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SOVEREIGN MAN

Business opportunities in Panama

February 2, 2010

Panama City, Panama

I see a lot of opportunity in Panama right now for entrepreneurs and small businesses; in fact, I see more opportunity here than in just about every other country in the western hemisphere with few exceptions.

Why?

Panama has two strong emerging consumer markets.

The first is the obvious low hanging fruit: foreigners. Their ranks in Panama are growing by the day, swelling the country with their capital and their consumer demands. Simply put, they are accustomed to certain products and services, not all of which are available in Panama. That spells opportunity.

Sure, there are droves of foreigners here already posing as real estate agents trying to sell the next expat on an overpriced, generic condo in Panama City… but that business model is dead for now. There are better options.

One possibility is a professional property management company. There are thousands of new condo units in the city whose owners might only visit a few times a year. During the vacant periods, there are bills to be paid, maintenance to be performed, and in many cases, tenants to be found and managed.

Only a few companies in Panama focus on this business model, and they’re completely slammed. The market could use some competition, especially considering all the new construction coming online in the next 12-months.

Another consumer demand that needs to be addressed is high-end storage.  Panama’s heat and humidity can be disastrous for sensitive belongings like wine, paintings, and antiques; thus, a high-end self-storage facility would likely do quite well here, and it would be fairly inexpensive to start up.

One idea that I have been considering myself is providing services for companies involved in Panama’s two major construction engines right now– the Canal expansion 34project, and the Panama Pacifico redevelopment project.

(Panama Pacifico is a $1 billion mixed use commercial/residential development on the former Howard Air Force base just outside of the city near the Canal.)

These two projects are attracting a myriad of foreign companies, and right now there are limited options available for corporate services, especially lodging for business travelers.

Nearly every reasonable hotel in Panama province is tucked inside the city, making for an unreasonable commute, and the first business class hotels outside of the city aren’t due to be rolled out until 2016. A well-located existing structure could be renovated, marketed, and profitable as a business-class hotel within 12-months.

The second consumer market worthy of an entrepreneur’s attention in Panama is its emerging middle class, and this is another group that is growing by the day thanks to the income effect of Panama’s growing economy.

The wealth of most developing countries is concentrated in the hands of the few, leaving the remainder of the population living on scraps; these types of markets should generally be avoided by smaller enterprises.

The mark of any well-developed country is a solid middle class– roughly 60 to 80 percent of the population that earns enough to provide a comfortable standard of living, savings, and discretionary spending.

Panama is clearly moving in this direction; middle class households earn between $800 and $1,500 per month, which is enough for them to buy a house and car while having plenty of money left over for savings and mindless consumption.

One clear opportunity is the current shortage of housing units for middle class Panamanians, which fall in the range of $60,000 to $80,000. The government projects that roughly 70,000 units are needed just in the area around Panama City; existing approvals show only around 8,000 in various stages of planning or development.

Retail opportunities also exist; by nature, Panamanians are a consumptive group– as a culture, if they have money, they’ll spend it. It seems like everyone has a new car these days, and given how poorly everyone drives here, there’s opportunity for maintenance and body shops.

Assisted living facilities and elderly care is also a fantastic opportunity, particularly when targeting the Panamanian middle class; for the first time ever, this group now has the income to outsource the care for their elders, and they’re starting to do it.  The few facilities that offer this service in Panama are booked solid.

These are just a few small business ideas in Panama that I’ve noticed recently; if you spend much time on the ground here you will probably come up with several more on your own.

One thing I would caution you about is running any employee-intensive business; Panamanian labor laws, while relatively relaxed in comparison to the rest of Latin America, clearly favor the employee.

Between the mandatory “13th month” annual bonus, 40+ days off, increasing minimum wage, and Byzantine termination rules, it’s in your best interest to keep the workforce slim and/or temporary.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • david hart

    What’s the latest on the self contained residential development survey?
    Would like to work with you on it. Will be in city 2-10-10

  • Jason

    Are there any Panamanian public companies (or public companies based elsewhere twith heavy exposure in Panama) that are worth looking at?

  • Randy

    I really need to speak with you.
    Long ago my friend has humanitarian foundation established in Panama & CR

    Very interesting connections there in new administration.
    Meetings have taken place with banking/finance ministers.

    best regards,
    r

  • Hans

    Hi Simon,

    Love the emails. Keep em comming. I own a company in Canada importing Japanese sports cars, SUV’s and luxury cars (Nissan Skyline GTR, Mitsubishi Lancer Evolution, Toyota Supra, Toyota Landcruiser, Mitsubishi Pajero, Mercedes SL500). I want to expand in South America since I know there is a lot if demand. I was thinking on Panama since it is centrally located to serve Central and South America and the local market. What is the used car market like in Panama? Would the new emerging middle class be able to afford a car, suv, etc of about US$7000-15000?

