Panama must solve problems limiting competitiveness

By Franklin Castrellón

Panama has dropped eight positions in the Global Competitiveness Index 2017-2018 which is made every year by the World Economic Forum (WEF). The country has fallen to 50th position among the 137 economies evaluated under the twelve pillars of the ICG.

They include institutionality, infrastructure, macroeconomic stability, health and primary education, higher education and training, stock market efficiency, labor market efficiency, financial market sophistication, technological availability, market size, business sophistication and innovation.

Competitiveness index in Latin America and the Caribbean.

Competitiveness index in Latin America and the Caribbean.

The data used in the report come from two main sources: the opinion poll, answered this year by about 14,000 executives from 137 countries and “hard data” (quantitative and objective factors) obtained from the IMF, WHO, ITU, UNESCO, UNCTAD, OECD, World Bank and ILO.

In Latin America, Panama moved to third place, surpassed by Chile and Costa Rica, after having been consistently in second place in the previous indexes, when it was only surpassed by Chile. Its best measurement was obtained in 2012-2013, when it occupied 40th position globally.

The fall of Panama is explained by the low rating it received in ten of the twelve pillars. In the health and primary education pillar, a gall of three places, but in the latter, the decrease was twelve. In the institutional pillar, it went back four positions, ten pillars, technological availability and higher education and training two positions. But in the pillars that perhaps most impact are maritime and logistics activity, labor market efficiency and factors that impact efficiency, where it fell nine and six positions, respectively.

The causes

The problems of competitiveness affecting the maritime and logistics sector are related to several aspects already discussed in the Logistics Cabinet, and the solution is pending implementation, explained the former president of the Panama Chamber of Shipping, Rommel Troetsch. In his view, the government should review and adjust the cost of operating licenses for those who provide services to ships, cargo and crew.

Another factor that, according to Troetsch, has a negative impact on Panama’s logistical competitiveness is the lack of adequate docks to meet the needs of companies providing auxiliary maritime services. He acknowledged, however, that the Panama Maritime Authority has already tendered to build a pier on the Pacific and has promised to build another on the Atlantic side, which is scheduled to start in 2018.

The twelve pillars that are evaluated in the competitiveness index.

The twelve pillars that are evaluated in the competitiveness index.

Also pending is implementation of payments by electronic means (ACH) to the Customs Authority, Quarantine and the Panamanian Authority for Food Safety (AUPSA) in early 2018, by the government or the Logistics Cabinet. So far, customers have been using the pay window for the services rendered by these entities for import-export cargo and, above all, for the freight that is transported by road and rail, something that has been overcome in the great majority of countries.

Another pledge pending implementation, explained the former president of the CMP, is to replace the anachronistic system of photocopies by sending the documents electronically. “And it is very important,” he added, “that the government share foreign trade information (according to origin/destination, type of cargo, type of container, etc.) in cargoes entering and leaving the country with shipping companies and logistics operators”.

The information is not provided by the authorities in Panama, so it is necessary to resort to sources in other countries. In the United States, for example, shipping agencies and ship operators get the trade data without difficulty, as Customs authorities in that country provide manifest information on the origin and destination of the cargo. It is the key to planning the size of vessels on various routes, slots and transshipment operations. This information must be provided by the Ministry of Commerce and Industry through the Vice-Ministry of Foreign Trade.

Regulated by Title 19 (Customs and Border Protection) of the United States, such information contained in Cargo Manifests is freely accessible, not only to shipping agents, ship operators and companies engaged in the import and export of cargo, but to the press in general. In Panama, this information is handled as if it were of confidential use.

In short, Panama must overcome anachronistic, bureaucratic and inefficient practices, so that it can scale upwards in the Global Competitiveness Index and be positioned, not only in regional leadership, but also among the most competitive countries in the world, such as Germany, Luxembourg, Sweden, Holland, Singapore, Belgium, Austria, the United Kingdom, Hong Kong and the United States.

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