PANAMA: Building a Global Business Platform Jose Pacheco Tejeira Viceminister of Foreign Trade Ministry of Trade and Industry Panama

PANAMA: Building a Global Business Platform

Jose Pacheco TejeiraViceminister of Foreign TradeMinistry of Trade and IndustryPanama


Strategic Geographical Position

Connectivity through land, sea and air

Open Service Dollarized Economy

International Financial Center

World Class logistic Platform

Ideal Site for doing business

PANAMA PROFILE


• GDP – Real growth rate (%):- Year 2010: 7.5- Year 2011: 10.6- March 2012: 10.6

• GDP per cápita: US$8,622 (2011)• GDP composition by sector (%):

- Agriculture: 4.1 - Industry: 16.7- Services: 79.2

• Inflation rate (%): 5.9 (2011)• Unemployment rate (%): 4.6 (March 2012)• Population: 3.5 millons• Life expectancy at birth: 77.9 years

- Male: 75.2 years- Female: 80.9 years

• Total area: 75,517 Km2


Panama Trade PartnersPanama has pursued a policy of liberalization and free trade

USA

South Korea

EFTA (European Free Trade

Association,Iceland – Liechtenstein –

Norway - Switzerland)

SINGAPORE

ROC (Taiwan)

PERUEnforcedSigned (under implementation)Negotiating (4 agreements with 7 countries) and Integration process with SIECA (Central America)

Central AmericaCosta Rica, El Salvador Honduras,

Guatemala, Nicaragua

CANADAADA Association

Agreement between EU and Central

America (27 countries)

CHILE

RANKING OF IMPORTS BY COUNTRY


No. PAIS IMP 1998 %

1 UNITED STATES 1,351.0 39.5%

3 JAPAN 308.4 9.0%

4 MEXICO 164.8 4.8%

6 COSTA RICA 101.7 3.0%

8 COREA 91.3 2.7%

9 COLOMBIA 64.3 1.9%10 GUATEMALA 55.7 1.6%

11 GERMANY 45.4 1.3%

12 SPAIN 44.7 1.3%

13 UNITED KINGDOM 40.3 1.2%

15 FRANCE 32.2 0.9%

16 TAIWAN 30.8 0.9%

17 BRAZIL 27.8 0.8%

18 CANADA 27.6 0.8%

21 EL SALVADOR 23.8 0.7%

24 CHILE 19.4 0.6%

25 PERU 18.3 0.5%

27 CHINA 12.7 0.4%

29 HONDURAS 12.3 0.4%

55 NICARAGUA 1.7 0.0%

57 SINGAPORE 1.2 0.0%

No. PAIS IMP 2007 %

1 UNITED STATES 2,079.6 30.3%

3CURAZAO ISLAMD 489.2

7.1%

5 CHINA 358.7 5.2%

6 JAPAN 328.9 4.8%

7 COSTA RICA 326.2 4.7%

8 COREA 267.7 3.9%

9 MEXICO 212.0 3.1%

10 COLOMBIA 192.1 2.8%

11 BRAZIL 140.7 2.0%

12 GUATEMALA 107.4 1.6%

13 SPAIN 107.0 1.6%

14 GERMANY 87.3 1.3%

16 EL SALVADOR 72.3 1.1%

17 PERU 69.0 1.0%

18 FRANCE 58.2 0.8%

20 CANADA 50.6 0.7%

23 ITALY 41.6 0.6%

24 CHILE 40.8 0.6%

26 TAIWAN 32.8 0.5%

27 UNITED KINGDOM 32.6 0.5%

54 SINGAPORE 3.3 0.1%

No PAISIMP

2011 %

1 UNITED STATES 2,826.7 24.9%4 CHINA 689.7 6.1%5 COSTA RICA 509.8 4.5%6 COLOMBIA 469.6 4.1%7 MEXICO 445.3 3.9%8 COREA 303.8 2.7%9 SPAIN 294.4 2.6%

10 JAPAN 292.1 2.6%11 BRAZIL 217.4 1.9%12 GUATEMALA 196.5 1.7%13 GERMANY 166.1 1.5%16 EL SALVADOR 103.8 0.9%17 CANADA 86.3 0.8%18 ITALY 86.1 0.8%20 PERU 68.5 0.6%21 CHILE 67.1 0.6%22 FRANCE 52.2 0.5%25 TAIWAN 45.6 0.4%27 UNITED KINGDOM 37.1 0.3%43 NICARAGUA 15.5 0.1%44 SINGAPORE 13.1 0.1%

Ranking includes CFZ and Petroleum Processing Zones

IMPORTS 1998 IMPORTS 2007 IMPORTS 2011 (P)

Investment Grade + Foreign Investment + Sustained Growth

Fuente: FMI (2010).

