Panama Investor Blog

Panama: A destination for Investments and Jobs

People fleeing Venezuela because of personal and/or legal uncertainty, commodity shortages and the political crisis are usually between 25 and 45 years years old -  and belong to the upper-lower middle class. However, some analysts warn that the phenomenon can be moved to lower social strata.

Antonio Bernal, an analyst and professor of constitutional law at the University of Panama, said that thousands of Venezuelans came, at first, to be an entrepreneur. He explained that according to current official statistics, residing approximately 37,000 Venezuelans. "The vast majority are people who have a job, some are wealthy, unlike migration we've had from other countries like Colombia or the Dominican," he says.

 

The immigration agency recorded that there are over 233,000 Venezuelans  who went to the Isthmus of Panama as visitors or to work in 2013, a marked increase to be compared with the 147,000 who did so in 2010.

Venezuelans seeking work in Panama usually enter on tourist visas and then change their situation.

 

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Why Pursue a Citizenship in Panama?

 

 Well there are many reasons. And this we know. But there are as many correct answers to that question as there are people who ask it. The answer is highly subjective, depending on the individual’s circumstances and what he or she is seeking. Panama has the whole package, but still we must consider many factors when explaining why. When considering factors that range from one’s family and financial situation and climate preference to language ability. Panama and Uruguay are the countries that now offer the most welcoming and fastest laws for foreign residents.

 

For many reasons the Republic of Panama is ideally suited for the offshore investor who wants strong financial privacy and no local taxes, corporate or personal. Panama and its territorial tax system impose taxes only on earnings from within the country. Its offshore professional community is one the best. South of Miami, Panama is the leading banking and financial center in Latin America with over 80 banks, many local branches of global banks. It has strong financial privacy laws and its asset protection laws go back to the 1920s governing creation of corporations, trusts and, since the 1990s, private family foundations.

 

The country is classified in the category of investment grade by credit rating companies like Standard and Poor's, Moody's and Fitch Ratings, and the GDP has enjoyed a sustained growth for more than twenty years in a row (1989). Making it a wise decision to come and invest in Panama. 

 There are many and varied programs for foreigners who wish to make it their home. All resident visa applications must be made through a Panamanian attorney. In recent decades, Panama deliberately has positioned itself as a first-class retirement haven, with some of the most appealing programs of special benefits for foreign residents and retirees anywhere in the world. Whether an individual may want to become a citizen of Panama depends on their financial and tax situation. Foreign persons residing in Panama are exempt from income taxes on all earnings unless the income is from within Panama. Citizens pay taxes of up to 30%. Official foreign resident status usually is sufficient since it grants virtually all rights, including property ownership, as well as an identification and travel document (but not an official passport).    

This country offers several kinds of visas for person of high net worth, persons seeking to invest, wealthy retirees, entrepreneurs of all kind like agricultural or business investors, and those who simply want to become a resident or citizen. Also, there’s the “ Pensionado Program” which offers tax exemptions and discounts of many services and goods along with immediate residence to qualified retirees. Nevertheless, it does not provide a citizenship. A visa is however available for foreign nationals who have invested in businesses in Panama, that leads to eventual citizenship. It is known as the “Immediate Permanent Resident Visa” 

 

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Some say it's the "safest investment" you can make...

Retirement has a Throne

Every year a country of this Planet is proclaimed the #1 place to enjoy the rest of your life after retirement, and its no big surprise that Panama earned this title amongst our civilization. The Annual Global Retirement Index (now on its 23^rd year) ranks the best international retirement destinations, and together with factors provided by InternationalLiving.com ranging from the price of groceries and average temperature, to utility costs and the friendliness of locals, the editors assess the results. After they do all the math, the result concludes that there is simply no other place where retirees can get more for their buck.  PANAMA is the place to be!

Panama is rapidly becoming a Capital for the world to invest into and this brings lots of incentive programs to make it a place worthy of spending the rest of live in. Having the American dollar as a currency and English as a widely understood language, it’s a magnet for retirees moving from the US and the world. This Central American nation has several significant reasons for obtaining this title, such as its pensioner residence program that offers discounts on real estate loans, medical expenses, pensioners entertainment expenses and much more. But most significantly the immigration process has been simplified for foreigners.

