One of the areas of development that still lags behind in Latin America is that of Infrastructure. Certainly in all other asset classes there has been tremendous, and in some cases, explosive growth. Unfortunately, the region’s countries have not worked hard enough for infrastructure to keep pace with the office, residential and industrial development demands. The only exception is in the tourism sector that caters to foreigners where they have experienced, until 2009, strong hospitality growth; there, infrastructure is generally proactively planned and implemented. Unfortunately, governments tend to place a higher importance on the comfort of non-native tourists, and the resulting generation of income, than they do on supplying adequate services to their own citizens and taxpaying constituents. One glaring example we can consider is Brazil. If it were not for the fact that it is host to the future Olympic Games and the World Cup in a few years, a significant number of the announced projects would not be occurring. Unfortunately, the other countries in the region do not have the benefit of such useful and motivating impetus. Nor do they seem to have the sufficient foresight and or will to pressure their political systems/populace into such a time consuming and capital investment intensive process… all, perhaps, excluding Panama. Panama is the country that gets it.

The past and current administrations in that isthmus country understand that for growth to continue successfully for its citizens and investors alike it needs to provide proactive and integrated infrastructure solutions; not only for business, but also for the masses. Infrastructure development in the isthmus is proceeding at a torrid pace to accommodate the residential growth that has and is occurring and for the domestic and international companies expanding into and making large investments in the near future. Panama expects to spend $20 billion over the next four years (not quite Brazil’s US$400 billion over the next 4 years, however, with 3.4 million Panamanians that averages out to US$5,900 per capita compared to Brazil’s US$2,000) building new ports, expanding its strategically important airports, constructing a subterranean metro, improving and expanding many highways and adding a third crucial bridge connecting Panama City proper to the booming region of Arraijan and La Chorrera located to the west across the Panama Canal where the successful mixed-use Panama Pacifico is located (www.panamapacifico.com ). Upon completion, some of these projects will make vehicle and pedestrian travel much more efficient throughout Panama City and its burgeoning greater metropolitan area. Other projects will increase tourism; support cargo transportation, importing and exporting; and create new business opportunities. Provided by our operations at NAI Panama (www.naipanama.com), here follows a summary of the key infrastructure projects that are now happening in Panama.

Tocumen International Airport

In 2006, the Tocumen International Airport, located adjacent to and just south of Panama City, expanded its passenger terminal with 22 new boarding bridges increasing its boarding areas to 28. In the near future new equipment, elevators, a luggage administration system, a flight information system, and new air conditionings systems throughout will be installed. The cargo area will undergo extensive remodelling including construction of new buildings. Future improvements also include doubling the number of passengers by constructing a new terminal on the north side. The North Terminal will have 10 moving pedestrian walkways and 1,400 m2 for commercial space. There will also be new platforms and a taxiway for airplanes with a new street connecting the cargo terminal and the airport’s administration operations. This project began in October of 2009 and is expected to be completed in early 2011. Increasing airport efficiency and doubling the number of passengers means more tourists and potential investors. Improving cargo terminals will mean more capable importing and exporting of goods, enhancing trade efforts.

Cinta Costera

The Panama City bay Cinta Costera, or “Coastal Belt,” began construction of a park, plazas and improved vehicle traffic control on the congested Avenida Balboa (Panama City bay’s main avenue) in 2007. Formally dedicated in June of 2009, the project is called “Cinta Costera y Nueva Vialidad” (Coastal Strip and New Roadway System). Avenida Balboa was widened with more vehicle lanes and entry and exit ramps at its busiest areas. This project includes 7 km of pedestrian walkways, 3.5 km of bicycle paths, and 6 pedestrian overpasses to access the Cinta Costera from different parts of Avenida Balboa. A total of $189.1 million will be spent on this project when it finishes with the Casco Viejo extension. The Cinta Costera project allows faster vehicular access from Punta Paitilla and Multicentro to the edge of Casco Viejo, which benefits businesses located within these areas, as well as adding a great pedestrian area for the entire city to enjoy.

