Hola, Latin America!

With more than 40 of the 59 available offices in the Phase 1 building of the Panama Gem & Jewelry Center already accounted for, ErezAkerman, President of the Panama Diamond Exchange, was recently visiting the Indian cities of Mumbai and Surat, where he met with companies interested in obtaining space in Latin America's first dedicated diamond, coloured gemstone and jewellery trading complex. Priyanka Desai met with the president to know more.

The Latin America region consists of 20 countries and 23 inhabited islands. With around 12,000 retail stores and a market share between US$ 8 to 9 billion, the region is expected to be more than just bustling in the next few years. The country of Panama is known as the financial hub of the Latin America and is known as the most developed in the region. Therefore, to help the business grow and prosper, a diamond exchange was in order. Realising this need and taking the initiative was ErezAkerman, President of Panama Diamond Exchange.

The $200 million Panama Gem & Jewelry Center is the largest and most impressive development project ever commenced on behalf of the jewellery and gemstone trades in Latin America.The construction of the Phase I building of the Panama Gem & Jewelry is about 60 percent complete. The two-story facility will aidfirstly as the headquarters of PDE, including its administrative offices and 300 square-meter trading floor, as well as offering office space for leasing for local, regional and international companies. It is scheduled for completion before end of the third quarter of this year, and will be occupied during the fourth quarter.

The second phase of the development will feature a multi-story tower, in which offices can be bought. Construction will begin in 2015, with a finish date scheduled for 2017. Tenants in the Phase I building will get the first pick of offices in the Phase II tower.

The entire complex will be located in the Vaguil Free Zone, which was established by an act of the Panamanian parliament for the benefit of the international gem and jewelry trade, and exempts transactions conducted within its area from payments of customs duties and taxes, and corporations registered in the Free Zone from paying company tax.

We interviewed Akerman to know more about the initiation, progress and the advantages at the Panama Diamond Exchange.

Q1) What inspired to launch a diamond exchange in Panama?
A1) I visited Panama for a business trip and I realized that the market had a huge potential but was underdeveloped. The global gems and jewellery industry was neglecting it. It was necessary for a good infrastructure and a world-class exchange to be launched in Panama, to unveil the potential of this market to the world and ease the trade in Latin America. It was basically, the right thing to do. It is right for the Latin American market and the global industry.

Q2) What were the difficulties in setting up the exchange and was the government supportive?
A2) There was lack of awareness and educational structure in the region but they were supportive of the idea. The governments too were highly supportive at the legislative level. During the time period of the initiation and the launch, three governments have changed and all three have been supportive.

Q3) How was the response to the exchange from the international community?
A3) The response of the international trade has been most satisfying and there are today only a limited number of offices remaining in the first phase of the development. What is most evident is people's understanding how important it is to obtain an early foothold in the Panama Gem & Jewelry Center, and to develop a presence in the fast-growing Latin American diamond and jewellery market.

Q3) How has been the response from the Indian diamond industry?
A3) The response in Indian trade for the PDE is extremely overwhelming. A lot of big names, sightholders& manufacturers, etc. have already confirmed their presence and space at the PDE. India is going to have a substantial representation at the PDE in comparison to the other countries. The Bharat Diamond Bourse (BDB) and Gem and Jewellery Export Promotion Council (GJEPC) have also been very supportive and have offered full assistance. We have planned a few programmes to help Indian diamantaires to penetrate the Latin American market. We will be hosting an India Week in Panama and will also have world-class level presentations of the Panama project in India.

Q4) What are the inducements to entice international companies to the Panama Diamond Exchange?
A4) Panama is the financial and business capital of the Latin America region. It has stress-free immigration laws. It has a democratic government that believes in economic growth. THE US$ is the national currency in Panama. The Human Resources conditions are very similar to Dubai. Panama is also very well connected to the U.S. and other markets. It is one of the most developed markets near to but outside of the U.S. The single most important thing is the free trade zone itself. The law that enacted the free trade zone was tailor-made for the exchange. There are no import or export duties and no corporate income tax.

Q5) What is the market size of the Latin American gems and jewellery industry and what are the growth estimations?
A5) The market size is between US$ 8-9 billion. I estimate it to grow by 30-40 per cent in the next few years. There are 12,000 diamond and diamond jewellery retailers and I estimate the number to be double in the next 10 years.

Q6) Please throw light on the trends and preferences of the Latin America region.
A6) The trends are quite similar to the U.S. Lightweight and subtle jewellery works well there. It is already an established market and jewellery is a part of the culture in Latin America. It is a spending economy and people love to splurge on gems and jewels. Brazil and Mexico are the two most important markets there and controls around 60 per cent of the total market share.

Q7) What should one consider while entering the Latin American market?
A7) Language can be a barrier for some people as Spanish is the most common language there. So, it is good to hire people who are well versed with the language. We will be starting the training for the personnel in January 2015 to create a strong talent pool.

Q8) Any parting message to our readers?
A8) I just want to reinstate that the Panama Diamond Exchange is going to be the best in the world with the most advanced technological facilities. It will not be similar to anything that you have seen in the industry. We will be inserting new innovations to the traditional trade. You can expect a lot of surprises there.