The June 25, 2013 Martes Financiero website published an interesting article about why Panama is a good country to start a brokerage house or an investment firm.
Panama has become a hot spot for new brokerage firms and investment advisors despite the 2008/2009 global economic crisis which saw economic growth in Panama. In the year 2000 there were 20 brokerage firms and now there are 83 firms with 57 operating independently and the remaining 26 owned by banks. This is a sign of a robust economy.
The article sites several reasons for this. A big boost came three years ago when Panama’s investment grade rating was upgraded by the leading rating companies. Only Brazil, Chile, Mexico, Peru, and Uruguay enjoy similar high investment grades throughout the entire Central and South American region.
Another reason is having the U.S. dollar as its legal tender which is not exposed to foreign exchange risks as other countries currencies in the region are. Rolando de Leon, former commissioner of Panama’s Superintendency of Securities (VPS), claims that having the U.S. dollar constitutes a “permanent peace globally amongst investors” afraid of countries with currencies in risk of fluctuation.
Panama’s Tocumen International Airport also helps as it has more flights and less waiting time than all other Central American airports and Colombia. Tocumen airport even has less flight waiting times than Miami. It is easier for the foreign investors to travel to and from Tocumen airport. Panama is truly the regional hub for air transportation due to the many cities with multiple daily flights and the increasingexpansion of Tocumen airport.
Panama’s territorial tax system is another reason because companies based in Panama can do business in other countries without being taxed on their gains. Leading economist Ernesto Bazan states, “In practice, not paying taxes means that costs are lower and the entity becomes financially more competitive.”
Having a centralized regional location, excellent international airport connections, tax free investment gains, a well regulated financial industry, and being based on the U.S. dollar all add up to a healthy environment to start a brokerage firm or relocate an investment advisory company to Panama.
Taking advantage of Panama’s favorable investment climate can be made easier by consulting with a Panama law firm knowledgeable with investment strategies, tax laws, and commercial laws.