Panama's economy has steadily increased in recent years despite the economic crisis suffered throughout Latin American and much of the world. On March 22, 2004, the Executive Board of the International Monetary Fund (IMF) concluded its Article IV consultation with Panama, which found that the economy grew a healthy 4% in real terms last year following two years of weak growth.
Panama has also showed no signs of change in its upward progress. In its annual Report, Moody's Investor Service says, "the country's (Panama) split ratings and stable outlook reflect a manageable fiscal position. Free Trade Agreements, such as the recent accord with Taiwan, will also help to benefit the Panamanian economy by encouraging foreign investment into the nation's financial and communications systems, the report added. In total, Panama has Bilateral Trade Agreements with over 20 countries throughout the world.
Several Steps that have been taken to ensure that the current trends of economic growth and stability continue are:
- Panama has excellent Business and Investment Incentives
- Equal treatment of foreign and local citizens. 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 long-standing policy of providing a foreign-investment environment that requires no special authorizations, permits or prior registration. 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.
- Panama Is politically sound. 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 financial instruments.
- Low Cost of Living. 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 Inter-American Development Bank (IDB).
- A high percentage of Panama's labor force is bilingual. About 8 out of 10 Panamanians living within the banking sector of Panama City are bi-lingual in English and Spanish.
- Panama is at the top of the list of the world's freest economies. According to Canada's Fraser Institute (Economic Freedom of the World), Panama ranked eighth with Australia, Ireland, the Netherlands and Luxembourg, Panama represents an environment conducive for the creation of companies, jobs and prosperity. Additionally, The Wall Street Journal/Heritage Foundation's annual Index of Economic Freedom found Panama second in the region.
- Panama's open economy offers the lowest tariffs in the region, which has helped increase foreign investment in both the public and private sectors. There are more than 40 laws and decrees that offer investors special import, tax, and operational incentives. Sectors enjoying these incentives include tourism, export processing zones, mining, reforestation, insurance and re-insurance, agro-industry, petroleum free zones, infrastructure and construction.
- Total absence of exchange controls
- 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
- Panama is a 100% Tax Haven: Non-resident Panamanian International Business Corporations (IBC's) and Private Interest Foundations do not pay tax on any of their income derived from abroad. nor do they have any reporting requirements on income derived abroad to the Panamanian government.
- Panama's circulating currency is the US Dollar, and Panama has no currency exchange controls or currency restrictions so funds can flow in and out of the country freely. Panama uses the U.S. dollar as its legal tender currency), instilling tremendous fiscal and monetary discipline while keeping inflation very low - under two percent for the last 40 years.
- Low inflation and zero foreign exchange risk. Panama's economic performance is, almost every year, better than that of just about every other country in Latin America. In fact, over the past 40 years, the country's inflation rate has averaged less than 2% per year...that's simply unheard of south of the United States according to Kathleen Peddicord of International Living.
- The Panama Stock Exchange is the fastest growing in the region with an average total trading volume of US$900 million.
- Panama is home to the second largest international distribution and trade center (free trade zone) in the world. Panama's Colon Free Zone has over 1500 international import/export businesses operating within it, receives more than 250,000 visitors yearly, and generates exports and re-exports valued at more than US$11 billion annually.
- Excellent tax holidays for specific investments in sectors such as tourism, maritime, real estate, mining, Colon Free Zone, exports and others
- Panama has Bilateral trade agreements with over 20 countries and Investment Protection Agreements with about a dozen countries including the United States, Canada, the United Kingdom, Spain, Germany and France. Additionally, Panama is a member of the World Trade Organization (WTO) and in the process of becoming a member of the Free Trade Agreement of the Americas (FTAA).
- Panama and the best retiree incentive program in the world.
- The newsletter of International Living (September 2001) names Panama as the best place to live outside.the United States.
- Modern Maturity ( June 2001) newsletter of AARP (American Association of Retired Persons) ranks Panama as one of the top four "best places to live abroad".
- A partial List of Retiree Incentives Include
- Household goods can be brought in to Panama free of taxes.
- New cars can be brought in duty free every two years.
- There are no property taxes on primary residences in Panama.
- Discounts between 15% and 50% are offered on hotels, restaurants, movies, many professional services etc.
