Paraguay has signaled that it is preparing to welcome new mega-sized industrial projects into the country’s forestry sector after President Santiago Peña met last week in Asunción with Peter Kaindl, CEO of Kronospan Group SA, the largest global producer of wood-based panels. The meeting comes amid renewed speculation that a major industrial project could be coming to Paraguay soon. Such projects have remained elusive for several years, even as the country’s area stocked with forest plantations has grown rapidly, and macroeconomic conditions have remained positive and stable. The meeting at Paraguay’s Government Palace was part of a wider-ranging government effort to promote manufacturing investments tied to the forestry sector instead of simply raw material exports. Mr. Kaindl is visiting Paraguay for undisclosed reasons, while government officials are reaching out to other potential investors in Brazil and elsewhere. Wood panel industry analysts have viewed those moves as a strong indication that a multi-billion-dollar project related to panel manufacturing or pulp production could materialize soon.

Meeting with Forestry Industry Titan

Mr. Kaindl is an Austrian businessman who has served as head of the Kronospan Group for many years. Kronospan is based in Austria but has facilities in Europe, Asia, and the Americas. The company manufactures particleboard, MDF panels (medium-density fiberboard), laminate flooring, and other wood-based materials used in furniture making and construction. It is currently the world’s largest producer of panels made from engineered wood. Kronospan operates in countries around the world, so interest in expanding its production further is closely watched by the forestry sector and construction industries in many countries. Mr. Kaindl traveled to Paraguay during a critical window during which government officials were meeting with investors to discuss potential opportunities related to forest plantations. Forestry investment in Paraguay is likely to continue picking up if multinational corporations like Kronospan believe that they can competitively produce goods for export to regional and international markets from Paraguay.

Background on Paraguay’s Forestry Sector Ambitions

Paraguay has grown its forest plantation area by about 10% each year on average over the past two decades. Forest plantation investments have been incentivized by Paraguay’s public sector, benefited from the country’s suitable climate, and experienced tremendous growth from private sector investment. Peña and previous administrations have encouraged landowners to plant trees through various public programs. They have also required long-term land use planning and other steps designed to ensure forestry projects would last for many years and supply raw materials that could eventually feed industrial projects capable of processing logs, wood chips, and other outputs into higher-value products. Forestry industrialization has been a particular focus of the Peña administration. While wood chip exports and log exports bring in millions of dollars of annual revenues for Paraguay, government officials have said that the country needs to attract companies that will operate sawmills, panel plants, pulp mills, and other industrial projects that further add value to exported goods. Forestry investment in Paraguay may be treated as synonymous with industrial policy under the Peña administration. Plans by Kronospan or another global leader in forestry manufacturing would create a flagship investment that Paraguay could promote to investors from other countries around the world.

Could Kronospan Bring Mega-Projects to Paraguay?

Forestry industry analysts believe that Kronospan is coming to Paraguay to explore opportunities related to either wood panels (MDF, particleboard) or pulp. Both forest products segments would be major investments for the company, though pulp is believed by some to be a primary target for investment. Analysts pointed to remarks by Paraguayan businessman Blas Zapag promoting a pulp plant referred to as Paracel that has failed to secure financing in recent months. Global pulp markets have been challenged by inflation and higher borrowing costs, making it difficult for the Paracel project to close on financing even though trees have already been planted in preparation for its development. Countries like Brazil are also experiencing challenges. The Arauco Group recently announced that it is studying alternative financing for a pulp plant under development near Brasilia due to higher capital costs. That pulp project, Sucuriú, may have to be partially sold off by Arauco in terms of its forest estate in order to advance. Forestry investment in Paraguay could become more likely if Kronospan views the country as a low-risk destination, given financing challenges elsewhere. Paraguay boasts low levels of debt compared to other countries in the region, stable macroeconomic indicators, and pro-business policies that are likely to appeal to global investors. Analysts say low operating costs in Paraguay are another potential draw for foreign investors looking at mega-sized projects that can take advantage of economies of scale.

Is MDF on Kronospan’s Radar?

It’s also possible that Kronospan is vetting an MDF manufacturing project during its trip to Paraguay. Last February, Paraguayan officials traveled abroad to tour an MDF facility as part of an investment promotion mission. During that mission, President Peña and senior officials met with Peter Kaindl, according to a source familiar with the meeting. An MDF manufacturing project would require consistent supplies of plantation-grown trees as well as reliable access to affordable energy and the ports needed to export products around the world. As noted above, forestry investment in Paraguay’s MDF sector could create demand for countless complementary products and services that would create jobs and boost value chains related to furniture making, construction, and other similar industries. SMEs in particular stand to benefit if larger projects are able to connect with local companies serving Paraguay’s plantation sector. Adding wood-based panel capacity in Paraguay would make sense from Kronospan’s perspective, too. Demand for MDF in South America has grown in recent years as countries look to promote wood-based construction.

Government Says Little about Plans but Shares Photos of Meeting

There have been few official announcements from the Paraguayan government about the potential implications of President Peña’s meeting with Peter Kaindl of Kronospan. Photos of the meeting were posted on X, formerly Twitter, by both the Presidency and President Peña. In the photos, Mr. Kaindl can be seen flanked by both President Peña and Graciano Pereira, a Paraguayan businessman with interests in rice farming and agroindustry. The newspaper Última Hora also reported that Peter Kaindl said that Paraguay has good forestry policies and seems interested in industrial projects instead of simply raw material exports. There has been no indication of a timetable should talks continue between the Paraguayan government and Kronospan. Such negotiations can often drag on for years as both parties conduct feasibility studies, track borrowing costs, solicit input from lenders, and negotiate key terms of any resulting agreements. Meetings like the one last week can take on increased importance when officials say little beyond showing that they met with potential investors from countries all around the world. Forest investment in Paraguay relies on these types of meetings to gain momentum.

Paraguay Poised to Become Forestry Hub

Plans related to MDF, pulp, or panels could help turn Paraguay into a regional hub for forestry-related industries. Global markets for wood products, sustainable packaging materials, and other bio-based sources of energy are expanding every year. Countries with strong capabilities in plantation forestry stand to benefit. Kronospan choosing to expand production in Paraguay would also create opportunities for suppliers of equipment, feedstocks, transportation services, and more. Forestry investment in Paraguay would have positive effects that reach far beyond the size of the initial investment. Rural communities that are home to plantation forestry investments would likely experience periods of accelerated development. Exports of higher-value wood products would diversify Paraguay’s trade portfolio and help the country connect with markets in North America, Europe, and Asia that demand sustainably sourced and traceable raw materials.

Forestry investment in Paraguay will continue to be watched closely by industry analysts and investors around the world as the results of Kronospan’s visit continue to unfold.

Baja California has emerged as one of Mexico’s fastest-growing and most competitive destinations for global capital, manufacturing, and innovation. In the third quarter of 2025, the state ranked in the top five nationwide in foreign direct investment (FDI), reaching over $1.8 billion invested YTD and placing fourth in Mexico. It has sustained investor confidence due to its diversified industrial base and strategic geographic position, which has allowed manufacturers to integrate into North American and global supply chains. While Mexico City, Nuevo León, and Querétaro have attracted significant attention and investment from multinational companies, investment in Baja California is also notable for the value-added complexity of its manufacturing sectors, forward-looking industries, and diversification of foreign capital sources.

Competitive Location and Industry Infrastructure Drive Investment

With one border state adjacent to California and several border crossings throughout Tijuana and Mexicali, as well as the Port of Ensenada linking Pacific Ocean trade with North America, geography is one of Baja California’s largest competitive advantages. More than 90% of Baja California’s exports are sold to the United States, illustrating the high level of cross-border production and supply chain integration between the two states.

Hosting more than 100 industrial parks and thousands of maquiladoras operating under export-based programs, the state has the infrastructure necessary to support just-in-time manufacturing models and same-day delivery to U.S.-based distribution centers. Lower transportation costs and inventory lead times are among the reasons investment in Baja California has become a cornerstone of Mexico’s nearshoring trend.

Automotive Manufacturing and Auto Parts: Powering Mexico’s Exports

Automotive and auto parts manufacturing is one of the largest sectors for investment in Baja California and contributes significantly to export totals. Over 250 automotive companies operate in Baja California, including auto part suppliers who manufacture wiring harnesses, electronic modules, interior systems, metal stampings, plastics, and more. Some of the largest automotive companies in the world operate facilities in Baja California to serve as Tier 1 and Tier 2 suppliers to automotive assemblers throughout Mexico and the United States.

