Panama's Economy

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A Country on the Rise

Panama City’s skyline has transformed itself in the past decade. Lined with new financial and condo towers and upscale hotels that reminds you more of Singapore or Miami than a Latin American hub…Panama is becoming the new economic dynamo of the Western Hemisphere. Much of the boom has been due to tremendous investment in the country from both multinational companies and private investment.  Thanks to the country’s political stability, dollarized economy, lower cost of living, retirement and real estate tax incentives and developed healthcare and financial industries, the GDP will once again be over over 6% this year.  It also happened to rank as the #1 happiest place on earth according to a recent Gallup poll.

But Panama is not a common reference point for the allure of Caribbean islands such as Turks and Caicos, St. Thomas, St. Lucia or Antigua.  But investors in these traditional Caribbean destinations should consider the less known islands of Bocas del Toro, Panama. The favorite stopping point of Colombus, as he named the islands after himself, and touted by international publications, these hidden beaches here are framed by majestic tropical forest frequented by Capuchin monkeys and sea turtles. Plus, it is only thirty miles from the border of Costa Rica.

Savvy sailors and Mega Yacht owners have known about this destination for years. Because these islands lie beneath the Caribbean’s hurricane belt, they are a natural stop over for those transiting the Panama Canal.  Owners and crews alike enjoy the resort amenities and vibrant nightlife. The island archipelago of Bocas del Toro IS part of the Caribbean and it has the added benefit of being part of that economic dynamo that is the country of Panama.

The Red Frog Beach Island Community lies adjacent to the Bastimentos National Marine park (with its protected rainforest and coral reefs). It is a place where people travel by boat around unique ecosystems. What makes the resort setting so extraordinary is its proximity to natural amenities; from untouched coral reefs to acres of botanical gardens and mangrove ecosystems with towering mountain ranges seen in the distance.  Bocas del Toro is truly a nature lovers dream that feels undiscovered and unexplored.

2019 Cabot Emerging Market writes of the growth and attraction of Panama for investors.

I have been to Singapore many times and each time it gets a little bit better. Better infrastructure, better communication services and better tax and trade policies. That is its secret — constant improvement, suggests international investing expert Carl Delfeld, editor of the Cabot Emerging Markets Investor.

On the other side of the world, Central America has the potential to evolve into the mirror image of Southeast Asia, offering investors plenty of growth, progress and opportunity.

And while Southeast Asia serves as a bridge between China and India and the Pacific and Indian Oceans, Central America ties together North and South America and the Pacific and Atlantic Oceans.

A couple of years ago I visited Panama and was taken aback with the size and sophistication of its cutting-edge financial center and business district. This is why I call Panama the “Singapore of Central America.”

Even way back when I was a rookie banker with Banco de Boston, Panama was the destination of a lot of money and trade flowing between North & South America. The U.S.-Panama Free Trade Agreement has only deepened its rising financial and trade role in tying the two continents more closely together.

But the Republic of Panama is booming not just because of lucky geography—smart free-market, investment-friendly policies have also sharpened its advantages. Here are a few example:

  1. Panama’s currency is the U.S. dollar, and this makes investing in the country easy.

  2. Banking and communication services are world class.

  3. Panama has launched a five-year, $13.6 billion investment plan, focusing on schools, hospitals, sewerage, roads and metro transit system

  4. There is no tax on interest earned from bank accounts for locals or foreigners.

  5. There are no corporate or personal taxes on offshore activity.

  6. Residents pay no local taxes on their foreign earned income

  7. In Panama any legal resident may buy and own property. Retirees don’t have to pay property taxes until they sell their homes. On new homes there is a 20-year tax holiday.The result of all this good stuff is an economy that has grown at a nice clip over the past five years. Oh, I almost forgot to mention the doubling of the capacity of the Panama Canal.

    The Panama Canal’s annual revenues have grown to over $2 billion (7.5% of GDP). How can U.S. investors cash in on all that Panama growth?

    One Panama stock that trades in the U.S. is the airline holding company Copa Holdings (CPA). Copa offers flights to 75 destinations in 31 countries in North, Central, and South America, as well as the Caribbean.

    The good news is that Copa Holdings continues to be one of the best operators in the business, with 89.7% on-time performance and 99.8% flight completion.