866.7 million.  Banana 
exports, Honduras' traditional export mainstay, plummeted from USD 229.1 
million to USD 155 million a 32.3 percent free fall.  The European 
Union's July 1, 1993 adoption of a restrictive banana import regime has 
severely punished this critical industry.  A paralyzing five-week labor 
strike in June-July, 1993 at plantations owned by the U.S. firm Chiquita 
Brands, coupled with unfavorable prices in a glutted U.S. market, 
compounded the decline in volume and value levels. 
 
Fortunately, a major rebound in international coffee prices due to 
large-scale crop losses in Brazil buoyed the coffee industry.  In 1994, 
average coffee export prices jumped 51.7 percent and coffee receipts 
surged 42.6 percent (to USD 177.7 million) despite a slight 6 percent 
drop in export volume.  In 1994, coffee surpassed, for the first time in 
nearly 20 years, bananas as the nation's leading export commodity.  We 
believe that Honduras' comparative advantage ( low cost/high quality) as 
a coffee producer sustained the industry during the dismal 1989-1993 
price era and the country will continue to reap windfall from favorable 
prices in the coming several years.  Preliminary harvest estimates for 
1994-95 suggest major gains in volume and export levels. 
 
The performance of other traditional export commodities was uneven.  
Gains were registered for silver, up 25.7 percent in value terms due to 
major increases in world prices.  Honduras was unable to take advantage 
of rises in lead and zinc prices as a result of declines in production 
levels.  Lead and zinc export values fell 16.7 and 31.3 percent, 
respectively. 
 
Large scale foreign and domestic investment continues to strengthen 
Honduras' seafood industry.  In 1994, shrimp exports, boosted by booming 
international prices caused by production shortfalls in China and 
Ecuador, triggered a 23.6 percent gain in shrimp export values (to USD 
117.7 million).  Local sources report that recent evidence suggests that 
Honduras' cultivated shrimp farms, which account for 50 percent of 
shrimp production, may have been infected with the deadly Taura virus, 
which has devastated Ecuadorian shrimp production in recent years.  
Industry sources tell us that shrimp yields are down 25-50 percent so 
far this year.  The Caribbean-based lobster industry grew by 5.3 percent 
in 1994 to USD 24 million.  Beef exports at USD 38 million were 
virtually unchanged from 1993 levels, but still represent a significant 
export industry. 
 
As designed, the move to a market-based exchange rate system in 1992 
continues to boost many non-traditional export industries.  In 1994, 
these promising sectors grew a combined 11.2 percent to USD 274 million.  
Agricultural related non-traditonal activity was principally driven by 
solid gains in melons, grapefruits and palm oil.  Maquila operations in 
Honduras' large and growing free zone and industrial park projects 
continue to be a major plus for the balance of payments.  Maquila, 
however, is counted as an export in the services account. 
 
In 1994, Honduras' slumping economy ensured a 6.7 percent drop in total 
merchandise imports to USD 1 billion.  The import decline was remarkable 
even with most major categories showing drops of 10 to 12 percent.  
Rising purchases of industrial and personal thermal power generators 
contributed to 1.2 percent increase in petroleum product imports (to USD 
182.7 million).  The generator purchases are also reflected in the 10.1 
percent growth in machinery imports (to USD 197.2 million).  Other major 
import categories were chemical products (down 12.3 percent to USD 103.4 
million), plastics (down 12.3 percent to  USD 72.9 million), and paper 
products (also down 12.3 percent to USD 63.6 million). 
 
Honduras' net balance in services and interest payments was USD 227.4 
million in deficit.  Nonetheless, the services deficit actually shrank 
almost USD 100 million compared to 1993.   
 
With modest export growth outpacing the drops in import levels, 
Honduras' merchandise/services trade deficit fell from USD 525.3 million 
in 1993 to USD 375.4 million in 1994.  The current account deficit, 
which reached a record USD 353.4 million in 1993, fell to a more 
manageable level of USD 215.4.  Current account transfers, mostly donor 
grants, declined slightly to USD 160 million. 
 
Honduras' capital account continues to perform well, recording a hefty 
surplus of USD 208.2 million.  In recent years the capital account has 
been bolstered by a hodgepodge of lower external debt payments - a 
direct function of favorable Paris Club debt reschedulings - and IFI 
disbursements.  In 1994, external debt payments were higher (reaching 
USD 490 million), but this was partially compensated by higher private 
bank financing, principally related to a USD 155 million 936 window loan 
for an AT&T/Siemens 220,000 line telephone project.  Also, new 
international private bank credit lines have been financing Honduras' 
flourishing coffee industry.  Paradoxically, Honduras' capital account 
was also buoyed by an increase in arrears to Paris Club countries.  The 
positive capital account numbers permitted a surplus in the overall 
balance of USD 32.3 million.  Net foreign exchange reserve levels grew 
by USD 44.8 million to USD 110 million. 
 
Honduras' balance of payments has improved in 1995.  First, the ongoing 
coffee boom is projected to increase Honduras' coffee earnings by at 
least USD 200 million in 1995.  The ailing banana sector, although 
continuing to suffer from European protectionism, should recover from 
dismal 1995 levels. The improved energy situation and the Mexican crisis 
should spur greater investments, and lead to expanding exports in the 
prosperous maquila industry.  On the down side, the Taura virus is 
likely to end a six-year boom in the shrimp industry. 
 
Honduras has already received USD 15 million in balance of payments 
support from the IMF.  The IMF program also opened the door to continued 
favorable Paris Club debt rescheduling terms and major Inter-American 
Development Bank and World Bank loans in energy, agricultural and 
industrial sectors.  Honduras is close to concluding agreements with its 
Paris Club creditors this month.  Greater IFI support will compensate 
for continued declines in bilateral U.S. assistance levels. GOH 
maintenance of positive real interest rates will increase short-term 
(private) capital inflows into the banking system.  These factors should 
continue to sustain Honduras' capital account surpluses during 1995. 
 
Overall, we expect the export recovery and increased lending activity by 
the multilateral banks to allow for a major - USD 100 million - increase 
in net reserve levels, a relatively stable lempira, a substantial drop 
in the current account deficit and a hefty surplus in the overall 
balance. 
 
H. THE EXTERNAL DEBT 
 
In recent years, Honduras has benefited from more than USD 500 million 
in debt forgiveness granted by the United States and other creditor 
countries.  However, Honduras has continued to take on a new debt and in 
1995 total external debt obligation rose USD 200 million to USD 3.6 
billion. On the year, debt service (principal and interest) was USD 300 
million, or 37 percent of total exports.  While Honduras has managed to 
remain current on debt service payments to its multilateral creditors, 
there are small but growing areas on bilateral commitments. 
 
I. ECONOMIC REFORMS AND POLICY ISSUES 
 
In the early months following his inauguration in late January 1994, 
President Reina and his economic team proved frustratingly slow in 
recognizing the severity of the crisis and mapping out a cogent strategy 
to save the economy.  Fortunately, by mid-year, GOH economic 
policymakers began to grasp the policy wheel.  In June 1994, the Central 
Bank sharply raised the reserve requirement and established ceilings on 
Central Bank net credit to the public sector -- important anti-
inflationary measures. Later in the month, the Central Bank also adopted 
a foreign exchange auction system effectively moving to a tri-weekly 
crawling peg foreign exchange regime.  These measures helped slow the 
inflationary surge and restored a measure of stability to the volatile 
foreign exchange market. The GOH also implemented draconian expenditure 
reduction measures by freezing most public spending on infrastructure 
projects begun under of the Callejas government (except in the 
telecommunications sector). 
 
In October 1994, the GOH was able to get Congressional ratification for 
an IMF-blessed deficit reduction package.  In November, the GOH 
implemented complementary measures such as higher petroleum prices 
(taxes) and domestic telephone rates.  On December 2, 1994, the IMF and 
the GOH signed a letter-of-intent for a second year of a three-year 
Enhanced Structural Adjustment Facility (ESAF).  The program was 
approved by the IMF Board in late January 1995.  
 
The GOH has been less successful in tackling the energy crisis.  In July 
1994, President Reina replaced the honest but ineffective Jorge del 
Valle as President of the National Electric Company (ENEE) with the 
energetic Chombo Sandoval.  Early on, Sandoval's task was helped by 
heavy rainfall in September-October, which raised water levels at El 
Cajon dam from a precariously low 223 meters (in early September) to 250 
meters.  Also, ENEE engineers were able to install two of three aging 
thermal generators, with close to 40 megawatts of power, donated by 
Mexico.  ENEE also obtained Congressional approval of an energy sub-
sector law that opened the market for private sector investment in this 
sector. 
 
Unfortunately, following more than a year of intensive efforts, ENEE has 
only been able to secure one major energy investment, a 40 megawatt gas-
fueled contract to a U.S. firm.  A 75-megawatt, 15-year contract with 
another foreign energy development firm, ratified by the Honduran 
Congress in October 1994, collapsed when the firm could not deliver on 
the promised financing package.  The GOH's failure to conclude or 
implement these contracts makes electricity rationing highly probable 
beginning in July 1995. 
 
On trade policy, the Reina administration has generally supported 
regional initiatives.  The GOH became a GATT member in April 1994 and 
was a signatory to the Uruguay Round.  The Honduran Congress unanimously 
ratified the Uruguay Round accords and WTO membership in December of 
1995. On investment, President Reina personally intervened to resolved 
the two major American citizen expropiation cases.  The GOH has also 
been supportive in the resolution of 21 of the 78 registered property 
cases. The GOH has also concluded negotiations with the U.S. on a 
Bilateral Investment Treaty (BIT), which was signed on July 1, 1995 at 
the Denver Ministerial.  Substantive progress has also been made to 
conclude an intellectual property rights agreement.  In the intellectual 
property rights area, in May 1995, the GOH submitted to Congress major 
U.S.-backed reforms of their copyright regime. 
 
J. INFRASTRUCTURE 
 
Ports: Honduras has ports on both the Atlantic and Pacific oceans that 
are served by a number of shipping companies that link the country with 
Asia and Europe, as well as the rest of the Western Hemisphere.  The 
northern port of Puerto Cortes, Honduras' pricipal seaport, operates 24 
hours a day and is used also for shipment of goods from El Salvador and 
Nicaragua.  A recently completed project to expand Puerto Cortes will 
provide it with greater dock facilities and cold storage installations. 
Honduras has three  other ports on the Caribbean and one on the Pacific. 
 
Roads and Highways: Honduras has a 14,000 kilometer official road 
network connecting the ports and airports with the secondary cities and 
rural areas of the country.  The country has good surface communication 
with the rest of Central America.  The Ministry of Communication, 
Transportation and Public Works (SECOPT) plans to upgrade approximetely 
2,000 kilometers of secondary roads during the next three years, which 
will improve the connection of small towns and rural farming area to the 
main road system. 
 
Airports:   Four international airports serve the capital Tegucigalpa, 
the commercial center San Pedro Sula, the tourism island of Roatan and 
the coastal city of La Ceiba.  Air freight services are reliable and 
efficient.  Three gateway cities (Houston, Miami, and New Orleans) are 
only 2 1/2 hours (flying time) from Honduras.  Direct flights between 
Honduras and cities in North and Central America are provided by the 
following international airlines: American, Continental, COPA, LACSA, 
IBERIA, and Taca.  Islena Airlines, a domestic air carrier, connects 
Tegucigalpa with the north coast and Bay Islands.  Charter service and 
aircraft rentals (small single-and twin-engine equipment) are available 
from private flying services operating out of Tegucigalpa, San Pedro 
Sula, and La Ceiba. 
 
Electrical generating systems: Honduras is experiencing a severe energy 
crisis caused by rising electricity demand and output shortfalls at the 
country's largest hydroelectric plant. By a Presidential Decree of April 
1994, the National Electric Company (ENEE) has been authorized to engage 
in direct contact negotiations with firms that offer thermal electric 
generating systems.  Over the next two years, we estimate investment in 
this area will reach USD 150 million. 
 
Telecommunications: In 1993, the Honduran Telephone Company (HONDUTEL) 
awarded two contract, valued at USD 155 million, for the installation of 
220,000 telephone lines.  HONDUTEL also awarded a USD 30 million leasing 
arrangement for private cellular telephone services.  The Goverment of 
Honduras expects to privatize HONDUTEL within the next three years. 
 
Construction: Even though the construction sector in Honduras has been 
hard hit by high interest rates, the erection of industrial parks in 
most of the secondary cities has kept this sector from total collapse.  
The demand for residential housing is greatly undersupplied.  The Reina 
goverment has announced plans to implement a program for the 
construction of low cost housing.  The project will be executed in the 
next three years.   
 
K. NATURE OF LOCAL AND THIRD COUNTRY COMPETITION 
 
The U.S. is Honduras' chief trading partner, accounting for about 50 
percent of the country's total exports and imports.  Honduras' other 
leading trading partners include Mexico, Japan, Taiwan, Korea and other 
Central American countries (El Salvador, Guatemala, Costa Rica, and 
Nicaragua).  Traditionally, Hondurans have maintained a preference for 
products "Made in the USA". In general, receptivity to U.S. products and 
services is very high.  There is little competition for U.S. exporters 
from local domestic suppliers, and competition for U.S. exporters from 
third-country suppliers is medium to heavy. 
 
Competition varies on a sector-by-sector basis.  Increasingly, 
developing and emerging countries are challenging U.S. exporters in many 
sectors. Japanese vehicles dominate the new car market, but U.S. 
manufacturers are beginning to make a serious effort to regain ground 
lost in previous years.  U.S. firms still dominate areas such as 
electrical power systems, construction equipment, forestry and 
woodworking equipment, automotive parts & service equipment, 
agricultural machinery and equipment, building products, hotel and 
restaurant equipment, computers & peripherals and software, and 
telecommunications equipment.  However, competition from Asian and 
European firms is growing. 
 
 
 
                   III. POLITICAL ENVIRONMENT 
 
A.   NATURE OF BILATERAL REALTIONSHIP WITH UNITED STATES 
 
Honduras sees the United States as its most important international 
partner by far, and the opinion of the United States is usually 
carefully considered by Honduras.  While Honduras is no longer as 
strategically important to the United States as it was in the 1980's, 
when it served as a base for the Nicaraguan Democratic Resistance 
(Contra), the U.S. sees Honduras as an integral part of our policy to 
promote democracy and stability throughout the region, and the U.S. 
continues to provide Honduras with some USD 35 million a year of 
economic assistance. 
 