– 2006: +10.1%– 2007: +12.2%– 2008: +10.7%– 2009: +3.2%

– 2010: +7.5%– 2011p: +7.0%

2005 2006 2007 2008 2009 2010 500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

2,362.5 U

S$

Mil

lio

ns

+33%

BBB Positive

BBB Stable

Baa3 Positive



Companies and Multinationals

http://www.draeger.com/

Government Strategic PlanningFocusing on sectors with the greatest potential will generate more than 500,000 new jobs over the next decade.

• The development plan prioritizes the stabilization of public finances

• Panama aims to improve on its Investment Grade credit rating and will ensure that the level of public debt stays below 30% of GDP over the next 10 years.

• Significant investments in the education, health, public safety, and transportation sectors will increase the standard of living and benefit the residents of Panama.

• During the next five years, this investment will be primarily focused on infrastructure development that will generate jobs and stimulate growth on a path towards sustainable development.

Key Growth Drivers(Measured by their impact on incremental GDP

and job creation)

Logistics Tourism

Agriculture Financial Services

Science and Technology


The Logistics Environment


PORTS

AIRPORTS

PANAMA CANAL

RAILROAD

COLON FREE

ZONE

SPECIAL ECONOMIC ZONES

ROADS NETWORK

CUSTOMS

LOGISTICS

CABINET

MAIN TASK Development of a Master Plan to promote Panama as a global logistic hub for world trade.


Connectivity Panama dominates the region with more direct connectivity

Tourism Developing a new air logistics networkPanama’s new air connectivity development plan

The plan seeks to further develop air connectivity beyond the Panama City and Colon corridor.

Through the development of 6 new airports and the expansion and remodeling of another 6 existing terminals.


The Panama CanalThe main international trade engine • Over 14,000 vessels

transit this waterway each year.

• 300 million tons through more than 120 routes.

• It’s complemented by Panama’s port infrastructure that handles an annual volume of more than 7 million TEUs.


•Estimated investment of $5,250 Millions

Cost

13

FUTURE LOCKS

CURRENT LOCKS

Figure 1: Graphical image of the expansion project. PACIFIC OCEAN•　 The Canal expansion is on schedule and is $413.8 million under budget.

•　 Completion Year: 2014


INFRASTRUCTUREThe Panama Canal Expansion The main international trade engine

SavannahSavannahYantianYantian

KwangyangKwangyang

Hong KongHong Kong

PusanPusan

SavannahSavannahKeelungKeelung

WilmingtonWilmingtonPusanPusan

NJ/NYNJ/NY

RotterdamRotterdam

Le HavreLe Havre

HalifaxHalifax

FelixstoweFelixstowe

Long BeachLong BeachLos AngelesLos Angeles

BremerhavenBremerhaven RotterdamRotterdam

KaohsiungKaohsiung

CharlestonCharleston

NagoyaNagoya ThamesportThamesport

OaklandOakland

SeattleSeattle

TokyoTokyo

ColomboColombo

ShanghaiShanghai

YokohamaYokohama

Newport NewsNewport News

HakataHakata Manzanillo (Mx)Manzanillo (Mx)

RotterdamRotterdam

KobeKobe

OsakaOsaka HamburgHamburg

ShimizuShimizu Port SaidPort Said

ZeebruggeZeebrugge

ChabangChabang

TahitiTahiti

AucklandAuckland

DoniamboDoniambo

BrisbaneBrisbane

SydneySydney

MelbourneMelbourne

Tanjung PriokTanjung Priok

SingaporeSingapore

MarseillesMarseilles

La SpeziaLa Spezia

TilburyTilbury

DunkerqueDunkerque

QingdaoQingdao

BuenaventuraBuenaventura

GuayaquilGuayaquilCallaoCallaoAricaArica

CoquimboCoquimbo

San AntonioSan AntonioSan VicenteSan Vicente

Puerto LimónPuerto Limón

IquiqueIquique

MantaManta

AntofagastaAntofagastaValparaísoValparaíso

..

BalboaBalboa

AntwerpAntwerp

ItajaiItajai

SavannahSavannahBaltimoreBaltimore

New OrleansNew Orleans

ParanaguaParanaguaSantosSantos

Puerto CabelloPuerto Cabello

VeracruzVeracruz ManzanilloManzanilloColon Colon

CartagenaCartagena

La GuairaLa GuairaGuantaGuanta

MaracaiboMaracaibo

EvergladesEverglades

KingstonKingston

MiamiMiami

Transit the Canal

Feeder services that don´t transit the Canal

BostonBoston


Maritime ConnectivityInternational Ports Connected through the Panama Canal every Week

Source : ACP

Infrastructure ProjectsNational Road and Highway Network Improvements

15

• Reorganization of Panama City’s road network: includes new overpasses in 18 intersections in metropolitan area by 2014.

