Panama is a business friendly nation that doesn’t have big ideological swings in policy because the vast majority of Panamanians welcome foreign investment. That stability is valuable for businesses looking at Panama, especially when many other countries in the region have been hit by political turmoil.
Investors see Panama as a safe haven. Panama has a dollarized economy, the best connectivity in Latin America and since the return of democracy more than 30 years ago, they have had market-friendly governments. It is impressive to see how Panama has been able to transform the Panama Canal from a military asset in the 20th century to an economic force in the 21st.
Five Economic Hubs
Panama’s economic model has long been based on the hub concept and they have established themselves as the best platform to do business in the Americas. But this government wants to focus on several hubs.
The first is logistics. With the Panama Canal and railroad, the second-largest free zone on the entire Atlantic Coast of the Americas, a top-ten Pacific Coast free zone, air cargo connectivity and a dry canal that can get containers from one ocean to the other in 35 minutes – they have the most comprehensive logistics hub in the region.
Then you have the air passenger hub, which can move people through 30 airlines with more than 1,300 direct and indirect destinations.
Business and Services
The third hub is business and services. Dollarization and political stability allow investors to make long-term plans while their multinational headquarters law provides strong incentives for firms setting up in Panama. More than 150 have already taken advantage of it, including 16 from the UK. People need to realize that when you set up in Panama you are not serving a local market of 4 million people but have great access to all of Latin America and its 700 million consumers.
The fourth hub is for value-added manufacturing. Here there is a big opportunity for medicines and technology. Panama has 23 trade agreements in place with the biggest economies in the world.
The fifth hub is digital. Along the strip of land that borders the Canal, pass seven of the most important fibre optic cables in the continent. Moreover, the guaranteed neutrality of the Canal protects that data from war or dictatorship, while Panama’s natural advantages make it safe from hurricanes or earthquakes. They have given that data further legal security with a data privacy law that is ranked among the top ten in the world. That’s why Google is now connecting to their digital hub. It has a fibre optic cable that runs from Los Angeles to Santiago and it will now add a branch line that connects it with Panama City.
Panama plans to tweak the visa requirements to allow companies in certain sectors to have up to 100% foreign workers. They realize that for technology transfer to happen they need to attract the best international talent.