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I N V E S T M E N T O P P O R T U N I T I E S

panama

GENERAL INFORMATION

PRESIDENTIAL MESSAGE

INTRODUCTION

WHY PANAMA?

LOGISTIC AND MULTIMODAL TRANSPORTATION CENTER SECTOR

TOURISM SECTOR

SERVICE SECTOR

INFORMATION TECHNOLOGY AND COMMUNICATIONS SECTOR

ENERGY SECTOR

PRIMARY AND ARTISAN SECTOR

Panama faces great challenges worldwide, and we are preparing for them by

carrying out the improvements necessary to allow us to achieve a unified and

stronger country in a globalized world. The development of our human

resources, as well as promoting new investments, will ensure our advancement

in science and technology that will bring us progress and wealth.

Panama will continue to offer the services that have made it an international

financial center, bringing new technologies to make our country the platform in

Latin America for launching new products and services in the international

marketplace.

Trade will be strengthened by attracting new partners through bilateral free

trade agreements, increasing market coverage and eliminating government

bureaucracy.

Our strategy is based on working jointly with the private sector, improving our

competitiveness, training our human resources, seeking new investors, and

developing those strategies that strengthen our potential as a logistic and

strategic center for the whole continent.

Welcome to Panama.

“Facilitating economic developmentwith a social vision”.

MINISTRYOF COMMERCEAND INDUSTRY

INFORMATION ABOUT PANAMA

M I N I S T R Y O F C O M M E R C E A N D I N D U S T R Y

ÊÚCiudad de Panamá

#SColón

#SPenonomé

#S

#S

Chitré

Las Tablas

#SSantiago

#SDavid

#SBocas del Toro

#SLas Palmas

PROVINCIA DEBOCAS DEL TORO

COMARCA NGOBE BUGLEPROVINCIA DE CHIRIQUÍ

PROVINCIA DE VERAGUAS

PROVINCIA DE HERRERA

PROVINCIA DE LOS SANTOS

PROVINCIA DE COCLÉ

PROVINCIA DE PANAMÁ

PROVINCIA DE COLÓN

COMARCA MADUNGANDI

COMARCA WARGANDI

COMARCA EMBERA

WOUNAAN N°1

COMARCA EMBERA

WOUNAAN N°2 PROVINCIA

DE DARIÉN

Isla Coiba

Isla Jicarón

Isla Jicarita

Isla Coibita

Isla Cébaco

Isla Gobernadora

Isla delCanal deAfuera

Isla Uvas

Isla Bricanco

Islas Secas

Isla Parida

Isla Montuosa

Isla Ladrones

Isla de Burica

Isla Sevilla

Isla Leones

Isla Iguana

Isla Otoque

Isla Taboga

Isla Chepillo

Isla del Rey

Isla SanJosé

Isla Pedro

González

Isla San Telmo

Isla Contadora

Isla Bayoneta

Isla Saboga

M A R C A R I B E

O C É A N O P A C Í F I C O

Golfo de Panamá

Bahía de Parita

Bahía de Panamá

Golfo de San Miguel

Golfo de Chiriquí

Bahía de Charco Azul

Isla Escudo de Veraguas

IslaColón

IslaBastimentoIsla

Cristobal

IslaPopa

IslaCayoAgua

Laguna de Chiriquí

Golfo de Los Mosquitos

Golfo de San Blas

N

EW

S

40 0 40 80 Kms

ESCALA

1:2200000

COLOMBIA

Elaborado e Impreso en le SIG delIsntituto Panameño de Turismo

COST

A R

ICA

Limite ProvincialRiosCalles PrincipalesCarretera Panamericana

LEYENDA#S Capital de Provincia

DIVISIÓN POLÍTICA DE LA REPÚBLICA DE PANAMÁ

Lago Bayano

Lago Gatún

Lago Alajuela

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II SOCIAL AND ECONOMIC INDICATORS

New promotional policies are being

developed for markets and sectors

such as: agriculture, marine, artisan,

industrial and services, with a calen-

dar of activities coordinated with our

foreign diplomatic representations for

the purpose of evaluating the best

opportunities for presenting our

export offers.

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III GROSS DOMESTIC PRODUCT BY SECTORS AND VARIATION

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V. TRANSPORTATION INFRASTRUCTURE

IV. TECHNOLOGY

Panama, a candidate for one of the most

important logistic centers for transportation

and storage of worldwide cargo, with private

ports on both sides of the republic, con-

nected by the inter-oceanic railroad, high-

ways and international airports, is capable

of offering all kinds of services for handling

cargo and passenger attention.

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VI. MAIN TRADING PARTNERS

Imports (2005): United States 27.21%, Colon Free Zone 12.18%, Curacao 11.44%, Costa Rica 4.68%, Japan 4.53%,Petroleum Free Zone 3.95%, Mexico 3.71%, Colombia 3.46%, Brazil 3.06%, South Korea 2.48%, Republic of China2.38%, Guatemala 2.01%, Spain 1.52%, El Salvador 1.35%, Germany 1.27%, Venezuela 1.08%, Trinidad and Tobago1.05%, Argentina 1.00%, Rest of the World 11.65%.

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Export (2005): United States 43.52%, Spain 8.88%, Sweden 5.64%, Holland 4.88%, Costa Rica 4.02%, Belgium2.58%, Guatemala 2.22%, Nicaragua 2.22%, Taiwan 2.08%, United Kingdom 1.91%, Mexico 1.78%, DominicanRepublic 1.71%, Honduras 1.62%, Colombia 1.60%, Italy 1.57%, Puerto Rico 1.36%, Colon Free Zone 1.36%, Portugal1.31%, Republic of China 1.06%, Rest of the World 8.67%.

VII. MAIN EXPORT PRODUCTSMelon, watermelon, pineapple, fish, shrimps, lobsters, tuna, beef, coffee, sugar, services.

VIII. MAIN IMPORT PRODUCTSPetroleum and its derivate products, automobiles, heavy equipment, electric and telecommunication devices,medicines, plastic and its manufacture, paper, cardboard and its manufactures, food, clothing, chemical products,shoes, furniture.

IX. HEALTH AND EDUCATION INFRASTRUCTURE

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Source: Document “Panama enCifras 2004”, National Controller’sOffice of the Republic of Panama* Statistics Department, EducationMinistry of the Republic of Panama** National Census of Population andHousing (2000)(P) Preliminary recordsNOTE: In conformity with the actionsand modifications introduced by Law34, of July 6, 1995 and Law 47 of1946, starting from the year 2000,there will be no graduations inelementary schools.

