Panamanian coffee has made an entrance on the world stage, and owners of farms in the rich, fertile coffee-producing highlands of Chiriquí are now well aware of just how hip a cup of local coffee can be. Starbucks, the mega-chain which led the coffee fad that became a world trend, features Panamanian Boquete coffee on their in-store displays, portrayed in a bright and colorful mola design.

Pride in the quality of our nation’s coffee was also instilled locally with a campaign for Café Duran featuring former Panamanian Miss Universe Justine Pasek. The ads featured the nation’s sweetheart enjoying a cup of Duran coffee while traveling the globe to make special appearances. The slogan of the campaign was “Lo Nuestro” which means “[That which is] Ours”.

Several other national coffees such as Sitton, Ruiz and Janson are sold at supermarkets across the country.

Others, like Kotowa (which means “mountain” in the native Ngabe Bugle language) are sold at specialty and gourmet stores. Café Duran has since opened single-serve coffee outlets in malls and airports throughout Panama, a venture that has jumped the Atlantic to franchise status in Spain.

There is, however, growing interest in a smaller segment of Panamanian coffee, one designated principally for export. These precious beans are part of Panama’s “Specialty Coffee Selection.” Each variety has its own unique qualities, flavors, depths and aromatic qualities.

Coffee facts: origins and types

All coffee species originated in Ethiopia. Just as wines are named after the vine, coffee is named after the kind of plant it comes from- Caturra, Catuai, Bourbon, Tipica, Geisha, Arabica, Robusto, etc.

Coffee came to the Americas from Ethiopia via Kenya and Tanzania. It came to Panama from Costa Rica in the 1960’s, encouraged by the Ministry of Agriculture, but the plants which were imported had a low yield and it was not a successful crop at that time. In those days coffee was just coffee. No one cared particularly about different fla ors or aromas and so all kinds of coffee beans were just lumped together.

Not until the 80’s did people begin talking about “cupping” coffee when tasters tried brews from different bushes, processed in different ways, to create different tastes. In fact “cupping really did not come to Panama until the 90’s.

Coffee culture humor

The world’s obsession with coffee drinking is illustrated by just how picky Starbucks encourages it customers to be. “I’ll have a triple grande half-decaf, amaretto-spiced latte 125 (degrees faranheit) in two cups with zero foam, please.” All this hype implies that a person can develop a unique sense of self just by stepping up to the order counter.

Coffee varietals

But the microclimates surrounding Volcán Barú, the dormant volcano in Panama’s far west, offer a much greater personalization and true selection. Just as the origin and heritage of the grapes make unique the fine wines they are used to produce, coffee beans are influenced by the uniqueness of the soil, elevation, weather patterns and even the other vegetation (native flora or agricultural products) that grow or grew where the bushes are planted.

The amount of caffeine, body, and flavor all varies from one valley to another, giving coffee connoisseurs around the world the capability to identify their favorite bean right down to the very valley that it comes from.

Specialty batches are created by master roasters on the farms, who know exactly how to obtain the best results from each different “micro-batch” of beans. Coffee experts know exactly how to roast a batch from the valley near a brook verses one that comes from higher up the mountain.

Perfection of this craft has led to new records appearing often in the headlines which proclaim the new monetary heights to which Panamanian coffee beans are climbing. Top-shelf products like Geisha coffee sell for upwards of $100 per pound in markets like Japan.

And in Panama, a country whose economy is largely service-based, the production of coffee is growing apace: as one of the leading export products, as part of the country’s brand as a coffee-producing nation and as an activity that is growing in popularity among visitors. Just as wine country tours are popular from Mendoza, Argentina to Sonoma, California, tourists enjoy visiting our nation’s coffee plantations to see (and sometimes participate in) the careful process from plant to harvest to cup.

Tours and tastings can be arranged with the majority of Panama’s “fincas” and “haciendas”(farms and ranches) in the Chiriquí province. Accommodations are available at some places, offering tourists the entire experience of the idyllic lifestyle of a tropical mountain coffee plantation.

The year-round spring-like climate of Panama’s coffee country is the same factor that has attracted residential tourism in the past decade with the picturesque town of Boquete as the epicenter.

The late Samuel Taliaferro pioneered this trend with his development at Valle Escondido, a hidden coffee-producing valley close to the town which he discovered while exploring on horseback around the turn of the century.

Coffee facts: processing and quality

Coffee bushes will produce berries after three years. The life of a plant is 25 to 30 years.

The red “cherries” are picked mostly by Indians from the Ngabe tribe who come from their reservation especially for the harvest which is usually from October to April. The whole family comes but nowadays child labor laws do not allow the children to pick.