- Panama is one of the safest countries in the world.
- Panama has a modern, American style infrastructure due to the near 100 year presence of the Americans in Panama.
- Panama's cost of living is a fraction (approximately 1/5th) of the United States.
- Panama has an ideal climate.
- Panama has medical facilities on a par with the United States.
- Panama is close to the United States with direct flights to Panama from 5 major US cities.
- Retirement visa requirements are minimal.
- Foreigners can buy and own property in Panama enjoying the same rights and protections as Panamanians
- Panama has many social and fraternal organizations commonly found "back home". Some of the organizations include: Elks Lodge, Masons, Shriners, Navy League, Kiwanis, Lions Club, Rotary Club, Red Cross Organization, American Society, as well as numerous communities organized by each host nations embassy, some of these include the German, Dutch, Japanese, and British Communities.
- Impressive International Interest
- The 2003 Miss Universe Pageant was hosted in the Republic of Panama, which coincidentally was the home of the 2002 Miss Universe Pagent winner.
- CBS's Pearl Island Survivor and All Star Survivor reality shows were filmed back to back in Panama's Pearl Islands. Additionally, several international Survivor Reality Shows have also been filmed in the Pearl Islands, including French and German Versions.
- The World Heritage Committee has inscribed the following Panamanian properties on the World Heritage List:
- 1980 Fortifications on the Caribbean side of Panama: Portobelo - San Lorenzo
- 1981 Darien National Park
- 1997, 2003 Archaeological Site of Panama Viejo and the Historic District of Panama. This property was inscribed on the World Heritage List in 1997. The archaeological property of Panama Viejo, inscribed this year as an extension, covers the location and ruins of the first European settlement on the American mainland and pre-Hispanic remains. It features impressive ruins. Moreover, older remains, dating to up to 1,000 years before the arrival of the Europeans, were excavated on this site.
- 1983 Talamanca Range-La Amistad Reserves/ La Amistad National Park
- Panama is becoming a home to an increasing number of large international corporations. Some of these corporations include: Federal Express, DHL, Sears, Price Costco, Bell South, Coca-Cola, Kansas City Southern Railways, Continental and American Airlines, ICA construction), Cable & Wireless, Evergreen and Hutchinson Whampoa, and Dell.
- US trade representative initiates free trade talks with Panama. After meeting on November 18 with President Mireya Moscoso and Trade Minister Joaquín Jácome of Panama, U.S. Trade Representative (USTR) Robert Zoellick "formally notified Congress, on behalf of President Bush, of the administration's intent to initiate negotiations for a free-trade agreement (FTA) with Panama," the Office of the USTR has announced. In a press release, Zoellick said that the Bush Administration expects to launch negotiations during the second quarter of 2004. "This step is a vote of confidence in Panama," he added. The USTR described Panama as "a reliable partner in the region, working closely with us to advance our common values and objectives in the World Trade Organization (WTO) and Free Trade Area of the Americas (FTAA) negotiations."
- The expatriate trend is booming. It is estimated that there are 3.5 million US expatriates world wide, and in the next 3 years it is estimated that the number of US expats will grow to over 10 million. Panama is a very hot expatriate destination due to its incredible retirement incentives, residency programs, weather, infrastructure and business opportunity.
- The Hotel and Restaurant Industry of Panama experienced a 17.5% increase during the economic crisis of 2000-2002 and has continued to grow steadily each year since. International Hotels Chaines that are currently in Panama include: the Marriott, Caesar Park, Intercontinental, Riande, Sheridan, Holiday Inn, and Melia.
- Real Estate in Values in Panama are soaring. In recent years, property values have doubled in much of the reverted areas, and in the Pearl Islands, property owners have seen an increase of 60% in their property values.
- All new homes receive 20 years of tax exoneration due to incentive law
- Expert Opinion regarding Panama & international real estate investments
- "Global real estate will be the only major asset class that could deliver double-digit returns over the next five years." - Morgan Stanley, Management, Pensions, Investments
- According to U.S. News and World Report, baby boomers are pulling their investment dollars out of the markets and putting them into real estate. The reason why? Double-digit returns and a secure retirement future. "If you give it [real estate investment] a minimum of 3 to 5 years, you'll do well," stated one of The magazine's experts.