B.   MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE 
 
The two most important political issues in Honduras are President Carlos 
Roberto Reina's attempt to address serious, endemic corruption via a 
"moral revolution," and the current economic crisis involving a yawning 
fiscal deficit and a steadily depreciating currency.  While President 
Reina has said he will stay with the free market economics introduced by 
his predecessor, it is possible that under popular pressure generated by 
falling living standards he may take more statist/interventionist 
measures (e.g. exchange rate controls, price freezes, etc.) 
 
C.   SYNOPSIS OF POLITICAL SYSTEM 
 
Honduras has been a democracy since 1982, when the armed forces - who 
had governed the country for most of its history since independence from 
Spain in 1821 - permitted the return of civilian rule.  Since 1982, 
there have been four freely elected presidents:  two from the Liberal 
Party, one from the National Party, and then again one from the Liberal 
party, President Carlos Roberto Reina.  Reina was elected in November 
1993 for a four-year term and took office in January 1994.  Although 
there are four registered political parties, the National and Liberal 
parties together claim the allegiance of about 90 percent of the 
electorate, giving Honduras a de facto two-party system.  While the 
National Party is traditionally regarded as the more conservative of the 
two, there is little real ideological difference between them and the 
U.S. has worked well with both National and Liberal presidents.  In 
addition to the President there is a unicameral Congress whose members 
are elected on the same ballot as the President.  This ensures the 
President of a Congressional majority, but factionalism in Reina's 
Liberal party means that the current Congress is no mere rubber stamp.  
As a result, Reina will have to negotiate with the Congress the economic 
measures he will need to take to address the economic crisis.  The 
Honduran judiciary is weak and riddled with corruption, and often 
incapable of effectively protecting property rights. 
 
 
 
                IV. MARKETING U.S. PRODUCTS AND SERVICES 
 
A.   DISTRIBUTION AND SALES CHANNELS 
 
The Honduran agent/distributor law includes a provision for penalties 
for wrongful termination that discourages exclusive distribution 
agreements.  Representatives and distributors tend to carry rather broad 
lines on a non-exclusive basis, and the number of full service local 
distributors that stock large inventories of parts and equipment is 
limited.  In order to reduce costs, or because local representatives are 
not sufficiently aggressive, many local buyers make direct contacts with 
U.S. suppliers at the factory or warehouse level.  Store owners ofter 
buy goods in small lots from stores, export brokers, or wholesalers in 
the U.S., particularly in Miami, New Orleans, and Houston, the principal 
gateway cities. 
 
In certain sectors such as automobiles, computers, and electric power 
generation equipment, U.S. companies are represented by local firms who 
also represent other foreign competitors.  In other cases, U.S. 
companies are not represented locally.  As a result, U.S. products are 
not aggressively marketed or supported by local representatives and lose 
opportunities in a market that is traditionally receptive to U.S. 
products. 
 
B.  USE OF AGENTS/DISTRIBUTORS; FINDING A PARTNER 
 
While there is a law of agents, representatives and distributors of 
foreign firms in Honduras, foreigners exporting to Honduras are not 
required to sell through an agent or distributor who has been registered 
in the country for a specified period of time.  However, exporters of 
pharmaceuticals, agrochemicals, and animal feeds and medicines, are 
required to register their products before they can be sold in the 
Honduran marketplace.  Pharmaceutical-related products must be 
registered with the Ministry of Public Health and agrochemicals and 
animal feeds and medicines must be registered with the Ministry of 
Natural Resources. 
 
Only Honduran nationals or Honduran legal entities registered with a 
local chamber of commerce and the Ministry of Economy and Commerce may 
represent foreign firms.  The principal-agent relationship is governed 
by the civil and commercial codes.  Principals may not terminate the 
contract without just cause unless they fairly compensate the agent for 
damages suffered. 
 
The U.S. Department of Commerce offers several services that are 
available to U.S. firms interested in finding a partner or distributor 
for their product or service.  The U.S. and Foreign Commercial Service 
(US&FCS) offers free and intensive, one-on-one counseling plus low-cost, 
highly effective programs to help U.S. businesses establish or expand 
their markets.  The Commercial Section of the Embassy can locate 
interested, qualified representatives in potential markets in Honduras 
through its Agent/Distributor Service (ADS).  A U.S. firm may check the 
background and reputation of a prospective partner through the World 
Trader Data Report (WTDR) service.  Scheduling appointments, arranging 
translators and making reservations are available through the Section's 
Gold Key Service (GKS).  ADSs, WTDRs, and other valuable services are 
available for a nominal fee through the District Offices of the US&FCS 
located in 68 U.S. cities. 
 
C.   FRANCHISING 
 
In recent years the number of U.S. franchises operating in Honduras has 
grown rapidly.  There are about 20 U.S. firms now operating in Honduras 
under franchising agreements. Most of these firms are fast-food 
restaurants. The Commercial Section has received an increasing number of 
requests about U.S. franchises.  This is an area well worth exploring by 
interested U.S. firms.  Regional stability and the growth in investor 
confidence have contributed directly to the increase in the availability 
of U.S. franchises.  On May 29, 1992, the Honduran Congress passed a new 
investment law that is increasingly responsive to foreign investors' 
needs.  Among other things, the new investment law provides for national 
treatment for most foreign investment, guaranteeing the right to 
foreigners to freely establish, acquire, and dispose of interest in 
business enterprises within constitutional bounds.   
 
D.   DIRECT MARKETING 
 
This method of marketing is still new in the country. This is mainly 
because telecommunications and mail delivery infrastructures are not 
well developed for this type of marketing.  However, there is a limited 
amount of direct marketing by television.  Direct marketing in Honduras 
has been developed moderately through door-to-door sales (e.g. Avon, 
Amway and Books). 
 
E.   JOINT VENTURES/LICENSING 
 
The most promising opportunities are offered to joint venture 
operations.  The 1992 investment law provides that, with few exceptions, 
there are no limits on the percentage of capital which can be owned by a 
foreigner.  Thus, foreign invested firms may be wholly owned or joint 
ventures.  Corporations organized under Honduran law can take the 
following forms: Corporation (Sociedad Anonima or Sociedad Anonima de 
Capital Variable).  Corporations can buy back their own stock under a 
limited partnership (Sociedad de Responsabilidad Limitada). 
 
The Commercial Section regularly reports to the Department of Commerce 
Honduran firms interested in pursuing joint ventures.  In recent months, 
there has been an increase in firms interested in joint venture 
partners.  The licensing process usually takes place between the 
interested parties without need for help from the Commercial Section.  
The use of licenses of U.S. firms is legally established in a contract 
signed by both parties and is governed by the Honduran Commercial Code. 
 
The constitution of Honduras requires that all foreign investment must 
complement and not substitute for national investment.  In certain types 
of industries, majority Honduran ownership is required (see section VII. 
Investment Climate, Openness to Foreign Investment).  There are also 
limits on the amount of land a single corporation may own.  Foreigners 
are also barred from ownership of small businesses with a capital 
requirement of less than 150,000 Lempiras (USD 18,000).  Licensing of 
foreigners to practice law, medicine, engineering and other professions 
is tightly regulated by national professional organizations. 
 
Except for foreign currency earned by companies operating in free-trade 
zones and industrial parks, Honduran law requires that all foreign 
exchange earnings on exports from Honduras be repatriated.  However, the 
progressive liberalization of Honduras' foreign exchange regime now 
makes it easier for companies operating in the country to remit 
dividends and royalties, return capital overseas, and make payments on 
foreign debt.  Foreign exchange authorizations by the Central Bank have 
been eliminated, and foreign debt authorizations now take less than 48 
hours to obtain.  Remittances of dividends and royalties must still be 
approved by the Central Bank, but the approval process now only takes 
around one month.  Although foreign exchange regulations have 
liberalized considerably, businesses should still be aware of foreign 
exchange shortages as the main constraint to repatriating in-country 
earnings. 
 
Taxation is an important issue to consider when investing in Honduras.  
The corporate tax rate is 15 percent on the first LPS. 100,000 of 
taxable income and 35 percent on any income above that amount.  Income 
tax on amounts between LPS 500,000 and LPS. 1 million is assessed a 10 
percent surcharge while amounts over LPS. 1 million are charged a 15 
percent surcharge.  Except for firms operating in the industrial parks, 
located at the free tourism zones (ZOLT) or under the Temporary Import 
Regime, income tax is payable on income derived from operations within 
Honduras. 
 
Income on profits obtained by foreign companies through operations of 
branches, subsidiaries, or legal representatives in Honduras is taxed at 
35 percent.  A 15 percent tax is assessed on corporate dividends and 
royalties on patents and trademarks.  Capital gains are taxed as normal 
income while capital losses can be used only to offset capital gains in 
the same period. 
 
Personal income tax is applied on a progressive scale ranging from zero 
to 40 percent.  The highest rate is applied to those earning more than 
LPS. 1 million.  Nonresident aliens are only required to pay for income 
derived from within Honduras.  Interest, dividends, rents, and royalties 
are subject to a five, 15, 30, and 35 percent tax, respectively.  A tax 
surcharge is also levied at the same rate as the corporate income tax. 
 
There is a sales tax of seven percent on most goods, five percent for 
new cars, and 10 percent for alcohol, cigarettes and tobacco products.  
A one percent tax is applied on the FOB value of all articles exported.  
Honduras also collects excise, property, and municipal taxes.  Exports 
of coffee, bananas, seafood, and beef are under a special tax structure. 
 
As of early 1994, there is a one percent tax on net assets in Honduras.  
This tax applies to companies whose capital is greater than Lps. 
750,000.  However, the income tax paid by these companies is credited 
against the net assets tax and many companies do not have any additional 
liability.   
 
Apart from the Tax Information Exchange Agreement (TIEA), signed between 
the United States Government and the Government of Honduras in 1991, 
there are no tax treaties between the U.S. and Honduras. 
 
F.   STEPS TO ESTABLISHING AN OFFICE 
 
The U.S. Embassy recommends that all U.S. businessmen interested in 
establishing an office in Honduras first contact the District Office of 
the U.S. Department of Commerce.  These offices are located in 68 cities 
throughout the United States.  We also strongly suggest that all U.S. 
businessmen make contact with the Commercial Section of the U.S. Embassy 
for counseling and advice.  In addition to the general information 
provided by commercial officers and specialists, the Commercial Section 
maintains a number of lists and directories of Honduran trade contacts 
and professionals, including business lawyers. 
 
Locating and securing a suitable local partner is one of the most 
important steps in establishing a base of operations in Honduras.  When 
doing so, U.S. business representatives should keep in mind that 
contracts and agreements are binding and fall under the jurisdiction of 
local laws. 
 
To establish a local corporation, interested parties must secure the 
services of an attorney.  Attorneys will guide investors through the 
procedures of incorporation, registration, and local taxation.  In 
addition, there are several other notarial acts that must be carried out 
before establishing a business that require the services of an attorney. 
 
In recent years the time to establish an office in Honduras has been 
reduced considerably.  With the exception of a few strategic areas that 
require special permission from the government, an office can be set up 
with a few days.  The Honduran government has a special One Stop Shop in 
the Ministry of Economy to deal with investors.  Through this department 
an office can be set up in a matter of hours.  (For further information 
see Section VII. of the Investment Climate Statement, Openness to 
Foreign Investment) 
 
G.   SELLING FACTORS/TECHNIQUES 
 
When selling in Honduras, U.S. exporters must take into account that, 
for marketing purposes, the country is divided into two regions; the 
North Coast, including San Pedro Sula, the country's commercial and 
industrial capital; and the Central region, where Tegucigalpa, the 
political capital, is located. 
 
Large importers and distributors in Honduras usually have offices in 
both cities to take advantage of market opportunities.  In other 
instances, large international firms have granted exclusive distributor 
rights, i.e., one exclusive distributor in San Pedro Sula and another in 
Tegucigalpa.  These types of arrangements are acceptable under current 
Honduran laws. 
 
Because of high interest rates, importers/distributors, as well as 
Government of Honduras agencies, often have problems in securing the 
funds to purchase imports.  U.S. exporters that offer attractive 
financing terms on sales to Honduran traders have the best chances of 
gaining market share.  This is particularly true for large-scale 
projects.  International firms, however, must exercise due caution when 
granting credit to Honduran trading partners. 
 
As in most Latin American countries, a good personal relationship with 
prospective customers is basic to penetrating the market.  While it may 
take a little longer than usual to consummate a business relationship, 
the investment in time usually pays off in long-lasting and mutually 
profitable alliances.  Honduran businessmen seem to seriously take the 
local expression that "deals are consummated at the restaurant table and 
signed at the office." 
 
H. ADVERTISING AND TRADE PROMOTION - LISTING OF MAJOR NEWSPAPERS AND 
BUSINESS JOURNALS 
 
Tegucigalpa Based Newspapers 
 
Name            Language/Distribution     Telephone         Fax 
 
El Heraldo         Spanish/Daily        (504) 36-6000      36-6284 
La Tribuna         Spanish/Daily        (504) 33-1283      33-1188 
El Periodico       Spanish/Daily        (504) 34-3086      34-3090 
Honduras This Week English/Weekly       (504) 31-5821      32-2300 
 
 
San Pedro Sula Based Newspapers 
 
Name            Language/Distribution   Telephone         Fax 
 
La Prensa         Spanish/Daily         (504) 53-3101      53-4020 
El Tiempo         Spanish/Daily         (504) 53-3388      53-4590 
El Nuevo Dia      Spanish/Daily         (504) 38-0445      36-5781 
 
 
I.   PRICING PRODUCTS 
 
There are no price controls, except on certain basic food items and 
cement.  The price of gasoline, diesel and liquid propane gas is also 
controlled by the government.  There is a seven (7) percent sales tax on 
most goods. 
 
J.   SALES SERVICE/CUSTOMER SUPPORT 
 
Firms that sell equipment, machines or electric appliances should 
provide effective customer support.  The availability of adequate 
service and support frequently makes the difference in decisions on 
purchases, especially by the government. 
 
K.   SELLING TO THE GOVERNMENT 
 
To participate in public tenders, foreign firms are required to act 
through a local agent.  By law, local agency firms must be at least 51 
percent Honduran owned, unless a government procurement is classified as 
an emergency.  All purchases by government ministries or autonomous 
institutions over LPS. 200,000 must be made through a public bid.  The 
government publishes a tender in the major newspapers of Honduras and 
sends written notices to the embassies.  Bid evaluations cover cost, 
delivery time, reputation of the firm, technical support, performance in 
previous contracts and specific aspects related to each particular bid.  
Interested U.S. businesses can access many of these bids through the 
Trade Opportunities Program (TOP), the National Trade Data Bank (NTDB), 
and the Electronic Bulletin Board (EBB), which are product services of 
the U.S. Department of Commerce. 
 
