Finally, it’s come true: the Honduran project has officially started. In addition, we are becoming directly involved with the Special Economic Zones industry and the Free Private Cities book is now available in French.
Próspera: The Dawning of a New Era
Próspera describes itself as a platform for economic development that is partnered with the Honduran government to create the first development hub on the island of Roatan. The regulations and taxation within this semi-autonomous hub are distinct from the rest of Honduras, which enables an environment for doing business that is supposed to be one of the best in the world. The framework instituted by the Próspera Platform enables businesses to grow profitably in a free market, and in a way that is sustainable for the environment and for local communities.
As most of you know, I contributed by helping create the legal and administrative framework and by having been Chief Legal Officer of the project for some years. I withdrew last year after the framework was eventually finished and approved by the Honduran government, but continue to be one of the investors of the project, alongside some of you readers. In addition, four of our advisers or ambassadors are operationally involved, namely Oliver Porter as Member and Rodrigo Quercia as Observer of the Próspera Counsel, as well as Patrik Schumacher, who is behind the stunning architecture and design of the project. Last but not least, Martin Klapper is an arbiter and trustee in the Próspera Arbitration Center, the dispute resolution mechanism of the project.
Próspera is located on the beautiful Caribbean island of Roatán, close to the Honduran coast. The island has a good infrastructure in place, including an international airport with direct flights from the US and two cruise ship terminals. I have been there several times over the last years and it is really a beautiful and lovely place.
What makes the project so unique, is that there is a residence contract, in Próspera called “Agreement of Coexistence”, which gives the residents transparent protection and which cannot be changed unilaterally by the operator, a majority or even the Honduran government. This is probably the first time in history that there is a real social contract, not a fictional one. Furthermore, the legal system is based on the “Roatan Common Law Code”, making Próspera the first jurisdiction worldwide to follow the ULEX model. In addition, the project has substantial autonomy with its own regulatory competencies, and a self-administration including dispute resolution and security. The unique model of choice between legal systems for businesses is outlined further on the website.
Interested readers should also have a look at PAC, the Próspera Arbitration Center, which is an innovative way of alternative dispute resolution. It was possible to convince top-notch judges from the US, Australia and Germany to serve as arbiters. This is important for creating trust with investors, businesses and residents, since Próspera is such a new and innovative approach.
In summary, the project is best described as a Special Administrative Region (SAR) in the form of a public-private-partnership. While the governmental services are outsourced to a large degree to a private company, the Honduran ZEDE law requires a state commission, which has to approve rules and regulations that are created within Próspera. There is also a kind of public representative body in Próspera, the Council. It can produce new legislation, but of course without changing the guaranteed rights of the residents, which are enshrined both in the Agreement of Coexistence as well as in the Charter of Próspera. The Honduran ZEDE law of 2013 also requires a tax structure, therefore there will be few moderate taxes. Altogether, it is a mixed system between a private governance model and a more traditional public political system. You might call it a Prosperity Zone.
How can you get involved?
Próspera Island Homes designed by Zaha Hadid Architects
With purchase, you can rely on a secured title. I remember well that it was quite a struggle convincing the Honduran administration to let the project establish its own land and property registry. It is in existence now, saving a lot of time and money to the transacting parties and is giving secured trust. Needless to say, it is fully digitalized and comes with technical and legal innovations.
To reserve a unit you will be asked to make a refundable $5k deposit. If cleared to buy after the reservation, you will have the opportunity to curate your community and customize your unit – you will also have the ability to purchase “3D property rights” to secure your views, or even space into which to expand your unit in the future. Lastly, you will have the opportunity to sign a management contract, so your property becomes part of a managed boutique hotel operation expected to yield owners between 10-15% per year (assuming 100% availability). You can learn more at the general website.
Próspera is taking reservations on a first-come first-serve basis. To reserve a unit, you can process the request by clicking this link.There are other opportunities within Próspera. You may establish a company; it is not expensive and done more quickly than is usually possibl. To do so you need not be a physical resident in Próspera, an e-residency would be sufficient. More details here.
Furthermore, the Próspera team is offering up to 100 slots in its Market Feedback Team, in which members will help shape the future of good governance. Those interested in participating should fill out this quick questionnaire.Finally, to stay informed on the effort, you can sign up for the Próspera newsletter directly.
