SMART MONEY PANAMA PIMM02

8/14/2019 SMART MONEY PANAMA PIMM02

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Like many great ideas,Panama Internation-al Merchandise Mart(PIMM) is a remark-ably obvious one. When

Reynald Henry Katz, President andCEO of PIMM, needed space to mar-ket his products in Panamas ColonFree Zone and was shown to theback of a line of 2,500 prospective

clients, he decided to go elsewhererather than wait his turn.

Elsewhere is now a billion-dollarproject, where work began in 2007and is scheduled for completion by2012, to build the first-ever whole-sale showrooms in Latin America.PIMM will be a permanent tradefair, where manufacturers, distribu-tors and exporters can showcaseproducts year-round in a dedicatedenvironment to which buyers and

importers will inevitably be drawn.Showrooms are available in 34

themed buildings, accounting for11 million square feet of floor space.The complex will eventually house6,800 units, offering everythingfrom cars and trucks to apparel andfootwear, from jewelry and acces-sories to furniture and housewares,from electronics and appliances totoys, gifts and even flowers.The 92-acre full-service complex

will also include hotels, apartments,office suites and a conference

PIMMThe cornerstone of Latin Americas first showroom complex will be laidin Panama in January 2008, with 6,800 units for sale and rent by 2012

PANAMA INTERNATIONAL

MERCHANDISE MART

General view PIMM project


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center and, after completionof the initial phases, there will stillbe plenty of room to grow. Laid outin a similar fashion to a small town,PIMM is located adjacent to the FreeZone, close to the end of the PanamaCanal, and by 2009 will be linked tothe capital, Panama City, by a newhighway in just 20 minutes.The Colon Free Zone on PanamasAtlantic coast is the second largesttax-free transshipment complex inthe world. Its volume of trade in2006 was worth close to $15 billion,almost 18% more than the previousyear, and forecasts see this continu-ing to grow after planned expansionwork is completed.With 560 million potential custom-ers throughout Latin America and

the Caribbean, not to mention a300-million strong market in NorthAmerica, its no accident that PIMMis located in Panama, at the veryhub of the Americas. The fact that2,500 other companies also needshowroom space proves demand isthere too.With a stable government, inflationat just over 2%, no tax on profitsand the US dollar as legal tender,Katz believes Panama is the best

place to invest in Latin America to-day. And for those from outside theUS doing business with Americanclients on a regular basis, meetingin Panama means no immigrationhassles.

each unit, initial investments shouldbe recoverable within three years.Its no surprise to learn that the firstphase sold out in just three monthsfor $135 million.Phase one, scheduled to last untilthe end of 2008, represents an in-vestment of $100 million for theconstruction of 11 buildings in-cluding the conference center and120 apartments. The second phase,which will be completed in 2009,includes another four showroombuildings, three for office space,180 more apartments and the first125-room hotel, and will cost in theregion of $126 million.The next two years will see the mostambitious phase costing around$240 million. No less than 16 new

showroom complexes will be erect-ed, in addition to two office build-ings, three new apartment blocksand another hotel. The final phasewill be undertaken in 2012, andadds the six final showroom build-ings, more apartments and extrahotel rooms.Operating costs from 2007-2012have been conservatively estimatedat $135 million, 20% of the proj-ect value, and will see 34,000 jobs

created locally to meet the demandsof clients. PIMM forecast that thePanamanian government should re-ceive an economic impact from theproject of more than $434 millionby the end of 2012.

Then there are the advantages ofdoing business at PIMM: proxim-ity to key markets, low set-up andoperating costs, an unrivaled choiceof goods for buyers, permanent fa-

cilities and services for sellers, andno language problems with partnersacross all of Latin America.With showroom prices starting fromjust $125,000, PIMM estimate that,with annual sales of $2 million for

PIMM location and buildings layout

Condos and office building


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If you want to invest,

Panama is the placeBorn in France, Reynald Henry Katz has workedin Europe, the Middle East, China and the US. Hefirst came to Panama in the 1970s, but only in 2001decided to settle here and do business.

Katz showed entrepreneurial flair early on. At 19,he helped develop an anti-cracking nail polish whichsoon accounted for 80% of market share worldwide.ICI later bought the business for $8 million. He thenheaded to Italy to manufacture lipsticks for Europeand, increasingly, the Middle East. Seizing the chance

to explore virgin territory, he moved to the region andmade cosmetics there before moving to the US.

Katz arrived in Miami in the 1980s and set up acompany making budget perfumes, selling out to aUS manufacturer in 1996. Meanwhile, he had beenapproached by the US government about using hisknowledge to develop shopping malls in China.

Advising the Chinese government, Katz createda model for cosmetic retailing used nationwide andacted as a liaison for US manufacturers. He thenreturned to the US in 1988, in time for the Internetboom, and developed an online duty-free e-com-

merce business. After the dotcom crash, Katz cameto Panama. His first venture here was a liquor distri-bution company in the Colon Free Zone serving LatinAmerican markets.

Again, Katz saw a need for quality, budget prod-ucts and now controls 16% of the Colombian marketwith his brands. Looking to promote these, he en-quired about showrooms in the Free Zone and wastold to join 2,500 other companies in line. The rest ishistory, as he explains:

The idea [for PIMM] was born in 2006, simply be-cause there was no space in Colon. So we decidedto open showrooms [to serve] this need, just as theAmericans have done in Miami and Los Angeles. We

created PIMM in Panama as there is nowhere else togo locally and in Latin America.

Our business is bigger, the concept is bigger,than the Free Zone itself. Panama has always beena country where goods are sent from, but what weneed here is to sell. We are the salespeople.

Most of our clients come from countries likeChina and India but weve had a great responsefrom the US, from companies who export fashion,manufacturing in China and selling to Latin America.I also think Spanish and other European companieswill come [here] as they expand. Panama and Latin

America offer easily accessible markets for them.We have showrooms and offices from $2,500per square meter, expensive by Panamanian stan-dards but cheap for Europe, China and the US. Youwont find anything at that price in Beijing, whereyoull be paying $10,000 minimum.

We are also selling apartments at $1,000 persquare meter as were providing a service and think-ing about clients from overseas. We are selling theseat reasonable prices so clients can invest in show-rooms. Its a real plus to be here all the time to lookafter your business.

I put up part of the capital and we found banks

to back the project. We did so by [selling] an oppor-tunity not only in the project, but in a country whichis growing at 9% and will continue to do so with theexpansion of the Panama Canal. This means that theentire multi-modal logistics infrastructure for the re-gion is in Panama.

Panama is stable, uses the dollar and is in the cen-ter of Latin America. I have traveled to 42 countriesaround the world but I ended up here in Panama.

Interview with the president of PIMM

MR REYNALD KATZ

PRESIDENT OF PIMM


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