News

China may be ready to make a major investment in Panama’s development. A news report suggests companies controlled by China’s government are examining deals along the Panama Canal, which could represent a significant boost for the economy.

The Panama Canal Authority is preparing to release a tender to develop 1,200 hectares along the Canal for a logistics park, Authority chief executive Jorge Quijano told the Reuters news agency. Three Chinese companies–China Communications Construction Corp, its subsidiary China Harbour Engineering Company and China Railway Group—have expressed an interest in the project, he told the reporter.

China’s interest makes sense. China’s government has been aggressively developing infrastructure deals around the world, focusing on ports and rail terminals. Companies backed by China’s government has recently made logistics deals in Malaysia and Greece, the article notes.

Making a big push into Panama would fit China’s strategy, while raising its role in the region.

“There are opportunities there [in the Canal], definitely for some of these Chinese companies to participate as a concessionaire, not just as a contractor to build something, but they can actually bid for the concession and then build,” Quijano told Reuters.

The canal authority will “parcel out the land and grant concession agreements of up to 40 years, with the aim to develop infrastructure and buildings on land previously used by the United States military for target practice,” Reuters reports.

The authority is also planning a tender for is an operating agreement for “a roll-on, roll-off terminal near the canal,” Quijano said.  The logistics project on the land the terminal could generate $100-$125 million a year, he said.

That’s a drop in the bucket for the Canal, which is expected to generate $2.8 billion in revenue this year. But a big commitment by China will send ripples through the entire Panama economy, bringing more international attention, more investors and more attention to real estate.

The area around the Canal is seen as huge undeveloped resource. Panama is also looking for ways to develop more tourist activities around the Canal, as we recently reported.