Panama has a long history of facilitating mobility and sustainability, as well as offering great opportunities for all kinds of activities. Since rising out of the ocean three million years ago to form a bridge between North and South America, the country has served as a strategic place of passage for the continent’s people and businesses.
Long before the term ‘globalization’ was popularized, Panama was an important player in the global trade of goods and the types of cultural exchanges typical of large ports. The country developed a robust service economy, creating business opportunities and strategic alliances, and opening its doors to benefit the entire world.
Invest in Panama
Over time, and thanks to Panama’s unique geographical location, the country has played a fundamental role in global mobility. The discovery of the ‘South Sea’ reaffirmed the short distance between the Atlantic and the Pacific Oceans and made Panama the most important trade route between Spain and the American Pacific. In 1855, Panama became the home of the world’s first intercontinental railroad and the Panama Canal opened in 1914.
Following this legacy, Panama continues to invest in its mission to connect the world. The Panama Canal expansion guarantees the transit of maritime cargo for another 100 years, and the new terminal in Tocumen International Airport’s Hub of the Americas makes it possible for millions of people to travel safely and comfortably to more than 90 cities in America, Europe, and the Middle East.
As a regional trade center, Panama enjoys access to excellent air and maritime transportation as well as overland connections to Central America, the United States, and Canada via the Inter-American Highway.
As a regional trade center, Panama enjoys access to excellent air and maritime transportation as well as overland connections to Central America, the United States, and Canada via the Inter-American Highway.
A digital information and communications super highway
This expansive physical infrastructure is perfectly matched by the country’s digital infrastructure: 100% of regional internet traffic, 97% of regional voice traffic, and 90% of regional data transmissions pass through Panama along eight fiber-optic cables that take advantage of the continent’s narrowest land.
Many tax, labor and immigration incentives are currently enjoyed by the hundreds of companies that operate in Panama’s seventeen private national duty-free zones. More than 170 multinational companies have regional headquarters in Panama. These companies benefit from the country’s location, facilities, incentives, professional workforce, and convenient access to sixty countries and more than 1.5 billion consumers that are covered by twenty-three free trade agreements, including the Colon Free Zone, Panama Pacifico, and the City of Knowledge.
The country’s ability to move world trade and connect all parts of the region makes Panama the ideal place to invest.
Panama offers a politically and economically stable and secure country virtually free of natural disasters; a world-class banking and financial center; a US dollar-based local currency; internationally renowned cutting edge medical services; an excellent business climate and an incomparable quality of life.
In addition to connecting land, oceans, people, and businesses, Panama is one of the world’s fastest growing economies, with an average annual growth rate of more than 5% in the last 15 years. In Panama, companies can take advantage of many opportunities for sustainable development through expanding, relocating, and consolidating operations closer to target markets.
Panama Fast facts
- Area 29,157.28 mi2
- Population 4.3 million (2020)
- Workforce 1,966,467 people (October 2021)
- Total GDP 63.6 billion USD (nominal 2021)
- Growth Rate (% GDP) 6.5% (projected 2022 vs. 2021) April*
- 15.3% (real 2021 vs. 2020)**
- -17.9% (real 2020 vs. 2019)**
- GDP per capita 14,664 USD (2021)
- GDP per sector Agriculture: 2.4%
- Manufacturing: 4.6%
- Services: 67.9%
- Inflation Rate 3.2% (March 2020 vs. March 2021)
- Total Unemployment 11.3% (October 2021)
- Exports 3.558 billion USD (2021)
- Imports 11.558 billion USD (2021)
Panama – the rising star of Latin America
The country covers slightly less than 30,000 square miles and has a population of some 4 million people. Panama offers strategic a location and exceptional natural beauty.
According to the World Bank, and despite the abrupt deceleration caused by the COVID-19 pandemic, Panama’s GDP increased 15.3% in 2021, representing the most rapid increase in Central America, greater than the average in South America and the Caribbean.
These promising projections are rooted in solid ground. Over the last decade, Panama has experienced notable economic progress, doubling its per capita income. Today, Panama has one of the region’s most buoyant economies, with an annual growth rate of 6% between 1992 and 2019, and the highest per capita income in Latin America.
Historical factors help lay the groundwork for the country’s economic and legal stability. The United States built the Panama Canal, and the dollar became the country’s legal tender, giving Panama a marked economic stability that has controlled inflation over the last 119 years, and also facilitated international transactions.
Politically, the country became a democracy more than thirty years ago. Government power is transferred through the popular vote every five years, providing the country with the stability and legal security needed for business to prosper.
The United States built the Panama Canal, and the dollar became the country’s legal tender, giving Panama a marked economic stability that has controlled inflation over the last 119 years, and facilitated international transactions.
Unparalleled Connectivity
Canal-related activities inspired Panama to foster a competitive service sector, which includes outstanding logistics, transport, financial, communications, and trade services. What began 150 years ago with the construction of the world’s first transcontinental railway, and later expanded with the building of the Panama Canal, has become a comprehensive network of air and sea routes —including eight underwater telecommunications cables— that combine to make the country one of the best connected in the world. The slogan ‘Bridge of the world, heart of the universe’ has never been so apt.
