The FAT CAt is killing your business opportunities – but there is a solution

Even if the headline looks funny, it is not. For decades now, entrepreneurs from all over have gone West, to build their business in the Silicon Valley, in NYC, Boston, Austin or elsewhere. Many still do so.

However, the way how the United States is nowadays treating their citizens or people with a greencard or other form of visa is very disturbing.

All over the world, these persons, once welcomed and respected, are now knocking on closed doors of banks and employers. What a change.

It’s all about FATCA, the Foreign Account Tax Compliance Act – Uncle Sam’s way to make every bank employee in the world an unpaid IRS agent.

When I opened a bank account days ago, here in Panama, there is a mandatory questionnaire to fill out, assuring your bank that you are not a trouble maker with a blue U.S. passport, a green card, a U.S. visa or even having spent more than 182 days in god’s own country. A formula is applied to the number of days spent during the last 3 years, in order to figure out if you are a risk, they may reject or charge more fees.

I am quite sure, right now, there are entrepreneurs out there, thinking about their plans to move business to the U.S., but do not want to end up under such a rigid regime for decades to come.

Here’s my recommendation: Come to Panama.

This blog has some posts describing the business environment and how life is here. Save your business a lot of money and enjoy a tropical lifestyle instead. Settle in a special economic zone and earn foreign income tax-free. Good for your business, right?

An increasing number of global leaders are establishing their regional or global HQ in Panama. What’s good for them is most likely good for your business too.

Try something new. Come to Panama.

Visiting 2 oceans within 2 hours

Try this from San Francisco.

In Panama it’s a piece of cake. What was planned as a roundtrip does look more like rectangular, doesn’t it?

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It’s one of not so many days during the rainy season in Panama, when Caribbean and Pacific coast are both and between available for VFR (visual flight rules). Today it is.

Our FlightDesign CTLS LSA (light sport aircraft) takes off from Chame (MP24), few miles only from the Pacific coast. Wind from South today, so it’s runway 18 on this non-towered airport. We need to coordinate with 2 SENAN (coast guard/boarder patrol) helicopters doing training.

When airborne, we turn North and contact Panama Radio. We have submitted a flight plan already as we are kind of surrounding Panana City with 3 international airports: MPTO, MPMG and MPPA.

Got our squawk code and are handed over to Panama Advisory. When reaching FL55 (5,500 ft) we are already over Lake Gatun, which is a significant part of the Panama Canal passage. Watching ships on their way and assembling on both sides of Gatun Locks. The old ones, in 24/7 operation since 100 years, and the new ones under construction, to double transit capacity from early 2016. Impressive.

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Then the city of Colon, Atlantic-side entrance of the Panama Canal and home of the second largest free zone, after Hongkong. Colon’s airport (MPEJ) is a waypoint to overfly today.

Now we are flying along the Caribbean coast of Panama, still under-developed, but not for long anymore. Clouds are building over the rainforest and we climb to 7,500 feet now. This leg, as the other ones too, is approx. 50 nautical miles long.

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Next waypoint is El Provenir, a settlement on few small islands, and even the airport is on an island. Runway is 400 m and this place cannot be reached by land. As these pictures look, it goes along the coast for another 120 km, into Colombia. Islands, palms, sand, seafood. A true natural paradise, which we will overfly the next time, but low and check out all the airstrips along the way.

Now we turn South, leaving Caribbean/Atlantic behind and climb to 9,500 ft because of clouds. It takes time for our Rotax 912 engine at this altitude and still 57F outside. New course: Las Perlas Archipelago, Pacific Ocean. And after a few minutes we can already see these islands ahead.

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Weather is perfect, the views are amazing. Landing on Isla Contadora (MPRA), out of the plane and straight into Gerald’s garden restaurant. Watching hummingbirds, enjoying super-fresh seafood, talking with our hosts. What a peaceful and relaxing atmosphere.

Now it’s high tide and the beach is only 200 meters aways. White sand, turquoise clear water to the ground. Turn on your back, close your eyes and drift for an hour.

