Panama, a Nation of Hubs & Clusters
Panama has consistently been ranked one of the fastest growing economies in LatAm in recent years and unlike some of its counterparts, the country has been remarkably resilient to global headwinds. After being hammered by the COVID pandemic, the country is jumping back to growth plus for 2021-22.
The new Panamanian government wants to leverage the country’s existing strong logistics hub and create five new hubs in aviation, business and services, value-added manufacturing, digital and talent.
Panama is already the Hub of the Americas because the interconnectivity created by COPA as well as an array of other airlines including United, Lufthansa, Iberia, Air Europa and 20 others make possible for 9,242,158 million passengers to transit thru Panama to connect to multiple destinations. Now the target is cargo.
Panama has great potential in shared services because dollarization and political stability allow investors to make long-term plans while our multinational headquarters law provides strong incentives for firms setting up in Panama. People need to realize that when you set up in Panama you are not serving a local market of 4 million people but have great access to all of Latin America and its 700 million consumers”.
Another target area is value-added manufacturing. There is a big opportunity for medicines and technology. We have 23 trade agreements in place with the biggest economies in the world.
Perhaps Panama’s most ambitious aim is to create a digital hub. The country already has the necessary building blocks. Along the strip of land that borders the Canal, pass 7 of the most important fiber optic cables in the continent. We’ve given that data further legal security with a data privacy law that is ranked among the top ten in the world. That’s why Google is now connecting to our digital hub.
These are ambitious but realistic aims, in emerging sectors where Panama has the potential to make an impact. None of them are mass-producing industries that need of scale or huge, low-cost workforces. However, they are hypercompetitive businesses that need high-quality human talent – so Panama will need to train people.
Panama creates lots of exciting new human talent each year. For the size of our economy, we add enough new workers every year to keep GDP expanding at an annual rate of 5%. But we realize that it’s not just about creating a certain quantity of graduates. We need to do a better job of measuring what type of talent is being created and ensuring that matches well with what is needed.
The government is under no illusions about the scale of the education task, but he notes that the administration has some achievable targets that should make a quick impact. “Changing the whole education system will take 20 years but you needed to start somewhere, so we are focusing on the low-hanging fruit. We are improving the country’s technical education so that creates workers for three of our hubs in particular: business services, value added and digital. We are creating programmer that will act as finishing school graduates the technical skills to fill some of these rules”.
But the most important ingredient to a cluster is the companies themselves. We have seen a massive growth in shared services, with companies completing sophisticated tasks, such as accounts payable, accounts receivable, financial software and international admin., with Panamanian employees. We’ve seen a growth in these companies and that’s because they can rely on a very good supply of bilingual Panamanian workers. Japanese companies, such as NTT, have 350 local workers in their shared services center, which operates 24/7, 365 days a year. Dell has 2,000 employees and Quest, which just hired 200 people here.
If you want to set up your Business in Panama, we have licensed real estate agents, investment advisors and we work closely with Pardini & Asociados, a law firm with 40 years of experience for all legal matters to assist you on all your business needs.
The BusinessPanama Group provides a convenient One Stop Shop offering the services of
- Setting up the company or branch
- Locating office and living premises in Panama City for the company and its executives
- Setting up all operations, contracts, permits, etc.
- Accessing special tax incentives
- Applying for visas, work and residence permits
- Relocation services
For more information, please contact us.