Pandas and pumas

I chaired an annual offshore financial services conference in March and what struck those attending for the first time, was the view from the luxury hotel on Panama's seafront just a stone's throw away.

The location gives a panoramic view of Panama Bay, with its scattered distant islands that I never tire of. But of course, what is also visible across the bay are the container tankers and ships of all shapes and sizes, either heading to, or coming from the Panama Canal.

The shipping and services business has been good to Panama, supplemented by a healthy banking industry, such that the country is on track to experience GDP growth in excess of 6 per cent this year, according to the International Monetary Fund.

Out of 34 regional countries surveyed in North, Central and South America, including the Caribbean, only one or two countries are expecting growth of 5 per cent. The average GDP growth for Latin America and the Caribbean, in fact, is projected to be 2.2 per cent.

The new theatre of events

William Henry Seward in 1852 predicted that the Atlantic would decline in importance, 'while the Pacific Ocean, its shores, its islands and the vast regions beyond, will become the chief theatre of events in the world's great hereafter'. He became Abraham Lincoln's secretary of state nine years later. And Panama, providing a commercial corridor between both the Atlantic and the Pacific, has harvested a copious bounty.

The trade between Asia and Latin America has been phenomenal. Since 2004 it has quadrupled, with Asia taking over from Europe as Latin America's second-biggest trading partner after the USA.

Meanwhile China has replaced the US as the biggest trade partner of Brazil, Chile and Peru. But even so, Japan is the biggest Asian investor in Latin America. Four countries on Latin America's Pacific coastline, namely Chile, Colombia, Mexico and Peru, signed a trade pact called the Pacific Alliance at the beginning of last year, strengthening ties with Asia.

Samuel George of the Bertelsmann Foundation, based in Germany and focused on promoting freedom and international understanding, is credited with coining the term 'Pacific pumas', in reference to those four members of the Pacific Alliance which have a combined population of 212 million and conduct half of all Latin America's trade.

Chile is the most enthusiastic participant in pushing Asian trade and, coincidentally, China rather than the US, is now that Andean nation's biggest trading partner, accounting for at least 20 per cent of its imports and exports.

Masks, poisons and sword-sticks

Chinese investment in Latin America is opaque, a word that regulators of western governments are trying to consign to the bin. It is known that a large chunk of China's capital is always parked in the Cayman Islands and the British Virgin Islands, prior to investment.

The United Nation's Economic Commission for Latin America and the Caribbean, says that since 2010, China has invested around $10bn a year in the region.

New transparency rules may have meant that, offshore, a planetary realignment is taking place, but not for China. China is able to display either its passive or aggressive face through two respective national symbols; the panda and the dragon.

The rest of us have joined hands with Alice and fallen down the regulatory rabbit-hole. She entered the world of upside down and with the blending of privacy, confidentiality and secrecy, so have we; precisely 150 years after Alice in Wonderland was written.

The offshore industry in particular is taking some rough treatment from governments in the west. Louis Brandeis, who was appointed to the US Supreme Court in 1916, believed that the violation of the right to privacy constitutes a kind of wound - a puncturing of the soul.

When it was learned that the British government had been opening people's mail in 1844, the editors of the The Times newspaper insisted that 'the proceeding cannot be English, any more than masks, poisons, sword-sticks, secret signs and associations, and other such dark ventures'.

Surveillance has moved on from steaming open mail and the subject, as we all know, is today far more contentious. Meanwhile, the panda cheerfully chews bamboo while often bamboozling the rest of us.

Derek R Sambrook is managing director of Trust Services, SA and has served as both treasurer and chairman of the British Chamber of Commerce in Panama

He writes a regular blog about Latin America for Private Client Adviser

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