Panama is a country from which the entire Central and South American market can easily be served. That is why InterGest has been present there since November 2021. Our local partner, Gregor Vorderwülbecke, spoke to Marco Jänicke, Managing Director of AHK Panama, about Panama's underestimated potential and the opportunities for medium-sized companies.
Mr. Jänicke, what do you say when the first thing people mention about Panama are the famous Panama papers?
Nice alliteration, I reply, but unfortunately factually wrong. Firstly, it should be “offshore papers”. Secondly, it is a fact that Panama does not want to be blacklisted and has therefore made considerable progress in the area of transparency in recent years. And thirdly, the country has so much more to offer besides the financial sector.
Nevertheless, German tax authorities immediately become suspicious when they hear Panama and show above-average interest in business contacts there. What do local German companies report back to you?
Well, in Panama everyone pays their statutory tax, of course. And there is nothing wrong with a thorough check in Germany. But for us as an exporting nation it is important to emphasise that the pure interest in investing in the strongest growing market in Latin America is more an expression of foresight than an attempt to conceal money transfers. Panama adheres to all international agreements and has been taking decisive action against unfair corporate constructions for several years. Nevertheless, German as well as European companies have to disclose their balance sheets and thus document that no dubious investments have been made. In seven years that I have held the position of managing director, I haven`t come across once a case in which suspicions have been confirmed!
If you have to briefly describe Panama's economy ...
... the first thing to mention is its geographical and geopolitical location in the heart of the Western Hemisphere. Panama is perfectly connected - with Latin America, but also with Australia, Asia and Africa. An ideal position in global supply chains! And there is more here than just the Panama Canal. The second largest copper mine in the world is located here. In times of raw material scarcity, the country has mineable resources of silver, gold and manganese. Mining is expected to contribute 8 percent to the gross domestic product this year, more than Panama Canal itself. 34 percent growth in mining last year, that's strong. Germany is in fifth place as a copper buyer, with China, unsurprisingly, in first place, with which, by the way, there are historical ties that are older than the Panama Canal. However, this has not lead to a dependency. The bond with the USA as a military protector is decisive for Panama. With more than 6 percent, it will finally have one of the highest growth rates in Latin America in 2022.
How stable is the Central American country of Panama?
Panama is and remains an oasis of stability. There have been orderly changes of government for more than 30 years. The currency is pegged 1:1 to the US dollar. However, we don't know of any political and economic problems in Panama like in Venezuela, which is also rich in raw materials.
Which sectors should be the first to ask you about what companies can do in Panama?
I don't want to exclude any sector for the time being. Panama - that's not just the 4.3 million inhabitants. The country is a global hub. As long as there is global trade, Panama will do well. Logistics is therefore a key issue. Panama has the best infrastructure on the subcontinent - and not only because of the canal. The Pacific and the Caribbean are also connected by a modern railway line onto which freight traffic can be transferred. The port of Colon is the largest port in Latin America. Furthermore, the city has the largest free trade zone in the Americas directly at the Caribbean entrance of the Panama Canal and the second largest in the world after Singapore. I was in the Colon Free Zone with a German delegation in the summer. The participants were surprised at how easily all regional target markets are supplied duty-free from there.
Which companies are already using Panama as a hub for Latin America?
We have Siemens Energy, DHL and Bosch here, who use the country as a regional hub. 80 destinations can be reached from Panama with a direct flight; recently also Atlanta in the USA! Panama is therefore an ideal location for sales teams working nationwide - a cost-effective alternative to Miami.
The IT company Dell has also discovered Panama and located its Latin American headquarters here. Information and communication technology is growing very strongly here, the sector already contributes 9 percent to the gross national product. There are law firms that have had their worldwide offices perfectly networked via Panama long before Covid.
Are there enough talents and IT experts for these growth areas?
Panama not only has a good university education, it is also a very young and open country, a multicultural hotspot. In addition, the country has been for years the destination of well-educated professionals from Latin America, such as Venezuela and Colombia. International professionals can be recruited here from Germany. This applies to IT, logistics, but also to the field of nursing staff. As AHK, we strive to place very well-trained people in Germany. In the next few months, we will approach interested candidates and qualify them linguistically for the German labour market. In addition, there will be dual training and programmes to prepare talented people from the region for companies from Germany.
What future fields are there still to be developed here?
Biodiversity is a goal in which Panama, together with Costa Rica, is a leader in all of Central America. Sustainability is very important here and climate neutrality is also widely accepted. That is why there is a lively demand for know-how and green-tech from Germany. Cooperations are being established with several German universities. I see a lot of potential especially in decentralised energy supply, in the optimisation of air-conditioning systems and in water treatment. We are happy to support companies that want to tap into this.
Mr Jänicke, thank you very much for this insightful interview!