- "Political and economic policy advancements have made it progressively easier for my clients to acquire customers in foreign markets. And the flourishing markets of Africa, Eastern Europe, Latin America, and Asia, economic growth rates are 3-10 times that of the United States." - Stacy Berver, Managing Director, International Marketing Solution
- 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 financial instruments.
- 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 Inter-American Development Bank (IDB).
- Canada's Fraser Institute lists Panama's economy as number eight on its list of the world's freest economies, along with Australia, Ireland, the Netherlands and Luxembourg.
- The Wall Street Journal/Heritage Foundation's annual Index of Economic Freedom found Panama second in the region.
- Panama's economic performance is, almost every year, better than that of just about every other country in Latin America. In fact, over the past 40 years, the country's inflation rate has averaged less than 2% per year...that's simply unheard of south of the United States according to Kathleen Peddicord of International Living
- Panama's Pacific Coast has Celebrity Appeal.
- Jimmy Buffet said of Tropic Star Lodge (which shares fishing waters with the Pearl Islands) "I love this place, I will be back right after the concert tour."
- John Wayne liked Panama so much he bought an island on the outskirts of the Pearl Island Archipelago called Taborcillo, as a private retreat.
- The Pearl Islands is the place the Shah of Iran chose to live in exile after his overthrow in 1979
- "Over Christmas, I went to Panama. That was very interesting, on the West Coast. It was extraordinary. Did a lot of snorkeling, a lot of tuna fishing, and that was fun. I like to go where there's culture, where there's interesting, indigenous cultures, crafts, artisans. I like to see all that stuff." -Martha Stewart on CNN's Larry King Live, February 2002, responding to King's question about where she liked to travel.
- Colin Powell and Sean Connery visited Panama to celebrate Panama's 100th anniversary in 2003.
- Such celebrities as Mick Jagger and Michael Douglas are involved in a very unique research facility on the wild and remote Pacific coast of Panama. This scientific laboratory that will operate with guidance of the Ocean Life Institute at the Woods Hole Oceanographic Institution (WHOI) and the Smithsonian Tropical Research Institute (STRI).
- Other celebrities recently spotted in Panama include, Pierce Brosnan, Samuel L. Jackson, John Travolta, Donald Trump, Alanis Morrissette, Luciano Pavarotti, and Anthony Keetis.
- Historic Treasures in the Pearl Islands
- Scientists, divers and historians of the National Cultural Institute of Panama found a sunken galleon off of Panama's Pearl Island Archipelago, dating as far back as the Spanish conquest, carrying a cargo valued at $50 million dollars.
- Over 200 International Game and Fishing Records have been broken in the waters surrounding the Pearl Islands.
- Here are what some of the worlds best fisherman have to say about the waters surrounding the Pearl Islands.
- Dave Ferrell (Marlin Magazine)"As a traveling angler who's seen some of the best our sport has to offer, I don't think you'll find another fishing lodge in the world that can match the consistently excellent service and fishing opportunities found at Tropic Star Lodge."
- Larry Dahlberg (Host, ESPN's The Hunt for Big Fish)
"I'm making my third trip to Tropic Star, and this time I'm bringing my wife! Great food, staff, boats, captains, and 5-star accommodations, plus excellent fishing for tuna, sails, cuberas, dolphin, blacks and blue marlin make this one of the top fishing destinations in the world!" - Flip Pallot (Host, ESPN's Walker's Cay Chronicles)
"Fabulous location, easily reached, opulent accommodations, friendly people, excellent equipment, knowledgeable crews, and, oh yes...incredible fishing! Two words pretty well sum it up: MERELY SPECTACULAR!" - Guy Harvey (World Renowned Marine Artist) "Tropic Star Lodge offers the best black marlin fishing in the Americas. Combined with blue marlin and sailfish, you have a great shot at catching a Grand Slam or a Super Grand Slam almost every day!"
- Mark Sosin (Executive Producer/Host, Mark Sosin's Salt Water Journal)"Tropic Star Lodge ranks as one of the world's premier fishing destinations and is one of my favorite places to fish. I can hardly wait to go back."
