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Saturday, May 25 2019 @ 03:30 AM UTC

The Goal: To Attact $5 Billion in New Foreign Direct Investment to Panama

Money MattersBy XENIA DE LEON for La Prensa - The target for this government in terms of foreign direct investment (FDI) is to attract at least one billion dollars per year, equivalent to 5 billion in five years, reported the minister of Trade and Industry, Roberto Henriquez. Although it is estimated that foreign capital flows into Latin America will shrink by some 35% this year due to the global economic crisis, the minister's goal is relatively conservative: according to the Comptroller General of the Republic, FDI in Panama totaled $2.401 million in 2008 and $1.907 million in 2007. And so far in 2009, in only the first quarter there has already been some $386.9 million in Foreign Direct Investment. In any case, to achieve its objective the government will create the single window for investment, it will make visas easier to obtain for investors, employees and directors of multinational companies, and it will try to get the most from Law Number 41 of 2007 which facilitates the operation of multinational headquarters in Panama. Furthermore the MICI plans to hire commercial attachés in key Panamanian embassies in foreign countries, to reinforce the diplomatic efforts being made to attract investment. This project is supported with funds from the program Impulso Panama. Companies from the United States, Singapore, Taiwan, Japan, Sweden and Norway have shown interest in investing in the country soon. One of these companies is the is the U.S. multinational General Electric which has already decided to move its regional corporate headquarters from Costa Rica to Panama. (See Comments)

Editor's Comment: Foreign Direct Investment (FDI) is the "mother's milk" of economic growth for small countries like Panama. Billions of dollars of FDI pouring into the relatively tiny Panamanian economy has a multiplying effect - that new money goes around and around about four or five times before it "settles down" or becomes integrated into what is considered to be the normal or regular local economy. Think of it as two streams coming together. The larger river is flowing fast and clear - which represents the existing or "normal" local economy. The newly incoming FDI is represented by the dark and murky water. The only reason that one is clean and the other murky is so that you can visually see the difference between the two. Now, how much of an impact does that new money have on the existing river? Well, it depends on the size of the river, and the size of the incoming stream, comparing the two side by side and relative to one another. A FDI of $1 billion dollars per year flowing into the river of the US economy would be totally insignificant and almost instantly lost in the huge flow of the tremendous size of the US economy. However, the size of Panama's economy in 2008 was only about $23.42 billion total. And since there was $1.907 billion dollars in FDI to Panama in 2008, then foreign direct investment alone accounted for 8.1% of all local economic activity. That's HUGE! An equivalent amount of flow into the US economy would be $1.16 trillion dollars. Anyway, back to the river. Now imagine the clean and clear flowing river of the Panamanian economy, and then picture the newly entering side stream that adds 8.1% to the size of the entire river. As that money (muddy water) enters the flow, it takes some time before the normal ebb and flow of the river (economic activity) completely absorbs the new money. And, for awhile you can "see" how the FDI is still somewhat segregated, especially because it represents such a large percentage of the overall flow of the river. Anyway, while it's great to see the new administration of Ricardo Martinelli talking about attracting new FDI, it's not so good for them to be setting low targets that they know they should be able to easily achieve. I mean since we already saw $386.9 million in just the first quarter, and since the first quarter was already the slowest of the year, just by extrapolating those numbers you get to $1.55 billion, or 18.7% less than in 2008. By setting a goal of just $1 billion dollars for 2009, the MICI is saying "we're hoping to see 47.5% less Foreign Direct Investment than last year..." Not a good stance to take. I would have much preferred to hear them say "we're going to fight like hell to hit last year's numbers, even though that's going to be tough to do..." It's all about the message.

INVERSIONES EXTRANJERAS

La meta: Atraer $5 mil millones

Definen estrategia para lograr que capital foráneo traiga al país al menos $1,000 millones por año entre 2009 y 2014. Ley 41 será un factor clave para lograrlo.

XENIA DE LEÓN xdeleon@prensa.com

La meta fijada por este gobierno en materia de Inversión Directa Extranjera (IDE) es atraer al menos mil millones de dólares por año, lo que equivale a 5 mil millones en el quinquenio, informó el ministro de Comercio e Industrias, Roberto Henríquez.

Aunque se estima que el flujo de capitales foráneos hacia América Latina se contraerá 35% este año, por la crisis mundial, la meta del ministro es conservadora: según la Contraloría General de la República, la IDE en Panamá totalizó $2,401 millones en 2008 y $1,907 millones en 2007. Y solo en el primer trimestre de 2009, se recibieron $386.9 millones.

En todo caso, para lograr su objetivo el gobierno creará la ventanilla única para la inversión; agilizará los trámites de visas de inversionistas, trabajadores y directivos de empresas multinacionales; e intentará sacar el máximo provecho a la Ley 41 de 2007 que facilita el funcionamiento de sedes multinacionales en Panamá

Además, el Mici tiene previsto contratar agregados comerciales en las principales embajadas de Panamá, que refuercen las gestiones que el cuerpo diplomático hace para atraer inversiones. Ese proyecto será apoyado con fondos del programa Impulso Panamá. Empresas de Estados Unidos, Singapur, Taiwan, Japón, Suecia y Noruega han mostrado interés en invertir en el país próximamente. Una de ellas es la multinacional estadounidense General Electric, que ya decidió mudar su sede regional corporativa de Costa Rica a Panamá.

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The Goal: To Attact $5 Billion in New Foreign Direct Investment to Panama | 5 comments | Create New Account
The following comments are owned by whomever posted them. This site is not responsible for what they say.
The Goal: To Attact $5 Billion in New Foreign Direct Investment to Panama
Authored by: Anonymous on Sunday, August 02 2009 @ 06:13 PM UTC
don , look at it this way , is it not better to say we want 1 billion and then take in 1.5 and brag that they really worked hard and did better than expected , if you say 2 billion and only take 1.5 you look like a loser .also that dept should be telling the dept that all this bank transparency crap will not help there cause . doug

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doug blair

The Goal: To Attact $5 Billion in New Foreign Direct Investment to Panama
Authored by: susangg on Sunday, August 02 2009 @ 08:01 PM UTC

How is Panama going to attract a stream of reputable direct investors until it cleans up its judicial system? Serious, legitimate investors understand the importance of contracts, and a contract means nothing if a party cannot rely on it because courts are for sale to the highest (or best "connected") bidder. If your property can be stolen, or your license to operate denied because a competing interest is better "connected" or has more money than you, its a risky proposition, isn't it?

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"Dissent is the highest form of patriotism."
(Thomas Jefferson)

The Goal: To Attact $5 Billion in New Foreign Direct Investment to Panama
Authored by: Anonymous on Wednesday, August 05 2009 @ 12:21 AM UTC

I agree with #2 also ANAM needs to be fixed or gotten rid of. It is a group of petty thieves and idiots now that do nothing for the environment and get in the way of any development if they can make a buck doing so. They chase the water world group out of Panama; I know 2 large casino projects that left because of the corruption in Panama, all companies that continually bring in foreign capital after built from tourism. They also have to look at tax structure, no wants to do business IN Panama, from Panama is OK but doing business here has easily 40% tax rate so there is no manufacturing here very little is created here and exported because taxes in Panama are high and complicated. They should look to Hong Kong for how to set up taxes. History has proven (particularly for small countries like Panama) that by lowering and simplifying taxes revenues will significantly increase and the economy will boom. They have done this in areas such as ships registry ad it works well they need to do it for all businesses in Panama. 10% flat tax and they will double the FDI in a year.