Thank you Peter, for the warm introduction.
Ambassador Popp, Chargé d’Affaires O’Brien and BCIU members.
Good afternoon to all.
My colleagues and I appreciate the opportunity to speak with BCIU members about this important region. In particular, I appreciate the opportunity to speak about the challenges and opportunities in Honduras. I have only been in Honduras for a few weeks but the importance of bringing private sector investment to Honduras is clear.
As many of you may know, there is a new President of Honduras. President Xiomara Castro took over at the end of January and while she is still building her team and broad agenda, bringing new private sector investment to Honduras is near the top of her list. In fact, there is a high-level delegation in Washington this week promoting U.S. investment in Honduras. The government is focusing on industries that provide significant employment for Hondurans including agriculture, construction, tourism, light Manufacturing, and the health and education sectors.
The COVID-19 pandemic has highlighted the vulnerability of supply chains to global disruptions, creating opportunities for nearshoring operations in Honduras, but that window will not be open for long. The United States is supporting these efforts including last week at a BCIU reception in Miami when WHA A/S Nichols specifically encouraged US investment in Honduras. In recent months, we have had several high-level visits from the United States including the Vice President, and officials from across the U.S. interagency including from the Department of Treasury.
Under Vice President Harris’ Call to Action initiative, over $1.2 billion in future investments are earmarked for the Northern Triangle. Much of that money is destined for Honduras. Companies such as PepsiCo, Cargill, Parkdale Mills, and PriceSmart have announced plans to make significant investments in Honduras.These visits and investment Announcements demonstrate the high priority Washington places on this Central American ally. A month ago, we hosted the first U.S.-Honduras Strategic Dialogue in Washington. The United States is committed to helping Honduras achieve sustainable and inclusive economic growth, good governance, and lasting security.
In my initial weeks in country, I have had the opportunity to speak with many leaders in the Honduran public and private sectors. All are eager to enhance economic ties with the United States. A couple of weeks ago, I visited San Pedro Sula and met with private sector leaders including the important energy and maquiladora sectors. Although much has been said about the precariousness of Honduras’ fiscal condition, the International Monetary Fund and other observers assess Honduras as low risk for debt distress.
The international community is prepared to help the Honduran government navigate its fiscal challenges. But the main challenge for the government is that resources for investments in health and education are limited. The government would prefer to direct money currently used to Service Debt toward improving health and education in the country. The international community is working with our Honduran counterparts to come up with solutions that will enable the Castro administration to implement its social agenda without increasing the national debt. There is widespread agreement that Honduras’ most binding constraint on sustainable and inclusive economic growth is its energy sector.
As I have expressed both in private and in public, we support the focus of President Castro and her government on energy reform. And we firmly believe that energy reform is critical for economic development. However, We believe the energy reform legislation that passed on May 11 sends the wrong message to potential investors. It forces private companies to agree to government terms in a renegotiation of their contracts or be forced to sell their power plants to the government at an arbitrarily determined price. In addition, by eliminating the independence of the systems operator and regulatory agency, the sector will be even more vulnerable to influence-peddling and corruption.
Countries that provide low-cost electricity to their people and businesses have strong and independent electricity regulatory agencies and robust and competitive participation of the private sector. We will continue to urge the government to consider these principles, including during a visit to Washington this week, as it works to resolve the problems in the energy sector. We also regularly collaborate with the administration of President Castro in efforts to improve transparency and in the fight against corruption – critical pillars to foreign investment. We recently met with the United Nations team to discuss the details of a possible new anti-corruption commission.
We understand the U.N. Secretary General will respond in the coming weeks and The U.S. looks forward to supporting the commission as it takes shape. In the coming months, the Honduran National Congress will select new Supreme Court magistrates. These magistrates will be key actors in the fight against corruption. A transparent and credible selection process is essential for generating public confidence in the judicial system, strengthening the rule of law, and fostering investment.
Honduras also has many advantages for business. CAFTA-DR provides duty-free access for bilateral trade. As a result, the United States is Honduras’ most important trading partner with $11 billion in two-way trade in 2021. Proximity to the United States is another major selling point. Honduras is just two hours by air or two days by sea. In December 2021, Palmerola International Airport opened for business, providing a state-of-the-art airport with expanded capacity and fewer crew restrictions than the old airport. Air cargo facilities will be expanding in Honduras as well. The port of Cortes is a strategically located deep-water port. It gives Honduras access to U.S. markets for Honduran exports and transit trade. Over 200 U.S. companies operate in Honduras. Honduras has developed world-class capabilities in the textile sector, and is now working to move into higher value-added operations in textiles to include spinning man-made fibers. Finally, USAID is working To link ongoing training Programs with skills Needed By private employers Here in Honduras. This should make it easier to find qualified employees.
In my first few weeks in Honduras, I also learned I have an excellent Economic and Commercial team ready to support private sector investors here in Honduras. Hector Maldonado from the Foreign Commercial Service and Scott Hansen from the Economic section lead an interagency team including many others from the Foreign Agricultural Service, USAID, and Customs and Border protection who are available to advise private sector investors. Minister of Economic Development Pedro Barquero has also offered to assist any firm considering investing in Honduras.
Thank you for the opportunity to speak with you this afternoon. My team and I hope to work with you to invest in Honduras.