Law for the Promotion of Competitiveness of Small and Medium-Sized Enterprises

The purpose of this Law is to promote the development of competitiveness and productivity of micro, small and medium enterprises in urban and rural areas, in order to promote employment and the social and economic well-being of all participants in said economic units. To this end, the State shall provide its support to this sector in the administrative, tax, social security, labor, credit and economic performance fields; it shall ensure the strengthening of their participation in the country's economic and social process as well as greater citizen participation of their members; strengthening of gender equity practices, improvement of their legal security in the economic sphere, as well as environmental protection; and equal access to the factors of production necessary for their development; transparency in the processes of utilization of economic resources and the strengthening of national identity.

The specific objectives of this Law are: 1) ESTABLISH: a) The bases to promote the coordinated and articulated participation of the sectors and actors that contribute to the development and strengthening of Micro, Small and Medium Enterprises (MIPYME), from urban and rural areas, as well as the coordinated planning and execution of activities that the different institutions of the State perform in favor of the effective development of the sector; b) The public policies and instruments of such policies, which best orient toward the improvement of competitiveness and productivity of the Micro, Small and Medium Enterprise (MIPYME) sector, as well as the tools for their evaluation and updating and which provide the State and Honduran society with the information necessary for decision-making regarding support for this business sector; and, c) The technical and financial means for the competent authorities to develop and implement public policies that are capable of effectively improving the productivity, competitiveness and quality of employment generated by Micro, Small and Medium Enterprises (MIPYME). 2) PROMOTE:

• a)

  A favorable environment for urban and rural Micro, Small and Medium Enterprises (MIPYME) to develop their competitiveness, so as to easily supply themselves both in the national market and in Central American and international markets;

• b)

  The creation of a business culture linked to procedures, practices and administrative, financial, production and accounting standards that contribute to the advancement of quality in the production, distribution, market and customer service processes of Micro, Small and Medium Enterprises (MIPYME);

• c)

  Access to financing under favorable conditions for Micro, Small and Medium Enterprises (MIPYME), so as to promote the consolidation and capitalization of such enterprises, and the increase of their production, as well as the establishment of new enterprises, strengthening entrepreneurial development;

• d)

  The conditions for the creation and consolidation of productive chains in the Honduran economy, strengthening the associativity of Micro, Small and Medium Enterprises (MIPYME), with the purpose of taking advantage of the benefits of geographic location, economy of scale, critical mass of supply and other aspects that characterize this type of associations;

• e)

  The development of strategic plans that guide the execution of activities inherent to the comprehensive development of the sector;

• f)

  Schemes for business innovation, as well as the modernization and technological development of Micro, Small and Medium Enterprises (MIPYME);

• g)

  The creation and development of Micro, Small and Medium Enterprises (MIPYME) within a framework of harmony and ecological awareness, so that these contribute to sustainable and balanced environmental development in the long term; and the implementation of cleaner production technologies; and,

• h)

  The strengthening of grassroots organizations in the Micro, Small and Medium Enterprise (MIPYME) sector, with the purpose of achieving harmonization and coordination of the sector through the development of cooperation and association of Micro, Small and Medium Enterprises (MIPYME) among themselves and with other economic actors, at the national, state, regional and municipal level, as well as within the various sectors and productive chains.

