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Panama’s investment climate is good but not without its issues. As the home of the Panama Canal, the world’s second largest free trade zone, and sophisticated logistics and finance operations, Panama attracts billions in foreign direct investment. However, corruption, lack of judicial capacity, a poorly educated workforce, and labor issues have either precluded further investment from foreign companies or complicated existing investments.

Over the last decade, Panama has been one of the Western Hemisphere’s fastest growing economies. Its economic recovery from the COVID-19 pandemic is outpacing most other countries in the region, with a 10.8 percent GDP growth rate in 2022 (after a contraction of 17.9 percent in 2020) according to Panama’s National Institute of Statistics and Census (INEC). GDP growth for 2023 is expected to be more modest, between 5 and 6 percent according to the World Bank and International Monetary Fund, due to rising inflation, higher fuel prices, and global instability caused by Russia’s war of aggression against Ukraine. Panama also has one of the highest GDP per capita rates in the region and has several investment incentives, including a dollarized economy, a stable democratic government, and 14 international free trade agreements. Although Panama’s market is small, with a population of approximately 4.4 million, the Panama Canal provides a global trading hub with incentives for international trade. However, Panama’s structural deficiencies weigh down its investment climate, with high levels of corruption, government delays and non-payments, a poorly educated workforce, a weak judicial system, and labor unrest. Panama’s presence on the Financial Action Task Force (FATF) grey list since June 2019 for systemic deficiencies in combatting money laundering and terrorist financing increases the risk of investing in Panama, notwithstanding the government’s ongoing efforts to increase financial transparency.

The government is eager for international investment and has several policies in place to attract foreign direct investment (FDI). As such, it continues to attract one of the highest rates of FDI in the region, including $3.5 billion from U.S. sources in 2021 according to the U.S. Bureau of Economic Analysis. As of March 31, 2023, Panama’s sovereign debt rating remains investment grade, with ratings of Baa2 (Moody’s), BBB- (Fitch), and BBB (Standard & Poor’s with a negative outlook). However, the ratings agencies have noted that Panama’s underfunded pension system – which is expected to exhaust its cash reserves by the end of 2023 according to a report delivered by the International Labor Organization – and ballooning state payroll could put it at risk of a future ratings downgrade.

Panama’s high COVID-19 vaccination rates of 82 percent of the eligible population with at least one dose and 72 percent with at least two doses as of February 2023 have contributed to its economic recovery. As the global economy rebounded, Panama’s services and infrastructure-reliant industries bounced back significantly. Sectors with the highest increase in economic growth in 2022 included arts, entertainment, and recreation (47.4 percent), hotels and restaurants (36.2 percent), construction (18.5 percent), commerce (16.3 percent), transportation, storage, and communications (13.7 percent), mining (6.3 percent), and industrial manufacturing (5.1 percent). Panama ended 2022 with a year-on-year inflation rate variation of 2.9 percent, according to data from INEC.

The government’s assertion that Panama has a carbon-negative economy creates opportunities for economic growth, aided by laws 37, 44, and 45 that provide incentives to promote investment in clean energy sources, specifically wind, solar, hydroelectric, and biomass/biofuels. In January 2023, President Cortizo signed into law landmark biofuels legislation, which includes an ethanol blending mandate requiring gasoline to contain at least 5 percent ethanol by April 2024, increasing to 10 percent by April 2026.

Panama’s investment climate is also threatened by high government fiscal deficits, unemployment, and inequality. The pandemic resulted in government debt ballooning in 2022 to over $44 billion, which represents a 40 percent increase since the start of the pandemic. The country’s debt-to-GDP ratio stands at around 58 percent, well above pre-pandemic numbers around 46 percent. Unemployment peaked at 18.5 percent in September 2020 (as reported by INEC, although some local economists estimated it reached nearly 25 percent), a 20-year high, but has since fallen to 9.9 percent as of April 2022 (the latest data available from INEC). Nonetheless, high levels of labor informality persist – as of April 2022, nearly 50 percent of the workforce was employed in the informal sector. Additionally, Panama is one of the most unequal countries in the world, with the 14th highest Gini Coefficient and a national poverty rate of 13 percent according to the World Bank. The World Bank’s 2022 Global Economic Prospects Report and the World Economic Forum’s 2022 Global Risks Report noted that Panama should focus on inclusive economic growth and structural reforms to avoid economic stagnation and an employment crisis.

In July 2022, nationwide protests against high gas prices and rising inflation wracked the country. Groups from diverse sectors of society, including an array of union members and indigenous activists, forced the closures of schools, major highways, and businesses, and prevented free movement of people and goods. In a first round of negotiations with organizations representing the protestors, President Cortizo made numerous concessions, including subsidies for gasoline and price caps for certain medicines. A second phase of negotiations was scheduled to begin in October 2022, but talks never resumed after participants failed to agree on a mediator. It remains to be seen whether the eventual expiration of subsidies and the still-rising cost of living will lead to renewed protests.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2022 101 of 180
Global Innovation Index 2022 81 of 132
U.S. FDI in partner country ($M USD, historical stock positions) 2021 $3.5 billion
World Bank GNI per capita 2021 $13,920

Policies Towards Foreign Direct Investment

Panama welcomes FDI and relies heavily on investment to fuel its economy. With few exceptions, the Government of Panama makes no distinction between domestic and foreign companies for investment purposes. Panama benefits from stable and consistent economic policies, a dollarized economy, and a government that consistently supports trade and open markets and encourages FDI.

Panama has had one of the highest levels of FDI in Central America, a trend that continued even during the pandemic. Through the Multinational Headquarters Law (SEM), the Multinational Manufacturing Services Law (EMMA), and the Private Public Partnership Law (PPP), Panama offers tax breaks and other incentives to attract investment. Executive Decree No. 722 of October 2020 created a new immigration category: Permanent Residence as a Qualified Investor, after an initial investment of $300,000. The Ministry of Commerce and Industry (MICI) is responsible for overseeing foreign investment, prepares an annual foreign investment promotion strategy, and provides services required by investors to expedite investments and project development (for more details, please visit: ).

The Cortizo administration created a Minister Counselor for Investment position that reports directly to the President, with the aim of attracting new investors and dislodging barriers that confront current ones. MICI, in cooperation with the Minister Counselor for Investment, facilitates the initial investment process and provides integration assistance once a company is established in Panama.

The Export and Investment Promotion Authority “PROPANAMA” ( was created by Law 207 on April 5, 2021. It provides investors with information, expedites specific projects, leads investment-seeking missions abroad, and supports foreign investment missions to Panama. In some cases, other government offices work with investors to ensure that regulations and requirements for land use, employment, special investment incentives, business licensing, and other conditions are met. Entities that carry out a minimum investment of $2 million in Panama enjoy the benefits of legal stability, with national, municipal, and customs tax incentives and stability in the labor regime for a period of 10 years.

In 2022, the United States ran an $11.8 billion trade surplus in goods with Panama. The U.S.-Panama Trade Promotion Agreement (TPA) entered into force in October 2012. The TPA has significantly liberalized trade in goods and services, including financial services. The TPA also includes sections on customs administration and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protections.  U.S. consumer and industrial products have been duty free since January 1, 2021, and duties on the most sensitive products will be phased out between 15 and 20 years after entry into force of the TPA (2026 to 2031). In March 2022, however, the Panamanian government (GoP) formally asked the U.S. government to review certain agricultural tariff provisions of the TPA. The U.S. government denied the request and instead recommended that both sides recommit to the Trade Capacity Building (TCB) chapter of the TPA to better enable Panama to access the benefits of the agreement. The U.S. government is assisting with three TCB projects related to trade-enhancing food safety compliance, including providing technical assistance to allow Panama to export beef to the United States. However, with tariffs on U.S. agricultural exports declining and the 2024 general elections approaching, Panamanian producers and certain of their elected officials have become increasingly vocal in demanding that Panama renegotiate the TPA with the United States to implement additional protections for the Panamanian agricultural sector. These demands have created uncertainty for U.S. exporters and, if implemented unilaterally by Panama, could undermine the TPA and damage U.S. investor confidence in Panama.

