April brought another month of strong activity across diverse sectors in Panama. In Canal news, demand is starting to catch up to capacity for LNG shipments. On its way to Japan, the LNG Sakura transited the Canal, marking the opening of a new route from the US to Asia. The shipment originated at Dominion Cove Point (the US’s #2 LNG export terminal), whose principal clients are ST Cove Point, a consortium made up of Sumitomo Corporation and Tokyo Gas, and Gail Global LNG, a unit of India’s GAIL. In 2018, the Canal’s LNG traffic is expected to grow by 50 percent, up from 163 to 244 transits. And, port officials from Corpus Christi in Texas traveled to Panama to explore new business opportunities as they look to complete the expansion of the US’s fourth largest port and the newer, taller Harbor Bridge, both set to open in 2020.
Tourism, which represents ~11% of Panama’s GDP, was down 1.6% for the first two months of the year compared to 2017, largely due to a drop in visitors from Colombia and Venezuela (previously the second most important country of origin for tourism). To plug the gap, Panama is looking to visitors with greater purchasing power – from the US, Canada, Europe and, of course, China. Expectations are high for Chinese visitors, estimated at 50,000 this year and 150,000 in 2019. The $165 million project to build a cruise port at the entrance to Amador, led by a Chinese-Belgian consortium and expected to open by the end of 2019, is hoping to achieve exactly that by selling the route to cruise ships.
Undeterred by the lagging visitor numbers, Wingo, the low-cost airline owned by Copa, is continuing to bet on tourism growth from Latin America, reporting solid seat occupancy figures (87%) across its operations. It also added two more weekly flights between Panama City and Cartagena, as well as an additional flight to Cali.
Panama has formally met the requirements to remain off the EU’s blacklist of tax havens, since it was removed from that list back in January. Since the infamous Panama Papers, the government has spearheaded various tax reforms and signed on to international tax cooperation efforts to end bank secrecy. And, the National Assembly is currently working on a new law to punish tax fraud.
Finally, some food for thought for logistics companies, where ideas are coming in about how blockchain might revolutionize Panama’s logistics sector. As a model, blockchain could, say, enable logistics companies to connect directly with importers/exports, logistics operators, financial and insurance companies to optimize their supply chains. This would not only speed things up by leaps and bounds, it’d help lower transaction costs, eradicate inefficiencies and improve transparency along the way. Imagine what this could do to the pharmaceutical sector or agribusiness, where digitizing commercial registrations and tracing origins is a big issue.