    Cheers
    Hans

    • Leo Rico

      Hans, yes most certainly.  This would be a great move…Panama is one of the fastest growing countries in Latin America and your investment would probably multiply due to the fast growing economy…Let me know if you need any assistance.
       
      Leo

  • James Walgren

    Are there opportunities for employment as a partially retired US DDS in Panama? Thanks

  • Chuck F

    have you looked at opportunities in tanzania?

  • Eric – Vancouver, Canada

    Hi Simon,
    Your spot on with your commect about once you have spent time in any location something will jump out at you as far as a businss opportunity. Having been going to Mexico for over 31 years (my wife is Mexican) it is like my second home. Over the years several business opportunities became obvious (and eventualy done by others). Although I do plan on spending more time in Mexico in the coming years I am reluctant to own any property there having seen how a panicked government can react during a currency or economic crisis (the peso devaluation several years ago). Unfortunatley I believe Mexico is on track some very serious problems including the possibility of a complete goverment implosion. I plan on keeping my money out of the country and ready to make a hasty departure without having to worry about property ect.
    I really enjoy your daily news letters, keep up the good work.
    Sincerely Eric.

  • bob

    Simon,

    Maybe we can talk in April in between catching sailfish & marlin.

    Cheers,
    Bob

  • bill

    Simon, I am looking to get in the market for construction related projects like assisted living or buildings that could be converted to long term living. The only problem I see is the lack of existing buildings near Howard. Any suggestions? I will be coming off a contract in August/Septembre from Afghanistan. I will be in the market with another business partner, to seriously check out the market then. Until then, I would like to view any possible properties, with the above stated.
    I am a genral contractor her in the US and I see the potential there.

    Bill

  • Raul Del Aguila

    Dear Simon,

    My name is Raul Del Aguila, I’m 50 yo., two years ago I came back to Peru after living 10 years in New York City and 8 years in Seattle,
    I worked in the Information Technology business, here in Cusco-Peru
    my family is the owner of a Hostel building with 22 rooms (3 stars),
    the tourist movement is very intense here in Cusco due to the fact
    is the obligated stop for tourists from around the World in their route
    to visit Macchu-Picchu, after a tenant rented by 20 years this Hostel,
    he is returning the building because they built their own Hotel building,
    I’m looking for an investor partner to upgrade this Hostel in a boutique-Hotel concept, the Hostel building is strategical located to one block
    from the Cusco Plaza mayor downtown. Cusco is a wonderful city
    in the middle of the Andes, the principal business is tourism and the
    city is very safe, clean and really nice, was the old capital of the
    Inca Empire before the conquerors Spaniards came to South America.

    • Anonymous

      Raul, I am the director of a boutique hotel located in Whitehorse, Yukon, Canada, the Skky Hotel. Am interested in your idea. I am a lawyer located in Toronto. Send me some details of what you are looking for.

      • Raul

        Could you please send me your e-mail address, after one year I’m reading your message

  • http://contessaone.blogspot.com contessa

    Opportunity is the keyword here… Hi Simon I like your thinking. Ive been an entrepreneur for years. Truth be im an honest individual, so I will tell you 3 ex partners were not nice. It’s okay I have new business ventures cause I’m super creative…

    I’m also bored by the states looking for new ideas always. Sounds like you have your hands full. No I do not have a legitimate business plan, nor do i care to write one. But I’m interested in doing if your interested in start up capital. I’ll just leave it to that for now, your always welcome to email me. Contessa & I like your blog.

  • Rick

    I helped a friend of my Father, set up a hearing aid lab in Tiajuana.

    I came home with all of the equipment & experience needed to build new hearing aids and repair existing ones, test for hearing loss and fit them to the ear…etc.

    I would be interested in the possibilities of setting up a lab in Panama.

    Any thoughts?

  • Ronald Schoenholz

    Simon,

    Thank you for your thought provocative commentary’s. I am interested in your thoughts on developing a self-sustaining community. I am in the process of deciding where to land as an ex-pat. My occupation is in agriculture. I am a farmer.

    Ron

  • RICH Novak

    Hey Simon – FYI – To the best of my knowledge only a Panamanian citizen can own any kind of retail establishment here in Panama.
    But please correct me if I am wrong.

    Thank YOU!

  • http://www.terrybraverman.com/Replenisher.html Terry Braverman

    Simon,

    Can you recommend anyone in Panama City who is a real “maivin” (expert) on the current res. real estate market in the city’s neighborhoods?

    Much appreciated!

  • http://www.terrybraverman.com/Replenisher.html Terry Braverman

    P.S. Do you think it’s a good time NOW to buy a condo there?

