Download Doing Business in Panama

Panama 2012
The crossroads of
the Americas, still
Domingo Latorraca M.
Partner—Financial Advisory & Consulting Services
Deloitte LATCO—Panama
[email protected]
September, 2012
Agenda
Section
1
Description
1
The macro issues
2
The challenges of an emerging economy
3
Conclusions
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The macro issues
2
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Panama: location, location, location…
Service based economy
US33 Billioin
Dollarized economy since 1904
Other
Real Estate
Primary
Industry
Energy, Gas
& Water
Construction
Finance
Hotel/Resta
urants
Logistics &
Telecomm
Stable political system
Commercial
3
Financial system fully integrated
to intenational financial system
Open economy
Strong banking regulation for regional
dollar based banking system
Relative low population
3.4 MIllion
Second highest
competitiveness in Latam
High connectivity
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The economy
Strong service oriented economy
4
Panama’s strong GDP growth (% variation)
14
12
5.9
7.5
10.6
7.6
6.6
2
3.9
8.5
4
7.2
6
10.1
8
12.1
10
7.5
 GDP: USD33 Billion
 70% in services
 Panama Canal
 Ports
 Financial services
 Trade
 Logistics
 Airline services (COPA Hub)
 Tourism (2 million visitors)
 Other significant players: construction
 Panama Canal Expansion
 Mining (under construction)
 Metro system
 Infrastructure
 Housing
 Long term expected growth rate: 5.7%
0
2005
2010
2014
Source: IMF
Average growth 2008-2012
Period
2008-2012
PAN
World
Latam
7.9
3.0
3.4
Source: IMF
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Logistics elements
Elements of the logistics activities maximizing the opportunities surrounding
Panama’s location
 The Panama Canal (14,000 vessels per year, USD2 Billion in revenue).
 World class ports on both entrances of the Panama Canal (46 million TEU per
year).
 Railway system (since 1855, moving cargo across the 60 mile trek from coast
to coast).
 Airways hub operations (COPA Airlines Hub of the Americas, reaching out to
66 destinations, from Canada to Argentina).
 The Colon Free Zone (the largest distribution operation in the Western
Hemisphere, with USD13.5 Billion in imports and USD13.8 Billion in exports)
 Telecommunications crossroads (wide bandwidth due to crossing of major
fiber optic underwater cables).
 Regional headquarters (more than 80 World class regional operations
centers).
 Strong regulated regional banking system (90 banks with USD85 Billion in
total assets, USD35 Billion in total deposits, and over 60% liquidity rate).
5
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Regional headquarters located in Panama
P&G
Maersk
3M
Brinks
GE
Unilever
Philips
Western Union
Halluburton
Catterpillar
Dell (AEPP)
6
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Public finances push infrastructure
 Strengthened public finances push an
agenda of major infrastructure
projects
 Metro for Panama City
 First line (USD1.8 Billion)
 4-5 lines in total (Govt. hopes to
contract second line before 2014)
 Major rehabilitation projects in
Panama City
 City roads
 Toll roads moving east-west
 Airport expansion
 USD800 Million
 Infrastructure
 Runway
 Gates
 Customs, immigration, cargo
7
Debt to GDP ratio (% of GDP)
45
40
41
40
39
35
38
36
30
25
20
2011
2012
2013
2014
2015
Three major rating
agencies (S&P, Fitch,
Moody) have upgraded
Panama’s sovereign
debt to investment
grade status
© 2012 Deloitte
The challenges of an
emerging economy
8
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Challenges
 With unemployment at 4.5%, human capital is scarce
 Education becomes critical.
 Strong FDI and arrival of World class operations demand advanced
economy’s rule-of-law.
 Effective implementation of free trade agreements.
 Latin America’s “new” left’s circle of influence must be kept at check.
 Human development, especially from those away from the 10% growth,
remain a significant challenge.
9
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Conclusions
10
© 2012 Deloitte
Conclusions
 Given current and expected economic conditions, there are significant
opportunities (logistics, infrastructure, trade, financial services, transportation) to
use Panama as hub for regional operations.
 Advances in public finances will continue to provide resources to push significant
changes in infrastructure.
 Financial system, with a fully dollarized economy provide favorable conditions for
regional transactions.
 Commercial integration continues to offer significant opportunities to access
larger markets from this hub position.
 Mid term economic conditions remain positive.
 Resources to face emerging challenges are there.
 Panama: the crossroads of the Americas.
11
© 2012 Deloitte
Domingo Latorraca M.
Partner—Financial Advisory & Consulting Services
Deloitte LATCO—Panama
[email protected]
+507-303-4100
12
© 2012 Deloitte