Honduras - Foreign investment



Traditionally, the Honduran attitude toward foreign enterprise has been favorable. Foreign capital is treated in the same way as domestic capital; however, firms in the distribution, health services, telecommunications, fishing and hunting, mining, insurance and financial services, or lumber business must have 51% Honduran ownership. Honduran economic development has been powerfully influenced by foreign investment in agriculture, industry, commerce, and other economic sectors.

Since 1910, the Standard and Fruit and Steamship Co. and United Brands (formerly the United Fruit Company) have developed railroads, ports, plantations, cattle farms, lumber yards, breweries, electric power, housing, and education. All contracts, aside from commodity exports, were canceled on 15 September 1975; plans to convert banana-marketing operations into a joint venture fell through, however, and in 1976, the government instead expropriated large tracts of land from the banana producers. Mines have been developed by the New York and Honduras Rosario Mining Co.

In 1998, annual foreign direct investment (FDI) inflows into Honduras totaled almost $100 million, down from $128 million in 1997. Annual FDI inflows more than doubled from 1999 to 2001, averaging $238 million.

The United States has historically been, and remains today, Honduras's largest investor, accounting for at least three-quarters FDI in Honduras. More than 100 American companies operate there. About 75% of those companies produce apparel, but the largest US investments in Honduras have been in the agribusiness sector. Other important sectors include petroleum products marketing, electric power generation, banking, insurance, and tobacco. US franchises have substantially increased their presence in recent years, mostly in the fast food sector. Other major investors include Japan, El Salvador, Korea, Hong Kong, and Taiwan.

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