Panama is one of the few economies in Latin American that is predominantly services-based. Services represent nearly 75 percent of Panama’s GDP. The TPA has improved U.S. firms’ access to Panama’s services sector and gives U.S. investors better access than other World Trade Organization (WTO) members under the General Agreement on Trade in Services. All services sectors are covered under the TPA, except where Panama has made specific exceptions, such as for postal services, air transportation, and water distribution. Under the agreement, Panama has provided improved access to sectors like express delivery and granted new access in certain areas that had previously been reserved for Panamanian nationals. However, some American companies face problems in this sector, including allegations of tax evasion by some local companies. In addition, Panama is a full participant in the WTO Information Technology Agreement.

Panama passed the PPP law in 2019 (Law 93), and published regulations for the program in 2020 (Decree 840), as an incentive for private investment, social development, and job creation. The law is a first-level legal framework that orders and formalizes how the private sector can invest in public projects. Panama’s 2023 budget includes funding to implement PPP projects.

Panama was selected to host Bloomberg’s “New Economy Gateway” forum in May 2022, which covered sustainable investment and the future of trade. It was the first time that this forum has been held outside of Asia. In March 2023, Panama hosted the global Our Ocean Conference, with robust participation from the private sector, as well as annual meetings of the Inter-American Development Bank and the Central American Banking Dialogue.

Limits on Foreign Control and Right to Private Ownership and Establishment

The Panamanian government imposes limitations on foreign ownership in the retail, maritime, and media sectors. In most cases, owners of firms in these sectors must be Panamanian. However, foreign investors can continue to use franchise arrangements to own retail outlets within the confines of Panamanian law (under the TPA, direct U.S. ownership of consumer retail is allowed in limited circumstances). There are also limits on the number of foreign workers in some foreign investment structures.

In addition to limitations on ownership, around 200 professions in both the public and private sectors, including within the Panama Canal Authority, are reserved for Panamanian nationals. For example, medical practitioners, lawyers, engineers, accountants, and customs brokers must be Panamanian citizens. Furthermore, the Panamanian government instituted a regulation that rideshare platforms must use drivers who possess commercial licenses, which are available only to Panamanians. In March 2023, the transportation committee of the Panamanian legislature submitted a draft bill for debate that, if approved, would implement additional restrictive regulations on ride-sharing companies, including U.S. ride-sharing firms that operate in Panama. The proposed regulations consist of geographic restrictions, price controls, and driver certification requirements.

With the exceptions of retail trade, the media, and many professions, foreign and domestic entities have the right to establish, own, and dispose of business interests in virtually all forms of remunerative activity, and the Panamanian government does not screen inbound investment. Foreigners do not need to be legally resident or physically present in Panama to establish corporations or obtain local operating licenses for a foreign corporation. However, if a corporation is engaged in retail trade (i.e., not wholesale operations), foreigners cannot serve on the board of directors. Business visas (and citizenship) are readily obtainable for significant investors.

Other Investment Policy Reviews

Panama generally allows private entities to establish and own businesses and engage in remunerative activities. It does not have a formal investment screening mechanism, but the government monitors large foreign investments, especially in the energy sector, through the President’s Cabinet Council.

Panama does not currently impose any sector-specific restrictions or limitations on foreign ownership or control. There are no licensing restrictions, although Executive Decree 81 of May 25, 2017, established controls over dual-use goods for reasons of national security. Panama does not currently have any requirements for controls over technology transfers, but there are limitations on data storage (see data protection law below).

On February 10, 2023, the International Monetary Fund published Panama’s Technical Assistance Report on Macroprudential Policy Frameworks (available at Otherwise, Panama has not undergone any third-party investment policy reviews through a multilateral organization in the past three years.

The WTO conducted a “Trade Policy Review” of Panama as of December 2021. Trade Policy Reviews are an exercise mandated in WTO agreements in which member countries’ trade and related policies are examined and evaluated at regular intervals: WTO | Trade policy review -Panama2022 .

Business Facilitation

Procedures regarding how to register foreign and domestic businesses, as well as how to obtain a notice of operation, can be found on the Ministry of Commerce and Industry’s website ( ), where applicants may register a foreign company, create a branch of a registered business, or register as an individual trader from any part of the world. Corporate applicants must submit notarized documents to the Mercantile Division of the Public Registry, the Ministry of Commerce and Industry, and the Social Security Institute. Panamanian government statistics show that applications from foreign businesses typically take between one to six days to process.

Historically, government procurement procedures have presented barriers to trade with Panama. The Cortizo administration has publicly committed to ensuring greater transparency in the award of government tenders. Law 153, officially passed in May 2020, provides greater transparency in public procurement by mandating that all public entities use an electronic procurement system!/ . While a step in the right direction, the system can be manipulated by competitors of U.S. firms by protesting bids, delaying procurement processes, or requesting the disclosure of certain proprietary information.

Other agencies with which companies typically register are:

Micro, Small and Medium Business Authority: AMPYME – Autoridad de la Micro, Pequeña y Mediana Empresa 
Tax Administration: Dirección General de Ingresos ( 
Corporations, Properties, and Mortgages: 
Social Security: Index – Caja de Seguro Social ( 

Outward Investment

Panama does not incentivize outward investment, nor does it restrict domestic investors from investing abroad. According to the U.S. Bureau of Economic Analysis, the United States received $1.9 billion in FDI from Panamanian sources in 2021.

Panama has 21 bilateral investment protection agreements with: Argentina, Canada, Chile, Cuba, the Czech Republic, the Dominican Republic, Finland, France, Germany, Italy, Mexico, the Netherlands, Qatar, Spain, Sweden, Switzerland, South Korea, Ukraine, the United States, the United Kingdom, and Uruguay. Panama has signed two bilateral investment treaties that have still not entered into force, one with Belgium and Luxembourg, and another with the United Arab Emirates. .

The U.S.-Panama Bilateral Investment Treaty (BIT) entered into force in 1991 and was amended in 2001. The BIT ensures that, with some exceptions, U.S. investors receive fair, equitable, and nondiscriminatory treatment and that both parties abide by international legal standards, such as those for expropriation and compensation and free transfers. Following the October 31, 2012, implementation of the TPA, the investor protection provisions in the TPA have supplanted those in the BIT. However, until October 30, 2022, investors could choose to invoke dispute settlement under the BIT for disputes that arose prior to the TPA’s entry into force, or for disputes related to investment agreements that were completed before the TPA entered into force. Panama has closely scrutinized, and in some cases disputed, which firms may qualify for preferred treatment under the BIT and TPA.

Panama established diplomatic relations with the People’s Republic of China in June 2017. Under the then-Varela administration, the countries were negotiating a free trade agreement and several other infrastructure projects, many of which were subsequently canceled or assigned to other developers. There have been no further formal negotiations regarding a free trade agreement since July 2019, when the Cortizo administration took office.

Current cultural, scientific, and educational cooperation agreements can be found under the Ministry of Foreign Affairs website: .

Panama does not have a bilateral taxation treaty with the United States but has tax agreements with other countries. Bilateral taxation treaties can be found under the Tax Administration website of the Ministry of Economy and Finance: .

Panama is the 87th country to join the OECD Inclusive Framework on Base Erosion and Profit Shifting, and it is one of the 137 Members who joined the October 2021 Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.

Transparency of the Regulatory System

The Panamanian legal, accounting, and regulatory systems are generally transparent and consistent with international norms.

Panama has five regulatory agencies, four that supervise the activities of financial entities (banking, securities, insurance, and “designated non-financial businesses and professions” (DNFBPs)) and a fifth that oversees credit unions. Each regulator regularly publishes on its website detailed policies, laws, guidelines, and sector reports, as well as information regarding fines and sanctions. Panama’s banking regulator began publishing fines and sanctions in late 2016, which tend to be significantly lower than neighboring countries. The securities and insurance regulators have published fines and sanctions since 2010. Law 23 of 2015 created the regulator for DNFBPs, which began publishing fines and sanctions in 2018. In January 2020, the regulator for DNFBPs was granted independence and superintendency status like that of the banking regulator. The Superintendency of the Securities Market is generally considered a transparent, competent, and effective regulator. Panama is a full signatory to the International Organization of Securities Commissions (IOSCO).

Relevant ministries or regulators oversee and enforce administrative and regulatory processes. Any administrative errors or omissions committed by public servants can be challenged and taken to the Supreme Court for a final ruling, a process that often involves a long and arduous dispute resolution. Regulatory bodies can impose sanctions and fines which are made public and can be appealed.

