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Pierpoint Charts New Course for Panama’s Colón Free Trade Zone

By: Contributor - Jul 9, 2014, 1:28 pm

By Luis Guillermo Martínez

EspañolSurse Pierpoint has the challenge of leading the sort of changes he has always struggled with. After three decades in the free trade zone, the Panamanian businessman will take on a new role in these difficult times.

Surse Pierpoint intentará llevar a cabo lo cambios que como empresario exigió para la zona libre (La Prensa)
Surse Pierpoint will attempt to introduce changes to improve the free trade zone. (La Prensa)

He takes the reins of the Colón Free Trade Zone (CFZ) and will begin to push forward with reforms that he has tried to convince authorities to enact for years, since his time as member of the Users Association.

After his inauguration ceremony, President Juan Carlos Varela took a helicopter to the city of Colón, where in front of thousands of people he promised drastic changes to improve the economy of the country’s second province. One of the promises that drew the most attention was the idea to transform the entire city of Colón into a free trade zone. This would achieve the objective of Law 29 of 1992, which established a free port system throughout the city.

What do you think of Juan Carlos Varela’s proposal?

It’s wonderful. It is one of the reasons why I took up the manager position of the free trade zone. I believe it is a project that has been yearned for — a dream for Colón. It would be a possible palliative method to improve [Colón’s] city center and integrate it to the free trade zone with all the benefits it already has. The contrast between either side of the fence is very strong, and I think [the locations] respond to the incentives that one has and the other one lacks.

How can this be achieved? Laws or reforms? 

That is part of what has to be done now. At the macro level, the president has shown his interest in pushing it forward. What we need to do now is to encourage all parties to sit down [and talk]. When I talk about parties, there are many aspects that have to be taken into account. We are talking about housing, the free trade zone, and trade itself. There are many angles that have to be looked at, and also consider other examples of best practices from around the world. This [policy] is not innovative. It’s definitely strange for Panama, but it is a model that has already been implemented in Hong Kong, for example, which is a free port. We can find a lot of examples of success out there to imitate.

Will it be a medium or long-term project? 

Oh no! I hope people do not think that this will mean change overnight. That is not going to happen. It is going to take time, and this next five-year term will help to lay the foundation.

What changes and actions will you make in your first days as manager? 

I am interested in the issue of Colón as a free port. The questions that I have been asked are “what about Colombia?” and “what about Venezuela?” The third trading destination of the free trade zone is Panama. That is why the Colón Free Trade Zone can exist. The vision I have is for the old cities of Panama to benefit from the investment that comes from incentives, and for investors to benefit when restoring a building.

We want to do the same thing in Colón, to take advantage of those benefits, and to have a piece of downtown next to Albrook Mall in the form of an outlet. It will be another point of sales, since Panama is a shopping destination in the region. We need to take full advantage of this and get more people to come. All those buses from Nicaragua, Honduras, and Costa Rica need to come over here.

A lot of businessmen are talking about the operating costs. What decisions are going to be made?

The cost issue is also very sensitive, and we’ll see how we can ease that as much as possible, along with the budget. There have been many detailed cost-benefit analyses done, and for some people it is no longer worth it to be in the free trade zone.

Will there be reforms? Will there be petitions made to the executive?

Yes, no doubt! That is part of the conversation. [We’ll need] an amendment to the organic law to bring it more in line. We have a law that is more than 65 years old, and it needs to be updated.

How will it be updated?

The point of single contact for official procedures is an example. In Panama Pacifico, it’s fabulous. It is something that is visible, and where all the government institutions that we have to interact with can be found in one place. This makes the process faster, because bureaucracy can be a burden. It is something that we have seen working and seems like a good idea to us. It’s all about including best practices.

What about looking for new markets that have declined, replacing Colombia and Venezuela? 

The problem is the size of Venezuela and Colombia. Imagine how difficult it is to replace 50 percent of your sales overnight. That is why Pareto’s law of 80-20 has to be applied. The concept in business is that 80 percent of your income comes from the 20 percent of your clients, or the other way around. We see that we should concentrate our efforts in Venezuela, Colombia, and Panama, because where else can you go to have the opportunity to collect that?

Are you going to be part of the negotiating body in charge of the Venezuelan debt? 

I do not know yet. The Ministry of Commerce and Industry of Panama and the country’s president will decide who will be part of the delegation.

How did you get to take up this position? 

I do not know.… I can tell you that someone crazy person offered it. When I got the offer, I had to check with my executive board, but I saw an opportunity. Sometimes in life, you get these opportunities, and Colón is where my grandmother and father were born. I have been working here for 30 years, and honestly, it hurts to see how Colón is these days. We have to roll up our sleeves sometimes. You can criticize the government as much as you want, but if you are not willing to do anything, it diminishes your credibility to criticize.

Source: La Prensa.

Translated by Mariana Nava.