For the purposes of this Law, the following definitions shall apply: CONAMIPYME: National Council of Micro, Small and Medium Enterprises. MIPYME: A set of micro, small and medium-sized enterprises from urban and rural sectors. MICRO, SMALL AND MEDIUM ENTREPRENEUR: Any natural or legal person who owns a micro, small or medium enterprise, engaged in productive activities, whether these are commerce, services or production, through which income is generated. MICROENTERPRISE: Any economic unit with a minimum of one remunerated person working in it, who may be its owner, and a maximum of ten (10) remunerated employees. SUBSISTENCE MICROENTERPRISE: Any productive unit not formally established that pursues the generation of income for the purpose of satisfying its immediate needs and those of its family, own and immediate consumption; mostly individual workers temporarily without employment who join the sector while they find more stable work. SIMPLE ACCUMULATION MICROENTERPRISE: A productive unit that stands out for having managed to define its competence and labor market. These are microenterprises whose productive resources generate income that covers the costs of their activity, although they may occasionally achieve sufficient surpluses that allow investment in growth. EXPANDED ACCUMULATION MICROENTERPRISES: Those in which productivity is sufficiently high to be able to accumulate surpluses that can increase the growth of the microenterprise. SMALL ENTERPRISES: Those with a better combination of productive factors and commercial positioning, which allow the economic unit to generate surplus margins. They have a more defined business organization and greater formalization in their management and registry, with a minimum of eleven (11) and a maximum of fifty (50) remunerated employees. MEDIUM ENTERPRISE: Enterprises that have greater investment in fixed assets in relation to the previous ones. Administratively they present an adequate structure in terms of working capital, a clear internal division of labor and formality in their accounting and administrative records, employing a minimum of fifty-one (51) employees and a maximum of one hundred fifty (150) remunerated employees. CO-FINANCING FUND: Public policy instruments and cooperation institutions, which is used as a vehicle to finance projects to improve business productivity and competitiveness. These funds are characterized by the use of shared financing mechanisms for the actions they promote, being funded both by the National Budget, the transfer of international donations or by loan resources intended to co-finance plans, programs or projects related to Micro, Small and Medium Enterprises (MIPYME). CREDIT LINE: Economic resources from cooperative organizations or the Government that are placed in financial institutions specialized in channeling resources to the final destinations specified, intended for the financing of specific programs of Micro, Small and Medium Enterprises and whose conditions are specified in the contracts executed. GUARANTEE FUNDS: Instruments of public policy or international cooperation, by means of which Micro, Small and Medium Enterprises (MIPYME) that request financing from credit institutions are granted the total or partial backing of a collateral or secondary source of payment, whose contribution guarantees the objective of facilitating them access to the credit necessary for the development of productive, commercial, service and agricultural activities. VENTURE CAPITAL: A fund of resources intended to be invested in enterprises which by their nature require enterprises with risks that are too high to reasonably ensure that they are subjects of bank credit. These funds are approved for new micro, developing technologies and entrepreneurs without history. The administration of funds of this nature is generally placed in the hands of the private or public sector; they are characterized by contributing resources to enterprises, while simultaneously asking these enterprises that said fund assume total or partial control of management, or the ownership, of the enterprise in which it has invested, as well as the definition of the conditions for the return of the contribution received, in order that the fund's participation in the ownership or management of said enterprise ceases. BUSINESS CULTURE: A system of values, patterns, customs, characteristics, idiosyncrasy that characterize micro, small and medium enterprises. ENTREPRENEURSHIP: An entrepreneur is any person who has the initiative and determination to carry forward an enterprise project in any sector of economic activity, whether in economic or social businesses. BUSINESS ASSOCIATIVITY: A grouping of enterprises from the same productive area or services that develop activities collectively, cooperating and complementing each other to achieve better competitiveness. BUSINESS DEVELOPMENT SERVICES: Services oriented toward the development of improvement processes in any area of the enterprise or in the capabilities of the entrepreneurs or their workers. BUSINESS DEVELOPMENT SERVICES FUND: Resources created to develop the market for business development services including training, tutoring, technical assistance, consulting and marketing, commercialization and information activities for Micro, Small and Medium Enterprises (MIPYME). TOOLBOX: A system of information that integrates content and practical applications that facilitate and contribute to improving the performance of entrepreneurs in the sector. LOCAL ECONOMIC DEVELOPMENT: The process by which the public, private and non-governmental sectors work collectively in a given territory to create better conditions for economic growth and job generation, whose purpose is to improve the quality of life of the entire population. CLEAN TECHNOLOGIES: Those technologies that, when applied by enterprises, generate minimal or no impacts on environmental balance and natural systems.

The competent authority for the correct application of this Law shall be the State Secretary in the Departments of Industry and Commerce as the Governing Body of public policies toward the Micro, Small and Medium Enterprise (MIPYME) sector. For these purposes it shall have the following functions:

• 1)

  To serve as the governing body of the Sector;

• 2)

  To promote the strengthening of financing systems and access to capital;

• 3)

  To promote the strengthening of financing systems and access to capital, for the benefit of Micro, Small and Medium Enterprises (MIPYME);

• 4)

  To establish programs and promote the formulation and execution of commercialization strategies in the national and international market of products and services produced or provided by Micro, Small and Medium Enterprises (MIPYME);

• 5)

  To promote the support and advisory services for Micro, Small and Medium Enterprises (MIPYME);

• 6)

  To ensure that programs are established and functioning correctly regarding entrepreneurship, spirit, national, regional and international business culture;

• 7)

  To promote the development of business programs and resources for the benefit of Micro, Small and Medium Enterprises (MIPYME);

• 8)

  To promote the organization of Micro, Small and Medium Enterprises (MIPYME);

• 9)

  To participate and exert influence by mandate, with prior case-by-case authorization from the Presidency of the Republic in all actions to be carried out by other public departments related specifically with the sector;

• 10)

  To promote the creation of a system of social and labor benefits for workers and entrepreneurs of Micro, Small and Medium Enterprises (MIPYME) in accordance with the reality of this business sector; and,

• 11)

  The other functions proper to the third level referred to in this Law.

The Under-Secretariat in the Department of Micro, Small and Medium Enterprises and the Social Economy Sector is hereby created, dependent on the State Secretary in the Departments of Industry and Commerce, which shall assist the Minister in:

• 1)

  Everything related to the execution of this Law and the Social Economy Sector;

• 2)

  Analyzing and formulating proposals and recommendations on policies, plans and development programs for the promotion and competitiveness of Micro, Small and Medium Enterprises (MIPYME), based on the demands and needs of these enterprises;

• 3)

  To encourage and provide opportunities for the full incorporation of its members into the formal economy;

• 4)

  To manage, coordinate and channel the technical and financial resources intended for this sector, without coordination of the different actions of the public sector and public or private organizations and institutions, national or foreign and international cooperation oriented toward its promotion;

• 5)

  To create a favorable environment for Micro, Small and Medium Enterprises (MIPYME) and provide them with business development services oriented to support them in aspects such as: improvement of their production, management and commercialization systems, promotion of business associativity; improve their access to information, financial services, training and technical assistance in order to establish an adequate business climate and achieve optimal competitiveness of the sector;

• 6)

  To generate special programs that stimulate the creation of new initiatives;

• 7)

  To incorporate in all its actions cross-cutting approaches, such as: social responsibility, transparency, gender equity and environment;

• 8)

  To develop technical capabilities, adequate management and public concertation and promote the same capabilities in the private sector; and,

• 9)

  Others that correspond within the framework of this Law.