Baja California’s annual automotive exports are estimated at over $12 billion, representing one of the largest shares of the state’s total exported manufacturing goods. As the global auto industry pivots toward electric vehicles, auto parts will continue to trend toward electric vehicle components, electronics, and lightweight materials. Expect investment in Baja California and its auto sector to grow in battery systems, power electronics, smart mobility, and other technologies as the electrification trend continues.

Aerospace: Advanced Manufacturing and Engineering

Aerospace represents another one of Baja California’s most lucrative and sophisticated industries. There are over 100 aerospace companies that operate throughout the state and employ tens of thousands of people in industries such as precision machining, aerospace composites, wiring systems, and aircraft assembly. Aerospace companies in Baja California produce parts sold and exported throughout the United States and generate over $3 billion in exports per year.

Companies based in the U.S., France, Canada, and the United Kingdom have made substantial investments in Mexicali and Tijuana to leverage certified labor and production costs while maintaining compliance with international standards such as AS9100. A number of companies also operate engineering and design centers in Baja California, allowing them to not only manufacture components but also become involved in product design and engineering. This helps raise the value-add of companies throughout the aerospace cluster.

Medical Devices and Life Sciences Manufacturing

Baja California, and more specifically, Tijuana has become one of the largest medical device manufacturing clusters in the world. With over 600 medtech companies producing surgical equipment, implants, diagnostic devices, catheters, and disposable medical goods, investment in Baja California in the  medtech sector has generated exports worth over $10 billion annually. The majority of medical devices manufactured in Baja California are exported to the United States.

North American and European firms dominate this sector as they look to increase production capacity near end markets while taking advantage of regulatory expertise found in Mexico. The cluster represents a full ecosystem of contract manufacturers, sterilization centers, testing labs, packaging and logistics providers that work together to rapidly develop and scale medical technologies. Medical devices represent one of the fastest-growing segments of investment in Baja California as companies continue to innovate and introduce new technologies.

Electronics and Consumer Goods Production

Electronics manufacturing has been one of Baja California’s key industries for decades. Televisions, computer monitors, semiconductors, telecom equipment, and household appliances are among the many consumer goods produced in Baja California and sold to consumers throughout the world. Electronics account for some of the largest exports out of Baja California, totaling over $15 billion annually.

Japanese, South Korean, Taiwanese, and Chinese companies have all established a presence in Mexicali and Tijuana to source and produce goods for North American consumers. Benefiting from trade agreements such as the USMCA, the electronics cluster has also grown support industries such as plastic injection molding, metal finishing, packaging, and third-party logistics. New investments continue to target advanced electronics, automotive electronics, and industrial automation.

Growing Industries: Technology, Renewable Energy, Logistics

Aside from large-scale manufacturing,  investment in Baja California is significant in technology service industries, renewable energy projects, and logistics. Located just miles away from one of the largest technology hubs in the world, California, Baja California has fostered cross-border collaboration in engineering services, software development, and R&D. Multinational companies have opened offices in Baja California to serve as engineering centers that support their global operations in automotive, aerospace, and consumer electronics.

Renewable energy is another sector that has started to pick up in recent years, with companies developing solar and wind energy projects to capitalize on natural resources and meet rising demand from industrial parks. Baja California receives some of the highest levels of sunlight per year in Mexico, creating a prime opportunity for solar farms. Warehouses, cold storage, and distribution facilities have also been on the rise as companies look to increase their cross-border trade volumes and participate in e-commerce.

Sources of Foreign Capital

The United States-Mexico border is the largest source of investment in Baja California by a significant margin. American companies account for the majority of investment across sectors such as medical devices, aerospace, automotive, electronics, and others. Due to its close proximity to the U.S. and established cross-border supply chains, numerous manufacturers view Baja California as an extension of their U.S. operations.

Asia is another important source of foreign capital for Baja California. Japan, South Korea, China, and Taiwan all have numerous companies with operations in Baja California. Japanese investment in Baja California dates back several decades with companies operating in the automotive and electronics sectors. South Korean investment has ramped up in recent years, with consumer electronics and home appliances leading the way. Chinese companies have also increased their presence in Baja California as trade tensions with the U.S. pushed companies to nearshore production and reduce overall supply chain risk.

