Panama is bordered by Costa Rica to the northwest, Colombia to the south-east, the Caribbean Sea to the north and the Pacific Ocean to the south. The country has shown strong economic performance of the last few years continues, despite the deteriorating global environment. An indication of this is the fact that Panama had one of the fastest growing economies in the world in 2007 (11.2% real GDP growth).
Advanatages of Investing in Panama
Unprecedented appreciation rates in vacation and retirement home markets in the US have led many Americans to look abroad for more affordable alternatives. Prices in the traditional south-of-the-border retreats like Mexico, Costa Rica and the Caribbean have escalated to the point where they rival those along America's own beachfronts. According to the National Association of Realtors, second home purchases in the US accounted for more than one third of annual sales in 2005. And the trend is expected to continue as the first wave of 79 million US boomers is turning 60 this year.
Americans are looking for the Next Great Destination… it is quite clear why Panama is quickly becoming the indisputable answer:
Real estate prices are still affordable but are appreciating quickly. In an effort to continue attracting Americans, the government is offering 5-10 year tax exemptions on new construction projects. Panama City is a booming metropolis with world class projects like our Trump Ocean Club and Tower, mountainous landscapes, and beautiful Caribbean coastlines - the stuff of travel-magazine cover photos. Direct flights are available from Los Angeles, New York City, Houston, Dallas, Miami, and more to come with direct flights even in the works from the UK and Spain
Reasons For Panama’s Strong Economy
- The Panama Canal expansion.
- Colon, the world’s second largest free trade zone.
- Panama-Pacifico special economic zone.
- World’s second largest offshore banking center.
- Second highest hotel occupancy rate in the world.
- $7.2 billion in telecommunications and hydro-electric projects.
- 2 multi-billion oil refinery mega-projects.
- Expansion and beautification of the Panama City Harbourfront and Ocean Drive.
- Growing tourism industry.
- New home port for cruise ships.
- New international airport.
The Panama Canal
- Panama has awarded its first contracts for the $5.2 billion expansion of the Panama Canal that is expected to create 80,000 new jobs and bring many additional investments.
- The project was approved on October 22, 2006.
- On September 3, 2007 the Panama Canal expansion project officially started.
- Total traffic in 2007: 14,721 ships.
- The Panama Canal generated income in the amount of $2.7 billion in the fiscal year that ended September 30, 2008.
Once the expansion of the Canal is completed, its shipping capacity and revenue will more than double.
Panama-Pacifico - Special Economic Zone
This special economic zone offers specific benefits that ensure the viability and success of any multinational company located here. The following points outline why some of the world’s largest multinational companies are moving to Panama-Pacifico.
- Exempt from Import Duties, Income Tax, Dividend Tax.
- Exempt from Withholding Tax on Interest Income.
- Exempt from Capital, Patents and License Tax.
- Exempt from Real Estate Property Tax.
- Exempt from Municipal Tax.
- Exempt from Withholding Tax on Royalties Paid to Foreigners.
- Exempt from Capital Gain Tax on Company Stock Transfer.
- Exempt from Stamp Tax.
- Exempt from Special Interests Compensation Fund (FECI).
- HP, Dell, 3M and Caterpillar are just some of the companies that have relocated to take advantage of this special economic zone.
Banking Industry
- Privileged location and business climate, as well as the competitive services provided by the 110 domestic and international banks, continues favouring investors of all countries.
- World’s strongest secrecy and anonymity laws make it an extremely popular financial and offshore hub.
- Panama banks have collective assets of over $75 billion as of July 2008.
- Banking assets increased 26.4% in 2008 compared to the previous year.
- Some of the international banks with a strong presence in Panama include HSBC,Citibank, Scotiabank, BBVA, BNP Paribas and many others.
The International Monetary Fund (IMF) observed that Panama's financial market has not been adversely affected by the global financial turmoil, and commended the authorities for stepping up the monitoring of banks' asset quality, liquidity and risk management.
Colon Free Trade Zone
The Americas’ largest free trade zone.
- The Colon Free Trade Zone (CFZ) is the largest free trade zone in the Americas and second largest in the world.
- Currently occupies 400 hectares.
