Honduras Once Again Passes “Model Cities” Law

The Honduran congress has approved once again a “model cities” project that the country’s Supreme Court had previously declared unconstitutional because it would create special Development zones outside the jurisdiction of ordinary Honduran law.

Congressman Rodolfo Irias of the ruling National Party says the law “includes the necessary modifications” to answer concerns about unconstitutionality.

The vote was 110 to 13, with 5 abstentions.

This has been a controversial subject for the country since the idea was first introduced by Paul Romer – economist.  He and Octavio Sanchez, chief of staff to the president of Honduras had the same idea for the same reason. Its hard to modify some of  the rules of a country, all at once… so the charter city idea was born and Honduras is the first country to adopt and implement it. Bringing the country out of poverty is a priority for the Honduran government. The Model City will create 40,000 jobs.  In addition, the implementation of the National Sustainability Tourism Strategy, Honduras is on the move to make changes for the people of this country.

The great news is that Trujillo is a consideration for the location of the model city. The in-migration growth that will come to the area will have a very positive impact on real estate and long term values as demand will continue to grow.

Model City

Paul Romer first TED Talk: http://bit.ly/VuWKKb

Paul  Romer second TED Talk: http://bit.ly/1497suP

ABC News article: http://abcn.ws/XCozyL

The Vancouver Sun article: bit.ly/Y0TFCh


  1. Is there a link to what the law is? What are the true benifits?

    This appears to be great news :)

    • Kimberley says:

      Any benefit will be quite far in the future. The idea is to create a special zone, much like they did for the textile industry that attracted Fruit of the Loom, Gilden, etc. They will likely change the reference from model city and will likely start referring to it as Economic Development Zones.

      The benefits of creating a tourism economy in these areas will be much the same as the benefits felt today in Progresso and San Pedro with the textile special zones. Raw material and finished export material are easily and efficiently moved in and out of the country and the industry currently employs tens of thousands of people. Gilden alone I think employs 12,000. With tourism it will be much the same. Visitors will move easily and efficiently in and out of the zone. Honduras already has implemented an extension on the 90 day visitor allowance and will likely expand this to 180 days so foreign property owners can stay in their vacation homes over the winter without needing to extend their visitor pass or leave the country and return. Goods and services being provided will flow in easier and likely with some tax and duty advantages. The existing incentives for foreign investment like the 10 year tax holiday will likely be expanded on and others added. There will likely be duty free areas (like the port) where taxes aren’t charged to one day visitors. Other incentives for major development like hotels, resorts, visitor attractions etc will likely become implemented to encourage development.

      Over time there will be good paying jobs for a significant portion of the local population, better policing and security in the area, better garbage and sanitation systems, better roads and infrastructure, access to more natural and historical assets, better school and medical systems, better municipal services, more local activities, etc. All of these benefits will take time, but in a few years we will begin seeing changes and in 20 years we won’t recognize the place.

  2. Three cheers! I like to think I helped make this happen. They organized conferences with representatives from the different sectors of society to get ideas on how Honduras could climb out of poverty. I added my suggestions to a rep of ex-pats, to research how Chile did it, South Korea, Singapore, Hong Kong. Year or two later I noticed executives and government sector folks giving talks in Honduras.

    Let us pray that the plan unfolds as designed. I have studied the ideas of some of the advisers involved, and they are all about freedom and not using government for favors. Don’t be deceived by the statist philosophies that government is so helpful.

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