The pickers pick into baskets which are then measured into what they call a ‘lata’ (tin) which holds 20lbs. They are paid around $2.50 per ‘lata’. The picked berries are unloaded into a sink containing water and stirred around. Any berries which float, together with other detritus, is skimmed off and the rest are siphoned off down a tube where the revolving water removes the pulp. The de-pulped beans are then dried in one of three ways:

1. On a patio in the sun. Some say this is the best method of drying beans. There is a romantic notion that sun-dried beans pro- duce a better flavor but this is not necessarily true because there is no consistency. Sometimes there is more sun, sometimes it rains and the beans have to be taken up during the process.
2. Lavado (washed). The beans are washed clean and dried in an oven
3. Honey: The beans are not washed but left with the mucilage ( a sticky substance left behind after the pulp is removed) and then dried in an oven.

The higher the altitude the bet- ter the quality. To classify as Café de Altura (high mountain coffee) it has to be grown higher than 1,600 feet above sea level.

A chance to visit century-old farms

Lerida Resort Hotel seen, not from the air, but from a footpath on a nearby peak.

But around the turn of the previous century the first pioneers were drawn to this mountainous area.

They came from as far away as Canada, eastern and western Europe and Scandinavia to settle on these pristine slopes with their rich volcanic soil. They were later the ones to begin planting coffee and leave the legacy of Panamanian coffee that is enjoyed today by so many.

The roots that were laid by Panama’s founding coffee families are truly reaching around the world today.

All the makings for a world-class product

Coffee will undoubtedly become Panama’s most famous export product. Old memories of a narco-dictatorship are giving way to the recognition of this far less scandalous stimulant. Today’s consumer market reacts to a new set of standards, one that is focused on the origin of the product and the manner in which it is brought to market, or in this case, to the cup.

This interest centers around three main pinnacles: the treatment of the environment, the option to consume products listed as free of chemicals and the social conditions of the product. Panama stands to be branded in a good light.

Organic options could become more readily available and farms are reportedly paying more attention to social issues so that the pickers (who are mostly from mountain Indian tribes) are treated fairly and that their children, who nevertheless participate in coffee collection in one form or another (strapped to their mothers as infants, bounding about the hillside as youngsters and even gathering beans) are not exploited.

The original water-powered machinery installed nearly 100 years ago at the “beneficio” of the Kotowa plantation is still in place to intrigue visitors.

Regardless of the conditions that Panamanian businesses (coffee producers included) may or may not have to adhere to this year as a trade deal with the United States enters into effect, there is value in this growing segment of buyers who care a great deal about the conditions surrounding the products they buy.

But perhaps the greatest news for Panama’s economy, image and tourism market is that coffee is a worldwide obsession, and the secret of how good Panamanian coffee can be is just getting out.

Finca La Esmeralda

One of the most prominent farms to export and promote Panamanian coffee is Finca La Esmeralda. It is owned by the Peterson family and is the biggest producer of the sought-after Geisha bean. They were the first in Panama to recognize its potential.

In 1964 Swedish born Rudolph A. Peterson (1904-2003), then president of the Bank of America, bought Hacienda La Esmeralda at Palmira, in the Boquete area, which was founded 40 years earlier by Hans Elliott, another Swede, who constructed the farmhouse which is now the residence of the Peterson family.

Rudolph Peterson’s son Price is now the doyen of the hacienda plus another property at nearby Jaramillo which the family purchased in 1996 and where they discovered a section planted with the now-famous Geisha Esmeralda Special trees. It is a family business jointly administered by wife Susan, son Daniel (operations) and daughter Rachel (marketing and sales).

La Esmeralda exports all of the production of it’s 200 acre plantation. Their finished product is taken down to 11 per cent humidity in the drier then beans rest for 30 to 40 days in bags before the outer shell, known as parchment, is removed.

The beans are sorted by size, weight and color then bagged for export. All of their coffee goes for export and the final process of roasting is done by the buyer. La Esmeralda ships all over the world to countries such as Japan, Taiwan, Australia, Korea, Denmark and Sweden. Each year they also sell 300 lbs of their best Esmeralda Special Geisha coffee in auction online where the highest bid ever was $170 a pound.

This contrasts spectacularly with the price of “ordinary” coffee which the New York Commodities Exchange regulates worldwide at $2.30 per pound.
Their Diamond Mountain brand is a mixture of everything that is not Geisha.
Their Palmira Brand is a mixture of Caturra, Catuai, Bourbon and Tipica.

Rachel Peterson, marketing manager, poses against a background of coffee sacks at the Esmeralda plantation.

Specialty Coffee Association

Every coffee growing country has its Specialty Coffee Association and every year they hold the Coffee of the Year Award which Finca La Esmeralda has won three years in a row with its Geisha Coffee. The Special Coffee Association of Panama (SCAP) awards the Best in Panama title for coffee every year. The Esmeralda Special brand Geisha coffee was first for six years in a row.

The 2012 competition will be held April 11 to 14. Rachel Peterson is the current president of the Association.

