help get more goods to market faster. Panama’s modern port system, a perfect comple-
ment to the Canal, handles over 3 million TEUs (twenty-foot equivalent units) per year. A prime example of the success of Panama’s port system is MIT, a port facility operated by Stevedoring Services of America, which is the busiest and most efficient port in all of Latin America. Additional support for the strength of Panama’s
economy and affirmation of its desirability as a des- tination for foreign investment came in the spring of 2010, when Panama became just the fifth country in Latin America to obtain an investment grade rating for its sovereign debt. There can be no doubt that international investors already have their watchful eyes turned towards this small nation. There is no specific legislation governing FDI,
and Panama maintains a liberal policy with regard to both foreign investment and investment in financial instruments. Investments (either foreign or local) are regulated, if at all, by sector-specific legislation. Sectors regulated through such specific laws include tourism, telecommunications, energy and mining. According to the 2007 WTO Trade Policy
Review of Panama, the country “maintains an open investment regime although the State still has a sig- nificant presence in activities such as transportation, electricity,
and telecommunications.”
Notwithstanding the general openness to FDI in Panama, some limitations on foreign ownership are imposed in sectors such as retail and media. As of October 31 2012, however, when the US–Panama Trade Promotion Agreement entered into force, under certain circumstances US retailers are now allowed to invest in Panamanian retail companies.
Panama requires no special authorisations, per-
mits or prior registration for foreign investors. On the contrary, many laws have been written with the purpose of giving incentives for foreign investment. One such piece of legislation is the Investment Stability Law, enacted in 1998, which guarantees to investors who invest at least two million dollars in Panama a special protection from regulatory changes for a period of 10 years, after their completion of registration in the Investment Stability Registry. Panama also encourages multinational compa-
nies to open regional headquarters in the country by offering various labour, tax and migratory incentives. All of the required steps to open a regional head- quarters in Panama are carried out through the Investment One-Stop-Shop at the Ministry of Commerce and Industry. As of January 1 2012, 63 international companies have thus far established regional branches under this law, including Samsung Electronics, DHL, Dell, Hutchison Port Holding Group, HSBC, BICSA, Scotia Bank, Assicurazioni Generali, PanAmerican Life Insurance Company; Tetrapak, General Electric, Johnson and Johnson, Unilever and McDonalds, among others. Panama generally requires that foreigners obtain
explicit permission to work, and typically requires that at least 90% of a company’s total ordinary employees be Panamanian. In addition, the practice of certain professions is reserved solely for Panamanian nationals. Non-Panamanian medical practitioners, lawyers, accountants, architects, engi- neers and custom brokers, for example, are generally prohibited from practising in Panama. Foreign lawyers, however, are allowed to practise and advise clients in Panama regarding the laws of their own
jurisdiction. Foreign companies that need to rely on technical personnel may request waivers if there are no suitable local professionals available. Notwithstanding the above restrictions, accord-
ing to recently approved special Decree orders, citi- zens of countries who maintain friendly economic relations with Panama (such as the United States, Canada, Brazil, Chile, France, Spain, Germany, Australia and South Korea) may be eligible to apply for Permanent Residency and an Indefinite work permit. The main requirement for the foreigners entails demonstrating to the Panamanian govern- ment that they will conduct professional and/or eco- nomic activities in or from Panama and will main- tain an account in a Panamanian bank. Panama has enacted several Bilateral Investment
Agreements with countries around the world such as Argentina, Canada, Czech Republic, the Dominican Republic, France, Korea, México, the Netherlands, Spain, Switzerland, Ukraine, United Kingdom and Uruguay. These agreements typically include provi- sions for the protection of FDI such as national treatment, most favoured nation treatment and anti- expropriations provisions. On the trade regulation side, Panama has entered
into several free trade arrangements with countries such as the United States, various Central American nations (Costa Rica, El Salvador, Guatemala Honduras and Nicaragua), Taiwan, Chile and Peru, all of which area already in force; additional trade agreements that will soon enter into force include those with Canada and an association agreement with the European Union. Panama will also soon become a member of the Central American Economic Integration system, after negotiations for
About the author Cristina Thayer Hausz joined Galindo, Arias & Lopez as associate in 2004, and previously held various positions in Panama's Ministry of Commerce and Industry and Foreign Trade Council, such as head of legal affairs for negotiations, head of bilateral and multilateral affairs and negotiator-lawyer. She held various posts on the Ministry of Commerce and Foreign Service, and participated in negotiations that led to Panama's Free Trade Agreements with the US, Central America, Taiwan, Mexico, Chile and the Free Trade Area of the Americas. She is a member of the Panamanian Bar Association, American Bar
Association and the Georgetown University Alumni Association (Panama Chapter) and the Society of Trusts and Estate Practitioners (STEP).
Contact information
Cristina Thayer Hausz Galindo, Arias & Lopez
Scotia Plaza, Floors 9, 10, 11 P.O. Box 0816-03356 Panama, Rep. of Panama T: +507 303 0303 F: +507 303 0434 E:
gala@gala.com.pa W:
www.gala.com.pa
About the author Julieta Rodriguez Molina has been part of Galindo, Arias & Lopez since 2007, specialising in corporate and labour law. She is a member of the Panama Bar Association, The London School of
Economics and Political Science Alumni Society, Institute of Corporate Governance – Panama and the Anglo-Panamanian Alumni Association.
Contact information
Julieta Rodríguez Molina Galindo, Arias & Lopez
Scotia Plaza, Floors 9, 10, 11 P.O. Box 0816-03356 Panama, Rep. of Panama T: +507 303 0303 F: +507 303 0434 E:
gala@gala.com.pa W:
www.gala.com.pa
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