Honduras: Way Cleared for "Private City"

The Commission for the Promotion of Public-Private Partnerships has signed an agreement with the international consortium MKG Group who will initially invest $15 million.

Wednesday, September 5, 2012

The first Special Development Region (RED, by its acronym in Spanish) will be built in Trujillo on the north coast of Honduras.

According to the agreement signed on Tuesday, the new cities will have their own legal and tax systems.

The agreement marks the beginning of a controversial experiment known as "model city", and inspired by the ideas of American economist Paul Rommer, who argues that cities that are better designed and ruled by better laws can help transform the economy of developing countries.

The government claims that this project will generate thousands of jobs and new development areas.

Indigenous communities are opposed to the "private cities", for fear of losing their territories.

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President Juan Orlando Hernández announced the beggining of studies to create the first "charter city" in the south of the country.

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New Law on Charter Cities in Honduras

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The law regulates the establishment and operation of Employment and Economic Development Zones, enabling the consultation of residents in the areas where they are to be set up.

Laprensa.hn reports that "With 102 votes in favor and 26 against, late on Wednesday deputies approved the Honduran Law on Areas of Employment and Economic Development (ZEDE by its initals in Spanish), better known as model cities. .. "

"Private City" Does Not Have Transparency Commission

September 2012

A protocol signed by the Government of Honduras with the developer NKG does not include the Transparency Commission announced as part of the governance system for "private cities".

Honduras had planned to appoint five international experts, including the driving force behind the concept, economist Paul Romer, to form a transparency committee, to ensure the necessary safeguards to protect Honduras and its workforce, and to enforce good governance in the "private cities".

Honduras Approves Law on Charter Cities

July 2011

Congress has approved a law governing the Special Development Regions (REDs in Spanish).

The law states that the REDs are allowed to have their own budget, the right to collect and administer their own taxes, to determine the rates they charge for their services, to hold all types of contracts that extend to the next period of government, and manage their own internal and external debts as long as they have the approval of the State of Honduras.