Panama has introduced new visas in the past year, that have made it easier to gain residence; and having a population of around 4,000,000 with a growth of 75,000-80,000 a year, has been a factor that encouraged major advances in infrastructure and boosted the economy in many ways. But besides many factors that make this country a “Happening” place, the low cost of living, the heavenly climate found across the country and the incredible scenery all around are key factors of this judgment.  

Some quotes from an Article on Forbes regarding this announcement are:

 

“If you’re planning to retire abroad—because you want to live better for less, diversify your investments or enjoy a greater degree of adventure—you should consider Panama…”

 

“Panama ranked No. 1 this year because it offers a “great combination of variety and value,” “No matter what it is you’re hoping to find, Panama is a good place to look for it.”

 

The Top 10 places on the list were:

1- Panama

2- Ecuador

3- Malaysia

4- Costa Rica

5- Spain

6- Colombia

7- Mexico

8- Malta

9- Uruguay

10- Thailand

Contact us if you are considering Panama for your next social or economic adventure! – we will gladly help you out, and point you to the right direction based on what you desire.

Panama's unemployment rate

Panama has come a long way since my arrival to its shores in 1997. As I recall, employment was officially in the teens and things were looking worse with the upcoming American pullout with the canal treaty. Wow, have things changed. Official unemployment is around 6.7% and the reality is that there is a great challenge in finding qualified personnel. I don't see this being alleviated any time soon as more business is on the way, the canal construction is well underway and more hotels will be opening requiring hoards of service people. The real challenge for Panama is skilled labor and the only way I see this will change is to open up immigration to skilled labor for other Latin American countries. This will help to bring the level of service up dramatically as these new imports will train Panamanain's. If nothing is done the labor problem will become acute and businesses will look elsewhere for a larger skilled labor pool.

Machine translated from La Prensa;

Roberto González Jiménez
[email protected]

To analyze unemployment in Panama is to pass on a road full of paradoxes.  The economy has begun to grow at rates as in Asia, but the official unemployment rate is just barely reduced. Meanwhile, companies talk of the lack of skilled labor and cannot even find drivers to work in the new urban buses.

 Although the country exceeded the international economic crisis without major problems, growing by 3.2% in 2009 and in 2010 regained the momentum after the crisis with a growth rate around 7%, unemployment declined only slightly in the last year .

According to the latest data from the Comptroller General of the Republic, the unemployment rate was 6.5% in August 2010, a level similar to a year earlier (6.6%).

The Household Survey also shows that the participation of the population in the labor market recorded a decline compared to August 2009, from the rate of 64.1% to 63.5%.

According to statistics from the Ministry of Labor and Workforce Development (Mitradel), in 2010 there were 334,766 labor contracts, only 1269 more than last year.

Apart from having a larger population of slightly more than 15 years (46,723 persons), how can we understand this apparent contradiction?

 "This explains how we are growing," says Rolando Gordon, professor of the Faculty of Economics, University of Panama, who argues that the fastest growing segment in the country is transportation, storage and communications, "activities to compete using technology, but not many jobs. "

Sectors such as manufacturing or agriculture, which create jobs, have grown only marginally.  "We should encourage the growth of other sectors that create jobs," he advised.

 Yet workers missing

While unemployment figures do not reflect a sharp decline, there are sectors of the economy that can not fill their job demands.

 In the hotel, for example, is quite difficult to find qualified bilingual people ", argues Sara Pardo, president of the Panamanian Association of Hotels. The gap between the worker and the job is in education and training.  "In the end it all comes back to the same," he laments.

However, not only are there unfilled needs for highly qualified personnel.

Recently, the Minister of Presidency, Demetrio Papadimitriu, acknowledged they were having trouble recruiting all the staff needed to work on the Metro Bus, which offers a fixed wage and social security registration, two conditions that should be attractive an economy where informality rate is 42%, according to 2009 data.

 Is there no work or no desire to work and follow in the formal economy?

