Honduras signed a deal for an initial investment of 15 million dollars to create the first “Private City” in the country. (Also referred to as “Free Cities”, “Charter Cities”, “Model Cities”, or in Spanish, “RED – Regiones Especiales de Desarollo”, and “Ciudades Modelo”.) The city will be built in Trujillo, in the Department of Colón, where it does not have the full support of the Garifuna people, as they fear that the loss of their land may be on the agenda.
Carlos Pineda, the president of Coalinza, stated that this was not just an agreement, but the most important project for the development of the country in 50 years.
Michael Strong, an executive with the MKG Group that was granted this project, stated that the objective is to create a secure and prosperous community for Hondurans.
The development of the physical infrastructure laid out in phase one of the project will result in 5,000 new jobs, as well as 15,000 indirect new jobs.
Juan Hernández, the President of the Honduran National Congress, stated that this is a giant step forward for the country. Last July, the Honduras Congress passed Decree #123-2011, which in a nutshell, takes care of all constitutional issues related to the creation of these RED zones, or model cities, as we refer to them in Honduras.
One of the case studies that helped get this project approved, was performed on Mauritius, a small island nation of the southeast coast of Africa, which became independent from the United Kingdom in 1968. Mauritius and Honduras established diplomatic relations in September of 2011, in order to facilitate the exchange of ideas on how it transformed itself into one of the most successful economies in Africa from a poor, sugar dependent economy. The World Bank, in 2011, ranked Mauritius number 21 out of 187 countries, ahead of Switzerland, France, and Chile. (Honduras is ranked number 128).
Maritius was able to transform itself, thanks to the model city blueprint, which calls for a strategy of growth based on international trade and strong and reliable legal institutions. The courts are subject to review by appeal to the Privy Council in the United Kingdom, thus providing credibility for investors.
As stated in
Article 8. – The REDs must establish their own police force, and are authorized to perform the said function on their own, or through proxy. Therefore, for this purpose, the REDs may enter into cooperative agreements with other countries or regions.
The new Model Cities will have their own police force, and will enlist a highly-reputable policing authority to train police officers and hold the police leadership accountable for fair and effective policing. In addition, there will be an audit committee that is overseen by a Transparency Commission, which is an independent body, with the power to gather and evaluate such information and statistics on crime rate, and the efficiency in handling of crimes by the legal system, as well as police misconduct.
Honduran President Porfirio Lobo appointed the initial members of the Transparency Commission:
- George Akerlof – Professor of Economics at the University of California at Berkeley, Senior Resident Scholar at the International Monetary Fund, and Nobel Prize Winner
- Harry Strachan – Former President of INCAE Business School, Director Emeritus at Bain & Co., and Managing Partner at Mesoamerica Partners and Foundation in Cost Rica
- Ong Boon Hwee – Former Chief Operating Officer of Singapore Power and Former Brigadier General in the Singapore Armed Forces
- Nancy Birdsall – President and Co-Founder of the Center for Global Development , former Senior Associate at the Carnegie Endowment for International Peace, and former Executive Vice President at the Inter-American Development Bank
- Paul Romer (Commission Chair) – Professor of Economics at the New York University Stern School of Business
Coalianza stated that Phase 1 will begin in October, and later on, factories will be built and equipped. 90% of the workforce is to be Honduran.
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