Earlier this week, Massachusetts governor Deval Patrick led a trade mission of commonwealth business executives and government leaders to Panama. Despite its population of only 3.5 million, Panama plays a significant role as a hemispheric hub for the Americas. With an economy comprised primarily of services, versus manufacturing, Panama is rapidly expanding its position as the logistics and distribution center for Latin America.
Panama's growth rate is high at ten percent, outpacing other countries in the region. The economy is diverse, unemployment is low, and innovation is being embraced by business and government leaders.
Panama's greatest asset is the Panama Canal, currently being expanded to accommodate longer, heavier and larger vessels that carry cargo between the Atlantic and Pacific Oceans. Operating 24 hours per day, with 40 ships making passage daily, the Canal contributes $2 Billion annually to the Panamanian economy.
For Massachusetts companies interested in doing business in Panama, opportunities abound. Many of the strengths of the Massachusetts economy match well with Panama's current needs, and Panamanian businesses and government leaders are eager to partner with firms from our commonwealth. Infrastructure is a key industry in Panama, where projects are underway or being launched to expand the canal, the subway system, and the main airport. Massachusetts companies are encouraged to bid on these projects. Security—of cargo, people, planes and ships—is another sector of interest. Energy conservation and retrofitting of buildings and homes to increase efficiency is a priority for Panama. And clean energy—power, water, and more—is needed in both urban and rural areas in Panama.
Ease of doing business is a hallmark of Panama. Massachusetts companies will benefit from a US dollar-based economy, prevalent English language, a safe environment, direct non-stop air service via Copa Airlines between Boston and Panama City, and a US-Panama Free Trade Agreement which means low or no tariffs. Two former US air bases near the canal have been converted into office parks: the City of Knowledge focuses on non-profit and scientific/research companies, while Howard Air Base has attracted US companies such as Dell, HP, Caterpillar and more. Several free trade zones are also available.
Like Massachusetts, Panama needs more engineers and mid-level workers. The K-12 public education system is not working as well as it should to produce the next generation of skilled workers. Some of the discussions during this week's trade mission centered on sharing best practices in education at all levels.
Panamanians are bullish about the future. Early stage plans are already in place for the NEXT expansion of the Canal, estimated to be needed in 20-25 years. In the meantime, businesses and ports around the world, including our own Massport, are eagerly anticipating completion of the current canal expansion in late 2015.
Massachusetts firms interested in identifying business opportunities in Panama should contact AIM's Kristen Rupert, who participated in the recent trade mission, at email@example.com.