Special Report #3 Investing in Panama For more than 100 years now, the main currency in Panama has been equivalent to the U.S. dollar - although, in order to maintain certain aspects regarding nationalism claims, the currency of Panama is called the Balboa. One other interesting fact about Panama's economy and currency is the fact that Panama does not have a Central Bank that handles the printing thus making it a constant issue in terms of fiscal policy. However, for a stable economy as Panama's is, it is not such a great disadvantage. While this can easily be considered an inconvenience, the numerous advantages immediately outweigh the small issues. From a historical point of view, it can be said that Panama was one of the first countries in the world to accept a dollarization of its own currency (given the fact that 1 Balboa = 1 US Dollar since 1904).
This is incredibly relevant information for someone looking out to invest in Panama, open a business or simply look for a place to expand their business. It is important to take into account everything Panama has to offer in terms of investment opportunities before actually diving in.
Investing in Tourism
During the past 5 years, tourism has been one of Panama's strongest development areas in terms of business opportunities. Not only that the flux of tourists has grown every year in significant percentages but it has also seen a general rise in quality of service which will only lead to more customers in the future. The greatest tourist flux is seen from Europe and has grown in total percentage of 32.1% throughout the last 4 years and this allowed Europe to become one of the best promoting platforms for Panama's tourism opportunities and one of its key markets nonetheless. Due only to the European flux of tourists, the Panamanian economy has witnessed a 10.2% in GDP making it one of the most successful financial sectors in the country.
In terms of tourism potential, Panama is one of the best countries to consider a tourism business. It has one of the highest occupancy rates of first class hotels making it a profitable business throughout all seasons. For investors from other countries, the advantages are quite palpable and can alleviate some of the stress of opening a business in a different country. These advantages include:
Dollarized economy - As mentioned above, Panama's currency is on a one-to-one basis. 1 Balboa equals one American Dollar.
Economic and political stability - Given the fact that Panama has no major conflicts, their economy is a stable one, and the same rule applies to its politics. The economic stability is also granted by the 100+ multinational companies that have decided to open a branch somewhere in Panama.
Great Geographical Position - The great thing about Panama is that it binds the lifestyle of the United States in a rather calm geographical area (the absence of tsunamis or hurricanes increases its safety limits and makes it one of the best places to invest in tourism). Another notable attraction of Panama is the Panama Canal which is more than 90 years old and exhibits a particular type of flora and fauna.
Financial Services
Apart from tourism, Panama can surprise any business investor or business owner with some surprising terms in the financial sector. Its recent rapid development make it one of the most successful economies and that is the perfect playground for any business owner. In terms of financial services, Panama City offers a modern international banking center made out of no less than 90 banks. Throughout latest years (and during the recession as well) this sector has still witnessed a dramatic increase over the past few years in rate of new loan disbursements. Even with the recession, there has been an increase of 16% in terms of credit portfolio and liquidity increased with no less than 54%.
Throughout the past three years, the most important financial sectors that witnessed important growth are:
Corporate credit
Consumer credit
Mortgage loans
Insurance Market
Down in top three business opportunities in Panama is the Insurance market that offers a genuine opportunity for anyone that is looking for a solid insurance investment. Not only that just like with any other financial sector it has remained incredibly unaffected by the financial crisis it also witnessed its own local boom in terms of growth. The following advantages will prove to be incredibly important in terms of choosing Panama as a headquarter for a business in this area.
Lack of monetary restrictions
Political and economic stability (as described above)
International banking availability
Easy-to-comprehend legal framework
Easy-to-reach International travel points
Large accommodation availability (in terms of both residential and business accommodations)
Large selection of well-trained employees