More Chinese Firms Investing in Panama
— Interview with the Panamanian Minister of Commerce and Industry Augusto Arosemena
China and Panama signed a joint communique on establishing diplomatic relations on June 13, 2017, which marked the establishment of formal diplomatic relations between the two countries and turned a new chapter of bilateral relations. By the anniversary of the establishment of diplomatic relations, both countries have developed a solid economic and business relationship, with remarkable achievements having been made. In a meeting held recently, the Panamanian president Juan Carlos Varela said that the achievements and changes since China and Panama signed diplomatic relations are very impressive.
Recently, the Panamanian Minister of Commerce and Industry Augusto Arosemena, said in an interview with China’s Foreign Trade, that the Panamanian government is proud of its good relations with China, and it was a positive decision made by President Xi Jinping and President Varela. Bilateral relations would enter a new phase of development. Remarkable achievements based on long-term cooperation
The Panama Canal connects the Pacific Ocean and the Atlantic Ocean, and is the world’s most important shipping routes. China is the largest supplier to the Colon Free Zone, and is a big user of Panama Canal second only to the U.S. China has also ranked first for many years in terms of the number of exhibition enterprises and exhibition stands at the Expocomer. Since the two countries established a diplomatic relationship, both sides have successfully cooperated with regards to trade, investment, civil aviation, infrastructure and in many other sectors.
“In the past year, bilateral cooperation has achieved positive outcomes. For example, we have a pproved a feasibility report about the railway project linking Panama province and Chiriqui province. Air China has opened a new direct flight route between Beijing and Panama, facilitating increased exchanges between the two countries. On top of that, the visa policy has also been relaxed. The formation of the new bilateral relationship has made both sides reach a consensus through signing the memorandum of understanding, which officially started the negotiations of free trade agreement between China and Panama,” said Arosemena, when commenting on the great changes that took place throughout the past year.
Arosemena said that the diplomatic achievements would be impossible without a solid background of mutual cooperation in the past years. “We really appreciate the works done by the CCPIT before and after the establishment of bilateral diplomatic relations. Without their efforts these fruitful achievements would have been impossible in the past year.” It is known that since 1975, the CCPIT has organized ten trade exhibitions for Chinese enterprises in Panama, arranged reciprocal business visits and trained a group of commerce association managers for Panama to enhance mutual business communications. In 2018, the CCPIT organized a training session for 21 business delegates of Panama. Since earlier this year, the local CCPIT offices in Zhejiang, Chongqing and Zhuhai have organized Chinese enterprises to visit Panama.
“The past year has witnessed active involvement of the CCPIT and Panamanian Ministry of Commerce and Industry in trade and business promotions. We have received business delegates from each other. Now we are assisting Chinese companies to start business in Panama. During the Panamanian President’s visit in China, the Panamanian Ministry of Commerce and Industry and the CCPIT signed a memorandum of understanding, which laid a legal basis for our future cooperation.” Arosemena is expecting to see more cooperation with the CCPIT and he said, “We welcome the CCPIT to establish an office in Panama to better promote and enhance bilateral trade and investment.”
Since diplomatic relations have been established, the Panamanian government has been corresponding to China’s Belt and Road Initiative and
said it would take this opportunity and play a more important role in extending Belt and Road construction in Latin America and connecting the Panama Canal with the maritime silk road. Panama was the first Latin American country that signed the memorandum of understanding on Belt and Road construction with China.
“We highly appreciate the concept of the Belt and Road Initiative, and Panama will play an important role in the extension of the Belt and Road Initiative into Latin America.” Arosemena gave very positive comments about China’s Belt and Road Initiative, saying that this initiative will play to the strength of Panama. For example, the Panama Canal is highly competitive with many ports and sound infrastructure, which will provide convenient logistics services for enterprises. With an important geographic location, Panama is the perfect place for setting up headquarters for the Latin America region. Arosemena said that there is be great potential for bilateral cooperation under the framework of the Belt and Road Initiative . Open up free trade agreement negotiation to welcome more Chinese investors
The official website of the Ministry of Commerce published an an- nouncement on June 12 that China and Panama had signed a memorandum of understanding, which signaled the start of negotiation of free trade agreement between the two countries.
Arosemena is optimistic about the free trade negotiation, saying that both Panama and China have conducted research about the feasibility of signing a free trade agreement. The signing of the document will be conducive to the bilateral trade and investment development, and that is why Panama decided to sign a memorandum of understanding with China and open up the first round of talks on July 9. He thought that the signing of the free trade agreement will not only promote commodity trade, but also establish a framework of mechanism that will promote more Chinese companies to invest in Panama, and also advance bilateral technological and knowledge communications. Panama will also see more exports of meat, coffee, fruits and vegetables to China.
Now China is Panama’s second-largest trade partner in the world, while Panama is China’s largest trade partner in Central America and 8th largest trade partner in Latin America. In 2017 Panama’s export to China surpassed USD 62 million, mainly including produce such as copper and al- uminium waste, aquatic products, wood and coffee. On the contrary, Panama’s import from China amounted to USD 6.6 billion.
Many Chinese enterprises also look to the plentiful investment opportunities in Panama. Now more than 40 Chinese companies have set up branches in Panama and invested in many sectors including port, road and bridge, energy, wholesales and automobile. These companies made full use of Panama’s geographic advantages to spread their business to Central America and Caribbean area. Many Chinese finance institutions also set up offices in Panama to promote financial cooperation.
“We sincerely welcome Chinese enterprises to invest in Panama. Panama is a logistics hub, with air flight and sea transportation reaching other Latin American countries. We hope Chinese companies would sell their products and expand the market here and the Panama government would provide favorable policies in immigration, finance and law of labor. I think they could invest in energy, logistics, tourism, commodity trading sectors, as these sectors have huge development potential.” Arosemena highly appreciated the huge success achieved by China in infrastructural buildings and welcomed Chinese enterprises to bid for projects in Panama.
Now more than 30 Chinese enterprises have invested in infrastructural building in Panama, some of which had happened before both countries established the diplomatic relations. The Margaret Island Port project being constructed by Lanbridge Group is the first and largest Chinese-invested project in Panama. According to person in charge of Lanbridge Group, each year about 35-million container cargo from China are transported to the America and the same amount of containers will go back to China. After the project is finished, it will become a key seaport linking China and the American continent. It is known that this project will create at least 2,000 jobs for local people, including 800 construction jobs and 1,200 operation jobs after construction is finished.