Finca La Esmeralda has also competed in the Rainforest Alliance Competition and won every time they competed (7 years in a row)

Finca Lerida

Another high profile farm is Finca Lerida which was started in the early 1920´s by a Norwegian named Tolef Bauche Moniche. His original house still stands as does the building where the coffee is processed.

It is still a fully functioning coffee farm but has also become a boutique hotel surrounded by magnificent views and gardens. They have 23 rooms, including 3 new junior suites complete with indoor-outdoor fireplaces. They have a fine restaurant and a coffee shop which sells, of course, their own brand of coffee. They offer tours of the farm, bird watching and have a wonderful hiking trail which takes three and a half hours.

It is a small farm with only 54 hectares under cultivation. They export all their coffee, mainly to Japan and Taiwan, except for sales in their coffee shop where it sells for $21.35 per pound. Their coffee type is mainly Catuai and Caturra and their own mix is 20 percent Natural, 50 percent Lavado and 30 percent Honey. Although it is not organic it is grown without herbicide. Their master coffee tester, Sr. Capistrano Rodriguez has been there for 12 years.

Coffee beans dry on a special patio at the Janson farm..... and can be sampled at their quaint hilltop coffee shop.

Kotowa

Finca Rio Cristal, home of the Kotowa brand was established 95 years ago by a Scotsman named Alexander Duncan. At some point the property was divided between family members. The present owner, Richard Koyner, is the great grandson of Alexander Duncan. Eighteen of the 30 acres are planted with coffee including Caturra, Pacamara, Catuai, Geisha and Creollos. They export some but most of their production goes to their chain of Kotowa coffee shops all over Panama. The original factory is still in use, mainly as offices but the original machinery which was powered with water is still in place and a fascinating attraction for tours of the property, which also offers a boutique hotel and a rainforest zip line.

Janson Coffee Farm

The Janson farm is situated in Volcan and has an unusual approach road down the middle of a WW 11 aircraft runway. A picturesque coffee shop sits on a hill overlooking the factory. Factory tours are available and you can take a tour of the farm on horseback. Janson coffee is available in supermarkets all over Panama.

The following is a list of tours offered in the Chiriqui highlands. Tours of the plantations include the beneficios, as the processing plants are called in Spanish. Some farms offer coffee tasting and additional attractions.

Panama, the perfect destination

The wedding, for most couples, is the momentous event which should define the quality and substance of the rest of their passage through life. Decisions about the details of this awesome ceremony are therefore most important.

So the couple must decide, first and foremost, where will the wedding be? In times gone by it was simple: the church in the bride’s hometown. Nowadays horizons have broadened and couples are choosing rose gardens, mountaintops, ski lodges, theme parks, beaches or even coral reefs.

Not only has the venue become a matter of sometimes esoteric taste but the ceremony itself often escapes the religious conventions of the past and instead of a priest or pastor blessing the union, a parent or friend officiates on the assumption that the vows will be just as binding and just as much in the sight of God in front of the friends and relatives gathered together.

As to venue, Panama provides a wonderful selection. Hotels in the capital and the provinces, many of which regularly cater to Panamanian weddings, will gladly organize a wedding for couples from abroad, either in the grounds or gardens or at a nearby beach or beauty spot.

Anyone wanting to investigate the possibility of tying the knot in Panama will find that the country is surprisingly sophisticated in this matter. Professional wedding planners offer their services in Panama City, talented photographers are available to record the event and caterers, for traditional, international or ethnic fare, will quote for any type and size of reception.

If the ceremony is to be casual in the manner mentioned above, everything is easy. Should a visiting couple require a civil or religious ceremony there are a number of requirements. One, which will seem odd, perhaps, is that for a civil wedding, the couple needs a “certificado de soltería” or document certifying that they are single. Other requirements are a birth certificate, a certificate of good health and two witnesses. The documents have to be authenticated in the country of origin, usually by a process known as “apostille” involving a Panamanian consulate. All documents have to be translated into Spanish by an authorized public translator.

One of the most experienced companies is “Gran Evento” which specialises in destination weddings. They regularly organize weddings for couples from many countries. They will do everything from finding a horse-drawn carriage to laying on pre-wedding tours and activities for any number of guests. Ms. Jaymar Pinzón, manager of Gran Evento says:

“Even though destination weddings may seem to be hard to plan, they are almost guaranteed to be simpler (and faster) to organize than a traditional wedding ceremony and reception and so much more affordable than regular in-state weddings. In Panama, an overall budget (lodging, meals, drinks, entertainment, decor and airfare) could represent half or even a third of what it would cost the average wedding in most big cities of the United States. “

The Panama Tourism Bureau (ATP, Autoridad de Turismo de Panama) apparently has plans to introduce a law making it easier for foreigners to wed here.

