Republic of Panama
REPUBLIC OF PANAMA
Guide to Business
Background
Gained independence from Spain in 1821 and from Colombia in 1903
Home to the Panama
Canal, completed in 1914
Located south of Costa
Rica and north of
Colombia in Central
America
Capital city is Panama
City, Panama
Cultural and Social Environment
Population of 3.6 million
Panama City is home to 1.5 million, or 42% of the population
70% Amerindian and white, 14% Amerindian and
West Indies, 10% white, 6% Amerindian
No national religion, but it is estimated around 85% of the population identifies themselves as Roman
Catholic
Spanish is the official language; though some
Panamanians are bilingual (14% speak English fluently)
Cultural and Social Environment
One of the fastest growing economies in
Latin American
Mortality, growth rate, and infant mortality are declining
Widespread demographics and wealth
Increasing social sector funding
Cultural and Social Norms
Panamanians consider their country and culture to be most unique and historic in Latin American
Considered very friendly people, very receptive to foreigners and Americans (especially after the official gifting of the
Panama Canal in 1977 as a result of the Torrijos-Carter
Treaties)
Very laid back culture with emphasis on extended family
(considered the most important social unit)
Tranquillo- relaxed nature and lack importance in promptness or rush
Mañana- “Let’s do it tomorrow”
Very important to show mutual respect
Address men as Don and women as Doña
Cultural Norms
Indigenous groups make up around 8% of Panama
Place same importance on tradition and family
Differ greatly on appreciation of Vasco
Núñez de Balboa
Spanish Conquistador,
Governor, and namesake of currency
Education
Only 3.5% of the GDP is contributed to education, ranking 122 nd in the world.
Universidad de
Panama has enrollment of about 55,000 and specializes in Maritime
Science
Monetary Environment
Panama uses the
American Dollar as their currency (no exchange rate)
Their “print” is called the Balboa
You will come across
American currency as much or more than
Balboa
Political Environment
Structure
Democracy
Three branches
Executive- The main difference is their president may only run for a single, five year term
Legislative
Judicial- Made up of nine appointed Supreme Court justices
Issues
There has been long standing issues with corruption within the Panamanian government
Specific issues include: property rights, overburdened judicial branch, and lack of institutional control within the legislative branch
Panama ranks 14 th of 29 in Economic
Freedom out of the South and Central
America/Caribbean region
Economic freedom is measured by these subcomponents: the size of government based on expenditures and taxes; the legal structure and its protection of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labor, and business
Legal and Regulatory Environment
There is no capital minimum to start a business in Panama
The process can be fully completed in less than 6 days
Two most used business structures are Panamanian
Corporations and LLCs
Similar to the United States
There is no limit to foreign investment, but foreigners are restricted from engaging in any retail business or restricted services (architecture, medicine, law, etc.)
Citizenship must be established
Panama has had tremendous trouble with property rights
Transportation
Considered the “Transportation Hub” of Latin
America
Tocumen International Airport is the largest airport in
Central America
Only multiple runway airport in Latin America
Panama Canal brought in over $800 million to the
Panamanian economy
Mostly goes to funding social programs
This year a third chamber will be finished, allowing more passage and the capacity to handle Millennial ships
Economic Environment
Panama’s GDP is mainly composed of services such as: banking, tourism, commerce, and the Panama
Canal (over 80%)
Government’s deficit as a percentage of GDP is down greatly over the past few years (now below 40%)
GDP per capita was
$11,461 in 2013, up over
40% from 2009
Much of the growth in their economy is attributed to large growth in international banking sector
Trading Environment
Panama Trade Promotion Agreement (October 2012)
Gives US more access enter into and invest in services industry
Similar agreements reached with EU and Mexico, positioning them to join Pacific Alliance
Member nation of WTO (September 1997)
Net exporter of services, net importer of goods
Major exports include: Bananas, Coffee, Petroleum,
Medicines
Majority of services are related to Panama Canal and
Colon Free Zone (second largest free trade zone)
Major trade partners are United States, Ecuador, Venezuela
Any direct investor who invests $2 million or more are treated as a domestic investor
References
https://www.cia.gov/library/publications/the-worldfactbook/geos/pm.html
http://www.everyculture.com/No-Sa/Panama.html
http://www.anywherepanama.com/travel-guide/peopleand-culture http://www.adventuretourspanama.com/attractions/indigen ous-cultures/indigenous-groups-of-panama.html
http://www.panama-guide.com/canal_operation/ http://www.heritage.org/index/country/panama http://www.businesspanama.com/about_panama/investmen t/political_environment.php
http://www.taglaw.com/files/Doing%20Business%20Guides
/Doing_Business_in_Panama_GALA_0411 http://www.focus-economics.com/countries/panama
