FDI in Figures
Panama is the top recipient of FDI in Central America with an annual average of USD 1.75 billion of FDI flows between 2004 and 2009. Despite the slowdown observed in 2009 due to the weak international situation, the FDI flows started to rise again in 2010 and have maintained their dynamic growth since then. In 2014 FDI influx into the country reached over USD 5 billion, with an increase of over 21% for the first 6 months of the year compared to the first 6 months of 2013. This good performance is due to the advantageous regulations for FDI and the incentive measures that the country adopted in 2011.
Panama benefits from strong financial and investment freedoms: commercial operations are, in general, subject to transparent rules. Moreover, the tax rates for individuals and companies are moderate and there are significant customs and tax advantages in the Colon Free-Trade Zone (CFZ). The strategic geographical location of the country, its dollarized economy and its economic specialisation in the strategic sectors (banking, maritime traffic) are some of the many factors that attract FDI.
Information on the 2014 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2015 by the United Nations Conference on Trade and Development (UNCTAD).
Why You Should Choose to Invest in Panama
Panama’s strong points are:
– Its political stability. The country is “protected” by the United States;
– Its economic stability. Inflation level is maintained at 2% and the country does not carry any devaluation since its currency is in parity to USD;
– Reduced taxes, with a 0% value added tax (VAT) in the real estate sector;
– Credit facilities: Mortgages up to 30 years; credit can be up to 80% of the real estate’s value;
– Large development of the real estate sector with new constructions;
– Easy process to develop tourism projects with significant tax exemptions;
– Easy process to create and develop manufacturing industries.
Government Measures to Motivate or Restrict FDI
The Panamanian government and the business milieu actively encourage direct foreign investment. In general, the laws do not make any difference between national and foreign companies. In 1998, the government enacted a law of investment stability, which guarantees foreign investors who invest at least two million dollars in Panama, equal treatment by virtue of the law and not by their domestic competitors. By virtue of law No. 41 of 2007, Panama has encouraged multinational companies to open their regional headquarters on its territory through a variety of different tax incentives.
Procedures Relative to Foreign Investment
Freedom of Establishment – Guaranteed
Acquisition of Holdings – Majority holding interest in the capital of a company in Panama is legal. However, all foreign investors must obtain a work permit from the Ministry of Employment.
Obligation to Declare – The foreign investment promotion agency in the country enables one to be informed of the authorizations required to set up.
Requests For Specific Authorizations – Some importation conditions (e.g. imports exempt of custom duty) or certain merchandise requires prior authorization from relevant Ministries. Amongst the merchandise, preliminary formalities specifically relate to equipment for the oil industry, household appliances, cars and naturally, products for human consumption for which one needs to obtain different registrations, in addition to a sanitary registration.
Learn more about Foreign Investment in Panama on Globaltrade.net, the Directory for International Trade Service Providers.