US/Panama Business Council- Why Panama

Panama: It’s Happening now!US Panama Business Council

ECONOMIC SITUATION

Solid Economic Growth2006-2008

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

El Salvador Colombia Panamá Costa Rica Guatemala Rep. Dominicana

Chile México

4.2%

6.9%

8,7%8.8%

5.4%

10.7%

4.6%5.1%

4.7%

7.5%

12,1%

7.8%

6.3%

8.5%

4.7%

3.3%

2.5% 2.5%

10.7%

2.6%

4.0%

5.3%

3.2%

1.3%

2006

2007

2008

Panamá has shown the best performance among

emerging markets in the region.

Source: www.eclac.org

Infographics: National Investment Promotion Division

GDP Growth compared to other countries in the Region

Continuous Economic Growth2009

During 2009 the world faced a financial crisis which reduced the world´s trade,

but Panama got over it, and became one of the few countries in the region that

has reported an economic growth of more than 2%..

Source: www.eclac.org

Graphics: Dirección Nacional de Promoción de la Inversión

Construction

2003 2004 2005 2006 2007 2008 2009

883.4 473.8 931.0 1,007.5 1,302.9 1,601.3(p) 1,548.8(p)

*Million dollars(p) Preliminary figures

Construction industry represents approximately 5.8% of the GDP

Source: Contraloría General de la República

2010 4.5% ECLAC Estimated Growth

The Economic Commission for Latin America and the Caribbean has estimated an

average of 4.1% growth rate for the region.

Panamá is above the average growth rate.

Investment Grade

Lower cost of financing

Higher degree of confidence in our banking system

Ideal environment for generation of jobs

Benefits

Panamá only country in Central America

BBB- Fitch Ratings

Source:Diario La Prensa. March 24, 2010.

Infography: La Prensa

Foreign Direct Investment

2004 2005 2006 2007 2008 2009e

1.019,1 962,1

2.574,2

1.825,1

2.401,7

1.772,8

Source: Contraloría General de la República de Panamá

In the past 6 years, Panama has established itself among the leaders of the region, boosting sectors such as Information Technology and Communications, Energy, Tourism, Real Estate, Multimodal Transport and Logistics Center, Construction Sector, banking, among others.

BUSINESS ENVIRONMENT

Easy of Doing Business

2009 2010

Chile 42 Colombia 37

Colombia 53 Chile 49

El Salvador 72 Panamá 77

Panamá 83 El Salvador 84

Rep. Dominicana 86 Rep. Dominicana 102

Guatemala 110 Guatemala 112

Costa Rica 121 Costa Rica 117

Source: The World Bank. Doing Business Report 2010.

Multi-modal and Logistics

PLATFORM

GATUN

LAKE

ATLANTIC

PACIFIC

Logistics Platform for the World

Panama Canal

Railroad/ Fiber optic cable

Transithmic Highway

Panamerican Highway

Ports

Airports

Tocumen InternaTional

Airport

Manzanillo Colon Container

Cristóbal

Airdrome Enrique A. Jiménez

Marcos A. Gelabert

Balboa

PSAHoward

Privileged Geographic Position

Panama offers direct access to a market of more than 3.5 billion people.

Source: NAFTA, APEC, MCCA, CAN, CARICOM, EU.

Panama Canalwww.pancanal.com

T

Movement of cargo of 298

MT/ year

Access to 144 maritime

routes in 80 countries

In 2009, +14,000 ships

transit the waterway

Source: http://www.pancanal.com/esp/maritime/statisti.html

Panama Ports Company -Cristobal

Panama Ports Company - Balboa

Manzanillo International Terminal

Panama Canal Expansion Project

• Estimated investment of $5,250 Millions

Investment

T

Land

Railway

75.5 Kilometers (47 mile) Single-

line track linking Balboa

and Colon

Two-way traffic at strategic locations.

Roads Network

3 main roads that connect

all major regions of

the country

Panamerican

Transistmica

Central

2 highways in Panama City and a

new connecting

to Colón

K

Substantial investment in road infrastructure

Source: Government Strategic Plan 2010-2014. Gaceta Oficial Nº 26445-A Pag. 48. http://www.gacetaoficial.gob.pa/pdfTemp/26445_A/GacetaNo_26445a_20100112.pdf

K

Key investments in added value to logistics services:

A. Finish the Panama Colon stretch.

B. Rebuild the road infrastructure in the Colon Free Zone

C. Connect Howard with the Centennial Bridge

D. Finish the North highwayE. Connect Tocumen with the

cargo terminal.

