CENTRAL TIME

Mexico 2016 | DIPLOMACY | VIP INTERVIEW

TBY talks to Juan Orlando Hernández Alvarado, President of Honduras, on improving the business climate, attracting Mexican investment, and bilateral trade.

What efforts is the current administration taking to improve the investment climate and promote employment creation?

The country's economic growth is based upon the strengthening of institutions, infrastructure development, macroeconomic stability, and the development of our human capital. This is why our efforts have been focused on these four essential pillars to develop the basis of the second part of our program. To do so, we launched the 20/20 Honduras Project, which aims to improve the business climate, while focusing on the development of the following areas: agribusiness, textiles, business services (call centers), tourism, intermediate manufacturing, and housing. Taken together, we hope this initiative will generate 600,000 jobs, attract investment worth USD13 billion, and boost exports. These six economic sectors are where the Honduran economy really has the potential to take off and generate enough jobs to meet the needs of the population. We already have a solid growth of 3.6% of GDP, but we think we can reach more with the implementation of the 20/20 Honduras Project. We are also organizing a scholarship system that will allow us to train and develop our human resources with priority given to areas related to the 20/20 Honduras Project.

How will the government increase the country's competitiveness inside and outside the region?

The elements for increasing our competitiveness all lie within the four previously mentioned pillars. In the short term, investment in infrastructure will be one of the most important elements because it will turn Honduras into a logistics corridor for all of Central America. To do so, we are building a series of corridors and improving port facilities in the Caribbean and the Gulf of Fonseca, which gives us access to the Pacific Ocean. We also have a plentiful and potentially well-qualified workforce that has already shown its strength in the maquila manufacturing industry and in rendering various business services. Furthermore, we have made important changes in the electricity sector. Since our energy production is increasingly based on renewable sources, foreign investors can be confident that their production does not jeopardize the environment. Finally, we have made various legislative advances that enhance foreign investors' legal protections, not to mention improved our competitiveness, both of which are reflected in our international rankings. For example, we moved up 23 places in the World Economic Forum's global rankings from 111th in 2014 to 88th in 2016. We know this is a difficult and long-term process, but our goal is to continue moving forward and make the country more competitive.

With nearly USD1 billion in bilateral trade, Mexico is Honduras' fourth largest trading partner. How important is this economic relationship?

Mexico is not only an important trading partner but also a prominent investor in our country. With trade of approximately USD$1 billion and hopefully rising, I hope these ties will strengthen and continue to generate more jobs in both countries. I also hope our FTA remains in place and that we can continue to expand our commercial ties with our Northern partner. Both countries have opportunities to grow even more, as trading partners, because of our proximity, shared cultural values, and common identity.

How would you rate the importance of the Mexico-Central America gas pipeline for Honduras?

This is an important project not only for Honduras but for all of Central America. Undoubtedly, having an alternative energy source at competitive prices is important to improve the competitiveness of our economy. It also gives Mexico permanent and reliable clients within its natural sphere of influence. We must remember that the relationship between Mexico and Honduras dates to pre-Colombian times. Thus, the gas pipeline is important for the region, as it would generate an energy zone between Mexico, Guatemala, Honduras, and, hopefully, El Salvador. It will be a multi-million dollar investment that would benefit the entire region.

How would you evaluate the importance of the role performed by Mexican private sector investors in the Honduran economy?

Mexican investors have been and currently are the number one foreign investors in Honduras. Nonetheless, we are always looking for more Mexican investment in Honduras, which is why I recently made two visits to a couple of Mexican states to encourage them to come, invest, and settle in Honduras. As a result of these visits, an increasing number of delegations from governors and business leaders are coming here. Seeing our attractive business agenda, we can only hope that more will do so in the near future. I am convinced that the arrival of Mexican companies would not only benefit Honduras for employment creation, but Mexico as well.

Compared to 2014, Foreign Direct Investment in Honduras grew by 5.2% in 2015. Which economic sectors are most attractive for Mexican investors and which have the greatest potential for growth?

Our economy is growing steadily in most of the key economic sectors, especially telecommunications, energy, finance, and construction. While these four have the potential to continue growing even more, we also need to incentivize labor-intensive sectors that generate employment, since the aforementioned sectors, with the exception of construction, do not generate mass employment. Nonetheless, it is important to highlight that we will continue promoting these sectors, as they are essential pillars for fostering the productivity and growth of other sectors, and can help strengthen this country's total productive capacities. There is a plan underway in the construction sector to invest more than USD2 billion, with which we will lay the foundations of economic expansion and the creation of thousands of jobs.