Investing In Panama: Tourism

Tourism in the Republic of Panama kept its growth during 2005 and 2006. Between January and November 2006, the country was visited by 992,000 tourists and excursionists, 15% more than in 2005, according to the report of the General Comptroller of the Republic. Expenditures made by the tourists during this period reached US$841.4 million, 20.1% more than in 2005.

In 1994, Panama passed Law No. 8 – still the most modern and comprehensive law for the promotion of tourism investment in Latin America and the Caribbean. In so-called Special Tourism Zones, Law 8 offers incentives such as 100% exemption from income tax, real estate tax, import duties for construction materials and equipment, and other taxes.

Panama has declared different parts of the country as Special Tourism Zones which are benefited with multiple tax exemptions and tax holidays. To view these Special Zones, download the PDF file.

Tax Incentives for Projects in Special Tourism Zones

• 100% Income tax exemption for a period of 15 years
• 100% Property taxes exemption including land
• 100% Exemption from Import taxes including the Sales tax (5%) for 20 years
• 100% Income Tax Exemption originated by the interests charged by creditors in the tourism activity investment for 20 years
• 100% Exemption from liens due to the use of docks or airports built by the company

On December 28th, 2006 the government approved Law 58 which incorporates new regulations and incentives outside the Special Tourism Zones. These incentives will be in force until 31 December 2008. However, in the metropolitan area the minimum investment has increased to US$3 million and US$50,000 for the rest of the country.

To date, 35 new hotels and resorts have been built - by some of the world’s largest hotel chains including Marriott, Holiday Inn, Sheraton, Inter-Continental, Melia, Best Western, Courtyard, Crowne Plaza, Radisson and Decameron. Other projects such as ecological and historical tours are also being developed Despite a rapid increase in tourism investments (ELIMINAR - above the world average in 2001), this sector is still undeveloped and represents great potential for investors.

Hotels

Tourism in Panama City has a very interesting tourism offer. Between January and November in 2006, the percentage of the global occupation had an increase of 53.9%, registering an increase of 10.2% over 2005. The 65.11% is for the first rate hotels and 35.3% for those of of the second category.

The hotel supply has significantly increased both in the capital as in the main cities in the countryside. Different hotel chains, such as Miramar Intercontinental, Marriott, Courtyard Marriott, Radisson Decápolis, Decameron, Country Inn, Gamboa Rain Forest Resort, The Bristol, Four Points Sheraton, Sheraton Hotel & Convention Center, Crowne Plaza Panama, Veneto Hotel & Casino, Inter-Continental Playa Bonita and Avalon Grand Panama were built in Panama City and Hotel Meliá Panama Canal in the province of Colon. To these hotels, we add important investments in improvements made by local hotels like El Panamá Convention Center & Casino, El Ejecutivo, Hotel Riande Continental, Riande Aeropuerto Hotel & Resort, Hotel Riande Granada, Coronado Country Club Resort, Canopy Tower, Camping Resort, Paitilla Inn and Soloy. There were improvements in the Washington Hotel in Colon.

In the month of June of 2007, the new Radisson Colón 2000 hotel will open its doors, with an investment of US$12 million. This building of 6 floors and 102 rooms is near the cruise port Colón 2000 and is only 150 meters of the main entrance from the Colon Free Zone.

Also, the hotel supply offering in the main cities of the provinces increased with the improvement and the opening of new hotels in David, like the Gran Hotel Nacional and Las Olas Beach Resort (Alanje). In Boquete, Panamonte Inn & Spa, La Huaca Hotel and in Cerro Punta, Los Quetzales Lodge & Spa, and Hotel La Casa del Risco. Also Royal Decameron (Farallón), Barceló Playa Blanca in the province of Coclé, Barceló Guayacanes, Hotel Versalles in Chitre (Herrera) and Villa Camilla Hotel (Pedasí, Los Santos). The construction of several small ecological lodges and beach resorts in the Caribbean region, specially in the sector of Isla Grande, Bananas Resort and Sister Moon, and in Bocas del Toro, Punta Caracol Aqua Lodge, Swans Cay, Casa Acuario and the new Red Frog Beach Resort & Village Community. In addition, new maritime transportation companies have been developed, allowing the connection between the local ports of Almirante in Bocas del Toro and Chiriqui Grande.

In 2010, Panama hopes to double the room offer of the hotel sector of 28,000, enough to receive 1,500,000 visitors.

Tourism Potential

The country has 1,398 tourism attractions currently registered, from which 1,005 representing 71.9% are natural sites and 393 representing 28.1% are cultural and historic expressions.

