Making Money in Panama
Panama has a large expat population and not all of them are retirees. Even some who came retire in Panama still work. There are lots of opportunities in the land that connects North and South America as well as the Atlantic and Pacific Oceans. Here are a few thoughts about making money in Panama.
Panama Investment Climate and Expatriate Talent
Panama has business friendly laws that attract foreign investment and foreign talent to this tropical paradise with world infrastructure. Panama ranks first in Latin America in foreign investment per capita.
Panama is taking advantage of the previously undeveloped parts of the Panama Canal Zone to promote assembly and export facilities and to upgrade its ports and container shipping infrastructure. These improvements will help especially when the "third lane" canal expansion is done in 2014 and some of the world's biggest ships will be able to pass from ocean to ocean.
As the business climate prospers so do entrepreneurs. A number of online English publications are run by expats and the owner and the editor of the most prominent English language newspaper in Panama City are long term expats.
Doing Business in Panama
It is perfectly legal for an expat to come to Panama, open a business, employ people, make things or provide services, make money, and prosper. It can also be difficult to do business in a foreign location. Panama lays few restrictions on doing business in the country. However, doing business in Panama is a lot easier for a Latino expat from Caracas, Bototá, or Barcelona than an English speaker from Chicago or Saint Louis.
Although business prospers in Panama the pace of life, and business, are different in this climate. A Venezuelan fleeing life under Hugo Chavez may well have better intuition into doing business in Panama City than even the son of Cuban refugee who was raised to do business in the Cuban community of Miami.
An example can be found on the Doing Business website. This business site ranks countries for ease of doing business. Panama ranks 81st out of 181 economies ranked. Panama ranks eighth in doing business across borders. Panama ranks twenty-eighth in getting credit for doing business. Within the Western Hemisphere Panama ranks eleventh overall out of thirty-one countries. Panama ranks seventy-third in dealing with construction permits. This means that there is a lot more paperwork and waiting to get a project going, make changes, and deal with paperwork in general. Panama does especially well in foreign trade related matters because of the Panama Canal and the Colon Free Zone. In other areas a foreigner will probably want a Panamanian partner for a hands on business.
So, if doing business in Panama could be a chore what are the options?
Doing Business Offshore
Not all expats living in Panama do business in Panama. It is perfectly legal in Panama to set up an offshore corporation, do your banking through your corporation, buy goods in Japan, and have them delivered to Australia. The nice thing about having an offshore entity in Panama is that money earned outside of Panama is not taxed in Panama. Because of the asset protection features of vehicles, such as a Panama Private Interest Foundation, foreigners will own an offshore corporation headquartered in Belize through the foundation and bank in Belize. This is living in Panama but it is not making money in Panama.
Investing in Panama
Since capitalism is the order of the day in Panama it is perfectly OK to let someone else deal with social security and workman comp issues while you purchase commercial real estate and have a professional property management company collect rents and handle all details. When the thriving economy in Panama drives the price of your commercial real estate to higher levels you can sell and reinvest in a new, promising location. The new Panama Metro Line 1 will start construction this coming fall. Anyone interested in commercial real estate investment would do well to consult the map provided by the Metro Authority for a hint as to look commercial locations.
Investing in Growth and Recovery in Panama
Every so often in life a good deal comes along. Those who recognize it and catch it in time do very well and those who miss out complain forever. One of those opportunities presents itself right now in Panama. The expensive end of the real estate market in Panama took a hit when the recession, stock market crash, and collapse of real estate markets took a bite out of pocketbooks the world over. Panama was doing well and, in fact, never had a recession with a growth rate that bottomed out at about 3.3 percent.
What happened in Panama was that North Americans and Europeans walked away from down payments on high rise condos. People whose hedge fund investments evaporated before their eyes had the mortgage on their second home in Panama repossessed. All of this happened a couple of years ago and buyers are coming in to pick up the deals. In some parts of the capital city prices on really depressed real estate have gone up as much as a third in the last year.
If you are in Panama to visit and are thinking about investing here or are retired and looking for a little more income a look at someone buying distressed properties might be in order. These distressed properties are brand new and are only distressed in the financial sense. They are in good shape and will sell readily. Over the next three to five years we can expect to see substantial appreciation the recovering high end properties in Panama. Of all the way of making money in Panama this idea may well be the best yet.
There are a number of ways of making money in Panama and while in Panama. The most efficient may well be to pay attention to Panama's Economy, the housing and real estate market, and other investment opportunities involving capital and not running a business in Latin American, unless you grew up in San Jose, Mexico City, or Bogotá.
Working for User Bancorp Ltd, which provides private and corporate accounts, merchant accounts, offshore companies such as Belize IBC's (International Business Company), Panama corporations and foundations, wire transfer services, managed funds/forex, credit- debit- and prepaid card issuing
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Views expressed in the article are those of the author and are not necessarily the opinions of CaribbeanChoice, its staff or members.