PANAMA: Building a Global Business Platform Jose Pacheco Tejeira Viceminister of Foreign Trade Ministry of Trade and Industry Panama

PANAMA: Building a Global Business Platform Strategic Geographical Position International Financial Center Connectivity through land, sea and air World Class logistic Platform Open Service Dollarized Economy Ideal Site for doing business

PANAMA: Building a Global Business Platform PANAMA PROFILE GDP – Real growth rate (%): - Year 2010: 7.5 - Year 2011: 10.6 - March 2012: 10.6 GDP per cápita: US$8,622 (2011) GDP composition by sector (%): - Agriculture: 4.1 - Industry: 16.7 - Services: 79.2 Inflation rate (%): 5.9 (2011) Unemployment rate (%): 4.6 (March 2012) Population: 3.5 millons Life expectancy at birth: 77.9 years - Male: 75.2 years - Female: 80.9 years Total area: 75,517 Km2 Los principales reportes de mayor importancia internacional que miden la competitividad de los países del mundo desde distintas aristas como el Índice de Competitividad Global del World Economic Forum, el Doing Business del Banco Mundial, reportes de FDI Intelligence del Finnancial Times y el Índice de Desempeño Logístico del Banco Mundial destacan a Panamá como un país que ocupa posiciones privilegiadas en sus distintas mediciones, destacando la fortaleza del país en Atracción de Inversión Extranjera Directa, Centro Financiero, Política Económica y la proyección de importantes proyectos de infraestructura

PANAMA: Building a Global Business Platform Panama Trade Partners Panama has pursued a policy of liberalization and free trade USA South Korea EFTA (European Free Trade Association, Iceland – Liechtenstein – Norway - Switzerland) SINGAPORE ROC (Taiwan) PERU Enforced Signed (under implementation) Negotiating (4 agreements with 7 countries) and Integration process with SIECA (Central America) Central America Costa Rica, El Salvador Honduras, Guatemala, Nicaragua CANADA ADA Association Agreement between EU and Central America (27 countries) CHILE

RANKING OF IMPORTS BY COUNTRY PANAMA: Building a Global Business Platform RANKING OF IMPORTS BY COUNTRY IMPORTS 1998 IMPORTS 2007 IMPORTS 2011 (P) No. PAIS IMP 1998 % 1 UNITED STATES 1,351.0 39.5% 3 JAPAN 308.4 9.0% 4 MEXICO 164.8 4.8% 6 COSTA RICA 101.7 3.0% 8 COREA 91.3 2.7% 9 COLOMBIA 64.3 1.9% 10 GUATEMALA 55.7 1.6% 11 GERMANY 45.4 1.3% 12 SPAIN 44.7 13 UNITED KINGDOM 40.3 1.2% 15 FRANCE 32.2 0.9% 16 TAIWAN 30.8 17 BRAZIL 27.8 0.8% 18 CANADA 27.6 21 EL SALVADOR 23.8 0.7% 24 CHILE 19.4 0.6% 25 PERU 18.3 0.5% 27 CHINA 12.7 0.4% 29 HONDURAS 12.3 55 NICARAGUA 1.7 0.0% 57 SINGAPORE 1.2 No. PAIS IMP 2007 % 1 UNITED STATES 2,079.6 30.3% 3 CURAZAO ISLAMD 489.2 7.1% 5 CHINA 358.7 5.2% 6 JAPAN 328.9 4.8% 7 COSTA RICA 326.2 4.7% 8 COREA 267.7 3.9% 9 MEXICO 212.0 3.1% 10 COLOMBIA 192.1 2.8% 11 BRAZIL 140.7 2.0% 12 GUATEMALA 107.4 1.6% 13 SPAIN 107.0 14 GERMANY 87.3 1.3% 16 EL SALVADOR 72.3 1.1% 17 PERU 69.0 1.0% 18 FRANCE 58.2 0.8% 20 CANADA 50.6 0.7% 23 ITALY 41.6 0.6% 24 CHILE 40.8 26 TAIWAN 32.8 0.5% 27 UNITED KINGDOM 32.6 54 SINGAPORE 3.3 0.1% No PAIS IMP 2011 % 1 UNITED STATES 2,826.7 24.9% 4 CHINA 689.7 6.1% 5 COSTA RICA 509.8 4.5% 6 COLOMBIA 469.6 4.1% 7 MEXICO 445.3 3.9% 8 COREA 303.8 2.7% 9 SPAIN 294.4 2.6% 10 JAPAN 292.1 11 BRAZIL 217.4 1.9% 12 GUATEMALA 196.5 1.7% 13 GERMANY 166.1 1.5% 16 EL SALVADOR 103.8 0.9% 17 CANADA 86.3 0.8% 18 ITALY 86.1 20 PERU 68.5 0.6% 21 CHILE 67.1 22 FRANCE 52.2 0.5% 25 TAIWAN 45.6 0.4% 27 UNITED KINGDOM 37.1 0.3% 43 NICARAGUA 15.5 0.1% 44 SINGAPORE 13.1 Ranking includes CFZ and Petroleum Processing Zones

