Vietnam - Panama, Viet Nam share 'special bond of friendship'

Viet Nam News spoke to Ambassador of the Republic of Panama Eduardo Young Virzi to mark his country's National Day Thursday.

How do you assess relations between our two countries over the past years?

Ambassador Eduardo Young Virzi

My assessment of the relations between Panama and Viet Nam is one that has been marked by the spirit of co-operation between both countries. Historically, the bilateral relations have been fluid, especially in multilateral affairs, as both countries have always supported each other in International Organisation forums.

Let's not forget that with the support of Panama as President of the United Nations Security Council, Viet Nam was admitted as member to the United Nations in September 1977. Although distant geographically, Panama and Viet Nam share similarities in their struggle for national sovereignty and this has enabled both countries to develop a special bond of friendship and mutual co-operation.

Being that the Embassy of Panama in Viet Nam has been open for only six years, I believe that major accomplishments have been achieved in the strengthening of economic, cultural and diplomatic relations.

Panama's economy is chiefly based on the services sector such as banking and tourism. Could you share your country's experience in developing these industries?

Panama has long been the cross-roads of the new world and because of the country's main interest, the Panama Canal, other sectors of the economy have been overlooked. Because of the focus on international trade, many of Panama's coastal regions and natural wonders were bypassed, opening the door for new opportunities and setting the stage for large scale tourism growth. As a consequence of a 12-year Tourism Master Plan created in 2008, today tourism has become one of the pillars of the Panamanian economy.

I can say that tourism in Panama has maintained sustained growth due to efforts to strengthen the strategies to promote the country in specific markets (mostly in North and South America), as well as efforts to position itself as a destination for cruise ships. Another important contributor to the success has been government efforts in the creation of laws that promote investment in this industry.

Specifically, these laws offer incentives such as 100 per cent exemption from income tax, real estate tax, and import duties for construction materials and equipment, just to mention a few.

The continued prosperity of Panama's banking sector relies upon its continued reputation among the world's financial community. This unique relationship with global investors assures a continued inflow of capital to fuel economic growth.

Last year Panama won a very important investment grade rating which is the result of our government's commitment to ensure an economic climate that provides confidence among foreign investors. Part of the success of the Panamanian banking system is that it is set up to ensure customers of the security of their deposits.

Also key to the success is the government's strict bank auditing guidelines to monitor banking practices, credit guidelines, and overall bank administration.

Today, Panama City is home to one of the largest international banking centres in the world and the most modern and successful banking centre in Latin America with more than 95 banks from 35 countries.

Two-way trade turnover between the two countries remains limited, reaching only about US$186 million last year. What more do you think should be done to boost trade relations between the two sides?

Two-way trade between both countries is well below our expectations. Without a doubt, one of the main reasons why this is happening is because of the people's lack of knowledge on each others' opportunities for investment.

However, we are very optimistic that this trend will change in the near future. In September, the Chamber of Commerce, Industry and Agriculture of Panama signed a Co-operation Agreement with its counterpart, the Viet Nam Chamber of Commerce and Industry.

The signing of the agreement will enable us to have close contact with business groups in Viet Nam, something that was lacking from our efforts in the past. We will work closely with them to identify strengths and opportunities.

Once these opportunities are clear and objectives are set, it will be easier to stimulate commercial activity through business delegation visits and participation in international trade fairs such as Expocomer, one of the most important commercial trade fairs in the region. In 2010,

Expocomer gathered over 530 exhibitors from 36 countries with more than 15,000 potential buyers. The potential to increase trade is evident and our Embassy is committed to serving as a bridge between business organisations in order to promote the exchange of products.

Panama's economy has been slowed down as a result of the global financial crisis. How has your country dealt with this issue?

I do not believe Panama has slowed down as a result of the global financial crisis. This is not to say it will not be affected if a recession were to happen in the near future.

Although financial problems seem to be hampering countries around the world, Panama has enjoyed sustained growth during this time of turbulence. The economy grew 11.4 per cent in the second quarter of 2011 and finished the first half of the year with 10.3 per cent growth. It is expected that the year will close with more than 8 per cent growth and will continue to expand in the upcoming year.

The main reason why this is happening is the private and public investments that are currently taking place, such as the US$5.2 billion expansion of the Panama Canal and the construction of a subway system in Panama City. These two projects are the pillars of a $45 billion investment projection plan from 2010 to 2016. Most investment under the plan will take place in 2012 and 2013. The major threat to Panama's economic growth is the probability of another recession in the US and/or Europe.

A possible recession would affect important sectors like the Panama Canal, the Ports system and the Colon Free Zone, but the construction industry will continue to expand vigorously and the economy is still expected to grow between 5 per cent and 7 per cent as a whole.

The well known Panama Canal is the favourable gateway for transportation of goods from Viet Nam to countries in the Americas. What more do you think Vietnamese businesses should do to tap on this opportunity?

By gross tonnage of cargo, Viet Nam ranks 47th in the transportation of goods through the Panama Canal. The Panama Canal provides access to over 140 different routes to more than 80 countries around the world.

The most relevant of these commercial routes is the one that provides Asian countries access to the east coast of the United States. It is estimated that 5 per cent of world trade goes through the Panama Canal. Its importance in world commerce is undeniable and Viet Nam's ability to tap this opportunity goes hand in hand with its strategy to export / import products from Latin America.

Today, Latin America can no longer be overlooked; it is a potential market of more than 590 million consumers with a combined GDP of over US$6 trillion. Panama's role in world trade is to provide easy access to different markets but also as a distribution centre for Vietnamese goods in the Americas.

Vietnamese people's understanding of Panama's culture remains limited. Do you have any plans to boost cultural exchanges between the two countries?

Due to the geographical distance between the two countries, respective cultural understanding of Vietnamese and Panamanian cultures remains very limited.

The Embassy of Panama in Viet Nam and the Embassy of Viet Nam in Panama have successfully carried out cultural events in the past year to promote cultural knowledge in our countries. However, much more work needs to be done.

The National Institute of Culture of Panama and the Ministry of Culture, Sports and Tourism of Viet Nam are currently working on the final details of a Memorandum of Understanding. The signing of this document will enable both countries to significantly elevate cultural activity. We look forward to participating in future events such as the East Asia – Latin America Cultural Exchange to be held in the city of Hue in April 2012.\

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