 Gordon argues that not everyone who is in the informal sector wants to be like that.  "Many can not find work.  Many would switch to the formal sector. "

 It also stresses that "perhaps the rate of 6.5% unemployment is disguised as busy as we are expecting of those that sells a rose in the Central."

 The context

 Although unemployment fell  between 2009 and 2010, expands the perspective for the last decade, it is observed a drastic drop.

 According to data from the Economic Commission for Latin America and Caribbean (ECLAC), urban unemployment rose from 15.3% in Panama in 2000 to 7.9% in 2009.

 In the region as a whole, there was also a downward trend, but not as pronounced.

 The urban unemployment rate rose from 10.3% in 2000 to 8.1% in 2009.  And by 2010 estimated to be completed in 7.5%, a reflection of economic recovery.

 However, the ECLAC warns that "indicators of recovery does not ensure a decent job growth" and that the region, like the rest of the world, faces the challenge of transforming the way they produce to develop sustainable economies in the long term .

Skilled manpower a big challenge for Panama

With over $13 billion in government infrastructure programs in the works, it is becoming more obvious to everyone that Panama does not have the necessary work force to accomplish its goals. And of course if government is having problems, so is the private sector. As this article points out, there is a real shortage of skilled workers and it will become more acute each year as these projects gain momentum. Fortunately the president sees the problem and says we must open up the country to foreign workers. The unions won't like it and neither will many entrenched Panamanians, but it is the only solution and one that will benefit the country in many more ways than just filling a job position. Panamanians need to work with skilled workers from other countries in order to learn new skills. They also need to see how performance is rewarded with higher salaries and benefits. This is the only way I see Panama able to build the bright future that lies ahead.

MINERVA BETHANCOURTH
[email protected]

The pace has been injected into state infrastructure investments could be damaged by the lack of skilled labor to build, management and manage the ten projects that are underway or about to start simultaneously.

According to the ambitious government estimates, contained in a report that contains 34 projects, some on wheels and other procurement-undated 34 000 direct jobs generated in the coming years.

The project will require more workers is the construction of the first Metro line, which should employ some 3 000 people from 2011 to 2013.

The scenario is complex, considering that 2011 is the year "spike" in regard to employment generation product of the construction of the third set of locks of the Panama Canal. For this work, it required 6 000 748 people.

According to analysts and experts in the labor market, the number of people trained not grow on par with the works, and it is likely that by 2013 demand will exceed supply.

The director of consultancy Insight Economy, Jovany Morales, estimated that from next year there will be a "bottleneck" and that 2014 will be a critical year.

Ricardo Martinelli administration is no stranger to this reality and, quietly, begin to say in forums and meetings with entrepreneurs that if the country lacks the necessary personnel should import people from abroad.

The amount of labor may increase as new projects up for tender, as the Financial Tower or the amphitheater in the area of Amador.

However, it would be wrong train workers only in the area of construction, because this business is cyclical and volatile.

Last October, Manpower Panama presented the results of the Talent Shortage Survey 2010, which found difficulty in finding workers.

38% of employees in Panama has difficulty filling key positions within their organizations.

In Panama, the most difficult to fill jobs are: technicians, sales managers, secretaries, personal assistants, administrative assistants and administrative support personnel, and accounting and finance staff.

Luis Fernando González, regional manager of Manpower and the Dominican Republic, said she is seeing a recovery in employment in many parts of the world, but where space is available, employers have difficulty filling.

The problem is not the number of potential candidates, but the lack of talent because not enough people with the skills required in the right place.

The matter is compounded, since employers are looking for a specific skill set and are less willing to preventive contracts. In the case of Panama that could see it coming, to set a target investment of $ 13 billion 600 million in five years.

Gringo Bashing in Costa Rica?

This article is written by an American businessman who lives and works in Costa Rica and appears on Insidecostarica.com. Over the years the Costa Rican government and the tico's have begun to take Americans and the economic benefits they bring for granted. Where tico's once were welcoming and desirous of Americans to come visit and live there, it seems there is a growing anti-American sentiment at worst and gringo gouging at the cash register at best. As this gentleman points out, if Americans quit coming to Costa Rica, their economy would be devastated. I think this same sentiments could apply to Panama although I don't believe North Americans make up as much of the overall economy in Panama as they do in Costa Rica.