Investment Grade + Foreign Investment + Sustained Growth PANAMA: Building a Global Business Platform Investment Grade + Foreign Investment + Sustained Growth BBB Positive +33% BBB Stable Baa3 Positive Fuente: FMI (2010). 2006: +10.1% 2010: +7.5% 2007: +12.2% 2011p: +7.0% 2008: +10.7% 2009: +3.2%

PANAMA: Building a Global Business Platform Companies and Multinationals

PANAMA: Building a Global Business Platform Government Strategic Planning Focusing on sectors with the greatest potential will generate more than 500,000 new jobs over the next decade. The development plan prioritizes the stabilization of public finances Panama aims to improve on its Investment Grade credit rating and will ensure that the level of public debt stays below 30% of GDP over the next 10 years. Significant investments in the education, health, public safety, and transportation sectors will increase the standard of living and benefit the residents of Panama. During the next five years, this investment will be primarily focused on infrastructure development that will generate jobs and stimulate growth on a path towards sustainable development. Key Growth Drivers (Measured by their impact on incremental GDP and job creation) Logistics Tourism Agriculture Financial Services Science and Technology

The Logistics Environment PANAMA: Building a Global Business Platform The Logistics Environment PORTS AIRPORTS PANAMA CANAL RAILROAD COLON FREE ZONE SPECIAL ECONOMIC ZONES ROADS NETWORK CUSTOMS LOGISTICS CABINET MAIN TASK Development of a Master Plan to promote Panama as a global logistic hub for world trade.

PANAMA: Building a Global Business Platform Connectivity Panama dominates the region with more direct connectivity

PANAMA: Building a Global Business Platform Tourism Developing a new air logistics network Panama’s new air connectivity development plan The plan seeks to further develop air connectivity beyond the Panama City and Colon corridor. Through the development of 6 new airports and the expansion and remodeling of another 6 existing terminals.

The Panama Canal The main international trade engine PANAMA: Building a Global Business Platform The Panama Canal The main international trade engine Over 14,000 vessels transit this waterway each year. 300 million tons through more than 120 routes. It’s complemented by Panama’s port infrastructure that handles an annual volume of more than 7 million TEUs.

PANAMA: Building a Global Business Platform INFRASTRUCTURE The Panama Canal Expansion The main international trade engine Cost Estimated investment of $5,250 Millions FUTURE LOCKS CURRENT LOCKS Figure 1: Graphical image of the expansion project. PACIFIC OCEAN 　The Canal expansion is on schedule and is $413.8 million under budget. 　Completion Year: 2014

PANAMA: Building a Global Business Platform Maritime Connectivity International Ports Connected through the Panama Canal every Week Savannah Yantian Kwangyang Hong Kong Pusan Keelung Wilmington NJ/NY Rotterdam Le Havre Halifax Felixstowe Long Beach Los Angeles Bremerhaven Kaohsiung Charleston Nagoya Thamesport Oakland Seattle Tokyo Colombo Shanghai Yokohama Newport News Hakata Manzanillo (Mx) Kobe Osaka Hamburg Shimizu Port Said Zeebrugge Chabang Tahiti Auckland Doniambo Brisbane Sydney Melbourne Tanjung Priok Singapore Marseilles La Spezia Tilbury Dunkerque Qingdao Buenaventura Guayaquil Callao Arica Coquimbo San Antonio San Vicente Puerto Limón Iquique Manta Antofagasta Valparaíso . Balboa Antwerp Itajai Baltimore New Orleans Paranagua Santos Puerto Cabello Veracruz Manzanillo Colon Cartagena La Guaira Guanta Maracaibo Everglades Kingston Miami Boston This map shows the international ports connected through the Panama Canal on a weekly basis. Transiting and feeder vessels , make up a global network , all possible because of the Panama Canal and the related ports infrastructure. Panama unmatched connectivity links more than 144 different trade routes around the world. Transit the Canal Source : ACP Feeder services that don´t transit the Canal