The Under-Secretariat of Micro, Small and Medium Enterprises and the Social Economy Sector shall be assisted by the General Director of Promotion for Micro, Small and Medium Enterprises (DIF'OMIPYME), as well as by an Advisory Council by Work Tables by levels, sectoral and territorial ones made up by the different Work Tables of the institutions and organizations of the sector. The specific functions shall be established in the Regulation of this Law.

The National Council of Micro, Small and Medium Enterprises (CONAMIPYME) is hereby created as an organism for participation in proposals and definitions of projects, advisory and consultation of the State Secretary and Under-Secretariat in the Departments of Industry and Commerce. The National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall have the following functions:

• 1)

  To analyze and formulate proposals and/or recommendations on national and sectoral policies, strategies and actions related to the promotion of micro, small and medium enterprises, especially those referring to production, commercialization, administration, financing, training, transfer and access to technology schemes, as well as the protection of material and immaterial property rights of Micro, Small and Medium Enterprises (MIPYME);

• 2)

  To analyze and formulate recommendations regarding technical and financial cooperation agreements that the Government intends to execute related to the promotion of micro, small and medium enterprises;

• 3)

  To analyze and formulate recommendations and submit to the consideration of the Presidency of the Republic through the State Secretary, measures aimed at improving the legal, social and economic framework of micro, small and medium enterprises;

• 4)

  To propose mechanisms that bring informal economy enterprises closer to formalization;

• 5)

  To promote the formulation of development plans for Micro, Small and Medium Enterprises (MIPYME);

• 6)

  To ensure that programs and projects respect the environment;

• 7)

  To propose programs and promote commercialization strategies in the national and international market of products and services produced or provided by Micro, Small and Medium Enterprises (MIPYME);

• 8)

  To promote improvements in technological management and knowledge of Micro, Small and Medium Enterprises (MIPYME);

• 9)

  To promote the establishment of programs to promote the entrepreneurial spirit at the regional and national level;

• 10)

  To promote the participation of women as a fundamental element in the productive process;

• 11)

  To ensure in the programs and projects the linking of production in Micro, Small and Medium Enterprises (MIPYME); and,

• 12)

  Others that correspond within the framework of this Law.

The Superior Direction of the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall be in charge of a Board of Directors composed of:

• 1)

  The Under-Secretary of State in the Departments of Industry and Commerce, who shall preside over it;

• 2)

  The Presidential Commissioner for Competitiveness;

• 3)

  The Presidential Commissioner for the Poverty Reduction Strategy;

• 4)

  The Director of the National Institute for Professional Development (INFOP);

• 5)

  Three (3) representatives of Microentrepreneurs;

• 6)

  Three (3) representatives of Small Entrepreneurs;

• 7)

  Three (3) representatives of Medium Entrepreneurs;

• 8)

  One representative of the Federation of Private Development Organizations of Honduras (FOPRIDEH);

• 9)

  One representative of the Network of Microfinance Institutions of Honduras (REDMICROH);

• 10)

  One representative of the Federation of Savings and Credit Cooperatives of Honduras (FACACH);

• 11)

  One representative of the Association of Municipalities of Honduras (AMHON);

• 12)

  One representative of the Federation of Chambers of Commerce (FEDEDCÁMARAS);

• 13)

  One representative of the National Institute for Women (INAM);

• 14)

  One representative of the Honduran Council of Private Enterprise (COHEP);

• 15)

  One representative of the Higher University Council;

• 16)

  One representative of the Honduran Council of the Social Economy Sector (COHDESSE); and,

• 17)

  The representation of micro, small and medium entrepreneurs shall be coordinated by the National Association of Micro, Medium and Small Industry (ANMPI) and whose regional distribution shall be made in reference to its corresponding geographic membership. To empower the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) to be able to agree by consensus to integrate other representations from Micro, Small and Medium Enterprises (MIPYME). National and international observers shall also be invited to sessions to participate with voice, but without vote.

To be a member of the Board of Directors and of the Executive Directorate, it is required to be in full enjoyment of civil rights and to be of recognized honorability.

The following may not be members of the Board of Directors:

• 1)

  Those who do not meet some of the requirements established in the previous article;

• 2)

  Relatives within the fourth degree of consanguinity or second degree of affinity among themselves or with the President of the Republic, with the Vice-President of the Republic or with State Secretaries or Under-Secretaries;

• 3)

  Debtors in default to the State, the bankrupt or those who have failed even if they have been rehabilitated;

• 4)

  Those who hold an elective public office or are members of the Board of Directors of political parties; and,

• 5)

  Those who for any reason are legally incapable of performing such function.

When any of the incapacities provided for in the previous article arises, the replacement of the respective member shall be proceeded with. The acts in which the member declared incapacitated had participated before his replacement shall not be invalidated by this circumstance.

The Members of the Board of Directors shall exercise their functions with absolute independence, under their exclusive responsibility within the standards established in this Law.

The Board of Directors shall take its resolutions in ordinary or extraordinary sessions. The former shall be held on the dates established by the Regulation; and, the latter whenever its respective President calls them. Together with the call to meeting, a copy of the agenda to be developed and of the documentation of the matter shall be sent to the members. The Board of Directors may be called at the request of the majority of its members. The Board of Directors shall only be considered constituted when more than half of its members attend the corresponding session. Ordinarily, resolutions shall be taken with the simple majority of votes, but in internal regulations qualified majorities may be established.

