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The exchange of finished goods has historically been deficient and given the fact that we are a service oriented country, the exchange amounted to B/.4, 615.4 million, a B/.2, 492.9 million more than in 2009 as a result of increased Value of imports (20.3%). Again the growth of the average cost of raw materials, mainly of petroleum, was decisive. On the other hand, there was a slight increase in exports, despite the growth of the Colon Free Zone (4.3%).

Rest of the country's exports
The value of exports, excluding the Colon Free Zone, totaled B/.725.2 million, some B/.95.8 million or 11.7% less than last year. The weight increased 9.1%, so the income of goods decreased 19.1% and were the lowest in the last five years. The products recorded higher sales growth were: gold (B/.54.3 million), waste and scrap of iron and steel (B/.14.4 million), copper (B/.11.1 million) and aluminum (B /. 4.2 million), fresh salmon (B/.5.9 million), sugar cane (B/.5.8 million), drugs (B/.4.8 million), boneless beef and frozen (B/.4.3 million), free coffee roasted (B/.4.2 million) and bananas (B/.4.0 million).

In 2010, gold sales for non-monetary, reached B/.70.3 million, surpassing the record of any previous year. Between 2006 and 2008 annual sales were less than B/.6 million annually, although in 2009 were higher sales (B/.16 million). This behavior corresponds to the onset of new extraction and growth of the international market price.

Moreover, exports of fishery products weighed down considerably because restrictions on access to member countries of the European Union, considering that the country does not comply with measures to avoid and prevent illegal

fishing and some adjustments to your statistical record, which makes comparisons difficult. Thus adopted a series of measures involving the change of traditional technologies, more regulation, control and surveillance.
According to the country or territory of destination, exports increased mostly to Canada (B/.66.3 million) in gold exports, China (B/.15.8 million) and Taiwan (B/.12.5 million) on sales of Metal waste and scrap. As decreases, were those to the United States (B/.138.4 million) and Spain (B/.30.9 million) mainly seafood. Sales also fell to Costa Rica (B/.11.2 million), Dominican Republic (B/.11 million) and Colombia (B/.6 million).

National imports FOB totaled B/.8,274.8 million, representing an increase of 16.8% compared to last year, primarily attributable to growth in demand and prices of consumer goods (mainly fuel). Increases recorded the purchase of raw materials, building materials, communication equipment and transportation.

In addition, Panama has 3.4 million hectares destined to agricultural activities, of which 1.5 million are arable farming. The growing demand for non-traditional crops is the main attraction for investors in the field. The farmers claim to feel safe in this aspect because of the increased purchasing power of markets like China and India which sets a promising scenario.
Europe represented 60% of the non-traditional agro exports of Panama, surpassing the United States.

Free Trade Agreements

With the signature of the Free Trade Agreement between Panama and the United States, a new commercial phase after mid 2012, once the processes of signature and ratification by the congresses of United States. This commercial instrument has 23 chapters providing substantial legal security for business, trade and investments between both countries increasing opportunities to investors from the United States.

This treaty:

  • Stimulates foreign investment between both countries
  • Widens significantly the product market
  • Increases the exportations from both countries
  • Improves the free customs access of merchandises and services with few exceptions
  • Provides higher levels of transparency, accountability, and legal security

The Panama-US FTA is expected to generate an increase in the exports of goods and services towards an efficient and demanding market, increasing the interest in Panama as a safe harbor for investments. For 2011-2012, it is expected that the United States will maintain its level of investment in Panama, in business areas of importance such as:

  • Construction
  • Technology
  • Services for the Panama Canal
  • Ports
  • Telecommunications
  • Tourism
  • Areas adjacent to complementary businesses

Panama and Chile entered a Free Trade Agreement because the South American country opened 92.5% of their tariff lines. Similarly, Costa Rica joins the list of agreements, negotiating areas such as dairy, beef, pork and chicken, as well as telecommunications and financial services. On the other hand since 2010, Colombia beginning negotiations on a Free Trade Agreement (NAFTA), South Korea addition, CARICOM and Peru are treaties that have initiated processes of negotiation.