Getting ready for the last leg. Another 50 nautical miles westward to Chame, our homebase. At 4,500 ft towards the sinking sun. A lonesome container ship is on its way to the canal, and already descending we take another picture of Punta Chame.

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Departed 10:40 from Chame, arrived 12:50 at Isla Contadora. Up again at 15:55 and arrival in Chame at 16:40 local time. Per Foreflight planning it was 204 nautical miles but we took several detours because of clouds or to slowly descend into Las Perlas. Closer to 450 km probably, burning 13.5 galons of 95 autogas. Gas for US$50, food for US$35 … total of $85 for visiting 2 oceans. Not bad, right?

Most of the journey we have been on the radio with and on the screen of Panama Advisory, coordinating our flight with some other traffic this morning. They were, as always, doing a great job, taking care in a friendly and professional way.

Gracias amigos.

Best places to work remotely – but forgot the best one

Here’s what NomadList found the best ones:

Chian Mai, Thailand – Prague, Czech Rep. – Bangkok, Thailand – Hoi An, Vietnam – Belgrade, Serbia – Riga, Latvia – Davao, Philippines – Zagreb, Croatia – Sofia, Bulgaria – Ubud, Indonesia.

Interesting. Half of them are in Asia, half of them are in Eastern Europe. I happen to know some of them and this list makes me laugh.

Of course, personal preferences are different and here’s why I would have Panama City, Panama ranked first.

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My criteria are very simple ones and there are 0, 1 and 2 points given

1. Quality of living

  • weather: 2
  • people: 2
  • nature: 2
  • safety: 2

2. Business environment

  • solid growth: 2
  • infrastructure: 2
  • bureaucrazy: 2
  • taxes: 2
  • immigration: 2

Details:

  • Weather: You can’t beat a country that close to the Equator, surrounded by 2 oceans. Don’t even try.
  • People: Super-friendly, good looking, competently running the Panama Canal, world’s largest ship register, a banking system without bad banks etc.
  • Nature: a rainforest within city limits, and 50% of the country is rainforest, more than 2,500 km coastline, Pacific and Caribbean, hundreds of islands, a silent volcano, 3,500 m high.
  • Safety: Only risk is in the drug trafficking business for those involved. Stay away,
  • Infrastructure: Impressive how fast things are being done here. Look at skyline and airports and metro and ports and the Pan-American Highway
  • Bureaucrazy: For self-imployed pros or those who do their business offshore, not a big deal. For the others, settle in one of 3 Special Economic Zones.
  • Taxes: See bureaucrazy. No income taxes for offshore business
  • Immigration: with 4% unemployment, the country welcomes foreign professionals and investments. Some easy ways to immigrate.

So Panama City is getting my 18 out of 18 points, but check with your own preferences.

Real estate prices SFO vs. PTY

Read a story these days where a couple bought a small house of 70 m² in San Francisco for $1.2 mio. Shocking. And what did Mark Twain say about the summers there?

Even for well-paid IT people, this is a lot of money for not a lot of living space.

How about this one instead? Just one example. 

Light-flooded 240 m² living area in one of the best and most expensive locations in Panama’s capital, for $995,000. One can get it for half of this along the coast, out of the city.

A penthouse with 3 bed/3bath at the entrance of the Panama Canal, 15 minutes from downtown and with stunning views of the skyline and historic quarter of Panama City, Panama.  

 

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Warm weather all year long. Numerous restaurants, yacht club in walking distance.

Nearby ferries going to the islands

Jogging and biking tracks along the Pacific entrance of the Panama Canal.  

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Do the math yourself. And it’s much more about quality of life then about money.  

TexMex and CalPan

TechCrunch yesterday had an interesting article about how “Mexico’s Ressources Fuel The Texas Startup Economy”. Quite impressive.

There is a solid trend to consider Texas’ (and others’) neighbour country before China or India. Mexico appears to become the better place for manufacturing jobs. Labour may still be higher but transport costs and flexibility are superior, compared with Asia. Mexico and Central America will most likely become the new workbench for U.S. companies.

How does Panama fit into the picture?

