Building an effective market entry strategy for Panama is crucial to the success of any business launching in the isthmus — one of the fastest growing economies in Latin America.
With a stable political environment and a vibrant economy, Panama has an average annual economic growth rate of 4.6% and a welcoming approach to foreign investment and business. But to take full advantage of the opportunities available, it is essential to build an effective market entry strategy for Panama.
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Your market entry strategy for Panama
Thanks to the Panama Canal, strong trade connections and progressive economic growth, the country is considered the commercial hub of the Americas. Furthermore, it employs an attractive tax system that supports the development of local and foreign businesses in the country.
Before building an effective market entry strategy, business owners must consider the available options to establish a local presence in Panama. Note that these vary depending on the economic resources and the activities being developed in the country. Possible options include:
- Form a new company
- Hire your sales executives and other staff through a Professional Employer Organization (PEO)
- Incorporate a branch of a foreign company
- Partner with a local company in a strategic alliance to achieve your business goals
- Authorize another company in Panama to sell your product or service
All of the options mentioned above will benefit from a robust market entry strategy to successfully establish your business in Panama. Analyzing your options according to your business plans will be crucial to ensuring rapid expansion.
How long does it take to incorporate a business in Panama?
When building a market entry strategy for Panama, foreign investors must be aware of the time it takes to establish a business in the country. The fastest way to start doing business in Latin America is to seek out a company providing PEO services, effectively allowing your business to get to work as soon as the ideal staff are located. Many businesses begin by hiring local staff through a PEO, before later formally incorporating in the country.
However, for those looking incorporate from the beginning, Panama’s company registration process and the opening of a corporate bank account can be done if four weeks. By establishing a local company in Panama, foreign investors can take advantage of the following benefits:
- Income generated from activities developed outside of Panama are exempt from taxes
- Panama is home to a number of Special Economic Zones.
- Business sectors such as agriculture, tourism, and import/export are offered generous subsidies
Key tips to build a market entry strategy for Panama
- Choose the right location
Despite being a small country, Panama has a diverse economy. Understanding the country’s geographic characteristics and consumer behavior is essential when identifying where to establish the business and how to build the marketing strategy.
Panama has three major Special Economic Zones that provide multiple incentives to companies located there, with the nature of your business likely dictating which SEZ would be most suitable:
- Colon’s free trade zone — incentivizes import and export activities with tax exemptions, migratory and labour benefits.
- Panama Pacífico — offers tax, migratory and labour benefits to companies developing import, export, and logistics-related activities.
- City of Knowledge (Ciudad del saber) — reserved for companies that work on technological and innovative development.
If your compny’s main activity doesn’t meet the requirements of one of these SEZs, there are still a wide range of opportunities for doing business in Panama. However, you would benefit substantially from engaging with a trusted local advisor equipped to perform a market/product analysis to help select the best location for the expansion of your business.
- Understand the cultural landscape
Culture and language can be a challenge when doing business in Latin America. The official language in Panama is Spanish and not being able to effectively communicate will limit your options while building commercial relationships.
As in other countries of the region, foreign investors must pay attention to Panama’s culture and business etiquette to make a good impression and create meaningful connections. Aspects of thecountry’s business culture include:
- Building a personal not just transactional relationship.
- Punctuality for business meetings.
- Appropriate greetings and use of correct titles and grammar in meetings and negotiations.
- Immaculate personal and professional presentation.
Work with Biz Latin Hub to build a market entry strategy for Panama
To build your market entry strategy for Panama, you will need a team of specialists to ensure you will achieve all legal, fiscal, regulatory, and accounting regulations.
At Biz Latin Hub, out multilingual team of company formation specialists can help you navigate the local market complexities, and overcome the challenges of entering a new market in Latin America. Reach out to us now for specialist support in market entry requirements, and commercial representation. Our team has a wealth of experience in assisting companies of all sizes to develop their operations by providing a range of customizable market entry and back-office services.
Learn more about our team and expert authors and watch our video to learn more about the outstanding benefits of doing business in Panama.