L.   PROTECTING YOUR PRODUCT FROM INTELLECTUAL PROPERTY RIGHTS (IPR) 
INFRINGEMENT 
 
Although Honduras was pended in the 1992 and 1993 Generalized System of 
Preferences (GSP) review under the IPR criteria, the Government of 
Honduras has taken recent actions to substantially improve the IPR 
climate.  Traditionally, well-known trademarks have been routinely 
infringed, computer software piracy and audio and video tape bootlegging 
have been common, patents were difficult to enforce and the protection 
afforded them under local law did not approach international standards.  
As part of the GSP review process, Honduras has committed to implement 
the comprehensive IPR legislation passed in 1993.  The government 
complied with the legislation's requirements by creating in 1994 an 
intellectual property rights office in the Ministry of Economy to 
implement and enforce its copyright, trademark and patent laws.  
Important amendments to the country's copyright law are now being 
considered by the Honduran Congress.  As a signatory to the Uruguay 
Round agreements and member of the World Trade Organization (WTO), 
Honduras has accepted the new TRIPS standard.  In addition, Honduras is 
expected to conclude a bilateral IPR agreement with the U.S. in 1995.  
Honduras is also expected to become a signatory to the Central  
 
American Convention on Industrial Property. 
 
To be protected under Honduran law, patents and trademarks must be 
registered with the Ministry of Economy and Commerce.  The life of a 
patent ranges from 10 to 20 years depending on the importance of the 
invention.  Trademarks are valid up to 10 years from the registration 
date.  "Notorious marks" are protected under the Pan-American Convention 
(1917) of which Honduras is a party.  Illegal registration of a 
notorious mark, however, must be contested in court if the original 
holder is to exercise the rights.  (Also see Section VII. G.) 
 
M.   NEED FOR A LOCAL ATTORNEY 
 
The selection of a competent and reliable local attorney is an important 
first step to doing business in Honduras.  The advice and counsel of a 
local attorney are essential to opening a business, preparing contracts 
and understanding the legal system.  The Commercial Section maintains a 
list of attorneys that have experience assisting U.S. firms.  The list 
is regularly updated and screened by several U.S. Government agencies. 
 
 
 
         V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT 
 
A.   MATRIX OF BEST PROSPECTS FOR INDUSTRY SECTOR EXPORTS 
 
 1.   ELECTRICAL POWER SYSTEMS 
 2.   AUTOMOTIVE PARTS AND SERVICE EQUIPMENT 
 3.   MEDICAL EQUIPMENT 
 4.   AGRICULTURAL MACHINERY AND EQUIPMENT 
 5.   BUILDING PRODUCTS 
     
 
B.   BEST PROSPECTS FOR AGRICULTURAL PRODUCTS 
 
   1.  CORN 
   2.  RICE (MILLED) 
   3.  WHEAT 
   4.  SOYBEAN MEAL 
   5.  CONSUMER-READY PRODUCTS 
 
A.   Rank of Sector:   1 
 
B.   Name of Sector: ELECTRICAL POWER SYSTEMS 
C.   Three-letter ITA Industry Sector Code: EPS 
 
                                  1993         1994       1995* 
                                        (U.S. Dollars) 
 
D.   Total Market Size            10,213.00   50,500.00  65,300.00 
E.   Total Local Production            0.00        0.00       0.00 
F.   Total Exports                     0.00        0.00       0.00 
G.   Total Imports                10,213.00   50,500.00  65,300.00 
H.   Imports from the U.S.         6,563.90   35,600.00  45,900.00 
I.   Exchange Rate (Lps-USD 1.00)      6.70        8.25      10.00 
 
    *1995 Statistics are unofficial estimates              
 
J. Best Sales Prospects: 
   Hydraulic Turbines, (not over 1000 Kva) 
   Parts of gas turbines 
   Transformers 
   Transformers (16 - 50 Kva) 
   Parts of transformers 
   Insulated electric conductors 
   Parts for steam and other vapor turbines 
   Electric rotary converters 
   Other rectifiers adn rectifying apparatus 
   Other apparatus for protecting    
   Electrical connectors 
 
Comments: 
 
Honduras is experiencing a severe electric energy crisis because of 
chronic difficulties at its main source of energy, the Francisco Morazan 
Hydroelectric Project.  The National Electric Power Company (ENEE) is in 
the process of refurbishing several diesel and gas powered electric 
generation plants and is to privatize generation of electricity in the 
future.   
 
 
A.   Rank of Sector:   2 
B.   Name of Sector:      AUTOMOTIVE PARTS AND SERVICE EQUIPMENT 
C.   Three-letter ITA Industry Sector Code:   APS 
 
                                1993           1994           1995* 
                                          (US Dollars) 
 
D.   Total Market Size        46,492.30     53,466.20      61,486.10 
E.   Total Local Production        0.00          0.00           0.00 
F.   Total Exports                 0.00          0.00           0.00 
G.   Total Imports            46,492.30     53,466.20      61,486.10 
H.   Imports from the U.S.    22,817.80     26,240.50      30,176.50 
I.   Exchange Rate (Lps-USD 1)     6.70          8.35          10.00 
 
   *1995 Statistics are unofficial estimates 
 
J.   Best Sales Prospects 
 
   Engines and parts for Japanese made light vehicles,  
   including manufacutred specifically for the U.S. market. 
   Engines and parts for American-made heavy-duty and passenger 
   transportation equipment. 
   Engines and parts for sport utility and 4X4 vehicles. 
   Tires for all types of motor vehicles. 
   Bearings for all purposes in motor vehicles. 
   Electrical parts for motor vehicles. 
 
 
Comments: 
 
An aging car population, as a result of economic hardship and limited 
consumer purchasing power, continues to fuel demand for automotive parts 
and accessories in Honduras.  Local importers and distributors of these 
products prefer to buy them directly from U.S. based suppliers.  The 
automotive parts aftermarket is one of the most promising subsectors. 
 
 
A.   Rank of Sector:   3 
B.   Name of Sector:   MEDICAL EQUIPMENT 
C.   Three-letter ITA Industry Sector Code:   MED 
 
                                    1993        1994         1995* 
                                            (US Dollars) 
 
D.   Total Market Size            6,313.60    7,197.50     7,917.30 
E.   Total Local Production           0.00        0.00         0.00 
F.   Total Exports                    0.00        0.00         0.00 
G.   Total Imports                6,313.60    7,197.50     7,917.30 
H.   Imports from the U.S.        2,914.00    3,351.10     3,686.20 
I.   Exchange Rate (Lps-USD 1)        6.70        8.25        10.00 
 
   *1995 Statistics are unofficial estimates 
 
J. Best Sales Prospects 
   Medical disposables, especially needles, syringes,  
   examination gloves, infusion sets, catheters, collection bags  
   for blood, urine, etc. 
   X-ray equipment 
   Fluoroscopes 
   Mammographs 
   Cardiac monitors 
   Ultrasonic imaging equipment 
   Spectrophotometers 
   Microscopes 
   Surgical tables 
   Surgical lights 
 
 
Comments: 
 
The main forces driving the local market for medical equipment include 
the Government of Honduras' regional hospital program and the 
modernization of private hospitals. 
 
A.   Rank of Sector:   4 
B.   Name of Sector:      AGRICULTURAL MACHINERY AND EQUIPMENT 
C.   Three-letter ITA Industry Sector Code:   AGM 
 
                                   1993          1994          1995* 
                              (USD 000'S) 
 
D.   Total Market Size           23,945.6      25,603.30     27,356.4 
E.   Total Local Production       1,850.0       1,961.00      2,059.1 
F.   Total Exports                    0.0           0.00          0.0 
G.   Total Imports               22,095.6      23,642.30     25,297.3 
H.   Imports from the U.S.        9,601.1      10,273.10     10,992.2 
I.   Exchange Rate (Lps-USD 1)        6.7           8.35         10.0 
 
* 1995 Statistics are unofficial estimates 
 
J. Best Sales Prospects: 
 
   Disc Plows 
   Disc Harrows 
   Row Crop Unit Planters 
   Harvesting Machines for Corn, Rice and Sorgum 
   Farm Tractors 
 
 
Comments: 
 
Honduras continues to strengthen its position as the main producer of 
agricultural basic grains in the Central American region.  The 
Government of Honduras is placing strong emphasis on basic grains 
production and has agreed on a program of price incentives with the 
largest agricultural operations in the country for that purpose. 
 
A.  Rank of Sector:   5 
B.  Name of Sector:      BUILDING PRODUCTS 
C.  Three-letter ITA Industry Sector Code:   BLD 
 
                                  1993      1994            1995* 
                                            (US Dollars) 
 
D.   Total Market Size          248,614.2    226,893.70    271,173.2 
E.   Total Local Production     227,675.3    204,907.80    245,889.4 
F.   Total Exports                    0.0          0.00          0.0 
G.   Total Imports               20,938.9     21,985.90     25,283.8 
H.   Imports from the U.S.        8,373.6      8,792.30     10,111.2 
I.   Exchange Rate (Lps-USD 1)        6.7          8.35         10.0 
 
   * 1995 statistics are unofficial estimates 
 
J. Best Sales Prospects 
 
   Ceramic bathroom fixtures 
   Glass bricks and tiles 
   Aluminum doors, windows and door frames 
   Door locks 
   Door closures 
 
 
Comments: 
 
Construction activity in Honduras is expected to accelerate by the 
second half of 1995.  This growth will be driven by an ambitious low-
cost housing program that will be executed by the Reina administration, 
including the construction of about 20 thousand new homes for low-income 
families. 
 
 
A.   Rank:   n/a 
B.   Name of Sector:   Corn 
C.   ITA or PS&D Code:   0440000 
 
                                  1993           1994       1995* 
                                               (000 MT)    
 
D.   Total Market Size         615      645      680 
E.   Total Local Production    589      518      615 
F.   Total Exports               3        3        3 
G.   Total Imports              36      128       65 
H.   Imports from the U.S.      36      128       65 
 
   *1995 statistics are unofficial estimates 
 
Comments: 
 
The above data are on a July/June basis.  The indicator years specified 
above correspond to the first year of the split marketing year. 
 
Corn is the grain produced on the largest scale in Honduras.  Lack of 
affordable credit for grain farming, poor seed, several consecutive 
years of weather anomalies, and other factors have prevented Honduras 
from becoming self-sufficient, however.  Given the fact that Honduras 
produces mostly white corn which is utilized mainly for human 
consumption, imports of yellow corn from the United States have been 
necessary to fuel a growing feed demand.  However, U.S. imports have 
declined in recent years at the expense of European and Canadian feed 
grade wheat. 
 
   Nonetheless, prospects for U.S. corn remain high in the Honduran 
market.  First of all, U.S. corn should eventually regain some market 
share from European and Canadian feed grade wheat.  Moreover, a rather 
aggressive production incentive plan put forth by the Honduran 
Government in 1995 is expected to yield little success.  A poor start to 
the 1995 rainy season has already resulted in some plantings to be lost.  
Therefore, imports ranging from 50,000 to 100,000 (depending on the 
outcome of the local crop) may be needed during the 1995/96 year.  
Similar import levels can also be expected in upcoming years. 
 
 
A.   Rank:   n/a 
B.   Name of Sector:   Rice (Milled) 
C.   ITA or PS&D Code:   0422110 
 
                                  1993      1994      1995 
                                          (000 MT) 
 
D.   Total Market Size            59        60        63 
E.   Total Local Production       30        29        33 
F.   Total Exports                 0         0         0 
G.   Total Imports                33        25        29 
H.   Imports from the U.S.         7        15        29 
 
Comments: 
 
The above data are on a July/June basis.  The indicator years specified 
above correspond to the first year of the split marketing year. 
 
Of all the grains produced in Honduras, rice is the one produced on the 
smallest scale.   Chronic production problems have not allowed domestic 
rice farmers to increase their output and keep up with demand.  As a 
result, rice imports have become a necessity in Honduras.  Historically, 
all rice imports have been sourced from the United States.  However, in 
recent years imports of inexpensive Vietnamese rice have displaced U.S. 
rice sales in Honduras.  In 1994 Honduras, together with its Central 
American neighbors, agreed to ban the importation of rice from 
Southeastern Asia for plant health reasons.  This ban, coupled with a 
more relaxed import policy for rice from other sources, should pave the 
way for increased exports of U.S. rice to Honduras. 
 
 
A.   Rank:   n/a 
B.   Name of Sector:   Wheat 
C.   ITA or PS&D Code:   0410000 
 
                                  1993      1994      1995 
                                          (000 MT) 
 
D.   Total Market Size            219       236        205 
E.   Total Local Production        0         0          0  
F.   Total Exports                 0         0          0  
G.   Total Imports                256       249        200 
H.   Imports from the U.S.        167       152        170 
 
Comments: 
    
The above data are on a July/June basis.  The indicator years specified 
above correspond to the first year of the split marketing year. 
 
Because its land and climate characteristics are unsuitable for large 
scale wheat farming, Honduras does not produce wheat in any significant 
quantities.  Therefore, Honduras depends strictly on imports to fill its 
growing wheat demand.  Historically, Honduras has filled virtually all 
of its wheat needs with U.S. wheat.  During calendar year 1994, Honduras 
imported a record high 145,734 MT of U.S. wheat worth US$21.9 million.  
The PL-480 program, USDA's Export Enhancement Program (EEP), and 
commercial sales have been the main vehicles of U.S. imports in recent 
years.  Traditionally only a small amount of wheat is imported from 
other sources and it is mostly in the form of donations. 
 
However, commercial imports of feed grade wheat from Europe and Canada 
grew considerably during 1993 and 1994.  These imports are partly 
responsible for the rather large surge in total market size during 
1993/94 and 1994/95.  While consumption of feed grade wheat is 
eventually expected to decline (it is largely a temporary phenomenon 
motivated by prices of this wheat relative to corn), human consumption 
is still expected to remain on the upswing.  Consequently, the Honduran 
wheat market should continue to provide excellent opportunities for U.S. 
suppliers.    
 
 
A.   Rank:   n/a 
B.   Name of Sector:   Meal, Soybean 
C.   ITA or PS&D Code:   0813100 
 
                                  1993      1994      1995 
                                           (000 MT) 
 
D.   Total Market Size            44        46        48 
E.   Total Local Production        1         1         1 
F.   Total Exports                 0         0         0 
G.   Total Imports                43        45        47 
H.   Imports from the U.S.        43        45        47 
 
Comments: 
 
The above data are on an October/September basis.  The indicator years 
specified above correspond to the first year of the split marketing 
year. 
 