Construction Cost: B/. 200.00 per mt2 (Average cost)Characteristics:• 15 cms Concrete Flooring• 6.10 mts High• Steel Structure• Insulations• Electricity for Lighting (non Industrial)• Boarding Plant

IX COSTS AND SERVICES

Source:

Home Survey, Controller General of the Republicwww.ersp.gob.paMinistry of Labor and Labor Development

Source: Direction, CommunicationsMinistry of Commerce and Industry

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L A S G A R Z A S P R E S I D E N T I A L P A L A C E

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INTRODUCTION

From the discovery of America, Panama’s geographicposition has been one of its most valuable assets, fa-cilitating the mobility of men and wealth from the Atlan-tic to the Pacific. Today, modernization and globaliza-tion has allowed us to continue providing this service,on land, by sea and air, from the most sophisticatedand advantageous logistical platform in the WesternHemisphere.

The Panama Canal has been in operation since 1914,making world trade easier, serving 120 maritime routesto over 80 countries and, in 1948, the Colon Free Zonewas inaugurated, becoming the second most importantfree zone in the world offering warehousing and the re-distribution of goods worldwide. With these new assets,in addition to modern highways, an inter-oceanic rail-road communicating the terminal cities of Panama andColon in only one hour, and modern private ports opera-ted by international firms such as Hutchison WhampoaLimited, Stevedoring Services of America, and Ever-green Marine Corporation, have made Panama the ideallocation for handling cargo coming from Asia en routeto the east coast of the United States, from the eastcoast of the United States to the west coast of SouthAmerica, and from Europe to the west coast of theUnited States and Canada, among others.

International cargo movement will continue its growthrate as a result of the participation of countries such asChina, India and others in world trade that have broughtnew investment projects to serve this new demand suchas the modernization of the Panama Canal and of theactual ports, and the construction of a mega-port at the

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Our tropical climate and varied tourist

attractions make Panama a preferred

destination for travelers who will find

picturesque indigenous and colonial

towns, white-sand beaches, coral reefs

of indescribable beauty, cool moun-

tains, tropical rain forests with lush

vegetation, and the home of a myriad

species of flora and fauna.

Pacific entrance of the Panama Canal that will allow usto handle seven million containers annually. These newprojects provide opportunities for other related services,such as repairing and cleaning containers, tugboat ser-vices, disposition of garbage and waste, handling haz-ardous materials, and others.

In the last few years, Panama has become the cen-ter of attraction for many investors seeking opportuni-ties, not only in port activities and cargo handling, butin other unrelated areas such as tourism, homes, en-tertainment, health, education, generating clean energyand others. The reasons are: Panama is easily ac-cessed; uses the US dollar as legal tender; permits freecurrency movement; has an international banking cen-ter; worldwide communications; excellent living condi-tions; free from major natural disasters; the largest andmost efficient maritime hub with seven private ports andtwo oceans; an international air transportation hub serv-ing over thirty destinations in America; natural re-sources; qualified workforce; social security; politicalstability and modern legislation that equally protect theinterests of nationals as well as foreigners.

The new strategy for national development designedby the Ministry of Commerce and Industry seeks to opennew markets, promote exports, prepare offers for thecompetitive export of goods and services, and for pro-moting investments focused on the following economicsectors: service, tourism, multi-modal transportation andlogistics center, energy, information technology andcommunications, and agricultural trade.

For more information, please visit our offices or seeour website at:

www.mici.gob.pa

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M I N I S T E R I O D E C O M E R C I O E I N D U S T R I A S

Panama is a country dedicated to service, and enjoysa privileged geographic position that has allowed it to beone of the most important logistics centers in the West-ern Hemisphere for importing, warehousing and distrib-uting worldwide cargo; a bridge for travelers to the en-tire American Continent, and provider of efficient andmodern communication services. It is a country that pro-motes trade, national as well as international, and en-joys economic, political and social stability. In fact, evenbefore America was discovered, Panama had been abridge between North and South America for hundredsof species and a myriad of people. To that extent, manycenturies later, in 1826, when the liberator, Simón Bolívar,stated: “if the world had to choose its capital, the Isth-mus of Panama would be selected for this august des-tiny, situated as it is at the center of the globe.”

Our nation has gone on to be more than a passage,and has become a modern logistical platform for sea,land and air transportation. The Panama Canal is its maincenter of activity, transporting over 278 million metric tonsof cargo (containers, grain, petroleum and its derivatives,among others), and today serves more than 120 mari-time routes to over 80 countries worldwide, comple-mented with container terminal systems in the Pacificand the Atlantic that serve as transshipment and cargoredistribution centers moving 2.3 million TEU’s (20'equivalent units) of containerized cargo annually. Addi-tionally, we have an inter-oceanic railroad that movesabout 100,000 containers yearly from coast to coast. TheColon Free Zone, the most important in the WesternHemisphere, with an annual trade surpassing $12 bil-lion, is also located in Panama. The development of thePanama-Pacific Special Economic Area at the formerHoward Air Force Base will serve as the designated areafor the production of high technology goods and services.

We provide efficient air transportation service at theTocumen International Airport, currently undergoing up-grading, in a comfortable and safe environment for alltravelers who visit our country and expeditious and effi-cient attention to those in transit who do not have to gothrough immigration or customs. Copa Airlines operatesits Hub of the Americas at the airport, offering over 36destinations to 21 countries in America with excellent

WHY PANAMA?

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connections, some of them with two flights daily, tothe most important cities in Latin America. Localairlines with excellent service are also available fordirect flights to the main cities in the interior of thecountry.

Thanks to our strategic geographic position andour narrow waist, Panama has become the point ofconvergence for the five submarine fiber opticscables, making it the ideal location for telecommuni-cations companies and data centers because of theadvantage of being connected to North and SouthAmerica, Europe, Asia and the Caribbean, benefitsthat have been enjoyed by companies such as MCI,Cable & Wireless, and Telefónica Móviles (Movistar),all offering first-class cellular phone and internet ser-vices, both locally and internationally.

Our prestigious International Banking Center, withover seventy recognized international banks governedby the principles of the Basel Convention, registeredduring the IV Quarter of 2005 assets in the order ofUS$44.915 billion.