Also, Panama presents many attractions for the investors of other countries:

• A dolarizad economy
• Political stability
• Legal security
• Tax incentives
• Airport hub
• A United States lifestyle
• Absence of hurricanes, tsunamis, etc.
• A bilingual population (in its majority)
• International attractions like the Panama Canal, with more than ninety years, exotic flora and fauna.
• Prestigious law, auditing and consulting firms.
• More than 100 multinational companies

Panama's Tourism Development Master plan has delimited the National Tourism Space, based on the location and importance of the attractions, achieving the decentralization in nine Tourism Zones, 20 Tourism Centers and other units convenient or apt for tourism development, For this purpose, equipping these nine zones is scheduled to obtain the development of different regions in the countryside.

The purpose of the Master Tourism Plan 2007-2020 is to unify strategies, interests and goals to obtain a complete effort towards one same direction, jointly with the government and the private sectors.

In the following years, the Panamanian Tourism Institute (“Instituto Panameño de Turismo”) will invest 39.5 million in the tourism campaign. In 2007 will destinate US$10 million to promote tourism through a paid announcement and advertising campaign, in Europe and in Spain. One section of this budget will be destined to the registration system and tourism quality by means of the Compite Panamá program (US$133,000); tourism signs in national roads (US$145,000); programs for rural bed & breakfast (US$150,000); installations of tourist information kiosks (US$275,000), construction of the craft center of Panama Viejo (US$650,000); construction of the tourist center of San Carlos (US$493,500).

For investment opportunities in the tourism sector, these are some highlight in various areas:

• The lands of the old airport of Río Hato for the construction of projects, for its attraction and development opportunity in the area of the Pacific.
• Isla Colon in the province of Bocas del Toro.
• The residential tourism in the province of Chiriqui, especially Boquete, Cerro Punta, Volcan and the beaches of Alanje.
• There are being developed 10 mega projects of residential tourism in other areas of the interior of the country. Including gated communities, hotels, golf courses, marinas and new commercial center

Cruise Ships

One of the tourism sectors that has experienced a recent growth is cruise ship activity. Panama has developed the proper infrastructure to accommodate this industry, including two ports in the Atlantic side of the Canal, Colon 2000 and one in the Pacific entrance, Amador Cruise Ship Port.

Two (2) brand new cruise passenger terminals have been built on the Atlantic and Pacific entrances of the Panama Canal representing in investment of US$100MM and opening more opportunities for cruises and mega-yachts docking in Panama for services and pleasure.

Annually some 300 thousand persons arrive in cruise ships to Panamanian ports. During high season there is a growth between 2 and 3%. It is estimated that in the cruise season 2007-2008, there will arrive at least 287 thousand 650 tourists in 192 cruise ships, leaving at least 40 million dollars to the Panamanian economy.

Shopping for tourists is just getting better with the opening of three (3) new mega shopping malls at a cost of US$100MM each one, Albrook Mall, Multicentro Mall and Multiplaza Pacific Mall. There are also other shopping malls like Los Pueblos, Los Andes and El Dorado.

In 2007, Multiplaza Pacific will inaugurate the second phase of this mall where franchises Duch as Louis Vuitton, Bulgari, Chanel, Ermenegildo Zegna and Ralph Lauren have already confirmed their participation. This addition is a convenient tourist offer for foreigners that look for commodity, entertainment, night life and business.

Additionally, Panama signed an agreement with Florida Caribbean Cruise Association (FCCA) to promote our country as one of the best destinations in the region and as a Cruise Ship hub.

All these efforts have resulted in the recognition of Panama by Porthole Cruise Magazine as "Best Adventure Destination”.

If you want to set up a tourism project, in the BusinessPanama Group, we have licensed real estate agents, excellent lawyers, insurance specialists, financing brokers, investment advisors and other professionals to assist you on all your business needs.

We can help you with:

• Buying properties in  Panama City , Beaches, Islands or Mountains
• Forming a company to own your property
• Legal services for all aspects of land acquisition and project development
• Title insurance
• All insurance required
• Procuring bank financing
• Others

If you are a developer or promoter, the BusinessPanama team of realtors, lawyers and experts will provide you a variety of services from the purchase of the property to all phases of development including structuring, subdivision, financing, contractual, design, environmental, construction, permitting, pre-sale and sale. We will be glad to provide you access to our “List of Recommended Professionals” formed by first class architects, environmental consultants, builders and others.

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