Road to finish

Panama is closer to the WorldTocumen International Airport

2009

HUB of the Américas

Operational Airport CapacityNow

• 32 Boarding Positions

• 32 Simultaneous Operations(Passengers)

• 11 Simultaneous Operations (Load)

• 5 Millions Passengers/Annually

• Track length of 3,050 mts

Future

• 66 Boarding Positions

• 70 Simultaneous Operations(Passengers)

• 20 Simultaneous Operations (Load)

• 30 Millions Passengers/Annually

• Track length of 4,000 mts

Source: Tocumen International Airport Presentation

BOCAS DEL TORO

Expansion of the Airports Network

DAVID

PROVINCIAS

CENTRALES

COLÓN

Source: Aeronautic Authority

Great Connectivity for Telecommunications

Panama is connected to the world through 5 fiber optic submarine cables

The United NationsConference on Tradeand Development(UNCTAD) rankedPanamá as the countrywith best connectivity inLatin America.

Source: Transport & Cargo Magazine. Written by JAN.HOFFMANN Chief Trade Facilitation (UNCTAD)

Financial SectorBanking Systemwww.superbancos.gob.pa

• No central bank

• 90 national and international banks

• Total assets US$ 64,209 million (Jan. 2010)

• U.S Dollar base economy

Insurance & Reinsurance www.superseguros.gob.pa

• By February 2010, the premiums totalizedmore than $ 139 million, 8.34% over than thesame period in 2009.

INVESTMENT PROMOTION LAWS

• Tax exemption on income, social insurance and educational insurance, when their salaries come from abroad (parent).

• Import Tariff Exemption for household goods when a worker moves for the first time to Panama.

Tax incentives for foreign workers are:

• Permanent Personnel – 5 years (Renewable) Indefinitely

• Temporal Personnel –3 months (Renewable) 1 Time

Immigration Benefits

Creates the Special Regime for Establishment and Operation of the Multinational

Company Regional Headquarters

Colon Free Zone

Decree-Law 18 of June 17th of 1948, by which the Colon Free Zone was created as an autonomous entity of the State.

680 hectares, divided into two (2) commercial areas:

• the commercial area of showrooms in Colon (old city limits) and,

• commercial warehouse and storage area in France Field.

250,000 visitors come every year from all over the world.

Is the largest free zone in the Western Hemisphere, being the major trading center for Latin America and the Caribbean.

Fiscal Benefits

• 0% Taxes on profits from re-exports.

• 0% Customs duties in import and export quotas.

• 0% Billing taxes.

• Highly competitive costs.

• Migratory facilities for foreign executives.

Importers Advantages

• Purchase in one place only.

• Excellent assortment of products.

• Credit facilities.

• Clearance in less than 24 hours.

Exporters Advantages

• From Colon, Rep. of Panama, located in the center of the Americas, you will have access to: - Western Hemisphere -Europe -Asia -Africa - Australia

Benefits and advantages of operating in the Colon Free Zone

Panama-Pacific

1,400 hectare Special

Economic Zone adjacent to the Canal, Railway,

Ports and Panamá City.

Taxation, customs, labor,

immigration and special business

Regime

London & Regional

Panama as master

developer of the project.

Business and Commercial world class center with

residential areas of high level

Target activities will be exempt from taxes in

the Republic of Panama

www.aaeepp.gob.pa

Law No. 41 of July 2004.

Target Activities

Multimodal and Logistics Services

Transfer of Services to the Aviation Industry

Maintenance, Repair and Overhauling of

Aircrafts

High Tech Product Manufacturing

Call Centers Office Administration Back Office Operations Data Transmission, Radio, TV, Audio and

Video

Off shore Services Stock Transfer Between Onsite Companies

Transfer of Goods and Services in the area.

Synergy

Education

InvestigationInnovation

City of Knowledge

Operates as a local node of the global network of

knowledge management, and contributes to human

development.

Panama’s International TechnoparkPanamá Business Accelerator

Established as a strategic focal point for regional operations of international organizations

City of Knowledge Benefits

FiscalExemption from all taxes,

contributions, tax or import duty on machinery, equipment,

furniture, vehicles, appliances and supplies needed

FiscalTransfer Tax Exemption of

movable tangible property and services (ITBMS) on machinery,

equipment, vehicles, implements and inputs necessary

FiscalExemption from any tax, fee or charge levied sending money

abroad, where such remittance or transfer of funds takes place for

the purpose of the project.