Panama does not promote or require companies to disclose environmental, social, and governance data to facilitate transparency and/or help investors and consumers distinguish between high- and low-quality investments.

Laws are developed in the National Assembly. A proposed bill is discussed in three rounds, edited as needed, and approved or rejected. The President then has 30 days to approve or veto a bill the Assembly has passed. If the President vetoes the bill, it can be returned to the National Assembly for changes or sent to the Supreme Court to rule on its constitutionality. If the bill was vetoed for reasons of unconstitutionality, and the Supreme Court finds it constitutional, the President must sign the bill. Regulations are created by agencies and other governmental bodies, but they can be modified or overridden by higher authorities.

In general, draft bills, including those for laws and regulations on investment, are made available on the National Assembly’s website and can be introduced for discussion at the bill’s first hearing. All bills and approved legislation are published in the Official Gazette in full and summary form and can also be found on the National Assembly’s website: .

Accounting, legal, and regulatory procedures in Panama are based on standards set by the International Financial Reporting Standards (IFRS) Foundation, including financial reporting standards for small and medium-sized enterprises (SMEs). Panama is a member of UNCTAD’s international network of transparent investment procedures. Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations, including the number of steps, the names and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing times, and legal bases justifying the procedures.

Information on public finances and debt obligations (including explicit and contingent liabilities) is transparent. It is published on the Ministry of Economy and Finance’s website under the directorate of public finance, updated monthly: .  The Office of the Comptroller General (OCG) publishes end-of-year reports on its website . The end-of-year report contains information about domestic and external central government debt, loan guarantees, and debt-related obligations, including with respect to debt obligations of state-owned enterprises. On December 22, 2022, President Cortizo signed Law 351 into effect, which implements changes to the OCG. The new law provides that employees of the OCG cannot be held criminally responsible for actions taken in their capacity as employees, and that internal auditors certified by the OCG cannot be dismissed without the Comptroller General’s consent. It also allows the Comptroller General to open and close audits at its discretion.

Mining regulations are in the process of being updated, but reform efforts have not materialized. In 2018, the Supreme Court declared unconstitutional the law on which the country’s largest mining investment contract was based. According to some industry experts, the ruling was a deliberate move to force contract renegotiations and achieve more favorable terms for the government. Between 2021 and 2023, the same company’s concession, governed by bespoke legislation outside of the mining code, was renegotiated for renewal, with a deal reached in March 2023. The agreed-upon contract will significantly increase royalties to the government. Contacts reported that the government used unfair pressure to achieve a deal, including temporarily closing the mine’s ports. Panama’s enormous potential for generating mining income is undercut by long delays in the government’s concession and permit approval process, according to foreign investor contacts.

International Regulatory Considerations

Panama is part of the Central American Customs Union (CACU), the regional economic block for Central American countries. Panama has adopted many of the Central American Technical Regulations (RTCA) for intra-regional trade in goods. Panama applies the RTCA to goods imported from any CACU member and updates Panama’s regulations to be consistent with RTCA. However, Panama has not yet adopted some important RTCA regulations, such as for processed food labeling and dietary supplements/vitamins.

The United States and Panama signed an agreement regarding “Sanitary and Phytosanitary Measures and Technical Standards Affecting Trade in Agricultural Products,” which entered into force on December 20, 2006. The application of this agreement supersedes the RTCA for U.S. food and feed products imported into Panama.

A 2006 law established the Panamanian Food Safety Authority (AUPSA) to issue science-based sanitary and phytosanitary import policies for food and feed products entering Panama. Since 2019, AUPSA and other government entities have implemented or proposed measures that restrict market access. These measures have also increased AUPSA’s ability to limit the import of certain agricultural goods. The Panamanian government, for example, has issued regulations on onions and withheld approval of genetically modified foods, limiting market access and resulting in the loss of millions in potential investment. In March 2021, Panama passed a bill to eliminate the AUPSA. In its place, the bill created the Panamanian Food Agency (APA).  APA began operations on October 1, 2021, and has responsibility for both imports and exports.  This transition continues to be a work in progress, as staff turnover, computer system interoperability, and inspection infrastructure pose ongoing challenges. The APA intends to improve efficiency for agro-exports and industrial food processes, as well as increase market access.

In October 2022, the Animal Health Directorate of Panama’s Ministry of Agriculture issued two decrees that clarified import procedures for U.S.-origin petfood and poultry products from U.S. counties in which Highly Pathogenic Avian Influenza has been detected in commercial flocks. These decrees clarified trade issues related to these products and are in line with World Organization of Animal Health (formerly the Office International des Epizooties) and Animal and Plant Health Inspection Service guidance, as well as regulations under the TPA.

Historically, Panama has referenced or incorporated international norms and standards into its regulatory system, including the Agreements of the WTO, Codex Alimentarius, the World Organization for Animal Health, the International Plant Protection Convention, the World Intellectual Property Organization, the World Customs Organization, and others. Also, Panama has incorporated into its national regulations many U.S. Food and Drug Administration regulations, such as the Pasteurized Milk Ordinance.

Panama, as a member of the WTO, notifies all draft technical regulations to the WTO Committee on Technical Barriers to Trade. However, in the last five years it has ignored comments on its regulations offered by other WTO members, including but not limited to the United States.

Legal System and Judicial Independence

When ruling on cases, judges rely on the Constitution and direct sources of law such as codes, regulations, and statutes. In 2016, Panama transitioned from an inquisitorial to an accusatory justice system, with the goal of simplifying and expediting criminal cases. Fundamental procedural rights in civil cases are broadly similar to those available in U.S. civil courts, although some notice and discovery rights, particularly in administrative matters, may be less extensive than in the United States. Judicial pleadings must be digitized and made a matter of public record (unless there is a specific legal exception to the contrary), but access to records and related processes are not always transparent.

Panama has a legal framework governing commercial and contractual issues and has specialized commercial courts. Contractual disputes are normally handled in civil court or through arbitration unless criminal activity is involved. Some U.S. firms have reported inconsistent, unfair, and/or biased treatment from Panamanian courts. The judicial system’s capacity to resolve contractual and property disputes is often weak, hampered by its lack of technological tools and susceptibility to corruption. The World Economic Forum’s 2019 Global Competitiveness Report rated Panama’s judicial independence at 129 of 141 countries.

The Panamanian judicial system suffers from significant budget shortfalls that continue to affect all areas of the system. The transition to the accusatory system faces challenges in funding for personnel, infrastructure, and operational requirements, while addressing a significant backlog of cases initiated under the previous inquisitorial system. The judiciary still struggles with lack of independence, a legacy of an often-politicized system for appointing judges, prosecutors, and other officials. On January 11, 2022, President Cortizo committed $15 million to the Judicial Branch to implement Law 53 of August 27, 2015, which mandates that judges be selected by a merit-based process instead of by appointment, but implementation still faces serious challenges. Under Panamanian law, only the National Assembly may initiate corruption investigations against Supreme Court judges, and only the Supreme Court may initiate investigations against members of the National Assembly, which has led to charges of a de facto “non-aggression pact” between the two branches.

Regulations and enforcement actions can be appealed through the legal system from Municipal Judges, to Circuit Judges, to Superior Judges, and ultimately to the Supreme Court.

Laws and Regulations on Foreign Direct Investment

Panama has different laws governing investment incentives, depending on the activity, including EMMA – a law adopted in 2020 intended to draw manufacturing investment. In addition, it has SEM, a Tourism Law, an Investment Stability Law, and miscellaneous laws associated with particular sectors, including the film industry, call centers, certain industrial activities, and agricultural exports. In addition, laws may differ in special economic zones, including the Colon Free Trade Zone, the Panama Pacifico Special Economic Area, and the City of Knowledge.

Government policy and law treat Panamanian and foreign investors equally with respect to access to credit. Panamanian interest rates closely follow international rates (i.e., the U.S. federal funds rate, the London Interbank Offered Rate, etc.), plus a country-risk premium.

