The very first question to consider before thinking of investing or living in Panama is, quite simply, why Panama?
Though this can be a question with very personalized answers, here are our reasons for establishing the community in Panama:
Panama has the fastest growing economy in latin america. At present, Panama is growing year after year at between 7% and 11% since 2006. Panama suffered for over a decade from the Noriega debacle of the eighties which severely damaged the reputation of the country for over a decade. Previous to this internal invasion and several years of tyranny, Panama enjoyed infrastructure and financial and social progress exceeding any country in the region. Because of this, when world wide economic systems were bubbling and neighboring Costa Rica was in a fanatical boom for 2 decades, Panama was relatively isolated and unattractive until foreigners began catching on around 2004, 15 years after Noriega’s US led removal. Mostly because of the Panama canal expansion, other internal government funded projects, and aggressive foreign investment incentives, Panama has been on a steady and realistic climb since that time. Panama City is an important hub for international banking and commerce, so if you are looking to invest or start a business while living in Panama, you will have plenty of resources at your disposal.
Resources of Panama.
Hydroelectric power, fruits, vegetables, beaches, tropical rain forests, an unnatural canal which the world depends on, gold, copper, affordable outsourcing work force, 1600 square kilometers of coral reef, low population, sustainably harvested hardwoods, water, healthy oceans, thriving indigenous cultures, surfing, affordable high level medical care, cement and a pro-foreigner attitude.
Panama ranks #7 on the Happy Planet Index (green).
The Happy Planet Index maps Life Expectancy, Experienced well-being and the Ecological Footprint of the Countries in the world. You can see that ranked as a green country and number 7, Panama is not only one of the top finishers, but is surrounded by a region (green and yellow) which is ranked by this system as the most future sustainable and happy on earth. As indicators, The United States is ranked 105, Canada 65, Mexico 22, and Switzerland is 34.
Owning property and residing in Panama: Foreigners in Panama have the same title and property rights guaranteed by the constitution both under the law and in practice as do citizens. Panamanian law and processes are often very similar to that of the U.S. No doubt this is as a result of the influence the United States has had on Panama for nearly a century.
Panama is so welcoming to foreigners partly because it is already a very diverse society. The population here is a true ethnic mix, with heritages including Spanish, African, Amerindian, and North American. There are several indigenous groups that live in Panama, such as the Kuna, Emberá, and Bribri. The Kuna are the most well known and recognized indigenous population in Panama, partly due to the beautifully colored attire worn by the females and the accouterments they weave.
Residency and Work Permits
Tourist visas are now commonly given for six months. After that time, if a “tourist” wants to stay longer, he must leave for a short period of time. This can be merely a visit to Costa Rica (or a trip to the border to pay the right person off to get a stamp before turning around to come home). A foreigner who makes Panama his principal place of residence can get residency. One who does not may also be able to qualify for residency by means of starting a business or making an investment in Panama. At this time, it is relatively easy to establish “Residency” in Panama for people from one of the 24 identified preferred countries. The requirements are that you have at least $5000 in a bank account in your name and that you either own real estate in your name or that you set up a corporation and obtain a business license. Additionally to obtain a work permit as a professional, you need only provide a letter for employment. The intention of this is that to make it easier for skilled labor to come to work in Panama to address a growing shortage.
Panama uses the U.S. dollar as its legal tender. The important note to make here is that Panama will take steps to tie it’s financial markets to a strong foreign currency. Recently President Martinelli joked about switching Panama to the Euro. For the time being, all investments and transactions are handled in the US dollars so for those from the United States or who simply have a familiarity of US dollars, there is a seamless transition and no guesswork in exchanges and money transfers. It’s one less thing to think about and there’s no exposure to fluctuating currencies and price instabilities which could be the result of an unstable currency resulting from a more volatile smaller economy.
Expanding Tourism… of the right kind.
Panama’s natural assets have been largely ignored for the past hundred years, sneaking under the sight of big developers (and even the city-dwelling locals) and avoiding the well known paradise-turned-disneyland tragedy. Panama has remained (thus far) the well-kept secret of nature and adventure lovers, with a slow-growing tourist base that knows and loves the country’s natural and historic assets. As your average traveler grows more eco-conscious and tourism begins to expand chances seem good to continue the trend of encouraging off-the-beaten-path travelers and entrepreneurs to set their sights on Panama.
Panama is a developing nation, but living here doesn’t mean you’ll be living in the Third World. Panama is full of the comforts and luxuries that many search for overseas but can rarely find in combination with an affordable cost of living. In fact, most people can significantly improve their quality of life by living in Panama, and they do so without having to live in an unsafe country with poor infrastructure. What makes it affordable? A thriving class of people with fewer needs and a more simple standard of living than most of us are spoiled with. We have “few needs when our needs are few”. Prices in Panama are largely set to suit incomes which are much less than what foreigners are used to.
Stability and Safe Democratic Process.
Politics of Panama take place in a framework of a presidential representative democratic republic, whereby the President of Panama is both head of state and head of government, and of a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the National Assembly. The Judiciary is independent of the executive and the legislature. Basically the same as the United States with the same pluses and minuses. The President is not eligible for a second term. Elections are every 4 years. You may expect to find a rough and unstable government, shabby, squalor conditions and anti-American sentiment. But the truth is almost the exact opposite. Panama is safest, most stable place in Central America. For the past 10 years, the Panamanian government has focused on getting foreigners to put money into the country’s economy. The government realizes that foreign investment will help the country as a whole...and so it has passed more than 40 laws protecting foreigners’ investment rights, including the Investments Stability Law (Law No. 54), which guarantees all foreign and national investors equal rights.
Affordable Western Medicine Heath Care.
Every tourist entering Panama receives a month of full coverage health insurance. Panama offers high quality health care and modern hospitals in the metropolitan areas. For example, the Johns Hopkins-affiliated Punta Pacifica Hospital in Panama City is the most technologically advanced medical center in Latin America. Many Panamanian doctors are U.S. trained, and the standards at the top city hospitals compare very favorably with those in the U.S., Canada, and Europe. Private health insurance is available and much less expensive than insurance in the U.S. (because doctor’s fees and hospital visits are much cheaper). Health insurance here is very affordable. Prices for prescription drugs are low as well, because manufacturers price them for the market. Plus, some drugs that require a prescription elsewhere are available over the counter. There is a brand new state of the art IBT Group General Hospital, “Anita Moreno General Hospital” going into service in 2014 in nearby Los Santos (town).
Anita Moreno General Hospital in Los Santos.
Panama is a safe country where you may actually live safer than you might in large U.S. cities. Generally, Panamanians are very welcoming to foreigners living in their country, so expats usually experience an easy transition when they move to Panama. Drug use is both unpopular and largely unavailable in Panama and drug related petty crime is non-existent where we are and in most of the country. You can still leave your sandals and sunglasses on the beach and surf boards on the porch in Cambutal without thinking much about it, at the time of writing.
Costa Rica Comparison
See this website:
Development Tax Incentives
The Tourism Authority of Panama (ATP) has agreed to reduce from one million dollars to $250,000 the minimum amount of investment required to obtain tax incentives when building a hotel outside the district of Panama. The proposed law states that tourism projects located outside the district of Panama will be exempt from payment of import duty on the entry of raw materials, fittings and equipment used in the construction and operation of the project until 2020. Similarly, they are also exempt from paying property tax on land used for tourism and the improvements made to it.