Put simply, up until the ascension of the administration of President Ernesto Pérez Balladares (1994-1999), the business marketplace in Panama remained an enigma to commercial entities outside of Panama. But, do to substantial, across-the-board structural reforms enacted during this post-1994 period, word has gotten out, resulting in an economic boom financed primarily by the international investment community.
Investor confidence is based on a unique economic and free-trade platform. Unlike any other Latin nation, service industries account for approximately 80% of Panama's GNP and Panama has the exclusive right to use the U.S. dollar as its par-value currency. This combination produced an economy that grew 3.9% in 1998, compared to the Latin American average of 2.5%, while registering an inflation rate of merely 0.6%. Foreign and national businesses reap the benefits of numerous trade pacts and accords, which have led to a 'blanket' average tariff reduction of from 37% to 9.5%.
Panama is a signatory to the World Trade Organization (WTO) and will be the Secretariate of the Free Trade Agreement of the Americas (FTAA) from 2001 to 2003; negotiations with the Andean Community and the Central American trade block are on-going. Twenty-two bilateral treaties have been or are in the process of being ratified and 11 country-specific investor protection agreements have been signed.
Panama's rapid commercial growth is a result of economic stability and carefully targeted expansion and promotion of key investment sectors. With the reversion of the Panama Canal from U.S. to Panamanian control on December 31, 1999, Panama is acquiring over 233,000 acres of prime real estate and over 7000 commercial and residential buildings located in and around former U.S. military installations. The Interoceanic Region Authority (ARI) administers the changeover and so far has awarded concessions which are expected to total over $5 billion by the end of this year.
Panama's maritime facilities have facilitated the country's emergence as one of the world's primary multimodal logistics centers. The benchmark is the Panama Canal, which transported over 13,000 vessels, 192 million tons of cargo and approximately 700,000 passengers and crew in 1998. Panama has the largest maritime fleet in the world, and its four privatized container ports represent an investment of over $4.5 billion. The ports, combined with the reactivation of the transisthmian railroad, are projected to move one million cargo containers in 1999 and two million by as early as 2002.
The imports/re-exports passing through the Colon Free (CFZ) are closely tied to the cargo industry. Created in 1948, the CFZ is the largest in the Western Hemisphere and the second largest in the world behind Hong Kong. The Zone houses 1,751 merchants, receives more than 250,000 visitors yearly, and generates over $11 billion annually.
The financial industry thrives in Panama. A modern International Banking Center contains 120 banks from 35 countries and is regulated by a new banking law that was passed in 1998 in order to meet the Basile Committee's standards for transparency and reporting. Activity on the Panama Stock Exchange increased 19.25% in 1998, nearly matching the growth percentage of its brother on Wall Street. In addition, with Britain's proposed regulation of its protected territories and the EU's push to do the same to Ireland, Panama is now one of the most secure offshore centers in existence.
Panama is heavily exploiting its tourism potential. The government has passed Tourism Law No. 8, which offers incentives such as 20-year exemptions from import duties and fees for construction materials and equipment, income, real estate and other taxes. The government has constructed tourism-friendly infrastructures and tourism authorities have embarked on an international promotional campaign. These programs have led to billions in development dollars, and to a tourism-growth rate that surpassed the world average last year.
In the industrial sector, Panama offers special tax and fiscal incentives for Export Processing Zones (EPZ's), in order to bolster internal manufacturing. For companies operating within an EPZ, there are no direct or indirect income taxes, no import tariffs on purchase of equipment or raw materials, and no taxes on the repatriation of profits.
Panama communicates via a world-class high-tech network and UNESCO projects that Panama will become the technology and communications center of its region in the early 21st century. In order to support the influx of technological industries, Panama has sanctioned the development two major, self-contained high-tech centers: the City of Knowledge and the Panama Teleport Smart Business City.
