I found this interesting article on Panama from a news letter that I subsctibe to. I know that Columbia is the destination of choice here, but as others on this board explore various latin countries more of us just may become interested. I've been doing some research on Panama and I have found that this country has tremendous potential, e.g., to live, to retire, to vacation, to conduct business, or to search for that latin wife. Here's the article.
Why Panama is the world’s number-one haven
--Kathleen Peddicord, Waterford, Ireland
This article is from the subscriber-only issue of International Living. Sovereign Society members can learn more about International Living in Panama here.
For years, I resisted traveling to Panama. How interesting could this place be, I wondered to myself? Isn't it really just a big U.S. military operation?
When I finally made the trip for the first time, I was reminded that everything in this world is a matter of perspective. Yes, sure, Panama City was occupied for 80 years by about 50,000 U.S. military personnel and their families. And, yep, the U.S. Army Corps of Engineers built the country's highways and bridges. And the capital city is home to three former U.S. military bases.
But, believe me, there's a great deal more to Panama than all that.
A complete surprise
Panama City is a complete surprise, especially the first time you see it. A skyline of skyscrapers...modern office buildings and hotels, all glass and steel, facing out over the water. Just like New York. Just like Miami.
That's the impression as you drive in from the airport. As you get closer, you notice upscale restaurants and shops on many streets, a bank on nearly every corner (there are more than 80 international banks in Panama...and all are physically present, as brass plate banking is not permitted)...and then you realize that the roads you're traveling on are well-paved and pothole-free. And that the people walking along are well-dressed.
If you spend time here, you'll realize that the city is virtually crime-free...and that there's no violent crime here whatsoever.
In Panama City, you can avail of any service or convenience you take for granted back home. Every major franchise is here. Most major retailers. And the infrastructure (yes, largely thanks to the extended U.S. presence) is First World, even if the country technically isn't.
As someone remarked on my most recent visit (last month), "Panama is, in fact, one of the world's largest producers of bananas...but this is no Banana Republic."
Panama has switched successfully from military (a common denominator for typical Banana Republics) to elected rule. And it is stable not only politically, but also economically, thanks largely to the U.S. dollar, which it uses as its currency...and to its geographic position, at the "crossroads of the Americas."
Historically, Panama has been recognized as a bridge...literally and figuratively...and, today, this country is the largest trading zone in the Western Hemisphere and the second-largest in the world. Panama is the world's largest shipping registry. And the Colon free trade zone is the largest in the Americas, second in the world only to Hong Kong.
We've been looking at the best places in the world to live and retire for more than 21 years. And, given that experience, we don't make the following statement lightly: Panama is on its way to becoming the world's top retirement haven. The next San Miguel de Allende, Lake Chapala, or San Jose, Costa Rica.
This isn't entirely news. We've been reporting to you on this country for the past few years. And, this year, it took top honors in our Global Retirement Index (see our September 2001 issue).
However, I'd like now to make the point directly. And to detail for you the supporting evidence for our position. (I've made some of these points already.)
First, Panama offers advantages over every other Central and South American destination. Tax advantages. Privacy advantages. Indeed, it is one of the world's best jurisdictions for offshore asset protection and banking. If you're looking for a private, offshore bank account, a tax-free corporation, a trust, or other offshore structures, Panama is one of the few places in the world worth considering right now.
Second, this country offers near-perfect weather, especially in the interior (mountainous) Chiriqui region.
Third, Panama offers what we consider to be the world's best incentive program for retirees, offering substantial savings on everything from mortgage rates to utility bills (we detailed this program for you in your September 2001 issue).
Fourth, Panama is a very affordable place to live. A full-time, live-in maid costs $120 a month...first-run movies cost $1.50. Groceries cost 20% to 30% less than in the United States.
Fifth, Panama is the safest place in Central or South America (the Pinkerton Global Intelligence Agency recently gave Panama its highest rating for tourist safety), boasting stable political and economic situations.
Sixth, it's the most developed country south of the United States, home to some of the top companies in the world (including 80 of the world's biggest banks, and other giants such as Federal Express, DHL, Sears, Price Costco, and Bell South)...and many top-drawer restaurants and hotels. You could even call Panama City "sophisticated." And, as I've mentioned, you'd certainly have to call its infrastructure First World.
Seventh, Panama uses the U.S. dollar as its currency (and here, by the way, it's not a case of "dollarization" as a recent experiment as elsewhere in Latin America; the U.S. dollar has been Panama's official paper currency since 1904) and has virtually no inflation.
As The Economist recently reported, in Central America, "Panama has stood apart, sustained by its Canal, its banks, and its free-trade zone."