Each member of the Board of Directors shall have the right to one vote. In case of a tie, the President shall have the deciding vote. Members of the Board of Directors whose domicile is in a place other than the Capital of the Republic shall only have the right to travel expenses as determined by the respective Regulation. The others shall fulfill their functions on an ad-honorem basis.

The Board of Directors shall be responsible for performing the following functions:

• 1)

  To approve the internal regulations necessary for its operation;

• 2)

  To issue opinions on plans, programs and projects related to Micro, Small and Medium Enterprises (MIPYME), and on technical, financial and accounting reports;

• 3)

  To ensure the correct execution of programs and the proper use and conservation of all assets;

• 4)

  To ensure compliance with the provisions of this Law and other applicable laws and regulations, the legislation as well as the policies and other resolutions approved by the State Secretary in the Departments of Industry and Commerce;

• 5)

  To issue opinions on the operational plan, the draft budget, the annual report and budget liquidation of the Institution's programs;

• 6)

  To propose to the State Secretary in the Departments of Industry and Commerce the policy measures that in its judgment are convenient for the better fulfillment of the Institution's purposes;

• 7)

  To issue opinions on the hiring of the services of an audit firm of recognized prestige, to audit its financial statements once a year;

• 8)

  To appoint the committees or work tables that it deems necessary for the development of the activities of the National Council of Micro, Small and Medium Enterprises (CONAMIPYME); and,

• 9)

  The other functions that correspond to it according to this Law.

LEVELS: For the execution of support policies for the development and competitiveness of Micro, Small and Medium Enterprises (MIPYME), an intervention scheme shall be implemented based on three (3) floors or institutional levels.

THIRD FLOOR: The role of third floor or superior institutional level shall be exercised by the Government of Honduras through the Ministry of State in the Office of Industry and Commerce, with the support of international cooperation. The fundamental functions of this institutional floor are:

• 1)

  The design of policies, strategies and programs for the sector;

• 2)

  The improvement of the normative and institutional business environment for Micro, Small and Medium Enterprises (MIPYME);

• 3)

  The allocation of public resources to the implementation of policies;

• 4)

  The establishment of regulations for the contracting processes and program execution through operators and service providers, in order to encourage competition in selection and the quality and efficiency of their execution;

• 5)

  The dissemination of support programs for Micro, Small and Medium Enterprises (MIPYME);

• 6)

  Guarantee the transparency of markets for goods and services intended for Micro, Small and Medium Enterprises (MIPYME);

• 7)

  Evaluate the results and promote learning and improvement of programs for promoting Micro, Small and Medium Enterprises (MIPYME);

• 8)

  The obtaining and channeling of resources, public and private, national and international, intended for Micro, Small and Medium Enterprises (MIPYME), through the transfer of such resources from the Public Second-Floor Banking system to specialized financial operators;

• 9)

  Create and manage a Single System of administrative procedures that facilitates and streamlines the opening and start-up of Micro, Small and Medium Enterprises (MIPYME), with all institutions involved in this area being required to coordinate for the execution of actions and the achievement of efficient operation of this System;

• 10)

  Account for the use of public resources in programs for promoting Micro, Small and Medium Enterprises (MIPYME); and to the Institute for Access to Public Information and Transparency; AND,

• 11)

  Ensure that the National Institute of Statistics (INE) maintains an updated National System of Statistics for Micro, Small and Medium Enterprises (MIPYME), as well as facilitate all users access to such statistical information.

CLASSIFICATION OF SERVICES: The second floor at the intermediate institutional level is constituted by financial and non-financial services. For purposes of this Law, it is incompatible that resources originated or collected by the Public Sector be channeled jointly toward those second-floor institutions that simultaneously perform in time and under a single legal personality, functions in the area of financial services and non-financial services. Similarly, in order to qualify for such financing, first-floor entities must choose a line of business of a Financial nature, or a non-financial one, but not both simultaneously.

FINANCIAL SERVICES OF SECOND FLOOR: Institutions providing second-floor financial services are those federations of microenterprises of savings and credit cooperatives or other credit institutions intended to grant financing to other institutions whose objective is to provide direct credit to the enterprise. Second-floor financial institutions that qualify to access public funds may be of public or private character and shall be regulated by the rules of the National Banking and Insurance Commission or, in its case, by the regulatory body of the system established in Decree No. 229-2000, dated November 1, 2000, as applicable.

NON-FINANCIAL INSTITUTIONS OF SECOND FLOOR: Non-financial service institutions of second floor are the operators of direct service windows to meet the requirements of enterprises in the matter of Business Development Services. In the field of non-financial services, the scope of operations and powers of second-floor institutions shall be performed exclusively by the private sector and shall be regulated by this Law, as well as by the regulatory norms issued by the Ministry of State in the Office of Industry and Commerce. The responsibility of these non-financial entities shall focus on channeling and meeting the demand for business development services of Micro, Small and Medium Enterprises (MIPYME), as well as on the operation of those instruments that allow them to reach these enterprises, those services delivered by service provider institutions that these have available in the market.

