For anyone looking to make a commercial entry into Latin America, doing business in Honduras may not be the first possibility that springs to mind. However, decades of consistent growth, an improving security situation, good conditions for enterprise, and a host of commercial opportunities combine to make company formation in Honduras an increasingly attractive option.
For anyone considering a shorter-term activity, or who only needs a limited number of workers, a good option can be hiring staff via a professional employer organization (PEO) in Honduras.
During recent years, Honduras has witnessed the second-highest growth rate in Central America, behind only Panama, with The World Bank reporting that the country has a great deal of potential for even more accelerated growth in the coming years.
Following 25 years of almost unbroken annual growth in gross domestic product (GDP), Honduras registered a GDP of $25.1 billion in 2019. The country saw a corresponding rise in prosperity, with gross national income (GNI) reaching $2,390 per capita that same year.
Among the attractive aspects the country has to offer investors is its growing and young workforce, with employees available at highly competitive rates. Beyond that, the country boasts a growing industrial base, a strategic location close to Mexico and the other major economies in North America, and ongoing government efforts to diversify exports.
Known as the original “banana republic” owing to its dependence on the fruit crop and political instability at the turn of the 20th Century, today bananas continue to be one the most important export commodities for Honduras. Other important products include garments, coffee, electrical goods, and fish.
While foreign direct investment (FDI) inflows have fluctuated over recent decades, they have followed an overall pattern of growth, with inflows increasing more than 14-fold in the two decades up to 2018, when they reached $1.44 billion. While it subsequently dropping back to $955 million the following year, that still represented almost ten times the $99 million of FDI inflows seen in 1998.
If you are interested in entering this fast-growing market, read on to learn about four great reasons for doing business in Honduras, as well as the benefits of hiring via a PEO in the country. Or go ahead and contact us now to discuss your business options.
3 reasons for doing business in Honduras
There are a number of good reasons for doing business in Honduras, including the following:
1. Competitive labour conditions
Honduras has an increasingly urbanized and young population, with an average age of 24.3 years in 2020, providing a ready supply of workers to new businesses. With a national minimum wage ranging from between $236 and $365 depending on the type of work being undertaken, it also has highly competitive labor costs that are attractive to investors.
The country has a growing pool of skilled labor, as well as a relatively high level of English proficiency, notably higher than major Latin American investment destinations such as Brazil, Colombia, and Mexico.
2. Geography and logistics
Located between Guatemala and Nicaragua, Honduras is the second-largest country by both area and population in Central America. The country has coasts providing trade access to both the Pacific and Atlantic oceans, with a 700km-long Caribbean coast home to four significant ports.
Meanwhile, the country has a growing highway network, with the Panamerican Highway passing through the south of the country, and major cities connected by thousands of kilometers of multi-lane roads. The country also benefits from having fast direct flights to the United States, with the capital Tegucigalpa just over three hours from Houston, and even closer to Miami.
3. Improving conditions for doing business in Honduras
Honduras has made efforts over recent years to open up more to international business and encourage greater investment, with the government of President Juan Orlando Hernandez announcing in 2018 plans for a series of free-trade zones (FTZs) known as Employment and Economic Development Zones (ZEDE).
That follows a decade in which the country has signed a number of free trade agreements, including agreements between Central American countries and the European Union, South Korea, Mexico, and the United Kingdom, as well as bilateral agreements with Canada and Peru.
On top of these trade- and business-friendly regime, Honduras has one of the shortest company formation processes in Latin America, with foreign investors able to open a company in just two weeks.
Hiring via a PEO in Honduras
If you are interested in doing business in Honduras but would like to get to know the market first, or are only planning a limited-scale operation, you may want to consider hiring via a professional employer organization (PEO).
Because a PEO in Honduras will hire staff on your behalf, while guaranteeing compliance with all local labour laws and norms, meaning you can have workers in just the time it takes to find them, as well as being able to exit the market rapidly.
The PEO firm will also be able to manage your payroll, while you maintain control over the workloads and schedules of all of those outsourced employees.
Biz Latin can help you to doing business in Honduras
At Biz Latin Hub, our multilingual team of experienced company formation experts is ready to help you establish an entity in Honduras. With our full suite of back-office support options, including hiring & PEO, legal, and accounting services, we can be your single point of contact for entering the market and doing business in Honduras, or any of the other 17 countries around Latin America and the Caribbean where we are present.
Reach out now for a consultation or free quote.
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