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7 things to know about doing business in Honduras

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1. Honduras is one of the poorest countries in the Western Hemisphere. Located in Central America between Guatemala and Nicaragua, and sharing a a border with El Salvador, more than 66 percent of the country’s population lives in poverty. However, following the global recession and political unrest within the country from 2010-12, the country has started to recover and seen some growth.

2. The United States is Honduras’ largest trade and economic partner. U.S. exports to Honduras were $5.7 billion in 2012, according to the U.S. Department of Commerce. The Dominican Republic-Central America-United States Free Trade Agreement, enacted in 2006, changed regulations regarding investment, customs administration and trade facilitation, technical barriers to trade, government procurement, intellectual property rights, transparency, labor and environmental protection. Now, about 80 percent of U.S. goods enter the country duty free, and tariffs on the remaining 20 percent are scheduled to be phased out by 2016. The stock of U.S. foreign direct investment in Honduras was $930 million in 2011, concentrated in the manufacturing sector. More than 150 American companies operate in the country.

3. Leading sectors for U.S. export and investment include automotive parts and service equipment, electrical power systems and renewable energy equipment, food processing and packaging equipment, processed foods, franchising, safety and security equipment, travel and tourism services, and agriculture including coarse grains, rice, wheat, soybean meal, red meats, and processed fruits and vegetables.

4. U.S. businesses setting up operation in Honduras are subject to the Commercial Code, which recognizes individual ownerships, general partnerships, simple limited partnerships, limited liability companies, corporations and joint stock companies. Starting capital for a limited liability company should be no less than 5,000 lempiras (U.S. $259) and the business should include at least two partners at all times. Starting capital for a stock company or corporation should be no less than 25,000 lempiras (U.S. $1,300) and the business should include at least five partners at all times.

5. Honduras has a great deal of labor available for industries requiring low-skilled workers. Because of the low average education level, there are very few skilled workers in technological fields, including medical and high technology industries. In 2011, unemployment was 4.3 percent, and underemployment was 36.5 percent. Honduran labor laws require a maximum eight-hour workday and 44-hour week. Workers must receive at least one 24-hour rest period every week and a paid vacation of 10 workdays after one year and 20 workdays after four years. Laws also prohibit the employment of minors younger than the age of 16, although children ages 14 to 15 may work with written parental consent and permission from the Ministry of Labor. Children younger than 18 may not work full time, at night or in a dangerous position.

6. Business customs are similar to those in the United States, although Hondurans place a greater value on personal relationships. They typically use written contracts to formalize verbal agreements, and business negotiations usually move at a slower pace than in the United States. Punctuality is not valued, and meetings are often delayed. Because Hondurans often enjoy serving as hosts, closing business deals tends to be more of a social activity.

7. Security is an important concern for Americans visiting Honduras. Street crime is prevalent and the State Department advises visiting Americans to avoid wearing excessive jewelry and visibly carrying cellular phones, valuables or large sums of money when walking in downtown areas. Americans living or traveling in Honduras should register with the U.S. Embassy through the State Department’s travel registration website at travelregistration.state.gov.