Doing Business Report

In Spanish, we refer to Panama as the 3P´s “puente, paso, puerta” (bridge, passage, and door). Panama is the bridge between Central/North America and South America, the passage that links the Pacific Ocean and the Caribbean Sea and an open door for everyone. We are truly the crossroads of the world. From the moment Vasco Nuñez de Balboa discovered the South Sea (Pacific Ocean), we became a logistics hub. Our Pacific Coasts were used as embarkation ports for all exploratory missions to Central and South America, while our Caribbean Coasts were used as trading posts and departure spots for the Old Continent. Later on, the first inter-oceanic railroad was built, by the US, and proved to be the fastest link between the West and East Coast cities. Panama is also the place that the King of Spain, Charles V, originally recognized as a potential site for creating a water passage, and which was chosen by France in 1881 and later taken over by the US in 1904 for the construction of the Panama Canal. Officially opened on August 15, 1914, the Panama Canal greatly reduced the amount of time ships took to travel between the Atlantic and Pacific Oceans, enabling them to avoid the lengthy, hazardous Cape Horn route around the southernmost tip of South America. This route opened new markets and possibilities and helped integrate the nations in and around the Pacific Ocean into the world economy. Recently, the Panama Canal inaugurated a third Set of Locks, which allows the passage of larger sized ships which can carry over twice as much cargo as the previous maximum allowed ships.

Gross Domestic Product

With an upper-middle income and an estimated per capita gross national income of $12,050 (The World Bank, 2015) Panama is the fastest growing economy in Central and Latin America mainly enforced by industries like: logistics, transportation and communication, properties and enterprises, commerce, financial and construction sectors.

Also, Panama is well positioned due to an easy access to loans, availability of financial services, affordability of financial services and regulation of securities exchanges.

Inflation

Panama’s inflation has gone down over 75% during the past two year period, reaching the lowest level of inflation in the last decade. This conduct encourages low interest rates for investors. The Ministry of Economy and Finance´s projections register a 0.4% inflation rate for 2016. 

 

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Foreign Direct Investment

Panama’s Foreign Direct Investment has gone up since 2009 and it has diversified different economic sectors among the country. According to the 2016 World Investment Report, rising reinvested earnings and greater inflows of intracompany loans to non-financial enterprises supported a 17 per cent increase in FDI inflows in 2015.


 

Investment Climate

“Panama's ratings are supported by its strong, stable macroeconomic performance, which has resulted in a sustained rise in per capita income, and reflects policies and a strategic location and asset (the Panama Canal) that underpin a high investment rate.” (Fitch Ratings, Feb 16th, 2017)

Panama continues being one of the fastest growing economies in Latin America supported by its key sectors like Logistics, Financial Services and Tourism. Panama, occupies the 69th place out of 189 countries according to the World Bank in the Doing Business Ranking 2016, and the 50th place out of 140 countries according to The Global Competitiveness Report prepared by the World Economic Forum. On May 31st, 2016, Moody’s has rated Panama’s sovereign debt rating at Baa2 with a stable outlook. On Sept. 23rd, 2015, Standard & Poor's Ratings Services affirmed its 'BBB/A-2' long and short-term sovereign credit ratings on the Republic of Panama. The rating outlook remains stable. The transfer and convertibility (T&C) assessment is unchanged at 'AAA'.

 

 

Investment Incentive Laws

In Panama, you will find a great variety of investment incentives. The following are the main Foreign Direct Investment Incentive Laws.

Click on each subtitle to access the different laws.

Export & Strategic Sectors

Panama exported about $817.2 million in 2014, a decrease of 3.1% compared to the previous year. This is the third highest figure in the last five years, according to the General Comptroller’s Office.

Main exports products from Panama come from the Agricultural, Fishing and Industrial Sector, such as bananas (11.4%), shrimp (9.7%), and fish meal (4.7%). All three products reached record breaking export numbers in regards to the last decade. Other notable products include: fresh or refrigerated salmonids (4.3%), pineapples (3.9%) and watermelons (2.1%).

Panama’s main trade partners are the United States of America, with the 19% of our total exports, followed by Germany (10.7%) and Continental China (8.4%).

Export Incentive Laws

The Trade Promotion Agreement between The United States of America and Panama has set a new commercial phase, increasing the ease of doing business between these countries.

As for Panama, the government has enacted “Free Zones” governed pursuant to Law N° 32, April 5th, 2011, “Through which a Special, Integral and Simplified Regime for the Creation and Operation of Free Zones is Established and Dictate Other Provisions”.

The Free Zones law establishes several Fiscal, Migratory and Labor incentives.

The permitted activities, previous to the export procedure, within these Zones are:

  • Manufacturing
  • Assembly
  • Processing
  • Sale of goods and services
  • Telecommunications (Call Centers)

Click on the link below to download the complete law:

Export Processing Zones: Law N° 32, April 5th, 2011 (in spanish)