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NEW REPORT: Panama’s 2030 Infrastructure Dream

Bnamericas Published: Friday, August 16, 2019
NEW REPORT: Panama’s 2030 Infrastructure Dream

In March and April of 2019, with elections fast approaching, Panama's then-president Juan Carlos Varela made a point of engaging in as many infrastructure-related photo ops as possible – he was receiving Chinese designs for Central America’s first high speed train, cutting the ribbon on Panama City’s second metro line and opening the second terminal at Tocumen airport.

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Infrastructure development has been central to Panama’s rapid growth over the last decade. Varela’s predecessor, Ricardo Martinelli (2009-14), oversaw the expansion of the Panama Canal and the completion of the country’s first metro line at a time when the economy grew at rates of over 10%.

In July, with Laurentino 'Nito' Cortizo taking up residence in the presidential Palace of the Herons, a new wave of investment appeared on the horizon, boosted by ambitious plans to deepen the country’s role as a regional logistics hub and fueled by Chinese capital.

Foreign interest in Panama's strategic location is not new. In 1513, Vasco Núñez de Balboa, a Spanish conquistador, summited a low mountain range and became the first European to set eyes on the Pacific Ocean. Ever since, Panama has been a key crossroads of global trade. But the interoceanic route requires periodic upgrades.

The Camino Real (royal road) of the Spanish empire was a dirt track over which Peruvian silver traversed the isthmus to the Caribbean port of Nombre de Dios to be shipped to the Old World. In 1855 the Panama railroad, which closely tracked the present-day canal, opened in time to help gold rush prospectors cross the isthmus from the Atlantic to the Pacific en route to California, avoiding the long and dangerous journey across the US. 

The completion of the Panama Canal in 1914 was one of the great engineering achievements of the industrial age. The growth of international trade in the early 21st century has allowed Panama to embark on a new era of infrastructure expansion. That process began in 2009 when work began on the expansion of the canal, doubling its capacity and allowing the passage of post-Panamax vessels.

Following the project’s completion in 2016, the Central American nation faces a new set of opportunities and challenges. The 2017 decision to open formal diplomatic ties with China has ushered in dozens of bilateral agreements with the Asian giant, which will culminate in the signing of a free trade agreement in the coming months.

After a period of slower growth, Panama is once again looking to invest in projects that allow it to enhance the benefits of its privileged position. The government’s National Logistics Strategy 2030, developed alongside the Inter-American Development Bank (IDB), aims to extend the country’s role beyond a shipping and ports hub to a regional logistics center. That change requires greater emphasis on warehousing, added-value assembly facilities, terrestrial links and inter-modal transport systems.

In 1815, Latin American independence hero Simón Bolívar wrote that Panama, in its “magnificent position between the two great seas,” would become, with time, “the emporium of the universe.” That time has come.

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