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JAPAN TIMES PIMM

JAPAN TIMES PIMM

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Published by PIMM
The Japan Times encourages Japanese businesses to participate in the Panama International Merchandise Mart.
The Japan Times encourages Japanese businesses to participate in the Panama International Merchandise Mart.

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Published by: PIMM on Jul 04, 2008
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11/01/2013

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There are some places in the world where location and lack of bureaucracy mean that businessopportunities are just cryingout to be taken advantage of.Panama is one of those placesand the Panama InternationalMerchandise Mart (PIMM) isfast becoming its commercialheartbeat. With no visa restric-tions, no tax on profits, flexiblecustoms laws and absence of restrictive quotas and taxes,PIMM is a commercial haven forfree enterprise.PIMM is already on its way tobeing the biggest merchandisemart in the world. Started byentrepreneur Reynald HenryKatz in 2007, it occupies an envi-able location next to the PanamaCanal and the Colon Free TradeZone — the second largest freetrade zone in the world.Once complete, in 2010, PIMM will house at least 6,800 show-rooms, 10 office blocks and fourhotels, although the first phaseshould be ready by spring 2008.Showroom prices start at just$125,000 and investments are100 percent tax deductible in what promises to be, in the wordsof the company founder, “the wholesale shopping center of the world.”PIMM will have a total of 34buildings with room for morethan 6,000 manufacturers. Plansinclude office space covering amassive 530 hectares of land.By 2009, $1 billion will havebeen invested in developingPIMM and each showroom isprojected to have a turnover of $2 million. The key to generatingthis revenue is its perfect locationin the heart of Latin America, which gives it access to a marketof 566 million people.PIMM originally came aboutdue to a desperate lack of show-room space in Panama to exploitthis market, according to founderKatz. He came up with the idea while visiting the Colon FreeTrade Zone in an unsuccessfulsearch for a showroom. Katz wasturned away, being told there wassimply no room and a waiting listof 2,500 companies. It was at thatpoint that he decided to go out onhis own and create PIMM.
 A concept is born
The essential concept was tocreate a space where manufac-turers can purchase showroomspace and negotiate withclients without excessive publicinterference.The potential for PIMM is sohigh because Latin Americaneconomies are now boomingagain after several years of decline. As Katz says: “The Latin American market is now ripe forthe picking and with showroomspace three to four times cheaperthan in the U.S., investmentoutlays can be made back withina few years rather than several.”The first phase of PIMM is dueto be completed by 2009, and willcomprise almost 11 million sq.ft. of floor space on the banks of Lake Gatún.Showrooms cover all kinds of industries, including textiles,clothing, catering, health,pharmaceuticals, perfumes,cosmetics, home electronics,telecommunications equip-ment, machinery, constructionmaterials, interior decoration,electrical appliances and chemi-cal products.PIMM also houses an exhibi-tion and conference center, andhotel and condominium spacefor visitors. Response to PIMMfrom the business communityhas already been extremelyenthusiastic. In the first threemonths, Katz sold $135 million worth of floor space, which wasnetting him around $1 millionper day. A number of prestigious world- wide brands have expressedinterest in the PIMM concept,including Philips, Siemens, ICIPeugeot, Renault Fiat, Man,Mercedes, Kraft Foods, Louis Vuitton, Gucci, Fendi, Chanel,Rolex, Prada, Lowes, Lvmh,Zara, Versace, Benetton, Escada,and Hermes.Part of the obvious attrac-tion is that Panama does notcharge business tax on profitsor imports. In addition, PIMMissues clients with a unique ‘Seal
PIMM
The Panama International Merchandise Mart – Gateway to Latin America
of Approval’ which is equivalentto the internationally recognizedISO 100.Katz says: “The aim is to speedup shipments so that they don’tneed any inspections whatsoeverat customs — everything is veri-fied in advance with manufactur-ers by PIMM. In this way, goodscan enter the country within twodays.”PIMM’s offshore showroomfacilities also mean tax-freetrading for owners. Sincegoods never actually touchPanamanian soil, there are notariffs or taxes to pay.There are no tensions betweenPIMM and the Colon Free TradeZone either as PIMM is more of an extension of the free-tradezone’s activities and both enjoyreciprocal benefits from theirclose proximity to each other.
PIMM: Where top international traders can meet under one roof
With showroom
With showroom
space three to four
 space three to four
times cheaper
times cheaper
than in the U.S.,
than in the U.S.,
investment outlays
 investment outlays
can be made
can be made
back within a
back within a
few, rather than
 few, rather than
several, years.
 several, years.
Reynald Henry Katz, President, PIMM
Reynald KatzPresidentPIMM