The Ministries of Tourism, Public Works, and Commerce and Industry, as well as the Minister Counselor for Investment, promote foreign investment. However, some U.S. companies have reported difficulty navigating the Panamanian business environment, especially in the tourism, branding, imports, and infrastructure development sectors. Although individual ministers have been responsive to U.S. companies, fundamental problems such as judicial uncertainty are more difficult to address. U.S. companies have complained about several ministries’ failure to make timely payments for services rendered, without official explanation for the delays. U.S. Embassy Panama is aware of tens of millions of dollars in overdue payments that the Panamanian government owes to U.S. companies.

Some private companies, including multinational corporations, have issued bonds in the local securities market. Companies rarely issue stock on the local market and, when they do, often issue shares without voting rights. Investor demand is generally limited because of the small pool of qualified investors. While some Panamanians may hold overlapping interests in various businesses, there is no established practice of cross-shareholding or stable shareholder arrangements designed to restrict foreign investment through mergers and acquisitions.

The Ministry of Commerce and Industry’s website lists information about laws, transparency, legal frameworks, and regulatory bodies.  Servicios – Ministerio de Comercio e Industrias Panamá ( 

Competition and Antitrust Laws

Panama’s Consumer Protection and Anti-Trust Agency, established by Law 45 on October 31, 2007, and modified by Law 29 of June 2008, reviews transactions for competition-related concerns and serves as a consumer protection agency.

Expropriation and Compensation

Panamanian law recognizes the concept of eminent domain, but it is exercised only occasionally, for example, to build infrastructure projects such as highways, the metro commuter train, and transmission lines. In general, compensation for affected parties is fair. However, in at least one instance, a U.S. company has expressed concern about not being compensated at fair market value after the government revoked a concession. There have been no cases of U.S. claimants citing a lack of due process regarding eminent domain.

Dispute Settlement

ICSID Convention and New York Convention

Panama has been party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (also known as the ICSID Convention or the Washington Convention) since May 8, 1996, and to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards since October 10, 1984.

Investor-State Dispute Settlement

Panama is a signatory to several agreements and bilateral investment treaties in which binding international arbitration of investment disputes is recognized. Panama has a total of 14 free trade agreements, including with Singapore, Peru, Central America, Mexico, South Korea, and Israel, as well as the TPA with the United States. Panama also has more than 21 bilateral investment treaties with different countries around the world, such as Germany, Italy, the Netherlands, Qatar, Sweden, Switzerland, and the United Kingdom, among others. Panama also has a bilateral investment treaty with the United States. U.S. investors have made 10 claims (three of which are pending) under these investment agreements in accordance with the ICSID (

Resolving commercial and investment disputes in Panama can be a lengthy and complex process. Despite protections built into the TPA, investors have struggled to resolve investment issues in court and have often reverted to mediation or arbitration. There are frequent claims of bias and favoritism in the judicial system and complaints about inadequate titling, inconsistent regulations, and a lack of trained officials outside the capital.

There have been allegations that politically connected businesses have received preferential treatment in court decisions and that judges have “slow-rolled” dockets for years without taking action. Panamanian law firms often suggest writing binding arbitration clauses into all commercial contracts. Local courts recognize and enforce foreign arbitration awards issued against the government.

International Commercial Arbitration and Foreign Courts

The Panamanian government accepts binding international arbitration of disputes with foreign investors. Private entities are increasingly reaching out for Alternative Dispute Resolution (ADR) in Panama, primarily due to a lack of confidence in the national judicial system and the attractiveness of a quick turnaround for the settlement of disputes. Two organizations handle most arbitration cases in Panama: the Chamber of Commerce of Panama and the International Chamber of Commerce, via their affiliations with the Panamanian Center for Conflict Resolution and Arbitration.

Panama is party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as well as to the similar 1975 Panama OAS Convention. As noted above, Panama became a member of the ICSID in 1996. Panama adopted the UNCITRAL model arbitration law as amended in 2006. Law 131 of 2013 regulates national and international commercial arbitrations in Panama.

Bankruptcy Regulations

The World Bank 2020 Doing Business Indicator, the most recent report available prior to its discontinuation, ranked Panama 113 out of 190 jurisdictions for resolving insolvency because of a slow court system and the complexity of the bankruptcy process. Panama adopted a new insolvency law (similar to a bankruptcy law) in 2016, but the Doing Business Indicator ranking did not identify any material improvement for this metric as a result of the 2016 insolvency law. The insolvency law provides that an insolvent company or its creditors (through a “board of creditors”) can commence a legal proceeding to restructure the company’s debt obligations. The reorganization petition must be accompanied by a series of documents, including the company’s financial statements and the proposed reorganization plan. The reorganization plan must be approved by the board of creditors and demonstrate the company will solve the problems that led to its failure to timely meet its financial obligations.

Investment Incentives

Panama provides Industrial Promotion Certificates (IPCs) to incentivize industrial development in high-value-added sectors. Targeted sectors include research and development, management and quality assurance systems, environmental management, utilities, and human resources. Approved IPCs provide up to 35 percent in tax reimbursements and preferential import tariffs of 3 percent. Panama does not have a practice of issuing guarantees or jointly financing FDI projects, instead relying on international financial institutions to fill the role.

Law 1 (2017) modified Law 28 (1995) by exempting exports from income tax and exempting from import duty machinery for companies that export 100 percent of their products. Producers that sell any portion of their products in the domestic market pay only a 3 percent import tariff on machinery and supplies.

SEM was enacted in 2007 to encourage multinational investment in Panama. The law focuses on administrative back-office operations, such as payroll, accounting, and other functions.

The GoP enacted EMMA as a special incentive law to attract FDI in manufacturing, remanufacturing, maintenance and product repair, assembly, logistics services, and refurbishing. EMMA is a complement to SEM and offers tax and employee incentives to qualifying companies, as well as reducing import duties and fees for equipment and supplies used in the manufacturing process. Any company that is licensed under SEM will automatically qualify for EMMA.

In 2012, Panama introduced a tourism incentive law to promote foreign investment in tourism and the hospitality industry. The incentives are available outside the district of Panama to companies registered through the National Tourism Registry of the Panama Tourism Authority and provide tax incentives and exemptions on real estate, imported good, construction materials, appliances, furniture, and equipment. Panama further modified the law in 2019 and 2022 to provide additional tax credits for new projects and extensions on existing projects through December 31, 2024. The 2022 modification lowered the tax credit from 100 percent to 60 percent of the total investment cost of the project, excluding the value of the land, and limits the tax credit to tourist areas outside of the district of Panama. These tax credits must be used within ten years from the start of a project.

Law 186 of December 2, 2020, facilitates entrepreneurship through a simplified registration system and tax incentives for entrepreneurs.

Panama has enacted a list of laws that provide attractive incentives for domestic and foreign investment in the energy sector. These laws encourage all-source energy projects such as hydroelectric plants, LNG plants, biofuel and biomass plants, wind, and solar. Some of the incentives include a 5 percent discount on income tax. For biofuel and biomass projects, incentives include a 10-year exemption from income taxes, a total exemption from entry fee costs, and a 10-year exemption from distribution or transmission rights for spot market operations.

Law No. 37 of June 10, 2013, establishes incentives for the construction, operation, and maintenance of solar power plants and/or installations.

Executive Decree No. 45 of June 10, 2009, provides incentives for hydroelectric generation systems and other new renewable and clean sources listed in Law No.45 of August 4, 2004, which establishes incentives for hydroelectric plants and other renewable and clean energy sources, as well as other favorable provisions.

Law No. 44 of April 25, 2011, establishes incentives for the construction and operation of wind power plants for the public electricity sector/service.

Foreign Trade Zones/Free Ports/Trade Facilitation

Panama is home to the Colon Free Trade Zone, the Panama Pacifico Special Economic Zone, and 21 other “free trade zones” (12 active and 9 in development). The Colon Free Trade Zone has more than 1,800 businesses, the Panama Pacifico Special Economic Zone has more than 345 businesses, and the remaining free trade zones host over 125 companies. These zones provide special tax and other incentives for manufacturers, back-office operations, and call centers. Additionally, the Colon Free Trade Zone offers companies preferential tax and duty rates that are levied in exchange for basic user fees and a 5 percent dividend tax (or 2 percent of net profits if there are no dividends). Banks and individuals in Panama pay no tax on interest or other income earned outside Panama. No taxes are withheld on savings or fixed time deposits in Panama. Individual depositors do not pay taxes on time deposits. Free trade zones offer tax-free status, special immigration privileges, and license and customs exemptions to manufacturers located within them. Investment incentives offered by the Panamanian government apply equally to Panamanian and foreign investors as a matter of law, although in practice they are not always equally applied.