FUNCTIONS OF NON-FINANCIAL INSTITUTIONS OF SECOND FLOOR: The functions of second-floor institutions, operators of service windows to meet demand for business development services, shall be:

• 1)

  The administration of financing funds for Business Development Services programs provided by third parties;

• 2)

  The provision of information and guidance to enterprises;

• 3)

  The qualification, registration and supervision of service providers and eventually the development of actions for their strengthening;

• 4)

  The linking on competitive bases of Micro, Small and Medium Enterprises (MIPYME) with service providers;

• 5)

  Quality control of financed services;

• 6)

  The obtaining of information on the impact of actions; and,

• 7)

  The contribution to program evaluation.

FIRST-FLOOR FINANCIAL INSTITUTIONS: These are those that systematically dedicate themselves to offering financial services to creditworthy borrowers or final borrowers.

NON-FINANCIAL SERVICES OF FIRST FLOOR: In the non-financial sector, the function of first-floor service providers is to offer quality services in accordance with the needs of clients, in order to contribute to the competitive development of Micro, Small and Medium Enterprises (MIPYME). CHAPTER IV BUDGETARY REGIME SINGLE SECTION

BUDGET PREPARATION: The draft budget for the programs established in this Law shall be prepared by the General Office and submitted for review by the National Council for Micro, Small and Medium Enterprises (CONAMIPYME) and subsequent approval by the Ministry to be included in the General Budget Project of Income and Expenses of the Republic through the corresponding channels. The budget to serve Micro, Small and Medium Enterprises (MIPYME) shall be financed with the resources that the State annually allocates, without prejudice to additional contributions and funds received from other sources as donations or financing for special programs with external funds, which contribute to ensure institutional efficiency. The auditing of budgetary resources is the responsibility of internal and external audits and the Court of Accounts under the terms established by the applicable laws, without prejudice to the supervision and control adopted by the administration.

PURCHASES FROM MIPYME: Within the framework of actions for equal opportunities for Micro, Small and Medium Enterprises (MIPYME), the Executive Branch, through the Ministry of State in the Office of Finance, shall raise every year to the Legislative Branch in the General Budget Project of Income and Expenses of the Republic, a proposal where it is provided that up to thirty percent (30%) of State purchases be contracted with micro, small and medium enterprises. Such purchases shall be made to the extent that Micro, Small and Medium Enterprises (MIPYME) ensure the required quality standards and offer prices within the framework of the State Procurement Law. The National Congress shall monitor each year the progress obtained in this area, with State companies and institutions being obligated to register information about the size of each of the enterprises to which State purchases are awarded. The auditing of budgetary resources is the responsibility of internal and external audits and the Court of Accounts under the terms established by the applicable laws, without prejudice to the supervision and control adopted by the administration. CHAPTER V PROGRAMS FIRST SECTION COMMON PROVISIONS

PROGRAM REQUIREMENTS: The Ministry, to achieve its purpose and objectives shall organize the programs it establishes in this Law and such others as may be necessary for the development of Micro, Small and Medium Enterprises (MIPYME). The programs, their design, results and objectives, methodology and specific activities shall be designed in consultation with each of the subsectoral working groups before being submitted for approval by the Ministry. The programs shall be framed within State policies, the norms contained in this Law and in the strategic development plans of the Micro, Small and Medium Enterprise sector (MIPYME).

EVALUATION: Such programs shall be evaluated, reviewed and updated semi-annually to measure progress in relation to the annual operational plan. They shall also be subject to a biennial evaluation by the Ministry with participation of the National Council for Micro, Small and Medium Enterprises (CONAMIPYME), for the purpose of measuring progress in achieving its goals, the objectives for its development and its impact on the three (3) subsectors: micro, small and medium enterprise.

DUTY OF COOPERATION: All departments of the Executive Branch, within the limits of their powers, are obligated to contribute to the achievement of the purpose and objectives of this Law as well as to the execution of the programs established therein by providing human and material resources.

PROGRAM MANAGEMENT: The Ministry shall be responsible for the preparation and management of programs and projects promoted by the public sector, with State resources or international cooperation, aimed at promoting and developing the sector, and shall establish mechanisms to coordinate the participation of the private sector.

STRATEGY FOR PROGRAMS: As a general strategy for the development of its programs, the Ministry shall:

• 1)

  Provide opportunities to improve the quality of life and productivity of micro, small and medium producers, giving preferential attention to Honduran microentrepreneurs, in order of subsistence, simple accumulation and expanded accumulation;

• 2)

  Promote the reconversion of Micro, Small and Medium Enterprises (MIPYME) in consonance with the preservation of the environment and international standards governing the matter, encouraging the use of clean technologies in adequate and compatible environments with sustainable development;

• 3)

  Design and execute the strategy that encourages, promotes and achieves that Micro, Small and Medium Enterprises (MIPYME) generate their production within the highest international quality standards, promoting their progressive incorporation into the National Quality Certification System, promoting the opening of markets for all those Micro, Small and Medium Enterprises (MIPYME) that achieve certification and supporting the commercial internationalization of Micro, Small and Medium Enterprises (MIPYME) through competent bodies, with emphasis on their process of insertion in Central American regional markets;

• 4)

  Optimize the linkage between Micro, Small and Medium Enterprise (MIPYME) supplier companies and large enterprises;

• 5)

  Promote the widest participation of women in the development of programs;

• 6)

  Ensure the broadest respect for the rights of children;

• 7)

  Ensure compliance with international norms corresponding to labor rights and other mandatory provisions related to the rights of workers in the sector;

• 8)

  Provide priority attention in the allocation of resources in the provision of its services to vulnerable groups such as ethnic groups and microentrepreneurs, formal and informal, and among these the microentrepreneurs of subsistence and simple accumulation;

