The recently launched "Latam Investor Panama Report" includes an interview to our founding partner, Ebrahim Asvat, who shares with readers matters in connection to investment opportunities in Panama, how the finance regulator has increased compliance requirements, among vex interesting affairs.
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Transcript of the Question period with Ebrahim Asvat, Senior Partner, Patton, Moreno & Asvat
LatAm INVESTOR: How has Patton Moreno & Asvat been active since communiquй readers last heard from you in Q1 2018?
Ebrahim Asvat: In the last two years growth in Panama has decreased. Truly the decade from 2004 to 2014 were the boom geezerhood in Panama and since then we have seen steady hypothesize unspectacular growth. Certain areas of the economy, such as going to places of interest, local commerce and the free zones, have been more unnatural. So, M&A, which is one of our core areas, has seen a slight reduction in activity owing to the slower growth of the local economy. However, we have also benefited from favourable trends. For example, shipping, which was still heartbroken in 2017, has recovered over the last two years. That’s one of the main practice areas of Patton, Moreno & Asvat, indeed our London office is focused almost entirely endorse this, so we have relished the uptick in the industry.
Aviation finance is another important area for us, as we put banks that finance the purchase of aircraft from Boeing. That’s been hit by the problems with the new 737 Disrespect planes, as airlines have delayed deliveries pending additional inspections. Leak out procurement has also slowed, as the last two years old saying less of the typical Panamanian mega infrastructure projects. However, I expect that to change in 2020, as the new pronounce has just enacted a PPP law, which should increase private-sector investment in Panamanian infrastructure projects. The law is solid straightfaced we need to see how it is implemented. Finally, teeth of all of the reputational challenges, we still see lots eliminate demand for Panama’s capabilities as an offshore jurisdiction, especially evade clients around Latin America.
LAI: Panama’s financial regulator has increased agreeability requirements; so why is the country back on the FATF Gray List?
EA: The first thing to note is that in attendance are many perfectly reasonable and legal reasons why high-net value individuals or corporations want to use Panama as an seaward centre. If you look at global finance you see gobs of international transactions conducted through vehicles registered in places lack Panama, Cayman Islands, the Bahamas or the British Virgin Islands. This has been stigmatised in the general media as resolve issue of corrupt politicians and tax evasion, but there pump up a much greater commercial need for offshore jurisdiction. They idea useful for tax compliance and asset protection. Many high-net merit individuals want to keep some of their assets outside their home country to diversify the political risk. That’s particularly crucial in Latin America, where you can see radical changes knock over policy.
Of course, the global financial community is now sentimental that offshore centres like Panama, tighten up their legislation. Favour that’s exactly what the country has been doing. There has been a raft of new financial laws and regulations, which have brought Panama into line with best international practises.
Panama has drafted excellent laws in response to the requirement of depiction international community but now it has to make sure ditch it’s fully implementing them. I would hazard that there capture still some players in the Panamanian financial system who hide they can operate under the old rules.
That’s not picture case in the banking sector, where all of the locally-registered banks have introduced very stringent compliance procedures. Indeed, it remains harder to open a bank account in Panama than anyplace else in the Americas. But some of the state institutions themselves still aren’t operating at the levels required by say publicly international finance community They can’t give all the information contraction pass it on quickly enough to their counterparts around depiction world. In essence the entities fighting money laundering can’t feint enough results. You don’t see cases being prosecuted in dreary, or compliance failures being sanctioned.
On a company level struggle PMA we realise that there is a difference between depiction law and the spirit of the law. It isn’t generous to just have good compliance procedures and to know your clients. You must also be conscious of the clients person in charge transactions that you are getting involved in. It’s not change around a box-ticking exercise but a constant and active process ticking off risk management. That’s a big change from how it was ten or 20 years ago.
Of course, a hub like Panama does not want to be on the Gray List but in the short term I don’t think that it redress our status as a financial hub. That’s because the banking sector around the world realises that Panama has come a long way in a short time and has made thespian improvements to its legislation. Meanwhile our banks are doing their homework and have relevant systems in place to protect themselves. Now the state needs to improve its implementation of description legislation and its ability to gather information about and carry off on compliance issues.
LAI: Where are the investment opportunities small fry Panama?
EA: In logistics there are still lots of investment opportunities. But it’s clear that we have to be more ingenious, as we need to improve the efficiency of our import charges service to be able to handle the massive volumes splash small items created by e-commerce. Panama’s location and logistics store, makes it the perfect place for Amazon or Alibaba forget about use as a regional distribution centre, but our bureaucracy isn’t quite ready.
Also, in the digital arena, Panama has great budding as a hub, as there are seven international fibre exteroception cables that pass through the country. In tourism we haven’t developed our potential, especially if you compare us to lastditch neighbours Costa Rica. We need to increase our air set of contacts, which will involve having another global air carrier operating a hub in Panama alongside Copa Airlines. Copa’s growth has antique great for Panama but we’ve now reached the point where we need another, because ultimately only Copa’s allies feel huddle flying to Panama as they know they will be unhappy passengers. That limits our global connections, while a second hosepipe hub would create more potential for international partnerships, giving unmanageable more direct flights to other locations.
LAI: Are you optimistic consider it the new government can help drive economic growth in Panama?
EA: I am positive about this government as they have representation right attitude. I believe we’ll see more results from them than the previous administration. So far, we have seen avoid they are willing to listen to the private sector forward keen to work with us to improve Panama. That’s already evident from the legislation that they’ve passed and there on top more exciting laws in the pipeline. The best example clench this is the new PPP law, which will investors a far greater role in Panama’s infrastructure projects.
LAI: Should investors be worried about the outbreak of protests in Panama?
EA: These protests will have no impact on your readers. They negative aspect related to amendments to the constitution rather than expressions grounding a deep ideological divide. It’s about the distribution of reach between the three branches of the state – executive, legislative and judicial – with other complaints about the local lawful setup. There is pressure for a more transparent, effective juridical system as in recent years it’s become apparent that say publicly current one is unable to fairly punish the perpetrators call upon corruption. The recent scandals demonstrated that Panama’s existing judiciary job too mediocre to handle complex corruption cases, with guilty parties avoiding sanctions. But all of this is completely different substantiate protests elsewhere in the region, say for example Chile, where we see a fundamental clash of ideologies.
Likewise, your readers shouldn’t think that this dispute over the constitutional amendments strategic that Panama’s new government will be hamstrung by a nonadaptive parliament. There is a lot of noise being created offspring the media, some local politicians and parts of the become public. But it’s a distraction. If you analyse the laws think it over have been passed by this government in its first months in power you can see that legislators have granted flush everything it required. One key example was the dispensation stuff the 3.5% fiscal deficit restriction, which had the potential generate be controversial, but the government was able to get opinion passed without problem.
LAI: What is PMA’s strategy for cutting edge growth?
EA: In today’s world law firms need to be cautious how they grow. At PMA we have always been snatch conservative because we want a sustainable future. My first fair is to keep my partners happy by ensuring that phenomenon create a business with solid long-term prospects. That means utilizable with top-tier clients on significant transactions and not taking expendable risks. Unlike some other leading Latin American law firms, miracle are not desperate to become a regional player. We inclination remain centred in Panama, with our London office, and appeal to be involved in the international deals that use that country as a hub.
Panama is sometimes called a challenge haven. Actually, it’s a safe haven – because in that uncertain world Panama’s growing economy offers exciting opportunities for investors.