What we are observing here could be indeed the dawning of a new era. It is not coming with a big bang but slowly materializing as an alternative. Próspera represents a new competitor in the “market of living together”, a competitor who has understood that governance is a service. The model will be successful, if it serves the main target group, the average Honduran, better than what they get now. Even if it fails, it already has set a benchmark and can be copied by others to follow. There have been Hong Kongs, Dubais and Singapores before, but this is the very first time that a new jurisdiction has been created, which offers all residents government services on a contractual basis. This alone could make the difference.
FEMAC: Bridging the gap to traditional SEZs
Now back from the future to the reality of today’s world. Several thousand Special Economic Zones (SEZ) already exist and their number is growing. A lot of governments are trying to find out how they can differentiate themselves from their neighbors and attract foreign direct investment by creating better SEZ‘s. My argument is that they should create zones that do not only attract businesses, but also qualified residents by offering an attractive model of governance. Of course, the latter should be based on ideas of private governance, which is not groundless, since many SEZ are already run by private companies.
Thus, I am happy to announce, that we have formed a joint venture called FEMAC which will cooperate with FEMOZA, the world’s leading federation for Special Economic Zones. Please find below the wording of the press release; it is self-explanatory.
Titus Gebel and Juan Torrents after signing the partnership agreement
Geneva/Douglas. FEMOZA, the World Free and Special Economic Zones Federation, based in Geneva, Switzerland, is entering a new era. After more than 20 years of activity in the sector of Special Economic Zones (SEZ), FEMOZA is partnering with FEMAC Limited, a specialized service company registered in the Isle of Man. The parties conducted an exclusive cooperation agreement, which stipulates that FEMAC will operate certain professional activities on behalf of FEMOZA. This includes, amongst other things, an online World SEZ Directory, outlining the SEZ challenges, activities and FDI terms in over 200 countries and territories. In addition, a Best Practice Management System for SEZs is being prepared and will be ready in a short time.
Juan Torrents, founder and president of FEMOZA said: “After twenty years of activity, FEMOZA has gained prestige and credibility as well as a lot of knowledge, experience and developed a network among the industry and we are repeatedly receiving requests for professional support. As a non-profit organization, we cannot serve these demands. Therefore, I am very happy that we are able to cooperate with a professional and innovative partner like FEMAC.”
FEMAC is headed by Dr. Titus Gebel, a German businessman who founded several companies before, including Frankfurt-listed Deutsche Rohstoff AG and TIPOLIS, a firm that is promoting a new form of semi-autonomous SEZs, called Prosperity Zones. Dr. Gebel was heavily involved in the structuring and implementation of the first Honduran ZEDE (Zone for Economic Development and Employment), a groundbreaking new type of SEZ. ZEDEs are based on a public-private-partnership governance model, which includes an alternative dispute resolution system.
Titus Gebel commented: “We are proud to partner with such a prestigious organization as FEMOZA. Together we can support traditional zones worldwide in implementing best practices. At the same time, we can advise interested governments in new competitive forms of SEZs. I am especially glad that Juan Torrents has agreed to serve as a director and advisor for FEMAC, so he can bring in his decades-long experience in the sector.”
Spreading the Idea
We’re excited to announce that the Free Private Cities book and website are now also available in French! As a major international language, a French translation was long overdue. We hope this translation can help spread knowledge about Free Private Cities in Europe, Africa and the Americas. If you’d like to help, please share it with your French-speaking friends.
Free Private Cities French book cover
But it’s not just us that have been busy: Our advisor Mark Frazier, together with Startup Societies Foundation President Joseph McKinney, has recently published a book on how to create new startup communities. “Founding Startup Societies” is a detailed practical guide that describes the many steps necessary to establish new community governance projects. The book also includes a variety of useful template documents in the appendices. You can find more information about it here.
Although things seem to be getting better with COVID-19, the boom in webinars doesn’t seem to be stopping anytime soon. Last month I participated in a webinar with Students for Liberty, and this Saturday 16th I’ll be participating in an E- Policy Conclave about Free Private Cities and how they could help with economic recovery after the pandemic. You’re welcome to join me in the discussion.
As always, we’re counting on your support to help spread the idea as much as possible. Please share our website, book and content with friends, think tanks, (social) media channels, politicians and others that might be interested. If you’d like to represent Free Private Cities, consider applying to become a local ambassador for your region.
Thank you for your continued interest and support. For any questions, proposals, criticism, etc. you are welcome to write at [email protected].
Monaco, May 2020