• 9)

  Provide equitable attention to beneficiaries located in all geographical areas and human settlements where development index prevails;

• 10)

  Promote the use of resources according to the respective territorial ordering;

• 11)

  Support the consolidation and extension of productive poles in the interior of the country to facilitate the convergence of links among public and private institutions and enterprises in order to improve the competitiveness of Micro, Small and Medium Enterprises (MIPYME) located in regional economies, enabling their insertion in national and international markets;

• 12)

  Facilitate the process of specialization of Micro, Small and Medium Enterprises (MIPYME) that allows increasing their competitiveness and consequently their access to external markets with the opening provided by globalization and free trade agreements; and,

• 13)

  Use tools that enhance the export projection of Micro, Small and Medium Enterprises (MIPYME), which is the display, quality and promotion of the product, financing of exports and other related matters.

FOMIPYME: There is hereby created the Fund for the Promotion of Micro, Small and Medium Enterprises (MIPYME) with contributions from the State and resources from international cooperation, which shall be used exclusively for the development and execution of the programs established by this Law. For the constitution of the Fund, the Secretary of State in the Office of Finance is authorized to transfer, from resources derived from the coordination of external debt in other sources, for the year 2009 an initial contribution of FIFTY MILLION LEMPIRAS (L.50,000,000.00) to a trust constituted for such purpose or to the Honduran Bank for Production and Housing (BANHPROVI). To strengthen this Fund, an annual sum not less than that indicated above shall be allocated and budgeted for a period of ten (10) years.

SOURCE OF FINANCING. The National Agricultural Development Bank (BANADESA) and the Honduran Bank for Production and Housing (BANHPROVI) shall establish special lines for the financing of Micro, Small and Medium Enterprises (MIPYME), intended for working capital, guarantee funds and venture capital. For such purpose they shall especially utilize resources from multilateral credit institutions or other sources of external or internal origin. Such credit lines shall be administered under the trust structure through financial intermediaries and other institutions that provide duly qualified financial services such as Banks, Rural Savings Banks, Cooperatives, OPD's, Chambers of Commerce, OPD's and other similar entities; in all cases, credits shall be offered and granted under the most favorable conditions for Micro, Small and Medium Enterprises (MIPYME). SECOND SECTION TRAINING PROGRAMS

NATIONAL TRAINING PROGRAM: The National Training Program shall be directed at business and managerial staff of Micro, Small and Medium Enterprises (MIPYME), especially toward new entrepreneurs of this sector who wish to join the formal economy and shall pursue in particular the achievement of the following objectives:

• 1)

  Improve managerial capacity and market knowledge, signs that provide appropriate responses to the constant evolution thereof and stimulate sustained growth in the production and productivity of Micro, Small and Medium Enterprises (MIPYME);

• 2)

  Open spaces for the participation of Micro, Small and Medium Enterprises (MIPYME) in their own development, as well as their business trade associations;

• 3)

  Provide advisory services to Micro, Small and Medium Enterprises (MIPYME);

• 4)

  Improve access by entrepreneurs and workers of Micro, Small and Medium Enterprises (MIPYME) to a broader range of quality business development services in accordance with their needs, seeking the creation of the network of governmental services in the sector, through the execution of agreements with institutions specialized in the same; and,

• 5)

  Establish strategic alliances with entities or networks of specialized financial entities mentioned in this Law, which offer services in accordance with the needs of Micro, Small and Medium Enterprises (MIPYME), at the national, departmental and municipal level as well as at the international level, in order to strengthen the activity of Micro, Small and Medium Enterprises (MIPYME) and their organizations for the execution of their different programs and projects.

SINGLE INTEGRATED SYSTEM OF INFORMATION AND ADVISORY SERVICES: The program shall be responsible for administering the Single Integrated System of Information and Advisory Services for Micro, Small and Medium Enterprises (MIPYME); for this purpose it shall incorporate all institutions of the public sector, which must mandatorily provide all information at their disposal that, in the judgment of the Secretary, is of interest for the action of Micro, Small and Medium Enterprises (MIPYME). Likewise, the Secretary and the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall invite national and international public and private institutions and organizations to incorporate into the Single Integrated System the information they possess that could be useful for the utilization of opportunities by Micro, Small and Medium Enterprises (MIPYME). The program and its projects shall ensure adequate coverage at the national level so that advisory services and information are useful for the utilization of opportunities by Micro, Small and Medium Enterprises (MIPYME). The program and its projects shall ensure adequate coverage at the national level so that advisory services and information are useful for the utilization of opportunities by Micro, Small and Medium Enterprises (MIPYME). The program shall adapt training contents to the concrete needs of Micro, Small and Medium Enterprise (MIPYME) entrepreneurs. For this purpose it shall be developed in a decentralized manner and the participation and advisory services of business trade associations shall be encouraged, and it shall support projects offering business development services. THIRD SECTION INSTITUTIONAL AND LEGAL ENVIRONMENT PROGRAM

PROGRAM OBJECTIVE: The Secretary through this program shall pursue, within a framework of competitive development of Micro, Small and Medium Enterprises (MIPYME):

• 1)

  Institutionally strengthen the public and private organization for support to Micro, Small and Medium Enterprises (MIPYME);

• 2)

  Monitor and execute the Support Policy for Competitiveness of Micro, Small and Medium Enterprises (MIPYME);

• 3)