Performance and Data Localization Requirements

There are no legal performance requirements such as minimum export percentages, significant requirements of local equity interest, or mandatory technology transfers. Generally, there are no requirements that host country nationals be chosen to serve in roles of senior management or on boards of directors. However, if a corporation is engaged in retail trade (i.e., not wholesale operations), foreigners cannot serve on the board of directors. There are no established general requirements that foreign investors invest in local companies, purchase goods or services from local vendors, or invest in research and development or other facilities. Depending on the sector, companies may be required to have 85-90 percent Panamanian employees. There are exceptions to this policy, but the government must approve these on a case-by-case basis. Fields dominated by strong unions, such as construction, have opposed issuing work permits to foreign laborers and some investors have struggled to fully staff large projects. However, professional visas are generally available and the procedures to obtain work permits are generally not considered onerous.

As part of its effort to become a hub for finance, logistics, and communications, Panama has endeavored to become a data storage center for companies (see data protection law below). According to the Panamanian Authority for Government Innovation (AIG, ), most of these firms offer services to banking and telephone companies in Central America and the Caribbean. Panama boasts strong international connectivity, with seven undersea fiber optic cables and an eighth currently under construction.

Panama’s data protection law (Law 81 of 2019) established the principles, rights, obligations, and procedures that regulate the protection of personal data. The National Authority for Transparency and Access to Information oversees the law’s enforcement, which began in March 2021. For extra-territorial transfer of data, the implementing regulation allows for contractual clauses or adequacy findings. An adequacy finding for the United States is still pending.

In September 2021, AIG issued a resolution requiring government entities with mission-critical or sensitive data in the cloud to transition such data to in-country storage facilities by December 31, 2022. According to U.S. companies and cloud service providers, the resolution has not had a material impact on their operations in Panama and enforcement mechanisms have not been implemented. AIG continues to develop a data classification scheme to aid companies and government agencies with understanding levels of data sensitivity.

The personal privacy of communications and documents is provided for in the Panamanian Constitution as a fundamental right (Political Constitution, article 29). The Constitution also provides for a right to keep personal data confidential (article 44). The Criminal Code imposes an obligation on businesses to maintain the confidentiality of information stored in databases or elsewhere and establishes several crimes for the misuse of such information (Criminal Code, articles 164, 283, 284, 285, 286). Panama’s electronic commerce legislation also states that providers of electronic document storage must guarantee the protection, reliability, and proper use of information and data stored on behalf of their customers (Law 51, July 22, 2008, article 55).

Real Property

Mortgages and liens are widely used in both rural and urban areas and the recording system is reliable. There are no specific regulations regarding land leasing or acquisition by foreign and/or non-resident investors.

A large portion of land in Panama, especially outside of Panama City, is not titled. A system of rights of possession exists, but there are multiple instances where such rights have been successfully challenged. The World Bank’s Doing Business 2020 report ( ) notes that Panama is ranked 87 out of 190 countries on the Registering Property indicator and ranks 141st in enforcing contracts. Panama enacted Law 80 (2009) to address the lack of titled land in certain parts of the country; however, the law does not address deficiencies in government administration or the judicial system. In 2010, the National Assembly approved the creation of the National Land Management Authority (ANATI) to administer land titling; however, investors have complained about ANATI’s capabilities and lengthy adjudication timelines. ANATI has attempted to clean up some titling issues and sought international assistance to modernize.

The judicial system’s capacity to resolve contractual and property disputes is generally considered weak and susceptible to corruption, as illustrated by the most recent World Economic Forum’s Global Competitiveness Report 2019 ( ), which ranks Panama’s judicial independence as 129 out of 141 countries. Americans should exercise greater due diligence in purchasing Panamanian real estate than they would in purchasing real estate in the United States. Engaging a reputable attorney and a licensed real estate broker is strongly recommended.

If legally purchased property is unoccupied, property ownership can revert to other owners (squatters) after 15 years of living on or working the land, although the parties must go to court to resolve ownership.

Intellectual Property Rights

Panama has an adequate and effective domestic legal framework to protect and enforce intellectual property rights (IPR). The legal structure is strong and enforcement is generally good (subject to the judicial system’s weaknesses discussed above). Although theft and infringement on rights occur, they are not so common as to include Panama on the Special 301 Watch List or Priority Watch List. There were no new IPR laws or regulations proposed or enacted in the past year, although the National Customs Authority (ANA) has deployed cargo scanners under its “Invisible Shield” program aimed at detecting counterfeit goods and other contraband transiting Panama. The network of cargo scanners will be monitored from a central monitoring station in Panama City staffed by ANA personnel and an IPR prosecutor. The U.S.-Panama TPA improved standards for the protection and enforcement of a broad range of IPR, including patents; trademarks; undisclosed tests and data required to obtain marketing approval for pharmaceutical and agricultural chemical products; and digital copyright products such as software, music, books, and videos. To implement the requirements of the TPA, Panama passed Law 62 of 2012 on industrial property and Law 64 of 2012 on copyrights. Law 64 also extended copyright protection to the life of the author (including co-authors) plus 70 years, mandates the use of legal software in government agencies, makes copyright infringement a felony, and protects against the theft of encrypted satellite signals and the manufacturing or sale of tools to steal signals.

Panama is a member of the Paris Convention for the Protection of Industrial Property, the World Intellectual Property Organization (WIPO), the Universal Copyright Convention, and the Berne Convention for the Protection of Literary and Artistic Works. In addition, Panama was one of the first countries to ratify the WIPO Internet Treaties (WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty). As a member of the World Trade Organization, Panama is a party to and has implemented its obligations under the TRIPS Agreement. Panama’s Industrial Property Law (Law 35 of 1996) provides 20 years of patent protection from the date of filing, or 15 years from the filing of pharmaceutical patents. Panama has expressed interest in participating in the Patent Protection Highway with the U.S. Patent and Trademark Office. Law 35, amended by Law 61 of 2012, also provides trademark and trade secrets protection, simplified the registration of trademarks, and allows for trademark renewals for 10-year periods. The law grants ex-officio authority to government agencies to conduct investigations and seize suspected counterfeit materials. Decree 123 of 1996 and Decree 79 of 1997 specify the procedures that ANA and Colon Free Trade Zone officials must follow to investigate and confiscate merchandise. In 1997, ANA created a special office for IPR enforcement; in 1998, the Colon Free Trade Zone followed suit.

The Government of Panama is making efforts to strengthen the enforcement of IPR. MICI oversees the Committee for Intellectual Property (CIPI), which is comprised of representatives from the Colon Free Trade Zone, MICI’s Offices of Industrial Property and Copyright, ANA, and the Intellectual Property Prosecution Unit of the Public Ministry (IPPU). CIPI is responsible for the development of intellectual property policy. Since 1997, two district courts and one superior tribunal have exclusive jurisdiction of antitrust, patent, trademark, and copyright cases. IPR law criminal cases are adjudicated in the Accusatory Penal System by Guarantees Judges, the Oral Trial Tribunal, and the Appeals Court. Civil and criminal jurisdictions are nonexclusive, and IPR cases may be prosecuted through both avenues. Since January 2003, a specific prosecutor with national authority over IPR cases has consolidated and simplified the prosecution of such cases. Law 1 of 2004 added crimes against IPR as a predicate offense for money laundering, and Law 14 establishes a 5 to 12-year prison term for IPR offenses.

Various Panamanian entities, such as the ANA, track and report on seizures of counterfeit goods, but there is no single repository or website that consolidates this information. The IPPU currently has a team of 12 attorneys and 15 operations officers dedicated to IPR violations, but there have so far been relatively few criminal prosecutions. Panama executes search warrants on businesses that trade in counterfeit goods, but such items are usually seized administratively without criminal prosecutions. ANA and free trade zone authorities may conduct IPR administrative actions against the trade of counterfeit goods. Decree 466 of 2015 provides that after ANA or a free trade zone authority completes an administrative process, it must send the case to the Public Ministry to determine whether to commence a criminal investigation.

Panama is not included in the 2023 United States Trade Representative (USTR) Special 301 Report.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .

