Rise in Foreign Direct Investment in Honduras

By Bufete Mejía & Asociados

According to EFE news agency, restaurants and hotels, with USD 361.6 million, were the economic sectors that received the largest flow of FDI, followed by the financial and insurance activities with USD 217.1 million.

Honduras is trying to recover from the COVID-19 consequences with several measures towards pushing up FDI throughout the country. Last year the government approved a new law to facilitate the development and formalization of Micro, Small, and Medium Enterprises (MSMEs), and the Results-Based Governance system and other anti-corruption measures are examples of efforts to improve the investment climate.

The legal framework for investment includes the Honduran constitution, the investment chapter of CAFTA-DR (which takes precedence over most domestic law), and the 2011 Law for the Promotion and Protection of Investments.

Currently over 200 American companies operate businesses in Honduras, as the country enjoys preferential market access to the United States under CAFTA-DR, which has allowed for the development of intra-industry trade in textiles and electrical machinery, among other sectors. The proximity to the United States and established supply chain linkages means that opportunities exist to increase nearshoring sourcing to meet U.S. demand for a variety of goods. The White House “Call to Action to Deepen Investment in the Northern Triangle” is designed to coordinate increased U.S. investment in the region, including Honduras.