- Stu Apte (Legendary Fly Fisherman) "I first fished at Tropic Star Lodge in 1964, and I'm pleased to say that the fishing is still spectacular, and the accommodations, food, boats and crews - are better than ever! I try to fly fish there once or twice a year."
- Dave Ferrell (Managing Editor, Marlin Magazine)"There are few places on earth that can match up to the remote beauty of an unspoiled area with a tremendously vibrant fishery. That Tropic Star can still do it and still provide an unequaled level of comfort never ceases to amaze me."
- Mike Leech (President of the International Game Fish Association)"If I had my choice of spending one week at any fishing lodge in the world, it would be Tropic Star Lodge."
- The United Nations for Development, IPAT (Panamanian Tourism Board), along with AS&P (Albert Speer and Partner) and ERM Lahmeyer GmbH have shown great interest in the Pearl Island Archipelago as a world-class tourist destination.
- A feasibility study valued at approximately 300,000 USD was conducted in Panama's Pearl Islands with Isla del Rey Isla del Rey is larger than the island of Aruba, and rich in natural resources including water.) as the central hub for a world-class tourist destination. Included in the study is an international airport, several large hotels and residential areas and a state of the art marina.
- Islands not already titled by 1972 can no longer be titled, thus making titled island property that much more valuable.
- Hub of transportation & Communication
- Panama is a Communication Hub. Panama sits at the intersection of five major undersea fiber-optic networks, which pass from the United States, Central America and the Caribbean down to South America, and from Europe and Asia to the Americas. That nexus gives Panama some of the best fiber-optic cable access and bandwidth in the world, enabling it to run systems as big as the New York Stock Exchange or websites as far away as Canada or Hong Kong.
- Panama is the transportation hub of the Americas serving 29 destinations in 19 countries in North, Central and South America, the Caribbean and the United States. From its "Hub of the Americas" at Tocumen International Airport in Panama City, one of the most successful and efficient hubs in Latin America is operated.
- Tourism in Panama is expected to climb almost 20 percent this year.
- The government ranks tourism as a priority sector. The country hopes to see tourism revenues climb almost 20 per cent this year, generating $1.15 billion, or around 10.5 per cent of gross domestic product.
- In 2002, Panama attracted around 800,000 visitors, a rise of six per cent on the previous year.
- According to Liriola Pitti, general manager of the Panamanian Institute of Tourism (Instituto Panameno de Turismo, or IPAT), there is plenty of room for growth. A record $10 million marketing budget was set-aside for 2003 to promote the destination to the outside world under the banner, 'Panama, the path less travelled'.
- The cruise ship industry, which only started to discover Panama a couple of years ago, is presently driving growth. Around 135 ships arrived in 2002, double the previous year, bringing more than 100,000 visitors, mainly from the US.
- The government is looking to expand the country's ports infrastructure to entice more ships and more wealthy European and American tourists. For every 12 visitors, it estimates that one new job is created.
- Panama's high-profile commercial standing is also crucial to the country's hotel and leisure industry. With its strategic location between North and South America, it is set to play an even greater role as cross-border trade expands. It is good news for Panama City's convention centre organizers, as well as nearby hotels, restaurants and other amenities.
- Panama's Gaming Institutions casino and gambling industry is also enjoying good times after the privatization of the sector in 1998. The award of licenses to three separate private operators has led to an upturn in investment in gaming facilities and a better product for customers.
- Lucas Alemán, general manager of Fiesta Casinos, says that the privatization of the industry has been a tremendous boost to the economy, with operators paying sizeable taxes. He says Fiesta Casinos pays $4.3 million a year in taxes, a figure which is almost certain to rise.
- In 2002, it also invested around $4 million in various projects to improve services. "We have created new employment and invested heavily in modernizing the casinos, bringing in new games and the latest generation slot machines," he says.
- Currently, about 20 per cent of business comes from tourists, though there are plans to raise the figure substantially in the coming years, according to Mr Alemán. Fiesta Casinos is working with IPAT in promoting Panama as a gaming destination offering affordable holiday packages to entice more visitors.
- "The gaming product is a new tourism product complementary to the existing wide variety of others that Panama has to offer - history, bio-diversity, shopping, culture, beach and sun," he says.