Panama must protect investors

The principle of transparency, institutional stability and legal certainty will be crucial for Panama to keep the confidence of national and foreign investors, this was stated by the President of the National Council of Private Enterprise (Conep), Julio De La Lastra.

Miriam Lasso
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- Actualizado: 16/5/2016 - 10:32 am

De La Lastra reaffirmed the need for the country to reinforce the image that is projected internationally, referring to the scandals which Panama has undergone in recent months.

Meanwhile, Economist Juan Jované also recalled that the economic growth of the country largely responds to foreign capital inflows, which represented between 11% and 12% of gross domestic product in recent years.

Economic studies of the region have placed Panama as the economy that has grown the most in Latin America, reaching a rate of over 6% and 5.8% in 2015, in addition to leading the line in foreign direct investment.

According to data by the Ministry of economy and Finance (MEF), foreign direct investment increased by $5,038 million 600 thousand in 2015, surpassing 2014 figures, when it was estimated in $4,309 million 400 thousand.

Only in 2014, 25% of the investment made in our country was foreign, and it is hoped that with the opening of the expanded Canal it will continue to grow in 2016.

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Most of this investment is reinvested by foreign investors, authorities estimate.

Similarly, in 2015, Panama transferred profits to foreign investors for $3,801 thousand 900 million and the rest was invested in the country.

In June 2014, the Financial Action Task Force (FATF) also included Panama in the "grey list", once the mission of the International Monetary Fund (IMF) detected deficiencies in the implementation of the 40 recommendations in the fight against the laundering of capital.

In addition to compromising the image, this international warning cost the country the cancellation of more than 20 correspondent banking and the reduction of lines and their rising prices which were kept.

However, at the plenary meeting of the Financial Action Task Force (FATF) held in February in Paris, France, the exclusion of Panama from the grey list of the organism was approved.

As a result, De La Lastra argues that any scandal affecting the financial platform and service of the country will generate confusion and fear among investors.

For Jované, the situation may be worse if cases like that of law firm Mossack Fonseca and the warning made by the US Department of the Office of the Treasury's Foreign Assets Control (OFAC) over group Waked affect the banking system.

According to the Economist, the fact that the correspondent banks break relations with local banks or fewer investors are willing to develop projects in the country would automatically rebound in economic activity and the generation of jobs.

According to the Comptroller General of the Republic, between 2011 and 2015, foreign direct investment was concentrated in activities such as trade to the wholesale and retail, with higher amounts to $1,200 billion dollars, business financial and insurance over $702 million 984 thousand.

For the President of Conep, this is sufficient for the State to find ways to ensure security and certainty for investors that their funds will be protected.

The Government's actions

Although experts say that Panama should have more energy to defend the image of the country, the authorities defend their actions.

In this regard, Iván Zarak, Vice-Minister of economy, said that Panama attacks head-on the topics, and they are taking responsible measures to assure the investment community and there is a brake on the economy due to scandals.