Buying and selling goods just got a whole lot easier after the launch of the Panama International Merchandise Mart. With the first phase of showrooms already sold out, the revolutionaryconcept looks set to become “the wholesale shopping center of the world.”
PANORAMA REPORTS
A breakthrough in wholesaling
PIMM offers a world of advantages for Japanese buyers
For foreign investors, especiallythose used to the friendly natureof business in Asia, Panama isan ideal location. The countryenjoys a much greater level of security than much of South America — and even the U.S.— illustrated by the fact that it was awarded the highest ratingon tourist safety from the pres-tigious Pinkerton Intelligence Agency.People are warm, friendly andopen, and Panama has alwaysbeen an international crossroadsdue to its central location andfamous canal. In addition, thelanguage of international busi-ness is English, as it has prettymuch been adopted as a secondlanguage, while the local cur-rency is the U.S. dollar.The modern surrounds of Panama City also compare with anything that Japan has tooffer. Panama City is frequentlyreferred to as a “second Miami” When finished, the area willfeature blanket wireless Internetcoverage and a fleet of 20 busesgoing to and from the airport andheliport. Visitors will also havethe chance to combine business with pleasure in an ecologicalhotel planned to take advantageof PIMM’S privileged positionclose to the tropical Lake Gatún. What’s more, there are notraffic problems associated witha major economic center becauseparking is centralized in a singlearea with shuttle services totransport people around PIMM.Japanese investors can restassured that PIMM is a profes-sional wholesale market, whichmeans that access to the public isseverely restricted. One must bea wholesaler, importer, exporter,sales agent or distributor to tradeinside it. The showrooms them-selves are designed to cater to allneeds from medium-size to hugecommercial enterprises rangingfrom 538, 1,076 and 1,614 sq. ft.
Open year-round
For the convenience of buyers,PIMM will be open year-roundfrom Monday through Fridayfrom 9 a.m. to 5 p.m. and 9 a.m-to 1 p.m. on Saturdays, makingit Panama and Latin America’sonly wholesale mart servic-ing the Latin America and theCaribbean markets year-round.Investors will find some of the world’s top companies tradingthere, including regular sched-uled trade shows with temporaryexhibitors joining the permanentones.Katz says: “Manufacturers will have a unique opportunity tobe in permanent direct contact with Latin American wholesal-ers that often cannot travel tothe U.S. or other marketsbecause of visa restrictions.PIMM effectively gives Latin American, Caribbean andforeign wholesale buyers theopportunity to purchase mer-chandise from thousands of manufacturers from around the world under one roof.“Once an investor has pur-chased space, they are free to useit for whatever use they choose— there is no interference byPIMM. If your purchase is forinvestment only and you do not wish to use the space, PIMM canalso rent the space for you guar-anteeing at least an 8.75 percentreturn on your money.” With such advantages on thetable, the PIMM formula looksset to be a winning one.because of its sophisticatedbusiness district, high-speedInternet connections, American-style infrastructure and theelegance of many of its neighbor-hoods. And of course, Japanese visitors will be welcomed by atemperate climate that averages85 Fahrenheit all year long. Although PIMM’s accessibil-ity to Latin American marketsis its strongest point, it does notintend to cut itself off from therest of the country. To improveits communication potential within Panama, a new highwayis being constructed to connectPIMM with Panama City in just20 minutes. In this way, PIMM’spresident, Reynald Henry Katzhopes to extend the benefits of PIMM to the local economy interms of employment, and new opportunities for the small- andmedium-company sector.
 PIMMland— a city in itself 
So far, the development of PIMMhas created 8,000 jobs and it isestimated that 14,000 more willbe created in the next few phases.In total, 15,000 jobs will bebrought to the province of Colonby the PIMM project. However,for those that are only concerned with working within PIMMitself, PIMM has everything that visiting investors need.Katz says: “One of the majoradvantages of PIMM forJapanese investors is that it is atotally self-contained space thatincludes banks, restaurants,bars, a police station and aninfirmary, as well as offices andpavilions. It became very clearto me that we needed to build amini-city for foreign investors sothat they would feel comfortableinvesting in Latin America.”The precise plan is to offer afree 24-hour shuttle from theparking area to PIMM’s monitor-ing service, supermarkets andbakeries, laundry and dry clean-ers, communications center, 10apartment buildings, 200 publicbathrooms and 10 local andinternational fast-food outlets.It also plans to offer a rec-reational center and gym, aconvention center with 10,000seats, 300 public phones withinthe complex, 5,000 car parkingspaces, 10 high-class interna-tional restaurants and a range of three-, four- and five-star hotels.
Launching the building blocks of a new wholesale concept
With a trading history that spans more than 100 years, Panama is a favored hub for investors.PIMM takes these advantages to a new level, bringing traders together under one roof.
It
It
 