One of the obvious advantages of a wedding in Panama is that the honeymoon destination is combined. Beach and island hotels, lodges, inns and boutique hotels in the mountains provide idyllic getaways. Another advantage for some is that while the list of invitees in one’s hometown often runs into treble digit figures, few will travel abroad for the event, so costs are minimized.

Some hotels in the Caribbean have for years done big business in “getaway” weddings, especially with Japanese clients. Apparently the obligatory lavish ceremony in their country comes with an exorbitant cost.

The wedding on the beach

The photographs of the ceremony on the beach in this article were of the wedding of Samara and Moritz Fortmann taken by photographer Jennifer Moloney in Bocas de Toro. The couple were married in Los Angeles a year previously but chose to reaffirm their vows in a simple ceremony on the beach.

Some hotels to check

The following is a list of some of the hotels which cater for weddings. Their contact information can be found in “Guide to Lodging” or see the Advertisers’ Index

Royal Decameron - Located on a Pacific beach, the Royal Decameron offers an all-inclusive plan, with an assigned wedding planner, all documentation handled, witnesses, flowers, cake and “bubbly” provided, even a golf cart for the bride and groom and extras like spa massages.

Hotel Radisson - This new hotel has a spectacular pool and spacious salons suitable for wedding receptions. It has the advantage of being close to Panama City (and the Miraflores Locks on the Canal) but set in beautiful countryside.

Bern Hotels - This Panamanian group has several hotels ideal for weddings and provides a specialist to attend to every detail. The Gamboa Rainforest Resort is an impressive lakeside hotel in the forest reserve of the Panama Canal. The elegant Playa Bonita is the beach hotel closest to the city just 15 minutes from the Bridge of the Americas. In the City itself, the Intercontinental Miramar on Avenida Balboa is dramatically situated right on the bayfront and the Crowne Plaza is centrally situated. The Holiday Inn is in the City of Knowledge 15 minutes from the city alongside the Canal.

Hotel El Panama - Traditionally the hotel for events in the capital, Hotel El Panama is centrally located on Via España and has a very large pool and surrounding gardens which form an ideal setting for a wedding.

Finisterre Suites - This is a new hotel in the banking district with excellent facilities for a wedding reception.

Albrook Inn - A charming small hotel which caters for weddings in the quiet and green surroundings of the former Canal Zone but ten minutes from the center of the city.

Hotels in Chiriqui

For large weddings, the traditional venue in the provincial capital of David is the Gran Hotel Nacional which has a pool and garden area ideal for an outdoor reception.

The other sizeable hotel is the Hotel Ciudad de David whose banquet hall and modern instalations are excellent.

In the highlands, Boquete has several hotels which cater for weddings. The management of the Hotel Ladera fronting the Caldera River prides itself on its organization and catering and offers special rates for wedding guests.

The exquisite surroundings of the Lerida Ecoresort on a coffee plantation high on the mountainside would be a tempting venue.

The famous Valle Escondido hotel and resort in its hidden valley a few minutes walk from the town of Boquete is one of the most picturesque settings.

For a small wedding you couldn’t beat Rancho de Caldera, a secluded American-owned boutique hotel surrounded by glorious mountain views.

On the other side of the Volcan Baru, high in the Friendship International Park, a cloudforest wedding can be catered at Panama’s highest hostelry Los Quetzales Lodge and Spa. Its high-ceilinged dining and recreation area built and panelled entirely in native hardwoods is big enough for a fairly large gathering.

Hotel Bambito, set in a spectacular gorge in the mountains above Volcan, is surrounded by exquisite gardens. The covered pool is also popular for wedding ceremonies.

The reason for the popularity of Panama-based corporations are many. Panama welcomes foreigner investors and has given them the same rights as nationals. The country’s tax structure is favorable and generous incentives are available, especially to operations devoted to export. Taxes are levied only on net income derived from operations within Panama and there are no exchange controls. There are no restrictions on transfer of profits, dividends, interest, royalties and fees, repatriation of capital or repayment of principal. Finally there is the foundation, Panama corporate law, amended only once since 1927, that is extremely conducive to organizing a company within the country for the purpose of directing operations elsewhere.

In terms of the actual opening and maintaining of a business in general, this equates to a relatively simple unrestricted process.

Business licenses

Law No. 25 of August 26, 1994 most recently modified licensing stipulations and licenses are issued through the Ministry of Commerce and Industry. Exempted from licensing are entities conducting business exclusively in certain agroindustrial and handicraft sectors, as are those companies with a startup capital base of under $10,000. There are two standard types of licenses, which must always be visible in the place of business.

