C.J. Schexnayder/ENR High-rise residential towers, 20 stories or more, are sprouting in Panama City, with more than 100 projects currently under way.

It’s construction boom time in Panama. While the $5.25-billion Panama Canal expansion is attracting international contractors, local contractors have already been busy due to a spike in the housing market.

Contraloria General de la Republica reported that direct foreign investment in Panama reached $2.5 billion last year, a 150% increase over 2005. A large portion went to development projects. The government estimates that building construction represents a fifth of Panama’s annual gross domestic product. Panama City-based construction firms like Constructora Urbana (CUSA) and Ingeniera R-M have led the infrastructure and building sectors.

There are more than 100 residential build-ing projects of at least 20 stories, valued at more than $3.2 billion, says a study by Prima Panama, a real estate promotion company. Some 11,000 apartment units are to open in the next five years. “How [can] we can keep infrastructure growing in order to satisfy the demand of private development?” asks Carlos Urriola, president of the American Chamber of Commerce and Industry in Panama.

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Private investment in infrastructure reached $1.1 billion last year; public investment was $450 million. More than 70 critical traffic points have been identified by the government. The Ministry of Public Works will spend $273 million this year, a 30% increase over last year, and seeks external funds. Earlier this year the InterAmerican Development Bank approved a $70-million infrastructure loan. Panama’s Legislative Assembly is expected to consider roadway system improvements in September. “We want to take a systematic approach that deals with the whole situation holistically,” says Minister of Public Works Benjamin Colamarco.

The canal expansion will spur even more work. An infoconference, held in Panama City in March, attracted contractors from Brazil, Spain, Portugal and the U.K. Brazil’s Odebrecht has opened an office in Panama. “We were interested in the expansion of the canal, but we are also looking for other opportunities,” says Andre Luiz Campos Rabello, the firm’s contract director. In 2005, it won a $60-million contract to build a dam in Chiriqui province. Last month, it began a $215-million, 42-kilometer highway upgrade between Colon and Panama City.

One challenge is skilled labor. “We need to increase the pool because everyone is going to share from that group,” says Agustin Arias, director of engineering and projects for the Panama Canal Authority. Panama has launched Instituto Nacional de Formacion Profesional y Capacitacion para el Desarrollo Humano to establish training centers and workshops. There are 35,000 trainees and more than 200,000 new applicants.

It follows that concrete production is booming, having reached 105,601 cu m in January, a 17% increase over January 2006. The Housing Ministry reports a jump in cost from $5.15 to as much as $10 a bag. Panama’s two largest cement plants, operated by Cemex and Cemento Panama, plan to quadruple production, says Walter Medrano, president of industry group Panamanian Chamber of Construction.