Privatized Cities are Coming to Central America

Private City Model (Archive Photo)

Privatization has struggled for many decades in Central America, but as regimes and dictators have lost power, and governmental bodies in Central America has failed to lift Central Americas from poverty, crime and corruption, and as more money flows into central America from venture capitalist taking advantage of Free Trade Agreements and opportunity of largest emerging market on the planet, privatization of entire cities may very well be the wave of the future.

Central America and Latin America as a whole may be a perfect testing ground for Private Cities and it has already started.

Honduras has just announced a radical free market plan to establish three privately run cities. This week, the government of Honduras signed an agreement with a US developer, MKG group to begin the construction of the cities. These cities will have their own governments, courts, laws, police forces and tax systems.

The initially investment of $14m for construction of the first phase of the first city which is near Puerto Castilla on the Caribbean coast, will immediately create 5,000 jobs and the entire project is predicted to create 200,000 new jobs.

In recent years, Honduras, pledged by violent crime, drug cartels, and other organized criminal elements has worked to diversify its economy to include exports of clothing and car parts and expand its product offering which was heavily focused on bananas and coffee.

Experts across the globe predict we are going to see a privatization wave across America, looking at models that work like Hong Kong and Singapore; however, there is a great deal of concern on both sides of the isle. Hong Kong’s poverty, at one time was approximately on the same level as Africa but now it is one of the wealthiest cities on the planet.

The default law for the Honduras Private Cities will be based on Texas state law, which has relatively few regulations, giving the corporation the greatest amount of flexibility.

One of the biggest concerns is that a private city would make decisions based on the interest of the majority share holders, or owners as opposed to a city that has an elected government makes decisions based on the majority voters. The two will have very different outcomes, goals and policies.

Some Left-wing Hondurans have filed a complaint in the Honduran Supreme Court, stating the project violates the constitution and treats national territory and people as a commodity.

But the model, at least on the surface, looks promising. Consider a city where all the people living there apart from maybe some spouses, and children are employees of the “corporation” or the city; unemployment would be near 0%. Housing costs would not be at the mercy of national and/or international markets.

There a large number of eyes on this project/experiment. The outcomes could potential change the way many Central American countries do business.

Terrence Johnson

The Costa Rica News (TCRN)
San Jose Costa Rica


Note: The views expressed in the article do necessarily reflect the views of TCRN

Leave a Reply