… you are invited to visit my other blog at disruptec.co, where I publish about this and other related topics. Have figured out that it does not need 2 different blogs.
Thanks for following me and see you there.
Jay
Glad to learn that some more people are working on the idea to make Panama a hightech hub: Visit pandemonio.io and find out more about their event on February 15-17, 2017 in Panama City’s Westin Playa Bonita resort.
Two days of thought-provoking keynotes and deep-dive breakouts. The technologies and trends that are fundamentally reshaping modern business. The people behind the most admired companies and most disruptive ideas on the planet.
First class presenters, 2 days, in a stunning place, right beside the Panama Canal Pacific entrance.
Don’t miss it.
Why Panama – Immigration and IRS
These are the 2 issues non-US citizens should be most concerned about when considering The Valley as their business location. Seriously.
First, getting a green card or visa or citizenship really means some effort and is time-consuming. This why even cruise ships are considered, out in the North Pacific Ocean, to accommodate workforce and work around the immigration problem.
Once you’ve got your immigration status, you’ll become a US tax resident, even with a non-resident visa under circumstances. The rules are complicated and execution appears to be harsh.
Based on that, US citizens and even visa holders are not welcome in banks around the globe anymore, meaning special non-preferred treatment and extra costs.
With a permanent visa or as US citizen, you’ll never stop reporting to Uncle Sam your world-wide income, every year to come. Think about it.
How does it work in Panama? Tranquilo!
Source: 007passportcopies.com
As long as you are doing business with customers outside of Panama, you don’t have to report anything tax-wise to anybody.
When you employ workforce in Panama or do business within the country, then get established in one of 2 special economic zones. Find out where your business fits in.
Both zones offer favorable immigration and tax arrangements.
For software and other hightech stuff there is the City of Knowledge.
Source: laopinion.webhost.com.pa
Source: prlog.org
Why Panama – No natural hazards
As Panama is located between oceans and continents, it is luckily located outside any areas of natural hazards.
Hurricanes happen in the Caribbean, but don’t reach Panama.
Earthquakes happening in Colombia, Chile, Guatemala are sometimes felt, but have never hit Panama hard. Looking at the tectonic plates, Panama is placed in a sweet spot, right between, not inside active zones.
Look at California, which is in a very different position, literally.
Here’s the San Andreas fault, crossing the state from Southeast to Northwest, building tension for The Big One.
(Source: Wikipedia)
Crossing the San Francisco Bay area, nobody knows when it will happen, but it will. Even a Small One will disrupt business and everyday routines for weeks. And a Plan B will not avoid this, possibly minimize consequences.
I still remember years ago, when Texas-based hosting provider Rackspace Inc. made the case for having their data centers in regions far away from earthquake-prone regions, like California. They’ve got a reason.
Data are precious, human lifes even more.
Conclusion: Building your business in Panama instead of California means that a Plan B for natural hazards is not necessary.
Get some peace of mind.
Right in the middle of my posts about why hightech companies can succeed anywhere, preferrably in Panama, there comes this:
Bill (Gross) explains, “I really believe startups can scale everywhere. Talent is everywhere. Money is now everywhere. In Silicon Valley, talent is everywhere, but it’s moving from company to company. Other places are actually much more stable to start a company.”
Exponential technologies have democratized access to many of the resources you need to build a company. Great founders can build great technology companies all over the world.
It’s part of a Peter Diamandis blogpost, that you can find here, together with a lot of more relevant information.
Stay tuned for my next post and find out what Panama has to offer.
Panama – Country Quick Facts
Located in Central America, between Costa Rica and Colombia, separated by the latter through the Darien jungle, the Republic of Panama is geographically and politically stable. There is not even an army, as there is none in neighbouring Costa Rica.
Source: geology.com
It is most famous for the Panama Canal, connecting two oceans. Built 100 years ago, extended recently, handling 4% of global trade, making the country a logistics hub.
The Canal extension means a lot more business to be built around. Beside the 2nd largest free zone after Hongkong, in Colon, there are 2 more Special Economic Zones:
Panama has become a preferred offshore business and finance center. Financial crisis since 2008 have had no influence in Panama, solid annual growth between 6 and 10%.
By far most ships globally are registered here. Incorporating and running offshore firms is therefore an everyday affair. Accordingly, Panama has successfully signed bi-lateral treaties to not be considered a tax haven by the OECD.
Source: anuvito
Panama City ’s skyline and infrastructure are impressive and GDP per capita has become #2 in Latin America ($21,800 in 2015). Middle class is growing, accumulating wealth. The country is a bit smaller than South Carolina, has a population of 3.6 mio, a coastline of 2,490 km, hundreds of islands in both oceans.
Half of the country is covered by tropical rainforest, including the Central American mountain range, reaching up to 3,475m (Volcano Baru). Thus there are several different climate zones to live in, and providing ideal conditions for tropical fruits, coffee and vegetables.
The Inter-American Highway is the backbone of the country, stretching over 775 km from the Costa Rican border until Yaviza. The Darien jungle is a natural boarder. Traffic to Colombia must use a ferry from Colon to Cartagena.
