Favorable Investment Climate Draws Multinationals to Panama

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Panama is a regional center for multinational corporate investment, and will continue to grow as such through 2016 and beyond. A multinational company, or multinational corporation, is defined as an organization that owns or controls production of goods or services in one or more countries other than their home country. It can also be referred as an international corporation, a “transnational corporation”, or a stateless corporation. Multinationals typically operate in strong markets, but are also known for investing heavily into emerging markets, in order to strengthen their global presence, while cutting their costs. Panama, as it stands now, is one of the most favorable countries for multinational investment, and it’s no surprise as to why.

Why Panama is perfect for multinational investment

Though it’s a small country population wise, Panama has had a great climate for multinational investment for nearly a decade now. Companies that choose to invest in Panama may not be doing so for its immediate market; rather, multinational companies and corporations want to use Panama as a base to explore other markets, and expand presence in the region. Panama gives favorable tax breaks to multinationals that see the Central American country as the ideal location for a home base, as well as providing investment incentives through loans, new property, and logistical locations. Companies like Adidas, Dell, Nintendo, Hewlett Packard, and Samsung already call Panama home, and this list is looking to expand in the near future.

Multinational investment by the numbers

As of January 2015, Panama had 117 multinational companies/corporations registered and operating out of it. This is a huge number considering the multinational licenses to operate were only granted as of 2007. The largest increase of multinational investment in Panama was between 2011-2013, where 43 companies picked Panama to set up shop. With such a high number of multinationals invested in Panama, the types of businesses that are investing run the gamut as far as diversity. These companies include banks, financial services, shipping/logistics companies, food franchises, electronics companies, and telecoms.

Overall investment from multinationals in Panama totals in the billiions, with a confirmed $145 million slated for 2016 from one company alone: Del Monte. Del Monte is one of six multinational corporations slated to invest in Panama in 2016, which is looking to be a great year for investment.

How multinational investment helps Panama’s economy

When major corporations, including multinationals, invest in Panama, they bring thousands of jobs to the local market. This accounts for a significant percentage of Panama’s total workforce, and helps keep unemployment under 5%. Multinationals also invest back into the country’s infrastructure. While they do get tax breaks, they still pay taxes, and better yet, create huge demand for construction, infrastructure, power, and use of the local economy for support services.

Being a small country (in size and population) it is absolutely crucial that Panama maintain a favorable investment climate. Not just for multinationals, but also small businesses and locally owned companies and corporations. Panama’s economy relies heavily on services, and these multinationals tend to support that structure critically. With continued growth, and major multinational investment on the way, 2016 is already looking like it could be an indicator of a major investment uptick trend, much like Panama had between 2011-2013. Only time will tell.

About Manoj Chatlani

Manoj Chatlani is a Senior Partner at POLS Attorneys, a full-service law firm in Panama City, Panama. Specializing in offshore services, including asset protection, estate planning, offshore banking, and offshore corporations, as well as Panama immigration and real estate transactions, POLS Attorneys offers clients a streamlined solution to all their Panama legal needs. Manoj is a Panamanian lawyer and holds a law degree from USMA and earned a Masters in Communication Law and Panama Tax law.

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