Rapidly growing poultry, shrimp, and swine sectors in Honduras have 
triggered a growing demand for soybean meal in recent years.  
Traditionally, Honduras has filled virtually all of its soybean meal 
demand with U.S. product.  Domestic production is negligible and is not 
likely to increase significantly in the near future.  Even though 
production problems in both the poultry and shrimp sectors resulted in a 
temporary decline in feed demand during 1994, expectations of renewed 
growth in the poultry sector and continued expansion of swine operations 
lead to a positive outlook for soybean meal demand in the foreseeable 
future.  
 
 
A.   Rank:   n/a 
B.   Name of Sector:   Consumer-Ready Products 
C.   ITA or PS&D Code:   n/a 
 
 
                                  1994      1995      1996 
                                         (USD mill.) 
 
D.   Total Market Size            n/a       n/a       n/a 
E.   Total Local Production       n/a       n/a       n/a 
F.   Total Exports                n/a       n/a       n/a 
G.   Total Imports                50        53        56  
H.   Imports from the U.S.        19        21        24 
 
 
Comments: 
 
The above data are on a calendar year basis. 
 
The former image of Honduras as a limited market for consumer-ready 
products is changing fast.  In fact, imports of consumer-ready products 
have soared in recent years, reaching an estimated US$ 50 million in 
1994.  Rapid development in the food distribution system, close 
proximity to the United States, ample port facilities, commitment toward 
trade liberalization, and strong business and social ties with the 
United States, make Honduras an excellent market for U.S. consumer-ready 
products. 
 
During 1994 Honduras imported US$19.4 million in consumer-ready products 
from the United States, just shy of the record high US$19.6 million 
imported during 1993.  Despite a serious economic recession during 1994, 
Honduras established new highs in its imports of U.S. snack foods, red 
meat (prepared/preserved), eggs & egg products, fruit and vegetable 
juices, wine & beer, and pet food.  In fact, over the past three years 
Honduras has established record import levels from the United States in 
12 of 16 sub-categories of consumer-ready products. 
 
Domestically and regionally produced breakfast cereals, snacks, canned 
goods, juices and beers may offer a significant degree of competition.  
Nonetheless, U.S. consumer-ready products enjoy a significant edge in 
Central America.  Virtually all of the middle-income and wealthy 
consumers in the area have been to the United States.  They know the 
quality of U.S. products and they are familiar with U.S. brands.  
Moreover, many Hondurans have access to U.S. cable TV, which helps 
influence the purchasing habits and diet of many consumers. 
 
 
 
               VI.  TRADE REGULATIONS AND STANDARDS 
 
A.   TARIFFS AND IMPORT TAXES 
 
Honduras' customs administrative procedures are burdensome.  There are 
extensive documentary requirements and red tape involving the payment of 
import duties, selective consumption taxes, consular fees and warehouse 
levies.  The duty assessed by the Honduran government at the time of 
customs clearance ranges between 5 to 20 percent for most items.  
Sensitive items such as automobiles will be assessed a higher rate, up 
to a 35 percent ceiling.  Additionally, in order to comply with the 
General Agreement on Tariffs and Trade (GATT) adhesion requirements, the 
administrative customs service has been reduced from 5 to 3 percent, and 
is expected to be reduced to 1.5 percent before December 31, 1995. 
 
B.   CUSTOMS VALUATION 
 
As part of the Government's economic structural adjustments, the customs 
valuation rate (FVA) has been liberalized.  The current FVA rate is 
applied according to the value or base price established in the Central 
Bank's foreign exchange auction system. 
 
C.   IMPORT LICENSES 
 
In the bilateral negotiations on Honduras' accession to GATT, the 
Honduran Government committed to using GATT consistent measures to 
protect basic grains and poultry.  Nonetheless, although all import 
licensing requirements have been eliminated, Honduras has an onerous 
phyto-sanitary requirement system that limits market access to U.S. 
agricultural products such as chicken parts, rice and corn.  In 
addition, a price band mechanism for yellow corn, sorghum, rice and 
soybeans has been in place since August 1992.  Imports entering with 
values within the defined band are assessed a 20 percent tariff.  
Imports entering with prices above the band are assessed lower duties, 
according to a predetermined schedule, and those imports priced below 
the band are assessed a higher tariff.   
 
D.   EXPORT CONTROLS 
 
There is a one percent export tax on the FOB value of goods exported 
from Honduras, although certain exceptions exist.  In May 1994 the 
Government of Honduras abolished a variable levy of seven to thirteen 
percent of their value on bananas exported from new or refurbished 
banana plantations. 
 
E.   IMPORT/EXPORT DOCUMENTATION 
 
Documents required for Import/export: 
   -Commercial Invoice 
   -Bill of Lading (for ocean or surface freight) 
   -Airway Bill (for air freight) 
   -Certificate of Origin or Certificate of Title for vehicles 
   -Honduras Consular Legalization of the Commercial Invoice and  
    Bill of Lading or Airway Bill or a Consular Invoice 
   -Phyto-Sanitary Certificate (where appropriate) 
 
By law, no import permits are required and no quotas are imposed.  
However, all commercial shipments to Honduras must be legalized by a 
consulate of Honduras.  The issuing consulate requires the legalization 
of both the commercial invoice and the bill of lading or airway bill.  A 
company must submit, in Spanish, the original commercial invoice plus 3 
copies that include a detailed description of the items to be exported 
including: 
 
   -The name of the vessel 
   -Sailing date 
   -Names of the departure and final destination ports 
   -Gross and net weight in kilograms 
   -Country of origin 
 
For ocean freight or surface freight, the original bill of lading must 
also be submitted in Spanish along with 3 copies.  For air freight, the 
original airway bill must also be submitted in Spanish along with 3 
copies.  A company may request a Consular Invoice instead of the 
legalization of the commercial invoice and the bill of lading or airway 
bill.   
 
Documents may be legalized in the following Honduran consulates:  
Baltimore, Houston, Los Angeles, New York, and Miami.  There is a 
nominal variable fee for the legalization based on the FOB value; and 
expedited service is available for an additional fee.  The Honduran 
Government insists that phyto-sanitary permits be obtained for imported 
foodstuffs.  All commercial imports must also be accompanied by proof 
that the dollars used to purchase them were acquired from the Honduran 
commercial banking system. 
 
Honduran law requires all exporters (except for free trade zone or 
export processing zone exporters) to inform the Central Bank, in 
advance, about the quantity, value, and destination of the goods to be 
exported, as well as the probable date of export and the value and 
currency of anticipated export revenues. 
 
F.   TEMPORARY ENTRY 
 
The temporary import law (RIT), enacted in 1984, allows exporters to 
bring raw materials and capital equipment into Honduran territory exempt 
from customs duties and consular fees -- as long as the product is to be 
exported outside of Central America.  This law also provides a 10 year 
tax holiday on profits from these exports under certain conditions. 
 
G.   LABELING, MARKING REQUIREMENTS 
 
Honduran law requires that all processed food products be labeled in 
Spanish (or if written in a foreign language, accompanied by the 
appropriate translation) and registered with the Ministry of Health.  
The following information should be included. 
 
   -Product name and origin 
   -List of ingredients 
   -Batch identification 
   -Expiration date 
   -Net content 
   -Sanitary registration number 
 
As a result of the Government's implementation of the new Health Code 
and sanitary regulations, these requirements are strictly enforced at 
the present time. 
 
H.   PROHIBITED IMPORTS 
 
The Honduran Government forbids the import of items that compete with 
certain domestic industries.  These protected industries vary over time, 
but at present include cement and sugar and rice from southeastern Asia.  
Import restrictions are also imposed on firearms and ammunitions, 
pornographic material and narcotics. 
 
I.   STANDARDS (E.G. ISO 9000 USAGE) 
 
The Honduran Government does not follow these standards.  Nevertheless, 
the Government has requested project assistance from the Inter-American 
Development Bank (IDB) in order to establish regulations for the 
creation of technical norms. 
 
J.   FREE TRADE ZONES/WAREHOUSES 
 
A company that locates in a free trade zone, industrial park or export 
processing zone (ZIP) is exempt from payment of import duties on goods 
and capital equipment, charges, surcharges, selective consumption taxes, 
and sales taxes.  In addition, the production and sale of goods within 
these areas are exempt from Honduran and municipal taxes.  Firms 
operating in these zones are exempt from income tax for 20 years and 
municipal taxes for 10 years, and there are no controls or restrictions 
over the use of foreign exchange or the repatriation of capital profits.  
The movement of imported components and exported products is handled 
with a minimum of paperwork and is normally done within hours.   
 
Privately-owned Tourism Zones (ZOLT) may be established to promote the 
tourism industry development in Honduras.  Legislation covering ZOLTs 
allows the free importation of equipment, supplies and transportation 
vehicles that will exclusively benefit the ZOLT. 
 
K.   SPECIAL IMPORT PROVISIONS 
 
There are no special import provisions aside from those mentioned above. 
 
L.   MEMBERSHIP IN FREE TRADE ARRANGEMENTS 
 
Honduras is a member of the Central American Common Market (CACM), which 
also includes Costa Rica, El Salvador, Nicaragua, and Guatemala.  
Panama, although not a full member of the CACM, has participated in 
activities. This group is currently negotiating free trade agreements 
with Mexico, Venezuela, and Colombia. 
 
Honduras benefits from two preferential trade arrangements with the 
United States.  Special export arrangements have been established 
through the Caribbean Basin Initiative (CBI I & II) and the Generalized 
System of Preferences (GSP).  Both of these programs provide unilateral 
and temporary duty-free trade preferences to designated countries, 
including Honduras, by the United States. 
 
Recently, the U.S. Government proposed new legislation that would 
enhance the CBI program, mainly through the passage of the "Caribbean 
Basin Trade Security Act".  This bill would provide treatment equivalent 
for Caribbean and Central American countries to that being provided to 
similar Mexican goods under NAFTA.  The products that would be subject 
to bilateral agreements include textiles and apparel, footwear, 
petroleum and petroleum products, canned tuna, handbags, luggage, flat 
goods, work gloves and leather-wearing apparel.  The bill is currently 
under consideration by the U.S. Congress.  The expectation is that 
countries will finalize the negotiations for accession to NAFTA or an 
individual free trade agreement with the U.S. by the end of the ten year 
duration of parity benefits.  The proposed legislation provides for the 
revocation of benefits if certain criteria, including intellectual 
property, investment and worker rights protection, are not met. 
 
 
 
                      VII.  INVESTMENT CLIMATE 
 
A.   OPENNESS TO FOREIGN INVESTMENT 
 
Honduras welcomes foreign investors, and can offer them a range of 
benefits.  The ratification of the 1992 investment law, existence of 
free trade zones and reduction of trade barriers have made Honduras 
increasingly attractive to investors. 
 
The 1992 investment law guarantees national treatment to all private 
firms in Honduras.  The law does not limit foreign ownership of 
businesses, except for those specifically reserved for Honduran 
investors, i.e., small firms with capital less than 150,000 lempiras 
(USD 18,000), or which require special government authorization.  These 
are: 
 
-   Basic health services. 
-   Telecommunications. 
-   Generation, transmission and distribution of electricity. 
-   Air transport. 
-   Fishing, hunting and aquaculture. 
-   Exploitation of forestry resources. 
-   Investigation, exploration, and exploitation of mines, 
-   quarries, petroleum and related substances. 
-   Agricultural and agro-industrial activities exceeding land  
-   tenancy limits established by the agricultural modernization 
-   law of 1992 and the land reform law of 1974. 
-   Insurance and financial services. 
-   Private education services. 
 
According to the 1992 investment law, all local and foreign investment 
must be registered with the Ministry of Economy.  Registration is to be 
carried out immediately and the investor is to be issued an investment 
certificate within twenty four hours of presenting the request.  If the 
activity requires special government approval, the Ministry of Economy 
must submit the case to the appropriate agency which must recommend 
approval or disapproval of the registration within sixty days.  If the 
opinion is favorable, the investment is to be registered immediately.  
In practice, registration can take much longer. 
 
Foreign investors face some discriminatory treatment in Honduras.  To 
participate in public tenders, foreign firms are required to act through 
a local agent.  By law, local agency firms must be at least 51 percent 
Honduran owned.  Dividends paid to foreign investors are taxed at 15 
percent, while local investors pay only a 10 percent tax on dividends.  
Finally, Honduran professional bodies heavily regulate the licensing of 
foreigners to practice law, medicine, engineering and other professions. 
 
While the law does not permit discriminatory or preferential export and 
import policies affecting foreign investors, some do exist.  The 1992 
investment law guarantees freedom to export and import to all foreign 
investors, and eliminates the requirement of prior administrative 
permits and licenses, except for statistical registries or customs 
procedures.  In practice, however, the Government of Honduras has used 
phyto-sanitary requirements to prevent import of U.S. poultry and feed 
grains to Honduras. 
 
U.S. citizens wishing to travel to Honduras do not have to obtain a visa 
prior to arrival.  Foreigners interested in working in the country must 
first apply and obtain a resident visa from the Honduran Ministry of 
Government.  In addition, they must obtain a work permit from the 
Ministry of Labor.  The time required to complete the resident visa and 
work permit process may take up to three months; however, there is no 
knowledge or evidence of discrimination against foreigners in the 
granting of these documents. 
 
Although there is a clear preference on the part of the Government of 
Honduras for new foreign investment in export industries, there are no 
officially mandated requirements which foreign investors must satisfy as 
a condition for investing in Honduras.  There is a requirement that a 
privately-operated industrial park must generate 5,000 new jobs within 
five years of start up, but this applies to all owners, foreign or 
national.  Few investment incentives are currently in force.  In the 
view of many senior Honduran officials, the country's natural resource 
base, freedom of entry, competitive exchange rate and political 
stability are the best incentives.  The following special incentives are 
available. 
 
1.   Industrial Parks and Free Trade Zones. 
 
A company, either local or foreign, that locates in one of the specially 
designated areas enjoys the following benefits: 
 
-   Duty-free import of machinery, equipment, fixtures, parts, raw 
    materials and supplies needed for operations (except vehicles). 
-   Exoneration from all income, export, sales, or consumer taxes. 
-   Unrestricted repatriation of profits and capital, and on-site 
    customs facilities. 
 
