Panama China Relations

Eyeing China, Panama’s Doors Are Wide Open

By in Blog with 10 Comments

Since Panama and China established diplomatic relations earlier this summer, the two countries have moved swiftly to open up new communications channels, and, you guessed it, trade has been high on the agenda.

A diverse Panamanian delegation from the Ministries of Security, Economy, Commerce and the Maritime and Tourism Authorities are on their way to China right now, following on the heels of the first Panama-China Trade and Investment Forum last month.

The Grand Plan (for China)

The pieces in China’s grand strategy seem to fit together seamlessly. China’s “One Belt, One Road” (OBOR) plan – a 21st century version of the ancient Silk Road, aiming to become the world’s largest platform for economic cooperation – has been on a roadshow the world over.

And, as the U.S. bows out of the Trans-Pacific Partnership and China fills the vacuum, courting Latin America with energy and infrastructure deals, it looks like Panama will increasingly become the gateway for China’s access to New World markets.

The Canal, the Master Plan to develop its banks, and the logistical hub around it will become a launch pad to boost trade, serving as a regional distribution center for any of China’s industrial giants looking to promote their exports in the Americas. As we said in our last article, some have been doing this quietly already — from diversified investments in ports, to telecom, to residential real estate even – paving the way for the bigger bids to come.

What’s In It For Panama?

But what’s Panama’s plan going into the negotiations?

Panama’s exports to Asia rose to US$51 million in 2016, up 23% on the previous year, all for commodities (copper and aluminum, wood, coffee…). On track to sign a Most Favored Nation Agreement to get preferential rates for Panama-registered vessels should help boost exports further.

And, to diversify growth, on their trip to China this week Panamanian officials will likely aim to position Panama as a potential regional HQ for Chinese companies and financial institutions, and pitch infrastructure projects to attract more Chinese investment (some via public-private partnerships). The good news is, OBOR’s 2017 vision (published just the day before the diplomatic relations between Panama and China were established) emphasizes sustainable development and environmental protection as core principles, so making these a cornerstone of cooperation can be in both counties’ interests.

Boosting tourism is also on the agenda during the visit, and, given Panama’s favorable residency requirements, expect more (much more) residential real estate investments from individuals, as well as developers.

Finally, a future trade agreement would be the icing on the cake – but there’s much that can be accomplished in the meantime.

About The Author

Kent Davis, founder and Managing Director at Panama Equity real estate, has been widely quoted in publications such as Wall Street Journal, Time Magazine, The Miami Herald and the Financial Times for his unabashed views on the Panama real estate market. Panama Equity is regarded as one of the most active real estate agencies in Panama and Kent’s articles, reports, and market research projects have been syndicated by press agencies including Bloomberg and the Associated Press.   Connect with the Author via: Email | LinkedIn | Facebook | Google+

10 Comments

  1. judy says:

    It seems Jeff that the government is taking the opposite approach on labor laws. Instead of speeding up issuing work permits to those willing and able, they instead are focusing on driving establishments (especially restaurants) out of business because it is impossible to find enough permitted staff to hire and therefore shut down because of this. Those with papers have even less incentive to offer great customer service since they know their job is secure even if their performance is shoddy. I walked into one place and the employee didn’t even bother to glance up from their cell phone while I stood there waiting for service. There is still an unfortunate perception that it is somehow degrading to serve someone else and therefore a large percentage of the workforce won’t work at certain jobs. In contrast, in the USA you have college kids (or aspiring actors) eager to take these jobs in a heartbeat. Until this changes, the labor situation will continue to be problematic and chase potential employers (and development) away.

  2. Bob says:

    Hi Jeff, I read your posting and agree that Panama is behind in several areas but what did you refer to when stating that tourism is behind… due to the restrictive laws Panama has limiting anyone from offering services?

  3. Marie Pecorella says:

    It will be interesting to see how all this plays out  for Panama and the time frame for new development by the Chinese.
    As for me I plan on visiting Panama City early next year to see if the city is what I’m looking for; and a visit to the Coronado area as I’ve been advised by expacts before any purchase of a vacation property; regards.

    • Kent Davis says:

      Marie, indeed! Let’s see how this plays out. And you are wise to spend time visiting both the city and Coronado. And if you are looking for a more small town beach feel, make sure to also check out Pedasi!

  4. Frank P. says:

    Very interesting Kent. Good useful information as always. Keep up the good work!

  5. Lewis G. says:

    The impact of Chinese investment on Panama and greater LatAm will be significant.  Chinese investors are chomping at the bit to diversify their portfolios: LatAm Commercial RE, Agricultural Commodities, even the infant capital markets…  Exciting times!

  6. Jeff says:

    Development of products to export should be high on Panama list of in country things to do. Changes to labor laws to make the Panama work force more competitive at this point labor in Panama is so hard to deal with that international companies leave due to the lack of skilled labor and the out dated labor laws. Education improvement are the number one long term solution. Easy immigration laws for Skilled workers is one of the best short term solutions as that would allow Skilled workers to come to Panama which has a big shortage of skilled workers. For tourists Panama needs to develop much better in country tourist services which are way behind most 3rd world countries mostly due to the restrictive laws Panama has limiting anyone from offering services.

  7. Henry lesnick says:

    Is it reasonable to assume that the dowtown residential project planned by u developer will alsobe near chinese  corporate development centres? Any idea when pre contruction offering for residential project will be available?
    All the best,
    Henry

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