PANAMA - Economy
Minister, Commerce and Industries
Augusto R. Arosemena M. was appointed by the President of the Republic of Panama, Juan Carlos Varela, as Minister of Commerce and Industry in January 2016. Previous to this appointment, he served as Vice-Minister of the Presidency. From 2009 to 2014 Minister Arosemena served in one of Panama’s most prestigious international law firms. Between 2004 and 2006, Minister Arosemena served as the Commercial Councilor in the Embassy of the Republic of Panama to the United States in Washington, D.C. He holds a degree in Law and Political Science from Santa Maria La Antigua University and a LLM in Banking, Corporate, and Finance Law from Fordham University,
We have set a number of priorities for 2018. We are in the midst of negotiating an FTA with China, and it is our main priority given the footprint of China’s economy on the global stage. Panama-China relations alone give us a fairly full plate in terms of actions for the year. In addition, Panama is always keen to attract foreign investments, and we are continuing our efforts to lead Central America in terms of FDI. We have certain legislative initiatives and recently submitted a policy change to the cabinet aimed at making the multinational headquarters law more competitive while adapting it to OECD’s latest international standards. We are also focusing on improving exports; they have been sliding over the last few years; however, we were able to reverse the trend in 2017, recording growth of around 5%. In 2018, we are up around 11% on our exports, illustrating that our initiatives are producing significant results. Equally important, we have important projects aimed at improving the tourism industry; we are aware that tourism will play a major role in ensuring Panama’s long-term economic wellbeing. To make this happen, we need to improve not only the natural and cultural infrastructure, but also take initiatives like Colón international shopping centers. Colón plays an important role in the government’s plans, investing over USD1.7 billion through a project called Renovación Urbana, Integración Humana (Urban Renovation, Human Integration), in areas such as infrastructure, housing, sport facilities, schools, and others. It is joined with another program called Colón Puerto Libre (Colón Free Port), that grants aggressive incentives for the private sector to invest in Colón, and for consumers, tourists, or Panamanians that buy certain goods.
FDI is a cornerstone of our economic activity, representing almost 10% of GDP. By being able to attract FDI, Panama is able to provide growth, employment, knowledge transfers, and higher quality of life. The numbers speak for themselves; almost 50% of the FDI in Central America comes to Panama. Of the FDI that we are able to attract, almost 50% is in the form of local reinvestment in earnings, which tells us that companies trust Panama and are willing to expand and diversify their footprint. Panama is an ideal hub for distribution and R&D, and many companies end up adding more global business services and activities to their operations in Panama.
We are working closely with the private sector as we negotiate this FTA in order to proceed with maximum transparency and maximize our opportunities. Simultaneously, we are organizing trade visits and will have a large trade delegation in November. The CIIE conference in Shanghai is the perfect window to connect exporters in Panama with importers and distributors across China. We are looking at the relationship from many angles and want to ensure that potential Chinese investment abides by clear rules in order to generate real, industrial economic growth and diversification. We approach the trade agreement as a holistic exercise that can inject sustainable investment into Panama and allow local companies to thrive.
To trigger this change, we needed to come up with a new, forward-looking industrial law. After several discussions, we developed a piece of legislation that provides aggressive incentives to modernize the industrial sector, foster competitiveness, and increase productive capacity. We have expanded on the law’s details, so the framework is in place. Now, it is about making sure that investors know how the industrial sector can work for foreign and national companies. We also have to automate the way companies access these incentives, and we are hopeful that this process will be completed by the end of 2018.