Swimming In A Blue Ocean Of Upside
I’m on the disabled list. While our Panama City-based staff is meeting with 100 out-of-town guests a few blocks away at the Riu Hotel, I’m at home with my laptop…and pneumonia.
Young Jack brought it home from school a few weeks ago. Jack came down with it, and now I have, too, and I’m missing all the fun. My apologies to everyone at this week’s Live and Invest in Panama Conference. I’m hoping to make it over to the Riu tomorrow to meet you at least briefly before you take off to discover more of Panama.
Meantime, my very capable team has been keeping me up-to-speed on what’s been going on in the Riu meeting rooms. I had this from my Associate Publisher Harry Kalashian this morning:
“One presentation that really got my attention yesterday, during the opening sessions, was by Mackenze McAleer.
“‘While so many other economies worldwide are circling the drain right now, this one, here in Panama, is booming,” Mackenze explained. “And this boom is sizing up to continue for another decade at least.
“‘Because this is the definition of a ‘Blue Ocean’ environment.’
“Mackenze is a serial entrepreneur. His current stomping-ground is Panama. He’s here because, as he explained to everyone assembled for the conference yesterday, no other marketplace in the world compares right now.
“Economic news from the United States and from across the Pond in Europe continues dire. Meantime, down here in little Panama, the economic outlook is as bright as the noontime sun. As Mackenze and others addressing the group yesterday explained, money is pouring into this country from all over…from elsewhere in the region, from North America, from Europe, from Russia, from China, from the Middle East…
“Because in this time of global crisis, people with money are seeking safe haven, and people paying attention are recognizing Panama for the safe haven it is.
“Safe haven with upside.
“‘Expansion’ is the operative word in this country these days, as it has been for the past seven or eight years at least. The local middle class is expanding, meaning the expansion of home sales, of car sales, and of the sales of everything else growing families with disposable incomes need and want.
“The financial services sector is expanding, thanks to all that global money looking for a place to park. This is leading to the expansion of sales of luxury condos and high-end goods. Tiffany’s, Hermes, Rolex, Cartier, and Jimmy Choo are all here and doing well.
“The infrastructure is expanding, from Phase III of the Cinta Costera highway along the Bay of Panama to the newly paved road to the Caribbean and the US$400 million expansion of Tocumen International Airport.
“And the Panama Canal is expanding. More than 5% of all the world’s sea trade passes through Panama, thanks to its canal, and this figure is likely to double once the current expansion project is completed in 2014 and bigger ocean tankers are able to pass through this isthmus.
“The Canal is run as an autonomous entity, outside the budget of the government. However, a portion of Canal profits are returned to the Panamanian government each year. Typically they cut a check to the Treasury for around US$500 million per year. The forecast for 2012 is to reach US$2.3 billion in revenues and to make a US$950 million contribution to the government.
“Meantime, again, the point, as Mackenze explained, is that this is a classic Blue Ocean environment, an entire country of untapped and uncontested markets. Everywhere you look there are more buyers with more money looking for more goods and more services.
“The would-be entrepreneur in Panama today has virtually no competition, at least not for dozens of products in fast-growing demand. In Panama right now, it’s not a matter of competing for market share. This is a place where you can create your own market.
“Mackenze made a list of products and services with ready markets but obviously lacking in this country…for example:
- U.S. and international franchises
- Convenience stores
- Car dent and ding repair
- U.S. and foreign tax prep
- Property management
- Relocation consulting
- Specialty restaurants
- Food trucks
- Luxury and HNWI (high-net-worth-individual) services
- Computer repair
- Web hosting
- Gun ranges
- Health food
- Organic stores
- Alternative health care
- Parking lots and parking garages
“Mackenze’s case for why Panama is the best place in the world to be an entrepreneur this decade was bolstered by David Stubbs, who gave the group an overview of the country’s current economic situation.
“Real gross domestic product (GDP) growth rates, David pointed out, averaged 8.1% between 2004 and 2009, and Panama even managed to grow 2.4% in 2009. Growth in 2010 rebounded to 7.5% and continued at a rate of 10.5% for 2011. GDP this year is projected to expand by a further 8%.
“One of the main drivers behind this growth has been foreign direct investment. Inflows reached US$1.7 billion in 2009 and US$3 billion in 2011, a sizable bet by foreign companies on the future of this small country. Big companies from around the world taking advantage of Panama’s open-door policies and incentive programs include Maersk Line, Halliburton, P&G, Dell, Caterpillar, Sinpopec…a total of 68 so far.
“Thanks to all this growth, the country’s unemployment rate has dropped significantly, from between 8% and 12% (depending on which set of numbers you use) to around 4% today.
“Still, of course, a large number of folks have yet to see any benefit from the current and continuing economic prosperity. While official unemployment numbers are down, there remains a stubbornly high level of underemployment in the countryside.
“On the flip side, it’s a growing challenge for all the foreign companies operating here now to recruit the numbers of highly skilled workers they need. This has forced the government to relax some rules regarding foreign employment. The recent Executive Order, for example, makes it much, much easier for foreigners from certain countries to establish residency in Panama, a first step toward helping to release some of the pressure that is building up.
“In a series of announcements made March through June 2010, David reminded us, the three leading U.S.-based credit rating agencies improved their ratings for Panama. Then, last year, all three agencies upgraded their ratings for Panama once more. Panama has joined a select group of countries in the region with investment grade status.
“Tourism was up 12% in 2010 over 2009 (up 20% from Spain alone) and up another 10% in 2011.
“The country’s flagship airline COPA has been investing US$6.3 billion in new aircraft and added seven new destinations last year, including Toronto and Chicago. By year-end, COPA will serve 57 destinations in 28 countries. COPA has also introduced ‘No Penalty Stop-Overs’ to encourage some of its millions of transit passengers to take time out to enjoy the fun and (very important) the shopping available in Panama City…”
In other words, it’s easier all the time to get here, and if you haven’t made the trip yet to come see for yourself what’s going on down here in the Hub of the Americans, I have to ask:
What in the world are you waiting for?
More (live from the scene) tomorrow.