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Honduras: incentives for textile production

Monday, May 30, 2016

Honduras seeks to strengthen its position as a producer of apparel for export markets, partly through incentives for investors, and partly through the creation of a national brand, known for high environmental standards, according to plans announced this month by President Juan Orlando Hernandez.

The proposed measures may help a sector, which benefits from logistical advantages and trade preferences, but which in recent years has been largely stagnant.

In terms of incentives, the state plans to improve productivity, by providing social housing for free-zone workers, as well as schools for the children of families, which work in the apparel sector.

Infrastructure devopment to facilitate shipments of imported inputs and of exported products is another commitment.

As far as environmental issues are concerned, Honduras requires treatment of water and recycling of salt used in the fabric dyeing process.

Honduras seeks to create 200,000 new jobs, adding to the 145,000 existing jobs in the textile industry, which often competes with Nicaragua, which has competitive wages.

Both countries have preferential access to key markets, including the United States and Europe, based partly on geographic proximity, and partly on favorable duty and quota rules included in the Central America – United States Free Trade Agreement, and in the Association Agreement with the European Union.

Despite these conditions, the Honduran apparel sector has in recent years been largely stagnant.

Exports for 2015 will be around $2.7 bilion, according to the Central Bank, a modest increase over the $2.5 milion value, which persisted during the four previous years.