PANAMA INTERNATIONAL

MERCHANDISE MART

PIMM
The cornerstone of Latin America’s first showroom complex will be laid
in Panama in January 2008, with 6,800 units for sale and rent by 2012

L
ike many great ideas,
Panama Internation-
al Merchandise Mart
(PIMM) is a remark-
ably obvious one. When
Reynald Henry Katz, President and
CEO of PIMM, needed space to mar-
ket his products in Panama’s Colon
Free Zone and was shown to the
back of a line of 2,500 prospective
clients, he decided to go elsewhere
rather than wait his turn.
Elsewhere is now a billion-dollar
project, where work began in 2007
and is scheduled for completion by
2012, to build the first-ever whole-
sale showrooms in Latin America.
PIMM will be a permanent trade
fair, where manufacturers, distribu-
tors and exporters can showcase
products year-round in a dedicated
environment to which buyers and
importers will inevitably be drawn.
Showrooms are available in 34
themed buildings, accounting for
11 million square feet of floor space.
The complex will eventually house
6,800 units, offering everything
from cars and trucks to apparel and
footwear, from jewelry and acces-
sories to furniture and housewares,
from electronics and appliances to
toys, gifts and even flowers.
The 92-acre full-service complex
will also include hotels, apartments,
office suites and a conference

General view PIMM project

 center and, after completion
of the initial phases, there will still
be plenty of room to grow. Laid out
in a similar fashion to a small town,
PIMM is located adjacent to the Free
Zone, close to the end of the Panama
Canal, and by 2009 will be linked to
the capital, Panama City, by a new
highway in just 20 minutes.
The Colon Free Zone on Panama’s
Atlantic coast is the second largest
tax-free transshipment complex in
the world. Its volume of trade in
2006 was worth close to $15 billion,
almost 18% more than the previous
year, and forecasts see this continu-
ing to grow after planned expansion
work is completed.
With 560 million potential custom-
ers throughout Latin America and
the Caribbean, not to mention a
300-million strong market in North
America, it’s no accident that PIMM
is located in Panama, at the very
hub of the Americas. The fact that
2,500 other companies also need
showroom space proves demand is
there too.
With a stable government, inflation
at just over 2%, no tax on profits
and the US dollar as legal tender,
Katz believes Panama is the best
place to invest in Latin America to-
day. And for those from outside the
US doing business with American
clients on a regular basis, meeting
in Panama means no immigration
hassles.
Condos and office building
PIMM location and buildings layout
Then there are the advantages of
doing business at PIMM: proxim-
ity to key markets, low set-up and
operating costs, an unrivaled choice
of goods for buyers, permanent fa-
cilities and services for sellers, and
no language problems with partners
across all of Latin America.
With showroom prices starting from
just $125,000, PIMM estimate that,
with annual sales of $2 million for
each unit, initial investments should
be recoverable within three years.
It’s no surprise to learn that the first
phase sold out in just three months
for $135 million.
Phase one, scheduled to last until
the end of 2008, represents an in-
vestment of $100 million for the
construction of 11 buildings in-
cluding the conference center and
120 apartments. The second phase,
which will be completed in 2009,
includes another four showroom
buildings, three for office space,
180 more apartments and the first
125-room hotel, and will cost in the
region of $126 million.
The next two years will see the most
ambitious phase costing around
$240 million. No less than 16 new
showroom complexes will be erect-
ed, in addition to two office build-
ings, three new apartment blocks
and another hotel. The final phase
will be undertaken in 2012, and
adds the six final showroom build-
ings, more apartments and extra
hotel rooms.
Operating costs from 2007-2012
have been conservatively estimated
at $135 million, 20% of the proj-
ect value, and will see 34,000 jobs
created locally to meet the demands
of clients. PIMM forecast that the
Panamanian government should re-
ceive an economic impact from the
project of more than $434 million
by the end of 2012.
Interview with the president of PIMM
“If you want to invest,
Panama is the place”
B orn in France, Reynald Henry Katz has worked
in Europe, the Middle East, China and the US. He
first came to Panama in the 1970s, but only in 2001
decided to settle here and do business.
Katz showed entrepreneurial flair early on. At 19,
he helped develop an anti-cracking nail polish which
soon accounted for 80% of market share worldwide.
ICI later bought the business for $8 million. He then
headed to Italy to manufacture lipsticks for Europe
and, increasingly, the Middle East. Seizing the chance
to explore virgin territory, he moved to the region and
made cosmetics there before moving to the US.
MR REYNALD KATZ
Katz arrived in Miami in the 1980s and set up a
PRESIDENT OF PIMM
company making budget perfumes, selling out to a
US manufacturer in 1996. Meanwhile, he had been
approached by the US government about using his
knowledge to develop shopping malls in China.
Advising the Chinese government, Katz created
a model for cosmetic retailing used nationwide and
acted as a liaison for US manufacturers. He then
returned to the US in 1988, in time for the Internet
boom, and developed an online duty-free e-com-
merce business. After the dotcom crash, Katz came
to Panama. His first venture here was a liquor distri-
bution company in the Colon Free Zone serving Latin
American markets.
Again, Katz saw a need for quality, budget prod-
ucts and now controls 16% of the Colombian market
with his brands. Looking to promote these, he en-
quired about showrooms in the Free Zone and was
told to join 2,500 other companies in line. The rest is
history, as he explains:
“The idea [for PIMM] was born in 2006, simply be-
cause there was no space in Colon. So we decided
to open showrooms [to serve] this need, just as the
Americans have done in Miami and Los Angeles. We
created PIMM in Panama as there is nowhere else to
go locally and in Latin America.”
“Our business is bigger, the concept is bigger,
than the Free Zone itself. Panama has always been
a country where goods are sent from, but what we
need here is to sell. We are the salespeople.”
“Most of our clients come from countries like
China and India but we’ve had a great response
from the US, from companies who export fashion,
manufacturing in China and selling to Latin America.
I also think Spanish and other European companies
will come [here] as they expand. Panama and Latin
America offer easily accessible markets for them.”
“We have showrooms and offices from $2,500
per square meter, expensive by Panamanian stan-
dards but cheap for Europe, China and the US. You
won’t find anything at that price in Beijing, where
you’ll be paying $10,000 minimum.”
“We are also selling apartments at $1,000 per
square meter as we’re providing a service and think-
ing about clients from overseas. We are selling these
at reasonable prices so clients can invest in show-
rooms. It’s a real plus to be here all the time to look
after your business.”
“I put up part of the capital and we found banks
to back the project. We did so by [selling] an oppor-
tunity not only in the project, but in a country which
is growing at 9% and will continue to do so with the
expansion of the Panama Canal. This means that the
entire multi-modal logistics infrastructure for the re-
gion is in Panama.”
“Panama is stable, uses the dollar and is in the cen-
ter of Latin America. I have traveled to 42 countries
around the world but I ended up here in Panama.”