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Panama, a solid place to do business

By Juan Carlos Martinez

Panama is the second best economy in Latin America according to the Global Competitiveness Index 2010-2011 published by the World Economic Forum. Much of this favorable rating hinges on Panama's sophisticated financial system which rates as number 21 on a global scale. Panama's International Banking Center places as number seven on the banking solidity category in the GCI index.

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This is backed up by the fact that 50% of the revenue of the Central American banking industry corresponds to revenue generated by the Panamanian banking system versus only 42% of the assets according to Fitch Ratings. This report by Fitch Ratings indicates that the Panamanian and Guatemalan banking banking systems have shown the best financial performance and coincidentally these two economies are the ones that have best weathered the recent economic crisis.

The Panamanian banking system has a well diversified portfolio as 50% of its business is international and 50% is local. It has a low default level and very prudent financial management. Panama has historically been a transit point for money, people and goods. With the advent of the Banking Center and the global business hub for the Americas money no longer passes through. It now stays. The first semester of this year direct foreign investment grew 26% totaling approximately $1.4 billion according to Panama's Ministry of Commerce and Industry.

In recent years Venezuelans have been among the leading group of foreign investors. The presence of Venezuelan citizens in Panama keeps growing although they still haven't outdone the Colombians in sheer numbers they are without doubt a significant presence. Venezuelans can be found in many areas of business such as construction, real estate, education, food, tourism, light industry, banking and finance, transport and trade. They are also some of the biggest partners of the Colon Free Zone, with an investment of close to 15% or $2.4 billion. According to the Bank Superintendency of Panama, Venezuelans have approximately $1.4 billion deposited in local banks.

This Venezuelan presence, although not as great as the Colombian one, is clearly felt and seen. Many local businesses have had to adapt to new competition and to serving new customers. Nowhere is this seen more clearly than in the retail food business such as supermarkets where before one mostly found local and US products but today you will find products imported from Venezuela, Colombia and South America as this customer base has grown very greatly in recent years.

According to Panama 's Tourism Authority up to April of this year the greatest quantity of tourists entering Panama came from Colombia (67,891) followed by Venezuela (36,373) and Argentina (17,868) and each month foreign sources inject $190 million into the Panamanian economy.

 

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Copyright© 2011, Pan Am Publishing S.A., Republic of Panama