The Ministry of Commerce and Industry of Panama (MICI) recently reported that so far in 2023, the free zones in Panama have attracted initial foreign direct investment in the order of $92.4 million.
Bertech companies Panama, SA, Pinturas Termoplásticas, SA, Chiriqui Electronic Design Studio, SA, and Centralpack Corp will operate in the Panapark Free Zone in the corregimiento 24 de Diciembre, east of Panama City.
These companies represent a total cumulative initial investment of $13,889,075.74 and come from Brazil, Chile, Peru, Venezuela, and Switzerland, the MICI said in a recent statement.
Within the Panapark Free Zone, they will be involved in manufacturing, assembly, and processing activities for finished and semi-finished products. These activities translate into the incorporation of new technologies, the establishment of export-quality industries, expanding Panama’s export offerings, as well as the generation of more than 90 direct jobs, primarily for Panamanians.
“Production chains are becoming more frequent and more powerful with free zones in Panama. We see, for example, that with Centralpack Corp., there is a convergence of suppliers and customers in the same free zone. This allows for achieving an industrial symbiosis that makes producing from within a free zone more efficient. This circumstance reduces the fragility of supply chains based on imports,” said Ámbar Ruiz Chaperón, MICI’s general director of Free Zones in Panama.
According to the information, manufacturing, assembly, and processing lead investments in free zones
The Government of Panama reported on February 8 that it had endorsed the establishment of two new free zones to encourage increased employment, production, and exports.
New free zones in Panama announced
The Executive of President Laurentino Cortizo, through the Cabinet (Council of Ministers ), authorized the establishment of the Tech Valley Free Zone and Panama Digital Gateway Free Zones. These two new developments will eventually house a total of 740 companies, including Hyundai.
Through the Galbay Holding Corp., Tech Valley Free Zone plans to invest 100 million dollars. As a result of this capital investment, it is projected that 1,140 direct jobs and 3,570 indirect jobs will be generated.
Panama Digital Gateway, for its part, is considered to be “the largest data center company” by the Panamanian Government. With an initial investment of 11.5 million dollars, the facility will house 620 companies and promote the country’s strategy of becoming the “Digital Hub ” of the region.
This free zone in Panama will have a privileged position that will allow large content companies to be closer to their end users while “positioning itself as a strategic place for receiving new submarine cable projects. This will consequently improve the competitiveness and connectivity of our Panama.” according to official information.
In addition, the Government of Panama points out, “The laying of the Curie submarine cable will facilitate the attraction of content providers such as Netflix, Microsoft Azure, Cloudflare, FaceBook, Amazon, and Akamai, among other digital enterprises.”
In three years, “historical figures” have been achieved in the free zones in Panama, which is mainly because the country promotes ” clustering ” and linkages between suppliers and customers in the same place, he added.
He stressed that “in 2018, 78 million dollars were exported through these free zones, while by 2022, this figure doubled to more than 143 million in billed exports. “
Investing in free zones in Panama is a good strategy
Investing in free zones in Panama can be a good strategy for several reasons:
Tax Incentives: Free zones in Panama offer several tax incentives, such as exemption from import duties, export taxes, and income tax. These incentives can significantly reduce the operating costs of companies operating within the free zones, allowing them to be more competitive in the global market.
Strategic Location: Panama is strategically located at the crossroads of the Americas, making it an ideal location for companies looking to expand their operations in the Americas. Its location provides easy access to the Pacific and Atlantic Oceans, facilitating the movement of goods to and from North and South America.
Developed Infrastructure: Panama has invested heavily in developing its infrastructure, particularly transportation and logistics. As a result, the country boasts world-class ports, airports, and highways, making it easy for companies to move their goods in and out of the country.
Skilled Workforce: Panama has a well-educated and skilled workforce, with a high percentage of its population fluent in English. This makes it easier for foreign companies to operate in the country without language barriers.
Pro-Business Environment: Panama has a pro-business environment with a government committed to attracting foreign investment. The country has implemented several reforms to improve its business climate, including simplifying procedures for starting a business and reducing bureaucracy.
The US Dollar is the nation’s currency
In addition to these benefits, Panama uses the US dollar as its official currency. The country adopted the US dollar as its official currency in 1904 and has been in use ever since. As a result, the US dollar is widely accepted in Panama, and visitors can use US dollars to pay for goods and services without the need for currency exchange. Additionally, the country has a modern banking system with many international banks, making it easy for foreign investors and free zones in Panama to do business there.
For more information on doing business in free zones in Panama, contact LATAM FDI\