From the birth of the Republic in 1903, we haveused the US Dollar as legal tender which has allowedus to enjoy an inflation rate below 2% for the last fortyyears with no risk of devaluation.

Our health and medical services are internation-ally recognized as mentioned in Strategy+BusinessMagazine wherein Panama earned first and secondplace by having the two best private hospitals in theCentral American region. Our hospitals are equippedwith state-of-the-art medical technology, and are af-filiated to world-famous hospitals such as the BaptistHospital in Miami, Florida, and Johns Hopkins Medi-cine International in Baltimore, Maryland.

Panama has the finest international hotel chains,such as the Intercontinental, Marriott, Radisson,Barceló, Meliá, Sheraton and Crowne Plaza, just tomention a few, all with excellent restaurants and lo-

cal and international cuisines. Additionally, there areseveral large shopping malls offering a wide varietyof products including electrical appliances, perfumes,jewelry, clothing and art of the finest brands, as wellas entertainment such as casinos, modern movie the-atres, concert halls, museums and sporting centersfor all ages.

Our tropical climate and various tourist attractionsplace us among the preferred destinations for travel-ers who will find picturesque native and colonialtowns, white-sand beaches, coral reefs of indescrib-able beauty, cool climate mountains and tropical for-ests with lush vegetation, and a myriad of fauna andflora species. With an excellent roadway network,you can travel the country in only six hours becauseof the short distances.

These advantages are acknowledged by severalprestigious international publications such as Harper’sBazaar, National Geographic Traveler and othermagazines that have chosen Panama as “the bestplace to live.” Panama City is cosmopolitan, with anexcellent trouble-free quality of life, juridical and per-sonal security, freedom of religion, and the comfortsof the major capitals of the world.

For these reasons, Panama has been chosen byimportant multinational enterprises such as SamsungElectronics, Inc., DHL, DELL, Hutchison Port Hold-ing Group, HSBC, BICSA, Scotia Bank, AssicurazioniGenerali, PanAmerican Life Insurance Company, andmany more as their centers for regional operations.International organizations have also establishedthemselves in Panama, including UNICEF, UNDP,OAS, Spanish International Cooperation Agency(AECI) and Bladex, among others.

Panama offers goods and services at reasonableprices, compared to its nearest neighbors, and hasFree Trade Agreements (FTAs) with Taiwan, El Sal-vador, Singapore and Chile. We are in the finalstages of negotiating FTAs with the United Statesand Central America, one with the European Union,and we are in the process of joining the G-3. Weare vying for being the headquarters of the FreeTrade Area of the Americas (FTAA), and we aremembers of the World Trade Organization (WTO).

All these advantages and many others are of-fered by Panama to enterprises and investors, andwe invite all to strive to strengthen internationaltrade in a pleasant and safe environment in apeaceful country that provides quality of life andtranquility to its residents.

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Panama, a candidate for one of the most impor-tant logistic centers for transportation and storageof worldwide cargo, with private ports on both sidesof the republic, connected by the inter-oceanic rail-road, highways and international airports, is ca-pable of offering all kinds of services for handlingcargo and passenger attention.

In recent years, millionaire investments havebeen made in construction and modernizing theport system by some of the world’s most importantcompanies, such as Hutchison Port Holdings andEvergreen Corporation, resulting in the capabilityof moving over two million containers in 2005. Wecontinue with the process of adding new ports, in-cluding the project for constructing a mega port atthe Pacific entrance of the Panama Canal that willpermit augmenting port operations.

We are in the process of modernizing and en-larging the Tocúmen International Airport to allowa greater number of flights to and from Panama byincreasing the modern positions for departures andarrivals from 14 to 27, as well as larger commer-cial and circulation areas. New equipment is be-ing obtained for service and support, such as: el-evators, a modern incoming, departing, and in tran-sit baggage-handling system, an integrated flightinformation system, and for renovating the air con-ditioning system. Work is also in process for re-modeling the cargo terminal and renovating its run-ways. The new premises should be ready in early2007.

From time immemorial, Panama’s geographicposition has been a valuable asset facilitatingmoving wealth and people through the narrowest

LOGISTIC AND MULTI-MODAL TRANSPORTATIONCENTER SECTOR

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point of the Central American Isthmus to destina-tions in North and South America. At the outset,gold and other riches were shipped to Spain. Thenthere were the Portobelo fairs, the California goldfever and, finally, the construction of the PanamaCanal, completed in 1914, that permitted the pas-sage of thousands of vessels, serving more than120 maritime routes to more than 80 countries.

The railroad, operated by Kansas City South-ern Railways from the U.S., with an investment ofover $60 million, moves cargo and passengersbetween the terminal cities of Panama and Colon,promoting international trade through the ColonFree Zone, the largest duty free area in the West-ern Hemisphere.

The Colon Free Zone, created in 1948, now hasover 2,000 companies with import and export op-erations worth more than $11 billion, and contrib-utes with 7.9% of the Gross National Product. Thenew administration, in its effort to strengthen theinternational competitiveness of its services, isimplementing new technological services to expe-dite trade, reduce expenses and increase trans-portation efficiency.

The Panama-Pacific Special Economic Area(AAEEPP) located at the former Howard Air ForceBase (former United States Southern Commandmilitary base) that reverted to Panama, covers ap-proximately 2,005 hectares (4,954 acres), has in-frastructure ready for use and land available forconstruction. The AAEEPP is only 15 minutes fromPanama City, the railroad, and the Port of Balboa,and one hour from the most important ports on theAtlantic side, which also has a first class airport.All this makes the AAEEPP the ideal place for de-veloping the Logistic and Multi-modal Transporta-tion Center of the Americas.

The AAEEPP offers fiscal, labor, and migratoryincentives, special customs regulations, andsingle-window (one-stop) service for investors, andis destined to be a high technology industrial manu-facturing center, an air logistics center, and a re-pair and shopping center in Panama serving theworld.

Panama has more than 94,000 hectares(232,274 acres) and 7,000 reverted buildings as a

The Colon Free Zone, created in

1948, now has over 2,000 companies

with import and export operations

worth more than $11 billion, and

contributes with 7.9% of the Gross

National Product.

Photo: Courtesy of Manzanillo International Terminal

Photo: Courtesy of Tocumen, S.A.

Photo: Courtesy of Tocumen, S.A.