Resources for Rights Holders

Embassy point of contact:
Colombia Primola
Economic Specialist

Local lawyers list: Services for U.S. and Local Citizens – U.S. Citizen Services – U.S. Embassy in Panama (

Capital Markets and Portfolio Investment

Panama has a stock market with an effective regulatory system developed to support foreign investment. Article 44 of the constitution guarantees the protection of private ownership of real property and private investments. Some private companies, including multinational corporations, have issued bonds in the local securities market. Companies rarely issue stock on the local market and, when they do, often issue shares without voting rights. Investor demand is generally limited because of the small pool of qualified investors. While some Panamanians may hold overlapping interests in various businesses, there is no established practice of cross-shareholding or stable shareholder arrangements designed to restrict foreign investment through mergers and acquisitions. Panama has agreed to IMF Article VIII and pledged not to impose restrictions on payments and transfers for current international transactions.

In 2012, Panama modified its securities law to regulate brokers, fund managers, and matters related to the securities industry. The Commission structure was modified to follow the successful Banking Law model and now consists of a superintendent and a board of directors. The Superintendency of the Securities Market is generally considered a competent and effective regulator. As noted above, Panama is a full signatory to IOSCO.

Government policy and law with respect to access to credit treat Panamanian and foreign investors equally. Panamanian interest rates closely follow international rates (i.e., the U.S. federal funds rate, the London Interbank Offered Rate, etc.), plus a country-risk premium.

Money and Banking System

Panama’s banking sector is developed and highly regulated and there are no restrictions on a foreigner’s ability to establish a bank account. Foreigners are required to present a passport and taxpayer identification number and an affidavit indicating that the inflow and outflow of money meets the tax obligations of the beneficiary’s tax residence. The adoption of financial technology in Panama is nascent, but there are several initiatives underway to modernize processes.

Some U.S. citizens and entities have had difficulty meeting the high documentary threshold for establishing the legitimacy of their activities both inside and outside Panama. Banking officials counter such complaints by citing the need to comply with international financial transparency standards. Several of Panama’s largest banks have gone so far as to refuse to establish banking relationships with whole sectors of the economy, such as casinos and e-commerce, in order to avoid all possible associated risks. Regulatory issues have made it difficult for some private U.S. citizens to open bank accounts in Panama, leaving some legitimate businesses without access to banking services in Panama. Due to its dollarized economy, Panama has no central bank, lender of last resort, or deposit insurance.

The banking sector is highly dependent on the operating environment in Panama, but it is generally well-positioned to withstand shocks. The banking sector could be impacted if Panama’s sovereign debt rating continues to fall. As of March 31, 2023, the sovereign debt rating remains investment grade, with ratings of Baa2 (Moody’s), BBB- (Fitch), and BBB (Standard & Poor’s). Approximately 3 percent of total banking sector assets are estimated by the Banking Superintendent to be non-performing as of November 2022.

Panama’s 2008 Banking Law – together with its implementing regulations in line with Basel III Standards – regulates the country’s financial sector. The law concentrates regulatory authority in the hands of a well-financed Banking Superintendent (  ).

Traditional bank lending from the well-developed banking sector is relatively efficient and is the most common source of financing for both domestic and foreign investors, offering the private sector a variety of credit instruments. The free flow of capital is actively supported by the government and is viewed as essential to Panama’s 66 banks (2 official banks, 40 domestic banks, 14 international banks, and 10 bank representational offices).

Foreign banks can operate in Panama and are subject to the same regulatory regime as domestic banks. Panama has not lost any correspondent banking relationships in the last three years despite its inclusion on the FATF grey list since June 2019. According to the Banking Association, an international bank announced it would leave Panama in 2023 due to “excessive compliance costs” related to Panama’s continued presence on the FATF grey list.

There are no restrictions on, nor practical measures to prevent, hostile foreign investor takeovers, nor are there regulatory provisions authorizing limitations on foreign participation or control, or other practices that restrict foreign participation. There are no government or private sector rules that prevent foreign participation in industry standards-setting consortia. Financing for consumers is relatively open for mortgages, credit cards, and personal loans, even to those earning modest incomes.

Panama’s strategic geographic location, dollarized economy, status as a regional financial, trade, and logistics hub, and favorable corporate and tax laws make it an attractive destination for money launderers. Money laundered in Panama is believed to come in large part from the proceeds of drug trafficking. Tax evasion, bank fraud, and corruption are also believed to be major sources of illicit funds in Panama. Criminals have been accused of laundering money through shell companies and via bulk cash smuggling and trade at airports and seaports, and in active free trade zones.

In 2015, Panama strengthened its legal framework, amended its criminal code, harmonized legislation with international standards, and passed a law on anti-money laundering/combating the financing of terrorism (AML/CFT). Panama also approved Law 18 (2015), which severely restricts the use of bearer shares; companies still using them must appoint a custodian and maintain strict controls over their use. In addition, Panama passed Law 70 (2019), which criminalizes tax evasion and defines it as a money laundering predicate offense. In 2021, Panama passed Law 254, which modifies six distinct laws in order to give the non-financial regulator more authority and strengthen know-your-customer (KYC) requirements. For example, it modifies Law 23 of 2015 to align Panama with accounting records standards and increase sanctions for money laundering violations from $1 million to $5 million; it also modifies Law 52 of 2016 to require resident agents for offshore corporations to hold or have access to a copy of the company’s accounting records.

In June 2019, FATF added Panama to its grey list of jurisdictions subject to ongoing monitoring due to strategic AML/CFT deficiencies. FATF cited Panama’s lack of “positive, tangible progress” in measures of effectiveness. Panama agreed to an Action Plan in four major areas: 1) risk, policy, and coordination; 2) supervision; 3) legal persons and arrangements; and 4) money laundering investigation and prosecution. The Action Plan outlined concrete measures that were to be completed in stages by May and September 2020. Due to the COVID-19 pandemic, FATF granted Panama two extensions, pushing the deadline to January 2021. In its February 2023 plenary, FATF recognized that Panama had largely completed 13 of 15 items on its Action Plan and highlighted the items Panama must still address, while noting the country’s progress since the last plenary meeting.

In February 2023, the European Union (EU) kept Panama on its tax haven blacklist along with American Samoa, Fiji, Guam, Palau, Samoa, Trinidad and Tobago, the U.S. Virgin Islands, and Vanuatu. The EU does not consider Panama to have met international criteria on transparency and exchange of tax information. Panama, however, remains committed to complying with the recommendations of the OECD’s domestic tax base erosion and profit shifting action plan.

Panama has made strides in increasing criminal prosecutions and convictions related to money laundering and tax evasion. However, law enforcement needs more tools and training to conduct long-term, complex financial investigations, including undercover operations. The criminal justice system remains at risk for corruption. Panama has made progress in assessing high-risk sectors, improving inter-ministerial cooperation, and implementing a law on beneficial ownership. Additionally, the GoP and the United States signed an MOU in August 2020 that created an anti-money laundering and anti-corruption task force that has advanced investigations of financial crimes. The United States provides training to the task force to combat money laundering and corruption, as well as training for judicial investigations and prosecutions.

Foreign Exchange and Remittances

Foreign Exchange

Panama’s official currency is the U.S. Dollar.

Remittance Policies

Panama has customer due diligence, bulk cash, and suspicious transaction reporting requirements for money service providers (MSB), including 18 remittance companies. In 2017, the Banking Superintendent assumed oversight of AML/CFT compliance for MSBs. MICI grants operating licenses for remittance companies under Law 48 (2003).

Sovereign Wealth Funds

Panama started a sovereign wealth fund, called the Panama Savings Fund (FAP), in 2012 with an initial capitalization of $1.3 billion. The fund follows the Santiago Principles and is a member of the International Forum of Sovereign Wealth Funds. The law mandates that from 2015 onward contributions to the National Treasury from the Panama Canal Authority in excess of 3.5 percent of GDP must be deposited into the Fund. In October 2018, the rule for accumulation of the savings was modified to require that when contributions from the Canal exceed 2.5 percent of GDP, half the surplus must go to national savings. At the end of 2022, the value of the FAP’s assets totaled $1.3 billion. The FAP’s cumulative gross return for 2022 was negative 8.64 percent, and its end-of-year deficit was $129 million. The FAP’s assets are mainly concentrated in North America (82 percent) and Europe (9 percent).

