Why Panama is Such Ideal Place to Invest
Panama's economy has steadily increased in recent years despite the economic crisis suffered throughout Latin American and much of the world. On March 22, 2004, the Executive Board of the International Monetary Fund (IMF) concluded its Article IV consultation with Panama, which found that the economy grew a healthy 4% in real terms last year following two years of weak growth.
Panama has also showed no signs of change in its upward progress. In its annual Report, Moody's Investor Service says, "the country's (Panama) split ratings and stable outlook reflect a manageable fiscal position. Free Trade Agreements, such as the recent accord with Taiwan, will also help to benefit the Panamanian economy by encouraging foreign investment into the nation's financial and communications systems, the report added. In total, Panama has Bilateral Trade Agreements with over 20 countries throughout the world.
Several Steps that have been taken to ensure that the current trends of economic growth and stability continue, which is why Panama has excellent Business and Investment Incentives.
- Equal treatment of foreign and local citizens. The Investment Stability Law (Law No. 54 of July 22, 1998), guarantees all foreign and national investors equal rights in terms of investments and business practices, continuing Panama's long-standing policy of providing a foreign-investment environment that requires no special authorizations, permits or prior registration. Up to date, more than US$2 billion have been registered under the protection of this legislation, ranging from energy and petroleum to industrial and tourism development projects.
- Panama Is politically sound. Political Risk Services (PRS) placed Panama in the top three countries of the hemisphere with the best risk-investment qualifications. Moody's and Standard & Poors have both granted high ranking to Panamanian financial instruments.
- Low Cost of Living. Panama has been ranked first in the region for low cost of living, operational cost and index of labor by the Tripartite Committee, which consists of the Economic Commission for Latin America and the Caribbean (ECLAC), the Organization of American States (OAS) and the Inter-American Development Bank (IDB).
- A high percentage of Panama's labor force is bilingual. About 8 out of 10 Panamanians living within the banking sector of Panama City are bi-lingual in English and Spanish.
- Panama is at the top of the list of the world's freest economies. According to Canada's Fraser Institute (Economic Freedom of the World), Panama ranked eighth with Australia, Ireland, the Netherlands and Luxembourg, Panama represents an environment conducive for the creation of companies, jobs and prosperity. Additionally, The Wall Street Journal/Heritage Foundation's annual Index of Economic Freedom found Panama second in the region.
- Panama's open economy offers the lowest tariffs in the region, which has helped increase foreign investment in both the public and private sectors. There are more than 40 laws and decrees that offer investors special import, tax, and operational incentives. Sectors enjoying these incentives include tourism, export processing zones, mining, reforestation, insurance and re-insurance, agro-industry, petroleum free zones, infrastructure and construction.
i. Total absence of exchange controls
ii. One of the most flexible company laws in the world
iii. No restrictions on 100 per cent foreign-owned companies
iv. No restrictions on mergers, acquisitions or joint ventures
- Panama is a 100% Tax Haven: Non-resident Panamanian International Business Corporations (IBC's) and Private Interest Foundations do not pay tax on any of their income derived from abroad. nor do they have any reporting requirements on income derived abroad to the Panamanian government.
- Panama's circulating currency is the US Dollar, and Panama has no currency exchange controls or currency restrictions so funds can flow in and out of the country freely. Panama uses the U.S. dollar as its legal tender currency), instilling tremendous fiscal and monetary discipline while keeping inflation very low - under two percent for the last 40 years.
- Low inflation and zero foreign exchange risk. Panama's economic performance is, almost every year, better than that of just about every other country in Latin America. In fact, over the past 40 years, the country's inflation rate has averaged less than 2% per year...that's simply unheard of south of the United States according to Kathleen Peddicord of International Living.
- The Panama Stock Exchange is the fastest growing in the region with an average total trading volume of US$900 million.
- Panama is home to the second largest international distribution and trade center (free trade zone) in the world. Panama's Colon Free Zone has over 1500 international import/export businesses operating within it, receives more than 250,000 visitors yearly, and generates exports and re-exports valued at more than US$11 billion annually.
- Excellent tax holidays for specific investments in sectors such as tourism, maritime, real estate, mining, Colon Free Zone, exports and others.
- Panama has Bilateral trade agreements with over 20 countries and Investment Protection Agreements with about a dozen countries including the United States, Canada, the United Kingdom, Spain, Germany and France. Additionally, Panama is a member of the World Trade Organization (WTO) and in the process of becoming a member of the Free Trade Agreement of the Americas (FTAA).