  Conduct analysis and legislative proposals for the benefit of Micro, Small and Medium Enterprises (MIPYME);

• 4)

  Simplify administrative procedures related to Micro, Small and Medium Enterprises (MIPYME);

• 5)

  Implement a System of Sectoral Monitoring and Impact Evaluation of the Micro, Small and Medium Enterprise (MIPYME) sector;

• 6)

  Facilitate access and strengthen protection of the workforce of Micro, Small and Medium Enterprises (MIPYME) to Social Security Programs: Honduran Institute of Social Security (IHSS), Sectoral Institute of Professional Training (INFOP), Private Contributions Regime (RAP) and other similar ones; and,

• 7)

  Promote access by microentrepreneurs to the formal economy. FOURTH SECTION FINANCIAL SERVICES PROGRAMS

DESCRIPTION: Through the development of this program, resources shall be channeled to Micro, Small and Medium Enterprises (MIPYME), positioning financial assistance to these enterprises on favorable terms and conditions, especially in the following areas of action:

• 1)

  Support for Innovation of Financial Services and Products;

• 2)

  Support for Supply and Demand of Financial Services for Micro, Small and Medium Enterprises (MIPYME); and,

• 3)

  Institutional and Legal Development of Financial Services for Micro, Small and Medium Enterprises. For such purpose the Secretary and the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall provide resources, coordinate with specialized institutions in resource channeling and manage pertinent assistance.

STRATEGIC ALLIANCES: The Secretary and the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall establish strategic alliances with entities or networks of specialized financial entities mentioned in this Law, which offer financial services and products in accordance with the characteristics, conditions and needs of Micro, Small and Medium Enterprises (MIPYME) at the national, departmental and municipal level as well as at the international level, in order to strengthen the activity of Micro, Small and Medium Enterprises (MIPYME) and their organizations for the execution of their different programs and projects.

DIVERSE INCENTIVES: The Secretary and the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall encourage through the diverse means at their disposal the constitution and operation in the private sector of risk rating societies, specialized in methodologies to evaluate the performance, soundness and credit risk of Micro, Small and Medium Enterprises (MIPYME) and financial intermediaries serving the sector, with the purpose of facilitating their financial and commercial management. In the same manner, it shall encourage the constitution and operation of reciprocal guarantee societies or private mixed guarantee societies that serve the financing needs of Micro, Small and Medium Enterprises (MIPYME) due to their economic conditions requiring special treatment by the State. FIFTH SECTION BUSINESS COOPERATION PROGRAMS

DESCRIPTION: Through business cooperation programs, the Secretary and the National Council of Micro, Small and Medium Enterprises (CONAMIPYME) shall promote at the national and international level, in all territorial levels of Honduras, the formation of groups of enterprises that support joint or integrated projects horizontally in the sense of financial assistance and technical assistance so that the producer develops in an integral manner; or vertically, that is, one stage of production, commercialization and distribution, according to its specialty, and then in a significant period of time at the local and national level in the development of the Micro, Small and Medium Enterprise (MIPYME) sector, creating greater awareness of the benefits of cooperation and business associativity. Likewise, corresponding methodologies shall be identified and disseminated.

INTEGRATION: The Business Cooperation Program shall be responsible for promoting in Micro, Small and Medium Enterprises (MIPYME) the utilization of economies of scale and their competitive advantages to access markets, services, technology and the benefits that business cooperation can provide them. In the same manner it shall prioritize the deepening, expansion and dissemination of the component of development of efficient processes to optimize the linkage between Micro, Small and Medium Enterprise (MIPYME) supplier enterprises and large enterprises.

ACCESS TO BUSINESS DEVELOPMENT: The Secretary shall ensure the improvement of access by entrepreneurs and workers of Micro, Small and Medium Enterprises (MIPYME) to a broader range of quality business development services in accordance with their needs, for which this program shall be executed, among others, through: 1) The Fund for Business Development Services (FOSEDEI); and, 2) Support for the Supply of Business Development Services.

CO-FINANCING: For the consolidation of business groups, business development services and joint projects, the Fund for Business Development Services shall implement a specialized line of co-financing in groups of Micro, Small and Medium Enterprises (MIPYME).

CAPITALIZATION: The Fund shall be capitalized with contributions made by the Central Government through the Secretary of State in the Office of Finance and by resources from national and international cooperating agencies. Resources may be placed by the Secretary in its capacity as trustee, in trusts, in which case it shall constitute the necessary technical committees. SIXTH SECTION MARKET PROMOTION AND EXPORTS PROGRAM

DESCRIPTION: Through this program the Secretary shall promote the products and services of Micro, Small and Medium Enterprises (MIPYME), through special national, regional and international events and shall take initiatives to reduce obstacles to the exportation of these products and services. It shall likewise promote associativity in the sector.

INFORMATION SYSTEM: This program shall promote the implementation of public information systems with access through in-person information services, telephone information centers, Internet websites, on matters related to exports and importation of inputs, which must be coordinated with the National Competitiveness Program. Additionally, through this program support and facilitation shall be provided for the promotion, organization and execution of business linkages, national, regional and international fairs and exhibitions and shall create a website for Micro, Small and Medium Enterprises (MIPYME) where commercial information by sectors and links with existing information centers shall be concentrated.

FINANCIAL SUPPORT: For more specialized services and private information, Micro, Small and Medium-sized Enterprises (MIPYME) may obtain financial support through the Business Development Services Fund, where a specific line shall be established for this type of demand through shared fund mechanisms.

