Panama, all but a byword for infrastructure, is upping its game with a raft of new projects, notably including the canal.
Back in 2015, the decision was made to proceed with the construction of a fourth bridge. A site north of the Bridge of the Americas at the mouth of the Pacific Ocean was deemed to be the optimal location in terms of linking a large number of people living in Panamá Oeste, and notably the commuter towns of Arraiján and Chorrera, with the city center. Official estimates put the number of beneficiaries of the scheme at 1.7 million people. The scheme also entails the addition of a third line to the metro network and six new highway lanes as part of the North Corridor extension, which promises to ease chronic congestion.
The New Bridge…
Tasked with overseeing both the related tender procedures and actual construction work was the Ministry of Public Works, specifically the Coordinating Unit of Public Infrastructure (UCIP). Work on the fourth bridge—part of a USD1.4-billion megaproject—commenced in 2Q2018, at the hands of the winning Chinese consortium comprising China Communications Construction Company LTD and China Harbor Engineering Company LTD. Indeed, the two boast an impressive pedigree in their field, having previously built the 55-km Hong Kong, Macao, and Zhuhai Bridge, a magnificent scheme nine years in the making at a cost of USD18.8 billion. Construction of the fourth bridge, with its 3,950m extension, was earmarked to take up to three years. As of late June 2019, Panama’s Ministry of Works announced that bridge construction was in its preliminary stage of topographical and geotechnical studies.
…of Panamanian Chinese Relations
Erstwhile former President Varela described the project as the fifth greatest in the nation’s history, though it also marked closer ties with China. Indeed, he had received Chinese President Xi Jinping ahead of the awarding ceremony in what was the first visit by a Chinese head of state since the establishment of diplomatic relations in June 2017. Panama is keen to become China’s Central American hub for commerce across Latin America. The numbers already attest to strong Chinese presence in Panama, as its contractors have also won lucrative tenders for a convention center and cruise terminal. Furthermore, China is the premier user of the Colón Free Zone, and after the US (68% of the total), the second-largest user of the Panama Canal; China in 2018 was followed by Mexico, Chile, and Japan.
An Impressive Outperformance
It has been a vibrant time for the Panama Canal, while geopolitical tension plagued the world elsewhere. It had surpassed expectations to close FY2018 with record tonnage of 442.1 million tons. This marked close to double-digit YoY growth. Leading the charge were liquefied petroleum gas (LPG) and natural liquefied gas (LNG), followed by container ships, chemical tankers, and vehicle carriers. Meanwhile, March 22, 2019 marked the newly expanded canal’s 1,000th day of operations. Usage records had been set confirming the effective operation plus time and cost reduction available to commerce on this inter-oceanic route. No less than 5,763 vessels had plied its waters during the period.
The Wider Benefits
Around 6% of global trade goes through the Panama Canal, and aside from reducing rcongestion, major infrastructure projects remain a tried-and-tested means of galvanizing wider economic momentum. Sector figures indicate Panama’s financial services sector is set for 10% YoY growth in 2019, floated, too, by post-election sentiment as Central America’s leading economy ushered in President Laurentino Cortizo. With continued commitment to infrastructure, the credit component of the equation was expected to grow by 8% YoY.
Panama seems poised for continued robust economic performance, and the latest infrastructure underway can but hone its offering for close to 10% of global trade.