The Key to Investing in Panama: Diversify!

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Have you been thinking about investing in Panama? Are you doing your due diligence right now to see if it’s right for you. If either of these are the case, you’ll have lots to consider before diving into the market, and many opportunities to weigh and consider. Panama has an incredibly diverse market, with investment potential in not just the services industry, but also in commodities, real estate, logistics, and even crypto-currencies. If you’re from outside of Panama, you may want to be a bit conservative with your initial investments. That’s OK, and completely within reason and understanding as a foreigner/outsider to the market. However, even if your investments are small, the best way to get a stable, good return is to diversify. Here’s why.

Investing in Panama

Panama’s major growth industries

Right now, the strongest industries in Panama continue to be in the services sector. Within this sector, there’s a lot of investment opportunity in financial services, hospitality, hospitality consulting, shipping/trade logistics, and construction management. All of these industries have room for nominal investments as part of larger groups, and all show steady growth availability for the foreseeable future. Even small consulting firms are in high demand in Panama. Panama’s services sector relies heavily on outside consulting, management, and education, which means foreign investment has a greater demand than supply.

Spreading out your investments in this sector between tourism, commercial construction, and financial management allows you be a part of industries that feed off each other, giving you multiple sources of returns that may or may not rely on your actual other investments. In other words, your secondary investment target can benefit from your first, and vice versa.

Agriculture has much more potential than advertised

When you think of Panama, it’s rare that you think of it as an agricultural potential, but that doesn’t mean that on a small scale it isn’t. The agriculture sector makes up for around 20% of Panama’s total workforce, and has a growing demand for domestic production, as imports become less financially reachable by the local consumer market. Products like beer, coffee, and even hydroponic vegetables are in high demand, and seeing a sort of “micro boom” within the Panamanian agricultural market. Again, with imports pricing out many people in Panama, local agriculture has needed to become more versatile, creative, and productive. This presents a huge opportunity for foreign investment, and an even better opportunity to spread/diversify investments throughout various sectors of the agricultural field.

2018 and beyond

Much speculation, as always, goes into the changing of the financial year, and this year is no different in Panama. While 2017 had a lot of ups and downs, the level of uncertainty for the future seems to be calming, albeit slowly. Financial scandals rocked Panama in 2016, making 2017 a bit of a recovery year. That being said, the rebuilt Panama Canal is showing lots of promise for increased trade, and 2017’s pact with recognizing mainland China is starting to bear fruits, which will only increase as we move into 2018 and beyond. Panama is poised to become a principle investment destination for the Chinese, which means public and private development projects should start to boom again, much like they did during the 2010-2012 period under Martinelli.

The future looks good from where we sit now. If you plan your investments with enough care, and take the time to spread them out wisely, you should see not only steady returns, but steady growth, which is so rare and critical in the LatAm market.

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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