‘The country is a global hub’
Panama is positioning itself as a location for companies that can work the entire market in Central and South America from there. Marco Jänicke, Managing Director of AHK Panama, on the country’s underestimated potential and the opportunities for medium-sized companies in the region.
Mr. Jänicke, what do you say when the first thing that comes to mind when people think of Panama is the Papers?
Nice alliteration, I reply, but unfortunately factually wrong. First, it should be called offshore papers. Second, it’s a fact that Panama doesn’t want to be on black lists and has therefore made considerable progress in recent years in the area of transparency. And third, the country has so much more to offer besides the financial sector. Fourth, Janosch’s “Oh how beautiful is Panama” is the most fitting and therefore most quoted rhyme about the country …
Nevertheless, German tax authorities immediately become suspicious when they hear Panama and show above-average interest in business contacts there. What do the local German companies tell you?
Well, in Panama everyone pays their legally required tax, of course. Furthermore, there is of course nothing to be said against a thorough check in Germany. But for us as an export nation it is important to emphasize that the pure interest to invest in the strongest growing market in Latin America is rather an expression of foresight and foresight than an attempt to disguise certain money transfers. Panama abides by 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 the seven years that I have held the position of managing director, I have not come across one case in which suspicions have been confirmed!
Panama is perfectly connected – with Latin America, but also with Australia, with Asia, Africa.
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, with Asia, Africa. An ideal position in global supply chains! And there is not only the Panama Canal here. The second largest copper mine in the world is located here. In times of raw material shortage, the country has mineable resources of silver, gold and manganese. Mining will probably 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 in first place, unsurprisingly, with which, by the way, there are historical ties that predate the Panama Canal. However, this has not become a dependency. The tie to the USA as a military protecting power is decisive for Panama. At more than 6 percent, it will ultimately 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 U.S. dollar. However, we do not know of any political and economic problems in Panama, such as in Venezuela, which is also rich in raw materials.
Which industries should be the first to ask you about what companies can do in Panama?
I don’t want to exclude any industry 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 just because of the canal. The Pacific and Caribbean are also connected by a modern railroad 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 can be 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 by 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 communications technology is growing very strongly here, and the sector already contributes 9 percent to the gross national product. There are law firms that have had their global offices perfectly networked via Panama long before Covid.
Are there enough talents and IT experts available 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 a destination for well-trained specialists from Latin America, such as Venezuela and Colombia, for years. International specialists can be recruited here from Germany. This applies to IT, logistics, but also to the field of nursing staff. As AHK we try to place very well educated people in Germany. In the next few months, we will approach interested parties and qualify them linguistically for the German labor market. In addition, there will be dual training and programs 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 throughout Central America. Sustainability is a top priority here, and climate neutrality is also widely accepted. There is therefore a lively demand for know-how and greentech from Germany. Cooperations are being established with several German universities. I see a lot of potential, especially in decentralized energy supply, in the optimization 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 informative interview!
Marco Jänicke is managing director of the german chamber of commerce