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Investment opportunities:* Expansion and modernizing the Panama Canal.

* Construction of the Mega Port at the Pacific entrance

of the Panama Canal.

* Expanding the ports on both sides of the Isthmus.

* Expanding the Panama-Colon Trans-Isthmian highway.

* Moving containers at the national level.

* Repair and maintenance of containers.

* Shipyards for repairing vessels.

* Supplying fuel.

* Tugboat service.

* Maritime agencies.

* Security and ship inspection services.

* Garbage collection service.

* Handling hazardous materials.

* Cargo movement at airports.

* Establishing companies in the Howard Area

for manufacturing high-technology products.

* Logistic and warehousing services for moving goods

on the Pacific seaboard of Panama.

* Specialized services in information technology,

communications and call centers.

* Housing.

consequence of the Torrijos-Carter Treaties, manyof which are still available to be used for carryingout transportation, storage and cargo distribution,tourism, housing and other activities.

We also have a modern highway network that cov-ers the whole country and permits us to reach as faras Alaska. There are more than 71 airports, andCopa Airlines’ Hub with daily flights carries cargoand passengers to 36 different destinations in 21countries in America. There is also the InternationalTechno-Park in the City of Knowledge, seeking to

develop new business opportunities by creating newpoles of competition to promote productivity andcompetitiveness.

With Law No. 25 of 1992, special regulationswere created for establishing and operating Pro-cessing Zones for Export. Defined as tax-free zonesand free enterprise, we are actively inviting newcompanies to participate with activities aimed atproducing goods and services for export, benefit-ing from the available incentives in addition to thelogistic and strategic facilities offered by Panama.

TOURISM SECTOR

When Law No. 8 of June 14, 1994 went into effectfor promoting tourist activities, it created a series of fis-cal incentives and benefits that, in addition to the excel-lent living conditions, the absence of natural disasters,the use of the US dollar as legal tender, Copa Airlines’Hub of the Americas with direct flights to major citiesand capitals in the American Continent with frequen-cies of up to twice a day to certain destinations, and thelargest port services in Latin America, have increasedattractiveness of investments in various segments ofthe tourism industry.

Our privileged geographic position, solid finances,personal and juridical security, political and social sta-bility, are more reasons that make Panama the perfectdestination for visiting, residing and investing. Theseconditions have led to having large hotel chains suchas Sheraton, Radisson, Crowne Plaza, Meliá andBarceló, among others, to establish themselves here.Panama has more than 16,700 rooms available in thecountry to accommodate our visitors. There are groupsof investors who are developing eco-tourism projects atbeaches, mountains and islands, in addition to sport fish-ing and underwater projects. Restoring Colonial Panamaand the Casco Antiguo has attracted new and variedinvestments in the tourism industry. The large shoppingcenters and malls, as well as entertainment centers,have created new investment niches.

Among the projects being developed is havingPanama designated as the Home Port for cruise ships.We are negotiating with some cruise lines that haveexpressed interest in Panama becoming a departureand destination port for their ships because of the con-veniences and benefits our country offers. This project

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should be ready by 2008. During the 2004-2005 cruiseseason that runs from September through May, we receivedover 300 cruisers whose passengers were able to see whatPanama has to offer, creating a marked interest in choos-ing our country as a destination for their next vacations.

When Law No. 9 of June 1987 was promulgated, incen-tives were created for retirees and pensioners who estab-lish their second home in Panama, offering them new, safe,and comfortable retirement areas with varied climates andmuch lower costs of living. We have also developed masstourism programs for beaches and mountains that havebeen the mainstay of the Panamanian Tourism Institute’s(IPAT) offer: “Panama, the route to be discovered.” Wehave analyzed the possibility of creating strategic allianceswith countries like Cuba, the Dominican Republic and oth-ers to promote multi-destination routes. Eco-AgriculturalTourism is another interesting program combining sustainedtourism with environmental protection, as well as exploit-ing Panama’s social and cultural wealth for those seekingpeace and tranquility, and to be in contact with nature.

We are strengthening the traditional destinations withservices, infrastructure and business chains, developingnew and novel tourist destinations such as: Panama City’sTourist Route which includes eco-tourism, national parks,the Panama Canal locks, Chinatown, Colonial Panama;the Colonial Caribbean Route that leads to shopping atthe Colon Free Zone; Portobelo and Palenque de Esclavos;the Kuna Yala Caribbean Route and the Gnobe BugléCaribbean Route, all offering the opportunity of knowingthe culture and way of life of the most important ethnicgroups in our country, their bright sun and beaches; theRoute of Panamanian Traditions and the Dry Arch to learnabout the folklore, customs and traditions of our people,and the Recreational Route to the Beaches of Panama.We continue to strengthen recreational, ecological, busi-ness, alternative health and socio-cultural tourism.

From the discovery of the South Sea, Panama hasbeen considered as a country of excellent service. 76.2%of the Gross Domestic Product (GDP) has come from theservice sector. Our Financial Center, strengthened bymodern legislation in accordance with the principles ofthe Basel Convention, the free movement of capital, theabsence of a Central Bank, the use of the US dollar aslegal tender, along with the banking system’s stability,have made Panama a trustworthy destination for morethan 70 banks from 45 countries, with assets exceeding$44 billion.

There are three types of banking licenses: the Gen-eral License allows banks to carry out local and foreignoperations; the International License only allows foreignoperations, but also permits participation in the local in-ter-banking market; and the Representative License thatis granted to foreign banks with offices established inPanama from which they can promote their services andvisit actual and potential customers.

The new banking law maintains the fundamental ele-ments of confidentiality and the identity of its depositors.However, it does not prevent Panama from having strictregulations to prevent money laundering.

The Banking Superintendence, the governing bank-ing entity, also supervises fiduciary transactions andgrants the respective licenses for their various activities.Ninety percent of the existing licenses have been grantedto banks established in Panama.

Insurance activities go back to the beginning of the20th century, when US companies began operating inPanama. For many years, the insurance industry oper-ated in the framework of the Code of Commerce until in1956 when a new law went into effect regulating this

SERVICE SECTOR

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activity, and finally in 1966, Law No. 59 was passed,and is in effect today, granting autonomy to the Super-intendence of Insurance and Reinsurance to duly su-pervise and oversee the insurance sector. We now have18 insurance companies with national and foreign capi-tal, 6 reinsurance companies regulated by Law No. 63of September 19, 1996, and 2 captive insurers and 5captive insurance administrators under Law No. 60 ofJuly 29, 1996, that oversee juridical persons that carryout insuring and reinsuring particular or specific riskspreviously authorized by the Superintendence of Insur-ance and Reinsurance.

