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for sale and rent by 2012
ike many great ideas, Panama International Merchandise Mart (PIMM) is a remarkably obvious one. When Reynald Henry Katz, President and CEO of PIMM, needed space to market his products in Panama’s Colon Free Zone and was shown to the back of a line of 2,500 prospective clients, he decided to go elsewhere rather than wait his turn.
Elsewhere is now a billion-dollar project, where work began in 2007 and is scheduled for completion by 2012, to build the ﬁrst-ever wholesale showrooms in Latin America. PIMM will be a permanent trade fair, where manufacturers, distributors and exporters can showcase products year-round in a dedicated environment to which buyers and importers will inevitably be drawn. Showrooms are available in 34
PANAMA INTERNATIONAL MERCHANDISE MART
themed buildings, accounting for 11 million square feet of ﬂoor space. The complex will eventually house 6,800 units, offering everything from cars and trucks to apparel and footwear, from jewelry and accessories to furniture and housewares, from electronics and appliances to toys, gifts and even ﬂowers. The 92-acre full-service complex will also include hotels, apartments, ofﬁce suites and a conference
General view PIMM project
center and, after completion of the initial phases, there will still be plenty of room to grow. Laid out in a similar fashion to a small town, PIMM is located adjacent to the Free Zone, close to the end of the Panama Canal, and by 2009 will be linked to the capital, Panama City, by a new highway in just 20 minutes. The Colon Free Zone on Panama’s Atlantic coast is the second largest tax-free transshipment complex in the world. Its volume of trade in 2006 was worth close to $15 billion, almost 18% more than the previous year, and forecasts see this continuing to grow after planned expansion work is completed. With 560 million potential customers throughout Latin America and the Caribbean, not to mention a 300-million strong market in North America, it’s no accident that PIMM is located in Panama, at the very hub of the Americas. The fact that 2,500 other companies also need showroom space proves demand is there too. With a stable government, inﬂation at just over 2%, no tax on proﬁts and the US dollar as legal tender, Katz believes Panama is the best place to invest in Latin America today. And for those from outside the US doing business with American clients on a regular basis, meeting in Panama means no immigration hassles.
PIMM location and buildings layout
Then there are the advantages of doing business at PIMM: proximity to key markets, low set-up and operating costs, an unrivaled choice of goods for buyers, permanent facilities and services for sellers, and no language problems with partners across all of Latin America. With showroom prices starting from just $125,000, PIMM estimate that, with annual sales of $2 million for
each unit, initial investments should be recoverable within three years. It’s no surprise to learn that the ﬁrst phase sold out in just three months for $135 million. Phase one, scheduled to last until the end of 2008, represents an investment of $100 million for the construction of 11 buildings including the conference center and 120 apartments. The second phase, which will be completed in 2009, includes another four showroom buildings, three for ofﬁce space, 180 more apartments and the ﬁrst 125-room hotel, and will cost in the region of $126 million. The next two years will see the most ambitious phase costing around $240 million. No less than 16 new showroom complexes will be erected, in addition to two ofﬁce buildings, three new apartment blocks and another hotel. The ﬁnal phase will be undertaken in 2012, and adds the six ﬁnal showroom buildings, more apartments and extra hotel rooms. Operating costs from 2007-2012 have been conservatively estimated at $135 million, 20% of the project value, and will see 34,000 jobs created locally to meet the demands of clients. PIMM forecast that the Panamanian government should receive an economic impact from the project of more than $434 million by the end of 2012.
Condos and ofﬁce building
“If you want to invest, Panama is the place”
orn in France, Reynald Henry Katz has worked in Europe, the Middle East, China and the US. He ﬁrst came to Panama in the 1970s, but only in 2001 decided to settle here and do business. Katz showed entrepreneurial ﬂair early on. At 19, he helped develop an anti-cracking nail polish which soon accounted for 80% of market share worldwide. ICI later bought the business for $8 million. He then headed to Italy to manufacture lipsticks for Europe and, increasingly, the Middle East. Seizing the chance to explore virgin territory, he moved to the region and made cosmetics there before moving to the US. Katz arrived in Miami in the 1980s and set up a company making budget perfumes, selling out to a US manufacturer in 1996. Meanwhile, he had been approached by the US government about using his knowledge to develop shopping malls in China. Advising the Chinese government, Katz created a model for cosmetic retailing used nationwide and acted as a liaison for US manufacturers. He then returned to the US in 1988, in time for the Internet boom, and developed an online duty-free e-commerce business. After the dotcom crash, Katz came to Panama. His ﬁrst venture here was a liquor distribution company in the Colon Free Zone serving Latin American markets. Again, Katz saw a need for quality, budget products and now controls 16% of the Colombian market with his brands. Looking to promote these, he enquired about showrooms in the Free Zone and was told to join 2,500 other companies in line. The rest is history, as he explains: “The idea [for PIMM] was born in 2006, simply because there was no space in Colon. So we decided to open showrooms [to serve] this need, just as the Americans have done in Miami and Los Angeles. We created PIMM in Panama as there is nowhere else to go locally and in Latin America.” “Our business is bigger, the concept is bigger, than the Free Zone itself. Panama has always been a country where goods are sent from, but what we need here is to sell. We are the salespeople.” “Most of our clients come from countries like China and India but we’ve had a great response from the US, from companies who export fashion, manufacturing in China and selling to Latin America. I also think Spanish and other European companies will come [here] as they expand. Panama and Latin America offer easily accessible markets for them.” “We have showrooms and ofﬁces from $2,500 per square meter, expensive by Panamanian standards but cheap for Europe, China and the US. You won’t ﬁnd anything at that price in Beijing, where you’ll be paying $10,000 minimum.” “We are also selling apartments at $1,000 per square meter as we’re providing a service and thinking about clients from overseas. We are selling these at reasonable prices so clients can invest in showrooms. It’s a real plus to be here all the time to look after your business.” “I put up part of the capital and we found banks to back the project. We did so by [selling] an opportunity not only in the project, but in a country which is growing at 9% and will continue to do so with the expansion of the Panama Canal. This means that the entire multi-modal logistics infrastructure for the region is in Panama.” “Panama is stable, uses the dollar and is in the center of Latin America. I have traveled to 42 countries around the world but I ended up here in Panama.”
Interview with the president of PIMM
MR REYNALD KATZ PRESIDENT OF PIMM