Honduras 'city states' to have separate tax laws

The Central American nation of Honduras is set to create three Hong Kong-like privately-run cities, having their own legal and tax systems to that of the rest of the country.

A memorandum of agreement signed off by the Honduran government will see the small impoverished nation become the test case of the controversial idea that originally emanated from the US.

High unemployment (one in four) and proportionally the worst murder rate in the world, has led president, Porfirio Lobo, to take drastic steps to try and improve the prospects for the country.

Built from scratch, the cities will be states within a state, having their own laws, police forces and able to set up their own international trade agreements and tax rates.

The investment group MGK reportedly will invest $15m (£9.39m) to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast. That first city, it is hoped will create 5,000 jobs over the next six months and up to 200,000 jobs in the future. South Korea has also given Honduras $4 million to conduct a feasibility study.

Another city will be built in the Sula Valley, in the north, with a third in southern Honduras, but the experiment has not been without its critics, with indigenous populations, such as the Garifuna tribe, venting their anger at the possibility of their land being lost to developers.

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