Chinese investment in Panamanian infrastructure and logistics projects set to grow

Lawyers predict increasing demand for advice on administrative law and public procurement after China and Panama schedule free-trade talks.

The establishment of diplomatic relations between Panama and China is expected to facilitate more Far East investment in infraestructure and logistics projects in the Central American nation, lawyers say.

Panama officially established diplomatic relations with the People’s Republic of China last year with negotiations on a free trade agreement between both countries scheduled for this year. In addition, the Central American country is once again expected to show strong economic growth in 2018, with figures released by the World Bank projecting 5.6 per cent growth.
“Establishing diplomatic relations between Panama and China is set to serve as a solid foundation for further commerce between the two nations,” says Cristina Lewis, partner at Panamanian law firm Galindo, Arias & López. Meanwhile, Jose Luis Sosa, an associate at Galindo, Arias & López, highlights the fact that both countries have already executed bilateral agreements covering sectors such as aviation and maritime services.

Jaime Alemán, managing partner of Alemán, Cordero, Galindo & Lee, notes that sectors such as logistics and transport, which are key in Panama, remain attractive to international investors. The Panama Canal and the Colon Free Trade Zone are among the country’s main drivers of growth, Alemán says. He adds that the Canal is expected to turn a profit of $1.8 billion in 2018, largely as a result of the expansion completed in 2016 allowing post-Panamax ships to cross the waterway. Alemán is optimistic that, with China and Panama establishing diplomatic relations, investment from China and elsewhere in Asia will flow more easily into the country´s growing infrastructure and logistics projects.

The anticipated increase in foreign investment will generate more opportunities for law firms in Panama, says Elizabeth Heurtematte, partner at Lovill LatamLex. She explains that, in particular, law firms with expertise in administrative law and public procurement should experience an increase in demand from clients seeking advice on participation in infrastructure projects.

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