The City of Knowledge will be located on the former Howard airforce base and will consist of four components: academic institutions, scientific research centers, a modern technology park and international forums for cultural exchange. The Panama Teleport is located adjacent to Tocumen International Airport and combines high-tech industry, commerce and research with a combination of EPZ and offshore status. Both centers will contain resident-support facilities for those persons working and residing within their grounds.
Investment/development opportunities do not end with the aforementioned categories. Other areas of interest, complete with incentive packages, are agroindustry, construction, mining, reforestation, seafood and transport.
The commercial opportunities in Panama are a secret no more. Due to a prudent reform-restructuring plan coupled with extensive fiscal benefits, international and regional investment development within the nation is growing exponentially. Be that as it may, Panama's commercial expansion is still in a nascent phase and broad opportunities yet exist in all sectors.
Information provided by the Council for Investment & Development
Banking Sector
Panama is both a traditional offshore banking
center and offshore financial services center.
This article covers Panama's banking laws
and the requirements for opening a corporate
banking account. Written by Derek Sambrook
of Trust Services S.A.
Incorporating a Company in Panama
The purpose of this summary is to provide
the basic information for incorporating a
company in the Republic of Panama, which can
conduct personal and/or business affairs.
Written by Derek Sambrook of Trust Services
S.A.
Panama Stock Market
Founded during the worst political and economic
crisis in Panama's history, the Panamanian
Stock Market (BVP) will soon complete its
first ten years in operation, throughout which
time it has clearly shown itself to be a valuable
and positive instrument through its participation
in the competitive intermediate financial
markets.
Telecommunications Sector
The telecommunications industry in Latin America
is taking off, and Panama is leading the charge.
Cable n' Wireless purchased the state owned
INTEL, and more recently PSInet has purchased
Panama's two largest internet service providers
Orbinet and Sinfonet. Bellsouth, a leader
in providing wireless phone service has recently
entered the ISP segment, competing head to
head with the three other major players. What
does all this competition mean for Panama,
cheaper prices and better service.
American Chamber of Commerce in Panama (AMCHAM)- contains plenty of helpful information about investment, finance, tourism and technology. Well worth a visit if you plan on doing business in Panama.
Panama Maritime Authority- The Panama Maritime Authority is joined by entities pertained to the former National Port Authority, such are: General Directorate of Consular and Maritime Affair, Panama Nautical School and General Directorate of Marine. Within its functions, this institution is responsible for the execution of the national maritime strategy, the administration of the maritime strategy, the administration of the marine and coastal resources as well as to make fulfill the provisions of the United Nations Convention of the Law of the Sea. This site is in Spanish and English.
Panama Chamber of Commerce - In Spanish only.
Panama Public Registry- In Spanish Only
Panama Stock Market- The Panama Stock Market, or Bolsa de Valores in Spanish, has a very complete web site, both in English and Spanish, that covers a wide variety of topics including a background of stock market trading in Panama, the mission of the Stock Exchange's roles and duties, structure and capitalization, management, trading sessions, members and more. For an indepth look into the Panama Stock Market, you need to look no further.
President of the Republic of Panama- This site is the official site fro the president of the Republic of Panama, which is in both Spanish and English.
Trust Services S.A.- The Company was established in Panama in 1981, originally by Inchcape plc, a British multinational public corporation. Still British-owned and managed, the Company is Panama's prime licensed offshore trust company, providing services to professional firms, institutions and private individuals. Their site includes a quarterly publication that can be downloaded free of charge, which covers important and interesting facts pertaining to the economic and political sectors in Panama.
Worldbidpanama.com, a leading international B2B trade portal, provides access to over a trillion dollars in buy and sell tenders in over 1,000 industry specific categories. Worldbidpanama.com links all sectors of the market to create a comprehensive business network. Registration includes access to categorized trade leads, including instant e-mail notification of new trade lead information; on-line auctions; trade lead posting, including bid documentation; an extensive directory of over 760,000 organizations; a comprehensive trade resources section; company showrooms; real-time trade news; web-based email; freight quoting; and much more. This site is predominantly in Spanish.
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