By John Holtz*

Just how dependent are we, in Costa Rica, on the economic well being of the United States and its population? I'm not convinced that Costa Rica really knows the answer to that question and perhaps does not care too much.

Maybe economic ignorance is a good thing since the US economy and most Americans are on the emotional cusp of deep depression brought on by way too many conflicting, contradicting expert opinions and figures drowning out the much needed feelings of optimism for the future.

We are told that at least 60% of all tourists who come to Costa Rica are from the US and that is a lot.

In a land where facts tend to conflict, I have heard 30,000 and up people have come from the US and live here but the records show as of March 31, 2010 only about 13,795 or so are in CR legally. But, they do spend a lot of money and they do invest heavily in Costa Rica. **

In total, the estimated amount of legal expats in Costa Rica is 346,956 from all over the world. That´s about 8% of the population. **

Thanks to the Spanish language newspaper, La Nación, we learned that CR´s growth for 2009 was not 2.2% as advertised but rather -1.8% and that is a shocker. Costa Rica´s deficit of trade jumped an astounding 86% for the 1st seven months of this year and make no mistake about it, the United States is CR´s number one customer.

The unrealistic and perplexing dollar – colon exchange rate is making CR products, the cost of living and services priced out of most international markets and there is no relief in sight. None at all! (Just try and get a straight answer as to why!)
Of investments, Americans are at the top of that list and they heard very few complaints from the nationals who held up the “Costa Rica For Sale” sign high above their heads during the boom years.

Costa Rica has survived for many, many years from the milk of the United States and it has been fairly easy with nifty slogans like “Pura Vida”, “Switzerland of Central America,” “Military Free”, “First Democracy”, “No Artificial Ingredients” etc. to attract Americans.

But, during the last several years the tits of mother America have gone dry and it looks like they will stay at just a dribble for more years to come. Perhaps many if you believe some economists.

Even Costa Ricans who work in the US and remit money home have had a dramatic drop from 2.3% of the CR GDP in 2007 to only 0.3% in 2009.

It is impressive the estimation of CANATUR and ICT who are paid well to pump only sunshine of these millions of tourists who are crowding the airports every day. However, According to a report on Canal 7, the average stay per tourist has dropped from 14 days in 2007 to just 10 or 11 days in 2010. None of those experts interviewed took a shot at how much money was typically being spent each day and even during the Costa Rica two week school break, hotels were only 46% full and restaurants mostly empty.

Having been touted as inexpensive, Costa Rica is being marketed as a good place to retire and live on the cheaper side of life. At least that´s what the real estate and tour agencies now promote. Sorry to bring in a little reality, however, it is expensive living in Costa Rica unless you are willing to make serious changes in life style plus you might wish to buy a gun.

In 2006 until 2008, while pieces of Costa Rica were being sold off, prices skyrocketed for everything from property to food stuffs because there were buyers on every airplane that landed and they have not come back to earth since then.

But now with American inbound cash flow slow to none, I am finding that Costa Ricans are not as warm in their welcome as when we had lots of money to spend.

Recently and too often, I have heard and read the time honored clichés more than I want: “Yanqui Imperialists”, to “Gringos Go Home” and even “Kill the Gringos” in Spanish language blogs and newspapers. Especially in response to the US sending ships and patrols to root out the drug traffickers at the invitation of the Costa Rica government. (Don´t blame Gringos, blame yourself for voting not once but twice and making the invitation in the first place.)

So Ticos, my advice as a businessman, is to drop this Gringo Bashing stuff! It´s not getting you anywhere.

Stop invading our hotel rooms, our homes, and our cars. Stop over charging us for everything and anything plus don´t even think about adding more taxes than we already pay in Costa Rica. And while you are at it, give us some efficient security, okay?

And if Costa Rica would rather ride the big horse to Beijing, may Zorro ride with you because the country will need a swift sword of justice on her side.

This is a new day and possibly the start of a new “norm” where Costa Rica will need to adjust and learn to compete on the open market for both tourist money and foreign investments in general.