The principal free trade zone in Honduras is located in Puerto Cortes 
and is operated by the Government of Honduras through the National Port 
Authority.  Privately-owned free trade zones are legal extensions of the 
free trade zones.  In terms of operations and incentives, they are 
identical to the privately operated industrial parks.  In addition, 
individual companies may obtain the benefits of free trade zone status 
if they are located in specially designated areas. 
 
The number of industrial parks has grown dramatically in the last five 
years.  In addition to the incentives listed above, a company that 
locates in one of these parks can benefit from management services 
offered by the operators.  These parks and zones are treated as if they 
were offshore operations, i.e., if products manufactured in them are 
sold in Honduras, customs duties must be paid on them; and, if Honduran 
raw materials are used to produce the products, these materials are 
treated as exports and must be paid for in dollars.  Ninety percent of 
the companies that operate in these parks are involved in apparel 
assembly; however, park operators are seeking to attract other types of 
light industry, such as footwear, automotive parts, and electronics 
assembly, as well as data processing services. 
 
At present, a group of Taiwanese investors is planning to build 
Honduras' first agroindustrial park.  The construction of an 
agroindustrial plant will involve cultivation, processing, packaging and 
shipment. 
 
2.   The Temporary Import Law. 
 
This law allows exporters to introduce raw materials, parts, and capital 
equipment into Honduran territory without payment of customs duties or 
consular fees when the final product of the process is exported outside 
Central America.  The law also provides a ten year tax holiday on 
profits from these non-traditional exports.  Interested parties may 
obtain authorization for this program through the Ministry of Economy. 
 
Companies that do not operate in free trade zones or export processing 
zones fall under the jurisdiction of the Temporary Import Law. 
 
According to the 1992 investment law, foreign investors are eligible for 
the same benefits as are local investors.  Performance requirements 
linked to incentives established in certain laws apply equally to 
foreign and Honduran investors. 
 
B.   CONVERSION AND TRANSFER POLICIES 
 
The 1992 investment law guarantees foreign investors access to foreign 
currency needed to transfer funds associated with their investments in 
Honduras.  This includes: 
 
-   Imports of goods and services necessary to operate. 
-   Payment of royalty fees, rents, annuities and technical assistance. 
-   Remittance of dividends and capital repatriation. 
 
In practice, there is a chronic shortage of foreign exchange in Honduras 
that can preclude foreign investors from obtaining the dollars they need 
within a reasonable period of time. 
 
 
In a move to stop the continued devaluation of the lempira against the 
U.S. Dollar, the Central Bank established an auction system to regulate 
the allocation of foreign exchange more tightly.  According to the 
auction system regulations, the dollar purchases are conducted at one 
percent above or below the base price regularly established every 21 
days.  During the latest auctions, the Central Bank has been 
adjudicating $25 million.  All individuals, either foreign or national, 
can participate in the auction system dollar purchases.  
 
C.   EXPROPRIATION AND COMPENSATION 
 
Complaints to the U.S. Embassy about land invasions by squatters or 
property disputes with Honduran citizens have increased sharply in 
recent years.  Many U.S. investors have encountered title problems on 
property purchased in Honduras, especially in the Bay Islands and along 
the Caribbean Coast.   
 
Rules and laws pertaining to property titles in Honduras are uncertain 
and unreliable.  Nearly 100 property dispute cases involving U.S. 
citizens have been registered with the offices of the United States 
Departments of State and Commerce in Honduras.  These cases are at many 
different levels of settlement within the Honduran judicial/legal system 
and some date back for many years.  For instance, even though the 
Honduran Congress passed laws authorizing the purchase of coastal 
property and tourism zones, there are constitutional restrictions 
prohibiting the foreign ownership of coastal property.   
 
The U.S. State and Commerce Departments are involved in ongoing activity 
to help resolve the cases that are pending and are working with the 
Honduran government to help avoid these problems in the future.  It is 
recommended that, until these cases are resolved and a clearer and more 
reliable process can be implemented by the Honduran government, U.S. 
citizens should not purchase real estate in coastal areas or the Bay 
Islands.  In any case U.S. citizens are advised to exercise extreme 
caution in any purchase of property in Honduras. 
 
D.   DISPUTE SETTLEMENT 
 
Settlement of any contractual or property dispute involving the Honduran 
government or its citizens must take place in the Honduran courts.  This 
process is generally slow and very expensive.  The U.S. Government 
signed a Bilateral Investment Treaty (BIT) that establishes the option 
of binding arbitration out of Honduran courts, most notably in the 
International Centre for the Settlement of Investment Disputes (ICSID).   
 
E.   PERFORMANCE REQUIREMENTS/INCENTIVES 
 
Exporters that have applied for benefits under the temporary import law, 
including duty-free introduction of equipment and materials and a ten-
year income tax holiday, must export their production outside Central 
America and generate a minimum number of permanent jobs. 
 
Export processing zones, on the other hand, must generate at least 5,000 
new permanent jobs within five years after start up.  In addition, firms 
that operate under this regime must comply with all Honduran labor and 
social security laws.  While firms that operate in these zones do not 
pay income taxes and enjoy free repatriation of profits, they are now 
required to purchase the lempiras needed for their local operations from 
Honduran commercial banks or foreign exchange trading houses registered 
with the Central Bank.  In the past, they were allowed to do so in the 
open market. 
 
The investment law of 1992 eliminated all local ownership requirements 
for foreign investments.  However, as indicated above, there are certain 
economic activities that are reserved exclusively for Honduran firms, or 
that require prior government approval if foreign investment is to be 
recognized. 
 
F.   RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
 
The investment law guarantees both local and foreign investors the right 
to own property without limitations besides those established by the 
Honduran constitution and the corresponding laws.  This guarantee 
includes the right to free acquisition, profit, use, disposition and any 
other right attributable to property. 
 
In addition, investors have the right to freely establish, acquire, and 
dispose of interests in business enterprises at market prices, under 
freely negotiated conditions, and without government intervention.  
Private enterprises compete on an equal basis with public enterprises 
with respect to access to markets, credit, and other business 
operations.  Access to credit by private enterprises, however, has been 
limited as a result of the Central Bank's high legal reserve requirement 
on commercial bank deposits, which is being used to finance the 
government's fiscal deficit.  This high reserve requirement makes loans 
relatively expensive and, according to businesses, puts them at a 
disadvantage against government entities. 
 
G.   PROTECTION OF PROPERTY RIGHTS 
 
Protection of Intellectual Property Rights is handled by the Ministry of 
Economy.  In 1994 the Ministry set up an office which handles 
registration of patents, trademarks and copyrights, as well as any 
complaints regarding their infringement.  The government complied with 
the legislation's requirements by creating in 1994 an intellectual 
property rights office in the Ministry of Economy to implement and 
enforce its copyright, trademark and patent laws.  Important amendments 
to the country's copyright law are now being considered by the Honduran 
Congress.  As a signatory to the Uruguay Round agreements and member of 
the World Trade Organization (WTO), Honduras has accepted the new TRIPS 
standard.  In addition, Honduras is expected to conclude a bilateral IPR 
agreement with the U.S. in 1995.  Honduras is also expected to become a 
signatory to the Central American Convention on Industrial Property. 
 
H.   REGULATORY SYSTEM: LAWS AND PROCEDURES 
 
Most of the Honduran laws dealing with business, trade, labor, and 
finance are old and outdated.  The country lacks a basic/indexed legal 
code; laws are published in periodically circulated gazettes which 
lawyers and judges must maintain and index on their own.  The Government 
of Honduras often lacks the resources to implement or enforce those laws 
on the books (or, more accurately, in the gazettes.)  Property 
registration often is not up to date, nor can the results of title 
searches be relied upon.  There is no title insurance in Honduras. 
 
In an effort to update the legal system and bring the country on stream 
with modern business practices, the former Callejas administration 
created a state modernization commission.  At present, the commission 
has conducted regular meetings in order to discuss policy priorities 
such as the privatization of state-owned enterprises, electoral reforms 
and environmental protection.  However, red tape is still very common on 
procedures and activities that require government approval. 
 
Nonetheless, significant progress has been made.  The passage of the 
investment law in May 1992 is one of the best examples.  As a result of 
the passage of the law, the Ministry of Economy and Commerce created a 
one-stop export and investment registration window to deal with 
procedures related to the registration of exports and investment in the 
country. 
 
The Government of Honduras, along with the interested parties, is 
currently discussing passage of new labor and financial sector 
legislation. 
 
I.   EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
There are no government restriction on foreign investors' access to 
local credit markets.  However, the local banking system is highly 
conservative and generally has limited credit available.  The situation 
has been made much worse by a recent increase in the legal reserve 
requirement on commercial bank deposits.  Therefore, local banks should 
not be considered a significant source of start-up capital for new 
foreign ventures, unless they use specific business development credit 
lines made available by bilateral or multilateral financial 
institutions, such as the Central American Bank for Economic Integration 
or the Inter-American Development Bank.  Otherwise, loans from banks 
tend to be short-term (one year or less) with substantial collateral 
and/or guarantee requirements. 
 
There is a limited number of credit instruments available in the local 
market, and two stock exchanges now operate in the country: the Honduran 
Stock Exchange (BHV) is located in the industrial capital of San Pedro 
Sula and started operations in 1990.  The Central American Stock 
Exchange is headquartered in Tegucigalpa and began operations in 1993.  
Both stock exchanges are supervised by the Central Bank of Honduras.  
The instruments that are traded in these exchanges include bankers 
acceptances, reposition agreements, short-term promissory notes, and 
Government of Honduras private debt conversion bonds and land reform 
repayment bonds. 
 
While, in theory, any private business is eligible to trade in the stock 
exchanges, firms that participate in them are subject to a rigorous 
screening process.  In addition, they generally have economic ties to 
the different business/financial groups represented as either 
shareholders of the stock exchanges or exchange trading houses. 
 
The Honduran Commercial Code is the main legislation that regulates the 
operations of businesses in the country.  This code, however, is more 
than 50 years old and local lawyers often argue that much of it needs to 
be updated to bring it on line with current business trends.  A general 
revision of this Code has been scheduled after Congress discusses 
reforms on a New Criminal Procedures Code.  The application of the 
Commercial Code and its regulations fall under the jurisdiction of the 
Honduran civil court system. 
 
There is no regulatory body for the accounting profession in Honduras.  
The College of Public Accountants, however, is responsible for 
certifying practicing professionals.  In general, Honduran businesses 
adhere to international Generally Accepted Accounting Principles (GAAP).  
These principles are normally applied following guidelines from the 
Ministry of Finance's General Directorate for Taxation. 
 
The five largest banks in the country hold an estimated USD 1 billion in 
total assets.  About ten percent of the total asset base of all banks is 
classified as non-performing. 
 
The Honduran financial system is made up of 20 banks, most of which are 
associated with powerful economic groups.  Most of these banks lend 
primarily to businesses owned by the economic group of which they are a 
part.  The system has been criticized for permitting excessive amounts 
of unsecured lending to major stockholders or bank principals. 
 
A new financial system law has been proposed, which would restrict 
lending to stockholders and bank officers, permit more control by the 
Superintendent of Banks over the financial system, favor increased 
financing for industrial reconversion, and institute a deposit insurance 
scheme.  To date, the overwhelming opposition of Honduran banks has 
proven an insurmountable obstacle to these reforms. 
 
Public ownership of business is almost non-existent in Honduras.  The 
largest corporations in the country are owned by small groups of 
families.  Admission of new stockholders to the firms must first be 
approved by the existing shareholders since the commercial code allows a 
company's incorporation charter to indicate how new owners will be 
admitted.  Likewise, any mergers or acquisitions must also be approved 
following the same procedure. 
 
In general, there are no specific practices by local firms or government 
to restrict foreign investment participation in economic activities 
besides those specified in the Investment Law of 1992. 
 
J.   POLITICAL VIOLENCE 
 
Acts of politically motivated violence have been rare in Honduras in 
recent years.  In December 1991, a liquid storage facility owned by a 
local subsidiary of U.S.-based Castle and Cooke suffered an isolated 
attack with a rocket-propelled grenade.  Following the early February 
1993 firing of a number of workers in a corporate restructuring, the 
general manager of Exxon's local operations received death threats 
against himself and his family.  His car was also badly damaged by 
unknown vandals.  Exxon has retained a security firm to protect the 
general manager and his family. 
 
U.S. fruit companies in Honduras employ upwards of 15,000 Honduran 
workers.  With the E.U. decision to restrict Central American banana 
imports into Europe, the U.S. banana companies in Honduras may well be 
forced to cut their production -- and labor force.  If this take place, 
some type of protest and perhaps isolated cases of violence could occur. 
 
As a result of deteriorating economic conditions, teachers' unions and 
other state workers unions have recently asked for substantial salary 
increases from the government.  In most instances the government has 
offered salary raises well below the expectations of the unions.  The 
largest federations of labor and peasant unions have also been pressing 
for economic reforms that would benefit their interests.  In many cases 
their actions have resulted in the taking of some of the most important 
roads in the country for several hours thus halting all vehicular 
traffic in some of the most important economic areas of Honduras. 
 
K.   BILATERAL INVESTMENT AGREEMENTS 
 
The U.S. - Honduras treaty of Friendship, Commerce and Consular Rights 
(1928) provides for most favored national treatment for investors of 
either country.  The U.S. and Honduras also signed an agreement for the 
guarantee of private investments in 1955 and an agreement on investment 
guarantees in 1966.  Honduras signed a Bilateral Intellectual Property 
Rights Agreement.  An Exchange of Tax Information Agreement was signed 
with the U.S. in 1992.  On July 1, 1995 Honduras and the U.S. signed the 
Bilateral Investment Treaty (BIT) at the Hemispheric Trade Ministerial 
in Denver, Colorado.  
 
Honduras also has trade and preferential treatment agreements with other 
Central American countries, Panama, and several Latin American 
countries.  Provisions for bilateral investment are included in the 
commercial treaties Honduras has signed with Costa Rica, El Salvador, 
Guatemala, and Panama.  In addition, Honduras, along with Guatemala and 
El Salvador, are in the process of negotiating a free trade agreement 
with Mexico, Venezuela and Colombia.  The agreement is expected to 
include investment provisions.  In 1993 Honduras signed bilateral 
investment agreements with Great Britain and Spain. 
 
