Greetings from the Isthmus,
Panama, bucking the trend: This month, we see continued growth across all sectors and report on foreign direct investment on the rise. We also explore the relocation of some large new corporations, cruises from Panama on the cheap, and well spent government dollars!
As always we’ve also provided some great deals on Panama real estate (right hand column) and even more on our websites www.panamaquity.com and www.panama-real-estate.com.
Panama on track for 7% GDP Growth for 2010
Fiscal Conservatism=Growth for the Isthmus
According to Alberto Vallarino, the minister of economy and finance, Panama’s GDP should come in at right around 7% by years end. This statement was made on the heals of announcing current year on year growth at 6.1%.
Two major government projects are set to launch in October, including the new Transmovil project we mentioned last month (End of the Diablo Rojo), as well as the start of construction on the citywide Metro. These two major initiatives in addition to the Panama Canal expansion project should help sustain growth for the next three years according to the minister.
This month, Panama also announced a budget of $13.9B for FY 2011, but where does this money come from? Well, according to the Martes Financiero, 44% of Panama’s revenue comes from taxes collected, 30% comes from managed assets including the canal, 20% from debt, and 6% from interest on deposits.
With all of the mining concessions being awarded and the spike in economic activity (including tourism), government funding should be readily available for further expansion and country-wide projects that will benefit both foreigners and locals alike.
Projects such as the metro already have allocated $100M this year and another $500M next year, with hospital projects budgeted for $358M.
On the 21st of this month, Sr. Vallarino also stated that the current administration is committed to leaving office in three years with a clean slate and 0 deficit. This would be in accordance with the social responsibility act that limits the non-financial public sector debt to at or under 1.5%. How’s that for keeping a budget!
Foreign Direct Investment up 26%
Continued Returns for Foreign Investors
“Foreign direct investment (FDI) grew 26% in Panama during the first half of 2010 compared with the same period last year,” according to the Minister of Trade and Industry, Roberto Henriquez. During this period, the raising of capital from abroad totaled 1 Billion 44.5 million dollars, a figure that, Henriquez said, demonstrates the confidence that investors have in Panama and her prominent role in the Latin American economy.
VFC is one such example of foreign direct investment, and yet another success story at Panama Pacifico. VFC is the brand manager for over 100 well known clothing lines including Reef, Wrangler, and North Face and will be the newest tenant in the Pacific free trade zone.
This $7 billion dollar apparel industry powerhouse will not only be relocating a major portion of their staff from the US, but also plan on hiring Panamanians to fill a number of key positions. This is yet another high profile tenant that’s taking advantage of Law 41 and the tax benefits that it provides.
Long story short, foreign businesses are still gravitating towards Panama in general and Panama Pacifico specifically because of the tax advantages. And all these people need housing 🙂
Royal Caribbean Cruise line Expanding
New Routes from the home port of Panama
Royal Caribbean recently announced that they will be expanding their cruise routes from the home port of Panama. Their packages now include a seven night cruise starting at $549.00 that will make stops in Montego Bay Jamaica, Grand Cayman Island, as well as the world renown diving spot of Roatan, Honduras.
What a fantastic lineup for this new route, and with Colon only an hour away from Panama City, it’s an easy way to hop a cruise starting and ending just around the corner! For more information about routes leaving from Panama, click here.
The cruise ship industry continues to grow in Panama, especially since 2008 when Royal Caribbean announced that Panama would now be a starting and ending point for one (now two) of their cruise lines. As we reported last year, the biggest surprise for Royal Caribbean thus far has been the amount of Panamanians taking advantage of the new home port. This, combined with the large number of South and Central American passengers who are now coming to Panama (instead of Miami) to take a cruise.
It is projected that 85,000 passengers, mostly foreigners, departed from the terminal of Colon, representing 35,000 additional tourists compared to last season.
With the addition of the Spanish Cruise line Pullman this year, the cruise season in Panama will be extended two additional months and now will run from October to June. The economic impact is expected to be in the neighborhood of $72 million, according to estimates by Augusto Terracina, director of Adventure 2000, a company that operates in the home port in Colon.
Overall, a total of 350,000 cruise passengers and about 170,000 crew members will arrive in Panamanian ports during the newly extended season. Bottom line: More money for Panama’s businesses and more funds for Panama’s projects.