Global Panama
While a strong Western influence has determined Panama’s currency, lifestyle, and high level of Spanish-English bilingualism, the country has also forged close ties with the other side of the planet, including links with strong partners like China.
China is the Panama Canal’s second largest client (by volume), but there are also close social ties that date back to the construction of the trans-Isthmus railroad and the Canal. The large Chinese immigrant community that was established some 150 years ago now plays an active part in the future of Panama.
Five factors make Panama the ideal place for foreign investment:
- Strategic location
- High levels of connectivity generated by the Panama Canal, which also led to the development of the aviation hub
- A legal and tax regime that favors investors
- High quality of life
- Public safety
The Panama Platform
Panama serves as a platform from which many companies can manage their operations for the rest of the continent. The country has the region’s most extensive network of free trade treaties: 23 trade agreements afford Panama preferential treatment in 56 countries.
Despite the heavy pressures weighing on the global economy, Panama continues to offer a prosperous, stable environment for business, thanks to its business-friendly tax regime, trade policies, and a regulatory framework that facilitates the diversification of its economy.
The Panamanian government has promoted policies that attract foreign enterprises and encourage innovation by creating a series of 20 Special Economic Zones (SEZ). The special program for Multinational Headquarters (MHQ) has attracted more than 170 multinational companies to the country. In 2019, Panama approved a Public-Private Partnerships (PPP) law to incentivize private investment, social development, and job creation.
Panama City
Certain historical factors make it possible for the country, and especially its capital city, to offer an enviable quality of life to people who come to do business. High purchasing power in Panama City facilitated the development of an urban infrastructure that places the capital among the most modern in Latin America. Its skyscrapers create a distinctive skyline that draws the eye, but that is no more than a hint of the city’s vibrancy.
High-end restaurants and nightlife venues dot the city. Greek, Italian, French, US, Caribbean, Pakistani, Chinese, Turkish, and Israeli communities, among other nationalities, play a considerable role in the national economy. This gives the city a cosmopolitan vibe and provides everyone with the chance to savour excellent cuisine based on recipes brought from around the world by third, second, and even first generation immigrants—immigration to the country continues today.
The country enjoys schools of an international standard, and some even offer primary instruction in languages such as Mandarin, Greek, Italian, French, Hebrew, and English.
The children of executives have no trouble adapting in Panama. Public safety is also a hallmark of the city, given that it has one of the lowest indices of robbery and street crime in the region, according to the UNDP and USAID Infosegura project. Beautiful and spacious residential complexes support a comfortable, tranquil lifestyle in a city filled with modern shopping centers where executives can find their favorite international brands. The city is also the perfect launch pad for a weekend escape to the Caribbean or Pacific beaches that are just a few miles away, or a trip to the tropical jungle that sits on the edge of the city.
Metro Moves
The Panama City metro is a thriving state enterprise used by 500,000 people in the metropolitan area. As the first and only urban metro in Central America, it places the country at the forefront of public transportation on the continent. Panama’s modern metro network, which has operated in the capital since 2014, is one of the great infrastructure works that improves quality of life for those in the country. Lines 1 and 2 of the Panama Metro have a total of 31 stations and a fleet of more than 40 trains, each with three to five cars, providing rapid and efficient public transportation.
Line 3 —one of the most ambitious projects currently in progress in the country— is already in development. This will be a commuter train that connects downtown Panama City with Panamá Oeste Province, directly benefiting a wide swath of Panama’s population. And Line 3 is just the beginning; the Panama Metro master plan anticipates up to nine lines and an investment of more than 10 billion dollars by the year 2035.
High-end restaurants and nightlife venues dot the city. Greek, Italian, French, US, Caribbean, Pakistani, Chinese, Turkish, and Israeli communities, among other nationalities, play a considerable role in the national economy.
A unique nearshoring location
Now is the time to consider Panama. By having their production plants closer at hand, companies can exercise greater control over processes, reduce transport costs, and form more robust supply chains that are less susceptible to interruptions.
To facilitate this, Panama approved Law 159 (August 31, 2020), better known as EMMA, to make it easier for multinational companies to provide manufacturing related services.
Panama will also become a base for production, assembly, maintenance, reconditioning, and development of products for internal commercial use and export, along with warehousing and distributing components.
Panama is the quintessential center for commercial logistics and trade activities. This is thanks to the fact that the country has invested significantly and consistently over the years in first-class infrastructure and outstanding logistics assets.
The Panama Canal
The expanded Canal has vastly exceeded expectations for transport and reaffirmed its environmental leadership in the maritime industry. The progress sparked by the expansion has resulted in a savings in water, as well as a reduction in CO2, since the waterway now gives customers a shorter route and greater cargo capacity.
In 2021, 13,342 ships passed through the Canal, carrying a total of 516.7 million tons of cargo.
The historic interoceanic route, which is nearly 50 miles long, connects many important ports on the Atlantic and Pacific Oceans and moves 6% of global maritime trade.
