DAVID STUBBS ECONOMIC & BUSINESS UPDATE Panama July 2012
Why should I care? Economic health of a country impacts everyone living or investing there. Infrastructure investment Job creation Future real estate values Foreign direct investment
Size: 75,517 km 2 29,157 sq mi Population May 2010: 3,322,576 Density: 44.5/km 2 115.3/sq mi GDP 2008: $26 billion GDP (PPP) 2008 Est: $42.446 billion GDP (PPP) Per Capita: $12,503 Capital--Panama City 1.7 million, metropolitan area Legal System Civil Law Napoleonic Code Panama -- Basic Country Data
Legal System Tip #1 Find yourself a trusted Attorney Tip #2 Know the law as it applies to you Panama_laws_for_expats@yahoogroups.com
Size: 75,517 km 2 29,157 sq mi Population May 2010: 3,322,576 Density: 44.5/km 2 115.3/sq mi GDP 2008: $26 billion GDP (PPP) 2008 Est: $42.446 billion GDP (PPP) Per Capita: $12,503 Capital--Panama City 1.7 million, metropolitan area Legal System Napoleonic Panama -- Basic Country Data
Panama Location Location Location Strategic aspiration à Singapore
Growth Rate Percentages 14 12 10 8 6 4 2 0-2 -4-6 2004 2005 2006 2007 2008 2009 2010 2011 2012 Panama USA GDP Growth %
Growth Rate Percentages 14 12 10 8 6 4 2 0-2 -4-6 2004 2005 2006 2007 2008 2009 2010 2011 2012 Panama Latam World GDP Growth %
Lower debt à improved credit rating Central government debt Percent of GDP 70.4 66.2 61 53.7 45 43 40 Public debt ratings Standard & Poor s 2004 2005 2006 2007 2008 2009 2010
Making the grade in 2010 Brazil Peru Panama Mexico Chile Fitch Ratings BBBpositive BBBpositive BBB stable BBB stable A+ stable Standard & Poor s BBBpositive BBBpositive BBB positive BBB stable A+ stable Moody s Baa3 positive Baa3 stable Baa3 positive Baa1 stable Aa3 stable
President Martinelli Strategic Plan for Development Economic & Social strategy Five Year investment plan Financial Programming
Strategic Government Plan Focusing on Our Competitive Advantages to Drive Sustainable Growth Alberto Vallarino Minister of Economy and Finance
Investment Plan by Sector Transportation Education & Culture 10% 5% 12% 13% 17% 32% Health Administration & General Services Labor & Social Welfare Agriculture Justice and Public Protection Housing Industry, Commerce & Tourism Energy Environment
Panama City Priorities
Integrated Transportation System Modern buses and a new system
Integrated Transportation System
Government City
Panama Metropolitan Area Metro Bus $270M Metro $1,500M Government City $360M Cinta Costera n Phase One $190M n Phase Two $52M n Phase Three $777M Bridge of the Americas $50M Panama City and Bay cleanup $140M Panama Pacifico $ 700M
Companies who have made the move Maersk Line Political stability and quality of life Halliburton Inexpensive real estate P&G Telecommunication infrastructure Dell Connectivity with region Caterpillar Advantages of Law 41 Sinpopec Safety, immigration flexibility Total of 68 so far
Key Growth Drivers Logistics Tourism Agriculture Financial Services
Logistics Panama can leverage the success of the Canal and be the value added logistics power of the hemisphere The Opportunity: Ensure that the canal remains a competitive logistics backbone and leverage traffic to generate income by providing value added services to products passing through
Panama Canal -- 13 years of success 3 major milestones: Dramatically increased revenue Tonnage increase Price increases Decreased transit time from 33 hours to 23 hours Returned $4.5 Billion to the Treasury.
Ripple effect of Canal #1 Maritime Registrations Major business in Maritime Insurance Major business in Trade Finance Employment Direct 5,000 Colon Free Zone Port } 2009 billed $10.6 billion Key location for undersea marine cables for internet access
Tourism Panama is positioned to become a world hub for high-end Sun & Beach, Business & Shopping and Eco-tourism The opportunity: Leverage Panama s unique geographical and infrastructural advantages to attract luxury sun & beach, and ecologic tourists, and become the business hub of the Americas Tourism is growing but. Panama still lacks a distinctive brand Lack of qualified staff for top destinations
Agriculture Panama has a unique opportunity to focus on highmargin crops where a comparative advantage exists The opportunity Maximize land-use around highmargin export oriented crops (e.g., tropical fruit)
Financial Services Financial Services sector will remain an important driver of growth without significant government investment requirements The opportunity: To ensure that Panama becomes the financial sector hub for Latin America and the Caribbean
More Investments Canal Expansion $5.2B Panama City to Colon highway $267M Highways project in Chiriquí $180M 5 new and renovated hospitals $386M Expansion of Int l Airport in David $25M New International Airport in Rio Hato $60M Fourth bridge over the canal Metro Line 2 tender in 2013 South Terminal at Tocumen $400M National Internet Network 600 hotspots in 22 cities Partial list of new infrastructure projects already announced
$13B investment plan Up to 7% of expected GDP Triple spend of previous Government 3000 2500 2000 1500 1000 500 0 Public Spending Apparently someone forgot to tell Panama about the world economic crisis $ Investment Plan
Panama The Hub of the Americas Better Infrastructure Lower cost of living Faster growth 8 to 9% p.a. Achieve reforms in education, health and security Aggressive goals for tourism, hotels, international airports Double GDP over 10 years Create 500,000 to 800,000 new jobs A new Sovereign Wealth Fund
DAVID STUBBS ECONOMIC & BUSINESS UPDATE Panama July 2012