Friday, April 24, 2015

Doing Businees in Panama - Part I

Ever since the discovery of the Americas, Panama’s geographic position has been one of its most valuable assets; facilitating the mobility of people and wealth-building from ocean to ocean and around the world. Today’s moderation and globalization trends have permitted Panama to become the gateway to North and South Americas by creating the most sophisticated and advantageous logistics platform in the Western Hemisphere.

Panama City 2015, Photo by Juliette Passer
The Colon Free Zone (CFZ), the second largest in the world after Hong Kong, is a vital trading and transshipment center serving not only the Americas but also the rest of the world. Last year, the CFZ accounted for 92% of Panama's exports and 64% of its imports, according to an analysis of figures from the CFZ management and estimates of Panama's trade by the United Nations Economic Commission for Latin America and the Caribbean. Panama's economy is also very much supported by the trade and exportation of coffee and other agricultural products including shrimp.  

Since its accession to the World Trade Organization on 6 September 1997, Panama has taken significant steps towards modernizing its economic and social structure, and has implemented a growing and sustained open trade process. In this connection, Panama has redoubled its efforts to simplify procedures and strengthen the performance of institutions, which safeguard proper and optimum functioning of the market; for example, by ensuring competitive practices and sustainable development.

In the last few years, Panama has become the center of attraction for many investors seeking opportunities, not only in port, cargo handling, export and import activities, but also  in other unrelated business sectors such as tourism, entertainment, real estate development, health, education, mining and clean energy generation.

Panama’s prospects for economic growth are strong amidst global economic meltdown, showing positive growth of 10.6% in 2011, 10.5% in 2012 and (according to the World Bank data) in 2013 the economy is expected to have continued to be one of the fastest growing in the world with predicted growth of 7.5%; this economic expansion is expected to continue in 2014 and beyond.

In addition, the commercial expectations placed on the ongoing expansion of the Canal, which connects the Pacific and Atlantic Oceans, will further endorse the natural hub for business that exists between North and South America, as well as between Asia and Europe, with direct maritime access to over 80 countries and 3.5 billion people. The canal presently serves more than 14,000 ships through 144 maritime routes and complements a system of container terminals in the Pacific and the Caribbean that serve as cargo transshipments and redistribution centers. The terminals record an annual movement of containerized cargo of 4.25 million TEU (Twenty-foot Equivalent Unit); in addition to the inter-oceanic railroad that has a capacity of 330,000 containers per year from one coast to another. Panama also has the world’s largest merchant marine fleet. 

New Panama Canal Locks, photo by Juliette Passer 2014
Panama's dollar-based economy offers low inflation and zero foreign exchange risk for US investors. Its legal and regulatory regimes are business friendly. Its government is stable, democratic, and reform minded, actively seeking foreign investment in all sectors, especially services, tourism and retirement properties.

According to Panama's Constitution, nationals and foreigners are treated equally under the law. Both Panamanian and foreign companies must fulfill the same basic requirements to organize and operate most types of business activities in Panama. 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. Panama has no restrictions on the outflow of capital or outward direct investment.

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