  • BOB

    I read your comments on storage the same day a cdn, with panamanian wife,was bugging me to get as many 20′ ocean containers down to him. Being from southern ontario my company already has a way to cut down on humidity. Maybe I should give the old boy a ring. Might need help later if things start to look promising

  • nan

    always read your blog with interest – maybe I missed it but I haven’t read anything about the weather in panama – my impression is hot, muggy, buggy. Am I wrong?
    Thanks.

  • Clement

    Belated happy new year to you simon,

    Thank you for the newsletter and the brief on Panama.I wish to make contact with Mr Raul Del Aguila on the opportunity in Peru. how do I get in touch with him via your email database.
    In Papua New Guinea (PNG) we are also experiencing exciting business growth in all the sectors. i am seeking out investors for ‘green investmnets in Geothermal and Hydro power and water in PNG. There is also scope for Microfinance development and capital to start new ventures in transport, hotels and diving resorts on New Britain island in PNG.

    • Eladiow057

      Mr Clement can you tel me more about the green investment sector. Thank you for your time.

  • Tom

    Hello, Simon
    Your suggestion on storage is right down my ally. I opperate storage in the states and have been wondering about whether it would work there. Seems with growth storage is allways needed up here. PC is not an area I hope to live
    but I am oppitunity driven so who knowes once I am on the ground there later this year. I like Ecudor better. I do not like the heat or cold either.
    I enjoy your blog though it seems much is intended for persons with much money. I have only a little bit but I still learn much from your writeings.
    Thank You
    Tom

  • Ray Kleiner

    The high end storage model could work. Its a very niche market but would need to see if the numbers stack up. A better model is to tap into the International companies involved in the canal expansion programme by providing a one stop shop point of reference for the executives. Sort out paperwork, accomodation issues and provide consultancy etc. based on US / International prics structures. They pay top dollar and don’t want the hassle.

  • Chris Devlin

    Hi Simon,
    In one of your previous reports you mentioned gun friendly countries. What are the livable, gun friendly countries where expats are allowed to own firearms?
    Thanks, Chris

  • anne kavanagh

    Dear Simon,
    Are there any opportunities to do sole proprietor alternative/natural
    medicine in Panama? I have had an acupuncture/herbal practice in the states for 15 years? I am both a US and dan Irish citizen, any advice?
    thanks and I really enjoy your site.

    • Leo Rico

      Anne, you are allowed to be a sole proprietor of any business in Panama.  The requirements are not different than any other country, you would need a work permit, own a residence or have a local permanent address and register your business with the government to obtain the appropriate permits.  My sister is an attorney in Panama so let me know if you need any advise.

  • Tami Herrington

    Your articles are very informative Simon, thanks. My husband and I are interested in opening a wine/beer shop with the possibility of offering personal wine storage, similar to the storage options available in NYC. Temperature control is very important to the storage of wine as is overall “safety” of one’s collection.

    We plan to move to either Costa Rica or Panama within the next 3 years, sooner if possible. We are now at the stage of finding the right country, once that place is found, we are ready to purchase an investment/vacation home and start operations.

    The comment about only Panamanian citizens allowed to own a retail business concerns me. It has been difficult to find information that is reliable. We do not want to move to a country where we cannot operate a legit business. Help?

    Thanks,
    Tami

  • Ray

    Regarding the ‘Panamanian Employee’ rules, I know that some countries require all businesses to employ citizens of their country-or at least, a certain percentage of its citizens. Does Panama have any rules concerning the citizenship of employees ?

    Thanks,
    Ray

  • SPANIARD

    Hi Simon,

    I am interested in the idea of the property management company. I am in contracting and have experience in Europe and ME. Right now based in Singapore/Thailand.

    I also have a couple of profitable business ideas I’d like to develop in Panama so if you are interested in sharing start up capital, let’s chat thru email – You are welcome to email me.

    Thanks.

  • Frank

    Simon, I am looking at developing a 20 unit assisted living and am leaning towards Mexico, due to North American proximity. I am located in Toronto, Canada and am a businessman and entrepreneur with a legal background who also heads up an investment group which owns a hotel in Northern Canada.

    Would you favor Panama over Mexico? Do you have interested investors?

  • Bill Massey

    Hello Simon,

    We are launching a Central America initiative for our Energy Service Business (aka ESCO). I have a partner in Costa Rica, and we want to immediately begin work in Panama City.

    In a nutshell, we decrease electricity costs in COMMERCIAL BUILDINGS anywhere from 10% to 30% or higher. (we guarantee our customers 10% savings). The higher the current electricity costs, the better. We save the customer more money. Not to mention the reduced carbon footprint that comes with it.

