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Investment in Honduras

by | Feb 12, 2023

Investment in Honduras

 

LATAM FDI: Hello, welcome to another episode of the LATAM FDI podcast. Today we are fortunate to have Yusuf Amdani as our guest. Yusuf speaks to us on the subject of investment in Honduras from San Pedro Sula in Honduras. How are you today, Yusuf?

Guest Speaker:
Yusuf Amdani
Chairman
GK Group

Yusuf Amdani: I’m very fine. Good speaking with you.

LATAM FDI: Same here. Could you introduce yourself, tell us a little bit about your background, and tell us about the GK Group and its activities to promote investment in Honduras and throughout the region?

Yusuf Amdani: Thank you very much. My name is Yusuf Amdani. I’m the chairman of GK Global. We are basically active in five segments of different industries, starting with textile, which we are in the third generation. We are vertically integrated and based in the entire region here in Central America, the Caribbean, and southern Mexico. We specialize in real estate, industrial and commercial as well as technology, lifestyle, and agriculture businesses. We are in nine countries and two continents mostly. But our big core businesses are both in real estate as well as in the textile industry.

LATAM FDI: You have a couple of very nice modern facilities.  First, I’m thinking of the Green Valley Industrial Park. Could you explain what’s going on there?

Yusuf Amdani: Green Valley is, you know, the largest industrial development in this region. Actually is the only industrial park in Western Hemisphere which does not use any public services. That means we produce our own water; we produce our own energy, we provide steam-chilled air, and we treat our wastewater. We are also ISO 14,001 certified for environmental management. Last year, we also got the certification from TRUE for waste management. We are actually the only industrial hub or development with this certification in the region.

Currently, we have two major clusters there that have made investments in Honduras. One is for the automotive wire harnesses. We have the largest cable and wire and cable manufacturer for automotive as one of our customers. Then we have Lear and Aptiv. They are the Tier 1 automotive suppliers. Then we have a smaller company making the tape and other accessories as their investment in Honduras. The largest cluster in Central America for wire harnesses is based in our facilities in Green Valley. Then we have a textile cluster. We have Delta Apparel, a stockholder, in the park and their large facilities there. We have GK’s textile facilities there, as well as we have three other textile plants.

In summary, we have five textile facilities that operate in Green Valley and some light industries.

LATAM FDI: Thank you for that synopsis of what you have happening at your facilities in Honduras. I have a few more questions I’d like to ask you. The first one concerns the Biden administration and the promotion of investment in Honduras in the Northern Triangle countries to address the issue of mass migration. Have you seen any visible results of these efforts?  Has there been investment in Honduras?

Yusuf Amdani: I think yes. The current US administration has taken this positive effort to actually create opportunities at the ground level within the countries in the Northern Triangle. We at GK Global have been doing this for 30 years. I always feel that people need to have the opportunity where they are from or where they live in the town or city; they have to migrate. The easiest migratory choice is to go to the US. That’s where there are opportunities. So, the current administration’s efforts since last year have been worthwhile.  They have gotten a commitment from several large US companies for different segments in different areas in which to invest in Honduras and the rest of the region. A few of them already have projects on the way, but it’s a process that will take some time. But in the end, it will definitely create some impact by providing more jobs in the Northern Triangle, which should mitigate the migration.

LATAM FDI: The next question I have has to do with the fact that your country changed its president in January. At the beginning of 2023, Xiomara Castro assumed the country’s top office. Has any discernible change in the environment for investment in Honduras due to changes to the government?

Yusuf Amdani: No, I think, as you probably know, she won landslide margins, and then we had a change in the party which was in the power for the last twelve years. This is a change of a party and, of course, a different ideology. They are still settling down, but in practice, there are no major changes to Honduras’s investment environment.  This is even though last year was especially challenging for the textile sector.  This is a big sector in the entire Northern triangle. Recently, the market has been soft, but still, we see several investments gearing up in all these three countries.

