Panamá Pacífico Special Economic Area

From 2001-2007, Locus Economica founder and CEO Jean-Paul Gauthier was contracted by the World Bank, International Finance Corporation (IFC) to advise on utilizing the 2,500-hectare area around the Howard Air Force Base, located across the canal from Panama City.  After acquiring the base in 1999 in accordance with the Torrijos-Carter Treaty, the government of Panama sought to use its new asset to stimulate sustainable economic activity, generate employment, diversify and strengthen Panama's economic base, make the country more competitive, and improve the investment climate.

Jean-Paul Gauthier with Henry Kardonski, the CEO of Panamá Pacífico

Jean-Paul Gauthier with Henry Kardonski, the CEO of Panamá Pacífico

As the Legal and Regulatory Component Leader, Jean-Paul helped draft the model SEZ law and regulations that turned the area into a Special Economic Zone and helped establish the regulatory authority, la Agencia Panamá Pacífico. Jean-Paul also conducted due-diligence for the transaction, which involved the privatization of $500 million in assets.

The SEZ regime Jean-Paul helped create features a streamlined regulatory framework, a modern administration that operates a "one-stop-shop" for businesses and residents, public-private-partnership operation, and new labor regulations that increase opportunities for Panamanians.

Today, Panamá Pacífico SEZ is reputedly the largest mixed-use development project in the world. It is managed by London & Regional Panama and includes 225 companies with on-site offices, including Caterpillar, 3M, Dell, Singapore Airlines, and various other companies involved in maritime, logistics, manufacturing companies and call centers. Roughly 7,500 people are employed in Panamá Pacífico and approximately 12,000 people are in the zone on any given day, including workers, residents, visitors, and school children attending the four on-site schools. Salaries have been up to 3 times higher than the national average.

Growth of firms in Panamá Pacífico

Data acquired from la  Agencia Panamá Pacífico

Data acquired from la Agencia Panamá Pacífico

The U.S. Green Building Council and the Clinton Climate Initiative named Panamá Pacífico one of 16 projects demonstrating "climate positive" urban growth strategies. The former airstrip is being used as an alternate to Tocumen International Airport in Panama City and rather than container vessels simply passing through the Canal, today they being filled there with products produced in Panama-Pacifico.

Panamá Pacífico is on course to become a major city center. Over the next 10 years, London & Regional plans to build 25,000 residential units and a shopping plaza in addition to the industrial, class A office, and residential units already on site. In 2007, London & Regional committed to invest at least $705 million over the courses of its 40-year concession. By 2019, it had already invested over $1 billion. By the end of the concession, the project is expected to have attracted billions in foreign direct investment and to have created 20,000 jobs.

Specific Contributions of Jean-Paul Gauthier to Panamá Pacífico:

  • Designed FIAS project intervention and lead provision of advice to the Government of Panama on the development of a regulatory framework for the Panamá Pacífico SEZ, for IFC Corporate Advisory Services (CASDR)

  • Conducted the legal and regulatory due-diligence process for a transaction privatizing $500 million in assets, with a view to creating the first special economic zone in the Western Hemisphere

  • Assessed the general competitiveness and prepared regulatory analysis of the business environment

  • Conducted specific due-diligence research on the topic of WTO-consistent incentives for attracting investment

  • Provided specific guidance on administrative reform and institutional development issues to establish and implement new organization and abide by international treaty commitments

  • Drafted the SEZ Law (Law No. 41 of 2004) and implementing regulations, with an eye to WTO and eventual FTAA consistency; worked with local counsel towards introduction of Bill before Legislative Assembly and passage through two first readings; Oversaw and controlled drafting of model environmental regulation; and initiated regulatory drafting work on Customs Regulation, Business Registration Regulation, and SEZ Authority Administrative Regulation.

  • Managed component team of 7, including local counsel

Laws Jean-Paul contributed to or led the drafting of:

  • Ley N° 41 (8 julio 2004) por la cual se dispone un régimen especial para el establecimiento y operación del Área Económica Especial Panamá - Pacífico y se crea la entidad autónoma del Estado, denominada “Agencia del Área Económica Especial Panamá – Pacífico ”Panama Pacifico Economic Area Bill (with White & Case LLP and Icaza, Gonzales, Ruiz & Aleman, LLP)

  • Panama Pacifico Economic Area Environmental Regulation Bill (with White & Case LLP and Icaza, Gonzales, Ruiz & Aleman, LLP)