In a move to enhance bilateral trade relations between India and Panama, India’s Ambassador, Dr Sumit Seth, met with Giovanni Ferrari, General Manager of the Colon Free Trade Zone (CFZ). The conversation zeroed in on Panama’s role as a regional logistics and business hub, delving into the advantages of the Free Trade Zone and the incentives to attract Indian companies.
Unveiling the Significance of Colon Free Zone
The talks with the General Manager of CFZ is very important, as it stands as one of the world’s largest free zones, still relatively untapped within the Indian market. This strategic endeavour aims not only to attract attention but potentially pave the way for groundbreaking partnerships.
Indian businesses could leverage CFZ by establishing their units, which could be pivotal for exporting goods not only to other Central American countries but also to the United States. Located strategically between North and South America, Panama emerges as a prominent re-export zone, thanks to its strategic location and the operational might of the Panama Canal. This positioning has attracted many international firms, establishing a robust logistics hub in and around Panama City.
The Phenomenon of Colon SEZ (CFZ)
Established in 1948 on Panama’s Atlantic side, the Colon SEZ (CFZ) shines as the largest free-trade zone in the Western Hemisphere and stands as the second-largest globally, surpassed only by Hong Kong. Notably, CFZ serves as an effective distribution channel, granting access to the Latin American and Caribbean markets, collectively boasting a population exceeding 650 million. Within the CFZ, over 3,000 companies operate, including a significant number of global brands. Noteworthy is the fact that approximately 25% of these companies exclusively deal with textiles and garments. Facilitating the export of merchandise across regions, CFZ stands equipped with high-level multi-modal logistical support.
Empowering Wholesale Clubs: A Strategic Move
The CFZ frequently welcomes Wholesale Clubs from various Latin American countries. These clubs, consisting of wholesale or retail merchants within a particular region, collaborate for consolidated purchases and pursue higher trade discounts and enhanced facilities. Within CFZ, according to information in the public domain Wholesale Clubs have the opportunity to source import goods from multiple countries, engaging in cost-effective and expedited container freight transactions. This collaborative platform offers customized labelling and packaging of products to meet specific requirements. In the CFZ, an Indian exporter can sell duty-free to a single merchant, foreseeing the distribution and retail of their products across Central America, the Caribbean, and the Andean region of South America.
Expanding Horizons: Beyond Textiles and Garments
While textiles and garments take the lead, numerous other sectors stand to benefit significantly from operations within CFZ. This includes pharmaceuticals, surgical products, spices, food items, leather goods, handicrafts, building hardware, specialty chemicals, and much more.
Panama’s Economic Momentum
Over the last decade, Panama has emerged as one of the world’s fastest-growing economies. This success is attributed to its strategic location and the operational prowess of the Panama Canal. According to information available in the public domain international firms continue to establish themselves in and around Panama City, bolstering its reputation as a pivotal logistics hub. With 144 maritime routes connecting to 1,700 ports across 160 countries, Panama’s significance is further underscored by a reported rebound in vessel transits following the global trade resurgence post the Covid-19 pandemic.
Building upon the success of CFZ, Panama has introduced five additional Free Trade Zones, each offering unique and specialized advantages. These zones hold immense potential for exporters seeking tailor-made benefits.
Promising Prospects: Ministerial Dialogues
Earlier this year, India’s External Affairs Minister Dr S Jaishankar had earlier this year visited Panama City, where fruitful discussions took place with the Panama President Nito Cortizo. The talks revolved around trade and investment prospects, including the exploration of a logistics hub for Indian companies. The discussions extended to addressing challenges in affordable healthcare, decentralized production of medicines, and opportunities in the energy and renewables sector.
A New Ambassador’s Role
The Ministry of External Affairs recently appointed Dr Sumit Seth as India’s ambassador to Panama, also accredited to Costa Rica and Nicaragua. With ties between the two countries rapidly intensifying, Dr Seth had the unique opportunity to present his credentials within a mere 15 hours of arriving in Panama City.
Paving the Path to Collaboration
Central America is keen to attract investments from India, particularly in the fields of agricultural technology, information technology, outsourcing, and research and development. Panama, along with Costa Rica and Nicaragua, as members of the eight-member Central American Integration System (SICA), presents a gateway to accessing diverse markets, including the US and other regional countries.
As India and Panama continue their journey towards enhanced economic collaboration, the exploration of CFZ’s potential serves as a promising gateway to deeper bilateral ties and mutual growth.
Source: Financial Express