Thanks to its strategic geographical location, Panama is often considered to be the ‘hub of the Americas’. As well as benefiting from a strong and stable economy and a number of world-leading industries, including its logistics industry and financial sector, the country is the gateway to lucrative Latin American markets, both geographically, as well as politically and in terms of its free trade zones and agreements, offering tax-free trade.
But with so many Latin American countries to choose from when incorporating or expanding a business in the region, why should you consider Panama above all others? Today, we’ve rounded up some of the reasons why the nation has become the business location of choice.
Panama business: straightforward setup processes
Thanks to reforms in the company incorporation process, it has never been easier to set up a business in Latin America, and opening a company in Panama is no exception. With the assistance of a legal firm in the country, you should be able to go from submitting articles of incorporation to trading in just a couple of months, provided you have the necessary funds to get started. The good news is that you do not have to step foot in the country to make a start, as businesses are able to register shareholders of all nationalities, even when they’re on the other side of the world. You’ll need a president, secretary, and treasurer to get started, and a General Power of Attorney to control your business, but the process is relatively straightforward. Once you have incorporated your business, you should focus on marketing, recruitment, and networking, and also think about the importance of HR when expanding a business.
Real estate is big business
Real estate is big business in Panama, with house prices in some cities at US$2,050 per square meter as of 2019. In high-end residential locations such as Punta Pacifica in Panama City, the market is increasing at an unprecedented rate, climbing up to 10% per annum.
With a huge increase in infrastructure investment in the country and sectors like construction see higher-than-average demand, there has never been a better time to step foot into the country’s property market, whether you’re looking to purchase a home to live in whilst you build a new company, or you want to buy properties to renovate and sell or rent to locals or tourists who visit the country in their millions. This is true for both old and new property – the country’s property market is a ‘buyer’s market’ in the majority of towns and cities, and as such, great deals can be had that will offer a significant return on investment and yield.
Some of the most attractive property investment opportunities in the country can be found in the Caribbean Coast and the Canal Zone residential development, where prices remain relatively low but will increase as buyers move into the market and look for accommodation.
Attractive financial sector
It would be wrong to deny that Panama’s reputation hasn’t taken a hit in the past couple of years, with the Panama Papers creating shockwaves in markets like the United States and the United Kingdom, but both the government and financial institutions are working hard to change its fortunes and prove to investors and individuals that the country means business.
After the ‘Procuraduría de la Nación investigation’, Panama’s banking sector has worked hard to meet regulations and distance their businesses from the scandal, and as such, its financial industry is now more transparent and open than ever. As an entrepreneur, that means being able to access financial products like mortgages, business loans, and banking services at a cheaper price.
If you’re looking to open a corporate bank account in Panama, then you should find the market to be competitively priced, allowing you to find a deal that reduces banking fees and enables you to maximize profitability in the country, and in other markets that you trade in.
Growing foreign investment in Panama
The idea of investing in a country where prices are rising and competition is growing may seem like a bad idea, but it’s important to follow demand and look to overseas markets when deciding where next to invest. Both businesses and countries are choosing Panama as part of their international expansion plans – but nobody more so than the Chinese. Back in 2017, the country realigned its diplomatic relations with the country, and soon a US$1.8 billion infrastructure investment was announced by the private Chinese firm Shanghai Gorgeous.
Several high-profile Chinese investments in Panama have also been hitting the headlines, from telecom firm Huawei’s entrance into the country’s Colon free trade zone to the government-owned China Construction America, which has been bidding on infrastructure projects across the country at a time when Panama has been spending billions on its future ports, roads, and transport links. CCA has also entered into residential construction in the country, building high-rise properties in Panama City, demonstrating its growth in the country.
China’s President Xi Jinping has also made it clear he wants to invest in the country – he set exchange goals for Latin America, hoping to trade US$500 billion and invest US$250 billion. The five-year plan was announced in 2015 and is expected to finish later this year (2019), so last-minute investments and trading deals will no doubt be tied up in the coming months.
As an investor, entering a market where foreign investment is on the up is only a good thing, as the demand for goods and services will naturally be higher. What’s more, as the country’s infrastructure and GDP continue to rise thanks to foreign investment, it makes sense to act fast and get ahead of a potential competitor, cementing your position in the market so that you can capitalize on trade with Panamanian consumers as well as international businesses.
Get started in Panama’s business environment with Biz Latin Hub
The opportunities we’ve mentioned in this article are just some of the reasons why investors and entrepreneurs are choosing Panama for their overseas expansion. As highlighted, many of these opportunities are available for a limited time, whilst prices remain low and both local and international competition takes its time to ‘cotton on’ and expand into the country.
Biz Latin Hub can assist you through the entire company formation process in Panama and indeed in other Latin American Countries. To find out more, do not hesitate to contact the team here, who will be glad to offer assistance and provide personalized support.
Learn about our team and expert authors, and check out our short presentation of the benefits of doing business in Panama.