Most of all, if Costa Rica wants foreign money she needs to embrace expats and should very much include them into the policy making process instead of keeping them outside the decision making loop. Only citizens should vote. That´s a given. But expats need to be heard because without them, there ain´t no economy, and “That´s a fact Jack” (Movie “Stripes” Bill Murray).

Costa Rica, think about the negative economic and social impact if expats did indeed pack their bags and took their money out of the country.


*John Holtz is the Executive Director of the Center for the Studies of Modern Management www.modernmanagement.org and can be reached at: [email protected].

**Source: Dirección General de Migración y Extranjería

Foreigners can now stay in Panama 180 days on tourist visa

Over the last few years there has been a lot of controversy on the length of stay allowed under the tourist visa. The last administration even shortened it to a maximum of only 30 days which created major problems with real estate sales of vacation properties. Although never fully explained, the government finally relented under pressure and allowed the 90 day stay which had been the normal time allowed under previous administrations. Now the Martinelli administration has changed the visa to allow for 180 days which in my opinion is a very wise move. Why would you want to restrict peoples ability to spend money in the country by forcing them to leave for 3 days and then return for another 90 day stay. Lets just hope the police and immigration officials are well informed of this new provision.

New Panama National ID Card

Panama has always had a national ID card they call a cedula and according to a recent article in Tradingmarkets.com Panama will be getting new ones made by 3M that are apparently more hi-tech and difficult to forge. They will even have one for us foreigners living in the country. It is amazing how often Panama authorities check your ID to be sure you are in the country legally and how in the U.S. many are opposed to the checking of ID as an infringement of our rights. I hear Americans complain about being stopped and checked for their ID here in Panama and I initially found it to be distasteful, but with the problems brought about by illegal immigration both here and in the U.S. I am more inclined to believe it is a necessary evil in this crazy world we live in.

Jul 29, 2010 (M2 EQUITYBITES via COMTEX) --

Diversified technology company 3M (NYSE: MMM | PowerRating) announced on Wednesday that its 3M security Systems Division has been awarded a contract to produce a new Panama national ID card.

3M said that it has created a new centralised personalisation facility in Panama, including all necessary equipment, and will provide the materials to produce half a million cards per year.

In addition to the national ID card, the Electoral Tribunal of Panama also contracted 3M Security Systems to produce minor ID cards and foreigner ID cards.

The one-year contract with 3M also gives the Electoral Tribunal the option to extend it through 2015.

Under the contract, financial details of which were not disclosed, 3M Security Systems will print and deliver sheets of Teslin-based card material pre-printed with a number of security printing features, the most notable of which is 3M Colour Floating Image Security Laminate.

3M's new centralised personalisation facility in Panama will provide 3M personalisation software, printers and high-speed die-cutting and laminator equipment.

In addition, 3M will also provide operational training support and maintenance.

3M Security Systems has been a supplier of personalisation materials and equipment systems for Panama's national ID card production since 2003.

How about an "educated and experienced" immigration visa?

An article in La Prensa today highlights the difference between executive salaries and  those of government officials in Panama. One thing that I consider a tribute to this administration is that many of the ministers and vice ministers are businessmen who are making a fraction of what they make in the private sector operating their businesses. They work in government because they want to make a difference during their term and then go back to their private sector jobs a soon as their term is up. This is the way politics should be IMO. In previous administrations you had only a few ministers with qualifications other than having helped get the president elected. They wanted the power and popularity, but did little of substance.

But this administrations ministers see significant challenges at lower levels than ministers and vice ministers. It is hard to attract talent when  the private sector offers two to three time the salary and benefits. I do understand the challenges of trying to accomplish great things when talent is so limited in a small country like Panama.

The solution may just come down to a form of educated and experienced immigration visa. If there were more talent available the cost of talent would not be as high. There are millions of talented unemployed around the world who would probably welcome a challenge working for a government in a foreign land.

minerva bethancourth
[email protected] [email protected]

  The Government needs to attract talent from the private sector to develop many of the projects he plans to run.

  However, one of the main obstacles to attract specialists and professionals who thrive in the private sector is the low wages paid in the governmental sphere.

