Economic reactivation and generation of Panamanian workforce

Image of the Panama Pacifico Special Economic Area.
Editorial Dept. Voz de la Diaspora

Despite the effects of the COVID-19 pandemic, the foundations of the potential of the Panamanian economy to consolidate itself as a world-class business hub have not changed.

But nevertheless, to achieve that goal, the country needs to strengthen the work and make new investments to create the ideal scenario that attracts foreign companies at the highest level.

Panama needs to adopt more technology, develop a skilled workforce, and guarantee legal security for foreign companies, since the investor seeks clear rules to operate with legal stability and trained and competent human resources.

For Hernán Riveros, Manager of Strategic Development of Clients of Panama Pacifico, the positive can be extracted from crises, and in this context, this economic area sees great opportunities by strengthening the logistics gear.

"We are the country that has the shortest connection between the two oceans, that allows us to become a global distribution center par excellence ", selaña Riveros.

Panama is a very well connected country with advantages to compete worldwide, a strong currency that adds competitiveness compared to other nations; incentive regimes for different types of industries, and an international banking center comprised of more than 70 banks established in the country that facilitate doing business inside and outside of Panama.

"The country also has an economic zone like Panama Pacifico with special laws for workers and different tax benefits for international companies installed in the area", says Hernán Riveros.

The location of Panama Pacifico is ideal for doing business, the proximity to the most important ports of the country can be an attraction for companies that wish to manufacture a product and market it worldwide.

It also offers tax benefits and hiring human resources, very attractive, that is why the global competition for this type of area is high, and it is vital to maintain it to attract companies.

Given its importance despite the crisis in 2020 they were approved 10 headquarters of multinational companies in the country, according to official data, but nevertheless, we keep wondering, What keeps companies away from establishing themselves in Panama?

Challenges

Uncertainty is an element that becomes an "enemy of investment", thus, It is important to establish laws that are actually complied with so that there is certainty of the legal knowledge and the regulations that exist in the country.

The subject of training is another determining factor, from there, the importance of investing more in the generation of knowledge through scientific research, technological development and innovation so as not to lose competitiveness in the global market.

It is necessary to adapt the educational system according to the reality and the needs of the companies, in other words, start to be creators of technologies and not just users of existing technologies.

Panama needs more engineers and scientists who can generate innovations and knowledge that add value to the products and services of companies.

During the first semester of 2020 Panama registered $1,429 million in Foreign Direct Investment (IED), a fall from 25.4% O $486 million less compared to the same period of the previous year, according to the Comptroller General of the Republic.

Last year overall the performance of FDI was negative worldwide, after falling into a 40% amid the global crisis caused by the pandemic, according to a report by the Economic Commission for Latin America and the Caribbean (CEPAL).

The agency foresees that in 2021 The decline in FDI will continue but to a lesser extent between a 5% Y 10%.

"From there, the importance of promoting Panama more abroad to enhance the benefits that this country offers ", Riveros said.

Combined efforts

Panama Pacifico is undoubtedly an example of the advantages that the country offers to investors at the highest level, and it is key to economic reactivation.

Since its installation only in infrastructure, it has invested more than a billion dollars, constituting an important injection for the Panamanian economy, besides being a source of job creation.

It currently employs more than 10,000 collaborators who are part of the commercial community of the area, who receive competitive salaries, Panama Pacifico currently maintains the highest minimum wage in the country.

During the 2020, the Panama Pacifico Area stood out as one of the most competitive industrial complexes, and largest in the national territory, testing your capabilities.

More of 300 companies remained active as bastions of the logistics chain, and they did it in an organized way, complying with biosecurity measures.

One of those companies is Panama Transshipmer Group PTG, logistics operator dedicated to the transfer of containers, and the care of refrigerated equipment in port facilities and ships.

Another example of high productivity to meet key needs is FedEx, that has continued to operate with the deliveries of medical supplies to meet the growing demand for COVID-19.

Hence, laws such as EMMA and SEM become good news for Special Economic Areas such as Panama Pacifico and other free zones..

The law reinforces the establishment of companies within Panama Pacifico, whose infrastructure allows the optimal development of the manufacturing industry.

In Panama, logistics activity is one of the main engines of the economy, which according to the Ministry of Commerce and Industry, provides the 30% of the Gross Domestic Product (Schedule) from the country, therefore its sustainability is crucial to guarantee the recovery and reactivation of all activities.

Panama is going through a key moment to become more competitive and offer the best conditions for those who want to invest in the country.

Regulations have been promoted that motivate the arrival of foreign capital, as the Headquarters of Multinational Companies, which in recent years attracted dozens of financial companies, technology and services, among others.

For the economist Víctor Cruz, the pandemic has affected the world as a whole, Thus, the efficiency and competitiveness of the countries has been disrupted, however new opportunities always open up even in times of crisis. "The basis of the investments made so far in the various areas such as highways, electricity, sanitation and transportation profiles Panama to maintain its competitiveness. If companies moved part of their operation to Panama and not simply a series of tasks, then the competitiveness of the economy would have another face ”, emphasizes.

According to economist Cruz, Panama Pacifico legislation that promotes investment attraction is favorable, like other export zones, but operations require more weight to generate a contribution higher than what is reflected today.