L.   OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
The U.S. Overseas Private Investment Corporation (OPIC) currently offers 
financing for U.S. citizens who invest in Honduras as well as insurance 
against risks of war and expropriation.  Other countries, including West 
Germany, the United Kingdom, Taiwan, Spain, Italy, Switzerland, and 
Japan provide insurance and guarantees for their companies doing 
business in Honduras.  In addition, Honduras is a party to the 
Multilateral Investment Guarantee Agency (MIGA). 
 
M.   LABOR 
 
Since May 1994, the Honduran Government has been tested by a number of 
strikes, most notably labor conflicts in the government-owned postal 
service.  This dispute ended November 21, 1994, when President Reina 
declared a 15-day strike illegal and ordered the postal workers back to 
their jobs.  Workers at the Tela Railroad Company, a subsidiary of 
Chiquita Brands, went on a 5-week strike that severely crippled the 
company's 1994 banana exports, causing a loss in employment and 
reduction in the country's foreign exchange reserves. 
 
Even though President Reina, who assumed office on January 27, 1994, 
received heavy support from the labor sector in winning 56 percent of 
the vote, there are growing doubts among union officials that his 
government is responsive to labor's demands or able to provide the type 
of economic environment it needs for growth and strengthening of the 
labor movement.   
 
For the most part, criticism centers on the inability or unwillingness 
of the Ministry of Labor to enforce workers' rights, particularly the 
right to form a union.  Labor leaders and workers alike are critical of 
Reina's slowness in making decisions, describing his Liberal government 
as weak and lacking political definition. 
 
In May 1994, the American Institute of Free Labor Development (AIFLD) 
transferred the majority of its functions to the regional office in San 
Salvador.  In June 1995, this regional office was closed and its 
functions moved to Washington. 
 
The three main labor organizations of Honduras represent approximately 
20 percent of the total work force.  These are the Confederation of 
Honduran Workers (CHT), the General Workers' Central (CGT), and the 
Unitary Confederation of Honduran Workers (CUTH).  The largest 
organization, CTH, led by Francisco Guerrero, has an estimated 160,000 
members in 3 federations.  The largest of these is the Federation of 
Unions of National Workers of Honduras (FESITRANH), headed by Mario 
Quintanilla since 1989.  (Quintanilla was elected President of CTH in 
August 1994). 
 
The FESITRANH is the country's most powerful labor federation, with an 
estimated 50,000 members.  It enjoys the reputation as one of the 
leaders of the Honduran labor movement.  In addition, the National 
Association of Honduran Campesinos (ANCACH), representing some 60-80,000 
members, is affiliated with FESITRANH, as are the unions of the U.S.-
owned fruit companies.  The CTH and FESITRANH have formal ties with the 
AFL-CIO and informal ties with other U.S. labor groups, such as the 
International Ladies Garment Workers Union. 
 
With 1994 per capita income estimated at $630, Honduras remains one of 
the poorest and least developed countries in the Western Hemisphere.  
Since 1990, the purchasing power of the lempira has declined 
substantially, while salaries have not kept pace.  To labor, the 
dramatic increases in the price of the basic food basket need to be met 
with commensurate increases in the workers' salaries.  As the economy 
declined in 1994 by 1.4 percent, anxious workers seeking salary 
increases of 40 to 100 percent have at times engaged in damaging work 
stoppages particularly aimed at the maquiladoras and Honduras' largest 
banana producer/exporter, Chiquita Brands.   
 
In December 1994, the government decreed increases ranging from 15 to 33 
percent in the minimum wage, the first such increase since June 1993.  
Daily pay rates vary by sector of the economy affected and geographical 
zones:  the lowest minimum wage is $1.60 per day in the agriculture 
sector.  The highest minimum wage is in the mining sector, at $2.79 
daily.  Urban workers earn slightly more than those in the countryside.  
However, even after the most recent increase, the minimum wage is 
considered insufficient to provide a decent standard of living for a 
worker and family.  The Constitution and the Labor Code stipulate that 
all labor be fairly paid, but the Ministry of Labor lacks the staff and 
other resources for effective enforcement.   
 
The law prescribes a maximum 8-hour work day and a 44-hour work week.  
There is a requirement for at least one 24-hour rest period every week.  
The Labor Code provides for a paid vacation of 10 work days after one 
year and 20 work days after four years.  However, employers frequently 
ignore these regulations due to the high level of unemployment and the 
lack of enforcement by the Ministry of Labor. 
 
N.   FOREIGN-TRADE ZONES/FREE PORTS 
 
See A.5. above. 
 
O.   CAPITAL OUTFLOW POLICY 
 
Given its economic condition and the need for export and job generation, 
Honduras is dependent on foreign capital.  The Government of Honduras 
does not have a policy that promotes Honduran investment overseas.  
While current government policies are designed to promote the return of 
flight capital that many Hondurans have deposited in overseas banks, in 
practice, Honduras is a net exporter of capital.  Pension funds are 
obliged to invest only in Honduras. 
 
P.   FOREIGN DIRECT INVESTMENT STATISTICS 
 
The following table provides an estimate of the stock of foreign 
investment in Honduras by country of origin.  Foreign investment figures 
in Honduras are hard to obtain.  Most of the data below have been 
obtained directly from the firms themselves or through publicly 
available documents. 
 
COUNTRY OF        ESTIMATED DIRECT 
  ORIGIN             INVESTMENT  
              (IN MILLION US DOLLARS) 
 
United States            475.0 
Japan                     40.0 
El Salvador               35.2 
Korea                     30.0 
Hong Kong                 28.0 
Taiwan                    25.2 
Spain                     20.0 
United Kingdom             9.7 
Germany                    6.5 
Guatemala                  5.5 
Venezuela                  4.8 
Costa Rica                 4.1 
Other                     25.7 
 
Total                     709.70 
 
 
APPAREL INVESTMENT IN HONDURAS 
 
ORIGIN   NUMBER OF COMPANIES    TOTAL INVESTMENT (USD MILLIONS) 
American            47            76.58 
Oriental            32            42.16 
Honduran            35            21.00 
 
Total              114           139.74 
 
There are no records kept on Honduran investments abroad. 
 
Q.   MAJOR FOREIGN INVESTORS 
 
The following is a partial list of the major foreign investments in 
Honduras, with a description of the type of investment and country of 
origin. 
 
INVESTOR               COUNTRY         TYPE OF INVESTMENT 
 
 
Castle & Cooke           U.S.          Banana, pineapple, citrus; 
                                       vegetable oil processing; 
                                       bottling and brewing; carton box 
                                       manufacturing 
Chiquita Brands Intl.    U.S.          Bananas, melons, winter 
                                       vegetables, pineapples; vegetable 
                                       oil processing; plastic products 
                                       manufacturing 
Seaboard Corp.           U.S.          Winter fruits and vegetables; 
                                       aquaculture; ocean freight 
Nestle                   Switzerland   Food products 
Domino's Pizza           U.S.          Fast food 
Pollo Campero            Guatemala     Animal feed; poultry processing; 
                                       fast food restaurants 
Wendy's Intl.            U.S.          Fast food 
America's Favorite       U.S.          Fast food 
Chicken 
Pizza Hut Intl.          U.S.          Fast food 
Burger King Inc.         U.S.          Fast food 
Taco Bell                U.S.          Fast food 
RJR-Nabisco              U.S.          Food products 
Cargill                  U.S.          Animal feed, poultry and meat 
                                       processing 
Citrus Develpmnt Corp.   U.S.          Citrus production and  
                                       processing 
CPC International        U.S.          Corn starch 
Circle K Corporation     U.S.          Convenience store 
Van Ommeren-Ceteco       Neth.         Trading/retailing 
Phelps-Dodge             U.S.          Electric wire and cable 
                                       manufacturing 
Kimberly-Clark           U.S.          Paper products; pharmaceutical 
                                       products 
Scott Paper              U.S.          Paper products 
Xerox                    U.S.          Business machine sales 
Sarah Lee Corp.          U.S.          Apparel assembly 
IBM                      U.S.          Business machines and computer 
                                       software 
Pan American Life Ins.   U.S.          Life insurance 
American Home Assurance  U.S.          Casualty insurance 
Oshkosh B'gosh           U.S.          Apparel assembly 
United Technologies  
Automotive               U.S.          Automobile electronics assembly 
Midas International      U.S.          Automotive Parts and 
                                       Services 
Breakwater Resources     Canada        lead/zinc/silver mining 
BAT industries           U.K.          Tobacco products 
Parker Tobacco           U.S.          Cigars 
U.S. Tobacco             U.S.          Cigars 
Texaco                   U.S.          Petroleum products marketing 
Lloyd's Bank             U.K.          Banking 
Citibank                 U.S.          Banking and financial services 
Ernst & Young Intl.      U.S.          Accounting and Auditing Services 
Price Waterhouse         U.S.          Accounting and Auditing Services 
 
 
 
                  VIII.   TRADE AND PROJECT FINANCING  
 
A.   DESCRIPTION OF BANKING SYSTEM 
 
The Honduran banking system has been involved in a drive towards 
modernization and increased competition. There are currently 20 
commercial banks, up from 14 just two years ago.  All Honduran banks 
have correspondent relations with US banks.  Most of these banks are 
associated with powerful economic groups, and lend primarily to 
businesses owned by the group of which they are a part.  The system has 
been criticized for permitting excessive amounts of unsecured lending to 
major stockholders or bank principals. 
 
The Central Bank of Honduras has proposed a new Financial System Law 
which would restrict lending to stockholders and bank officers, permit 
more control by the Superintendency of Banks over the financial system, 
and institute a deposit insurance scheme.  To date, the overwhelming 
opposition of the commercial banks has proven an insurmountable obstacle 
to these reforms. 
 
The five largest banks in the country control an estimated USD 1 billion 
in assets.  About 10 percent of the system's total asset base is 
estimated as non-performing.   
 
B.   FOREIGN EXCHANGE CONTROLS AFFECTING TRADING 
 
Until early 1990, Honduras maintained a fixed official exchange rate of 
2 lempiras (Lps.) to the U.S. dollar.  In March 1990, with the passage 
of a sweeping economic reform package, the Central Bank of Honduras 
devalued the lempira vis-a-vis the dollar, and later permitted it to 
float freely.  This system of currency valuation, the interbank rate of 
exchange, has been used for all purposes, except payment of official 
debt which was maintained at the LPS2/USD1 rate.  The interbank rate of 
exchange was initially set at LPS.4/USD1, and as of June 1995 was 
LPS.9.26:USD1. 
 
The Foreign Exchange Repatriation Law passed in September 1990 requires 
all Honduran exporters, except those operating in free-trade zones and 
export processing zones, to repatriate 100 percent of their export 
earnings through the commercial banking system.  Until recently, 
commercial banks were allowed to use 70 percent of export earnings to 
meet their clients' foreign exchange needs.  The other 30 percent had to 
be sold to the Central Bank at the prevailing interbank rate of 
exchange. 
 
However, in a move to stop the continued devaluation of the lempira 
against the U.S. Dollar in mid-1994, the Central Bank established an 
auction system to regulate the allocation of foreign exchange more 
tightly and improve transparency of foreign exchange transactions.  
Commercial banks are now required to sell 100 percent of repatriated 
foreign exchange earnings to the Central Bank, which in turn auctions up 
to 60 percent of them daily in the open market.   
 
 
C.   GENERAL FINANCING AVAILABILITY 
 
There is limited short-term trade financing available from local 
commercial banks.  The financing situation has deteriorated recently 
because of Central Bank contractionary monetary policies aimed at 
halting inflation and stabilizing the value of the lempira against the 
U.S. dollar.  The Central Bank recently lowered the legal reserve 
requirement on commercial bank deposits to 35 percent.  Bank interest 
rates on commercial loans remain high.  However, bank liquidity is so 
tight that, even at such a high rate, they are not disbursing funds to 
their preferred customers. 
 
D.   HOW TO FINANCE EXPORTS/METHODS OF PAYMENT 
 
Because of a chronic shortage of foreign exchange, U.S. exporters should 
exercise caution when extending credit on sales to Honduran trading 
partners.  Cash in advance and irrevocable letters of credit, confirmed 
by U.S. banks, are the most appropriate methods of payment for U.S. 
exporters selling to Honduran firms. 
 
E.   TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE 
 
The United States Export-Import Bank (EXIMBANK) offers short and medium 
term financing for U.S. exports to Honduran private sector buyers.  At 
present no local bank has direct access to EXIMBANK's credit lines.  
These lines, however, are available through U.S. commercial banks.  
EXIMBANK's credit facilities available to Honduras include the Working 
Capital Guarantee Program, Exporter Insurance Program, Bank Letter of 
Credit Policies and Financial Institution Facilities. 
 
F.   PROJECT FINANCING AVAILABLE 
 
Long-term financing is generally available only through special funds of 
the Central Bank of Honduras, the Central American Bank for Economic 
Integration (CABEI) and the Inter-American Development Bank.  The 
programs that are available from these institutions concentrate on 
export projects, including export processing zones and industrial parks. 
 
The U.S. Department of Agriculture (USDA) provides loan guarantees 
(GSM), concessional credits (PL-480) and export subsidies such as the 
Export Enhancement Program (EEP). The USDA financing programs are aimed 
at encouraging U.S. agricultural exports.  
 
The U.S. Small Business Administration (SBA) provides financial and 
business development assistance to encourage and help small business 
develop export markets. SBA offers both loans and loan guarantees. 
 
The U.S. Trade Development Agency (TDA) provides grant loans for pre-
feasibility studies overseas on projects with high U.S. products and 
services export potential. 
 
Assistance from the Overseas Private Investment Corporation (OPIC) is 
available for new investments, privatizations, and for expansions and 
modernizations of existing plants sponsored by U.S. investors. The 
investors must contribute additional capital for modernization and/or 
expansion to be eligible. Financing is not available for projects that 
can secure adequate financing from commercial sources. 
 