For more than 100 years, the Panama Canal has been the greatest and best-known asset of the Panamanian Logistics Services Center. The legendary interoceanic route, which links the Caribbean Sea with the Pacific Ocean at the narrowest part of the Isthmus of Panama, connects more than 1,900 ports around the world through 180 sea routes that serve more than 170 countries.
In 2016, the two new Corolí and Agua Clara locks gave the Panama Canal a third lane, allowing New Panamax ships to pass. This route expansion has contributed to the development of global maritime trade, multiplying connectivity and interchange among countries and markets.
Panama Ports
Panama boasts extremely important coastal strips on both the Pacific Ocean and the Caribbean Sea. This advantage has given the country a unique opportunity to develop an extensive network of national ports.
As a result, Panama is now home to five of the ten main ports in the region. Among these are two exceptionally important ports: Balboa and Cristóbal. Located on the Pacific and the Caribbean respectively, these ports are the most active in Latin America. The other three most notable are Panama International Terminal, Manzanillo International Terminal, and the Colón Container Terminal.
These terminals process container cargo as well as a variety of other types of cargo and passenger transport for both the local and international markets. This level of excellence allows Panamanian ports to handle more than 7.7 million TEUs (equivalent to a 20-foot container) per year.
The Panama Railroad
The railroad is an extremely important component of Panama’s logistics hub, forming an essential part of the country’s modern connectivity platform. The railroad has great historic value as the world’s first transcontinental railway line, which was proclaimed the great engineering marvel of the mid-19th century.
The Panama Canal operates in conjunction with the railway system, which serves as a “dry canal“ for moving merchandise between Caribbean and Pacific ports. Opened on January 28, 1855, the country’s rail system is known as the Panama Railroad. Today, it is administered by the Panama Canal Railway Company, a merger of the Kansas City Southern and MiJack Products companies, which won a 50-year concession in the late 1990s to reconstruct and operate the railroad.
The railway’s primary role is as a transfer connection for container shipping, but it is also a tourist attraction. It offers passenger transport, allowing visitors to enjoy a unique voyage through the exuberant Panamanian jungle along the route of the Panama Canal.
Highways and Roads
In total, Panama boasts a road network of approximately 9,406 miles, of which 3,946 miles are paved. The section of the Pan-American highway that crosses Panama runs from Paso Canoas on the Costa Rican border to the town of Yaviza in the Darién jungle. This is the most important stretch of roadway in the Panamanian road network; it is vital to international trade, since it connects the country directly to Central and North America, reaching all the way to Canada.
The country’s road infrastructure is ranked third in quality in Latin America. Panama’s road network includes the Pan-American Highway, the Panama North and South Corridors, the Panama Colón Highway, the Trans-Isthmus Highway, and other through-roads that provide access to principal urban centers.
A center for digital innovation
Panama’s 10-year strategy for information technology and communications sector (ITC) development consists of a public-private and academic partnership that seeks to turn Panama into a center for digital innovation.
Based on these pillars, the country has created a map of coordinated programs and projects to promote cluster relationships and ensure appropriate resource distribution, making the ITC sector competitive at the international level.
World-class sustainable tourism
Panama is no longer satisfied with being the jewel of Central American tourism. Now, the country seeks recognition as a world-class sustainable tourism destination, thanks to the extraordinary wealth and diversity of its natural and cultural heritage, as well as the quality of its services.
This strategic plan encapsulates a vision of Panama as a world-class sustainable tourism destination, thanks to the extraordinary wealth and diversity of its natural and cultural heritage, as well as the quality of its services.
Now, the country is reaching higher, and moving toward more sustainable, mindful tourism with the help of a master plan created to provide visitors with unparalleled experiences: the Sustainable Tourism Master Plan 2020-2025. In pursuit of these goals, the Panama Tourism Authority has created the Tourism Cabinet and the Tourism Promotion Fund, two innovations that represent a major step toward ensuring that Panama makes a name for itself in sustainable tourism.
The City of Knowledge
This is an innovative project that is a point of great pride for the country, since it embodies the wonderful ideal that it is indeed possible to build a new world. This is a community where entrepreneurs, scientists, thinkers, artists, community leaders, NGOs, and international bodies work together as peers toward the common goal of developing initiatives that generate social change.
The nearly 300-acre central campus is in Clayton, just minutes from the Panamanian capital, right across from the Panama Canal’s Miraflores Locks. Its more than 200 buildings (originally constructed for a different purpose more than 80 years ago), and its fabulous green areas make an excellent setting for this modern technology, science, and business park. The City of Knowledge seeks to create an ecosystem that makes it possible to imagine, research, learn, teach, experiment, invent, create, and inspire. Investors have everything they need for their business activities, ventures, and creative industries in surroundings that allow them to share knowledge, infrastructure, and even projects.
The City of Knowledge offers a unique work environment, with expansive green spaces surrounded by nature, as well as outdoor recreation zones ideal for walking, running, and biking. The companies established there also enjoy many other advantages. For example, their activities, operations, transactions, procedures, and transfers of real and personal property are 100% tax-free.