The Class A Commercial License applies to commercial and mortgage banks, financial companies, high-technology companies insurers and reinsurers, international financial brokers and transportation companies, mutual funds and public utilities. The Class B Commercial License is mandatory for bars, drugstores, gas stations, real estate agents, representation agencies, restaurant and other retail-oriented businesses. Class B status is only granted to Panamanians or corporations owned entirely by Panamanians since foreign companies are not permitted to engage in retail trade or certain professional activities. The National Securities Commission or the Superintendency of Insurance and Reinsurance must grant special accreditation for specified financial industries.

Forming corporations

Corporate names are certified by the Official Register of National Industry (Registro Oficial de la Industria Nacional). Names can be in any language, but are required to be suffixed with S.A., Inc., Corp. or Corporation.

There are two types of corporations in Panama: resident and non-resident. Two or more individuals or corporations may start a corporation and articles of incorporation may be executed inside or outside Panama in any language. Corporations may be owned by a single individual or corporation and capital does not have to be held by Panamanians. A foreign company is allowed to have branches or subsiduaries in Panama and numerous entities offer the use of shell companies to those requiring them.

The Board of Directors must be composed of at least three directors. Directors can be individual or corporate, national or non-national. A President, Treasurer and Secretary are required and one person can hold more than one of these positions. Directors and officers need not be shareholders and shareholder meetings need not be held in Panama.

All corporations are required to have a Resident Agent (read : Panamanian lawyer or law firm) and only agents can file incorporation documents. Approval is normally granted within one week. Costs vary, but usually fall within the $900 to $1,300 range.

Corporate taxes

Panamanian income tax is meant to be levied only on income derived from sources "within the territory of the Republic", and the 1964 law specifically states that the following activities do not produce taxable income: (1) invoicing from an office in Panama the sales of goods that do not enter the country; (2) handling offshore transactions from an office in Panama; and, (3) distributing dividends from income derived abroad, including income from (1) and (2).

Taxable income is defined as the balance of gross income less deductible expenses. The resident corporate tax rate on income of up to $500,000 is 30%. For over $500,000, the rate is $150,000 plus 34%. Non-resident corporate income is considered to be offshore, but a yearly fee of $150 is levied. For non-resident banking corporations in Panama, income from activities is also tax-free.

Organizational expenses may be excluded from taxable income in the year incurred or amortized over five years, at the discretion of the taxpayer. The total cost of research and development may also be subtracted.

Other considerations

The fiscal year is calculated from January 1 to December 31. Due to the existence of numerous back-to-back holidays, business activity slows down dramatically during the months of November and December.

Business information sources

Those wishing to obtain more information pertaining to establishing a business in Panama may contact:

Chamber of Commerce, Industry and Agriculture of Panama • Tel: (507) 227-1233 • Mailing address: Apartado 74, Panama 1, Rep. of Panama • Website: www.panacamara.com

Ministry of Commerce and Industry • Tel: (507) 227-4222, (507) 227-1222 • Mailing address: Apartado 9658, Zona 4, Rep. of Panama • Website: www.mici.gob.pa

American Chamber of Commerce and Industry of Panama (AMCHAM) • Tel: (507) 269-3881 • Mailing address: Apartado 168, Balboa (Ancon), Panama, Rep. of Panama • Website: www.panamcham.com.

Unionism is not as prevalent as in European countries and the United States and tends to be centered in the construction, government works and private manufacturing sectors. In Panama, union membership includes around 10% of the workforce.

Though modifications are under study, the Panamanian Labor Code still tends to be protective of the worker and somewhat prohibitive for the employer. Under the code, three types of labor contracts are recognized. The Definitive Period of Time Contract allows for employment not to exceed one year. The time period of a Defined Work Labor Contract is determined by the job performed. The Indefinite or Permanent Labor Contract is for a duration which is at yet undetermined by the parties at the time of signing. When special circumstances dictate them, probationary three-month contracts may be signed.

Mandatory employee fringe rights represent an estimated 35-40% of base pay and a Panamanian employee is guaranteed a wide range of benefits by law. Some of special note to employers include:

• An annual paid vacation of 30 days for every 11 months of continuous employment.
• A "Thirteenth Month" compensation that is aggregated at one day’s salary for every 11 days worked. The bonus is paid in three installments in April, August and December.
• Termination compensation equivalent to a week’s salary for each year worked.
• An unjustified-cause termination payment. This is a lump-sum payment, the value of which is based on labor code indemnification tables. After the amount is paid, the effected employee must be rehired if he or she desires.
• A paid maternity leave of 14 weeks.

The maximum normal workweek is 48 hours for daytime work, 42 hours for night work and 45 hours for mixed day and night work. Executive Decree No. 38 of July 22, 1998 established new minimum wage standards for three geographical regions, cross-referenced by employment sector. The resultant table places the minimum wage rate at between $0.82 and $1.33 per hour.

