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Following is the transcript of a CNBC interview with Jorge Quijano, CEO, of Panama Canal Authority. The interview was broadcast on CNBC on 26 April 2017 at 08:40AM SG/HK Time, during CNBC's "Hong Kong versus Singapore" theme week.
All references must be sourced to a "CNBC Interview ".
Interviewed by Dan Murphy, Correspondent, CNBC, and Bernie Lo, Anchor, CNBC.
Dan Murphy: And of course it is a vital component of shipping infrastructure. Let's bring him in now. It's great to get you on the program welcome. Now you are meeting with the number of investors here in Asia. You're also really checking the pulse of what's happening out there with regards to sentiment right now. How would you describe sentiment more broadly in this space at the moment?
Jorge Quijano: In our rounds that we've done with our customers, CEOs around the world, both Asia and Europe very recently, we see a lot of hesitation with regard to how the markets are going to be, especially because of the impact that over-protectionism by the United States will have on the flows of cargo. However, everyone seems to be a little bit positive about it. We are more of an optimistic industry. So we think there will be some measure in the implementation of any protectionism in the future because of course that has an impact on cargos flows.
Dan: And as I mentioned, you're also looking out for some potential investors in this region perhaps as well. The canal recently put some land to tender for development on either side of the canal. But that potential diversification strategy has hit somewhat of a roadblock. Can you tell me what's happening now?
Jorge: Well it's basically, we have several projects and one of them has had a little bit of a roadblock because of some legal actions that have been implemented by some of the competitors that don't want to see any competition from an additional port, transshipment port, to be actually built in the canal area. So but we have other projects that we have a roll…on roll off activity that we plan to put tender out as a concession later this year. We also have a...over 200 hectares of reclaimed area on the west bank of the canal just next to PSA, a new further development of the port in Panama. And we want to continue with that concession probably sometime by the end of the year. So yes, even though we have a hiccup in the process we continue to approach our diversification strategy positively. We believe there is more than just for us in the Panama Canal to transit vessels. We have recovered all of these land that now it's available to be used productively for Panama and for also direct private investment.
Dan: And Bernie has a question for you. Yeah.
Bernie Lo: Thanks Dan. Jorge, Bernie here in Hong Kong. When the Panama Canal was built, when the whole concept came into being, I mean it was talked about and it would change the world. It changed the landscape of trade and the ability of the world to trade with each other. But nowadays you know, the supply chain has become so global, you know there's been a lot of arguments that a lot of these long trips and a lot of these, you know, former you know vanity projects you know, do not have the same kind of impact that they might have had half a century ago. Is there any fairness to that kind of discussion or is that unfair?
Jorge: I think it is not totally correct. I think there may be some businesses in particular could be affected. But globalization is here even though there are some proposals especially from the U.S. to reverse that. I don't think that's going to happen. The cheapest, the less expensive way, to transfer...transport cargo is specifically through the maritime industry and ships can make it today with more...quicker vessels and with the prices of fuel so low it makes very competitive and very timely deliveries to everywhere in the world. So I think one of the things that we have to, in particular for the Panama Canal, you know we've reinvented ourselves with our expansion. We've now...are...our driving force for the U.S. LNG exports and LPG exports since fracking came around. So for us this opens up new opportunities. We've seen some major tonnage moving off of those straits moving from the U.S. Gulf ports to Asia. But we've also seen all the traits of that same trade coming from that Trinidad & Tobago, for example using the Panama Canal to go to Chile or to Mexico. We've even seen Algeria using the Panama Canal to go to Mexico on the Pacific side. So for us it's very thrilling to see the fact that we have revived ourselves with…with this new opening of the Panama Canal expansion.
Dan: And you're finally starting to see some of the fruits of that expansion being delivered to the canal more broadly. I also wanted to ask you about another thing that you've been focusing on as well. And this is the links between the Panama Canal and Singapore. Do you think there's more that, you know, that unites you than divides you when it comes to the Panama Canal and Singapore as an IMC?
Jorge: I think we learn a lot from Singapore. I think that Singapore has definitely a head start on Panama but we're both very small countries. We don't really have exports, we're a service oriented economy. And I think, you know the people, the services that we provide at central locations- If you drill a hole through Singapore 180 degrees apart that's where we are. So we're in the center of our own regions. Singapore is the center of Asia and we are in the center of the Americas and we tend not only to the Americas but also to Asia and also to Europe. Our best route, for example that goes through the Panama canal is from Asia to the East Coast of the United States and vice versa and Gulf Ports as well. But we also have West Coast of South America going to East Coast of the United States or going from the West Coast of South America going to Europe. So we feel that there's a lot of things to learn from Singapore. We, you know, we both have military…not occupation but military presence from different governments during different periods of time. And Singapore was one that converted all of that land into very useful businesses and we are trying to do with our diversification strategy, do some of that ourselves in Panama.
Dan: And just very quickly what do you think is the key risk to your relevancy moving forward. Is it this rising anti-trade sentiment?
Jorge: Well you know we… a link just like anybody else that's in this business. We're just a link in a long transportation chain or we definitely…we have to depend...we depend immensely on trade and of course anybody talking about protectionism especially as United States, it could have an impact. We believe globalization, although there is some intent to somehow contain it, is not going to happen. It's irreversible. We depend too much on each other nowadays. And…and even the United States… it's, you know like I just mentioned, LNG exports from the United States are going to Asia. Asian products are going to the United States. That will continue to happen. I mean you're not in this world alone and everybody would recognize that. And we hope that in the future things will settle down and we will see even more growth in the Panama Canal. I can't say but...that we're very pleased with what we've accomplished in this last nine months since we expanded the Panama Canal. And we are already seeing 18 percent growth in tonnage going through the canal with nine percent growth in revenue. So we expect this year to be a very, very good year for…for the canal and for Panama.