 The minister of Economy and Finance Alberto Vallarino is aware of the situation.  In a talk recently he expressed some frustration with the need to attract talent from the private sector to develop the work contained in the investment program, valued at $ 13 billion 600 million and the wage gap that exists.

  Of the 14 ministers that the current government has more than 50% comes from the private sector, therefore, are used to a rhythm and different working method is practiced in the machinery of government.

  There are even a lot of brain drain from the Government, just over wages, a source said.

  A review of the return of some ministries offers a view on the wages earned in the government, and helps to establish comparisons with the fees that are charged on private enterprise.

  Within the high charges in the governmental sphere, we see the post of minister and deputy minister, who enjoyed a salary of 3 thousand dollars and 3 thousand 500 dollars, not including the fees of which are another component in the salary.

 Extrapolating these jobs to a private company, where higher charges are the manager and his senior executives, salaries ranging from 5 thousand dollars and 18 thousand U.S. dollars, according to a market survey conducted by the firm KPMG. The wage gap is significant, making it difficult to recruit private practitioners in government.

  However, jobs related to the area of technology, engineering and special projects within the government reflect higher wages to the median wage in the central government, which is located at $ 738, according to the report template to February of this year.

According to Linnet Jessica Benitez, manager of Advisory Services of KPMG People, no doubt that wages in the private structure influence in attracting talent.

  Another aspect to consider, according to Benitez, is that private enterprise tends to provide other cash benefits for executives, such as annual increases in productivity or performance bonds (which range between 16% and 25% annual compensation).  They also offer profit sharing, fringe benefits, life and hospitalization insurance, provision of car, pay union membership or professional associations and social clubs.

 "When you consider all of the executive compensation package (ie salary plus benefits in cash and in kind), it becomes even more evident the difference between a sector and the other," he reflected.

  Regional manager for Central America and Dominican Republic Manpower, Luis Fernando González, not only affects wages to attract staff of the private sector, but other factors such as work environment, teamwork, training and development.

  It is therefore necessary to reinforce the work done in different sections of the Government with professionals from business, to gain experience and improve business areas that are experiencing a climate of motivation, organization teamwork , adherence to standards and policies.  Both private business and government management stem from different angles.

While the company seeks to maximize profit, the State must strive for the best development and welfare of citizens in various aspects, such as economic, educational and health fundamentally sentenced Tom Rodriguez, economic analyst with the National Competitiveness Centre.

 The general government budget for 2009 entered in the line of personal services, including worker-employer share of Social Security Fund, about 2 thousand 168 million dollars and generated a payroll of 516 173 thousand employees in the public sector.

Panamanian skill levels not expected to improve

The message came through to me loud and clear last year when I interviewed the minister of commerce. He said, "we have many issues we will tackle, but the Panama labor code is not one of them!" Like most businessmen in Panama, both he and I realize that the labor code in Panama is what really holds it back from making true advances in the skills of its work force, which is truly the future of the country. An article in La Prensa on Saturday was about Panama business leaders bringing up the matter to the minister of labor and getting a similar response as I did. You can't really blame the administration for not wanting to touch this hot potato. Labor unions would revolt and there would be violent demonstrations against any changes that would allow Panama to become more competitive in the world market place. After all, to allow foreigners to fill the many  lacking skills  may force Panamanians to improve their own skill level, and we can't have that. Best to keep things as they are and not rock the boat!

From La Presna;

MINERVA BETHANCOUTH
  [email protected]

  Authorities from the Ministry of Labor and the Immigration Service have held meetings with business demand to increase the standing of foreign workforce.

  The Union of Industrialists of Panama days ago raised the need to ease immigration rules because they need manpower in certain disciplines.

  However, the director of the Ministry of Labor Employment, Samuel Vargas, warned that changing the rules on hiring foreign staff would change the Labor Code, a fact which is not covered now.

  He said that the issues raised in meetings with the private sector are related solely to expediting the time to get permits to work in the country.

  The director of the National Immigration Service, Maria Cristina Gonzalez, said to be respected Panamanian labor and enforce the rules that stipulate the hiring of foreign staff.