This content is from: Local Insights

Panama: Panama and China – a new Era

Since the Republic of Panama and the Popular Republic of China (PRC) established a diplomatic relationship back in June, much has been speculated as to the effect that this bilateral understanding will have in the dynamic economy of the Republic of Panama.

The PRC has been seeking a solid investment partner in Latin America, and having diplomatic relations with various countries in the region, is now focusing its efforts to set Panama as its midpoint for its ventures in this part of the world.

Currently, both countries are negotiating 19 memoranda of understanding, including agreements to enhance their respective industrial, logistics, infrastructure and tourism sectors, among others.

Of such agreements, the construction and installment of a first world railway system that would connect Panama City and Chiriquí, the country's second most important province, will be negotiated. As far as connectivity goes, because of these agreements, Air China, one of China´s main airlines, has just approved a direct flight from Beijing to Panama City. Bearing in mind that many tourists come from the PRC, we can only expect favourable opportunities in that important sector of the economy.

A free trade agreement, which is also being negotiated, will very likely increase trade drastically between both countries, as the Republic of Panama would partner with the world's number one exporter of merchandise and goods.

In the energy sector, Exim Bank of China, has expressed its interest in financing several projects of the Empresa de Transmisión Eléctrica (ETESA), Panama's national energy transmission company.

These agreements will definitively boost Panama's economy to a new level, creating new business opportunities, which will in turn increase the interest of foreign investors.

Raúl Morales

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