Telecoms & IT

Connecting the Future

As Panama's economy continues to expand at an impressive rate, IT and telecoms are a major driver of growth, sparking innovation and activity across the country.

With one of the fastest-growing economies in the world, Panama continues to make great strides in all sectors of its economy, including IT and telecoms. With the World Bank forecasting GDP growth of nearly 5.5% for 2017 and 2018, Panama is poised to continue expanding at an impressive rate.

Thanks in part to strong showing in the key pillars of technological readiness and innovation, Panama has risen eight places on the World Economic Forum’s (WEF) Global Competitiveness Index between 2015 and 2016 and 2016 and 2017, jumping from 50th to 42nd. The country is currently ranked 53rd in the pillar of technological readiness and 49th in innovation. Panama boasts 174 mobile cellular telephone subscriptions and 15.6 fixed telephone lines per 100 people, ranking the country at eighth and 67th in each respective category. The high cost of fixed-line telephone subscriptions has contributed to the widespread proliferation of mobile phone plans and usage across Panama. According to the World Bank, the contract mobile telephone market is dominated by Movistar, which has a market share of 52.7%, followed by Mas Movil at 24.9%, Digicel at 12.5%, and Claro at 9.9%. The prepaid mobile market is dominated Mas Movil with 42.3% market share, followed by Movistar at 35.7%, Digicel 13.4%, and Claro at 8.6%. Mobile telephone tariffs are quite low compared to the region. Though coverage is always expanding, some of the country’s more remote regions lack coverage.
The country performed well in the categories of availability of latest technologies, firm-level technology absorption, and FDI and technology transfer, ranking 31, 27, and fifth, respectively. According to the WEF, 51.2% of the population are internet users, and there are 7.9 fixed broadband internet subscriptions per 100 people. Additionally, internet bandwidth is 75.9kb/s/user, which compares favorably to countries in the region, and there are 32.7 mobile broadband subscriptions per 100 people.

According to the UN’s specialized institution for ICTs, ITU, females are the predominant users of the internet in Panama, with 52.5% of women using the web compared to 49.9% of men. In urban and rural areas this divergence persists, with 61.8% of urban females using the internet compared to 60.7% or urban males, while in rural areas 30.4% of females use the internet compared to 27.3% of males. Additionally, the proportion of all Panamanian households with radios is 71.7, while TVs is 87.5% and computers 39.6%, according to ITU.
According to the most recently available statistics from the World Bank, the ICT sector is growing faster than the economy as a whole, contributing more than USD2.4 billion to the Panamanian economy. While Panama is a strong exporter and importer of ICT goods, ICT imports represent more than 8% of total imports and ICT exports represent nearly 8% of total exports. Panama has also been working to improve its position in terms of ICT service exports. According to the World Bank, ICT services exports accounted for only a bit more than 6% of total service exports.

Panama’s access to the internet is provided via a handful of undersea cables that make landfall at either side of the Panama Canal. By locating the cables’ access points close to the canal, providers are able to insulate the system from natural disaster and attack. The newest broadband cable system is the Pacific Caribbean Cable System, a 6,000km system that connects the Caribbean and greatly enhances Panama’s broadband infrastructure. According to the latest data from the World Bank, Panama has a maximum capacity of 33,425Gbps, which is above its lit capacity of 4,455Gbps. In 2016, telecoms giant Level 3 Communications expanded its systems in Latin America, including Panama.

ICT has formed the backbone of new initiatives aimed at improving the persistent social issues in the country. Firms are recognizing that new technologies are capable of transforming the way institutions and communities interact with one another and the government. One such company is Maxia LatAm, a firm dedicated to solving pressing social issues. In an interview with TBY, Peter A. Diaz A., explained the company’s mission. “The premise was to help solve social issues as people have basic needs in every country,” said Diaz A. By emphasizing projects that can improve social needs, Maxia LatAm hopes to transform the country and the region. “Panama is important to us; we have a vision for greatness and this country has a great deal to offer.” As more and more Panamanians become connected and enter the digital economy and society, the potential for solving some of the country’s most persistent problems has grown by leaps and bounds.

The potential for Panama is also immense, and IT firms recognize the role that the country could play. In interview with TBY, Tommy Habibe Vargas, General Manager of Benchmark Technologies, discussed the changes he foresees coming to the Panamanian and Latin American IT environment. “Traditionally, Latin America has lagged a bit behind the US in IT, but the region is not that far behind. In certain areas of IT, we may even be ahead of North America. Latin America has some of the fastest-growing economies, and Panama has traditionally positioned itself as a hub for Latin America,” said Vargas. “All these factors make Panama a natural place for the IT sector, which is driven mostly by the American market.”

Directing Growth

The government has also been playing a major role in stimulating innovation and development in the country. As officials and institutions across Panama have been trying to stimulate growth and development in the ICT sector, one of the core strategies has been expanding access. Speaking with TBY, Dr. Jorge A. Motta, National Secretary of Science Technology and Innovation (SENACYT) for Panama, discussed the key role the government and SENACYT is playing in developing the country’s ICT industry. Motta noted that his office strives to strengthen “the National Sytem of Innovation by promoting programs to financially support entrepreneurs and companies that develop business innovation to create or improve a process, service, or product.” SENACYT has been so successful in this that Panama will soon be one of the leaders in Latin America in terms of registered patents.

SENACYT is also working to ensure that areas outside of the capital city have adequate ICT infrastructure through the development of Infoplazas. These Infoplazas are community learning centers that provide both access to the internet and digital training services for all walks of Panamanian life. The Infoplazas attempt to democratize digital services across Panama, and the more than 200 locations spread throughout the country serve to “help close the digital breach in Panama,” according to Motta. According to the World Bank, a 10% expansion of broadband penetration leads to an almost 1.4% increase in GDP per capita and every job directly created by broadband development leads to between 1.5 and 4.5 indirect jobs. Additionally, every dollar invested in directed low-cost or free internet stimulates activity worth more than USD7, according to the World Bank. SENACYT is trying to leverage its position to develop these types of technology-driven jobs by expanding access. As the country moves closer and closer to its goals of expanding prosperity for all of its citizens, IT and telecoms projects like the Infoplazas will continue to play a major role. By expanding access and knowledge, Panama is taking important steps towards bringing all of its citizens and residents into the 21st century.
SENACYT has not been the only institution attempting to redefine Panamanian’s relationship to technology through internet access, however. Liberty Technologies, a growing telecom firm, has committed itself to expanding Wi-Fi access to customers across the country because it recognizes the potential internet has to make major changes within society. Talking to TBY, Moises N. Abadi, General Manager of Liberty Technologies, discussed the central importance of connecting people to the internet and the efforts his firm has been making to aid the government in transforming the nation’s connectivity through the Internet Para Todos movement. “We have over 3 million registered users and hundred of thousands of users connecting to the network every month,” said Abadi. “We have seen the results over the years; students, people with special needs, and people with no access to connectivity were able to participate in the rapidly advancing world as a result of Internet Para Todos.” Liberty Technologies and firms like it have taken the government’s call to expand access seriously, and they have made great strides in expanding connectivity in the country.

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