ImmigrationThe State shall grant special visas to foreign personnel who enter

the country to help in the development project of the City

of Knowledge.

LaborThe companies affiliated with the City of Knowledge are authorized

to hire international staff as necessary to carry out their duties

EXPORT PROCESSING ZONES

• EPZ are Duty Free Zones of Free Enterprise,specifically delimited, whose activities arethe production of goods and services forexport.

• Categories:

– Manufacture enterprise

– Assembly

– Processing enterprises of finished orsemi-elaborated goods

– Service export enterprise

– General services enterprises.

Incentives

– Exemption from export taxes and duties on all goods or services required for its operations.

– Tax on capital assets or property exemption

– Income tax exemption for warehousing services who have their desired effect abroad

– Permanent Resident Permit as an investor

– Temporary Resident Permit

Tourism

• Exemption of Import and Land Tax for 20 years

• Exoneration of tax on capital gain.

• Exemption from payment of taxes of docking and landing at docks, airports or heliports owned by the company

• Exemption from Income Tax

• Rate of 10%, for the purposes of calculating the depreciation on real estate.

Fiscal Incentives

National Tourism RegistryMinimum Investment:

$ 3,000,000.00 - Metropolitan Area$ 50,000.00 - Rest of the Republic

Source: Law Nº 58 2006. G.O.25,701

Cabinet Decree No. 36 dated 17 September 2003, regulates the activity of oil-free zones in Panama within these areas there is a special treatment

Import, export, refine, process, recycle, mix, distribute, transport and market petroleum products authorized.

Tax Regime: Free Zone, will not cause any tax, fee, levies and other fiscal contributions reasons for introduction, or re-export of crude oil and its derivatives

Fuel Free Zone

Mining

We promote the mining industry development as a substantial element in the social -economic and industrial

development of our country.

It is the main activity in terms of its foreign exchange contribution to the

national economy.

Transparent Sustainability InnovationSocial and Environmental

Responsibility

Source: National Direction of Minerals Recourses.

Investment Legal Stability

Guaranteed beneffits for 10 years:

• Legal stability

• Tax stability

• Tax stability in the municipal order

• Stability of the customs that are derived from the Laws

• Stability in the labor regimeRequirements for Investors:

• Investment Plan at least twomillion (B/.2, 000.000.00) intwo years.

• Prove the amount ofinvestment and activity

Law No. 54 -1998

PROJECTS

Agro - Export

•Absence of extreme summers

•Higher concentrations ofsweetness in fruit

•High quality of natural water

•Coffee SHG (Geisha)• Melon

• Watermelon • Pineapple

Public Investment by Sector

Panama City Metro

• Currently representatives of companies fromItaly, Spain, France, Japan, Brazil, China,Colombia, Germany, Mexico, like Panama, hasshown interest in participating in this project.

• The Swiss-Mexican-Panamanian consortiumPÖYRY Cal & Mayor & Geoconsult won the bidto be the integrator advisor of the project.

• For the prequalification statement visit thewebsite www.panamacompra.gob.pa.

Investment: U.S.$ 1,000 - U.S. $1,500 millionsExtension: 14 kmTravel Time: 30 minutes.

Source: http://www.presidencia.gob.pa/ver_nodo.php?cod=886

http://www.prensa.com/t.asp?d=100107p2054148

New Convention Center

Aprox. Cost: 150 millions

Will allow Panamá to take advantage of thegeographic position, holding all types ofmega events .

Will oversize our current convetion center

Source: Government Strategic Plan 2010-2014. Gaceta Oficial Nº 26445-A Pag. 76

Governmental City and Financial Tower

Physical centralization of key government institutions.

Area: 64 HectaresCost: $ 450 million.

Source: Government Strategic Plan 2010-2014. Gaceta Oficial Nº 26445-A Pag. 75- 76

70 levels100,000 m² of construction

PanamaComprawww.panamacompra.gob.pa

Objectives

• Increase transparency in government procurement

• Efficiency

• Intensify the fight against corruption

Informs

• Products and services that are required by the Panamanian public sector

Allows

• Get information about business opportunities

• Consult the time that it will make payments to suppliers

• Receive notifications to be affiliated.

Agency for Investment Attraction and Export Promotion

LOGISTICS AGROEXPORTSTOURISM FINANCIAL SERVICES

ONE STOP SHOP

SEM

Panamá Pacifico

Ciudad del Saber

Panamá Film

Commision

www.mici.gob.pa