Why Panama?
US Dollar Based Economy
The US dollar has been PanamaÕs currency since 1904,
although it is called the Balboa for nationalistic reasons. As a consequence,
fiscal policy is the government principal macroeconomic policy instrument.
Because Panama does not have a central bank to print its own currency,
government spending and investment is strictly bound by tax and non-tax
revenues and the governmentÕs ability to borrow. Thus, creditworthiness is
linked directly to public finances.
The disadvantage of not having an independent monetary or
exchange-rate is not a serious problem for an economy the size of Panama. The
advantages more than outweighed the inconveniences. Moreover, in an era of
dollarization of other economies, one could say that Panama was the pioneer.
Panama uses the U.S. dollar as its legal tender, virtually
eliminating any currency exchange risks to foreign companies operating here.
The country has maintained an annual inflation rate of under two percent for
the last 40 years, and just 2.3 percent in 2005 – one of the lowest in
years. Panama's economy has become one of the healthiest in Latin America, in
spite of the Latin American economic crises. Panama has no restrictions on the
outflow of capital or outward direct investment.
Panamanian Currency: Balboa (B/.)
Exchange Rate: US$1.00 = B/.1.00 (fixed exchange since1904)
Geographical Location
The US dollar has been PanamaÕs currency since 1904,
although it is called the Balboa for nationalistic reasons. As a consequence,
fiscal policy is the government principal macroeconomic policy instrument.
Because Panama does not have a central bank to print its own currency,
government spending and investment is strictly bound by tax and non-tax
revenues and the governmentÕs ability to borrow. Thus, creditworthiness is
linked directly to public finances.
The disadvantage of not having an independent monetary or
exchange-rate is not a serious problem for an economy the size of Panama. The
advantages more than outweighed the inconveniences. Moreover, in an era of
dollarization of other economies, one could say that Panama was the pioneer.
Panama uses the U.S. dollar as its legal tender, virtually
eliminating any currency exchange risks to foreign companies operating here.
The country has maintained an annual inflation rate of under two percent for
the last 40 years, and just 2.3 percent in 2005 – one of the lowest in
years. Panama's economy has become one of the healthiest in Latin America, in
spite of the Latin American economic crises. Panama has no restrictions on the
outflow of capital or outward direct investment.
Panamanian Currency: Balboa (B/.)
Exchange Rate: US$1.00 = B/.1.00 (fixed exchange since1904)
Stable Economy
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 quote s long-standing
policy of providing a foreign-investment environment that requires no special
authorizations, permits or prior registration.
This law provides a 10 year stability as of the registration
of the investment that al legal, tax, customs, municipal and labor rules will
remain identical to those in force at the time of registration. This is an
important guarantee to secure no-changes will affect the amortization of
investments.
Up to date, more than US$2 billion have been registered
under the protection of this legislation, ranging from energy and petroleum to
industrial and tourism development projects.
International Banking Center of Latin America
Panama cannot strictly be called an emerging market.
Panama has the most modern and successful international
banking centers in Latin America, with more than 85 banks from 35 countries
represented. PanamaÕs new comprehensive banking law (Decree No. 9) meets the
standards of leading financial centers around the world for transparency and
regulation, and conforms to the statutes of the Basle Commission.
Some of the banks present in the center are: Citibank, HSBC,
Dresdner, Bank of Boston, International Commercial Bank of China, Banque
Sudameris and more.
The Republic of Panama maintains a firm commitment to fight
and maintain a proactive and efficient role against money laundering and the
financing of terrorism and organized crime through its different governmental
bodies and in close cooperation with other jurisdictions.
Panama«s banking system has effectively achieved the
following, among others factors:
*
International Standards
*
International cooperation
*
Modern legislation
*
Competitive advantages.
As a necessary complement of the above, important
legislation has been passed by the Panama Legislative Assembly and sanctioned
by the President and resulted in relevant Cabinet Decrees being issued by the
Executive power. These regulations, listed below, are not only in effect, but
has also provided assistance throughout the region and beyond.
*
Law 41 of October 2, 2000, which defines the crime of money laundering with
regard to the predicate offenses: qualified fraud, illegal arms trafficking of
humans, kidnapping, extortion, embezzlement, corruption of public officers,
acts of terrorism, international theft, trafficking of vehicles and drug
trafficking.
*
Law 42 of October 2, 2000, which establishes as "accountable persons"
in the observance of due diligence for banks, trust companies, currency
exchange offices, money transfer service providers, non-bank loan companies,
savings and loan cooperatives, securities exchanges, securities clearing
houses, securities firms, securities brokers and investment managers.
*
Law 45 of June 4, 2003, by which Chapter VII to Title XII of the Second Book of
the Penal Code is added therein under the heading of Financial Crimes, fraud,
illegal money transfers, concealing, deleting and counterfeiting accounting
books and related documents. Disclosure of classified information, omitting or
denying information, price discrimination, signing of fraudulent agreements,
collecting financial means without proper authorization, among other types of
crimes with their respective sanction.
