Panama: Strategic Gateway for China into Latin America

Panama is an important country on the strategic map of China as a gateway to all Latin America meaning South and Central America as well as all Caribbean countries. 
Diplomatic relations between Panama and China were opened in 2017.
Panama is increasingly ranked on decision makers’ shortlists when it comes to choosing the location of their international and regional investments. 
Panama provides access to the LatAm market of 400 million people. Offering a high quality of life, a central location and tax incentives, among other advantages, companies view Panama as a strategic location from where they can oversee investment in the developed and emerging countries of the region. 
Coupled with English-speaking staff and strong cultural ties, the country is gaining attention as an international investment center and an ideal hub to enter neighboring markets.
Despite a number of challenges, China is undergoing a transformation that is difficult to ignore.  China is seeking to accelerate its own economic growth and offers investment and trade opportunities across all sectors, including energy, retail, tourism, leisure, utilities, transport, telecoms, health and education. 
Panama is an important piece in the Belt and Road Initiative.
In this panorama, Panama’s profile as a safe and secure gateway to these developing markets is taking shape and the country is emerging as a preferred entry point for Chinese companies seeking to enter LatAm. 
Chinese corporations have opened offices in Panama and more and more Chinese businessmen are visiting the country looking for the opportunities that Panama can offer.
Some of the first companies to take advantage of the opportunities in Panama have been China’s retailers, banks, ports, energy and engineering & construction companies. 
Here are some highlights:
  • Air China started on April 2018 a direct flight from Panama to Beijing.
  • China Development Bank and Exim Bank China, the two main China development banks are already providing financings in Panama. Two more banks China Construction Bank and China Agricultural Bank are opening in Panama.
  • Miniso, the Chinese-Japanese retail chain opened in Panama in 2018.
  • China Harbor, a subsidiary of CCCG, is building a Cruise passenger terminal costing an estimated US$450MM and in July 2018 the same company won the 4th Bridge over the Panama Canal with a bid of US$1.4 billion, which will be the platform for Line Three of the Metro.
  • In LNG, Shanghai Gorgeous is progressing on its development of an LNG tank farm & terminal. 
  • In energy, Shanghai Electric is pursuing a 700MW gas fired power plant together with a local group and another Chinese company owns a 270MW wind park.
During many years, Chinese companies have successfully supplied products to companies located in the Colon Free Zone and Panama’s business community believes the country is well suited to be a base for the sale and distribution of a vast range of consumer goods into LatAm markets.  
Panama has established itself as a magnet for foreign-owned companies and is improving its competitive position steadily. A stable business environment, favorable corporate tax regime, world-class infrastructure and excellent quality of life – these are just a few of the many reasons why investors as well as companies relocate senior decision makers to perform strategic functions from Panama. 
Panama is currently negotiating a Free Trade Agreement with China with the objective to open markets and attract foreign investments. Panama also has free trade agreements with several other countries including USA, Canada, Singapore, Peru and others.
For more information, please contact us.
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