European and Canadian companies have invested significantly in Baja California as well, with a particular focus on aerospace, automotive, and industrial equipment. Germany boasts some of the largest companies operating in auto parts and industrial machinery in Baja California. French and Canadian aerospace companies have made substantial investments in aerospace manufacturing and engineering services throughout the region.

Exports and Economic Contribution

Baja California is one of Mexico’s top exporting states, with total exports generating over $60 billion annually. Over 90% of those exports are manufactured goods, with electronics, automotive components, and medical devices leading the way. The United States serves as the end market for over 85% of Baja California’s exports.

Tens of thousands of employees work in industries that have been attracted to Baja California via foreign direct investment. Average wages are higher in these sectors as companies look to recruit and retain talent. Companies also provide ample opportunities for indirect employment through their supply chains. Local Mexican suppliers gain exposure to larger global companies by becoming part of their supply chains. Skill levels and training have increased as companies work with local universities and technical schools to develop programs tailored to their needs.

Public policy and investment in industrial infrastructure have also helped attract foreign capital and investment in Baja California. State and municipal governments have made strategic investments while streamlining permitting processes and improving access to workforce training programs. Coordinating with federal policymakers allows for alignment with national industrial policies as well as efforts to drive inclusive economic growth.

Looking Ahead: Baja California and Nearshoring

As global companies look to restructure supply chains and reduce risk, nearshoring opportunities will become even more prevalent. Companies are looking to mitigate geopolitical tensions, shorten lead times, and diversify their supplier bases by shifting production to nearby countries like Mexico. For Mexico, northern border states like Baja California will continue to be the top beneficiaries of nearshoring investment. Proximity to consumers, an established industry cluster, and an available workforce will ensure investment in Baja California remains strong in the coming years as companies continue to evolve their supply chain strategy.

Environmental Impact and Future Considerations

While industrial growth has brought substantial benefits to Baja California, there are hurdles that must be addressed to maintain momentum. From infrastructure to water scarcity, energy production, and urban development, there will need to be continued investments in Baja California to not only support its population but also its industrial ecosystem. Many companies are also evaluating ways to operate more sustainably, focusing on renewable energy, water reclamation, and circular economy initiatives.

Ensuring Mexico’s growth is enjoyed by everyone is another important goal for policymakers and business leaders. Although abundant opportunities exist in manufacturing, both companies and governments need to continue investing in education, skills training, and affordable housing.

A High-Profile Meeting at Mar-a-Lago Sparks Optimism in Honduras

Upon returning from his Florida meeting with former President Donald Trump at Mar-a-Lago late last week, Honduran President Nasry “Tito” Asfura shared that he expects the United States will help his nation strengthen economic ties, particularly through private investment in Honduras. As the world watched the meeting between Trump and Asfura, policymakers, Honduran business leaders, and members of the Honduran diaspora shared optimism about the bilateral meeting’s results and implications.

Sources familiar with the meeting confirmed that Asfura and Trump met for close to an hour, double the scheduled time. Both leaders reportedly spent significant time discussing ways to improve bilateral relations between Honduras and the United States. Sources close to President Asfura expressed that the atmosphere during the meeting was productive, with both leaders developing political and personal chemistry.

Top topics of conversation reportedly included trade, foreign direct investment (FDI), and migration

Sources from Honduras’s official delegation said that trade, foreign direct investment (FDI), and migration were central topics of conversation between Asfura and Trump. Honduras depends heavily on the U.S. for imports and exports and on remittances from Hondurans living in the United States.

Trade deals were top of mind for both leaders. Officials in Asfura’s delegation said they discussed reducing tariffs and increasing export opportunities for Honduran-made products into the U.S. Honduras currently exports significant amounts of agricultural, textiles, and manufactured goods to the United States. Honduran exports benefit from preferential tariff treatment with the United States. Experts believe that tariff reductions and the furtherance of trade could bolster Honduras’s export economy.

Private investment in Honduras was another likely focus of the meeting between Asfura and Trump. Asfura reportedly told Trump that Honduras offers a competitive nearshoring opportunity for the United States due to its geographic proximity, low labor costs, and membership in free trade agreements. He went on to highlight Honduras’s industrial parks and maquiladora sector and growing interest from firms looking to invest in renewables, logistics, and manufacturing. Strengthening political ties between Honduras and the United States could create the confidence U.S. investors need to increase private investment in Honduras.

