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Meg Munn MP - Sheffield Heeley's voice in Parliament | Welcome
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Central American Connection

Friday, December 7, 2007

This article first appeared in Overseas Trade, to subscribe visit www.overseastrade.co.uk.


The UK is one of the largest foreign investors in Panama and the two countries enjoy a strong relationship, with close co-operation on issues such as drug trafficking, money laundering and climate change.


Panama presents many exciting business opportunities. One of the most significant events at the moment is the expansion of the 90-year-old Panama Canal, which links the Atlantic and Pacific oceans. This $5.3 billion project will include widening and deepening the waterway, as well as the construction of new sets of locks at both ends to allow the passage of much larger vessels. The Panama Canal is a key channel for international shipping, with more than 14,000 ships passing through it each year, carrying over 293 million tons of cargo.


“Some of the preliminary contracts for the Panama Canal expansion, such as financial management, the environmental impact study, project management and some of the earth moving, have already been awarded,” said Meg Munn. “However, there are still opportunities. The main design and building contracts for the new sets of massive locks are at the pre-qualification stage and many spin-off contracts and opportunities are expected.”


“This was my first overseas trip since taking up my new position. The abundance of business opportunities currently available in Panama was one of the reasons why an early visit was a priority for me. I was impressed to learn that the UK’s exports of goods to Panama in the first six months of this year reached 96 million, an increase of more than 100 per cent over the first six months of 2006.”


 “I had the chance to see the canal in operation and had meetings with the administrator of the Panama Canal Authority, Alberto Aleman Zubieta; Jorge Quijano, head of the Panama Canal Expansion Programme, and Manuel Benitez, head of Canal Operations. We discussed the significant business opportunities presented by the expansion project.  It was also pointed out that the canal expansion is one of many ongoing and future business opportunities in Panama. They are estimated to be worth around $13.5 billion in total and centre on private construction, urban and rural development and energy generation.”


One UK company has been awarded a contract worth $405 million to develop the former US Howard Air Force base on the Pacific entrance to the Panama Canal. London & Regional Properties has been engaged by the Panamanian government to develop the 1,100-hectare site. Plans include a high-tech business park, light industrial units, call centres and large residential areas.


“I met with representatives of London & Regional Properties and top managers of other UK companies in Panama, including HSBC, Cable & Wireless and JCB, as well as prominent local lawyers and business people,” Meg continued.  “UK enterprises are key players in strategic areas of the Panamanian economy, such as finance, telecommunications, property development, engineering and construction. I discussed with them the issues affecting UK commercial interests in Panama. They all stressed that there was a positive climate for business there.”


The UK was the largest foreign direct investor into Panama in 2006, with total FDI for the country reaching $2.5 billion. Much of the UK investment was due to the acquisition of the largest financial concern in Panama, the Banistmo group, by HSBC.  Even though no similar major take-over transactions are foreseen for this year, total FDI into Panama in the first six months of 2007 reached $588 million, showing a 19 per cent increase over the first six months of 2006, which was a record year.


“UK Trade & Investment’s export statistics for 2006 show Panama ranked 10th overall in the American continent as a destination for UK goods,” added Meg. Panama imported an average of 36 worth of UK products per person in 2006, ranking fourth behind Puerto Rico’s 47, 106 in the US and 117 in Canada. The first six months of 2007 found Panama ranked seventh overall in Latin America as a destination for UK exports, not far behind Venezuela and Argentina.


These impressive figures reflect the importance of Panama’s Colon Free Zone (CFZ). The CFZ is a logistics, financing and distribution centre for the north of South America, the Caribbean and Central America. “Goods worth $7.7 billion were re-exported via the CFZ in 2006, making it the most important channel for goods in the region. The CFZ presents good business opportunities for small and medium-sized UK enterprises wishing to export goods into Latin America and the Caribbean.”


Panama holds a strategic position linking North and South America. It also has the largest rainforest in the Western Hemisphere, outside the Amazon Basin, and its jungle is home to an abundance of tropical plants, animals and birds some of which are found nowhere else in the world.  “Climate change is high on the agenda in Panama and a subject that greatly interests the Panamanians, who are dependent on high levels of rainfall for the operation of the canal,” said Meg.  “The UK Climate Change Projects Office (CCPO) sponsored a trade mission to Panama in September. I understand that this was a great success, with lots of local interest and good potential business opportunities being explored. The CCPO initiative featured a seminar and business meetings between Panamanian and UK companies.”


“As you will see from the opportunities I have described, Panama has much to offer UK businesses. I, and my colleagues at the Department for Business, Enterprise & Regulatory Reform, look forward to continuing to work with the Panamanians for our mutual benefit and, in particular, to promote UK business interests there.”

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