By Sandeep Wasnik
India and Panama have enjoyed a friendly and mutually beneficial connection since the middle of the 19th century. Notably, Indians contributed to the construction of the Panama Canal, an essential piece of infrastructure that transformed international trade. In 1973, India established a resident mission in Panama, while in 1983, Panama established an embassy in New Delhi. Both nations foster mutual understanding and collaboration by upholding ideals like as democracy, multiculturalism, and secularism.
A number of Memorandums of Understanding (MoUs) have been signed by India and Panama in recent years with the aim of strengthening their bilateral relationship in various fields. These accords demonstrate the two nations’ increasing commitment to common objectives and level of cooperation. Recently, the Panamanian Election Tribunal (ET) and the Indian Election Commission. They established the institutional basis for their ongoing cooperation in the area of election management and administration by signing a Memorandum of Understanding in Panama City on July 7, 2023.
India – Panama Bilateral Trade:
India and Panama have seen a steady increase in trade in recent years. In FY 2022-23, bilateral trade reached US$ 597.87 million, with India exporting US$314.56 million worth of goods to Panama (Non-Colon Zone) and importing US$283.31 million worth of goods from Panama (Non-Colon Zone). India’s major exports to Panama consist of machinery, automobiles, textiles, and pharmaceuticals. The majority of products that Panama exports to India are copper ore, scrap iron, and wood.
Unfortunately, as of now, India and Panama do not have a preferential trade agreement (PTA), a free trade agreement (FTA), or a comprehensive trade agreement. If India and Panama have a trade agreement, the total trade will increase by three times due to Panama’s strategic location and its advantageous position as a gateway to the USA, Latin America, and Caribbean countries.
Graphs show data on India’s exports to Panama (Non-Colon Zone). In FY 2023–24 (April 2023–July 2023), India exported US$115.54 million, followed by FY 2022–23 (US$314.56), FY 2021–22 (US$347.75), and FY 2020–21 (US$151.88).
Graphs show data on India’s imports from Panama (Non-Colon Zone). In FY 2023–24 (April 2023–July 2023), India imported US$102.29 million, followed by FY 2022–23 (US$283.31), FY 2021–22 (US$292.40), and FY 2020–21 (US$32.92).
India – Panama Trade opportunities and Investment climate:
Panama’s economy has been one of the fastest growing in the Western Hemisphere during the last decade. Panama boasts one of the highest GDP per capita rates in the region, as well as a dollarized economy, a stable democratic government, the world’s second largest free trade zone, and 14 foreign free trade agreements. The country’s strategic geographical location, its dollar-driven economy, and its specialisation in strategic areas like banking and maritime traffic are all characteristics that attract FDI.
India’s investors find Panama to be a strategic location due to its advantageous position as a gateway to USA, Latin America, and the Caribbean countries. In addition, the workforce is highly educated, the political and economic climate is stable, and the cost of living is rather modest. Due to its strategic location, India can consider the prospect of opening a logistics hub in Panama for Indian firms.
On October 27, 2023, the Panama Tax Authority released a press release announcing that the Financial Action Task Force (FATF) had decided to remove Panama from the Anti-Money Laundering (AML) gray list. Panama’s economy is set to grow as a result of its removal from the Financial Action Task Force’s (FATF) gray list. Due to gray list, Investors hesitant to commit to large-scale projects in Panama resulted in delays and even cancellation of investments. Now, India has the opportunity to invest in Panama, especially in infrastructure.
In terms of inflation, it was predicted that Panama’s average inflation rate will rise by 0.5 percentage points overall between 2023 and 2028. This general rise is not sustained, especially not in 2026. It is projected that in 2028, the average rate of inflation will be two percent. Panama is the only nation in Latin America without a currency crisis, severe inflation, or financial collapse in the last century. Considering that the Panama has experienced political upheaval and instances of corruption, this is even more astounding. The unusual economic governance of Panama, which does not have a central bank, is a fascinating example of international economics, without a central bank, the economy is thriving.
Panama gateway for India Pharmaceuticals
Panama’s unique pharmaceutical sector position and efforts have been acknowledged and recognized by prominent international organizations, creating an atmosphere that is favourable to development and innovation. For pharmaceutical businesses looking for development and investment opportunities in Latin America, its existing infrastructure, business-friendly legislation, and strategic position make it a desirable prospect.
The Panamanian government has set regulations in place to encourage investment in the pharmaceutical sector. Panama offers a biodiverse environment with enormous untapped potential for companies interested in pharmaceutical drug discovery and research. In light of the existence of establishments such as the Institute for Advanced Scientific Research and High-Technology Services (INDICASAT), which offers a basis for innovative drug discovery efforts, Panama is an appealing destination for companies involved in pharmaceutical research and development.
There is potential for growth in the pharmaceutical sector, which is broad and has 299 active importers and manufacturers as of the end of 2019. Value-Added Distribution, Drug Testing, and Local Drug Production are among the sectors in Panama that UNIDO has determined are ready for growth and investment.
Panama’s Regional Logistics Centre for Humanitarian Assistance has played a pivotal role in providing aid and medical supplies to nations in need, so demonstrating the country’s logistical ability and dedication to global health and humanitarian endeavours. Often called the Humanitarian Hub, this state-of-the-art building aims to centralize and streamline disaster relief and humanitarian aid efforts in the Latin American region.
The point of intersection of North and South America is Panama. With less time and money spent on transportation, this ideal position makes it easier to provide pharmaceuticals to both continents. A further factor supporting Panama’s status as a vital pharmaceutical distribution hub is the Panama Canal, a logistical marvel that makes it possible for goods to be transported quickly between the Atlantic and Pacific oceans.
The author is an Advisor of Asian Countries – Latin American and Caribbean countries and is also the Director of international trade and foreign investment at Grupo 108.
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