Foreign labor must obtain a one-year, sometimes-renewable work permit from the Bureau of Immigration. (In certain sectors and for some specialized positions, special temporary permits are granted.) For companies choosing to hire foreign labor, the rule of thumb is that the percentage of foreigners to nationals cannot exceed 10%. Due to the fact that unemployment has averaged between 12% and 14% for the last several years, foreign-labor statutes are strictly enforced in Panama and violations may result in fines and/or revocation of visa status, depending upon the individual case.

In terms of taxation, bonuses to employees in excess of one month’s salary or $750, whichever is lowest, are not deductible, nor are profit-sharing payments in excess of 10% of a company's taxable income.

Big investments, not to mention the $5.2 billion enlargement of the Canal, have been causing a snowball effect, reaching down into nearly every economic activity. Panama is also experiencing demand for immigration, both from retirees and others mostly from North America and Europe and from neighbouring countries, but the financial and housing crisis in the U.S.A. has slowed many residential housing projects.

Panama’s greatest asset, perhaps equal to the Canal, is the fact that the American dollar is in practice the currency of the country. Officially Panama’s currency is the Balboa which exists in coinage form only, identical in size to U.S. coinage.

The country uses American paper currency, and therefore the Balboa is automatically at par with the U.S. dollar.

This situation derives from the unique association between the U.S.A. and Panama as a consequence of the Canal.

FINANCIAL CENTER

In 1959, Panama’s legislators paved the way for the exploitation of this fiscal legacy and passed Law 18 making provision for numbered bank accounts. Further stimulation came in 1970 with Decree Law 238 providing both more incentives and controls for growth.

At that time there were 10 banks in Panama. Today the count is about 80.

The growth of the banking sector has made Panama the financial capital of Latin America – a safe international haven for money attracted by tax exemptions and the absence of exchange restrictions or controls.

The regulating agency is the Superintendencia de Bancos, which studiously applies the laws to all financial institutions.

THE SERVICE ECONOMY

Another of Panama’s assets is its geographical position, where world trade routes converge.

This has nurtured the Colon Free Zone, unchallenged hemisphere champion, and has made Panama prime head office or regional H.Q. choice for multinationals covering Latin America and the Caribbean. Panama’s international ship registry, with the largest fleet in the world, also adds boom and brass to Panama’s commercial orchestra.

This diverse activity has spawned a lucrative infrastructure supporting business and service organisations. Insurance, re-insurance, legal, accounting, trust services, business and tax consultancy all add to the harmony of Panama’s bustling business community.

A PANAMANIAN COMPANY

Part of Panama’s success as a haven for private business can be attributed to the country’s attractive corporate legislation, modeled on that of the State of Delaware. It is relatively easy to establish a corporation in Panama.

Those who wish to form a Panamanian corporation can benefit from the vast pool of experience and the international reputation of the many firms of lawyers and accountants established in Panama.

Panamanians and foreigners are equal before the law. There is no distinction between foreign and Panamanian companies regarding the formalities for their constitution. Neither are foreigners restricted in the type of business they enter, except for retail business, which is limited to Panamanian nationals, and the local communications media in which the capital must be entirely Panamanian.

Two persons or more, although they need not be Panamanians or residents of Panama, can form a “sociedad anonima” (corporation). Paid-up capital or minimun capital is not required and shares can be issued “to bearer”. The cost of forming a “Sociedad anonima” varies between $450 and $1,000. There is an annual tax of $300 and only companies which receive income from within the national territory are subject to income tax.

PRIVATE INTEREST FOUNDATION

A Panaman Corporation, in conjunction with a Panama Private Interest Foundation is a dual tool which very weathly and also only moderately wealthy people protect their assets and is one of the reasons why Panama’s banks hold total assets of over $55 billion.

The country’s unique laws allow the strongest asset protection in the world, together with strict bank secrecy and anonymous legal entity laws, Panama being one of the few countries allowing “bearer shares”.

The Private Interest Foundation law is modelled on similar laws in Switzerland, Liechenstein and Luxembourg. The foundation can be used as a holding company for a corporation or corporations which hold the assets.

Most offshore tax haven banks around the world require knowing the true owner of an account. A Panamanian foundation may open a bank account using nominee council members and keeping the true owners anonymous. The only exception is if a foundation is involved in terrorism or money laundering, in which case a Panamanian judge can sign a court order requiring the bank to disclose records of the account.

Legacies and bequests can be handled within the foundation, avoiding probate, gift taxes, estate taxes, inheritance taxes or legal delays.

TAX HAVEN

As is well known, Panama is a tax haven because of its income tax structure, founded on the concept of taxing income only if it is earned within the national territory. Transfers of funds for any purposes in and out of the country from abroad are completely free of tax.

Investors who wish to establish an industrial enterprise can benefit from various incentives if they sign a special contract with the Ministry of Commerce and Industry. This “Contract with the Nation”, as it is called, can be for ten or 15 years and is renewable.