became very
became very
clear to me that
clear to me that
we needed to build
 we needed to build
a mini-city for
a mini-city for
foreign investors
 foreign investors
so that they would
 so that they would
feel comfortable
 feel comfortable
investing in Latin
 investing in Latin
America.
 America.
Reynald Henry Katz, President, PIMM
12345678910111213141516173433323130292827262524232221201918HOTELS
CONVENTION
CONVENTION
CENTER
CENTER
OPEN AIR
OPEN AIR
EXHIBITION
EXHIBITION
CENTER
CENTER
CONTROL
CONTROLLAKELAKELAKELAKE
 
SITE MAP
 
Reynald Henry Katz, PIMM’senterprising president, is confi-dent that Latin America is oneof the best places in the worldto invest at the moment. “Allthe major economies in Latin America are booming at themoment — this is an incredibleopportunity for investors to takeadvantage of this from Panama’soptimum location,” he says.“Banks are giving people loansto buy goods at very low rates atthe moment, making it a muchmore consumer-oriented societythan before.”Particularly important forthose suffering from visa restric-tions in the U.S., PIMM is com-pletely visa-free. Covering sucha large area as Latin America would usually pose all sorts of logistical problems but PIMMenables companies to reach anentire client base within six months.The signing of the Free Trade Agreement between Panamaand the U.S. — although stillawaiting approval by the U.S.Congress — will be of hugeimportance to PIMM, as well asPanama. Katz believes that thisshows the U.S. is already lookingat Panama as the gateway toLatin America. Under the agree-ment there will be even moreLatin American manufacturersselling to the U.S. and vice versa.This still presents opportunitiesfor those that can manufacturecheaper than U.S. competitors,Katz affirms.Panama itself is a centralmeeting point in Latin America— a stable country where busi-ness is inexpensive, returns arebig, and there are no taxes onsales or profits.
Top for capital access
 According to a Capital AccessIndex compiled by the MilkenInstitute, Panama ranks secondonly to Chile as the best place inLatin America to access capital,although it scored even higherthan Chile in three sub catego-ries, including macroeconomicenvironment, banking govern-ance and advanced capitalmarkets.The index, comprising 98countries worldwide, looks at fivekey components that can make iteasier or more difficult for entre-preneurs to access capital. Thecomponents are economic envi-ronment, banking development,capital market development,international environment andsovereign ratings, and Panamascored highly in all of them.Panama, which was one of thenew countries added to the index,made its debut as the second-bestplace in Latin America for capitalaccess. Its score of 4.19 pointsgives it a ranking of 34, ahead of countries like China, Poland andEgypt. Thanks largely to onlyusing the U.S. dollar during itsentire history, Panama has beenable to maintain one of the lowestin its report: “The Asian Crisisof 1997, the Russian defaultand subsequent near financialmeltdown of 1998, the resultingproblems in Brazil and Ecuador,and the collapse of the Argentineeconomy, combined with Japan’sslow financial resolutions andnearly decade-long recessionsdramatically curtailed inves-tors’ appetite for investments inemerging-market countries.”
 Firm trading partners
Nowadays, however, manyJapanese investors alreadyenjoy close relations with Latin America. According to theJapanese Ministry of Foreign Affairs, Japan is the region’ssecond-largest trading partnerafter the U.S.Japan accounts for some 4 percentof Latin America’s total tradetoday and may well account fora much larger share in the yearsto come. In particular, it does anenormous amount of trade withMexico, Brazil, Chile, Argentinaand Panama. At the start of the 1990s,business conditions in Latin American economies turned ina favorable direction, and todaythe region is once again attract-ing international attention as the world’s second-largest growthcenter after East Asia. Latin American countries have beensteadily promoting economicreforms based on the principlesof the market economy andPIMM is the next big phase inthat development.The result has been a remark-able economic rejuvenationover recent years, one to whichpeople around the world havebeen paying attention. Latin America’s strong economicgrowth has been powering asteady expansion in relation toJapan’s exports to it.Starting at roughly $9.7 billionin 1990, these exports have risento more than three times thattoday, driven mainly by machin-ery, metal products and chemicalproducts. Japan’s imports fromLatin America did, however,fall slightly in the early 1990sas a result of Japan’s economicslump.
 Aiding development