Migration was another expected topic of conversation. Sources familiar with the meeting say both leaders agreed that growing the Honduran economy and providing more jobs will help decrease irregular migration. Both leaders have expressed interest in expanding collaboration on workforce development, joint investment in migrant sending communities, and pathways for legal labor migration.

Reaction among Hondurans and Honduran Americans has been mixed

Images and video footage of the private meeting circulated quickly through Honduras and social media among Honduran diaspora populations across the United States and Latin America. Local news outlets published stories focusing on the symbolic importance of the meeting.

Outside Mar-a-Lago, Hondurans waving Honduran flags gathered to celebrate the successful meeting. On social media, people reposted news coverage of the meeting and shared their hopes for new private investment in Honduras.

Before boarding the plane to Florida, President Asfura posted a message of confidence to his social media accounts: “Today is a good day for Honduras. In God’s name and with Him, everything is going to turn out well today. Honduras, we are going to be fine!” The tweet was shared widely across Honduras.

U.S. Honduras relationship critical for economic growth

The Honduran economy depends on strong ties with the United States. The U.S. is Honduras’s largest trading partner, a major source of FDI, and is home to millions of Honduran emigrants who send home billions of dollars to their families in Honduras each year. In fact, remittances make up one of the highest percentages of GDP when compared to other Latin American countries.

Because of this close relationship, any development on trade or migration will have real impacts on the Honduran economy and the pockets of Hondurans. Business leaders watched the meeting closely, hopeful for signals that economic policy may open doors for greater private investment in Honduras.

Analysts also noted that Asfura is setting himself up for geopolitical success by pivoting Honduras closer to the United States. As global companies look to diversify their supply chains and nearshore production, Latin American and Caribbean countries are competing for those investments. By strengthening ties with the U.S., Honduras can position itself as a leader in regional manufacturing and increase its chances of securing multinational investment.

Foreign investment could signal opportunities for growth and stability in Honduras

Growing U.S. interest in Honduras has business leaders and politicians hopeful that they can quicken the pace of reforms needed to open Honduras for private investment. These reforms include reducing red tape for investors, improving physical and digital infrastructure, and cracking down on corruption.

For investors, partnerships with the United States send a signal that the country has stable economic policies and a rule of law that make Honduras a safe place to do business. If U.S. leaders advocate for private investment in Honduras, investors may begin to look more closely at sectors like manufacturing, agriculture, renewable energy, tourism, and logistics for business opportunities.

Honduras’s strategic location in Central America also provides an advantageous platform for regional distribution hubs and export-led manufacturing. Global companies are looking to nearshore production to diversify their supply chains. Honduras could benefit from new investment if it positions itself as a leader in these sectors.

Migration can only be curbed through economic development and opportunity

Honduras continues to face the consequences of high migration rates to the United States. Many Hondurans leave their homes in search of economic opportunity and better wages. Asfura has made economic development through job creation a top priority for his administration.

Addressing the root causes of migration through foreign direct investment and expanding exports can help create jobs at home in Honduras. The U.S. and Honduras could expand cooperation on creating economic opportunities in Honduras through vocational training programs, infrastructure development, supporting small businesses, and more.

Remittances are the lifeline for thousands of Honduran families. However, migration is not a long-term solution to Honduras’s economic challenges. Families want to stay in Honduras and not feel forced to leave to support their children. The talks between Trump and Asfura at Mar-a-Lago may be the first step to combining smart enforcement with economic development and pathways for legal migration.

FDI flows have recovered, and Peruvian companies have more international projection than ever before, factors that are conditioning the destinations of investment capital in the country. In this context, investments in Peru are increasingly being guided by sector-specific opportunities rather than by macroeconomic performance alone.

In Peru, investment destinations are beginning to be defined more clearly. With a year-on-year increase of 56.7% in FDI flows during 2024, which reached nearly US$6.8 billion, Peru registers one of the highest growth rates recorded in Latin America, according to the Economic Commission for Latin America and the Caribbean (ECLAC). However, for investors, macroeconomic stability does not fully explain this figure: in the current context, investments are channeled towards sectors that allow them to see concrete projects underway, demand that has not yet been satisfied, or marked opportunities to enter new markets with a horizon that goes beyond 2026.

