Panama Finance

Panama real estate investors like doing business in Panama because it’s an international banking center. The famous Panama Canal brings a tremendous amount of international business to the small isthmus every year, and with the new expansion, the Canal is driving much of Panama’s impressive economic growth. This makes for a very attractive setting for foreigners living and doing business in Panama.

Strong Economy

Panama is enjoying the strongest economic growth in Central America, and will lead all of Latin America through 2015, according to the International Monetary Fund (IMF). The Canal expansion plan and ambitious infrastructure investment bolster economic growth while attracting multinational corporations, real estate developers, retirees, and savvy travelers to this emerging nation, who’s diversified economy is driven by transport, banking, communication technology, and tourism. Investors worldwide are no longer just passing through Panama’s infamous Canal, but are choosing Panama as a financial haven.

Panama’s economic activity rose 6.24% in July, well above the expected 5%. As it embraces its 11th consecutive month of economic growth, international investors are lining up to buy Panama real estate. “Between the expansion of the Canal and the continuing double digit increases in tourism, it’s hard to see how Panama won’t become Latin America’s greatest success story,” says Benjamin Loomis, developer of a  new Panama real estate project The Resort at Isla Palenque. The forward-thinking Loomis was ahead of the curve in 2007 when he chose Panama for the site of his luxury eco-resort and vacation homes, which are currently being developed on a Panama island property.

The future looks promising for Loomis. The Wall Street Journal recently published that Panama’s hotel activity grew 9.5% so far this year. The revenue and job opportunities created by growth in tourism and real estate development are projected to be strong economic contributors in the coming years, and they’re not the only industries that have attracted multinational firms to invest in Panama: Proctor & Gamble, Dell and DHL all have headquarters or regional hubs in Panama.

Pro-Business Climate

Panama has also emerged as the Latin American country with the best business climate, according to the Latin Business Index, surging past Chile for the top spot this year. The Panama Guide reported that, according to the Ministry of Commerce and Industry, direct foreign investment grew 26% in the first part of this year, and companies have invested approximately 1.1 billion dollars to open new business in Panama in just the first six months of 2010. The Latin Business Chronicle recently deemed Panama the “Latin American Star.”

Ambler H. Moss, Jr., Professor of International Studies at the University of Miami and former U.S. ambassador to Panama believes that President Ricardo Martinelli has what it takes to sustain Panama’s impressive growth. “With a solid growth rate even in difficult times, all of the country’s political and economic signs are favorable,” he says. Martinelli’s five year plan consists of a comprehensive investment plan with a focus on infrastructure. Road expansions, highway systems, hospitals, airports, and a metro system are already underway, giving investors even more confidence in Panama’s upwardly-mobile trajectory. “Panama now has 20 years of unbroken electoral democracy [and] the Panama Canal, entirely in Panamanian hands since 2000, has been hugely successful,” says Moss. “This is impressive for a country of 3.4 million people.”


Panama’s capital city is a thriving metropolis, and it’s greatest economic component is banking. There are 80 worldwide banks, 40 of those offering personal banking services. Newcomers be aware that a lengthy process is involved in setting up a personal banking account and you must provide an abundance of information. In addition to worldwide and personal banking, there are commerce organizations and offshore trust companies in Panama.

While the official currency is the Balboa, the U.S. dollar is widely in use and has been tied to the Balboa at a rate of 1:1 since 1903. The U.S. dollar is used as the primary street currency, and is accepted everywhere, so no need to change money or worry about exchange rates for American’s in Panama. If you’re not American, remember that Panama lacks money exchanges so convert your currency to the United States dollar before arriving in Panama. Those who prefer to use credit cards as opposed to paper currency can utilize the widely accepted Visa and Mastercard as well as American Express at most establishments. Credit cards issued by Panama banks are only available to individuals with a residency visa or who are employed in Panama.


You can’t escape taxes, even in paradise. Every resident of Panama, temporary or permanent, pays a 5% ITBMS sales tax on all goods and services at the time of purchase. However, only Panamanian sources of income can be taxed: any foreign earned income is not taxable in Panama. Taxation on income applies to both citizens and temporary residents. Income made in Panama should be reported to your home country in order to stay in good standing with the government. For home buyers, there is a property tax exemption of up to 20 years on some new real estate properties in Panama. Ask a lawyer for details.


Panama is a buyer’s market. The best deals in Panama can be found in remote areas of the country where foreign investment is not highly concentrated. Reforestation visas allow investors to gain a residency visa while their newly planted trees and land grow to maturity over 15 years. Investors can also participate in tourism investment by opening a café or investing in a hotel chain. These investors reap benefits from Panama Law 8 due to the importance of tourism in Panama.

Panama acts as one of the world’s remaining tax havens and provides benefits to individuals who move their assets there. Many multinational companies are based in Panama and many are taking advantage of “Special Economic Zones” including Panama Pacifica, a development including residential areas, schools, leisure facilities and commercial areas.

Former Ritz Carlton CEO, Horst Schulze, chooses Panama.

Reforestation Investment Program

Panama’s Reforestation Program is a potentially beneficial investment program that offers a relatively inexpensive way to expedite permanent residency in Panama. A $40,000+ investment in reforestation automatically insures immediate residency, in addition to eligibility for citizenship within 5 years. An $80,000+ investment in reforestation offers the same incentives, only citizenship is available after only 1 year.
There is no guarantee of a return on your investment, and it would be 15-25 years before you saw any return at all. On the plus side, reforestation is a green-friendly movement and good for the planet. The success of the reforestation program (teak trees in particular) would significantly reduce CO2 emissions in Panama.

There are several books that recommend the best ways to save taxes or to maximize your investments in Panama, or ask a qualified Panamanian financial adviser.


Offshore Banking, Private Banking, Offshore Corporation, Second Passport and Asset Protection -- Panama Legal Law Firm:

Complete List of Panama Banks -- Panama Forum:

Offshore Banks in Panama

HSBC in Panama -- Wikipedia:

Panama Banks -- Focus Publications:

United Teak Plantation -- Reforestation Visa:

Panama Teak and Forestry Inc. -- Green Investments:

Pacific Teak -- Who said money does not grow on trees?:

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