Infrastructure Projects National Road and Highway Network Improvements PANAMA: Building a Global Business Platform Infrastructure Projects National Road and Highway Network Improvements The Ministry of Public Works has engaged in a major overhaul of Panama City’s internal road network, as well as the expansion of major national highway segments. Reorganization of Panama City’s road network: includes new overpasses in 18 intersections in metropolitan area by 2014. Expansion of Highways: Corredor Sur will be widened to six lanes, while Corredor Norte will be extended until the Tocumen area . In addition, highway segment expansion outside Panama City have been competitively awarded. Justificación / Objetivos 15 15

PANAMA: Building a Global Business Platform Infrastructure Projects National Road and Highway Network Improvements Madden – Colon II: US$ 220 Million Divisa – Chitre: US$ 112.1 Million La Villa – Las Tablas: US$ 75.7 Million David – Boquete: US$ 119.8 Million Arraijan – La Chorrera: US$ 152.6 Million Total: US$ 680.2 Million

PANAMA: Building a Global Business Platform Integrated transportation system Public transportation system serving GPC will integrate the Metro and Metro Bus systems. An international bidding process was undertaken to select the operator of the MetroBus system. The winner was the Colombian group Fanalca. Panama’s MetroBus system will have 1,200 state of the art Volvo and Mercedes-Benz buses operating on 76 routes.

PANAMA: Building a Global Business Platform PROINVEX Panama Trade and Investment Agency The shortest road of investing in Panama ONE STOP SHOP Integrated Information System that allows the investors to easily identify all the instruments that the National Government has available for the Direct Foreign Investment. CONCIERGE SERVICE in processes of due diligence. PROINVEX is also responsible of coordinating the international commercialization and the promotion of the exports of national products.

PANAMA: Building a Global Business Platform Incentive Laws An attractive legal framework for investment as Multinational Headquarters (SEM) Every year, more multinational companies choose Panama Judicial stability facilitates trade and provides investment incentives. One of the most competitive legislations in the region. Laws specifically aimed at multinational companies complement the incentives offered by special zones. No Taxable income (Offshore Operations)

PANAMA: Building a Global Business Platform Multinational Headquarters (SEM) Every year, more multinational companies choose Panama

PANAMA: Building a Global Business Platform Special Economic Zone The Colon Free Zone The most important free trade zone in the western hemisphere Operating since 1948. Currently houses over 3,042 operators. The second largest free trade zone in the World after Hong Kong. The Colón Free Zone is located a few kilometers from the Panama Canal in the Caribbean sector. Goal for 2012 is to handle $30 billion in annual trade volume.

Special Economic Zone City of Knowlegde PANAMA: Building a Global Business Platform Special Economic Zone City of Knowlegde Synergy International Technopark Non-governmental Organizations Academic Organizations Research & Development For Example: Information Technology, Biomedical, Renewable Energy Florida State University, University of California-Berkeley, Georgia Tech University . United Nations, Unicef, Red Cross, World Food Programme

Special Economic Zone Panama Pacifico PANAMA: Building a Global Business Platform Special Economic Zone Panama Pacifico 1,400 hectare Special Economic Zone adjacent to the Canal, Railway, Ports and Panamá City. Taxation, customs, labor, immigration and special business Regime London & Regional Panama as master developer of the project. Business and Commercial world class center with residential areas of high level Target activities will be exempt from taxes in the Republic of Panama Law No. 41 of July 2004.

PANAMA: Building a Global Business Platform Special Economic Zones Zones can be established anywhere in the country FISCAL : Tax Exemption No Value Added Tax and no Income Tax. MIGRATION: Permanent Resident Visa as Investor, Special Resident Visas, Scientist Visas , Spouse and Dependents LABOR: Workers´s rotation, Negotiable vacation periods.

PANAMA: Building a Global Business Platform Incentive Laws Film industry Incentives are granted for the development of the movie making and audiovisual industry Fiscal, customs, labor and migratory incentives are granted to the industry. Eliminates bureaucratization and guarantee prompt processes for the productions. BENEFITS FOR THE FOREIGN PRODUCTION Sole “One-Stop-Shop” for the paperwork. Processing of Migratory and Labor Permits for the foreign personnel. Customs: Temporary custody of equipment without guarantee bond. Permits for public locations throughout the entire national territory. Link with producers, technicians, casting agencies and national personnel.

Panama: Where the World Meets PANAMA: Building a Global Business Platform Panama: Where the World Meets #1-for Financial Freedom In Latin America. #1-for Port Facilities in the Western Hemisphere. #1- in Latin America for Availability of Venture Capital. #1-for Air Transport Facilities in Latin America. #2-among Most Competitive Economies in Latin America. #3-for Business Freedom in Latin America. #3-in the World for Affordability of Financial Services. CLOSING FACTS

PANAMA: Building a Global Business Platform Jose Pacheco Tejeira Viceminister of Foreign Trade Ministry of Trade and Industry Panama