Welcome to the second edition of the Weekly Offshore Panama News roundup. We had a lot of great feedback on the last roundup and the team was keen to contribute once more, with a very important week for Panama’s offshore community now in the rear view mirror.
We look at how American organizations are affecting the offshore world and directing business to Panama, as well as the impact of new trade relations with unexpected political and financial allies. The return of Panama’s boom times after a sluggish period of 2-3 months will also be discussed, alongside the potential business opportunities presented by incentivized zones on both Panama’s Atlantic and Pacific coasts. Read on for our news roundup, in yet another news-filled week for Panama’s offshore community.
Democrats Balk at Obama’s Pacific Trade Accord Fast Track
Potential slowdown is on its way to U.S. trading and financial dealings in the Pacific, with the news that a bipartisan bloc of 60 senators may be impeding President Obama’s ability to sign trade bills. Previously this executive power has led to swift deals with Panama, Korea, and Colombia, with a larger accord (also including revisions to the 2011 deal co-signed by President Ricardo Martinelli) being held up by the legal wrangles.
“The fast-track approach, also known as Trade Promotion Authority, gives the president the ability to put an accord before lawmakers for an up-or-down vote. That method was used to negotiate deals, including pacts with Korea, Panama and Colombia, before its expiration in 2007. The administration and business groups say fast-track can help assure trading partners that commitments made by the U.S. won’t unravel in Congressional negotiations.
A bipartisan group of 60 senators — a bloc big enough to sink a trade accord — on Sept. 24 urged the administration to include provisions to prevent currency manipulation in U.S. free-trade agreements. In addition to the 12-nation Pacific accord, the U.S. is negotiating a trade deal with the 28-nation European Union.”
Source: Bloomberg
Swiss Finished? America Forces the bulk of Switzerland’s banks into a painful deal
Interesting article throwing some light on recent attempts by the American government to force Swiss banks into opening their books. While they have been met with limited success so far, a number of Swiss banking organizations are reluctantly acquiescing to their demands. This has meant that a large number of offshore accounts are currently in play around the world, with foreign clients seeking more amenable shores for their accounts. Swiss scrutiny may lead to Panamanian profit in the future – we’ll bring you more on this as it resolves itself.
“The deal is cleverly structured. Of Switzerland’s 300 banks, 285 will be able to avoid prosecution if they provide certain information about American clients and their advisers, and pay penalties of 20-50% of the clients’ undeclared account balances, depending on when the account was opened and other factors. Banks that persuade clients to make disclosures before the programme starts will get reduced fines. Banks will not have to take part but the legal risks are daunting for those that don’t, even if they hold little undeclared American money. Those with no foreign clients will have to produce independent reports proving they have nothing to hide if they want a clean bill of health.
Source: The Economist
Panama growth accelerates in July despite slower canal traffic
Good news for investors in Panama with 3rd quarter reports hinting that Panama’s economy once again surged despite a relatively sluggish trade through the Panama Canal. Economists are predicting anywhere between 7.5% and 8.5% growth rates for 2013, with strong levels of investment in both government and private schemes in the Republic. Panama’s ongoing commitment to extensive public works are fuelling confidence in the country, with transport links and shipping key priorities. Yet another strong sign for an impressively expanding economy.
“Much of the growth is thanks to significant government infrastructure spending, including the ongoing expansion of the Panama Canal and the $1.8 billion construction of Central America’s first metro.
Along with a global slowdown that has dampened trade, a delay in the opening of the expanded canal has persuaded some shippers to use alternative routes such as the Suez Canal, through which they can squeeze bigger ships.”
Source: Reuters
Panama Prepares to Welcome Ibero-American Leaders
It’s been a decade of total change for Panama, with an economic miracle and increasingly virile political power helping to shake up the region for the better. Alongside this monumental change, the European nations of Portugal and Spain have found themselves in an economic tail spin. Both European countries are seeking to increase their exports to and through a thriving free trade zone in Panama, with greater cooperation envisioned for joint projects hosted between the nations. This interesting flip in the power balance has led to even more interest and speculation in Panama about the buoyant future of the Republic.
“The realities of Latin America, Spain and Portugal are very different from what they were in 1991, when the first Ibero-American Summit took place in Guadalajara, Mexico. The focus then was on supporting incipient democracies and promoting development. But Latin America’s “lost decade” was followed by a period of vigorous growth that lifted 70 million people out of poverty and swelled the ranks of the middle class by 50 million. Now it is Spain and Portugal that find themselves striving to emerge from economic crisis, in part by boosting exports to Latin America.”
Source: Fox News Latino
Qatar, Panama Discuss Bilateral Relations
Panamanian and Qatari ministers have met to discuss how to enhance trade and mutually beneficial financial relationships, as part of a political drive in Qatar to increase their visibility in Central America. Establishing stronger relations between the two countries is seen as another key segment for Panama’s economy, with potential for new projects in line with Panama’s infrastructure needs. With varied financial needs on both sides, it is expected that off and onshore corporations will be used to provide a base for mutual projects or legislation. Expect to see a Free Trade Agreement announced soon.
“The the Assistant Foreign Minister for Foreign Affairs Ali Bin Fahad Al-Hajri met Deputy Minister of Foreign Affairs of Panama Mayra Arosemena.
During the meeting, they discussed bilateral relations and ways of enhancing them, especially in the political, economic and cultural domains.
An agreement to establish political consultations between the Foreign Ministry and the Ministry of Foreign Affairs of Panama was also signed.”
Source: Quatar News Agency
Panama Tax Incentives: Colon Free Zone vs Panama Pacifico
This week’s blog post pick comes from a familiar source: US!
Breaking down the differences between tax incentive packages offered in the Colon Free Zone and Panama Pacifico, our team put together this short article on why you need to pick the right package for your company. With a substantial difference between the two physical spaces both legislatively and culturally, we outlined why location is as important as law to companies investing in Panama.
“The Panama Pacifico Special Economic Zone is still being built on a 1,395 hectare (3,447 acre) site including an 8,400 foot jet airfield runway for cargo planes. This is situated near the Panama Canal for easy access. Upon completion this will become a small city with corporate offices, bank offices, logistic services, call centers, offshore services, high tech production and manufacturing, aircraft repairs and maintenance services, goods being transferred to airplanes & ships, exporting goods, and a film industry.
The first Panama tax incentive began in 1948 when the Colon Free Trade Zone was established and has become the second largest tax free zone in the world after Hong Kong. Over 1,800 companies operate in the Colon Free Zone with the majority of them involved in importing and exporting, including factories, warehouses, and re-packaging many products.”
Source: International Relocation Firm