COLON FREE ZONE

The Colon Free Zone is one of Panama’s greatest areas of investment opportunity. Over the years it has manifested a steady, heavy growth which has been further stimulated by port expansion, coast-to-coast railway and a new Panama Colon freeway.

Among advantages enjoyed by companies in the Colon Free Zone is that for the first five years of operation, they enjoy a 95% discount on income tax on foreign trade operations, providing that 80% of their revenues are from foreign trade operations and that they hire a minimum of 5 employees.

CONSTRUCTION BOOM

Also worth noting is the increasing number of retirees from North America and Europe who are investing in small hotels and bed & breakfast and other establishments.

USEFUL SOURCES

Useful sources of information about business and investment in Panama are the following:
Chamber of Commerce, Industry and Agriculture of Panama • Tel: (507) 227-1233 • Fax: (507) 225-3653 • Website: www.panacamara.com

Ministry of Commerce and Industry • Tel: (507) 227-4222, (507) 227-1222 • Fax: (507) 227-5604 • Website: www.mici.gob.pa

American Chamber of Commerce and Industry of Panama (AMCHAM) • Tel: (507) 269-3881 • Fax: (507) 223-3508 • Website: www.panamcham.com

To date, Panama has had four constitutions, introduced in the years 1904, 1941, 1946 and 1972. The latter was revised in 1983. A noteworthy constitutional amendment, voted by two successive assemblies in 1994, affirms that Panama will have no army, only bodies of specialized police.

The government of Panama is divided into a central government and ''decentralized" government entities. The central government is led by the cabinet, which consists of the president, vice presidents and ministers of state under the direction of the president. Thus, the cabinet represents the three powers of the state: Executive, Legislative and Judicial. The Comptroller General's office and the Electoral Tribunal are also represented on the Cabinet.

Executive Branch

The Executive branch comprises the president, the vice-presidents and the ministers of state. The president and the first and second vice presidents are elected by direct popular vote, and the president chooses the ministers.

There are thirteen ministries: Ministry of the Presidency, Ministry of Government and Justice, Ministry of Foreign Relations, Ministry of Economy and Finance, Ministry of Commerce and Industry (MICI), Ministry of Agricultural Development (MIDA), Ministry of Public Works (MOP), Ministry of Education, Ministry of Health, Ministry of Labor and Job Development (MITRAB), Ministry of Housing (MIVI), Ministry of Canal Affairs, and Ministry of Youth, Children, Women and Family.

Legislative Branch

The Legislative Assembly is composed of members elected by popular vote from electoral districts at the same time as the presidential vote. These legislators serve for five years and may be reelected for one consecutive period. The Legislative Assembly must approve the nominations that the president makes for ministers of state and high court judges. Among its functions are: to make, reform or repeal the nation's laws and regulations, approve or disapprove international treaties negotiated by the executive arm, approve the budget and establish or change political divisions. The Assembly is also charged with the responsibility of assisting the Executive branch to maintain a state of peace and it has the power to declare war.

Judicial Branch

The judiciary comprises the Supreme Court, subordinate tribunals and district and municipal courts. The Supreme Court consists of nine judges who serve a ten-year term. Among the functions of the Supreme Court is the enforcement of the constitution, dealing with criminal proceedings against functionaries of the state, and finding administrative solutions in labor disputes in government entities.

The Electoral Tribunal

The Electoral Tribunal is an autonomous institution charged with making and interpreting the electoral laws, and directing the electoral process. It consists of three judges, elected for ten years and one representative each from the Legislative Assembly, the Supreme Court and the Executive branch. The Electoral Tribunal also organizes the process of "cedulación" or provision of identity cards to all Panamanian citizens over 18 years of age.

The Office of the Governor

The Governor is the highest authority of each of the provinces. This position is named directly by the president.

Municipalities

The Municipalities are autonomous political community organizations established in all districts of the country. Each municipality has a municipal council of elected representatives. The role of the municipalities includes promoting development and social welfare of each community, execution of national laws, and the establishment and operation of works and services within the community.

Comptroller's Department

The General Comptroller's Department is another independent state entity with the responsibility of the nation's budget, its internal and external debt, of managing public funds and property, of rendering financial statements of public funds to the Executive Branch and of preparing national statistics.

Decentralized Entities

The decentralized institutions fall under the responsibility of a ministry and follow the policies of the Government. Some autonomous institutions are: National Mortgage Bank, National Bank, the Government Savings Bank, Social Security Organization, Regulatory Entity for Public Services, National Lottery, University of Panama, Technical University, and the Colon Free Zone.

Some semi-autonomous institutions are: Comptroller General's Department, Attorney General’s Office, Tourist Bureau, Fair Trade and Customers Affairs Commission, Bank of Agricultural Development, Agricultural Research Institute, Agricultural Marketing Institute, Agricultural Insurance Institute, Autonomous Cooperatives Institute, Civil Aeronautics, National Maritime Authority, Institute for Special Skill Training, National Culture Institute, National Sports Institute, Scholarship Institute, National Aqueduct and Sewage System Institute, National Transport Authority.