LATAM FDI: For people that are thinking of investing in Central America, what can companies expect in terms of benefits if they look towards investment in Honduras?

Yusuf Amdani: Because we have operations in Mexico, we have operations in some other countries, Honduras, and all three Central American countries. Honduras has a free zone law that allows companies to establish without any long paperwork or legal drama. Secondly, they are 100% exempt from any kind of tax, which means importing raw materials for export or your income tax. It’s all under one because, in any place, the custom facilities are right there, whether you build your own free zone or your lease or operate in an existing free zone. There is only one document required for entry and one for the exit. So, there’s no further customs or other paperwork to be done at the port or the airport. This makes it very easy to establish and operate, and as well as definitely there’s a tax benefit as to your 100% exemption for your income tax. So many companies, especially the US and other countries, try to manufacture and keep their profits in Honduras so that they can use the same for their expansions and don’t have to go back and pay taxes for them.  Such benefits definitely affect your overall cost of manufacturing. So, I think those are really the key benefits when the decision is made to invest in Honduras. Beyond this, of course, we have the largest port in Central America, which is Puerto Cortez. Then we have connectivity with the US, which is one flight from Atlanta, Miami, Houston, and most of the cities we can be connected. So direct flights are coming to San Pedro Sula because all the industries are located in the northern part of the country. So, I think there’s connectivity. There is shipping from Miami or to Houston. It’s only a day and a half transit time. So even if you can ship on a boat so in two days, the vessels are there logistic-wise as well as connectivity by air. Not having any tax liabilities and easy to operate, you don’t have to go through many local government permits, permissions, and certifications. So that makes it very easy. So, when an investor comes in, they can basically start their operation by leasing a building.  Then the park operator or company that manages the park provides all the support. Your leasing contract entitles you to start that process.

LATAM FDI: You mentioned a little about the kind of companies located in the Green Valley advanced manufacturing hub, and you mentioned a bit about the infrastructure. If a company wants to do business with you at the Green Valley facility, for instance, can they lease space, build to suit, and purchase land? What are the options for investors in your facility to invest in Honduras?

Yusuf Amdani: We have a unique business model that, of course, you can lease the building, or we can build to suit, or you can buy the land. We can design and build any of the options available, but we are not a typical industrial park per se. Definitely, real estate is a component that we offer. So, first of all, we not only design your building, but we also design all your infrastructure, which means your electrical installation, mechanical installation, HVAC, and any specialized installation you may require due to the equipment you may be using. So first of all, we provide completely fitted buildings, so it’s ready for you to send the equipment and start installing it. If you need assistance with the talent pool or labor force, we provide a prescreening database of employees. So whatever number of employees you need, you provide the details, and then our HR department provides you with the number of people you may need for interviews. Currently, we usually run from 84% to 87% of hiring rates at the park. This means if we are providing 100 employees for them to interview and hire, the previously mentioned percentage of interviewees get offered positions.

We also provide all the security, both external and internal. We provide maintenance, energy, water, and wastewater treatment. Basically, everything which is not your core business as a client we take care of it. So you can only focus on what is your core business. You don’t have to worry about sending down the ex-pats, their housing, schools for their kids, or anything you need to set up your company. For any governmental permits, logistics, or anything you need to operate and manage your business, we provide that as a package. When you come to Green Valley, you will bring your technology and equipment, and then we will help set it up and run it. Then even if you need specialized training, we also look for university or tech company partners who come and train in a particular area. Currently, we are working with Colin College and Aptiv, one of our guests at the park, to create the most advanced tech camp at the Green Valley Industrial Park in the different disciplines.

LATAM FDI: With respect to other activities in the facility, obviously, there is manufacturing, but are there any back-office operations? Do you have facilities for companies that do those sorts of things?