• Expansion of Highways: Corredor Sur will be widened to six lanes, while Corredor Norte will be extended until the Tocumen area .

• In addition, highway segment expansion outside Panama City have been competitively awarded.

The Ministry of Public Works has engaged in a major overhaul of Panama City’s internal road network, as well as the expansion of major national highway segments.


Madden – Colon II: US$ 220 Million

Divisa – Chitre: US$ 112.1 Million

La Villa – Las Tablas: US$ 75.7 Million

David – Boquete: US$ 119.8 Million

Arraijan – La Chorrera: US$ 152.6 Million

Total: US$ 680.2 Million

Infrastructure ProjectsNational Road and Highway Network Improvements


Integrated transportation systemPublic transportation system serving GPC will integrate the Metro and Metro Bus systems.

• An international bidding process was undertaken to select the operator of the MetroBus system.

• The winner was the Colombian group Fanalca.

• Panama’s MetroBus system will have 1,200 state of the art Volvo and Mercedes-Benz buses operating on 76 routes.


ONE STOP SHOP Integrated Information System that allows the investors to easily identify all the instruments that the National Government has available for the Direct Foreign Investment.

CONCIERGE SERVICE in processes of due diligence. PROINVEX is also responsible of coordinating the international commercialization and the promotion of the exports of national products.


PROINVEXPanama Trade and Investment Agency The shortest road of investing in Panama

Incentive Laws An attractive legal framework for investment as Multinational Headquarters (SEM)Every year, more multinational companies choose Panama• Judicial stability facilitates

trade and provides investment incentives.

• One of the most competitive legislations in the region.

• Laws specifically aimed at multinational companies complement the incentives offered by special zones.

• No Taxable income (Offshore Operations)


Multinational Headquarters (SEM)Every year, more multinational companies choose Panama


Special Economic ZoneThe Colon Free Zone The most important free trade zone in the western hemisphere

Operating since 1948. Currently houses over 3,042 operators.

The second largest free trade zone in the World after Hong Kong.

The Colón Free Zone is located a few kilometers from the Panama Canal in the Caribbean sector.

Goal for 2012 is to handle $30 billion in annual trade volume.


Synergy

International Technopark

Non-governmental Organizations

Academic Organizations

Florida State University, University of California-

Berkeley, Georgia Tech University

United Nations, Unicef, Red Cross,

World Food Programme

Research & DevelopmentFor Example: Information

Technology, Biomedical, Renewable Energy


Special Economic ZoneCity of Knowlegde

1,400 hectare Special

Economic Zone adjacent to the Canal, Railway,

Ports and Panamá City.

Taxation, customs, labor,

immigration and special business

Regime

London & Regional

Panama as master

developer of the project.

Business and Commercial world class center with

residential areas of high level

Target activities will be exempt

from taxes in the Republic of

Panama

Law No. 41 of July 2004.


Special Economic ZonePanama Pacifico

Special Economic Zones Zones can be established anywhere in the country


FISCAL : Tax Exemption No

Value Added Tax and no Income Tax.

MIGRATION: Permanent Resident Visa as Investor,

Special Resident Visas, Scientist Visas , Spouse

and Dependents

LABOR: Workers´s rotation, Negotiable vacation periods.


Incentive Laws Film industry Incentives are granted for the development of the movie making and audiovisual industry

Fiscal, customs, labor and migratory incentives are granted to the industry.

Eliminates bureaucratization and guarantee prompt processes for the productions.

BENEFITS FOR THE FOREIGN PRODUCTION Sole “One-Stop-Shop” for the paperwork. Processing of Migratory and Labor Permits for the foreign personnel. Customs: Temporary custody of equipment without guarantee bond. Permits for public locations throughout the entire national territory. Link with producers, technicians, casting agencies and national personnel.

CLOSING FACTS

Panama: Where the World Meets

#1-for Financial Freedom In Latin America.

#1-for Port Facilities in the Western Hemisphere.

#1- in Latin America for Availability of Venture Capital.

#1-for Air Transport Facilities in Latin America.

#2-among Most Competitive Economies in Latin America.

#3-for Business Freedom in Latin America.

#3-in the World for Affordability of Financial Services.



Jose Pacheco TejeiraViceminister of Foreign TradeMinistry of Trade and IndustryPanama

Documents

PANAMA: Building a Global Business Platform Jose Pacheco Tejeira Viceminister of Foreign Trade Ministry of Trade and Industry Panama