PITCH YOUR PLACE

Panama 2014 | ECONOMY | B2B: ZONE MANAGEMENT

Housing one of the most important shipping lanes in the World, Panama has realized that free zones and specialized cities are an effective way to benefit from this passing trade.

Olmedo Alfaro Preciado
OLMEDO ALFARO PRECIADO
Former CEO
Agencia Panamá Pacífico
Jorge R. Arosemena
JORGE R. AROSEMENA
President
City of Knowledge Foundation

What are the main benefits of your zone?

OLMEDO ALFARO PRECIADO My first task was to find a true direction for a state-of-the-art, modern business. I felt that having a logistics center was not good enough; we had to go deeper and design something to serve the modern world. The ports will also expand. If they expand, then developing facilities for logistics is simply logical. We need to keep improving on our transformation. In the Area, foreign companies pay zero taxes on profits. Shareholders pay no taxes on the dividends. In exchange, I want the companies to pay the employees a good salary because they are well trained. The higher the salary the more taxes for the government. Things are simple and business is growing. The labor law in Panama says that you can only have 10% foreign labor. But if a global company can only find 80% Panamanian employees, we are flexible and find a way to approve that excess. The law can be flexible in dealing with short-term exigencies, but you have to have a plan that shows how you will achieve those legal requirements over the long term. What I don't want is to have a company leave because of a legal technicality.

JORGE R. AROSEMENA Every year we only accept 10% of the companies that apply to join the technology park at the City of Knowledge because we are strict about our admission process. The benefits are tax exemptions; they can conduct international business from here, and they also have migratory status, guaranteed by City of Knowledge visas issued by the government of Panama. Once a company is affiliated to the City of Knowledge technology park, work permits are issued as another benefit. These are also offered by other projects in Panama, like Panamá Pacífico, among others.

What are your main objectives?

OAP If we take GDP as an indicator of job creation, we are far above that index. We have around 11,000 employees at the moment, while we create about 3,000 jobs per year. Those employees are not government employees. The companies ask us why they should set up in Panama. It is simple; we choose technology and transformation because we can move between the Atlantic and the Pacific easily through the Panama Canal. We have the five most important fiber-optic cables coming through Panama, and there will be two more installed in the next couple of years. That gives the companies communications security. If one cable fails, there are more. You can send a huge amount of information, which gives Panama the opportunity to open up different businesses. We want to digitalize the cost of music production, for example, and with Warner Bros. we would like to run post-production facilities in the country.

JRA The main objectives were the launching of a platform conformed by prestigious universities and research centers, along with high-tech businesses and eventually international organizations. The presence of these actors, with the participation of local counterparts, should create added value in the pursuit of knowledge and its application to answer the key questions brought about by the 21st century. With that in mind, the first crucial decision led to the creation of a non-profit private foundation to facilitate continuity for this ambitious project. The model was organized around a board of trustees representing different sectors, including the academic-scientific community, the business community, the government, and labor unions. The presidents of the three main universities, the president of the Council of the Presidents of Universities, the National Secretary of Science, Technology, and Innovation, and a number of businessmen are part of the board of trustees of the foundation. We also have the ministers of Foreign Relations, Education, the Presidency, and of Finance and Economics, a representative of the National Assembly, our legislative body branch, as well as two representatives from organized labor unions.