Some complications for Honduran Hong Kong

Some complications for Honduran Hong Kong

We’ve written a bit here before on Honduras’s planned Región Especial de Desarrollo — a planned free enterprise zone with its own legal and judicial institutions set up along the lines of economist Paul Romer‘s "charter cities" concept.

Last Tuesday, the Honduran government took a major step toward making the project a reality by signing a memorandum of agreement with an international group of investors:

The "model cities" will have their own judiciary, laws, governments and police forces. They also will be empowered to sign international agreements on trade and investment and set their own immigration policy.

Congress president Juan Hernandez said the investment group MGK will invest $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast. That first city would create 5,000 jobs over the next six months and up to 200,000 jobs in the future, Hernandez said. South Korea has given Honduras $4 million to conduct a feasibility study, he said.

There seems to be some trouble behind the scenes on the project, however. Last Friday, Romer — along with fellow members of a transparency commission appointed by the Honduran government — sent the following letter to President Porfirio Lobo:

Since the report of our appointment as members of the Transparency Commission for the Special Development Regions (REDs) appeared in December 2011, we understand that a constitutional challenge to the legal framework for the REDs has made it difficult for you to publish the decree giving legal validity to our appointment. Thus the conditions have not existed to permit the Transparency Commission to play the role envisioned for this ambitious and important project.

As you continue to work to attract foreign investment under the RED framework in this period of uncertainty, we feel it would be wise to release you from any sense of obligation to proceed with publication of the decree and thus with our formal appointment.

You should know that we, as individuals, continue to believe strongly in the vision behind the Honduran RED initiative, and we stand ready to be of service when the impediments to the full establishment of the institutional framework of the REDs have been resolved.

Romer also told the Guardian that he had been surprised by the MKG investment deal and that the members of the transparency commission "do not have any information, or means to check or look into any aspect of the negotiation."

It was just last May, that Romer was working closely with the Honduran government to promote the idea, co-authoring an op-ed with Lobo’s chief of staff to promote the project.