Panama has 16 non-financial state-owned enterprises (SOEs) and 8 financial SOEs that are included in the budget and broken down by enterprise. Each SOE has a board of directors with ministerial participation from the GoP. SOEs are required to send a report to the Ministry of Economy and Finance, the OCG, and the Budget Committee of the National Assembly within the first 10 days of each month showing their budget implementation. The reports detail income, expenses, investments, public debt, cash flow, administrative management, management indicators, programmatic achievements, and workload. SOEs are also required to submit quarterly financial statements. SOEs are audited by the OCG.

The National Electricity Transmission Company (ETESA) is an example of an SOE in the energy sector, and Tocumen International Airport and the National Highway Company (ENA) are SOEs in the transportation sector. Financial allocations and earnings from SOEs are publicly available at the Official Digital Gazette ( ), as well as their respective websites.

Privatization Program

Panama’s privatization framework law does not distinguish between foreign and domestic investor participation in prospective privatizations. The law calls for pre-screening of potential investors or bidders in certain cases to establish technical capability, but nationality and Panamanian participation are not criteria. The Government of Panama undertook a series of privatizations in the mid-1990s, including most of the country’s electricity generation and distribution, its ports, and its telecommunications sector. There are presently no privatization plans for any major state-owned enterprise.

Panama maintains strict domestic laws relating to labor and employment rights and environmental protection. While enforcement of these laws is not always stringent, major construction projects are required to complete environmental assessments, guarantee worker protections, and comply with government standards for environmental stewardship.

The ILO program “Responsible Business Conduct in Latin America and the Caribbean” is active in Panama and has partnered with the National Council of Private Enterprise (CoNEP) to host events on gender equality. Panama does not yet have a State National Action Plan on Business and Human Rights.

In February 2012, Panama adopted International Standards Operation (ISO) 26000 to guide businesses in the development of corporate social responsibility (CSR) platforms. In addition, business groups, including the Association of Panamanian Business Executives (APEDE) and the American Chamber of Commerce (AmCham), are active in encouraging and rewarding good CSR practices. Since 2009, the AmCham has given an annual award to recognize member companies for their positive impact on their local communities and the environment.

Panama has two goods on the U.S. Department of Labor’s (DOL) “List of Goods Produced by Child Labor or Forced Labor”: melons and coffee. DOL removed sugarcane from the list in 2019. Child labor is also prevalent among street vendors and in other informal occupations.

There have been several disputes over the resettlement of indigenous populations to make room for hydroelectric projects, such as at Barro Blanco and Changuinola I. The government mediates in such cases to ensure that private companies are complying with the terms of resettlement agreements.

Despite human resource constraints, Panama effectively enforces its labor and environmental laws relative to the region and conducts inspections in a methodical and equitable manner. Panama encourages adherence to the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas and supports the Kimberley Process. Panama is not a government sponsor of either the Extractive Industries Transparency Initiative (EITI) or the Voluntary Principles on Security and Human Rights.

The National Council of Organized Workers (CONATO) and the National Confederation of Trade Union Unity (CONUSI) are the most active labor organizations advocating for worker rights in the private sector. They enjoy access to and dialogue with key decisionmakers. CONATO is currently participating in a nationwide dialogue regarding the future of Panama’s pension regime, which is expected to exhaust its cash reserves by the end of 2023. CONUSI is focused on labor rights in the construction sector.

Panama is a signatory of the Montreux Document on Private Military and Security Companies. Panama follows the standards set by ISO and certifies security companies in quality management and security principles consistent with ISO standards.

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

Panama ratified the United Nations Framework Convention on Climate Change (UNFCCC) through Law 10 of April 12, 1995. Law 8 of March 25, 2015, includes a title on climate change and chapters on mitigation and adaptation. Executive Decree 36 of May 28, 2018, established the Ministry of Environment, which includes the Climate Change Directorate, in accordance with Law 41 of July 1, 1998, the General Law on the Environment.

In 2022, a draft law on Panama’s Climate Change Regulatory Framework was unanimously approved by the Cabinet and submitted to the National Assembly for debate. The proposed law would increase inter-institutional coordination, create a Vice-Ministry of Climate Change, set requirements for participation in the National Carbon Market, and provide for the transaction of negotiable climate financial instruments.

The government relies on the Green Climate Fund, established within the framework of the UNFCCC, to finance programs and projects for mitigation and adaptation, promulgated by the public and private sectors.

Panama presented three National Communications, in 2000, 2011, and 2019; a biennial update report in 2019; its first Nationally Determined Contribution (NDC) in 2016; and an update to the first NDC in 2020. Panama’s enhanced NDC is in line with the 2030 Paris Agreement to limit warming to 1.5 degrees Celsius and to maintain negative or net zero GHG emissions through 2050.

The Government of Panama touts itself as one of only three countries in the world whose emissions are “carbon negative,” along with Bhutan and Suriname. In 2021, Panama began the “Reduce Your Corporate Footprint” program, which is the first voluntary state program for the management of the carbon and water footprint at the organizational level in the country. This program establishes a standardized process to identify, calculate, report and verify the carbon and water footprint within the operational limits of public, private, and civil society organizations that are legally constituted in the national territory.

Panama’s national strategy for climate change aims to boost and increase the use of renewables, protect coastal regions, create green jobs, integrate transportation networks, design a carbon market, manage greenhouse gas emissions, boost adaptation capabilities, reduce the use of plastics (the government banned 11 types of single-use plastics in 2021), and contribute to the socioecological wellbeing of all Panamanians.

In January 2023, President Cortizo signed into law landmark biofuels legislation, which includes an ethanol blending mandate requiring gasoline to contain at least 5 percent ethanol by April 2024, increasing to 10 percent by April 2026. Panama is also a signatory of the Methane Pledge, and in February the government confirmed Panama’s participation in the Agricultural Innovation Mission for Climate and took steps to join the Sustainable Productivity Growth Coalition.

On March 2-3, 2023, Panama hosted the eighth Our Ocean Conference (OOC), showcasing its environmental ambitions and actions on the world stage. OOC resulted in over $19.9 billion in global commitments, including nearly $6 billion in commitments from the United States. At OOC 2023, President Cortizo signed a new executive decree expanding Panama’s marine protected areas from 30 percent to 54.25 percent, further protecting marine ecosystems in the Pacific and Atlantic Oceans.

In 2022, Climatescope by BloombergNEF ranked Panama as the 30th most attractive market for energy transition project investment out of 107 countries surveyed.

Corruption is among Panama’s most significant challenges. Panama ranked 101 out of 180 countries in the 2022 Transparency International Corruption Perceptions Index. High-profile alleged procurement irregularities, including several related to pandemic response, have contributed to public skepticism of government transparency. U.S. investors allege that corruption is present in the private sector and at all levels of the Panamanian government. Purchase managers and import/export businesses have been known to overbill or skim percentages off purchase orders, while judges, mayors, members of the National Assembly, and local representatives have reportedly accepted payments for facilitating land titling and favorable court rulings. The Foreign Corrupt Practice Act precludes U.S. companies from engaging in bribery or other similar activities, and U.S. companies look carefully at levels of corruption before investing or bidding on government contracts.

The process to apply for permits and titles can be opaque, and civil servants have been known to ask for payments at each step of the approval process. The land titling process has been troublesome for many U.S. companies, some of which have waited decades for cases to be resolved. U.S. investors in Panama also complain about a lack of transparency in government procurement. The parameters of government tenders often change during the bidding process, creating confusion and the perception that the government tailors tenders to specific companies. Panama passed Law 153 on May 8, 2020, to modernize its public procurement system and address some of these concerns.

Panama’s government lacks strong systemic checks and balances that incentivize accountability. All citizens are bound by anti-corruption laws; however, under Panamanian law, only the National Assembly may initiate corruption investigations against Supreme Court judges, and only the Supreme Court may initiate investigations against members of the National Assembly, which has led to charges of a de facto “non-aggression pact” between the branches. Another key component of the judicial sector, the Public Ministry (Department of Justice) and the Organo Judicial (Judicial Branch), have struggled with a historical susceptibility to political influence.