“In terms of sectors, capital is flowing especially towards infrastructure projects associated with continuous operations and linked businesses,” says Luis Fuentes, director of Grupo Fuentes and Alligare Internacional, a holding company focused on international consulting and investment promotion. Private investors see attractive sectors based on ecosystems where growth is not predicated on a single isolated project but a series of activities that provide continuity, scalability, and assurance of long-term profitability.

Sector Spotlight: Infrastructure

Infrastructure and logistics are currently at the core of investments in Peru, particularly those tied to long-term operational ecosystems. “Peru is positioning itself as a logistics hub for the Pacific”, affirms Fuentes. In recent years, the creation of the Port of Chancay and expansion projects for the port of Callao have created opportunities not only for global logistics operators but also for industrial warehouses, technical and mechanical service companies, or those focused on operational support.

Infrastructure, therefore, heads the list of sought-after sectors. Transport infrastructure, real estate developments for urban projects, road concessions, and other public-private partnerships not only allow direct entry of capital but also connect to a series of services such as engineering, project supervision, maintenance contracts, and operations. That opens space for investors not only at the large institutional level but also for mid-market companies with technical value propositions.

The second pillar related to infrastructure projects is logistics. Chancay port is designed to connect commerce with Asia and foster production agreements with countries such as China, while Callao’s expansion plans are reaffirming Peru’s role in Pacific trade routes. Both projects are creating demand for industrial storage space, specialized transportation services (such as fleet maintenance and cold chains), and technical logistics services.

Energy and Agroindustry: Continuity of Demand

Energy is a third area of interest. If generation, transmission, and energy services continue to attract interest from investors focused on large projects linked to mining or connected to industries in growth, other renewable projects, grid modernization, and energy efficiency begin to gain prominence as mandatory sustainability requirements begin to filter into decision-making.

The food industry, in turn, rounds up the list. The fact that Peru is a net exporter of agricultural goods and that crops grown locally are inserted into value-added production chains makes it an attractive destination for capital. However, opportunities go beyond mere food production: irrigation infrastructure, cold chain logistics, certification services, consulting, or application of technology to food packaging and processing are sectors within the value chain that also benefit from foreign capital. Added to this is Peru’s wide range of climates and counter-seasonality with respect to the northern hemisphere, as well as access to other markets through free trade agreements.

Technology: Common Thread Through Multiple Opportunities

Finally, technology can be considered a cross-cutting sector. There are opportunities in industries such as mining, food production, or logistics tied to technologies that increase efficiency, allow traceability, introduce automation, and improve processes. Platforms, industrial software, and other tools to manage data and boost productivity are key solutions that international companies require and that national companies can provide not only domestically but also for export.

“There is an investor that is increasingly participating in these sectors: regional investors,” comments Fuentes. Investors from Chile, Bolivia, Ecuador and Asia, particularly China and South Korea, stand out. “Peru wins in terms of its investment attractiveness due to macroeconomic stability, its trade openness and its network of free trade agreements,” he adds. The country is therefore not just a destination market but a platform to operate in the region and send exports.

In fact, this type of scenario is encouraging some Peruvian companies to consider expanding abroad as well. Companies are slowly making their way into Chilean, Bolivian, and Asian markets and entering through commercial offices in places such as Hong Kong has become one of the initial strategies for firms wanting to internationalize (particularly in processed foods or other value added products), decreasing risk while getting closer to final markets without needing major capital injections.

Inbound and Outbound Investment: Toward 2026

The outlook is positive as we enter 2026. The challenge now is to consolidate these sectors as pillars for sustained growth so that investments in Peru become more diversified and resilient over time. Clear rules, legal stability, and an agenda that incentivizes capital entry and facilitates Peruvian companies to go abroad will be key to achieving this objective.

The Chinese government has ordered state-owned enterprises and private companies to suspend new Chinese investments in Panama until “conditions allow.” Commercial relations between Panama and China will never be the same after this announcement, which was released in response to a Panama court ruling last week that adversely impacted one of China’s primary port operators in the country. This is the most notable strain in relations between China and Panama since diplomatic ties were established and formalized in 2017.