INFORMATION FOR EXPORTING: In coordination with other programs, the Secretary shall develop export promotion activities, within which it shall promote the establishment of Commercial Information Centers for exporting, which shall offer information and assistance in: Market intelligence, market access, distribution channels, statistics and others. Likewise, it shall promote the formation of companies or consortiums in other certified business models regarding the quality of products or services developed or provided by Micro, Small and Medium-sized Enterprises (MIPYME). SEVENTH SECTION PROGRAM OF BUSINESS CULTURE AND SUPPORT FOR ENTREPRENEURS

DESCRIPTION: The Program of Business Culture and Support for Entrepreneurs aims to foster greater business culture, the promotion of business exchanges, the provision of financial technical assistance to new entrepreneurs, the dissemination of information about actors, services, sources of resources and especially the incorporation of microentrepreneurs into the formal economy.

COMPONENT: This program shall be executed through projects such as: 1) Business Culture; 2) Institutional and Sectorial Information; and 3) Formalization. For this purpose, it shall conduct activities such as the following:

• 1)

  The promotion of competitive entrepreneur competitions;

• 2)

  Public recognition of entrepreneurs according to their achievements;

• 3)

  The promotion of business exchanges at national and international levels through business missions;

• 4)

  The review of the secondary and technical education program to include content and methodologies that promote business culture, creativity, entrepreneurial culture and social responsibility of the entrepreneur;

• 5)

  The promotion of the establishment of young entrepreneurs programs;

• 6)

  The updating and permanent dissemination of the Business Management Toolkit for Micro, Small and Medium-sized Enterprises (MIPYME);

• 7)

  The promotion in Micro, Small and Medium-sized Enterprises (MIPYME) and new entrepreneurs of business culture and shall encourage the implementation of accounting records, as a measure of control over their businesses;

• 8)

  The promotion of the organization of Micro, Small and Medium-sized Enterprises (MIPYME) and the removal of obstacles for their development; and,

• 9)

  The promotion at levels and sectors of the trade organizations of Micro, Small and Medium-sized Enterprises (MIPYME). EIGHTH SECTION PROGRAM OF TECHNOLOGICAL INNOVATION

DESCRIPTION: Through the National Program of Technological Innovation, jointly with the National Program of Competitiveness or its equivalent, mechanisms shall be implemented to support investment in Micro, Small and Medium-sized Enterprises (MIPYME) in technological innovation, through the strengthening of networks of companies and providers of technological services. Likewise, mechanisms of co-financing shall be promoted, with resources from the Business Development Services Fund, combining shared funds, risk capital and credit to support innovation of products and processes. CHAPTER VI FINAL PROVISIONS

RATIONALIZATION AND SIMPLICITY OF PROCEDURES: All actions of the Secretary in relation to individuals shall be governed by the principles of economy, promptness and efficiency; therefore, it shall establish the bases to simplify and rationalize its administrative procedures when facilitating to propose any modification to administrative procedures provided for in the institutions of the public sector.

FAIR COMPETITION: The Secretary is empowered to, in consultation with the National Council of Micro, Small and Medium-sized Enterprises (CONAMIPYME), establish policies and enact rules of commercial loyalty and defense of competition with specific application to the relations of Micro, Small and Medium-sized Enterprises (MIPYME) with large companies, whether these are their clients or suppliers, which shall provide for the intervention of the Secretary in cases of unjustified delay or non-payment, whether from the provision of goods or contracting of services. Likewise, it shall coordinate actions with national instances in matters of arbitration for the resolution of conflicts arising from their commercial operations.

STATISTICS: The Secretary through the support and coordination with the National Institute of Statistics (INE) shall maintain a register of Micro, Small and Medium-sized Enterprises (MIPYME), program activity, geographic location, company size and other indicators, which shall have the purpose of obtaining current information on the composition and characteristics of the diverse Micro, Small and Medium-sized Enterprises (MIPYME) sectors, which allows for the design of adequate policies and instruments for the support of this sector.

COORDINATION: As an effect of this Law, all funds, programs and projects related to the Micro, Small and Medium-sized Enterprise sector

INSTALLATION OF THE NATIONAL COUNCIL OF MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES (CONAMIPYME): The President of the Republic within sixty (60) days counted from the effective date of this Law, shall increase the Members of the Board of Directors of the National Council of Micro, Small and Medium-sized Enterprises (CONAMIPYME) and shall approve the respective Regulation.

REPEALING CLAUSE: This Law repeals the Law for the Promotion of Small and Medium-sized Industrial Enterprises and Crafts, ordered by Decree No. 681 of October 23, 1978, and published in the Official Newspaper La Gaceta on November 11, 1978.

EFFECTIVE DATE: This Law shall enter into force twenty (20) days after its publication in the Official Newspaper La Gaceta. Done in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the first of October of two thousand eight. ROBERTO MICHELETTI BAÍN PRESIDENT JOSÉ ALFREDO SAAVEDRA PAZ SECRETARY ELVIA ARGENTINA VALLE VILLALTA SECRETARY To the Executive Branch. Therefore: Execute it. Tegucigalpa, M.D.C., October 31, 2008. JOSÉ MANUEL ZELAYA ROSALES PRESIDENT OF THE REPUBLIC The Secretary of State in the Departments of Industry and Commerce. FREDIS ALONSO CERRATO VALLADARES