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Honduras Commercial Guide

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Honduras Commercial Guide Honduras 1 Table of Contents Doing Business in Honduras ________________________________________ 5 Market Overview _______________________________________________________________ 5 Market Challenges _____________________________________________________________ 6 Market Opportunities ___________________________________________________________ 7 Market Entry Strategy ___________________________________________________________ 7 Political Environment _______________________________________________ 9 Selling U.S. Products & Services ____________________________________ 12 Using an Agent to Sell U.S. Products and Services _________________________________ 12 Establishing an Office _________________________________________________________ 14 Franchising __________________________________________________________________ 17 Direct Marketing ______________________________________________________________ 17 Direct Marketing through mobile telephony ________________________________________ 18 Joint Ventures/Licensing _______________________________________________________ 18 Selling to the Government ______________________________________________________ 19 Distribution & Sales Channels ___________________________________________________ 21 Express Delivery ______________________________________________________________ 21 Selling Factors & Techniques ___________________________________________________ 21 eCommerce __________________________________________________________________ 22 Trade Promotion & Advertising __________________________________________________ 24 Pricing ______________________________________________________________________ 25 Sales Service/Customer Support ________________________________________________ 26 Protecting Intellectual Property __________________________________________________ 26 Due Diligence ________________________________________________________________ 29 Local Professional Services ____________________________________________________ 30 Principle Business Associations ________________________________________________ 30 Limitations on Selling US Products and Services ___________________________________ 30 Web Resources _______________________________________________________________ 31 Leading Sectors for US Exports & Investments ________________________ 32 Packaging Machinery & Packaging Products ______________________________________ 32 Construction Products _________________________________________________________ 35 Safety & Security Products and Services __________________________________________ 37 Automotive Parts & Service Equipment ___________________________________________ 41 Travel and Tourism ____________________________________________________________ 44 2 Agricultural Sector ____________________________________________________________ 46 Other Consumer Oriented Products ______________________________________________ 53 Customs, Regulations & Standards __________________________________ 55 Trade Barriers ________________________________________________________________ 55 Import Tariff __________________________________________________________________ 55 Import Requirements & Documentation ___________________________________________ 56 U.S. Export Controls ___________________________________________________________ 61 Temporary Entry ______________________________________________________________ 61 Prohibited & Restricted Imports _________________________________________________ 62 Customs Regulations __________________________________________________________ 62 Standards for Trade ___________________________________________________________ 62 Trade Agreements _____________________________________________________________ 67 Licensing Requirements for Professional Services _________________________________ 68 Web Resources _______________________________________________________________ 68 Investment Climate Statement ______________________________________ 70 Executive Summary ___________________________________________________________ 70 Openness to and Restrictions upon Foreign Investment _____________________________ 71 Conversion and Transfer Policies ________________________________________________ 74 Expropriation and Compensation ________________________________________________ 75 Dispute Settlement ____________________________________________________________ 76 Performance Requirements and Investment Incentives ______________________________ 77 Protection of Property Rights ___________________________________________________ 79 Transparency of the Regulatory System __________________________________________ 80 Efficient Capital Markets and Portfolio Investment __________________________________ 80 Competition from State-Owned Enterprises _______________________________________ 81 Responsible Business Conduct _________________________________________________ 82 Political Violence ______________________________________________________________ 83 Corruption ___________________________________________________________________ 83 Bilateral Investment Agreements ________________________________________________ 90 OPIC and Other Investment Insurance Programs ___________________________________ 90 Labor _______________________________________________________________________ 90 Foreign Trade Zones/Free Ports/Trade Facilitation __________________________________ 92 Foreign Direct Investment and Foreign Portfolio Investment Statistics _________________ 93 Contact for More Information on the Investment Climate Statement ___________________ 94 Trade & Project Financing __________________________________________ 96 3 Methods of Payment ___________________________________________________________ 96 Banking Systems _____________________________________________________________ 96 Foreign Exchange Controls _____________________________________________________ 97 US Banks & Local Correspondent Banks __________________________________________ 97 Project Financing ____________________________________________________________ 100 Web Resources ______________________________________________________________ 101 Business Travel _________________________________________________ 102 Business Customs ___________________________________________________________ 102 Travel Advisory ______________________________________________________________ 102 Visa Requirements ___________________________________________________________ 103 Currency____________________________________________________________________ 103 Telecommunications/Electric __________________________________________________ 103 Transportation _______________________________________________________________ 103 Language ___________________________________________________________________ 106 Health ______________________________________________________________________ 106 Local Time, Business Hours and Holidays _______________________________________ 107 Temporary Entry of Materials or Personal Belongings ______________________________ 107 Web Resources ______________________________________________________________ 108 INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2017. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 4 Doing Business in Honduras Market Overview Located in the geographic heart of Central America, Honduras has a democratic government and a free market economy. Exports to Honduras continue to perform well and as the 41st largest export market for U.S. companies in 2016 (0.33 percent of U.S. exports), Honduras’ population of 8.7 million is highly receptive to U.S. goods and services. Despite a complex domestic environment resulting from economic downturns and political reforms, the country is taking important steps towards improving its business investment climate, such as: adopting fiscal discipline and consolidation; infrastructure development through public private partnerships; combating corruption and security concerns; simplifying bureaucratic procedures; and focusing on improving overall competitiveness and productivity. The United States is Honduras’ largest trade and economic partner, accounting for 61 percent of total imports. Exports to Honduras were $4.8 billion in 2016, slightly down by 8 percent from 2015 (sectors affected by commodity price decreases, such as mineral fuel, accounted for most of the decrease). The Central America – Dominican Republic Free Trade Agreement (CAFTA-DR), which entered into force in 2006, boosted U.S. export opportunities and diversified the composition of bilateral trade. Currently, U.S. exports to Honduras are up by 50 percent since 2005, the year before implementation of this Free Trade Agreement. CAFTA-DR implemented important measures related to investment, customs administration and trade facilitation, technical barriers to trade, government procurement, intellectual property rights, transparency, labor and environmental protection. As a result of this FTA, more than 95 percent of U.S. consumer and industrial goods exports to the Central America region, meeting relevant rules of origin, are no longer subject to tariffs. Honduras had a nominal GDP per capita of $2,551.5 in 2016. It is a low/middle income country, with over 60 percent of its population living in poverty. Honduras has enjoyed moderate economic growth since 2010 after a sharp decline in 2009 that had occurred due to the effects of the global economic downturn and Honduras’ domestic political crisis. GDP growth is picking up from 2.8 percent in 2013 to 3.6 percent in 2016, with a similar
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