Page 26 - Preview (PA)

ECONOMY
Central American country into a strategic hub for commerce and security in the Americas and around the world. Sole responsibility for operating the canal was handed over by the United States on December 31, 1999. In 2007, Panama broke ground on its ambitious plan to double the canal’s capacity by 2016. Rising concern about the growing size of the global cargo fleet spurred the Canal Expansion Project, which will allow passage of larger ships, including tankers carrying liquefied natural gas (LNG). Producers on the U.S. Gulf Coast have been eager to sell LNG in the Asian market. The project will also increase the efficiency of the lock system, recycling 60 percent of the water from each trip.
Rapid transit and highways
In April 2014, Central America’s first rapid transit system came online, as the initial segment of Panama’s Metro—just under 14 kilometers of rail—opened in Panama City.The first line was built at a cost of more than $2 billion. Under the master plan for the Panama City Metro system, more than $10 billion in projects are to be completed by 2035, including three more lines and a tram. Funding is currently being lined up for the 24-kilometer, elevated second line, which is projected to cost around $2 billion and will connect to Tocumen International Airport.
In addition to the Metro, the government is currently planning the construction of five major highways that are designed to reduce congestion and increase connectivity between strategic areas like the Colón Free Trade Zone, Tocumen International Airport, and the new transit stations.
Regional air hub
Tocumen International Airport, the home airport of Panama’s flag carrier, Copa Airlines, is the largest intra-Latin American traffic hub in the region, flying approximately 220,000 seats per year; Lima is a distant second with 140,000. Copa has direct flights to 69 destinations in 30 countries around the Americas and the Caribbean, flying as far north as Toronto, Canada, and as far south as Montevideo, Uruguay. Tocumen is the only airport in Central America with two runways. It has been upgraded to handle the Airbus A380, and its 83,000-square-foot cargo facility—the largest in Central America—serves as a hub for DHL.
A booming office market
In addition to the large infrastructure projects currently underway, Panama is in the midst of a boom in office construction, particularly in the capital. Seventy percent of investment in the private sector comes from construction. Panama City is the 11th-largest office market in Latin America, and its annual production ranks with much larger cities like Santiago, Chile, and Lima, Peru. Office rents, however, are among the lowest in region.
New sectors bolstering growth
GDP powered by communications
The growing contribution of information and communications technology (ICT) to the Panamanian economy rests on several pillars:The Multinational Enterprises Headquarters law has been a factor in inducing companies like Dell and Hewlett-Packard to make the country their regional headquarters; incubators like City of Knowledge have attracted academic expertise from entities such as Georgia Tech and the Smithsonian Institution; and the
David
Hanono
CEO
CIF Express, S.A
Colón: Marketplace to the World
David Hanono, CEO of cargo consolidator and dispatcher CIF Express, S.A., believes in Panama. The government is stable, and the dollarized economy is strong. The banking system is robust and growing, which has led to a burgeoning insurance industry. And Panama is diversifying, putting new resources into virgin agricultural territory.
There is one element of Panama, however, that Hanono lives and breathes: the Colón Free Zone (CFZ). Touted as the world’s second-largest free zone after Hong Kong, Hanono argues that it is actually number one, thanks to its “zero tax on income produced from work of the free zone.”
With nearly 30,000 employees benefiting as many as 150,000 people indirectly, the free zone also supports many ancillary businesses and employees, including gas stations and truck and taxi drivers.
Hanono describes the approximately 600-acre CFZ, located at the Atlantic Ocean entrance of the Panama Canal, as a “master stocker,” with warehouses holding everything from electronics, silverware, and sundries to clothing, shoes, and fabric. The system is held together by loyalty, trust, and conocer a tu cliente—knowing your customer.
President Enrique Jiménez created the Colón Free Zone in 1948 to foster employment following the semi-boom of the World War II years. Mission accomplished: With nearly 30,000 employees benefiting as many as 150,000 people indirectly, the free zone also supports many ancillary businesses and employees, including gas stations and truck and taxi drivers.
Hanono cites a number of factors contributing to the country’s economic success, particularly the canal, the CFZ, the nation’s connectivity, and easy access to markets like Chile, Peru, and Brazil. Panama is “a pathway of anything and everything,” he says. “People, merchandise, ideas.”
24 STRATEGY