Panama City’s Tocumen International is named the “Hub of the Americas”, with numerous destinations between Montreal and Vancouver in the North, to Buenos Aires and Santiago de Chile in the South.
Conveniently, the currency is the USD, officially named as Balboa, the first European looking at the Pacific Ocean, although there are no Balboa bills.
Why Panama – Your business’ bottom line
This is the most important issue for any great owner of a small business.
Let us look at your personal income situation now and assume you’re making $100,000 per year. (http://www.tax-rates.org/California/income-tax)
California Panama
Income $100,000 $100,000
Tax $32,000 $0 *
Subtotal $68,000 $100,000
Condo rent $36,000 $18,000 (www.zillow.com) 2/2 with 130 m²
Cost of living $30,000 $15,000 **
Total $2,000 $67,000
Suggestion: This amount of $67,000 re-invested in Panama, buys ⅙ ownership/8 weeks occupancy in a 2/2 oceanview condo 130m², fully equipped and with concierge service. (www.oceanview42.com)
* Having your company registered in Panama, charging foreign businesses only, there is no obligation to report anything. No tax declaration whatsoever. Call it freedom.
** The cost of living numbers appear low. However, in our example, the Californian cannot spend more and we assume that cost of living in Panama is roughly half of California.
To grow a small business, having money left over after tax is essential. Working without other people’s money in early stage means independence, keeping control. Selling shares not before the company has some value, means to make more money, just later.
Conclusion: Having a global business based in Panama is best for your business’ bottom line.
Disclaimer: We are not a financial or tax advisor. Information given is based on public Website information everybody can find. It may change or have already changed. No guarantees. Do your own math and research. (Picture: supermoney.com)
If you as an entrepreneur are confident to build the next unicorn, a start-up with 1b market capitalization, then go ahead and settle in the Silicon Valley. Best choice.
If not, there is a better place to start and run your business, to live and to invest.
Why Panama? Living here for 8 years already, let me present my thoughts in a series of posts.
Conditions have changed significantly.
“The Valley” began as a center for the capital-intense semiconductor and computer industry, followed by Internet software developers and service providers in the late 90s.
Renting an office, hiring staff, setting up servers and workstations, purchasing software licenses was expensive and Venture Capital was a necessity to take off or to grow.
These days are over. However, it has established a concentration of ideas and capital there as nowhere else in the world, now focusing to solve the big problems of mankind.
Your ambitions are a bit smaller? Then you don’t have to pay the ridiculous price of living and working there.
Establishing a business nowadays is much easier than a decade ago.
No fancy office, desks and chairs.
No permament hires, beside a core staff, people work project-based.
No hardware investments, but BYOD.
No software licenses, get everything cloud-based.
No expensive marketing. Win followers by early release of a good-enough product.
Conclusion: The capital demand for new endavours is low, as are entry barriers. So who needs VCs anyway anymore?
It has been a while since I suggested to develop Panama as a “Second Home & Bootcamp Facility” for Silicon Valley corporations.
As time goes by and things in tech are changing as fast a never before, my views have changed as well. Having seen how other places have tried to copy the Valley unsuccessfully, this place should move up in its own way.
Coder courses, accelerators, VC firms – there is nothing that can’t be done here. What has to be created and nurtured is the mindset to go for top achievements.
Despite the Panama Papers fuss, this country still has the best conditions to establish and run a business, not to forget essential soft factors, like quality of life and vast investment opportunities. See here
Few weeks only until the Panama Canal extension goes live. Time to seek a new challenge for the country connecting North with South America, the Atlantic and the Pacific Ocean.
Source: ACP
May 2016: Emirates has postponed this service until end of 2016 or early 2017. However, Lufthansa from Frankfurt and Turkish Airlines from Istanbul have begun their regular flights.
More important: Copa Airlines is now flying on 7 days a week between Panama City, Panama and San Francisco, CA.
END_OF_UPDATE
Doing the longest regular airliner flight is something special; for the carrier, the manufacturer and for the destinations.
Starting February 1, 2016 an Emirates Boeing 777-200LR will take off as flight EK251 from Dubai to Panama City, non-stop.
Arrival in Panama at 4:40 pm, after not less than 17 hours and 35 minutes for this 13,800 km trip.
It is the #5 airline with a direct trans-atlantic connection to Panama, Dubai joins Amsterdam (KLM), Lisboa (TAP), Madrid (Iberia) and Paris (Air France), Frankfurt (Lufthansa) will follow one month later. in March 2016.
commons.wikimedia.org
Since Singapore Airlines has terminated their ultra-long non-stop flights to New York and Los Angeles, nowadays these are the longest ones:
Quantas between Sidney and Dallas (B747)
Delta between Atlanta and Johannesburg (B777)
Emirates between Dubai and Los Angeles (A380)
Emirates between Dubai and Dallas, Houston and San Francisco (B777).
This new flight is even longer and is the first non-stop connection between Middle East and Latin America.
The fact that Panama has been selected underlines the growing economic importance of this small country and takes advantage of Tocumen International Airport as “Hub of the Americas”, reaching all of Central-/South America and many places in the Caribbean.
Tocumen’s new South Terminal, designed by Sir Norman Foster, will be ready, just in time, to welcome Emirates.
commons.wikimedia.org
Better Panama 