Light Manufacturing

Wide opportunities for foreign investment in light manufacturing centers

To increase regional competitiveness, Panama is developing a plan to attract foreign investment, facilitating the establishment of light manufacturing operations. Toward this goal, the country has enacted laws 25 and 76, which define important incentives to the DFI and promote local investment in the industrial sector.

WHY PANAMA?

Special incentives for companies dedicated to:

Also, for companies dedicated to R&D:

R&D for new raw materials and supplies to improve production processes.

R&D of new production processes to improve the products’ characteristics.

R&D of new products.

INDUSTRIAL DEVELOPMENT CERTIFICATE

The companies that develop activities within the framework of laws 25 and 76 may opt for the Industrial Development Certificate. This is a non-transferable document authorized by the Ministry of Economy and Finance.

Benefits of the Industrial Development Certificate

The companies that have this certificate will receive the following benefits:

They may use the certificates to pay all national taxes, tariffs and contributions.

They may use the certificates for a period of 8 years.

They will only pay 3% import tax (in addition to VAT and ITBMS) on raw material, semi-finished products, machinery, equipment and spare parts, packing and other articles necessary to create their products.

In the event of losses in a fiscal period, they will be able to deduct them during the next 5 years (at a rate of 20% each year).

Up to 40% of the following may be reimbursed:

  • Investment or reinvestment of benefits.
  • Investment in direction, quality control and environment management systems.
  • Investment or reinvestment of benefits in production improvement processes, new product creation or expansion of the production capacity.
  • Investment in staff training activities.
  • Investment to find news production personnel.

Dynamic manufacturing center in a strategic geographic location

Panama, a growing industrial cluster

In 2016, Panama’s industrial manufacturing sector was US$2.89 billion of the national GDP, a 13.7% growth since 2012.

Strategic location

Panama’s central location on the continent, together with its exceptional maritime and air connectivity, enables manufacturers to use the country as a regional distribution center, broaden the reach of their operations and substantially reduce costs in the supply chain.

Skilled labor force at accessible cost

The annual labor cost of a production operator in Panama is around 77% cheaper than in the United States. That of an industrial engineer is much less than in other large economies, between 45% and 80% less than in Brazil, Mexico and the United States.

Extraordinary air connectivity

The Tocumen International Airport is the most connected in Latin America, with more than 132,000 direct annual flights to 90 destinations in 35 countries. The airport is hub to Copa Airlines, in addition to the regional center of several commercial and cargo transportation airlines, with excellent advantages for cargo transportation throughout the region. Panama occupies the #1 position in Latin America and the Caribbean regarding the quality of air transportation infrastructure.

Panama City is the best connected of Latin America.

Source: OAG Aviation Wolrd Wide Limited, 2017.

Outstanding maritime connectivity

The Panama Canal and its recent expansion make it possible to reach markets of 1.3 billion consumers. Through the canal more than 144 shipping lanes connect 1,700 ports around the world in 160 countries. Panama is the only country in the world with a terminal with access to 2 oceans. It has the two most active ports in Latin America, with an annual load movement of more than 7 million containers. Panama is #6 in the world regarding the quality of port infrastructure.

in the world for the quality of its airport infrastructure.

Source: Global Competitiveness Index, 2017.

Special regimes to encourage DFI

Panama investment schemes offer a wide range of profits tax, immigration and customs that help light manufacturing operations. Panamá Pacífico, strategically located at the entrance of the Pacific Ocean from the Panama Canal, offers high-tech manufacturing companies a total exemption on taxes, both direct and indirect, in addition to offering a package of work incentives and immigration.

Transnational commerce simplified

Panama occupies the 2nd position in Latin America and the Caribbean with respect to transnational commerce. Its advantages include greater speed in import and export time in addition to lower costs. Panama has signed 20 treaties, more than any other Central American country, including treaties with the United States, European Union, Canada, Mexico, Colombia and almost all of the Central American countries.

en América Latina y el Caribe en cuanto al comercio transfronterizo.

Fuente: Proinvex

Download: Manufacturing

Special Investment Regimes

SUCCESS CASES

“Halliburton established its Latin American regional operations in Panama in 2009 and opened its Business Support Center in the country in 2010. In 2012, Halliburton expanded even further opening their Human Resources Employee Center. Since then, Halliburton has established a transnational center in Panama and is currently exploring opportunities to expand its operations in various sectors within Panama. The key reasons behind Halliburton’s continued investment in Panama include its strategic geographic location and the Multinational Companies Headquarters Law (SEM) which helps to make Panama a profitable location. Additionally, Panama offers good quality of life and school options, which makes the country favorable both for Halliburton and its employees”

Francisco Tarazona, Vice-president
Halliburton Latin America

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