Martin Torrijos has been courting international
support to bolster Panama’s expansion.
Ever since its completion in 1914, the Panama
Canal has provided the backbone of the nations
economy. Today, seven years after the U.S. officially
returned full control of the waterway to the
Panamanian people, the canal is about to enter
a new epoch thanks to the launch of a major
expansion program. Never in the history
of the country have we Panamanians taken a decision
of this magnitude, commented President
Martin Torrijos as the results were announced.
We have laid the foundation for a better
In a nationwide referendum held last October,
people voted overwhelmingly by a margin of four
to one to approve the ambitious plans to expand
its famous canal and double its capacity. Since
colonial times, Panama has been a globalized
nation with enormous potential for commercial
development, says Torrijos. We are
now making up for lost time in order to develop
a country that holds promise for all Panamanians
and to take advantage of our location and global
circumstances so we can expand our potential.
In January, Panama began a two-year term as
the newest member of the UN Security Council.
Elected in May 2004, Torrijos and his administration
identified fiscal reform with transparent and
coherent public policies, along with the reconstruction
of the social security fund, as the spur to
a social development program that would benefit
everyone. The determination of the government
to redefine Panamas status in global markets
is evidenced by a proactive attitude that has
produced political, social and economic growth
The Panama Canal handles an estimated 5 percent
of world trade, with over 14,000 transits shipping
200 million tons of cargo per year. On average,
40 ships a day pass through the 50-mile (80.5
kilometer) shortcut between the Caribbean Sea
and the Pacific Ocean, but its capacity is now
stretched, partly because of surging exports
from China. Traffic between Asia and the U.S.
East Coast now accounts for more than 40 percent
Panamax ships are specifically built to the
maximum size that will pass through the canal.
However, larger carriers, referred to as post-Panamax,
are gaining in popularity. Panama faces the
prospect of missing out on business from these
more capacious transporters. A new generation
of super-ships, which can carry up to twice
as much cargo as normal vessels, are forced
to look to other routes as the canal is too
narrow to support them.
The $5.5-billion expansion project will widen
and deepen the canal. It will also create a
new set of giant locks, measuring more than
50 meters (164 feet) wide, to provide a third
lane of traffic capable of handling greater
loads, thus avoiding what could potentially
become a bottleneck of world commerce.
The United States has long been a close trading
partner of Panama, and regards it as a true
ally in Latin America. In December last year,
the two nations furthered their relationship
by reaching a free-trade agreement (FTA), that
promises to expand and secure trade and investment
flows between the two nations. The FTA aims
to put U.S.-Panamanian trade on a reciprocal,
mutually beneficial footing. More than 88 percent
of U.S. exports of consumer and industrial goods
to Panama are to become duty-free immediately,
with remaining tariffs phased out over the next
Panama has a very open economy, excellent
port services, the Colon Free Zone, one of the
largest offshore banking centers in the world,
insurance, tourism and also a booming real estate
sector. In December 1999, Panama fully regained
control of the canal and its benefits. There
is still great investment potential in the maritime
sector that the country is starting to discover,
says Torrijos. Currently, we have an investment
of $1 billion to enlarge our ports and we are
aiming to construct a new port on the Pacific
coast. Theres investment potential in
new shipyards and also in providing essential
services to cargo ships as they pass through
the canal. Our commercial policy seeks to open
The government is in partnership with a private
company to establish continual training of Panamanian
workers to prepare the nations human resources
for the new opportunities that are arising.
People are beginning to rediscover Panama.
I believe Panama is in the right place
at the right time, says the president.
It has major potential and its doors are
open to new investments.