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a global hub
geographic location, we are a country that contributes significantly to the development of international trade,” says Torrijos. A number of flagship projects are underway to reinforce Panama’s position as a leading player in manufacturing, trade and logistics. The canal is being expanded in a $5.2 billion project that will dramatically increase capacity. Hong Kong-based Hutchinson Whampoa is planning to turn Balboa, the administrative headquarters at the entrance of the canal, into the largest port in Latin America, and a competing mega-port project is underway on the Pacific coast.
he completion of Panama’s famous canal in 1914 unlocked a gateway between the Atlantic and Pacific oceans, cementing the country’s position as the fulcrum linking North and South America. Nearly 100 years later, Panama’s strategic importance remains immense. Evidence of a boom can be seen throughout Panama City, where construction projects dominate the skyline, new cars flood the streets and shopping arcades are bustling with activity. The country is now positioning itself as a regional logistics and services hub, backed by a strong offshore finance industry, shipping registry and manufacturing base. A services-based economy is flourishing and forecasts have predicted 11% growth this year. In its latest World Economic Outlook, the IMF singles out Panama as Latin America’s leading economy in terms of GDP growth. Since Martin Torrijos triumphed in Presidential elections in May 2004, the administration has placed greater emphasis on attracting FDI, which more than doubled in 2006 and is now worth 16% of GDP. In addition he has negotiated a free trade agreement with the US which should open the door to increased commerce throughout the Western Hemisphere. “Panama is a country which offers great opportunities, not just for its residents but also for investors. Due to our
ALREADY A HUB FOR TRADE AND COMMERCE
Since 14,000 ships already pass through the Panama Canal annually, carrying in excess of 200 million tons of cargo, it comes as no surprise that Panama already boasts one of the largest Free Trade Zones in the world. Opened by the government in 1954, the Colon Free Trade Zone is home to over 3,000 companies and revenues of $14 billion last year are indicative of vibrant commercial activity. But when Reynald Henry Katz, an experienced entrepreneur, visited the Free Trade Zone in search of
“Panama is a country which offers great opportunities, not just for its residents but also for investors”
artist’s impression of PIMM
THE MAN WITH THE VISION
Reynald Katz is a serial entrepreneur. The son of a French cosmetics manufacturer, he earned $100,000 as a child selling his own hand-made jewellery – money which he invested to co-found a 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 worked extensively in the cosmetics industry throughout the world from Europe and the Middle East, to the US and Asia. He manufactured his own cosmetics range in Florida and later sold his company to a major US firm. As a senior advisor to the Ministry of Internal Trade in China he helped the government establish malls in China. During the internet boom, Katz developed the first internet duty free ecommerce business – a project that stalled when the internet bubble burst. Arriving in Panama in 2001, Katz purchased a liquor distribution company in the Colon Free Zone. He has since developed his own liquor brands which currently have significant market share in the Latin America market. He is fluent in English, Spanish, French, Italian, Arabic and Mandarin.
a showroom he was informed that Colon was running at full showrooms capacity and that he was in line with 2,500 other companies also looking for showroom space. Sensing a unique opportunity, Katz decided to implement his own solution – a $750 million project designed to create the perfect environment for buying and selling goods.
and inflation is very low. Geographically, Panama is in the perfect position and 80 flights daily give direct access to the US, Latin America, Europe and the Caribbean.”
AN INTEGRATED WHOLESALE UNIVERSE
His mission is to create a fully integrated “wholesale universe.” The scale and scope of the project is unprecedented in the region and when complete, will be the largest wholesale market in Latin America, featuring thirty-four 25,000 m2 buildings with 6,800 showrooms, as well as housing ten apartment blocks, ten commercial office buildings, four hotels and a convention centre. The development, built in less than 2 years, will resemble a small city, complete with banks, residential apartments, restaurants, an infirmary and blanket wireless coverage. The heart of the development is the construction of showroom space that will enable thousands of manufacturers, gathered under one roof, to attract buyers and distributers from around the world. The response from manufacturers, companies looking for strategic partners and investors has been enthusiastic. The entire stock of 800 showrooms to be constructed in Phase I were presold within 3 months to clients from Asia, the US and Europe, raising $130 million. “From the beginning our sales have been in excess of $1 million a day. This demonstrated to me that investors already understood that PIMM represented a great business opportunity,” says Katz.
