New data shows that foreign direct investment (FDI) surged a whopping 32.2% in Panama during the first three months of 2015, extending the country's prolonged growth spurt of recent years.
According to research by Santander, Panama is the top recipient of FDI in Central America. After averaging €1.5bn revenues annually between 2004 and 2009, FDI inflows saw dynamic growth from 2010 reaching more than €4.4bn in 2014. Advantageous regulations for foreign investors and incentives introduced in 2011 have been attributed with increasing foreign investor sentiment in the tiny nation.
There are many benefits for foreign investors in Panama including its strong financial and investment freedoms. The country has several selling points:
- It is politically stable and enjoys a degree of 'protection' afforded by the US
- Panama has achieved economic stability with inflation maintained at 2% and its currency pegged to the dollar – currently enjoying significant strength
- It has a beneficial tax environment with reduced taxes and a 0% VAT in the real estate sector
- 80% LTV mortgages with up to 30-year terms widely available
- There is currently large-scale development of the real estate sector that is well underway with several construction projects in the pipeline
- Significant tax exemptions are available for the development of tourism projects
Foreign money is mainly being poured into hotels, banks, property, electricity generation, commerce and manufacturing, according to data from Panama's statistics bureau INEC. More than 65% of FDI in Panama comes from reinvested profits, while 22% comes from purchases of Panamanian companies' shares by investors based overseas.
Foreign companies from outside the Colon Free Trade Zone contributed €110m to FDI growth in the first three months of this year, representing a 17% increase over the same period in 2014.
The country's strategic location together with the almost completed expansion of the Panama Canal contributes to its strong growth outlook, proving to be a powerful magnet for private and institutional investors overseas.
Rogelio Alvarado of the Economy and Finance Ministry commented that: "Panama offers favourable conditions for the reinvestment of foreign investors' profits and the volume of additional investments is a solid vote of confidence on the business climate and Panamanian institutions".
Panama is a fantastic destination not only because of its welcoming investment climate but also due to its spectacular and diverse landscape. It is possible to enjoy a taste of cosmopolitan living in Panama City with its impressive skyline that easily rivals Dubai and within hours escape to an idyllic white sandy beach in the heart of the tropics where you can take a dip in the Caribbean Sea.
For many years Panama has remained the top retirement destination for Americans who have long since enjoyed the many benefits that come from having the same status as a national. Now it seems that not only is the secret out but word is rapidly spreading among international investors.