BUSINESS & ECONOMICS

BUSINESS BRIEFS

Airfares up eight percent

Although travelers looking for a bargain flight to Honduras have never had much luck finding one, their search is even more in vain since April 11th's across-the-board hike on airfares between Honduras and the United States.

The Ministry of Public Works, Transportation and Housing authorized the unannounced hike after a meeting with the foreign and local airlines that cover routes between San Pedro Sula, Tegucigalpa and major U.S. gateway cities.

"Now it's cheaper to fly to London than New York," said Mario Duarte, president of the San Pedro Sula Airport Commission, in a La Prensa report.

Although Duarte says neither the Airport Commission nor the travel agencies are happy with the hike -- not to mention budget travellers -- the increase has been authorized and is, therefore, official.

An average of eight percent higher than the pre-hike fares, the new rates are as follows on flights departing from San Pedro Sula: to Miami, $482; to New Orleans, $505; to Houston, $505; to Los Angeles, $769; to New York, $697; and to Washington, D.C., $712.

San Pedro Sula wants U.S. consulate

San Pedro Sula needs its own U.S. consulate, says North Coast businessman Carlos Chahín, echoing a growing sentiment among Sampedranos, said a La Prensa report.

"We have a great deal of immigration of U.S. investors, businessmen...and other people who, due to the nature of their activities, need to legalize documents, visas and residencies. This makes it necessary to have a U.S. consulate here," he said. He added that travelling to the embassy in Tegucigalpa again and again can grow costly. Although San Pedro Sula had its own U.S. consulate for many years, it was one of many to be shut down in the face of U.S. government budget cuts.

Today, a representative of the U.S. embassy visits San Pedro Sula once a week to handle problems with citizens there. But Chahín says that's not enough for the nation's industrial capital.

Toncontin expansion carries hefty price tag

Despite donations by the Japanese government that have been specifically aimed at the expansion and improvement of Tegucigalpa's Toncontin International Airport, the Ministry of Public Works, Transportation and Housing announced Thursday that it will cost more than Lps. 260 million to carry out the project. Lps. 130 million alone would be spent to pay indemnization to the families and businessowners that would be forced to move in order to accommodate the expansion, said the Ministry's Luis Carlos Zelaya in an El Heraldo report.

Hondurans have long been demanding a larger, more modern airport for their national capital, but the possibility of replacing the tiny downtown Toncontin with a new facility outside the city is out of the question, said Zelaya, because it would be too expensive.

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BUSINESS BRIEFS

Tegucigalpa will house region's largest mall

President Reina led the ground breaking ceremony last week at what is touted to become Central America's largest shopping mall. The President called the $50 million project "a logical answer to a favorable investment climate" and proof of growing international confidence in Central America. The mall, which will be called Multiplaza Camino Real, will be built by Roble International, a consortium of Central American investors who "believe that it is cooperation that will promote the regional integration that has become so necessary to compete in a world market," said Roble president Ricardo Poma at the ceremony last Wednesday.

Multiplaza Camino Real will include a 200-room five-star hotel, a seven-floor tower for corporate offices and a 40,000-square meter shopping mall, complete with five movie theaters and a 15-restaurant food court. It is scheduled to be completed in the year 2000 and will be located between Instituto San Miguel and Banco del Cafe in Tegucigalpa.

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Honduras could have nearly 30 ZIPs by next year

The Economy Ministry says it's looking at authorizing the construction of five new industrial free zones (ZIPs), which would bring the total number of these tax-free manufacturing parks, both in operation and in planning, to 29. According to a La Tribuna report, the Taiwanese investors interested in building the ZIPs could have them under construction as early as next year. All slated for the North Coast, the five parks would create an estimated 25,000 jobs for Hondurans.

Although Taiwan has increased its investment here in recent years, the single largest foreign investor in Honduran ZIPs continues to be the United States, with a total of $1,470 million invested in industrial parks. Other large scale ZIP investors are Korea, Singapore and Hong Kong.