Analysts around the world were quick to react to the news, which was announced late last week. Panama is considered one of the most important hubs for international trade due to its geographic location and the extensive financial and logistics services that operate within its borders. Chinese investment in Panama has totaled multiple billions of dollars in the country over the last decade, furthering diplomatic relations and becoming a major player in many of Panama’s development projects.

The dispute originated after Panama’s Supreme Court of Justice handed down a ruling last week that impacted several concessions held by one of China’s largest port operating conglomerates in the province of Colon, Panama. According to officials in China, the ruling “violates legal certainty” and sets a precedent that could discourage future Chinese investments in Panama, if the “business environment becomes too unpredictable.” Chinese foreign policy officials have publicly stated their disappointment in the decision, citing that recent court rulings put investments at risk because of the ambiguity surrounding Panama’s legal system.

China initially entered the Panamanian market to expand opportunities south of the United States. The country gained access to one of the most important shipping lanes in the world through the Panama Canal. Additionally, Panama’s robust logistics network and telecommunication services made it an easy target for Chinese investment, with projects ranging from port operation to energy and tech development quickly after diplomatic recognition in 2017. China became Panama’s second-biggest trading partner within just a few years.

Projects Suspended

The executive order suspends Chinese investments in Panama, not only in bids on infrastructure projects, but also in strategic agreements being discussed in areas such as:

• Logistics: Expansion of port capacity. China has been directly involved in Panama’s port modernization plans for several years, with a focus on increasing capacity to handle projected traffic through the Panama Canal and larger transshipment projects.
• Energy: Electricity generation and transmission projects where Chinese investors were expected to play a role.
• Technology: Development of smart cities, including data centers and telecoms initiatives.

The suspension of Chinese investments in Panama is particularly detrimental to these areas, as they require long-term planning and often take years to secure financing. This creates a conundrum for Panama as it now questions how rapidly it can replace lost Chinese capital, if at all.

Immediate Damage to Panama’s Economy

While the Chinese investment freeze in Panama is set to last an indefinite amount of time, it’s important to note that Panama’s economy could be damaged in the short term.

• Foreign Direct Investment (FDI): China has been one of the largest consumers of services at the Panama Canal in recent years. China is also deeply integrated into Panama’s efforts to expand its free trade zones and port infrastructure. Any slowdown in FDI can cause foreign investors to reconsider Panama’s business landscape.
• Judicial Reputation: There is an irony to the dispute. On one hand, Panama’s judiciary is considered one of the most reliable in Latin America and upholds its decisions with autonomy. Foreign investors want that kind of stability. But, as China has publicized, there is a fine line between stability and unpredictability that can turn investors away from property rights and contract law.
• Employment: Large-scale infrastructure development will come to a halt until the investment suspension in Panama is lifted. This means construction jobs, engineering consultancies, and other service providers who cater to large project developers could see slowdowns.

China Wants What Comes Next to be Clear-Cut

With globalization at an all-time high, the suspension of Chinese investments in Panama is yet another example of how China wields its economic strength as “soft power.” This power allows China to influence business decisions to be more favorable to Chinese companies operating in foreign countries. It’s unlikely that China will completely pull out of Panama, but it wants to send a message that its investors need to be taken more seriously.

The ball is now in Panama’s court. Will it stand up for the independence of its judicial system, or cave to pressure from one of its largest trading partners? This situation is far from unique. China has had similar issues with Latin American countries trying to exercise their judicial power over Chinese companies operating in their territories.

Only time will tell how this trade dispute unfolds. In the meantime, diplomatic talks are already taking place at the cabinet level to negotiate some form of common ground. World markets are waiting with bated breath. After all, what happens in Panama could set the precedent for how world powers interact with local laws enforced by Latin American countries.

The Dominican Republic keeps pace as a prime investment destination

After nearly doubling foreign direct investment inflows during the past half-decade, foreign investment in the Dominican Republic reached record highs last year. In addition to setting a new annual record for the fourth year in a row, Dominican foreign direct investment (FDI) stocks reached US$5,032.3 billion in 2025, Central Bank data shows. That’s nearly 97% higher than in 2020.

This growth indicates that foreign investment in the Dominican Republic is on solid footing and is not just part of a cyclical recovery or driven by volatile capital flows. Thanks to macroeconomic stability, attractive policies, and a commitment to long-term planning, the Dominican Republic continues to distinguish itself as one of the most dynamic and reliable FDI destinations in Latin America and the Caribbean.