 

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Well, Panama has no surplus in workforce, nor does it have any track record in manufacturing. Panama is much more of a service than a manufacturing economy. Think of the vessel registrations, the solid financial sector, the offshore business industry. And how multinationals are moving their global or LatAm headquarters and callcenters to this country.

What Mexico is and will become for outsourced manufacturing, this should Panama be for California’s IT and VC firms. Fueling growth and profitability.

Preferrable business, tax and immigration rules, constantly growing economy, US currency, first world infrastructure, very affordable living costs, excellent investment opportunities,  and a tropical lifestyle.

 

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Think about it.

Coincidence

Funny. Few days after starting this blog I ran into an article today in AllThingsDigital.

Judson Moore writes about “How to Achieve Silicon Valley Anywhere”. Here’s the link.

It describes their view of what it takes to begin building something similar. Their example is the Brazos Tech District, downtown Austin, Texas. Good job.

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However, the Panama approach is different. Come back soon to learn how.

And if you like the topic, share it. A blog has to be read, you know, or as we Germans are saying: A beer that is not drunk has missed its determination.

 

 

Panama – Building a global workforce

Panama has a population of 3.6 mio and 44.7% of them are age of 24 and younger. (USA 33.1)

 

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This makes for a perfect population pyramid, as shown. Life expectancy is 78 years. (USA 79.5)

Despite the USA’s unemployment rate of 7.3%, Panama has 4.6% what in reality means a lack of qualified workforce. Therefore the immigration rules have become much easier through the last years and is now kind of inviting for 44 so-called friendly connected nations. (Source)

Bringing these relaxed immigration rules into a mix with Panama’s tropical lifestyle, excellent business environment and investment opportunities,  it is easy to attract talent from everywhere to staff hightech businesses with global reach. And this way to offer many opportunities for young Panamanians too.

 

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This picture shows the Pacific entrance of the Panama Canal with the Bridge of the Americas, kind of connecting North and South America, crossing the Panama Canal, which connects Atlantic and Pacific.

There is a marina on the left, where ferries and yachts are leaving to and arriving from the numerous islands in the Gulf of Panama, a general aviation airport is 10 minutes away by car. Along the coast there are many surf spots and year-round, nobody wears a neopren suit. Here’s why not:

 

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Conclusion: There’s no better place to attract, motivate and keep talent.

 

 

Panama – The business environment

Before even thinking about extending the Valley to Panama, there have to be criteria defined and considered. Panama today is already a first class logistics and financial hub:

The famous Panama Canal, extended by another set of locks, doubling capacity in early 2016. (www.pancanal.com)

The Port of Balboa on the Pacific entrance of the canal and Port of Colon on the Atlantic side, and the Pacific Canal Railway, connecting both.

The Colon Free Zone, second largest in the world. (www.colonfreeezone.com)

City of Knowledge, Special Economic Zone, a technology hub, connected to four major communication cables. (www.ciudaddelsaber.org)

Panama Pacifico, Special Economic Zone and quarters for up to population of 60,000. Center of manufacturing and logistics. (www.panamapacifico.com) All these zones offer favourable tax rules for their companies.

Tocumen International Airport, a hub connecting the Americas and the Caribbean, and direct flights to Amsterdam, Frankfurt, Madrid and Paris.

Panama has more than 50 airports and airstrips, a paradise for private pilots.

Financial industry: Panama’s currency is named Balboa, but there are no Balboa bills, only coins. Balboa means US Dollar. The country has more than 50 banks and none of them crashed during the US financial crisies. Panama is a safe heaven for many foreigners when their countries and currencies go South. Venezuela is a recent example.

Investment opportunities. Taking a look at the capitol, the beaches and islands, there is no question about investment opportunities. Real estate prices are still a bargain compared with the U.S. or Europe. How about oceanfront appartments at $2,000 per m²?

Establishing a corporation. Panama is famous for having the majority of vessels under their flag. And there are numerous foundations and holding companies. Easy to set up and maintain. Same for operational businesses.

Taxes. Foreign income is generally excempted from tax. So imagine the average Google employee, not a U.S. citizen, living in Panama, paid by the mother company – legally no income tax. And VAT is 7% only.

Conclusion: Panama has an outstanding and inviting business environment.