Some 70 percent of Japan’sexports to the region are capitalgoods, which will help Latin American countries upgradeand expand their industrialbases, and should contribute tolong-term economic growth.Last year, 33 percent of exports were processed prod-ucts, 24 percent were foods and23 percent were raw materials.Latin American countries havebeen working hard to sell morefood to Japan, especially Chile, which saw its Japanese-boundfood exports surge from roughly$569 million in 1994 to almostquadruple that today.The simple exporting of Chilean grapes, kiwi fruit, and wine, Mexican mangoes andBrazilian orange juice fromthe ground-breaking PanamaInternational Merchandise Martis a tariff and tax-free opportu-nity just waiting to be seized.
Latin America opens up further
inflation rates in Latin Americaand one that often has been lowerthan that of the U.S. itself.In addition to hosting one of Latin America’s top internationalbanking centers, Panama alsoboasts a relatively large numberof domestic banks. And sincethe dollar is the legal currency,the country’s central bank haslimited authority — it neitherprints money, nor owns or bailsout local banks.“Countries with high levels of inequality tend to be character-ized by substantial barriers tocapital. They under perform eco-nomically as they prevent theircitizens from making full use of their human capital,” the MilkenInstitute says in its analysis.Things have certainly come along way since the economic illsof 1997. As the institute states
Investing in a PIMM showroom allows investors to reach the Latin American market with ease.
 Japan-Latin American trade is already booming, and with several Latin American econo-mies enjoying unprecedented growth and a rise in consumerism, there has never been a bettertime to investigate the possibilities of a PIMM showroom.
PANORAMA REPORTSPANAMAwww.panoramareports.com
Where did life start for you?
I was born in Avignon, France in 1955. Business wasin my blood from an early age. My father has alwaysbeen in the perfume and cosmetics industry, andduring my childhood, I always helped him during thesummer holidays to manufacture cosmetics such aslipsticks, nail polish, make-up and foundation. Duringmy teenage years, every summer I was sent to studyin Los Angeles and San Francisco in California, whereI learned to speak English and about American busi-ness methods.
What is your educational background?
I attended the St. Joseph College of Avignon whereI graduated with straight A grades. I developed ahunger for clinching a deal and always managed tosell something to someone during my school years.During the Avignon Festival, I had a stall and soldhandmade artisan jewelry. After a few years of selling,I’d earned $100,000. At 18, I started to work withmy father because I craved to be heavily involved inthe family business. I was at that time, the manager for a nail polish fillingplant.
How did you make the break on your own?
At 19, I had differing views from my father and decided to make my ownbusiness choices although today, my father is still my best friend. Oneday, I flew to London to meet a nail polish chemist who had discovered anew anticracking formula. In those days, nail polish used to crack the dayafter application. This new formula was a revolutionary invention in thecosmetics industry. We joined together and created our own company,and split the profits 50/50.
How did the business develop?
I invested my savings of $100,000 in the company, and took care of theselling and company funding while the chemist took care of the production.I discovered that at that time, the British government was giving grants tocompanies hiring employees from Outer London and establishing plants300 km outside the City of London. I applied for one of these grants and gotthe funds for my new plant and for research and development. At 19, I wasawarded a $1 million grant and was able to get the manufacturing facilityfree of charge. In two years, I conquered 80 percent of the worldwide nailpolish market, and two years later ICI (Imperial Chemistry Industries),which was my main vendor, bought the business for $8 million, netting $4million each for my partner and myself.
How did you end up in Panama?
After this, I traveled the world selling the concept and fell in love withPanama, although I was living life in the fast lane and went back to Pariswhere I bought everything from a multimillion dollar house to severalsports cars. In the end, I went to Italy to open a cosmetics businessmanufacturing lipsticks. I developed a way to sell the cheapest lipstickson the market, including the manufacturing of the product, the raw mate-rial and the marketing. I was the pioneer in offering a cheap, attractivequality cosmetic product in Europe at a time whenChina was not manufacturing cheap cosmetics. Irealized that the Middle East was a particularlyvirgin market for cosmetics so I moved there,learned Arabic and eventually became the cosmet-ics head buyer for one of the governments in theregion. In 1986, I arrived in the U.S. because therewas a boom in the perfume industry, and all themain brands were establishing themselves in theperfume business. Every day there was a new brandof perfume launched and I went to check this emerg-ing market. By doing this, I discovered the need fora budget, attractive quality fragrance. I created myown line of budget-price perfumes and installeda plant in Miami. Once the products were launched,I sold the plant in 1996 to a major Americancompany. During this time the American govern-ment approached me at the request of the ChineseGovernment to develop the perfume industry fora new project of malls the Chinese governmentwas building.