PANAMA INTERNATIONAL MERCHANDISE MART (PIMM)
Katz’s dream is to build Latin America’s first wholesale merchandise mart, called Panama International Merchandise Mart (PIMM) on a 1,800 acre plot close to Lake Gatun and city of Colon. The concept is to centralise the region’s wholesale goods businesses by consolidating manufacturers, vendors, exporters, distributors and sales agents in one state-of-the-art space. PIMM is revolutionising the region’s commercial landscape giving importers and exporters alike direct access to global markets. He reasons that Panama already offers numerous competitive advantages. Geographically, Panama has direct access to 561 million people in Latin America. The canal has secured the country’s position as a global trading hub and Katz knows firsthand that demand for showroom space is already high. “Panama has always been a meeting point for business,” says Katz. “The tax regime means it is an inexpensive place to do business – there are no import duties, no sales tax and no tax on profits. The currency is the US dollar
Geographically, Panama is in the perfect position and 80 flights daily give direct access to the US, Latin America, Europe and the Caribbean
In fact, uptake was so strong that construction of Phase II, III and IV was accelerated and now 6,800 showrooms will be available by 2009. A critical component of Katz’s vision is to enhance previous models for merchandise marts. “We are sparing no expense to create an environment where relationships are formed and orders placed. We need to ensure that everything is in place to facilitate buyers and sellers working together as productively and efficiently as possible. We have the facilities to host merchandise shows and trade events, all with the express aim of increasing the volume of trade for our international wholesalers. Being at PIMM gives buyers and wholesalers the opportunity to see goods, trends and fashions six months ahead of the market. We are providing suppliers a world of goods in one location.”
PIMM GUARANTEES ACCESS TO THE LATIN AMERICAN & CARIBBEAN MARKETS
PIMM provides companies of any size, from multinationals to SMEs, easy access to the burgeoning Latin American market by offering manufacturers the opportunity to set up a cost-effective presence in the region and develop direct relationships with buyers. In practice the operation is very simple. For example, any European manufacturer keen to access the Latin American market contacts PIMM and buys a permanent showroom. Wholesalers from Brazil can contact the manufacturer directly at their PIMM showroom. Deals can be signed, orders placed and merchandise shipped immediately from Europe to the customer in Brazil with a quick phone call. A number of prestigious global brands have already expressed an interest in PIMM, including Philips, Siemens, ICI, Peugeot, Renault, Fiat, Mercedes, Kraft Foods, Gucci, Chanel, Rolex, Prada, Zara, Versace, Benetton and Hermes. Among the services that PIMM will provide are a legal team to help incorporate companies, procure investor visas and open bank accounts. Trade specialists are on hand to help navigate international requirements, trade financing, customs regulations, freight forwarding and showroom setup. Local experts will help with logistical and practical matters such as finding appropriate schooling for kids, securing apartments and even leasing cars. The objective is to facilitate a quick start up, so that manufacturers are exhibiting, meeting buyers and selling as quickly as possible. “What is in our customers’ best interests is in our best interest. If they succeed, we succeed.” The benefits to the local economy are projected to be considerable. In terms of employment, the project is expected to create in excess of 30,000 jobs. It is estimated that the PIMM project in all its phases will add a total of more than $400 million to the economy of Panama with annual revenues of $87 million a year for the next five years to the Colon province. According to Katz: “One of the key aspects when considering PIMM’s economic impact on Panama is that an estimated 6,000 people will be visiting PIMM daily,
PIMM: the facts
LOCATION OPENING THE PROJECT
Colon Province, Panama. Close to the second largest freezone in the world and the Panama Canal 2009 6,800 showrooms into 34 buildings on 1,300 acres making pimm the largest commercial structure in Latin America with 2 million square metres under construction 10,000 seat convention centre, international business centre, 10 office blocks, 10 residential apartment blocks, 4 hotels, 10 restaurants, heliport, 5,000 parking spaces, free shuttle buses, 24 hour security, blanket wireless coverage, police station, fire station, supermarkets, medical centre, gym, recreational facilities 30,000 jobs projected making PIMM Panama’s largest single employer 7,000 showrooms each with an estimated annual turnover of $2,000,000 Spanish and English universally spoken
FACILITIES & AMENITIES
EMPLOYMENT ECONOMIC IMPACT LANGUAGES
bringing $500 million a year of indirect investment. But the most important thing to bear in mind is that everyone who opens a showroom in PIMM will get their money back within 2-3 years because PIMM guarantees business success. We are investing $1 million a month on chartered flights which we give free of charge to buyers just so that they will buy at PIMM. When someone buys a showroom at PIMM they are not just getting a piece of real estate, they are buying a means of doing business.”
Ultimately, Katz believes that the concept is exportable and has ambitions to build a global brand based on the same concept as PIMM. “We are exploring the possibility of an IPO in the future. We would like to raise $10 billion and use the capital to enter new markets like South Africa, India, China, Russia and even New York.” He estimates that the cost of setting up an operation in each new jurisdiction would be around one billion dollars.
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