Stock exchange activity began with Cabinet DecreeNo. 247 of 1970, but it was not until 1989 that a group ofbusinessmen founded the Panama Stock Exchange,seeking to strengthen the financial market and creatingnew financing mechanisms. As of 1990, the stock mar-ket began to be the scenario for a greater number of stockmarket operations, and new actors arose, such as stock-brokers, institutions for payment, transfer and liquidationof stocks. This brought on Decree Law No. 1 of July 1,1999, which is the regulating framework in force govern-ing stock exchange operations and all actors in this field.

Panama has its Conciliation and Arbitration Cen-ter, founded in 1994, sponsored by Panama’s Cham-ber of Commerce, Industries and Agriculture and other

Panama has its Conciliation and Arbitration Center,

founded in 1994, sponsored by Panama’s Chamber

of Commerce, Industries and Agriculture and other

business groups to offer the business sector the

services of administering arbitrations and

conciliations as modern alternatives to resolving

commercial controversies.

business groups to offer the business sector theservices of administering arbitrations and con-ciliations as modern alternatives to resolvingcommercial controversies.

In 1997, Panama’s Chamber of Commerce, In-dustries and Agriculture agreed with the Inter-American Development Bank (IDB) on a project toimprove the use of alternative methods to resolve

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Photo: Courtesy of the Communications Departmentof the MInistry of Commerce and Industry

conflicts (arbitration, mediation and conciliation). Na-tional legislation regulating this activity is under DecreeLaw No. 5 of July 18, 1999.

Today, Panama’s Conciliation and Arbitration Centeris a solid institution, with its own juridical person, offer-ing its many customers comfortable and modern of-fices, highly qualified personnel, lists of formally trainedand experienced arbiters, mediators and conciliators with

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excellent negotiating abilities in diverse business areas.It is worth mentioning that Panama is also known

for having important law firms, with international of-fices and correspondents who will assist you in han-dling all legal and administrative matters. We also pro-vide ship registration, an important segment of the in-ternational maritime field, auditing and accounting ser-vices, and many others.

Photo: Courtesy of Manzanillo International Terminal

INFORMATION TECHNOLOGYAND COMMUNICATIONS SECTOR

The Republic of Panama is the ideal location forcompanies in the field of Information and Communi-cations Technology (ICT) to provide innovative ser-vices worldwide. In keeping with its motto “Pro MundiBeneficio” (“For World Benefit”), Panama has the po-tential to become the “Digital Bridge of the Americas.”Its competitive advantage lies in creating value andcompetitiveness for other countries that move forwardby using its developed service platform that includesa commercial trade and logistics center around thecanal and an international financial center. Addition-ally, we have an International Technological Park seek-ing innovative companies that produce, assemble orprocess high technology goods or provide serviceswith similar features destined to be sold in the localand international market.

In the last decade, Panama has developed a strongand stable telecommunications infrastructure providinghigh quality service through a large network. This abil-ity to offer that service substantially exceeds local de-mand. The five main submarine fiber optics cables thatconverge at the Isthmus of Panama communicateNorth and South America with the Caribbean and therest of the world (MAYA, ARCOS, SAC, PAC and Pan-American) provide that service, guaranteeing thebroadband, redundancy and security necessary fortelecommunications and information technology ser-vices. It is said that Panama has connections compa-

rable to those offered in the largest cities worldwide,but at much lower costs.

A growth is foreseen in the infrastructure becauseof deregulation in the sector, which is in progress atthis time. On the other hand, companies in the electri-cal transmission field are also investing in telecommu-nications infrastructure, developing fiber optics net-works. These factors, added to Law No. 54 of October25, 2001, granting benefits to commercial call centers,has influenced the decision of international companiesto have offices in our country. Likewise, the City ofKnowledge’s Technological Park has a high-technol-ogy data storage operation, Internet Data Center, whichhas made Panama the doorway for Latin America tohave access to Internet and telecommunications, al-lowing those companies to have an infrastructure withservers dedicated to electronic commerce, meeting themost advanced network safety requirements in themarket. Panama offers a sophisticated telecommuni-cations system operated by renowned and prestigiouscompanies from the United States and Europe.

The ICT services sector in Panama represents ahealthy industry, with a stable financial record and goodpotential growth, expediting business operations cre-ating a world market within the reach of all. Also, engi-neers and information technologists, mostly universitygraduates, are available at very competitive costs.

On the other hand, the “Electronic Government”

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Photo: Courtesy of the Communications Department of the MInistry of Commerce and Industry

initiative carried out by the Secretariat of the Presidencyfor governmental innovation is moving ahead, provid-ing business opportunities for consultation companies,data bases, systems integration, televised teaching andmany alternative services that will allow expediting stepscarried out by the government or by the private sectorthrough said measure.

Through Law No. 43 of July 2001, electronic docu-ments and signatures are legally recognized. Thislaw provides juridical equality to both traditional andelectronic trade thereby expediting business trans-actions. Panama’s Ministry of Commerce and Indus-try, with the help of the Science and Technology Sec-retariat, developed the Digital Signature Project,which is a group of characters that accompany adocument or electronic message as a means of for-mally identifying the author of said document. Thispermits a means of fast, secure and trustworthy com-

munications among its users.Panama’s Chamber of Commerce, Industries and

Agriculture, with the support of the Inter-American De-velopment Bank, is executing the “Development of Elec-tronic Trade in Panama” project to increase the com-petitiveness of small and medium Panamanian enter-prises in the electronic market by means of expandingthe use of information and communications technology.

The Panamanian banking sector follows AgreementNo. 5 of 2003, issued by the Banking Superintendence,which regulates online banking activity, permitting re-duced operation costs and increasing the competitivelevel. Panama is known as a country that is most quali-fied for developing electronic commerce directed toLatin American markets, for which reason our goal is tohave a part of these transactions carried out throughour territory and that our logistic and transportationservices be used for their distribution.

Panama is known as a country that is most qualified for developing electronic

commerce directed to Latin American markets, for which reason our goal is to

have a part of these transactions carried out through our territory and that our

logistic and transportation services be used for their distribution.

