Panama is easy to find on a map of the world. It's that tiny, narrow isthmus which joins the two great land masses of North and South America. Zoom in to a verdant land of mountains, rainforest, arable coastal plains and islands. Zoom in closer to the Panama Canal and look at the new, wide locks which will double its capacity. Notice that ground has just been broken for a port extension on the west bank; on the opposite bank a new port is scheduled to begin construction.
The iconic Bridge of the Americas defines the Pacific entrance to the Canal – soon to have a sister bridge with six lanes and Line 2 of the Metro system crossing to the special economic area of Panama Pacifico and the western satellite towns. Scroll over to the Caribbean side and you see another new bridge over the canal nearing completion, and building activity on the streets of Panama’s second city, Colon, which is undergoing a major urban renewal.
You are looking at a beautiful country, alive with growth and opportunity.
The geographical position of Panama is what gives this country its unique character, its history and a clout which is quite disproportionate to its diminutive size.
The Panama Canal is the principal factor. Before that it was the Camino Real and Las Cruces trails across the isthmus – the route of the Spanish conquerors for moving the wealth of the new continent to Europe. Then the railroad, which carried thousands of adventurers to the Californian gold mines.
Much has changed, but the principle remains the same.
The Isthmus is an important gateway of North and South America and a hub of business and commerce, thanks to its comprehensive multimodal logistics platform with ports, railway, modern roads and of course the expanded Panama Canal.
Many multinational companies have moved their headquarters here, attracted not only by the privileged geographical position, but also by the tax incentives, the dollarized economy, the political stability, the banking center and the favorable investment conditions that exist in the country.
The Investment Stability Law No. 54 of July 22, 1998, guarantees equal rights to foreign and national investors with regards to investments and business practices, with no restrictions on the outflow of capital or outward direct investment.
History: Panama was inhabited by several indigenous tribes prior to its discovery by the Spanish conqueror, Rodrigo de Bastidas in 1501.
The territory broke away from Spain in 1821 and joined a union of Nueva Granada, Ecuador, and Venezuela and Colombia named the Republic of Gran Colombia. When Gran Colombia dissolved in 1831, Panama and Nueva Granada remained joined, eventually becoming the Republic of Colombia. With the backing of the United States, Panama seceded from Colombia in 1903, allowing the Panama Canal to be built by the U.S. Army Corps of Engineers between 1904 and 1914. In 1977, an agreement was signed for the total transfer of the Canal from the United States to Panama by the end of the 20th century, which culminated on December 31, 1999.
Geography: The Republic of Panama is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean to the north and the Pacific Ocean to the south. It mostly lies between latitudes 7° and 10°N, and longitudes 77° and 83°W (a small area lies west of 83°).
The highest point in the country is Volcán Barú , which rises to 3,475 meters (11,401 ft.). A jungle forms the Darien Gap between Panama and Colombia and creates a break in the Pan-American Highway.
The country has nearly five hundred rivers, the most important being the Río Chagres. The central part of the river is dammed to form Gatun Lake, the main element of the Panama Canal. When it was created, Gatun Lake was the largest man-made lake in the world, and the dam was the largest earth dam. It drains northwest into the Caribbean. The Kampia and Madden Lakes (also filled from the Río Chagres) provide hydroelectricity for the area of the former Canal Zone.
Climate: Panama has a tropical climate. Temperatures are uniformly high—as is the relative humidity — and there is little seasonal variation.
Diurnal ranges are low; on a typical dry-season day in the capital city, the early morning minimum may be 24 °C (75.2 °F) and the afternoon maximum 30 °C (86.0 °F). The temperature seldom exceeds 32 °C (89.6 °F) and then only for short periods. Almost all of the rain falls during the rainy season, which is usually from April to December, but varies in length from seven to nine months.
In general, rainfall is much heavier on the Caribbean than on the Pacific side of the continental divide.
Economy: Panama is projected to be the fastest growing economy in Central America. The IMF is predicting GDP growth of 6.4% while the World Bank is predicting GDP growth of 7%. The current unemployment rate is 4.1%. According to Forbes Magazine, economic growth will be bolstered by the Panama Canal expansion project. This features the construction of a third set of locks, which will allow the canal to handle post-Panamax ships with a capacity of up to 15,000 containers, instead of the current maximum of 5,000.
The transportation and logistics services sectors, along with infrastructure development projects, have boosted economic growth.
Panama’s economic freedom score is 64.1 and the country is ranked 14th out of 29 countries in the South and Central America/Caribbean region, and its overall score is above the world average.
The country’s top individual and corporate income tax rates are 25 percent. Other taxes include a valueadded tax of 7% and a capital gains tax.
Panama’s average tariff rate is 7.6 percent, and the country is relatively open to international trade.
The government welcomes foreign investment. The financial sector, vibrant and well-regulated as a regional financial hub, provides a wide range of financing options. Capital markets are relatively sophisticated and continue to expand.
Free trade agreements: Panama has free trade agreements with the United States, Canada, Chile, Mexico, Peru, El Salvador, Singapore, and a partial one with Colombia.
There is a Central American Association Agreement with the European Union.
Competitiveness rate: Panama‘s competitiveness rate was 4.44% in 2014 and the country ranks number 48 in the Global Competitiveness Index list. Standard & Poors credit rating for Panama stands at BBB.
Moodys rating for Panama sovereign debt is Baa2. Fitchs credit rating for Panama is BBB. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge credit, thus having a big impact on the country’s borrowing costs.
Population: Panama had a population of 3,984,995 in March 2015. The capital and largest city is Panama City, whose metro area is home to nearly half of its people.
The CIA World Factbook gives the following statistics for the population: “70% mestizo (mixed Amerindian and white), 14% Black/mulatto, 10% white, and 6% Amerindian”.
The Amerindian population includes seven indigenous peoples: Ngäbe, Kuna (Guna), Emberá, Buglé, Wounaan, Naso Tjerdi (Teribe), and Bri Bri. Around 94.5% of the population is literate.
Language: The culture, customs, and language of the Panamanians are predominantly Spanish and Caribbean. The official and dominant language is Spanish. About 93% of the population speaks Spanish as their first language. However English is the language of commerce.
Government: Panama is a democratic republic. The Constitution treats foreigners and nationals equally. The President is the head of state and government and is elected by direct votes. The Executive, Legislative and Judicial powers operate independently.
The country has ten provinces and five comarcas (reservations), populated by a variety of indigenous groups.
Currency: The Panamanian currency is officially the balboa, fixed at par with the United States dollar since independence in 1903. In practice Panama is dollarized: US dollars are legal tender and used for all paper currency, while Panama has its own coinage. Because of its ties to the US dollars, Panama has traditionally had low inflation and in 2014 registered only 2.6%.
Legal Framework: Panama has laws and tax incentives alongside strict investment protection legislation in order to promote investment and fair trade. The International Headquarters Law, The Tourism Law, The Special Economic Areas Law are just some to be mentioned.
The Public Registry gives transparency to company registration, recording of mortgages and liens and transfer of title to properties.