In 2010 Panama signed together with the countries of the Central American region an association agreement with the EU, which gives a very positive for the region, achieving consolidation and improved access for many products such as bananas, sugar , meat, textiles, tuna and rice, which will grow in that market conditions predictable and safe. Domestic products will have preferential access to a market of half a billion consumers with high purchasing power.

Export Processing Zones

The Export Processing Zones governed by Law No. 25 of November 30, 1992 are defined as Duty Free Zones of Free Enterprise, specifically designed for developing all the infrastructures, as well as the operative organization and the administrative activities that are necessary, under maximum efficiency criteria, so that within them are established, companies from all over the world which activities are the production of goods and services for the exportation.
The main export industries allowed in the EPZ are:

  • Manufacturing
  • Assembly (or maquila)
  • Processing
  • Telecommunications and High Technology Parks

The promotion/development and the operation of the EPZ are well-defined and the Law grants extensive power to the promoter to develop land; construct building and installations for all purposes; construct technical, medical, sporting, public service, transport and other centers; install and operate gas, energy, water, telecommunications and sewage systems, schools and other facilities; and construct and operate airports, ports, docks, cargo facilities, roads and other infrastructure, all subject to the applicable laws of Panama.

The new Law turn the EPZ in 100% tax-free areas. As a consequence, both the promoter/developer and the export industries as well as any activity, operation, transaction, license, procedure, transfer of movable goods and real estate, purchase and importation of all equipment, spare parts, raw materials, and all goods and services required for its operations, shall be 100% exempted from national direct and indirect taxes, duties, levies, right and charges. It is worth mentioning that all tax exemptions are granted for an indefinite period.

Special labour law regulations are also contained in the Law applicable to employment contracts for a fixed period or work, productivity regulations, rotation of employees, vacations and others.

For these successful companies the following benefits

Fiscal Incentives:

  • Exoneration of taxes and import rights on raw material, semi-elaborated products, purchase and importation of equipment and construction materials, machinery, spare parts, tools, accessories, reinvestments, packing material and all goods and services required for its operations.
  • Exoneration of taxes on capital assets or goods.
  • Exoneration of income tax in the storage and warehouse services that have an effect abroad.

Labor Incentives:
The labor relations within a processing zone are more flexible than those in effect in the rest of the national territory.

Migratory Incentives:

  • Permanent Resident Permit in the capacity as investor.
  • Temporary Resident Permit in the capacity as trustworthy personnel, executives, experts and/or technicians, valid throughout the term of the contract.
  • Short stay visa in the capacity as business person and investor, by way of special laws, valid for nine months, for carrying out transactions or businesses within exportation processing zones.
  • The permits shall be extensive, under equal conditions, to the spouse and minor children and adults dependants of the principal requestor.

Similar incentives exist for oil and petrochemical companies located in the country’s Petroleum Free Zones as well as for Call Centers.

Panama is currently undergoing modifications to the law of export processing zones, by Bill 276 made on Thursday January 13, 2011. The changes come following a mandate from the World Trade Organization (WTO) does not endorse the export subsidies and production subsidies suggests. Thus, Panama has long pledged to eliminate the rule and now the turn seems to have arrived. The new bill creates new tax and labor rules for the Fairgrounds.

If you want to set up an export industry, in the Business Panama Group, we have licensed real estate agents, excellent lawyers, insurance specialists, mortgage brokers, investment advisors and other professionals to assist you on all your needs.
We can help you with:

  • Buying properties in Panama City, Beaches, Islands or Mountains
  • Forming a company to own your property
  • Legal services for all aspects of land acquisition and project development
  • Title insurance
  • All insurance required
  • Procuring bank financing
  • Others

The Business Panama Group team of realtors, lawyers and other professionals will provide you a variety of services from the purchase of the property to all phases of development including structuring, financing, contractual, environmental, construction, permitting, employment, immigration and more. We also will be glad to provide you access to our “List of Recommended Professionals” formed by first class architects, environmental consultants, builders and others.

For more information, please click here to contact us.

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