Economy

The Panamanian Way

Doing Business

he World Bank ranks Panama 69th out of 189 economies for its ease of doing business, a fall of three places on 2015. In the same tables, the country is […]

he World Bank ranks Panama 69th out of 189 economies for its ease of doing business, a fall of three places on 2015. In the same tables, the country is ranked 44th for starting a business. The country was largely built upon the tenets of international trade and commerce, business-friendly initiatives, and a growing reputation as the region’s business hub. The Panama Canal gives it an unrivalled strategic importance in the region. But understanding this diverse and fast-changing economy takes patience, and it is important to be well briefed on the country’s business scene before arrival in Panama.

Setting up a company

The government is actively promoting Panama as a first-rate place to do business, and is encouraging foreign companies to open offices in the country. There are many advantages to setting up a company in Panama. The government offers support and advice at all stages of the process, and has recently passed laws to make it easier for foreigners to locate there. The economy is diversified and grew at 5.8% in 2015, and inflation is low and manageable, having rarely risen above the 2% mark. The expansion of the Panama Canal is forecast to boost the economy still further. Famously, Panama offers numerous tax advantages for international businesses located there, and there are currently more than 400,000 companies domiciled in the country.

COlón Free Trade Zone

Many foreigners’ point of entry to doing business in Panama is the Colón Free Trade Zone (CFTZ), the largest free port in the Americas, and the second largest in the world. In operation since 1948, Colón is now home to 1,751 companies and is a vital conduit of trade and goods between the Americas and Asia and Panama and its neighboring states. Although even freer of red tape than the rest of the country, the CFTZ nonetheless issues operational permits to companies located in the zone, ranging from $2,000 to $3,000 a year. The CFTZ’s regulators ask for a guarantee deposit upon arrival, which costs $5,560 in 2016. In May 2016 Panama announced new regulations for the CFTZ, including tightened rules for banks working in the zone and provisions for anti-money laundering.

Practical advice

Most companies have a dress code, and men are expected to wear suits and ties, and women a skirt and blouse or a trouser suit. Shaking hands is the usual form of greeting, although if you know someone well you should expect to be embraced. Titles are used until people are on familiar terms, and although many Panamanians use both their father and mother’s surnames, it is the former you should use (listed first on most business cards and email signatures). While decision-making can be a time consuming process, Panamanians do expect you to be punctual, so allow plenty of time to arrive at your meeting place on time.

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