Photo: Courtesy of the Communications Department of the MInistry of Commerce and Industry

33

The above gives advantages for the following operations:

* Commercial Call Centers that serve the regional market thanks toqualified bilingual personnel.

* Data Centers/VoIP communications services.

* Applied Services providers.

* Bio-Information Technology Application Development Center, thanksto the existing biodiversity and research institutes such as theSmithsonian Tropical Research Institute (STRI).

* Regional Training Centers in Telecommunications, Information Tech-nology Security and Free Software.

* Research and Development for new telecommunications tech-nologies, such as third-generation (3G) Universal Mobile Telecom-munications System (UMTS) at the campus of the City of Knowl-edge.

* Local content development for mobile phones: Software for textmessaging and multimedia, Wireless Application Protocols (WAP), Re-gionalizing melodies and logos, games development, etc.

34

Panama also has Law No. 15 of August 8, 1994, that protects au-

thors’ rights on literary, instructive, scientific or artistic works arising

from intellectual creations, which guarantees and safeguards the re-

sults of research and development of new technologies.

35

In August 2005, the National Government implementedthe National Policy on Hydrocarbons and Alternative En-ergy for the period of 2005-2020, with a series of measuresto deal with the world crisis caused by increasing prices ofpetroleum-based products and to counteract the possiblelack of energy due to shortages or exorbitant prices thatcould mean a threat to the country’s economic and socialdevelopment.

The political energy guidelines are based on short, me-dium and long-term measures that would eliminate beingdependent on petroleum, create savings and generatingclean energy taking advantage of the benefits granted bythe Kyoto Protocol under the Clean Development Mecha-nism (CDM) in which the countries may obtain funds toinvest in new energy projects.

An immediate action has been to offer the alternative ofusing Liquid Petroleum Gas (LPG) as vehicular fuel thatwould mean savings for consumers and the State. Wehave signed a memorandum with Colombia for the impor-tation of natural gas, which is a clean high calorific fuel forhome use, vehicles and generating electricity. Correctivemeasures will also be implemented in power consumptionin the public sector.

Taking advantage of what Panama has to offer, such as:its logistic platform that permits connections by land, seaand air; seven private ports in the Atlantic and the Pacific, aUS dollar economy, and an international financial center,the government seeks to make the country an “energy hub”,promoting, among other projects, a regional refinery thatwould process heavy crude from South America and Mexico

to supply the demand for petroleum and its byproducts toCentral America and the west coast of the United States.

There is an actual demand in Central America for 370,000barrels of crude per day, and there is no refinement capa-bility in the region to satisfy that demand which creates amarket that Panama could supply facilitated by legislationthat would permit construction of new refineries, grantingfiscal benefits on earnings resulting from exports of the finalproduct. Additionally, advantage can be taken of the facili-ties offered by the existing pipeline, owned by PetroTerminales, S.A. (a mixed capital enterprise in whichPanama has a major share) that unites the Pacific and At-lantic coasts, the storage tanks and the existing port facili-ties and adequate depth.

This project will also bring benefits in producing electri-cal energy as the estimated demand for the coming yearsshould increase by more than 400 MW for the Central Ameri-can market, and Panama as part of the Central AmericanElectrical Interconnection System (SIEPAC) would permitus to supply the demand of the five Central American coun-tries.

Recently, agreements and memoranda of understand-ing on energy matters have been signed with the BolivarianRepublic of Venezuela, among other aspects of the supplyof petroleum, finished products, storage, etc. All of the aboveis part of the initiatives taken by the present administrationfor the purpose of Panama becoming a center or energyhub for the region. Additionally, Law No. 8 of 1987 will berevised, which will regulate activities related to hydrocar-bons, and we will promote petroliferous exploration.

ENERGY SECTOR

36

The guidelines of the National Policy on Hydrocar-bons and Alternative Energy cover:

• Diversification of the Energy Balance. Actually, 65% ofour energy consumption comes from petroleum for whichwe will diversify our dependency using natural gas andseeking and promoting other sources of renewable en-ergy (biomass, photovoltaic, solar, wind power, etc.)

• Independence and sustainable energy. We will de-velop our own sources of energy such as hydro energy,wind power, solar energy, biomass energy and energysourced from peat (fossil fuel formed by an accumula-tion of partially decomposed vegetable matter, foundusually in bogs).

• Taking advantage of Panama’s geographic position toset up processing plants for lubricants, establishing aregional refinery and a liquefied natural gas (LNG) plant,using the storage capability on a regional level, usingthe Panama Canal for tankers transporting crude, andthe only trans-isthmian pipeline in the region, fromChiriquí to Chiriquí Grande in Bocas del Toro (131 km),and becoming the Regional Energy Center for redistri-bution to the Central American region.

• To promote the use of new non-contaminating technol-ogy and developing renewable energy sources, such assolar energy, wind power and biomass to protect theenvironment. Also being considered are other projectsfor remote communities, such as improved kitchens thatwill reduce the use of firewood and consequently elimi-nating harmful smoke emissions.

• Introducing and promoting new technologies. UsingLPG in vehicles, and other technologies approved in in-ternational markets.

• Rationing energy consumption. Designing energy-sav-ing programs.

Law No. 41 of July 1998, the General Environment Lawof the Republic of Panama, creating the National Envi-ronment Authority (ANAM), indicates that it is the na-

tional environment policy to stimulate and promote sus-tainable behavior and the use of clean technologies toreduce the levels of waste and contamination of the en-vironment. Also, it states that it is the government’s re-sponsibility to promote producing and using renewableenergy and the use of clean technologies. The Statepromotes the development of renewable energy sourcesfollowing the guidelines of the Kyoto Protocol, the sav-ings and efficient use of energy, and supporting viablealternatives for generating electricity at low costs.

In August of 2004, Law No. 45 was approved, and es-tablishes incentives for promoting Systems for Hydro-electric Generation and Other New Sources, Renew-able and Clean, which supports the State’s policy thatseeks to promote producing and using renewable en-ergy as a means of developing a more friendly behaviorwith the environment. We are actually promoting thislaw through our participation in international fairs wherewe present a portfolio of hydroelectric projects and re-forestation that employ clean development mechanisms(CDM) that allow developed countries to comply withpart of their commitments to reduce the emissions ofgreenhouse gases under the Kyoto Protocol by invest-ing in these projects.

