Dear LatAm INVESTOR readers,
As I complete 36 months of my constitutional mandate as President of the Republic (2019-2024), Panama reaffirms its vocation as a country open to investors who trust in the possibilities of our development, under the guarantees we offer through political and social stability, a solid democratic system, a bilingual business culture, dollarization of our economy and countless advantages for establishing highly productive businesses.
Although Panama was also severely affected by the Covid-19 pandemic, we handled the situation with internationally-recognised success, by virtue of the prompt acquisition of sufficient vaccines from Pfizer and AstraZeneca, and an effective nationwide immunization plan, which has made it possible for more than 90% of the target population to have two doses of vaccines today. In this scenario, our Economic Reactivation Plan has always had as its objective the preservation and generation of employment, leveraged first through our most important public policy: an effective immunisation plan. This is coupled with a strong public investment pipeline and a strong investment climate to promote investments in the private sector.
Our government's ongoing public investment plan includes over $12billion of investments. Among the works in execution or to be executed, we can highlight: Metro Line 3, tunnel under the Panama Canal, extensions of metro Line 1 and Metro Line 2 to Tocumen International Airport, and a new children's hospital, among others. Similarly, progress is being made in the construction of 100 bridges in communities throughout the country, with an investment of $193million. It should be noted that the public infrastructure investment programme alone will generate 18,000 jobs in three years.
For instance, during the last six months, our government has completed and delivered 56 public infrastructure works for $564.5million, at the same time it has delivered 61 new orders to proceed for $1.5billion and tendered 55 additional projects for $724.4million. As for the Panama Canal Authority, it will invest $1.8billion in projects related to the inter-oceanic waterway and the supply of drinking water for the population.
In the last semester of 2021 alone, the government’s investments impacted the country's economy with $2.78billion. In addition, we are planning to invest approximately $1.5billion through public-private partnerships, the first of which will be tendered in the next months. The pipeline will generate approximately 5,000 jobs in the next three years. On the private side, during this month, we can mention the start of construction of a natural gas plant on the Atlantic coast, with an investment of more than $1billion.
Despite the complexities imposed by the pandemic, the central government's budget execution was 96%, the highest in recent decades. The efficient management of the government’s budget during the last two years supports the positive forecasts for the immediate performance of the Panamanian economy. According to the National Institute of Statistics and Census of the Office of the Comptroller General of the Republic, during the first nine months of 2021, the country's economy grew by 14.9%, leading regional growth and one of the highest in the world, exceeding local and international projections.
According to the Economic Commission for Latin America and the Caribbean (CEPAL), Panama leads economic growth projections for 2022. International economic organisations positively recognise the way Panama has managed its economy during the current health crisis. Moreover, Fitch Ratings recently reaffirmed Panama’s investment grade and revised its outlook to stable.
It is important to mention that the World Bank, the Inter-American Development Bank and the Development Bank of Latin America (CAF) have all established their regional headquarters in Panama. Another example of international recognition is the fact that Panama has been chosen to host The Bloomberg New Economy Gateway 2022 on May of this year. This is the first time that this event, which brings together the world's largest economies, takes place outside Asia. The meeting will showcase our country's regional competitiveness and its advantages as a global investment destination.
Panama is a privileged country with a territory of 75,517 km2 and 3,000 km2 of coastline, which operates one of the most important international hubs in the hemisphere, with a logistics platform that provides access to the world's largest markets. These facilities, which include a system of efficient ports on both the Atlantic and Pacific Oceans, were not interrupted by the pandemic, and in fact, like the Panama Canal, worked continuously 24/7, connecting 180 shipping lanes and 1,920 ports in 170 countries. Panama, is therefore, the country in the region with the best maritime and aerial connectivity in Latin America and the Caribbean.
With the vision of attracting investment and technology transfer to improve our international competitiveness, we have created a special regime with tax and labour incentives for the establishment of multinational headquarters in Panama, known as SEM. Within its framework, we have approved 176 licenses that represent an accumulated private investment of $1.2billion dollars and generated 7,000 jobs since 2007. So far in our administration, during the pandemic, 36 new companies have registered under this regime, representing a 37% historical annual increase and a 40% growth over our initial projections. An interesting fact is that we have eight MHQ companies from the United Kingdom, such as Diageo, GSK, and Ernst & Young, among others. Some of these corporations operate in an exclusive location of exuberant natural beauty on the shores of the Panama Canal, in the sector known as Panama Pacifico.
By maintaining 23 free trade agreements, Panama is able to strengthen the exchange between countries, enhancing the reach of a market of $1.3billion consumers. Recently our government has created a new regime known as EMMA, aimed at promoting and facilitating the development of "nearshoring" that facilitates the establishment of manufacturing, production processes, construction of collection and distribution centres, favouring economies of scale for industrial groups or product marketers.
In addition to easy access to seaports and the various special trade zones operating in the country, another competitive advantage that Panama offers is the regional air hub operated by the national airline COPA, which serves direct flights between Panama and the most important capitals and cities in Latin America. Prior to the pandemic, the air hub connected directly 90 destinations in 39 countries and over 1,300 destinations indirectly. Currently Panama has recovered 85% of its pre-pandemic connectivity to North America and Europe, as well as its intra-regional traffic, surpassing countries that never closed their skies.
Panama is a nation with vocation and culture in the protection of its natural resources. Thus, it especially welcomes investments that share this purpose. It is worth mentioning that our country is one of only three nations in the world recognised and declared carbon negative. We recently increased our protected marine area by 30%, and together with Costa Rica, Colombia and Ecuador, agreed on the Conservation and Management of the Ecosystems included in the Eastern Tropical Pacific Marine Corridor.
The capital of the country, Panama City, is one of the most modern and thriving cities in the region, home to one of the largest banking conglomerates in Latin America and an important international financial centre. Panama was recently selected in International Living's Annual Global Retirement Index as the number one destination in the world for retirees.
Finally, to the readers of LatAm INVESTOR, there are many reasons that make Panama a model investment location in Latin America. We will always be pleased to welcome British and international investors who want to share with us the many opportunities that Panama has to offer. It will be a win-win experience.