“This year’s historic figures are not merely numbers. They are confidence signals, bets on the future, proof of long-term vision, and the result of a strategic positioning that projects stability, competitiveness, and openness to the world,” said Biviana Riveiro Disla, Executive Director of Dominican Republic Export and Investment Center (ProDominicana).

As demonstrated by strong results over the past five years, continuity in policies and institutions is vital to attracting foreign investment to the Dominican Republic. Sound fiscal and monetary policies have been supported by regulatory reforms to improve the rule of law for investors and strengthen public-private coordination. Together, these policies have helped cement the country’s reputation as a place where investors can count on stable business conditions, clear rules and processes, and access to regional and international markets.

The Dominican Republic: a diversified destination for foreign investment

Tourism continues to be the main beneficiary of foreign direct investment in the Dominican Republic, accounting for 26.3% of the total. The sector has proven particularly attractive to foreign investors thanks to its robust infrastructure, brand awareness, and ability to win high-value and sustainable tourism projects.

Foreign investment in energy projects placed second with 23.8%, buoyed by power generation and renewable energy investment. Commercial real estate investment amounted to 15.7% of the total, supported by continued demand for residential and mixed-use projects. Commerce attracted 10.5% of foreign capital, while free trade zones captured 8.7%. Mining represented 6.7% of foreign investment directed to the Dominican Republic; financial services made up 3.4%, and the remaining sectors comprised the final 4.9%.

FDI is a driver of the Dominican economy

Investment plays a multiplier effect across Dominican industries. “It integrates the country into global value chains, contributing to export growth, job creation, economic resilience, and the transfer of technology and knowledge,” said Riveiro. Productivity, job skills, and competitiveness are strengthened across sectors as investment is filtered through the economy.

Employment created by FDI is often high-quality and supports auxiliary local businesses. Additionally, foreign companies often bring international know-how related to management practices, innovation, and sustainable production. For these reasons and more, investment is key to fostering shared prosperity in cities and provinces across the Dominican Republic.

Dominican Republic Opens Doors for Investors with ProDominicana

ProDominicana has been at the forefront of the Dominican Republic’s efforts to attract and retain foreign investors. By focusing on targeted sectors, prospecting in key markets, and offering personalized services to investors, the agency has laid the groundwork for investment in the Dominican Republic to reach record levels.

Over the last few years, ProDominicana has conducted more than 350 promotion events spanning more than 60 countries. The agency has worked to raise awareness of the Dominican Republic as an investment destination across continents.

Not only has ProDominicana strengthened the country’s brand abroad, but it has also partnered with public and private organizations to improve processes at home. By collaborating with government agencies to strengthen the Single Investment Window, ProDominicana has simplified more than 41 procedures undertaken by investors across 26 institutions.

Efforts to attract and retain investors are ongoing

ProDominicana has undertaken several initiatives with the goal of continuing the Dominican Republic’s streak of FDI records. The Investment Guide, which is available in 10 languages, serves to make information on investing in the Dominican Republic accessible to interested parties around the world.

More recently, ProDominicana has led the creation of Guidelines for the Foreign Direct Investment Attraction and Expansion Plan 2025–2036. Outlining the next decade’s strategy for foreign investment in the Dominican Republic, the plan sets a roadmap for not only attracting new investors to the country, but also retaining and expanding existing investors.

With a focus on encouraging reinvestment and greater linkages to the local economy, foreign investors can expect the Dominican Republic to improve upon its efforts to be a convenient and rewarding place to do business.

Exports reach US$15,930.6 billion; up 14.4%

Aligned with record-setting foreign investment levels, Dominican exports continued their historic expansion in 2025. Total exports were valued at US$15,930.6 billion, an annual increase of 14.4%. Gold, cocoa beans, unmanufactured tobacco, medical instruments and devices, plastic products, Portland cement, bananas, electric circuit breakers, and coffee all experienced expanded export totals in 2025.

Foreign investment sets the stage for continued growth

“The Dominican Republic continues its journey towards consolidating itself as a safe destination to invest, produce, and export, with clear long-term visions,” Riveiro concluded. Looking ahead, foreign investment in the Dominican Republic will continue to support economic growth and Dominican exporters.