In short, Panama has its act together. Yet few foreigners, particularly Americans, consider Panama as a travel destination... and even fewer think of it as a "retirement haven."
In 1998, the most recent year for which the World Tourism Organization has tourist figures, the country's total overnight visitor count was 431,000...100,000 of whom came from the United States. To put this in perspective: Panama gets about as many American tourists in a year as Disneyland sees in three days.
In other words, there's plenty of room for you.
Opportunity in a coffee and canal crisis
Furthermore, the time to act is now.
Panama is in the middle of a short-term economic downturn, a recession brought on by the departure of the more than 50,000 Americans from the Canal Zone...and the steep drop in worldwide coffee prices.
When the troops, the civilians, and their families left, they took with them, according to some estimates, more than $400 million a year - a big chunk of this country's economy, which has annual budget revenues of only $2.4 billion.
More recently, the worldwide coffee industry has been turned upside-down by inexpensive Asian beans, which are flooding markets and causing prices to plummet. According to an article in The New York Times last month, "World prices for wholesale coffee have sunk to less than half of what they were in 1999." There is so much coffee in Asia, according to one report, it's being thrown away...or ground up for fertilizer. "The collapse of the market has set off a chain reaction that is felt throughout the [Central American] region," the Times reported. This year, a drought has only made things worse.
The combination of these two factors means it's a buyer's market, big time, in Panama right now.
Real estate in Panama City can be a "screaming bargain" (to quote a friend). In the wake of the U.S. military and Panama Canal personnel pulling out, thousands of houses and apartments are on the market. You can find a three-bedroom, luxury apartment downtown - with a deck, private parking, a pool...the works - for about $60,000.
However, one of the most interesting opportunities in Panama City is in the Old City, Casco Viejo, where many of the charming old buildings are being renovated. This is where the French hung their hats in the late 1800s, when they first took a shot at building a canal through Panama. Graham Greene and Paul Gauguin both strolled down these streets, sat in these plazas, and dined in cafés in these neighborhoods.
Tax incentives in the old city
Casco Viejo languished and decayed for close to 100 years. No one with any sense, it seemed, invested money here. Now, the government is offering incentives (including discounted mortgages and tax exemptions) to would-be renovators.
We believe that in another few years this will be one of the most sought-after parts of the city. But right now, only a few pioneers are on to the idea. If you join them, even your rent here would be a deductible expense...and you could rent or sell property in this historic neighborhood without paying a penny in taxes.
We recently saw several homes here for as little as $38,000...and an enormous, 12,000-square-foot palace (in serious need of renovation) for $120,000.
One more thing: In Panama, there is little red tape involved with taking up residence, buying real estate, or starting a business. If you're interested in residency here, know that the country offers four resident's visas:
1.) The Tourist Pensioner Visa (or Pensionado Visa). With this, you can bring up to $10,000 of personal belongings and household goods into the country duty-free...and you can import a car duty-free every five years. Plus, once in the country, you can take advantage of substantial discounts on nearly everything - from medical care to restaurants, from in-country airfares to movie and theater tickets. We believe this is the best pensionado visa program currently on offer anywhere. Furthermore, it is granted indefinitely and need never be renewed.
2.) The Private Income Retiree Visa. Comes with the same benefits as the pensionado visa...plus a travel passport (which, critically, does not constitute citizenship or nationality but does qualify as a legal travel document). This visa is granted for five years at a time.
3.) The Investor Visa. You can qualify for this if you plan to start a business in the country. You'll need to show evidence of your investment and produce the company's tax return and payroll every year, showing at least three Panamanian employees.
4.) The Forestry Investor Visa. Panama has an aggressive forestry investment incentive law. This is a long-term (typically 25-year) investment (that you should not attempt without a local partner)...but, in that context, can offer good returns.
(Which visa is best for you? Greg Geurin, who manages our International Living Local Office in Panama City, has been working with a Panamanian attorney to understand the pluses and minuses of each visa option...and can walk you through the process of obtaining the visa most advantageous for you. He's put together a turnkey program that includes the medical exam, the paperwork and filings, and the government fees. Contact him by e-mail at Panama@InternationalLiving.com.)
Yes, it's a buyer's market, but prices, I predict (and many I've met with on recent visits agree), will slide further over the coming year. Building continues. Big apartment and condo buildings are under construction throughout the city. In other words, the supply of real estate is increasing...as the economy weakens. Outside the city, the depressed price of coffee is forcing land onto the market at distressed rates. Again, the current prices will go lower.
We expect this economic crunch to be short-lived. Panama simply has too many good things going for it. The country's long-term prospects are tremendous.
Now is the time to investigate.