*
Executive Decree No. 78 of June 5, 2003, which modifies the name of the
Financial Analysis Unit (FAU) to Financial Analysis Unit for the Prevention of
Money Laundering and the Financing of Terrorism and extends its duties and
responsibilities to assets related to the financing of terrorism.
*
Law No. 48 of June 26, 2003, which regulates the operations of money remittance
companies.
*
Law No. 50 of July 2, 2003, by which Chapter VI, denominated Terrorism, is
added to Title VII of Book II of the Penal Code and sets forth other
provisions, This Law defines the crimes of terrorism and the financing of
terrorism, turning both into autonomous crimes in our legislation.
This proven commitment by the Republic of Panama against
money laundering and financing of terrorism includes both the public and
private sector, guarantees that Panama shall continue in this crucial endeavor
and fully understands the importance of international coordination and
cooperation.
International Credibility
Panama has long had a open doors policy towards foreign
investment and aggregate foreign direct investments during the period 2004 and
2005 was $1,012.3 and $1,027.0 respectively, a significant amount.
Panama has long provided several important incentives for
foreign investors, including
*
US dollar-based economy
*
Low inflation and zero foreign exchange risk
*
Total absence of exchange controls
*
Equal treatment of foreign and local citizens
*
One of the most flexible company laws in the world
*
No restrictions on 100 per cent foreign-owned companies
*
No restrictions on mergers, acquisitions or joint ventures
*
Excellent tax holidays for specific investments in sectors such as tourism,
maritime, real estate, mining, Colon Free Zone, exports and others
*
High percentage of labor force is bilingual
Panama has been ranked first in the region for low cost of
living, operational cost and index of labor by the Tripartite Committee, which
consists of the Economic Commission for Latin America and the Caribbean
(ECLAC), the Organization of American States (OAS) and the Interamerican
Development Bank (IDB).
Panama has full coverage from OPIC, MIGA, IDB and other
multilateral entities.
Political Risk Services (PRS) placed Panama in the top three
countries of the hemisphere with the best risk-investment qualifications.
Moody's and Standard & Poors have both granted high ranking to Panamanian
bonds.
International HUB
Ports
Nearly 14,000 ships transit the Panama Canal each year with more than
192 million tons of cargo and 700,000 passengers and crew onboard. Because of
this traffic and modern port facilities, Panama is expected to become the
regionÕs principal multi-modal logistics center in coming years.
Today, Panama has the largest maritime fleet in the world and its four
new container ports represent a total investment of over US$4.5 billion. The
ports, combined with the trans-isthmian railroad, are projected to move one
million cargo containers in 1999 and three million by 2006.
Currently, the main ports are:
On
the Atlantic Coast:
1.
Manzanillo International Terminal (Stevedoring Services of America)
2.
Colon Container Terminal (Evergreen International Corporation).
3.
Colon Port Terminal (Hutchinson Port Holdings)
4.
Colon 2000 (Cruise Ship Terminal)
On
the Pacific side:
1.
Panama Port Terminal S.A (Hutchinson Port Holdings)
2.
Rodman (Alireza - Mobil) for fuel loading and unloading.
Railroad
The railroad operated by Kansas City Railroad and Mi-Jack runs parallel
to the Panama Canal in a 47 mile distance, and with 143 years of existence,
being the first transcontinental railroad. This important transportation means,
recently restored and modernized, will provide an efficient inter modal
connection for world trade complemented by the present infrastructure,
transforming Panama into a multimodal transportation center. Among the railroad
services are:
1.
Cargo transport
2.
Passengers transports
Highways
Panama has a highway network of approximately 11,300 Km., in asphalted
concrete roads. Among the roads that add importance to Panama and facilitate
communication and transportation are:
1.
The Panamerican Highway
2.
The Northern and Southern Corridor
3.
The Madden Colon Freeway
The construction of the highway that connects the cities of Panama and
Colon will contribute to complement the intermodal logistic cluster, the
services provided by the Panama Canal and the Inter Oceanic Railroad are added
to this infrastructure, considering the transport of cargo they may effect,
plus the services provided by the Tocumen International Airport, the airport
located in the former Howard Base and the Enrique A. JimŽnez Airport in Colon,
Panama has the necessary and available infrastructure for the development of a
multimodal logistics center of world scope.
Airports
Panama has 27 public and 41 private airports. From these public
airports, 5 are full fledged airports, meaning that they have immigration and
customs services.
Our main international airport is Tocumen, located a 15 minutes from
Panama City, and may be easily accessed by a modem highway (Southern Corridor).
The second most important airport is Marcos A. Gelabert, located as well in the
capital city, providing services to national and international flights.
It
is worth mentioning that the transformation of Enrique A. JimŽnez Airport,
located near Colons Free Zone, into an airport for cargo and passengers is one
of the projected goals set by the Logistics & Multimodal Center Project,
that is being currently developed in this important Atlantic area.
Also PanamaÕs economy is booming due to its Real Estate market
which has been booming and experiencing an unprecedented growth in the last
few years. For Panama Real Estate
visit: