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PIMM CNBC

PIMM CNBC

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Published by Reynald Katz

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Published by: Reynald Katz on Mar 29, 2008
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06/16/2009

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T
he completion of Panama’s famous canal in1914 unlocked a gateway between the Atlanticand Pacific oceans, cementing the country’sposition as the fulcrum linking North andSouth America. Nearly 100 years later, Panama’s strate-gic importance remains immense. Evidence of a boomcan be seen throughout Panama City, where constructionprojects dominate the skyline, new cars flood the streetsand shopping arcades are bustling with activity.The country is now positioning itself as a regional logisticsand services hub, backed by a strong offshore finance industry,shipping registry and manufacturing base. A services-basedeconomy is flourishing and forecasts have predicted 11%growth this year. In its latest World Economic Outlook, theIMF singles out Panama as Latin America’s leading economy in terms of GDP growth.Since Martin Torrijos triumphed in Presidential electionsin May 2004, the administration has placed greater emphasison attracting FDI, which more than doubled in 2006 and isnow worth 16% of GDP. In addition he has negotiated a freetrade agreement with the US which should open the door toincreased commerce throughout the Western Hemisphere.“Panama is a country which offers great opportunities,not just for its residents but also for investors. Due to ourgeographic location, we are a country that contributessignificantly to the development of international trade,”says Torrijos.A number of flagship projects are underway to rein-force Panama’s position as a leading player in manufac-turing, trade and logistics. The canal is being expandedin a $5.2 billion project that will dramatically increasecapacity. Hong Kong-based Hutchinson Whampoa isplanning to turn Balboa, the administrative headquartersat the entrance of the canal, into the largest port in LatinAmerica, and a competing mega-port project is under-way on the Pacific coast.
ALREADY A HUB FOR TRADEAND COMMERCE
Since 14,000 ships already pass through the PanamaCanal annually, carrying in excess of 200 million tons of cargo, it comes as no surprise that Panama already boastsone of the largest Free Trade Zones in the world. Openedby the government in 1954, the Colon Free Trade Zone ishome to over 3,000 companies and revenues of $14 billionlast year are indicative of vibrant commercial activity.But when Reynald Henry Katz, an experiencedentrepreneur, visited the Free Trade Zone in search of 
PIMM
:
“Panama is a countrywhich offers greatopportunities, not just for its residentsbut also for investors”
aglobalhub
artist’s impression of 
PIMM
 
THE MAN WITH THE VISION
Reynald Katz is a serial entrepreneur. The sonof a French cosmetics manufacturer, he earned$100,000 as a child selling his own hand-made jewellery – money which he invested to co-founda nail polish company in London at the age of 19.Four years later this company was bought out by ICI for $8 million. During his career he has workedextensively in the cosmetics industry throughoutthe world from Europe and the Middle East, to theUS and Asia. He manufactured his own cosmeticsrange in Florida and later sold his company to amajor US firm. As a senior advisor to the Ministry of Internal Trade in China he helped the govern-ment establish malls in China. During the internetboom, Katz developed the first internet duty free e-commerce business – a project that stalled when theinternet bubble burst. Arriving in Panama in 2001,Katz purchased a liquor distribution company inthe Colon Free Zone. He has since developed hisown liquor brands which currently have significantmarket share in the Latin America market. He isfluent in English, Spanish, French, Italian, Arabicand Mandarin.
a showroom he was informed that Colon was runningat full showrooms capacity and that he was in line with2,500 other companies also looking for showroomspace. Sensing a unique opportunity, Katz decided toimplement his own solution – a $750 million projectdesigned to create the perfect environment for buyingand selling goods.
PANAMA INTERNATIONAL MERCHANDISEMART (PIMM)
Katz’s dream is to build Latin America’s first whole-sale merchandise mart, called
Panama InternationalMerchandise Mart (PIMM)
on a 1,800 acre plot close toLake Gatun and city of Colon. The concept is to centralisethe region’s wholesale goods businesses by consolidatingmanufacturers, vendors, exporters, distributors and salesagents in one state-of-the-art space.
PIMM
is revolution-ising the region’s commercial landscape giving importersand exporters alike direct access to global markets.He reasons that Panama already offers numerouscompetitive advantages. Geographically, Panama hasdirect access to 561 million people in Latin America. Thecanal has secured the country’s position as a global tradinghub and Katz knows firsthand that demand for showroomspace is already high.“Panama has always been a meeting point for busi-ness,” says Katz. “The tax regime means it is an inexpensiveplace to do business – there are no import duties, no salestax and no tax on profits. The currency is the US dollar
Geographically, Panamais in the perfect positionand 80 flights daily givedirect access to the US,Latin America, Europeand the Caribbean
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and inflation is very low. Geographically, Panama is in theperfect position and 80 flights daily give direct access tothe US, Latin America, Europe and the Caribbean.”
AN INTEGRATED WHOLESALE UNIVERSE
His mission is to create a fully integrated “wholesaleuniverse.” The scale and scope of the project is unprec-edented in the region and when complete, will be thelargest wholesale market in Latin America, featuringthirty-four 25,000 m2 buildings with 6,800 showrooms,as well as housing ten apartment blocks, ten commercialoffice buildings, four hotels and a convention centre. Thedevelopment, built in less than 2 years, will resemble asmall city, complete with banks, residential apartments,restaurants, an infirmary and blanket wireless cover-age. The heart of the development is the constructionof showroom space that will enable thousands of manu-facturers, gathered under one roof, to attract buyers anddistributers from around the world.The response from manufacturers, companies lookingfor strategic partners and investors has been enthusiastic.The entire stock of 800 showrooms to be constructed inPhase I were presold within 3 months to clients fromAsia, the US and Europe, raising $130 million. “Fromthe beginning our sales have been in excess of $1 milliona day. This demonstrated to me that investors already understood that
PIMM
represented a great businessopportunity,” says Katz.
 
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PIMM: the facts
LOCATION
Colon Province, Panama. Close to the second largest freezone in theworld and the Panama Canal
OPENING
2009
THE PROJECT
6,800 showrooms into 34 buildings on 1,300 acres making pimm thelargest commercial structure in Latin America with 2 million squaremetres under construction
FACILITIES &AMENITIES
10,000 seat convention centre, international business centre,10 office blocks, 10 residential apartment blocks, 4 hotels, 10restaurants, heliport, 5,000 parking spaces, free shuttle buses, 24hour security, blanket wireless coverage, police station, fire station,supermarkets, medical centre, gym, recreational facilities
EMPLOYMENT
30,000 jobs projected making PIMM Panama’s largest singleemployer
ECONOMIC IMPACT
7,000 showrooms each with an estimated annual turnover of $2,000,000
LANGUAGES
Spanish and English universally spokenIn fact, uptake was so strong that construction of Phase II, III and IV was accelerated and now 6,800 show-rooms will be available by 2009.A critical component of Katz’s vision is to enhanceprevious models for merchandise marts. “We are sparingno expense to create an environment where relation-ships are formed and orders placed. We need to ensurethat everything is in place to facilitate buyers and sellersworking together as productively and efficiently as possi-ble. We have the facilities to host merchandise shows andtrade events, all with the express aim of increasing the volume of trade for our international wholesalers. Beingat
PIMM
gives buyers and wholesalers the opportunity tosee goods, trends and fashions six months ahead of themarket. We are providing suppliers a world of goods inone location.”
PIMM GUARANTEES ACCESS TO THE LATINAMERICAN & CARIBBEAN MARKETS
PIMM
provides companies of any size, from multi-nationals to SMEs, easy access to the burgeoning LatinAmerican market by offering manufacturers the oppor-tunity to set up a cost-effective presence in the region anddevelop direct relationships with buyers.In practice the operation is very simple. For example,any European manufacturer keen to access the LatinAmerican market contacts
PIMM
and buys a perma-nent showroom. Wholesalers from Brazil can contact themanufacturer directly at their
PIMM
showroom. Dealscan be signed, orders placed and merchandise shippedimmediately from Europe to the customer in Brazil witha quick phone call.A number of prestigious global brands have already expressed an interest in
PIMM
, including Philips,Siemens, ICI, Peugeot, Renault, Fiat, Mercedes, KraftFoods, Gucci, Chanel, Rolex, Prada, Zara, Versace,Benetton and Hermes.Among the services that
PIMM
will provide are alegal team to help incorporate companies, procure inves-tor visas and open bank accounts. Trade specialists areon hand to help navigate international requirements,trade financing, customs regulations, freight forward-ing and showroom setup. Local experts will help withlogistical and practical matters such as finding appro-priate schooling for kids, securing apartments and evenleasing cars. The objective is to facilitate a quick startup, so that manufacturers are exhibiting, meeting buyersand selling as quickly as possible. “What is in our custom-ers’ best interests is in our best interest. If they succeed,we succeed.”The benefits to the local economy are projected tobe considerable. In terms of employment, the project isexpected to create in excess of 30,000 jobs. It is estimatedthat the
PIMM
project in all its phases will add a total of more than $400 million to the economy of Panama withannual revenues of $87 million a year for the next fiveyears to the Colon province.According to Katz: “One of the key aspects whenconsidering
PIMM
’s economic impact on Panama is thatan estimated 6,000 people will be visiting
PIMM
daily,bringing $500 million a year of indirect investment. Butthe most important thing to bear in mind is that everyonewho opens a showroom in
PIMM
will get their money back within 2-3 years because
PIMM
guarantees businesssuccess. We are investing $1 million a month on charteredflights which we give free of charge to buyers just so thatthey will buy at
PIMM
. When someone buys a showroomat
PIMM
they are not just getting a piece of real estate,they are buying a means of doing business.”
GLOBAL AMBITIONS
Ultimately, Katz believes that the concept is export-able and has ambitions to build a global brand based onthe same concept as
PIMM
. “We are exploring the possi-bility of an IPO in the future. We would like to raise $10billion and use the capital to enter new markets like SouthAfrica, India, China, Russia and even New York.” He esti-mates that the cost of setting up an operation in each new jurisdiction would be around one billion dollars.

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