Honduras importing more, exporting less

Honduras' trade imbalance grew by eight percent from 1995 to 1996, according to a report released in late March by the Department of Statistics and Census. Although many Honduran exports enjoyed record growth last year, overall the country imported 36 percent more than it exported, spending $738.5 million abroad and generating only $275.6 million here. Economists place much of the blame on falling international coffee prices; Honduras exported only $278.9 million of the bean last year, compared to $349 million in 1994. Exports of beef are also down, from $13 million in 1995 to $10 million in 1996. But many other exports grew in 1996. Banana exports increased 16 percent to $254.6 million; shrimp exports grew six percent to $132.4 million; and lumber was up six percent to $20.2 million. The problem, say economists, is that imports continue to grow faster than exports. In 1996, Honduras spent 15.8 percent more on electronic appliances and materials, 13.5 percent more on fuel and lubricants, 8.7 percent more on food and 6.9 percent more on plastics from abroad.

BCH says inflation dropped in March

Although the March inflation rate is down one percentage point over February according to the Central Bank of Honduras, economists say they were expecting an increase and wonder if the CBH altered its monthly Consumer Price Index to please the International Monetary Fund, said a La Tribuna report last Friday (April 4). In order to continue receiving financial assistance from the IMF, Honduras agreed last year that it would keep inflation to a minimum of 16 percent. Nevertheless, the 1996 inflation rate spiraled to 24 percent. The CBH says accumulated inflation so far for 1997 is 5.2 percent, but that the rate has slowed since February.

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New Tax Code imposes stiff penalties

Tax evaders could be looking at up to 15 years in prison under Honduras' new Tax Code, approved last week (April 3) by the National Congress. The new legislation, effective June 1, calls for prison terms between 10 and 15 years for individuals who fail to pay taxes on more than Lps. 500,000. The minimum prison penalty is three months to one year for failure to pay taxes on amounts between Lps. 50,000 and Lps. 100,000. Likewise, the new law comes down hard on contrabandists, defined as individuals who fail to pay taxes on items leaving Honduras to be sold on foreign markets or entering the Honduran market from abroad. The maximum penalty for contraband is two months in prison, plus a fine equal to double the value of the contraband, for shipments valuing more than Lps. 10,000. The minimum penalty is between one day and one month in prison, plus a fine that equals the value of the merchandise for contraband whose value does not exceed Lps. 10,000.

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Cheaper to buy electricity from Panama

Although local electric companies say they should be given preferential treatment, the Honduran government says it's saving $200,000 a month importing electricity from Panama. According to a La Tribuna report, electricity from private Honduran generators like LUFUSA, ELCOHSA and ENSE sells for between $0.07 and $0.14 per kilowatt, while energy from Panama goes for $0.058 ($0.035 per kilowatt, plus import costs). Local generators say they need government subsidies to compete with electric companies throughout Central America, but the government says times are tough and everyone has to make sacrifices. "If you can pay less for the purchase of goods and services, why pay more?" says Julio Gonzalez, Vice Minister of Trade. "You can't protect a group of businessmen by maintaining exclusivity in the purchase of energy within the framework of a policy of free trade." Gonzalez says local companies will have to "reduce their profit margin" if they want to compete.

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New law will prohibit rents in dollars

Ramón Izaguirre, Vice Minister of Government, says his office is ready to submit a bill to the National Congress that would reform the Tenant's Law (Ley de Inquilinato). If the legislation is approved, landlords will no longer be able to charge rent in dollars, a practice that is growing increasingly widespread in Honduras. "The economy is becoming dollarized and it is necessary that the economic cabinet take measures to stop this process," said Izaguirre in a La Tribuna report. "The idea is that we have to remember the national currency is the Lempira." The new law would also transfer the bulk of housing and property authority to the municipal governments, allowing the central government to focus on matters like standards, regulations and subsidies. In addition, it proposes that the Tenant Administration Department and the Health Ministry work together to ensure that underprivileged Hondurans have access to adequate housing.

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