The Financial Times (English), August 13, 2007
The Financial Times (English), August 13, 2007
Panama builds on economic boom
President Martin Torrijos of Panama yesterday unveiled what
could become one of the biggest investment projects in the
country’s history with a value of up to $10bn (€7.3bn £ 4.9bn). The
creation of an urban centre the size of central London on the
outskirts of Panama City is the latest sign of an economic boom
that has invited comparisons between Panama and bigger
international business centres such as Dubai.
A specially created government agency will provide residents
with streamlined regulation and there will be tax incentives for
selected industries. London & Regional, the UK – based company
that will develop on the former Howard US air force base would
reinforce Panama’s attraction as a centre of international
business. Ian Livingstone, of London & Regional, said it would
combine industrial, retail and residential properties and its
value, including all finished infrastructure and buildings could be
worth up to $10bn. Mr. Torrijos’s administration, which took office
in 2004, is poised to award the first contract for breaking ground
in an ambitious $5.25bn plan to expand the canal, which connects
the Atlantic and Pacific oceans and is one of the world’s most
important waterways.
Panama took full control of the canal in 1999 and the investment
in three new locks and physical widening will facilitate the
passage of huge cargo ships, known as post – Panamax vessels.
International and local companies are pouring billions of dollars
into Panamanian residential property developments. In large part to
capitalise on the peak of interest shown by US and Canadian retired
people and second-home buyers. In addition, deals worth $14.5bn
have been agreed recently to build two oil refineries and the US
Congress is expected to approve a trade agreement soon between the
two countries. Mr. Torrijos said recently that the refineries,
canal expansion, and trade pact are the three motors that could
propel Panama towards developed country status. Panama’s economy,
which is fully dollarised grew 8.1 per cent in 2006, and economists
believe it could grow more than 10 percent this year. Inflation,
meanwhile, is subdued and lending rates are among the most
competitive in the western hemisphere. However, some analysts
suggest that the government must do more to reduce poverty,
especially in rural areas, if development goals are to be achieved.
“Wealth is being concentrated more and more. This is very bad
news,” said Guillermo Chapman, an analyst at the Indesa consultancy
in Panama City.
The London & Regional project hopes to attract businesses
from neighbouring countries that do not enjoy the sort of stability
that Panama offers. Panama has begun to attract significantly
higher numbers of investors from Colombia and Venezuela than
before, and analyses expect the trend to continue. Although London
& Regional has yet to present the government with a master plan
of the 1,800 – hectare site – WS Atkins, the UK professional
services company must do so within 90 days – the plans are known to
include a golf course, apartments, schools and hospitals. “It will
have an urban feel, with town-centre-type shops, public open
spaces, condominiums… We are going to build a sustainable
community,” said Mr. Livingston.
The site’s proximity to the Panama Canal, the Pan American
highway and to Howard’s 3.5 km runway gave it unprecedented access
for individuals and companies, be said. “In terms of logistics,
it’s a no brainer.” In addition to an initial $405m minimum
investment over the next eight years by London & Regional and
local partners. Mr. Livingston commented another $300m over the
remainder of the 40 year concession. London & Regional, a
private company run by Mr. Livingston and his brother Richard, is
known as a highly leveraged buyer of property assets. In recent
years it has branched out into development projects and started
investing overseas.
Financial Times (13/08/07)