- Over $11 billion dollars of goods are trans-shipped through the CFZ annually.
- Some tax and other benefits are as follows:
- No taxes on income derived from export activities.
- No tariffs and quotas on imports and exports.
- Highly competitive costs.
- Immigration benefits for executives and foreigners.
- Over 2,000 business currently operate in the CFZ.
- Ambitious 5 year expansion project is currently under way which will encompass the following:
- Increase the size of the CFZ from 400 hectares to 1,200 hectares.
- Unite existing infrastructure and transport entities (maritime installations, airports and railroads) into one permanent entity to facilitate the transport of goods from coast to coast.
The CFZ will be converted into the “Multimodal Logistics Centre of the Americas”, attracting new investors and buyers and helping to increase international commerce.
Tourism
- Panama has the highest tourism growth rate in all of Latin America.
- Panama has had a steady rise in property values because of its increasing popularity as a retirement destination.
- Panama maintains this position due to its political stability, stable banking laws, warm climate, one of the lowest crime rates in Latin America and relatively low cost of living.
- Tourism in the first half of 2008 was up 13.1% from the same time period in 2007. Source: Panama Ministry of Tourism
- Starting in January 2009, KLM will be increasing the frequency of its direct flights from Amsterdam to Panama City from 3 to 5 flights a week. Iberia will also be increasing the frequency of its Madrid – Guatemala City – Panama City flights.
Over the past 5 years, 35 new hotels and resorts have been built - by some of the world’s largest hotel chains including Hilton, Marriott, Holiday Inn, Sheraton, Inter-Continental, Melia, Best Western, Courtyard, Crowne Plaza, Radisson and Decameron.
Viva Panama
- Panama City is the most modern, exciting and sophisticated city in Latin America.
- Panama is gaining a strong stance with Latin American tourists who find it a burden to obtain a U.S. travel visa.
- Its dynamic skyline, modern shopping malls, cosmopolitan nightlife and casinos are viewed as Latin America’s answer to Las Vegas and Miami.
- Panama City is home to over 10 fully equipped casinos, with numerous other casinos spread out across the country.
Donald Trump and Hilton Hotels are each currently building 5-star hotel and casino projects in Panama City.
Hotel Occupancy
- Panama hotel occupancy rates are the second highest in the world.
- Panama has an 86% hotel occupancy rate. Source: Panama Ministry of Tourism
- Panama City showed an impressive 37.9% increase in revenue per available hotel room from 2007 to 2008.
- Even with the downturn of the global economy, it appears as though Panama is one of the strongest destinations for tourism in the Americas.
Tourists from Europe and Asia are likely to take advantage of the weakened dollar and visit Panama, which has been building its reputation as a safe and easily accessible destination.
Infrastructure
- The government is in the middle of a program to privatize the nation's main railway, the Panama-Colon Railroad.
- U.S. companies, Kansas City Southern Industries and Mi-Jack Products, are investing $73 million to rebuild a rail line parallel with The Panama Canal and across the nation.
- There are 130 kilometers (81 miles) of crude oil pipelines in Panama.
- The international shipping terminal in Manzanillo, in the Caribbean, is the largest container port in Latin America.
- Hutchison Port Holdings of Hong Kong has initiated a $150 million port project to develop a port facility on the Pacific side of The Panama Canal.
- At a cost of $189 million, the expansion and beautification of the Panama City Harbourfront and Ocean Drive will also increase the value of properties in the Panama City oceanfront district.
Home Port Cruises
The region’s leading departure terminal for cruise ships.
- Royal Caribbean has established a new home port in Panama.
- This will attract more than 42,000 Central and South American as well as European tourists hoping to avoid tight U.S. visa requirements necessary for Miami, from where many popular Caribbean-bound cruises depart.
- These cruises will departure from Colon, Panama's main Caribbean port.
- More than $10 million has been set aside to construct a new terminal for cruise ships next to the Colon 2000 Port. The cruise ships will leave Colon on seven day trips and set sail to Cartagena, Santa Marta, Aruba, Curacao and Bonaire.
- A mega cruise ship port is also planed for Panama City on the Pacific side of the Panama Canal.
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