In late 2016, Brazilian construction firm Odebrecht admitted to paying $59 million in bribes to win Panamanian contracts worth at least $175 million between 2010 and 2014. Odebrecht’s admission was confined to bribes paid during the Martinelli administration; however, former President Juan Carlos Varela (2014-2019) is also under investigation on charges of corruption related to Odebrecht. Odebrecht agreed to pay $220 million as part of a judicial settlement, but Panama imposed additional sanctions after Odebrecht failed to make all the required payments. While Odebrecht continues to operate in Panama, Odebrecht is still under litigation after the Government of Panama asked to terminate the contracts for two projects: the Hydraulic Project Chan II and the new terminal at Tocumen International Airport. The Government of Panama is now seeking to ban Odebrecht from any other public procurement tenders.

Panama has basic anti-corruption mechanisms in place, including weak victim and witness protection programs and conflict-of-interest rules. Accordingly, the public perceives that anti-corruption laws are inadequate and not applied rigorously by government enforcement bodies and courts that are not effective in pursuing and prosecuting those accused of corruption. The lack of a strong professionalized career civil service in Panama’s public sector has also hindered systemic change. The fight against corruption is hampered by the government’s refusal to dismantle Panama’s dictatorship-era libel and contempt laws, which can be used to punish whistleblowers and intimidate journalists. Acts of corruption are seldom prosecuted, and perpetrators are almost never jailed.

Under President Cortizo, Panama has taken some measures to improve the business climate and encourage transparency. These include a public-private partnership (PPP) law passed in September 2019 that covers construction, maintenance, and operations projects valued at more than $10 million. The law is designed to implement checks and balances and eliminate discretion in contracting, a positive step that will increase transparency and create a level playing field for investors. In addition, the public procurement law that was approved in May 2020 is aimed at improving bidding processes so that no tenders can be “made to order”.

Panama ratified the UN’s Anti-Corruption Convention in 2005 and the Organization of American States’ Inter-American Convention Against Corruption in 1998. However, there is a perception that Panama should more effectively implement both conventions.

Resources to Report Corruption

National Director
Autoridad Nacional de Transparencia y Acceso a la Informacion
Ave. del Prado, Edificio 713, Balboa, Ancon, Panama, República de Panama
+507 527-9270

Olga de Obaldia
Executive Director
Fundacion Para el Desarrollo y Libertad Ciudadana (Panama’s TI Chapter)
Urbanización Nuevo Paitilla. Calle 59E. Dúplex Nº 25. Ciudad de Panamá. PANAMÁ
+507 223-4120 

Panama is a peaceful and stable democracy. On rare occasions, large-scale protests can turn violent and disrupt commercial activity in affected areas. In July 2022, nationwide protests against high gas prices and rising inflation wracked the country.  Groups from diverse sectors of society, including an array of union members and indigenous activists, forced the closures of schools, major highways, and businesses, and prevented free movement of people and goods.  In a first round of negotiations with organizations representing the protestors, President Cortizo made numerous concessions, including subsidies for gasoline and price caps for certain medicines.  A second phase of negotiations was scheduled to begin in October 2022, but talks never resumed after participants failed to agree on a mediator.

Mining and energy projects have been sensitive issues, especially those that involve development in designated indigenous areas called comarcas. One U.S. company has reported not only protests and obstruction of access to one of its facilities, but costly acts of vandalism against its property. The unrest is related to disagreements about compensation for affected community members. The GoP has attempted to settle the dispute, but without complete success.

In May 2019, Panama held national elections that international observers agreed were free and fair. The transition to the new government was smooth. Panama’s Constitution provides for the right of peaceful assembly, and the government respects this right. No authorization is needed for outdoor assembly, although prior notification for administrative purposes is required. Unions, student groups, employee associations, elected officials, and unaffiliated groups frequently attempt to impede traffic and disrupt commerce in order to force the government or private businesses to agree to their demands.

Homicides in Panama decreased by 9 percent in 2022, to 501, 49 fewer than were recorded in 2021. Strife among rival gangs and turf battles in the narcotrafficking trade continue to contribute significantly to the number of homicides each year. Panamanian authorities assess that 70 percent of homicides in the country are linked to organized crime, especially transnational drug trafficking and gangs. The 2022 homicide rate of 11.5 per 100,000 people is still among the lowest in Central America, but remains higher than pre-pandemic levels (e.g., 480 homicides registered in 2019).

According to official surveys carried out in April 2022, the unemployment rate in Panama improved significantly, but the level of informality remained high. As of April 2022, the unemployment rate stood at 9.9 percent and the informality rate at 48.2 percent, while the economically active population (the number of people looking for work) had increased by 4 percent, according to the labor market survey carried out by INEC.

There is a shortage of skilled workers in accounting, information technology, and specialized construction, and a minimal number of English-speaking workers. Panama spends approximately 10 percent of its budget, or 4 percent of GDP, on education. While Panama has one of the highest minimum wages in the hemisphere, the 2018-2019 World Economic Forum Global Competitiveness Report ranked Panama 89 out of 141 countries for the skillsets of university graduates.

The government’s labor code remains highly restrictive. The Panamanian Labor Code, Chapter 1, Article 17, establishes that foreign workers can constitute only 10 percent of a company’s workforce, or up to 15 percent if those employees have a specialized skill. By law, businesses can only exceed these caps for a defined period and with prior approval from the Ministry of Labor.

Several sectors, including the Panama Canal Authority, the Colon Free Trade Zone, and export processing zones/call centers, are covered by their own labor regimes. Employers outside these zones, such as those in the tourism sector, have called for greater flexibility, easier termination of workers, and the elimination of many constraints on productivity-based pay. The Panamanian government has issued waivers to regulations on an ad hoc basis to address employers’ demands, but there is no consistent standard for obtaining such waivers.

The law allows private sector workers to form and join independent unions, bargain collectively, and conduct strikes. Public sector employees may organize to create a professional association to bargain collectively on behalf of its members, even though public institutions are not legally obligated to bargain with the association. Members of the national police are the only workers prohibited from creating professional associations. The law prohibits anti-union discrimination and requires reinstatement of workers terminated for union activity, but does not provide adequate mechanisms to enforce this right.

The Ministry of Labor’s Board of Appeals and Conciliation has authority to resolve certain labor disagreements, such as internal union disputes, enforcement of the minimum wage, and some dismissal issues. The law allows arbitration by mutual consent, at the request of the employee or the ministry, and in the case of a collective dispute in a privately held public utility. It allows either party to appeal if arbitration is mandated during a collective dispute in a public-service company. The Board of Appeals and Conciliation has exclusive competency for disputes related to domestic employees, some dismissal issues, and claims of less than $1,500.

The Ministry of the Presidency’s Conciliation Board hears and resolves complaints by public-sector workers. The Board refers complaints that it fails to resolve to an arbitration panel, which consists of representatives from the employer, the professional association, and a third member chosen by the first two. If the dispute cannot be resolved, it is referred to a tribunal under the Board. Observers, however, have noted that the Ministry of the Presidency has not yet designated the tribunal judges. The alternative to the Board is the civil court system.

Panama does not have a system of unemployment insurance. Instead, workers receive large severance payments from their employer upon termination. During the COVID-19 pandemic, employers were permitted to furlough workers for longer than normally permitted, without paying severance. Law 201 of February 25, 2021, allowed employers to establish temporary measures to preserve employment and normalize labor relations by extending furloughs to the end of 2021. This law ended on December 31, 2021.


Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $63,605 2021 $63,605 Panama: Development news, research, data | World Bank
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2021 $10,945 2021 $3,460 BEA data available at
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2021 $1,872 BEA data available at
Total inbound stock of FDI as % host GDP N/A N/A 2021 94.1% UNCTAD data available at

FactSheet_2021_new (


* Source for Host Country Data: 

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data 2021
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 59,039 100% Total Outward N/A 100%
United States 10,945 18.5% Country #1 N/A X%
Colombia 10,329 17.5% Country #2 N/A X%
Barbados 6,471 11.0% Country #3 N/A X%
Switzerland 3,925 6.6% Country #4 N/A X%
United Kingdom 2,654 4.5% Country #5 N/A X%
“0” reflects amounts rounded to +/- USD 500,000.

Colombia Primola
Economic Specialist – Economic Section
Office: +507 317-5491
Cell: +507 6613-4687

2023 Investment Climate Statements: Panama
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