Casco Viejo Expansion

The Cinta Costera is now being expanded into the popular tourist area “Casco Viejo” (Old Town). Casco Viejo’s French and Spanish colonial era architecture will be preserved and made easily accessible for vehicles and pedestrians by relieving the current vehicle traffic congestion. This $52 million project will extend the existing highway from the popular Japanese style Fish Market on Balboa Avenue which will run along the waterfront entrance of the President’s Office (Palacio de las Garzas) into Casco Viejo. Upon completion, this project will allow direct access from the Tocumen International Airport into Panama City and Casco Viejo by adding two new vehicle lanes. The 2nd phase of this project will include constructing a 120-space underground parking area along with a new multi-purpose pier with an outdoor theatre, basketball courts and a park. This means tourists, shoppers, workers and cargo can travel faster between Tocumen Airport and Casco Viejo.

Metro Underground Subway

Panama City will have a new $1.5 billion subway system along with a new $500 million public bus system. The first line for the subway system will run from the Albrook transport terminal to the Los Andes neighbourhood which measures 14 kilometres. Major streets will be connected by Line 1 including Transistmica, Via España and Justo Arosemana Avenues. The first line will include 7 km of tunnels and 6.3 km of viaducts. It will include 16 stations (11 underground and 5 elevated ones) 100 meters long. Line 1 is expected to be completed in 2013. Companies and job sites will benefit with a clean and efficient subway system for workers, tourists, and shoppers to travel quickly (shades of Singapore!). Businesses surrounding the 16 stations will benefit from increased pedestrian traffic.

Panama Canal Expansion

The Panama Canal Authority (ACP) proposed building a third set of locks to handle the larger Post-Panamax ships (12,000 TEU capacity) that will double the capacity of the Canal. This was approved by a public referendum in 2006. Two locks (one on the Pacific Ocean side and the other on the Atlantic Ocean side) each having three chambers, including three water basins, will connect to each other. Construction is scheduled to be completed in 2014. Bigger cruise ships will deposit more tourists spending extra money for local businesses. Increasing the number of larger cargo vessels means more goods to be sold in Panama along with greater opportunities for importing and exporting products. The revenues from the tolls will boost Panama’s economy, ultimately benefiting several industries.

Third Bridge Over The Canal

A third bridge to be built between the current Centenary and Americas bridges will connect the ex-Howard Air Force Base (now Panama Pacifico) to Panama City proper – running from Panama City across the Canal with roads leading to Panamá-Pacífico, Arraiján and La Chorrera. This project will allow faster vehicle access to the large community being developed in Howard with its cargo airfield along with business opportunities and to the growing residential communities.

Interior Airport Projects

Within 20 months the international airport in David, Chiriqui expects to finish its remodelling allowing more passengers and cargo. An international airport will be constructed in the Interior, as well as an enlargement of France Field and Davis Airfield along with Santiago and Chitre airports. These will make the interior more accessible and bring more tourists, business opportunities and investment to the rest of the country.

Curundu Urban Renewal

This project includes the construction of 40 free medical clinics and five new hospitals along with 1,000 new dwellings. New opportunities will arise in all medical-based and consumer products businesses.

 

Unlike too many countries in the region and even round the world, Panama is answering the call and committing its resources to continuously improve infrastructure throughout the country. Already considered to have some of the best infrastructure in the region, the new projects are expected to keep Panama ahead of the growth curve and on the “favoured list” of investors, businesses, travellers and expatriates alike. Nevertheless, if the country continues to grow at the rate that it has over the last 7 years, I foresee that it would have to dedicate even more capital resources to its infrastructure development or fall behind and be like any other country in the region.

-David Berger

Based in Miami, David Berger is Managing Director for Latin America & The Caribbean region at NAI Global.