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.

 

The famous Silicon Valley

Being an IT person for ever, I know and admire this place, the people, the business, the spirit. This has brought so much progress into our lifes, and is still going on and on.

Have been in Austin for some time when the VC scene was going crazy there as well, around 2000, and know that NYC is doing a lot to catch up, but nobody so far has beaten the original. Congratulations, guys. I am really impressed.

However, nothing lasts for ever and sometimes you have to destroy your business yourself before somebody else does it, right? Creative destruction or so.

The success of the valley comes with some side effects that haven’t been so visible for long but are popping up now and won’t just go away:

(1) There is heavy competition between companies for talents. And it’s hurting as past silent agreements between the big guns have shown.

(2) Some talented people from all over the world may not want to end up under the IRS regime for the rest of their life.

(3) And, as the Valley is a wealth-creating beast, the number of millionaires, of rich and well-paid employees is going up steadily. Which is good. But this means, of course, that demand goes up and prices go up. And after some time this makes many people outside the industry unhappy, even creates social unrest, unfortunately. It already does.

I think it is the time to let the Valley grow another leg, in a place where overall conditions are even better.

Guess where?

When the U.S. had given the Panama Canal into the hands of Panama, this has been a jumpstart for this country. And now imagine what will happen when part of the spirit of the Valley is being transferred to Panama too.

In my next posts I will describe in detail, why this makes a lot of sense, will be a win for everybody involved.

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A surprising opener

In Houston you’ll find 14 buildings higher than 200m.  Los Angeles has 11, Seattle and Miami have 4 each, San Francisco only 3 and Boston 2.

Panama City, Panama, has 19.  (Source: emporis.com)

PTY_Ancon

It can’t compete with New York City and with some others when speaking about the number of highrises generally, but in the 200m category you have most likely not expected a “third-world country” to compete with US cities.

And with the Trump Ocean Club Tower it’s home of the highest building in Latin America too.

Can’t impress you with highrise buildings? Well, how about Panama City having a tropical rainforest natural park within city limits?  Here you can have it all.

The explosive growth of Panama’s economy and the capitol has been initiated by the Torrijos-Carter Treaties which gave the Republic of Panama the Panama Canal and Canal Zone with all its facilities back for free, by end of 1999.

Between then and now, Panama has become the second-richest country in Latin America with an impressive average annual growth rate of 8.4% since 2004.

But, you may say now, what has all this to do with the Silicon Valley? Come back to see …