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CLD Insights

Challenges and Opportunities for Panama: A look at the Future of the New Administration

In this article, our founding partner, Ricardo Cambra, responds to two key questions for this transition period in Panama and presents an analysis of the most significant challenges the next administration will face in terms of business and investment. He addresses critical issues such as the crisis of the Caja del Seguro Social and the need for a new constitution. Additionally, he highlights promising opportunities, such as the construction of the train between Panama City and David.

What do you believe will be the most significant challenges the next administration will face in terms of business and investment?

In response to this question, I find it pertinent to address an inevitably political issue that is the president-elect's thorn in the side, namely former President Ricardo Martinelli. It is unavoidable not to address this issue when we see how the former president seeks to influence (even before taking office) the decisions that the president-elect may make, holding meetings with the elected deputies of his political party.

In my opinion, as a Panamanian and businessman, one of the first decisions the president-elect must take is what to do with the aforementioned former president, who is currently sheltered in the Nicaraguan Embassy. Prolonging this issue could create tensions between our country and our largest trading partner, the United States of America.

On the other hand, we are pleased to see that the president-elect has appointed a cabinet made up of highly experienced individuals, some from opposition political parties and others who are independents.

Taking all the above into consideration, in our opinion, the government will have to address the crisis of the Caja del Seguro Social and will need to make very strong decisions regarding austerity, digitalization, and the acceleration of tax collection processes to increase revenue, review tax incentives, among other financial measures to build confidence in the international markets and particularly among local and foreign investors.

However, attention must also be paid to the mining issue. The president-elect has mentioned on several occasions that he is willing to open the mine to gradually close it. This aspect could face opposition, as evidenced in October-November of 2023, which means such decisions must be accompanied by a logical and legally sound explanation, environmental protection, and social peace.

What are the most promising investment opportunities you anticipate for the coming years under the new administration, and how can businesses or investors prepare to maximize them?

Regarding investment opportunities, I believe caution should prevail to act under the best scenarios, and for this, it is essential that the most delicate issue, concerning the former president, is resolved. Once that matter is addressed, we need to see how the first 100 days of government unfold. One of the key elements we might witness is the start of negotiations and discussions to carry out a constitutional reform.

In our opinion, a new constitution is absolutely necessary, but it must be done through an orderly process that does not violate the current Constitution. This means adhering to the established procedures to avoid social unrest that could undermine the confidence of the private sector willing to invest in Panama.

Among the proposals of the incoming president is a train between Panama City and the city of David, which would bring significant development throughout the country and would certainly be a major job generator. Considering it is a mega-project, it is important to note that it may take no less than a year to go to tender, and according to experts, it is a project that would take approximately five to seven years to complete. If realized, it will bring numerous benefits to various sectors and create opportunities in many areas, including commerce, real estate, and all kinds of products needed for construction.

In conclusion, Panama, in my humble opinion, will always have a bright future because we, its inhabitants, work diligently and honestly, knowing that Panama has much to offer and much to develop still. We trust that the new administration will successfully address the challenges posed and, from day one, tackle the most important issues with practical solutions that yield results in the short and medium term. This will enhance Panama's strengths as an investment destination, maintain its position as the hub of the Americas, and restore its exceptional investment grade.

Challenges and Opportunities for Panama A look at the Future of the New Administration
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