In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
Panama is the first recipient of FDI in Central America with an annual average of USD 1.75 billion of FDI flows between 2004 and 2009. Despite the slowdown observed in 2009 due to the bad international situation, the FDI flows started to rise again in 2010 and they should maintain their dynamic growth. In 2013 FDI influx into the country reached over USD 3 billion. This good performance is due to the advantageous regulations for FDI and the incentive measures that the country has adopted in 2011.
Panama benefits of good financial and investment freedoms; commercial operations are, in general, subject to transparent rules; the tax rates for individuals and for companies are moderate; there are significant customs and tax advantages in the Colon Free-Trade Zone (CFZ). The strategic geographical location of the country, its dollarized economy and its economic specialization in the strategic sectors (banking, maritime traffic) are some of the many factors that attract FDI.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Panama||Latin America & Caribbean||United States||Germany|
|Index of Transaction Transparency*||3.0||4.0||7.0||5.0|
|Index of Manager’s Responsibility**||4.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||5.3||5.0||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||3,132||2,887||4,651|
|FDI Stock (million USD)||23,875||26,762||31,413|
|Performance Index*, Ranking on 181 Economies||18||-||-|
|Potential Index**, Ranking on 177 Economies||85||-||-|
|Number of Greenfield Investments***||43||20||30|
|FDI Inwards (in % of GFCF****)||38.3||28.9||41.8|
|FDI Stock (in % of GDP)||76.2||73.8||77.9|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: October 2014