G.   LIST OF COMMERCIAL BANKS 
 
Banco de El Ahorro Hondureno, S.A. 
P.O. Box 3185 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 37-5161 
Fax: (504) 37-4638 
 
Banco Atlantida, S.A. 
P.O. Box 3164 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 32-1742 
Fax: (504) 32-1273 
 
Banco La Capitalizadora Hondurena, S.A. (BANCAHSA) 
P.O. Box 344 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 37-1171 
Fax: (504) 37-2775 
 
Banco del Comercio, S.A. (BANCOMER) 
P.O. Box 160 
San Pedro Sula, Cortes 
Honduras 
Tel: (504) 53-3600 
Fax: (504) 53-3128 
 
Banco Continental, S.A. 
P.O. Box 390 
San Pedro Sula, Cortes 
Honduras 
Tel: (504) 53-1310 
Fax: (504) 52-2750 
 
Banco Financiera Centroamericana, S.A. (FICENSA) 
P.O. Box 1432 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 38-1661 
Fax: (504) 38-1630 
 
Banco de las Fuerzas Armadas, S.A. (BANFFAA) 
P.O. Box 877 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 31-2051 
Fax: (504) 31-3832 
 
Banco Hondureno del Cafe (BANHCAFE) 
P.O. Box 583 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 32-8370 
Fax: (504) 32-8332 
 
Banco de Honduras, S.A. (CITIBANK) 
P.O. Box 3434 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 32-6122 
Fax: (504) 32-6164 
 
Lloyd's Bank 
P.O. Box 3136 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 36-6864 
Fax: (504) 36-6417 
 
Banco Mercantil, S.A. (BAMER) 
P.O. Box 116 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 32-0006 
Fax: (504) 32-3137 
 
Banco de Occidente, S.A. 
P.O. Box 3284 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 37-0310 
Fax: (504) 37-0486 
 
Banco SOGERIN, S.A. 
P.O. Box 440 
San Pedro Sula, Cortes 
Honduras 
Tel: (504) 53-3888 
Fax: (504) 57-2001 
 
Banco de Los Trabajadores, S.A. 
P.O. Box 3246 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 37-9501 
Fax: (504) 37-8422 
 
Banco de la Exportacion, S.A. (BANEXPO) 
P.O. Box 3988 
Tegucigalpa, D.C. 
Honduras 
Tel: (504) 39-4256 
Fax: (504) 39-4265 
 
Banco del Pais, S.A. 
P.O. Box 314 
San Pedro Sula, Cortes 
Honduras 
Tel: (504) 52-5202 
Fax: (504) 52-5229 
 
Banco Corporativo (BANCORP) 
P.O. Box 3827 
Tegucigalpa, D.C. 
Honduras 
Tel: (504)39-2263 
Fax: (504)39-3286 
 
Banco de la Produccion (BANPRO) 
P.O. Box 5151 
Tegucigalpa, D.C. 
Honduras 
Tel: (504)39-2800 
Fax: (504)39-2911 
 
Banco Hondureno de Credito y Servicios (BANHCRESER) 
P.O. Box 2948 
San Pedro Sula, Cortes 
Honduras 
Tel: (504)57-3438 
Fax: (504)57-3439 
 
Banco Ficohsa 
P.O. Box 1671 
Tegucigalpa, D.C. 
Honduras 
Tel: (504)39-6380 
Fax: (504) 
 
 
 
                    IX.  BUSINESS TRAVEL 
 
A.   BUSINESS CUSTOMS 
 
The U.S. is Honduras' main trading partner and U.S. citizens are 
considered to be trustworthy.  The contract is a formality that 
represents an agreement between gentlemen.  But even when a gentleman 
has breached his word his personal dignity must be preserved.  There is 
a tendency to build lifetime relationships and establish close links 
with clients or customers, which creates a reciprocal feeling of 
obligation and a mutual desire to be helpful. 
 
Hondurans are very hospitable and gracious hosts.  Generally social 
activity is closely related to the consummation of a deal. Business 
etiquette dictates that going straight to the point when negotiating 
with Hondurans is not well received.  When meeting with them it is best 
to wade in slowly.  Only when the formalities of courtesy have been 
attended to should the interview enter into a more concrete discussion 
of the business at hand.  Negotiations tend to be slower and more drawn 
out in Honduras than in the U.S.  Hondurans place more emphasis on 
completing human transactions than on holding to schedules. 
 
Traffic in the two largest cities is always a problem so visitors should 
allow ample time between appointments.  Punctuality is more lax than in 
the U.S. and waiting is typical.  U.S. businessmen are in a hurry but 
Hondurans are not always available so do not expect to be given an 
appointment just because you have come for one day only.  It isn't 
necessarily a sign of disinterest, but should be taken as more of a 
cultural difference. 
 
B.   TRAVEL ADVISORY AND VISAS 
 
United States citizens must have a passport.  Visas are not required for 
bearers of U.S. diplomatic, official, or regular passports for tourist 
or business visits under 60 days.  The Honduran Embassy or consulates 
issue visas and answer queries regarding tourism in Honduras.  No 
immunizations are required for entry. 
 
C.   HOLIDAYS 
 
Honduran Holidays (1995) 
 
DATE          DAY OF THE WEEK         HOLIDAY 
 
January 2         Monday           New Year's Day (LH and AH) 
April 13          Thursday         Holy Thursday 
April 14          Friday           Good Friday 
April 14          Friday           Americas Day 
May 1             Monday           Labor Day 
September 15      Friday           Honduran Independence day 
October 3         Tuesday          Francisco Morazan's Birthday 
October 12        Thursday         Discovery of America Day 
October 21        Saturday         Armed Forces' Day 
December 25       Monday           Christmas Day (LH and AH) 
  
American Holidays (1995) 
 
DATE          DAY OF THE WEEK          HOLIDAY 
 
January 16        Monday           Martin Luther King's Birthday 
February 20       Monday           President's Day 
May 29            Monday           Memorial Day 
July 4            Tuesday          Independence Day 
September 4       Monday           Labor Day 
October 9         Monday           Columbus Day 
November 10       Friday           Veteran's Day 
November 23       Thursday         Thanksgiving Day 
 
D.   BUSINESS INFRASTRUCTURE 
 
1.  Transportation:  Four international airports serve the capital 
Tegucigalpa, the commercial center San Pedro Sula, the coastal city of 
La Ceiba and the bay island of Roatan.  Passenger and air freight 
services are reliable.  Three gateway cities (Houston, Miami, and New 
Orleans) are only 2 1/2 hours (flying time) from Honduras.  Direct 
flights between Honduras and cities in North and Central America are 
provided by the following international airlines: American, Continental, 
COPA, LACSA, IBERIA, and TACA.  Islena Airlines, a domestic air carrier, 
connects Tegucigalpa with the north coast and the Bay Islands.  Charter 
service and aircraft rentals (small single- and twin-engine equipment) 
are available from private flying services operating out of Tegucigalpa, 
San Pedro Sula, and La Ceiba. 
 
Taxi service is adequate in downtown areas of Tegucigalpa and San Pedro 
Sula, but some drivers pick up as many passengers as possible along the 
way.  Taxis can be hard to find in some residential areas.  Major hotels 
and the airport in Tegucigalpa and San Pedro Sula have a fleet of cabs 
that charge two to three times the normal rates.  Taxis are not metered, 
so negotiate the fare first.  Rental cars are available and taxis can be 
hired on a daily or hourly basis. 
 
2.  Language:  Spanish is the official language of Honduras.  A large 
number of Honduran professionals and businessmen speak English and many 
high government officials and private sector leaders were educated in 
the United States. 
 
3.  Communications:  Telephone service is adequate.  Direct-dial, long-
distance calling within Honduras and to the U.S. and several other 
countries is available.  Costs are based on the destination, and rates 
are available through operator assistance.  Night rates are charged from 
10 pm to 7 am daily.  Direct-dial calls placed from the continental U.S. 
to Honduras are considerably cheaper.  AT&T credit card holders may also 
use the less costly "USA-Direct" service.  MCI and Spring have similar 
services.  Worldwide telephone service offers good connections. 
 
Telegraph service is available to all parts of the world at a rate of 
L.70 (.9 cents) per word, including name and address.  An urgent 
telegram costs L1.40 (.18 cents) per word. 
 
Radio reception is satisfactory.  U.S.-style music is featured on 
several stations, but news is exclusively in Spanish.  A good shortwave 
radio is necessary to receive American stations and international 
broadcasts including the Voice of America (VOA).  The United States 
Information Service has schedules and program information. 
 
Five local TV stations can be seen in Tegucigalpa, all with Spanish-
language programming.  Some local companies offer cable service with a 
wide range of stations, including major networks, CNN and entertainment-
oriented stations. 
 
Six Spanish-language dailies are published in Tegucigalpa and San Pedro 
Sula.  One weekly English-language newspaper is published in Honduras.  
Major sources of English-language news are the Latin American air 
express editions of the Miami Herald, the New York Times, the Wall 
Street Journal, the Washington Post, and USA Today.  They normally 
arrive the day of, or day after, publication.  Overseas editions of Time 
and Newsweek are available at several news stands or by subscription. 
 
4.  Housing:  Arriving visitors can choose from a number of hotels in 
Tegucigalpa or San Pedro Sula.  In Tegucigalpa they include: the Hotel 
Honduras Maya, which has a coffee shop, dining room, swimming pool with 
pool side service, and sauna and exercise facilities; The Alameda, which 
has a pool, restaurant, and unisex hair styling salon; the Hotel La 
Ronda and Hotel Plaza San Martin both have a restaurant and coffee shop; 
the Hotel La Aurora offers completely furnished apartments and has a 
pool, restaurant and snack bar.  There are also a number of bed and 
breakfasts available.  In San Pedro Sula they include: the Copan Sula, 
which has a coffee shop, dining room, swimming pool with pool side 
service, and sauna and exercise facilities; the Gran Hotel Sula and 
Hotel Bolivar, which has a pool, restaurant, and unisex hair styling 
salon; and the Hotel Los Andes which offers completely furnished 
apartments and has a pool, restaurant, snack bar. 
 
5.  Climate and clothing:  A distinctive characteristic of Honduras is 
the great diversity in the weather and topography.  The northern part is 
basically hot and humid the whole year.  The mountainous zone in the 
central part of the country is dryer and cooler.  There are two seasons 
in Honduras: the rainy season from June to January and the dry season 
from February to May.  Heavy showers fall once or twice a day during the 
peak of the rainy season.  March and April particularly are hot and dry, 
with considerable smoke in the air from slash-and-burn agriculture.    
 
Summer clothing is suitable year-round in Tegucigalpa.  Tegucigalpa's 
weather is tropical by day and somewhat cooler in the early morning and 
evening.  From mid-November to February it may be cooler during the day.  
At this time lightweight wools and long sleeves may be worn. 
 
6.  Health:  Water must be boiled and filtered and often is in short 
supply during the dry season.  Fruits and vegetables must be cleaned 
carefully and meats cooked well.  The main health hazards include AIDS, 
dysentery, parasites, hepatitis, typhoid, and rabies.  There have been 
reports of cholera as well, although not in epidemic proportions.  A 
malaria suppressant should be taken if traveling to coastal regions for 
extended overnight stays. 
 
APPENDICES 
 
A.  COUNTRY DATA 
 
1.  PROFILE 
 
1995 Population (millions):         5.6 
1995 Population growth (percent):   2.9 
Religion:   Roman Catholic         97 percent 
   Protestant                       3 percent 
Government System:                 Democratic Republic 
Languages:                         Spanish (official) 
Work Week:  Government             40 hours 
   Private Sector                  44 hours 
 
2.  DOMESTIC ECONOMY  (Statistics provided by Honduran Central Bank) 
                   
                                    1994      1995      1996 
 
Real GDP (millions of 1978 Lps.)  5,898.0   6,133.9      N/A 
Real GDP growth rate (pct. chg.)     -1.4       4.0      N/A 
Per Capita GDP (pct. chg.)           -3.2       0.6      N/A 
Government Deficit (pct. GDP)         7.5       4.0      3.0 
Consumer Price Index (pct. chg.)     28.9      32.0     15.0 
Unemployment (pct.)                  16.1      16.0     15.8 
Foreign Exchange Reserves 
  (USD millions)                    110.9     300.0      N/A 
Year End Exchange Rate (LPS/USD)      9.4      10.2      N/A 
Year End Foreign Debt 
  (USD millions)                  3,748.2   3,868.2  3,925.4 
Debt Service (USD millions)         428.5     465.2    491.5 
 
 
3.  TRADE (US DOLLARS) 
 
Total Honduran Exports (FOB)      866.7      1174.4     N/A 
Total Honduran Imports (CIF)    1,014.7      1,208.5    N/A 
Exports To U.S. (FOB)             450.1      N/A        N/A 
Imports From U.S. (CIF)           558.0      N/A        N/A 
U.S. Share of Honduran Imports 
  (percent)                        45.8      N/A        N/A 
 
Imports of Manufactured Goods: 
Total (from world)                746.0      N/A        N/A 
From the U.S.                     650.3      N/A        N/A 
U.S. Share of Manufactured Products 
  (percent)                        87.0      N/A        N/A 
Imports of Agricultural Goods: 
Total (from world)                192.0      N/A        N/A 
From the U.S.                      78.4      N/A        N/A 
U.S. Share of Agricultural Imports 
  (percent)                        58.1      N/A        N/A 
Agricultural Goods Trade Balance   N/A       N/A        N/A 
  with U.S.                        N/A       20.6       N/A 
 
4. INVESTMENT 
 
See Section P) of Investment Climate Statement 
 
C.   U.S. AND COUNTRY CONTACTS 
 
1.   COUNTRY GOVERNMENT AGENCIES 
 
Presidential Palace 
Carlos Roberto Reina Idiaquez 
Constitutional President of the Republic of Honduras 
Bessy Watson de Reina 
First Lady 
Isabel Figueroa 
Secretary 
Centro Civico Gubernamental 
Tegucigalpa, M.D.C. 
Tel. (504) 34-4921-22-23/193 
Fax. (504) 34-1865 
 
Central Bank of Honduras  
Hugo Noe Pino 
President 
Ena de Amaya 
Secretary 
Edif. Banco Central 
Tegucigalpa, M.D.C. 
Tel: (504) 37-1668, 37-1677 
Fax: (504) 37-6261 
 
Ministry of Economy and Commerce 
Fernando Garcia 
Minister of Economy and Commerce 
Wilma Duque 
Secretary 
Edif. Salame, 2o. Piso   
Calle Peatonal 
Tegucigalpa, M.D.C. 
Tel: (504) 38-2025, 22-1850, 22-3251 
Fax: (504) 38-1336   
 
Ministry of Finance and Public Credit 
Juan Ferrera 
Minister 
Ana Cecilia Guzman 
Secretary 
Palacio de Hacienda 
3a. Calle 
Tegucigalpa, M.D.C. 
Tel: (504) 22-8701 
Fax: (504) 38-2309 
 
Ministry of Foreign Affairs 
Delmer Urbizo Panting 
Minister 
Gloria Vega 
Secretary 
Palacio Jose Cecilio del Valle 
Blvd. Juan Pablo II 
Tegucigalpa, M.D.C. 
Tel: (504) 31-4200 
Fax: (504) 31-0097 
 