We have two feasibility studies that brought up the WindPower Map and the Geothermic Map of Panama thatreflect the potential in different areas nationwide for gen-erating energy by these means.

37

Investment opportunities:

* Constructing a regional refinery for processing

and supplying petroleum and its byproducts.

* Systems for generating biogas and biologi-

cal fertilizers by processing waste from an

agro-industrial farm (porcine) located in

Veraguas province.

* Pilot plan for solar energy refrigerators for

artisan fishermen.

* Drip irrigation through photovoltaic energy

systems for sustainable agriculture and rural

development in the central provinces.

* Designing, promoting and implementing a na-

tional biofuel program.

* Generating biogas and organic fertilizer sourced

from biomass produced by agricultural activities.

* Technical assistance for designing a renew-

able energy and energy-efficiency plan for the

Republic of Panama.

* Designing and implementing an energy

efficiency program for the commercial, industrial,

residential and government sectors.

* Strengthening the capability of the Inter-institu-

tional Environmental System (SIA) for evaluat-

ing the environmental impact and auditing stud-

ies for projects and companies in the renewable

energy sector.

Panama has a great potential for developingprojects for generating energy that involveusing renewable energy sources, such as:

* Solar energy: Approximately five and a half

hours of sunlight daily.

* Hydro resources: We have large rivers in dif-

ferent provinces that can be exploited for hy-

droelectric power plant projects.

* Wind power resources: Studies made reveal

that we have a substantial potential for gener-

ating electricity using wind power in the prov-

inces of Veraguas (Cerro Tute), Los Santos (La

Miel) and Chiriquí (Boquete and Hornitos).

* Peat resources: In Changuinola (Bocas del

Toro province), an 80 Km2 area with an aver-

age thickness of 8 meters of peat was found

that could become the second source of energy

generation after the hydroelectric plants.

* Biomass resources: There are projects for

using state-of-the-art technology to produce

ethanol from vegetation and agricultural waste.

Ethanol could be used for fuel, electricity and

organic chemical products.

In 2005, Panama had a sustained growth with a record11.66% in exports, amounting to $839 million, and it is ex-pected that 2006 will be even closer to one billion dollars.This is due largely in part to the free trade agreementswith Taiwan and El Salvador that have helped diversify theportfolio of countries that buy Panamanian products. Andwith the coming into effect of the treaties with Singaporeand Chile, and finalizing the negotiations with the UnitedStates, encouraging perspectives will permit the growth ofPanamanian exports.

The Ministry of Commerce and Industry (MICI), throughthe EXPORTA program dedicated to promoting exports,promotes and strengthens the rural sector’s agriculturalexports and industrial agriculture, utilizing new tools suchas financial assistance, technological assistance programs,and using windows at international fairs and trade missionsas a more direct method of reaching international markets.

The products with the greatest interests in the interna-tional markets are those known as “non-traditional prod-ucts,” such as: pineapples, melons, watermelons, calabash,yucca, yam, handicrafts, beef and fowl, among others. Weseek to increase growth opportunities for the existing non-traditional products, and to find and develop new productsthat meet the demands of international consumers.

The MICI helps investors with means that develop ourexport offer. An example would be creating export and stra-tegic alliance consortiums, programs for promoting exports,training programs, improved access to information and au-tomation of services to the private sector, and strength-ening the protection of exports with export insurance pro-grams to motivate and to ensure payment of exports.

New promotional policies are being developed for mar-kets and sectors such as: agriculture, marine, artisan, in-

PRIMARY AND ARTISANSECTOR

38

dustrial and services, with a calendar of activities coor-dinated with our foreign diplomatic representations forthe purpose of evaluating the best opportunities for pre-senting our export offers.

We seek to attract investors that not only want busi-ness opportunities with local partners, but that also bringnew techniques in processing, packing, conservationand added value that improve the quality of their prod-ucts, fill the niches in the market, and provide new prod-ucts with greater benefits.

Business opportunities are arising in the following areas:

* Processing frozen fruits and vegetables.

* Processing vegetables in flour, puff pastries and pastas.

* Processing dehydrated fruits and vegetables.

* Processing chopped fruits and vegetables for salads.

* Animal nutritional supplements with fruits and vegetables as raw material.

* Processing nectars for yogurt, natural cheeses and beverages.

* Processing sausages and special hams.

* Processing fish and seafood.

* Processes for extracting oil from agricultural products.

* Processing alcohol and its byproducts.

* Processing juices, pulp, concentrates and marmalades.

* Designing and producing artisan works for dress purposes.

* Designing and producing artisan products for home use (furniture, decorations, etc.)

39

Why invest in Panama?

You will find Panama to be the ideal choice for investments and businessbecause of the advantages listed below:

• A country dedicated to service that promotes business opportunities.• Political, social and economic stability.• Low levels of inflation.• The US dollar is the legal currency, and prevents devaluation problems.• Its worldwide renowned International Banking Center with strict international standards.• The center where worldwide fiber optics telecommunications converge.• The most important free zone and modern logistics platform in the Western Hemisphere serving the world.• Legislation guaranteeing juridical security, fiscal and tax incentives for investors.• Excellent natural resources, with almost unexploited virgin jungles, beautiful beaches and immense marine wealth, and the ideal tourist and cruise ship destination.• Cosmopolitan city, multicultural and multiethnic, with a modern infrastructure, excellent shopping centers and large hotel chains.• World-class health and medical services with the most highly rated hospitals in the region.

The Ministry of Commerce and Industry’s National Office for Promoting Investmentsoffers investors the following services in order to facilitate investing in Panama:

• Provide investors with assistance to expedite investment-related procedures.• Actively promote investments in various designated economic sectors.• Attend to actual and potential investors, providing support and continuity in order for them to successfully achieve their goals and realize growth in their investments.• Identifying and assisting in evaluating business opportunities in Panama so that investors can arrive at decisions to establish operations in the country.• Coordinate interviews for investors with government entities and associations of the private sector.