Canal Authority

A special case is the Panama Canal Authority (ACP), created in the 14th Constitutional title to administer the Canal and its watershed. Due to its importance, it enjoys financial autonomy, has its own assets and the right to manage them; its three-year budget is not part of the State’s general budget.

ACP’s management is handled by an executive board of 11 members; one of them is nominated by the President, acts as Minister of State for Canal Affairs and presides over the board.

Archaeological evidence indicates that Panama has been inhabited for over twelve thousand years. Early inhabitants left a rich store of pottery and burial sites to mark their passing.

Spanish colonization began in the 16th century and lasted till 1821 when Panama, Colombia, Venezuela and Equador formed a union called Gran Colombia and declared independence from Spain.

In 1903 Panama with U.S. help and encouragement broke from Colombia and signed the Hay-Buneau Varilla Treaty which gave the U.S. a 10 mile wide, 50 mile long strip of land through Panama to be used "in perpetuity" to build a canal. The Panama Canal was built between 1904 and 1914 and Panama's commercial importance to the world was established.

Panama's government was in the hands of a few wealthy aristocratic families until a military coup in 1968 when the country became a military dictatorship, under General Omar Torrijos whose reforms helped to create a strong middle class. His lasting legacy was the signing of the Torrijos Carter Treaties in 1977 which allowed for the gradual handover of the Canal and its territory to Panama by the end of 1999. Torrijos was killed in a helicopter crash in 1981 in what many still believe were suspicious circumstances.

His place was taken by General Manuel Antonio Noriega under whose regime relations with the U.S. deteriorated so badly that the U.S. finally invaded Panama in 1989 and Noriega was transferred to the U.S. and tried, convicted and jailed on drug charges.

From that time until the present day, Panama has increasingly prospered under a series of democratically elected presidents.

ENTRY REGULATIONS

A tourist can remain in Panama for 180 days, not normally extendable.

There is no need to obtain departure permits to leave the country, provided that the visitor complies with the terms of the tourist status. If a tourist exceeds the time allowance without a legal extension or justification, a fine will be charged according to the exceeded time.

COUNTRIES WHOSE CITIZENS DO NOT REQUIRE VISAS NOR TOURIST CARDS

The Americas: Argentina, Bolivia, Brazil, Chile, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Paraguay, Uruguay

Asia: Israel, Rep. of Korea (South Korea), Singapore

Europe: Germany, Andorra, Austria, Belgium, Cyprus, Denmark, Slovakia, Spain, Estonia, Finland, France, Greece, Hungary, Ireland, Iceland, Italy, Latvia, Liechtenstein, Lituania, Luxembourg, Malta, Monaco, Norway, the Netherlands (Holland), Poland, Portugal, United Kingdom, Czech Rep., San Marino, Sweden, Switzerland, The Vatican

COUNTRIES WHOSE CITIZENS CAN ENTER WITH A TOURIST CARD (OR STAMPED VISA

The Americas: Antigua and Barbuda, Bahamas, Barbados, Belize, Canada, Colombia, Dominica, Grenada, Guyana, Jamaica, Mexico, Nevis, United States, San Cristobal, Saint Lucia, Trinidad and Tobago, Venezuela

Asia: Japan, Rep. China (Taiwan), Tailandia

Australian Continent: Australia, New Zealand

COUNTRIES WHOSE CITIZENS REQUIRE A STAMPED VISA

The Americas: Ecuador, Peru, Dominican Rep.

Africa: Angola, Bostwana, Cape Verde, Cameroon, Gabon, Ghana, Comoros Islands, Madagascar, Matawi, Mauricio, Prince Seychelles, Central African Rep., Rep. of the Congo, Democratic Rep. of the Congo, Santo Tome, Swaziland, Togo, Zimbawe

Asia: Maldives, Mongolia, Vietnam

Europe: Bielorrusia, Bulgaria, Croatia, Georgia, Moldavia, Rumania, Russia, Ukraine

Australian Continent: Fiji, Marshall Islands, Solomon Islands, Kiribati, Micronesia, Nauru, Palau, Papua New Guinea, Western Samoa, Tonga, Tuvalu, Vanuatu

Citizens of all other nations need an authorised visa to enter the country.

Tourist Cards: Tourist cards cost $5.00 and can be purchased at air lines or travel agencies. All tourists must have valid passports, with the exceptions of citizens of the United States of America, who only need a proof of nationality to obtain a card.

Stamped Visas: Can be obtained at Panamanian consulates abroad.

Authorized Visas: Can be obtained at Panamanian consulates abroad with the authorization of the Immigration Bureau in Panama.