Ministry of Communications, 
Transportation and Public Works 
German Aparicio 
Minister 
Milagro Sierra/Ana Maria Pavon 
Secretaries 
Bo. La Bolsa 
Comayaguela, M.D.C. 
Tel: (504) 33-6768 
Fax: (504) 34-2223 
 
Ministry of Natural Resources 
Ramon Villeda 
Minister 
Zoila Rodriguez/Marta Isabel Rodas 
Secretaries 
Col. Loma Linda Norte 
Blvd. Centro America 
Tegucigalpa, M.D.C. 
Tel: (504) 32-8613 
Fax: (504) 32-5375 
 
Ministry of the Environment 
Carlos Medina 
Minister 
Cll. La Fuente 
Fte. Centro Cultural Aleman 
Tegucigalpa, M.D.C. 
Tel: (504) 39-0241/32-6721 
Fax: (504) 32-5375 
 
Ministry of Labor 
Cecilio Zavala Mendez 
Minister 
7a. Cll., 2 y 3 Ave. 
Comayaguela, M.D.C. 
Tel: (504) 22-8526 
Fax: (504) 32-2230 
 
Banco Nacional de Desarrollo Agricola (BANADESA) 
Adolfo Leonel Sevilla 
President 
13 y 14 Cll., 4 y 5 AVe. 
Comayaguela, M.D.C. 
Tel: (504) 37-8506 
Fax: (504) 37-3093 
 
Direccion Nacional de Inversiones 
Diego Turcios 
Director 
Edif. Salame, 4o. Piso 
Tegucigalpa, M.D.C. 
Tel: (504) 22-3251 
Fax: (504) 37-3025 
 
Empresa Nacional de Energia Electrica (ENEE) 
Jeronimo Sandoval 
General Manager 
Edif. Banco Atlantida 4o Piso 
Segundo Calle, Comayaguela, M.D.C. 
Tel:(504) 37-8466 
Fax:(504) 37-8473 
 
2.   COUNTRY TRADE ASSOCIATIONS/CHAMBERS OF COMMERCE 
 
Foundation for Industrial Development and Export Promotion (FIDE) 
Norman Garcia 
President 
P.O. Box # 2029 
Tegucigalpa, M.D.C. 
Tel. (504) 32-0937/32-9345 
Fax: (504) 31-1808 
 
Federation of Agricultural Producers and Exporters (FPX) 
Medardo Galindo 
General Manager 
P.O. Box # 1442 
San Pedro Sula, Cortes 
Tel: (504) 52-6794 
Fax: (504) 52-7852 
 
Private Enterprise Council of Honduras (COHEP) 
Adolfo Facusse 
President 
P.O. Box 3240 
Tegucigalpa, M.D.C. 
Tel: (504) 37-4371 
Fax: (504) 37-4339 
 
Inter-American Development Bank 
Federico Alvarez 
Edificio Los Castanos 
5to. and 6to. Pisos 
Colonia Los Castanos 
P.O. Box 3180 
Tegucigalpa, M.D.C. 
Tel: (504) 32-4838 
Fax: (504) 32-8953 
 
National Association of Exporters of Honduras (ANEXHON) 
Nicolas Chahin 
President 
Edif. Banco Atlantida, 6to. Piso 
San Pedro Sula, Cortes 
Tel/Fax: 53-3626 
 
Honduran Chamber of the Construction Industry (CHICO) 
Angelo Botazzi 
President 
Edif. Simon 
Boulevard Suyapa 
Tegucigalpa, M.D.C. 
Tel: (504) 32-1756 
Fax: (504) 39-0973 
 
International Chamber of Commerce (INTERCHAM) 
John Coleman 
President 
P.O. Box # 1145 
San Pedro Sula, Cortes 
Tel: (504) 57-4994 
Fax: (504) 52-2438 
 
Honduran - American Chamber of Commerce (HAMCHAM) 
Sonia de Aguero 
General Manager 
P.O. Box # 1838 
Tegucigalpa, D.C. 
Tel: (504) 32-7043 
Fax: (504) 32-2031 
 
Honduran - American Chamber of Commerce (HAMCHAM) 
Veronica Torres 
Regional Manager 
P.O. Box # 1209 
San Pedro Sula, Cortes 
Tel: (504) 58-0165 
Fax: (504) 52-2401 
 
Federation of Chambers of Commerce and 
Industry of Honduras (FEDECAMARA) 
Rolin Escober 
President 
c/o Tegucigalpa Chamber of Commerce 
P.O. Box # 3444 
Tegucigalpa, D.C. 
Tel: (504) 32-8110 
Fax: (504) 31-2049 
 
Chamber of Commerce and Industry of Tegucigalpa (CCIT) 
Eduardo Facusse 
President 
P.O. Box # 3444 
Tegucigalpa, D.C. 
Tel: (504) 32-8110 
Fax: (504) 31-2049 
 
Chamber of Commerce and Industry of Cortes (CCIC) 
Roberto Reyes Silva 
President 
P.O. Box # 14 
San Pedro Sula, Cortes 
Tel: (504) 53-0761 
Fax: (504) 53-7777 
 
3.   COUNTRY MARKET RESEARCH FIRMS 
 
Price Waterhouse 
Reynaldo Rodriguez 
Manager 
P.O. Box # 20541 
Tegucigalpa, M.D.C. 
Tel: (504) 31-1911 
Fax: (504) 31-1906 
 
Peat Marwick Mitchell & Co. 
Armando Barnica 
General Manager 
P.O. Box # 3398 
Tegucigalpa, M.D.C. 
Tel: (504) 32-2806 
Fax: (504) 32-5925 
 
Morales Palao Williams y Asociados 
David Omar Palao 
Manager 
P.O. Box # 3838 
Tegucigalpa, M.D.C. 
Tel: (504) 32-0799 
Fax: (504) 31-3709  
 
Baggia Zuniga y Asociados, S.A. de C.V. 
Edif. I.S.P., 5o. Piso 
Fte. Cine Clamer 
Tegucigalpa, M.D.C. 
Tel: (504) 37-8117/38-1056 
Fax: (504) 38-1057 
 
Bufete Contable Nunez y Asociados 
Edif. Cantero, 70. Nivel, No. 703 
Tegucigalpa, M.D.C. 
Tel: (504) 38-8395 
 
Fernandez Fortin Bogran 
Col. Humuya 
Sendero Alpha No. 512 
Tegucigalpa, M.D.C. 
Tel: (504) 39-2312 
 
U.S. EMBASSY TRADE PERSONNEL 
 
U.S. & Foreign Commercial Service 
 
Senior Commercial Officer 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 38-2888 
 
Maria Callejas de Duron 
Commercial Specialist 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 38-2888 
 
Rosana Lobo 
Commercial Specialist 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 38-2888 
 
Iris P. Zamora 
Commercial Secretary 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 38-2888 
 
Economic Section 
 
Hugo Llorens 
Economic Counselor 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 36-6936 
 
Andrew Bowen 
Economic Officer 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 36-6836 
 
John Meakem 
Economic Officer 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 36-6836 
 
Foreign Agricultural Service 
 
Omar Gonzalez 
Agricultural Specialist 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 36-8342 
 
Tania Koritza David 
Secretary 
U.S. Embassy 
Avenida La Paz 
Tegucigalpa, M.D.C. 
Tel: (504) 36-9320 
Fax: (504) 36-8342 
 
 
4.   WASHINGTON - BASED U.S. GOVERNMENT, COUNTRY CONTACTS 
 
U.S. Department of Commerce 
Office of Latin America 
Caribbean Basin Division 
Matt Gaisford 
International Trade Specialist 
14th St. and Constitution Ave., N.W. 
Washington, D.C. 20230 
Tel: (202) 482-0057 
Fax: (202) 482-0464 
 
U.S. Department of Commerce 
Office of International Operations 
Frank Foster 
14th St. and Constitution Ave. N.W. 
Washington, D.C. 20230 
Tel: (202) 482-2736 
Fax: (202) 482-3159 
 
U.S. State Department 
Honduran Desk Officer 
Ms. Lynn Allison 
Washington, D.C. 
Tel: (202) 647-4980 
Fax: (202) 647-2597 
 
Office of the U.S. Trade Representative 
Ralph Ives, Deputy Assistant USTR for Latin America and the Caribbean 
600 17th Street, NW 
Washington, DC 20506 
Tel: (202) 395-5190 
Fax: (202) 395-3911 
 
Overseas Private Investment Corporation (OPIC) 
Joan Cezair, Insurance Officer 
1100 New York Avenue, NW 
Washington, DC 20527 
Tel: (202) 336-8590 
Fax: (202) 408-5142 
 
U.S. Trade and Development Agency 
Al Angulo, Regional Director for Latin America 
Room 309, S.A.-16 
Department of State, Washington, DC 20523-1602 
Tel: (703) 875-4357 
Fax: (703) 875-4009 
 
Export-Import Bank of the United States 
Mauricio Milian (for credit terms of less than one year) 
Donald Hultman (for 1-5 year loans and guarantees) 
811 Vermont Avenue, NW 
Washington, DC 20571 
Tel: (202) 566-8960/6774 
Fax: (202) 566-7524 
 
U.S. Agency for International Development 
Craig Vaier 
Desk Officer for Honduras 
State Department Building 
2201 C Street, NW 
Washington, DC 20523 
Tel: (202) 647-9555 
Fax: (202) 647-0102 
 
U.S. Department of Treasury 
Katherine Parkinson 
1500 Pennsylvania Ave., NW 
Washington, DC 20301 
Tel: (202) 622-5292 
Fax: (202) 622-1731 
 
U.S. Department of Agriculture 
Foreign Agricultural Service 
Marsha Moke (Policy only) 
12th and Jefferson Street, SW 
Washington, DC 20250 
Tel: (202) 720-6010 
Fax: (202) 690-2079 
 
U.S. Department of Commerce Liaison Officer to the 
Inter-American Development Bank 
U.S. Executive Directors Office 
Judith Henderson 
1250 H Street, NW 
10th Floor 
Washington, DC 20005 
Tel: (202) 942-8260 
Fax: (202) 942-8275 
 
or 
 
Office of Multilateral Development Banks 
U.S. & Foreign Commercial Service 
U.S. Department of Commerce 
Room H-1107 
Washington, DC 20230 
Tel: (202) 482-3399 
Fax: (202) 273-0927 
 
 
U.S. Department of Commerce Liaison to the 
U.S. Executive Directors Office  
International Bank for Reconstruction and Development 
1818 H Street, NW 
Room D-13004 
Washington, DC 20433 
Tel: (202) 458-0118 
Fax: (202) 273-0927 
 
or 
 
Office of Multilateral Development Banks 
See address above 
 
  
5.   U.S. - BASED MULTIPLIERS RELEVANT FOR COUNTRY 
 
Embassy of Honduras 
3007 Tilden Street, NW 
Washington, DC 20008 
Tel: (202) 966-7702 
Fax: (202) 966-7751 
 
Honduras Consulate General 
80 Wall Street, Suite 915 
New York, NY 10005 
Tel: (212) 269-3611 
 
Foundation for Investment and Development of Exports (FIDE) 
Miami Office 
Airport Corporate Center 
7200 19th St. N.W. 
Suite 303 
Miami, Fl 33126 
Tel: (305) 592-3166 
Fax: (305) 592-3969 
 
FPX International 
Airport Corporate Center 
7200 N.W. 19 Street, Suite 303 
Miami, Fl  33126 
Tel: (305) 471-6129 
Fax: (305) 471-6140 
 
D.   MARKET RESEARCH LIST 
 
1.   List of Available Department of Commerce Industry Sector Analyses 
(ISA) and International Market Insight Reports (IMI): 
 
Available ISAs: 
 
-   Hand and Power Tools, March 1994 
-   Electrical Power Systems, April 1994 
-   Medical Equipment and Supplies, June 1994 
-   Management Consulting Services for the Financial Services 
    Sector, December 1994 
-   Tourism Development, June 1995 
 
Upcoming ISAs: 
 
-   Waste Water Treatment Equipment, 1995 
-   Cellular Telephone Equipment, 1995 
-   Automotive Parts and Accessories, 1995 
-   Biological Pest Controls, 1995 
 
Available IMIs: 
 
IMI: Motorola Won the Cellular Telephone Bid in Honduras 
IMI: Central American Bank for Economic Integration (CABEI), Housing
     Construction Project in Honduras 
IMI: Central Bank Guarantees Convertibility for the Energy Contracts 
IMI: Honduras and IMF sign Letter of Intent 
IMI: Honduran-American Trade Fair Expoferia USA '95    
 
NOTE:  IMI reports on changing business conditions and commercial 
opportunities in Honduras will be compiled and submitted to the maximum 
extent possible. 
 
2.  List of U.S. Department of Agriculture/Foreign Agricultural Service 
Commodity Reports and Market Briefs: 
 
-   Meat Import Act Quarterly Report, February 1994 
-   Information Division's Country Report, April 1994 
-   Sugar Annual Report, April 1994 
-   Meat Import Act Quarterly Report, May 1994 
-   Coffee Annual Report, May 1994 
-   Poultry Annual Report June 1994 
-   Livestock Annual Report, August 1994 
-   Meat Import Act Quarterly Report, August 1994 
-   Agricultural Situation Annual Report, September 1994 
-   Meat Import Act Quarterly Report, November 1994 
-   Coffee Semi-Annual Report, November 1994 
 
E.  TRADE EVENT SCHEDULE 
 
1.   Foreign Buyer Program 
 
During FY-95 the U.S. Embassy in Tegucigalpa will actively promote local 
participation at the following U.S. Foreign Buyer Events: 
 
-   47th Annual Meeting & Clinical Laboratory Exposition, 
    July 16-20, 1995 
-   Bobbin Show, AAMA Convention, Sep. 12-15, 1995 
-   International Meat Industry Exposition, Sep. 21-24, 1995 
-   Automotive Aftermarket and Industry Week '95, 
    Oct. 24-27, 1995 
-   Greater New York Dental Meeting, Nov. 25-29, 1995 
-   MEDTRADE/NHHCE, Nov. 15-18, 1995 
-   18th World Energy Engineering Congress, Nov. 7-9, 1995 
-   The Power-Gen Americas '95, Dec. 5-7, 1995 
-   The Builders Show, January 26-29, 1995 
 
2.   Catalog Exhibitions 
-    Infrastructure USA Multi-State Catalog Exhibition, Nov. 1995 
 
3.   Fairs 
-    Expo Feria USA '95, August, 1995
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