Home to the famous 48-mile canal, Panama is a central location for import and export, serving as a connector to ports and cities worldwide. Panama has free trade agreements with many countries, including the United States. Its population has surpassed 4 million and continues to grow along with the average wage, which is currently US$1,238 per month.
Taking after its neighboring country, Costa Rica, Panama uses 65% renewable resources for its energy supply. The financial sector plays an important role in Panama’s GDP. Thanks to sizeable investments, Panama’s economy has prospered, leading to installations of Metro lines and significant city renovations. 2016 marked one of its biggest foreign investments, rolling in at US$5.2 billion.
Panama is a prime country for foreign investment and considered a “Tax Haven” by many governments because it does not tax income generated outside of Panama. For income generated inside the country, all of the normal business deductions are available, and income tax rates are low.
The currency (the balboa) is dollarized, meaning it remains at a fixed rate of 1:1 with the dollar, which is also legal tender in the country. Given the dollarization of the currency, Panama enjoys low inflation, which is a key attraction for investors. Panama relies heavily on foreign investment, so the government makes the investment process relatively simple. There are almost no distinctions between domestic and foreign investments and many expats from North America and Europe call Panama City home.
Though Panama does not have a shortage of investment opportunities, poverty and income disparity persist throughout the country. In fact, it was the runner up for worst income distribution in Latin America. Disparities aside, sizable investments are leading to noticeable growth in the business sector, especially with startups. For example, Atlas Banc, which launches in 2017, is a Panama based bank that will serve as a technology centric clearing and settlement bank to support financial institutions and Private Bank clients in Latin America and the world.
The innovative hub of Panama is known as The City of Knowledge. This impressive 120-hectare space located near the canal’s Miraflores locks is where local firms, entrepreneurs, academic institutions and international organizations meet to exchange knowledge. With a coworking space, convention hall, plaza, and sports complex, there’s no shortage of spaces for tech savvy people to meet up, network, and share ideas.
Kalu Yala takes its startup incubator to another level with its unique business model geared towards young entrepreneurs. The incubator, located in a town with the same name, Kalu Yala, centers around sustainable living. This unique approach provides startups access to a remote market as well as the city.
Similar to Yelp, Degusta is another Panamanian startup attracting attention by connecting consumers with Panamanian restaurants and offering the opportunity for users to provide feedback and add to a collective guide of the food scene. In the housing market, GoGetIt is a real estate platform and guide to Panama’s diverse neighborhoods. Users can see neighborhood reviews based on safety, walkability, and traffic. Additionally, the platform displays real estate agents and available properties for sale or rent.
Another startup on the radar is MercaTrade, a platform for companies interested in doing business in Latin America. The site provides key information such as free trade agreements and important upcoming projects in the LATAM region. My Office is a sustainable coworking space with sweeping views of Panama City. It provides biodegradable office equipment and fosters a creative and open space for entrepreneurs.
While Spanish is the official language in Panama, English is also very popular due to a large English-speaking expat community and the fact that the US has been heavily involved with the Panama Canal from 1904 through 1999. This combined with a lower cost of living, high-speed Internet, and modern banking and telecommunications systems, make Panama an extremely attractive place to do business.