 And is that when you ended up in China?
Yes. I had just sold my plant so I thought it could be a good opportunityto learn about business in China, and the language of course. Therefore,I was appointed as the senior adviser for the Ministry of Internal TradeCosmetic Division. I lived in China for six months and developed the ideaand model for the cosmetics department and opened three malls. In fact,I developed the cosmetics template that was used to open another 124malls. I developed the link between the Chinese government and all theAmerican cosmetics manufacturers, which included fairs and invitations.In 1998, I went back to Miami and was amazed by the potential of theInternet, and this developed into the creation of the first Internet duty-freee-commerce business.
So how did you arrive in Panama and create PIMM?
In 2001, as part of a global-sourcing mission, I arrived in Panama anddiscovered the geopolitical advantages of this place. I therefore decidedto move to Panama, which had been a dream since 1974 when I was 19years old. I purchased a distribution liquor company in the Colon FreeZone and began to work around Latin America. I realized there was a needfor budget-priced liquor brands so I started to produce my own brands inPanama, and at present hold about 16 percent of the entire Colombianmarket. This brought me to looking for a showroom in the Colon Free Zone,but in my search, I discovered that there were no showrooms available.When I asked what I needed to do to get one the answer was: “Beforeyou, there are 2,500 other companies in line waiting for a showroom.” SoI left the Colon Free Trade Zone administration office with the wonderfulnews that there was a market for 2,500 showrooms! I began to investigatethe situation and it was confirmed that Panama needs thousands moreshowrooms. And that’s when I decided that the Panama InternationalMerchandise Mart (PIMM) should no longer remain a dream but becomea reality.
Introducing Reynald Henry Katz, the man who dreamt up PIMM
“I arrived in Panama as part of a global-sourcing mission, and discovered the geopolitical advantages of this place. I had dreamt of moving to Panama since I was 19 years old.” 
 Panama is a natural gateway between Asia and Latin America.A wealth of potential customers beckons.PIMM will have a huge impact on the Panamian economy.
 The Latin American Market
 Total population in millions Source: Population Reference Bureau 2006
 Economic Activity:
 Estimates suggest the PIMM project will generate a total of $434 million for thePanama economy, in salaries, showroom sales and other building activities, tax rev-enues and consumer spending.
All the major
 All the major
economies in
economies in
Latin America
 Latin America
are booming at
are booming at
the moment — this
the moment — this
is an incredible
 is an incredible
opportunity for
opportunity for
investors to take
 investors to take
advantage of this
advantage of this
from Panama’s
 from Panama’s
optimum
optimum
location.
location.
Reynald Henry Katz, President, PIMM
566 million consumers Caribbean 39 Central America 149South America 378
Banks are
 Banks are
giving people
giving people
loans at very
loans at very
low rates at the
low rates at the
moment, making
moment, making
Latin America a
 Latin America a
more consumer-
more consumer-
oriented society.
oriented society.
Reynald Henry Katz, President, PIMM
 JAPAN
COLON
COLON
PIMM LAND
PIMM LAND
PANAMA CITY
PANAMA CITY
ATLANTIC OCEAN
ATLANTIC OCEAN
PACIFIC OCEAN
PACIFIC OCEANPANAMA
PANAMA -COLON
PANAMA -COLON
FREEWAY
FREEWAY Transactions frombuilding sales, hireand hotel serviceswill be around $73.8million (16.9% of totaleconomic input). Total salaries payablewill be around $158million (36.3%). Consumer spending willbe around $118 million(7.3%). The project willgenerate an estimatedU.S.$83 million in taxesrevenues (19.2%).
 
I am confident that Latin America
 I am confident that Latin America
is one of the best places in the world to
 is one of the best places in the world to
invest at the moment.
 invest at the moment.
Reynald Henry Katz, President, PIMM

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