Zones for Employment and Economic Development (ZEDE)
The special Zones for Employment and Economic Development regime was created in 2013 through a constitutional amendment to articles 294, 303, and 329 of the Constitution of the Republic of Honduras. The constitutional amendment was followed by the enactment of the ZEDE Organic Law. The ZEDE are territorial and political subdivisions of the Republic of Honduras that enjoy broad levels of political, administrative, legal, and economic autonomy. The ZEDE are subject to the Constitution only on matters related to sovereignty, territory, application of justice, elections, national defense, foreign relations, and issuance of identifications and passports, including the International Treaties ratified by Honduras, but are otherwise autonomous and not subject to most of the national legislation. The only national laws that apply within a ZEDE are the ZEDE Organic Law, legislation concerning territorial waters and national symbols, and the criminal legislation of Honduras; upon these foundations, the ZEDE are free to build and adapt their own forms of local government, policies, and norms.
The ZEDE are authorized to adopt their own norms and policies, including commercial, financial, labor, civil, administrative, and procedural legislation; they can design and adopt an independent fiscal and financial regime, but must share 12% of tax revenue with the national government; the ZEDE government can develop its own local public administration, commercial and property registries, local security forces, investigation, and criminal prosecution bodies. The ZEDE are Free Ports, and companies operating within their jurisdiction are not subject to any import or export taxes, tariffs, duties, charges, or surcharges; the ZEDE have authority to control ports and airports within their jurisdiction, as well as to regulate aerial and maritime navigation. Furthermore, the ZEDE are not subject to the Central Bank of Honduras (BCH) or the National Commission on Banks and Insurance (CNBS) and are authorized by law to adopt their own monetary policy.
The ZEDE are subject to the exclusive jurisdiction of a Special Judiciary appointed by the national Judicial Power, from a list of 10 persons nominated by the CAMP. The ZEDE special judiciary allows for national and foreign persons to act as judges and is authorized to operate under a common law legal system or any other legal system that provides, at least, as much protection for human rights as afforded by the Constitution of Honduras.
The ZEDE are governed by a Technical Secretary and the governing bodies they may establish by exercising their administrative and political autonomy. All ZEDE are supervised and authorized by the Committee for the Adoption of Best Practices (CAMP), which was originally appointed by the President of the Republic and ratified by the National Congress, but future members can only be elected by the CAMP itself. This selection procedure insulates the CAMP and the ZEDE regime from the fluctuations and changes in national politics, enabling it to provide legal certainty and stability to national and foreign investors.
A ZEDE can be set up by a private developer known as “Promoter and Organizer” in low population density private lands within the Departments of the Bay Islands, Cortés, Atlántida, Colón, Gracias a Dios, Valle, and Choluteca. There are currently three authorized ZEDEs in Honduras: a) Prospera ZEDE, promoted by Honduras Prospera, Inc.; and, b) Ciudad Morazán, promoted by Centroamerican Capital & Consulting; and c) ZEDE Orquidea, promoted by an agroindustrial exporting business group in the Choluteca Department. Economic researchers from Universidad Francisco Marroquín in Guatemala have calculated the economic potential of Próspera ZEDE, concluding that Honduras could raise its current Per Capita Income from US$ 2,500.00 to US$ 20,000.00 in 40 years, if at least 11% of the population goes on to work and live under Prospera’s jurisdiction. Within the Próspera, the economists estimate that GDP per capita could exceed US$ 40,000.00 in the same period of time.
The official source of Próspera ZEDE norms: https://pzgps.hn/
The official source of Ciudad Morazán norms : https://www.morazan.city/laws/
The official source of ZEDE Orquídea norms: https://zedeorquidea.com/