40

Photo: Courtesy of Panama Canal Authority

Ministry of Commerce and IndustryMinisterio de Comercio e IndustriasApartado 0815-01119Panamá, República de PanamáTel. (507) 560-0600/0700Fax (507) 560-0656Web http://www.mici.gob.pa

Reverted AreasUnidad Administrativa de BienesRevertidoApartado 0816-02886Panamá, República de PanamáTel. (507) 211-9600Fax (507) 211-9700Web http://www.ari.gob.pa

Ministry of Economy and FinanceMinisterio de Economía y FinanzasApartado 0816-02886Panamá, República de PanamáTel. (507) 507-7008/507-7600Fax (507) 507-7053Web http://www.mef.gob.pa

Presidency of the Republic of PanamaPresidencia de la República de PanamáZona1, Ministerio de la PresidenciaPanamá, República de PanamáTel. (507) 527-9600Fax (507) 527-4622Web http://www.presidencia.gob.pa

Ministry of Agricultural DevelopmentMinisterio de Desarrollo AgropecuarioApartado 0816-0111Panamá, República de PanamáTel. (507) 507-0600Fax (507) 507-0952/0954Web http://www.mida.gob.pa

General Comptrollershipof the Republic of PanamaContraloría General de laRepública de PanamáApartado 0816-01521Panamá, República de PanamáTel. (507) 510-4777Tel (507) 510-4100Web http://www.contraloria.gob.pa

General Customs OfficeDirección General de AduanasApartado 0816-02886Panamá, República de PanamáTel. (507) 506-6202Fax (507) 506-6210Web http://www.aduanas.gob.pa

City of KnowledgeCiudad del SaberApartado 0816-03991Panamá, República de PanamáTel. (507) 507-0111Fax (507) 507-0118Web http://www.cdspanama.org

Ministry of HealthMinisterio de SaludApartado 0816-06812Panamá, República de PanamáTel. (507) 512-9100Fax (507) 512-9229Web http://www.minsa.gob.pa

Panamanian Industrial GuildSindicato de Industriales de PanamáApartado 0819-05411Panamá, República de PanamáTel. (507) 230-0169Fax (507) 230-0805Web http://www.industriales.org

National Secretary of Science,Technology and InnovationSecretaría Nacional de Ciencia,Tecnología e InnovaciónApartado 0816-02852Panamá, República de PanamáTel. (507) 507-0000Fax (507) 507-0007Web http://www.senacyt.gob.pa

Ministry of Public WorksMinisterio de Obras PúblicasApartado 0816-06734Panamá, República de PanamáTel. (507) 507-9400Fax (507) 507-9419Web http://www.mop.gob.pa

National Bank of PanamaBanco Nacional de PanamáApartado 0816-05220Panamá, República de PanamáTel. (507) 505-2000Fax (507) 505-2150Web http://www.banconal.com.pa

Ministry of Foreign AffairsMinisterio de Relaciones ExterioresApartado Panamá 4, República de PanamáTel. (507) 511-4100/4200Fax (507) 511-0416Web http://www.mire.gob.pa

Superintendency of Insurance& ReinsuranceSuperintendencia de Segurosy ReasegurosApartado 0832-1653World Trade CenterPanamá, República de PanamáTel. (507) 560-0512Fax (507) 560-0518Web http://www.mici.gob.pa/sector_seguros/

Superintendency of BanksSuperintendencia de BancosApartado 0832-2397World Trade CenterPanamá, República de PanamáTel. (507) 506-7800/7900Fax (507) 506-7700/7989Web http://www.superbancos.gob.pa

National Migration& Naturalization OfficeDirección Nacional de Migracióny NaturalizaciónApartado 0830-00147Panamá, República de PanamáTel. (507) 507-1826Fax (507) 507-1830Web http://www.panamatramita.gob.pa

Civil Aeronautical OfficeDirección de Aeronáutica CivilApartado 0816-03073Panamá, República de PanamáTel. (507) 501-9000/9099Fax (507) 501-9214Web http://www.aeronautica.gob.pa

Administration of Colon Free ZoneAdministración de la Zona Libre de ColónApartado 0302-00512Colón, República de PanamáTel. (507) 475-9500/9524Fax (507) 475-9592Web http://www.zonalibredecolon.com.pa

National Environmental AuthorityAutoridad Nacional del Ambiente (ANAM)Apartado 0843-00793Panamá, República de PanamáTel. (507) 500-0855Fax (507) 500-0822Web http://www.anam.gob.pa

Panamanian Tourism BureauInstituto Panameño de Turismo (IPAT)Apartado 0816-00672Panamá, República de PanamáTel. (507) 501-7000Web http://www.ipat.gob.pa

Social Security AdministrationCaja del Seguro SocialApartado 0816-06608Panamá, República de PanamáTel. (507) 503-0623/0627Fax (507) 503-0621Web http://www.css.org.pa

National Institute of Aqueducts and SewersInstituto de Acueductos y AlcantarilladosNacionales (IDAAN)Apartado 0816-01535Panamá, República de PanamáTel. (507) 523-8640Fax (507) 523-8502Web http://www.idaan.gob.pa

Ministry of Government and JusticeMinisterio de Gobierno y JusticiaApartado 0816-06715Panamá, República de PanamáTel. (507) 512-2000Fax (507) 512-2032Web http://www.gobiernoyjusticia.gob.pa

Maritime Authority of PanamaAutoridad Marítima de PanamáApartado 0843-00533Panamá, República de PanamáTel. (507) 501-5101/501-5183Web http://www.amp.gob.pa

Panama Canal AuthorityAutoridad del Canal de PanamáP. O. Box 526725Miami, Florida 33152-6725Tel. (507) 272-1111Web http://www.pancanal.com

Chamber of Commerce, Industryand Agriculture of PanamaCámara de Comercio, Industriasy Agricultura de PanamáApartado 0816-07517Panamá, República de PanamáTel. (507) 207-3400Fax (507) 207-3422Web http://www.panacamara.com/

National Security CouncilConsejo Nacional de SeguridadApartado 0816-06764Panamá, República de PanamáTel. (507) 514-0001/0000Fax 514-0063

Panama-Pacific Special EconomicArea AgencyAgencia del Área EconómicaEspecial Panamá-PacíficoApartado 0843-05522Panamá, República de PanamáTel. (507) 316-0000Fax (507) 316-0003Web http://www.aaeepp.gob.pa

DIRECTORIO DE INFORMACIÓN / DIRECTORY OF INFORMATION

MINISTRY OF COMMERCE AND INDUSTRY

Edison Plaza, Third Floor, Ricardo J. Alfaro Avenue & El Paical. P.O. Box 0815-01119 Paitilla, Panama.

Phones: (507) 560-0600 / 560-0700 Fax: (507) 560-0656

www.mici.gob.pa

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