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THE INTENT OF THE HONDURAN EPZ LAW

The intent of the EPZ (Export Processing Zone) development is the creation of jobs for the 50% of the Honduran labor force who are unemployed or only partially employed. That is why it offers plants in EPZ's the maximum freedom of operation, and opportunity to make and retain profits. On both counts, ease of operation, and profitability, there simply is no better alternative.

CORPORATE
LEGAL FRAMEWORK

100% foreign ownership with a min. of two shareholders is acceptable under Honduran law.

Joint Venture Corporations organized under Honduran law can take any of the following forms: Sociedad Anonima (Corporation), Sociedad Anonima de Capital Variable (Corporation), the only type of legal framework under which a corporation can buy back its own stock: Sociedad de Responsabilidad Limitada (Limited Partnership).

EFFECTS OF NAFTA

The North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico could effect CBI countries such as Honduras. There are very strong forces in the US Government to benefit the CBI countries with trade agreements to eliminate any adverse effects created by the NAFTA agreement. All CBI countries are now enjoying the same benefit under CAFTA (Central American Free Trade Agreement).

MINIMUM WAGE IN THE EPZ IN US$

 Hourly base salary: 0.63
Daily base salary: 5.58
Weekly salary (5 Days): 27.90
Annual salary (52 Weeks): 1450.80
Social security (2%): 29.01
Infop (1%): 14.51
13th Month pay: 119.69
   
Labor cost per year: 1614.01
   
Fully loaded salary per hour: 0.97
   
Fringe benefits as a percentage of fully loaded salary: 35%

LOCAL LABOR REQUIREMENTS AND BENEFITS

A 90% Honduran labor force has to be equivalent to 85% of the total payroll. 
One month pay bonus in December
 Social Security
Night work: 25% surcharge
Overtime: 25% (day), 50% (night)
Work shifts, Day: 5:00am to 7:00pm
Night: 7:00pm to 5:00am
Mixed shifts: 44 hour week for day shift, 36 hour week for night shift

FTZ INVESTMENT INCENTIVES
  • Unrestricted currency conversion
  • Duty free importation of all production machinery, other equipment, fixtures, spare parts, raw Material and supplies.
  • Import and export shipments cleared in less then one day with minimum documentation.
  • No government income, sales or corporate taxes or fees.
  • Unrestricted repatriation of profits and capital at any time.
  • Low cost skilled and unskilled labor.
  • Ample supply of trainable and productive labor.
  • A wide range of low cost, local raw materials such as wood, cotton, textiles, fruits, sugar, vegetables, meats, seafood, leather, coffee, cocoa and spices are available for processing and manufacturing industries.
  • Many Honduran products enter the US duty free under the Caribbean Basin Initiative.

FREE ZONE LAW

A special law has been established for export companies operating in government Free Zones that provides the following benefits.

  • No import or export duties for material, equipment, office supplies, etc., required by the manufacturing plant.
  • Companies are exempt from income tax, city and county taxes.
  • 100% repatriation of currency is permitted.
  • The paperwork required to clear incoming and outgoing shipments is minimal.

THE CARIBBEAN BASIN Initiative CBI

In February 1982, the Reagan Administration proposed the Caribbean Basin Initiative to promote economic development and political stability in Central America and the Caribbean countries, through trade incentives and increased economic aid to boost private sector trade and investment. The goal of the CBI is to attract foreign and domestic investment to these countries, to encourage economic diversification, and to expand export earnings.

Today CAFTA (Central American Free Trade Agreement) improved on the trade laws and has replaced the CBI Initiative.

CAFTA (CENTRAL AMERICAN FREE TRADE AGREEMENT)

see Publication of US government CAFTA-DR Final Text

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