* Traditionally, Panama has maintained a rather liberal regime for foreign investment and investment
in financial instruments. The government and the Panamanian business
community actively encourage foreign direct investment (FDI). Laws in
general make no distinction between domestic and foreign companies.
*Panama has no legal restrictions on the transfer abroad of funds associated
with or capital employed in an investment. There are no restrictions on
capital outflows or convertibility. Panama uses the U.S. dollar as legal
tender. Currency conversion therefore is not an issue.
* Embassy is unaware of any outright expropriation of property by the Panamanian government
in recent years.
* The business community generally lacks confidence in the Panamanian judicial system as an objective, independent arbiter in legal or commercial disputes, especially when the case involves powerful local
figures with political influence. When disputes with foreign investors arise, as they do from time to time, the investors often choose not to pursue remedies available to them via the court system. In a few cases
the appearance of corruption has been so widely accepted as to constitute
conventional wisdom. The decision by investors to avoid the court system is moreover understandable, given massive case backlogs and the specter of corruption.
* An increasingly popular and viable alternative for settling disputes is the Center for Reconciliation and
Arbitration established by the Panamanian Chamber of Commerce. Rulings by arbitrators are generally fair and reasonable.
* There are no legal performance requirements such as minimum export percentages or significant
local procurement rules.
* With the exception of retail trade, the media, and a few professions, foreign and domestic entities have the right to establish, own, and dispose of business interests in virtually all forms of remunerative enterprise.
* Some of Panama’s business, corporate, and banking codes have been modernized and are, in general, enforced so as to strengthen confidence in property rights.
* Protection of intellectual property rights (IPR) in Panama has improved significantly over the
past several years.
* Panama’s relatively recent accession to the WTO, wholesale privatization, and overhaul of various laws that regulate economic activity created a fluid regulatory climate. Panamanian
regulators have been exposed only recently to complex issues, many of
them technical. Regulators’ responsiveness to the concerns of those they
regulate have been mixed, depending on the sector. U.S. businesses
have complained of arbitrariness or a lack of responsiveness by
officials responsible for issuing sanitary/phytosanitary permits for
the importation of agricultural products and, more recently, that those
same officials have applied unannounced and costly sanitary controls
upon arrival of various shipments of agricultural products that had
previously been pre-cleared for importation.
* Political violence in Panama is relatively rare, however, in 2002, there were several public
demonstrations, including a major public protest against corruption in
Panama City.
* Panama suffers from an expansive, unproductive labor force,
due, in part to, inflexible labor laws
* By regional standards, Panama is a strong advocate of trade liberalization, in part because a relatively
large proportion of its economy is outwardly focused: A.T. Kearney
ranked Panama as the most globalized country in Latin America on its
Globalization Index for 2003. Panama’s strong international thrust
was also evidenced by the fact that it served as Secretariat for the
Free Trade of the Americas from 2001-2003, and continues to lobby to
become the permanent headquarters of FTAA offices.
* Panama has bilateral investment agreements with the United States, the United Kingdom, France,
Switzerland, Germany and Taiwan.