Yusuf Amdani: We have an LTE Smart City, which is actually located in the city. As you know,  the people who work in BPO operations are mostly students with high school or university degrees. So, we actually have Altia Smart City, both in San Pedro Sula and Tegucigalpa. In fact, Altia Smart City is considered among the 1% of the best infrastructure in the world to host companies that have made the decision to invest in Honduras. We are currently hosting five of the 10 largest BPO operations in the world as our tenants in LPs Smart City, plus we have some software development companies. We also have boot camps for different disciplines, from cloud services to data science to cyber security. Companies may be interested in finding talent because universities do not offer skill sets for those disciplines. So we have started to set up our own boot camps using one of the best training companies in the world to provide this education and those skill sets to the people so that companies can come to invest in Honduras. In Altia, we also provide a very similar type of package service, not just the space but also the furniture and the computer installations, electricity, and internet, as well

We also provide human resources. We provide security, we provide logistics; we provide everything for them. Again, in this case, they bring their software or some of their management personnel, and then they can operate. Currently, we have over 13,000 people working in the tech industry out of LPs Smart City, and we are growing. We didn’t have any space. We were about to start our fourth tower, and then COVID came, so we didn’t do it then, but we started last year. It will be completed later this year. So, we continue to expand and build. So yes, there is an opportunity for any tech services companies, whether they’re first-year BPOs or high-end cyber security companies.

LATAM FDI: According to your website. I was looking it over, and it seems to me that, having reviewed it, you place a high priority on sustainability. Can you tell us how you’re achieving that?

Yusuf Amdani: Yes, in Green Valley, for example, as I mentioned to you, we are the only industrial development in the region which has ISO 14,001 certification for environmental management. Because from the get-go, when we started in 2004, our park design was by a master plan. Two design groups did it out of Canada based on sustainability. So that we have like more than we probably have less than 50% utilization of actual land. We have so many green areas; we plant three trees per person that work in Green Valley park right now. Forty percent of our energy is solar. We just put in 15 MW last year, and currently, we are building another 15-megawatt capacity. And even in our thermal, we do cogeneration. We are using steam and chill air through the waste heat. So, we do heat recovery, and so even on thermal, our emissions are very low, and we are working very hard to be carbon neutral by 2030. As I mentioned, we are also TRUE-certified for waste management and zero waste.

So, we have energy-efficient buildings. We use only LED lighting. We also have solar in all our buildings because it’s a low percentage. Only about 16% of our energy consumed is coming from renewable resources right now. But we continue to build the parking structures with solar on top. So that will double our solar production in the park. It would be best if you took care of the people; the facility and environment are very important to protect. So, we have specific strategic plans that we are continuing year-to-year. We just in fact, in November 2022, we released our first sustainability report based on a global reporting initiative in UN Agenda 2030. And with that, you will see all the different activities we carry across our organization based on sustainability that we factor into our operations when we invest in Honduras.

LATAM FDI: One of the things that we’ll do in the transcript of this podcast is to include a link to that document so people can get detailed information about it.

Yusuf Amdani: Thank you.

LATAM FDI: A lot of the listeners that we have, after hearing a brief discussion with our visitors in these LATAM FDI podcasts, have questions beyond those that were addressed during the podcast. Suppose anybody who is listening has a question for you or wants information on the Green Valley Industrial Park or the Altia Tech City. How would they contact you with their questions regarding how to invest in Honduras?

Yusuf Amdani: We have a corporate info site.  The address is www.gkglobal.com, or they can also connect through directly through the websites of www.greenvalleyhub.com or www.altsmartcity.com.

LATAM FDI: As I said, we’ll make information available about you, and your company will include a link to your LinkedIn page. If people want to contact you that way as well.

Yusuf Amdani: Great. Like any other required information, we will be happy to provide it to your listeners anytime.

LATAM FDI: Thank you very much for joining me today. I wish you the best of luck for the remainder of the year and far into the future.

Yusuf Amdani: Thank you so much. Always great speaking to you after such a long time, but great to see you.

LATAM FDI: Same here. Have a great day.

 

 

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