    We are beginning work in Mexico, the Philippines, soon in Hawaii and NYC. All places with high electricity costs, and our low hanging fruit, you might say.

    I would be interested in talking with you personally because of your world travels and network of leaders and people of vision. For the first time in my business life, I have a deal that makes my company money, while still providing net cash savings to our customers … and actually helps Mother Earth in her time of need. A Hell of a Deal, I say.

    • Wes

      Hey Bill,
      I like your vision towards building energy conservation bus opportunities in CR and Panama,way to go!
      Since your last posting 7 month ago did you make any progress there?
      I’m in Toronto,Canada looking to move to CR or Panama and would be very interseted to work on this field.
      I’m specializing on HVAC/Refrigeration fuel/energy consumption reduction and building envelope(glazing insulation).My experience is upgrading efficiency of existing equipment with out high upfront cost therefore quick payback time and exelent ROI.
      If you will be looking for an expertize or need someone in those countries please contact me.
      Thank you.
      Wes

    • Eladiow057

      Hi Mr Massey How is your business doing in Panama

    • Eladiow057

      Bill i”m from Panama looking to move back to panama, I”M working in the Renewable Energy industry

    • Greg

      Bill,
      I am in energy conservation as well. I would like to get in touch with you regarding Panama.

    • http://www.facebook.com/smithbey7 Horace SlimSwagga Smith

      Bill, is this business opportunity to provide cost savings in usable energy available for others to madket and promote in a business manner? If so, then I would like for you to contact me with details at smithbey2000@yahoo.com, My name is Horace. Thank you!

  • http://www.ginckmedia.com Jenner

    Hi Simon,

    I’m a cartoonist/illustrator here in Austin, Tx and I’m interested in knowing what legal hurdles I might have to overcome if I were to set up as a street vendor dealing in custom illustration and original printed material in one of Panama’s English-speaking tourist cities. What kind of risk would I be taking if I were to import some of my product via suitcase? Also, how tolerant might the airport terminals be of someone doing that on their premises and are they be willing to negotiate rent? Another thing I’m wandering is if you know of any Panamanian printers that are capable of printing short-run, perfect-bound, retail-quality books.

    Thanks for everything you do,
    JC

  • Danny

    I am starting a business in Panama and the Colon Free Trade Zone. I have already registered a corporation in Panama. My obstacles at the moment are that the bank manager is claiming that I need to have an office before I can open a corporate bank account. The account can be open only by having 3 Panamanian citizens that become partners of my corporation and will be having access to this account which will be opened on my name (not the corporation). My question: Are all these requirements/policies accurate in accords to their law? Is it this hard to actually open a corporation in Panama?

    • Digimixstudios

      It is not hard to open a corporate account just use the service of a lawyer.

    • Leo Rico

      Danny, I’m duo citizen and retired from the US Army.  My sister is an attorney in Panama so you can send me an email if you want to make contact so that we can further discuss your concerns.  Leo

      pty.rico@gmail.com

      • Walter

        hello Leo I live in Saint Maarten Caribbean a  couple of our flight from Panama, I own a five star hair salon and spa here in the island, and I will be in Panama from the 30th of dic to the 8 of jan… im very interesting of open a business in Panama, and i will be happy to meet your sister to have a talk about it… let me know please, kindly Walter….  

  • PaulAlanTurner

    Simon, they were listening to you and now they are coming !

    La Quinta to invest $25m in 13 new hotels
    One of the largest hotel operators in United States is coming to Panama. La Quinta “limited-service hotels” recently announced Interoceanic Hotels Inc. will build 13 La Quinta hotels, totaling 500 rooms throughout Panama. The total investment is $25 million dollars and the building process will take seven years.

    The flagship property for La Quinta in Panama will be in Albrook in the Centro Comercial PanCanal. In addition there will be La Quinta hotels in El Valle and on Isla Grande.

  • PaulAlanTurner

    Still More Opportunities in Panama

    The daily La Prensa reported that a “magnifying glass” is on the Canal expansion project and more recently on the 4,925 hectares surrounding the waterway that have not been fully developed, stating that this is fertile ground for mounting maritime service, logistics and tourism companies. Mentioned areas were the lands of North Sherman, Fort San Lorenzo and Corozal West.

  • PaulAlanTurner

    Simon:

    Do you have any comments on the impacts of the current tax reform in Panama to increase the value added goods and services tax (ITBMS) from 5% to 7% … a 40% increase ?

    Do you think it will slow down Panama’s FDI or foreigner relocations ?

  • http://pulse.yahoo.com/_NHTT4II7O6UHUPRGVIOKMCKDQ4 Roert Brookes

    Yeah, absolutely panama is growing day by day and getting more opportunity of business. Specially real estate business are boosting and everybody are interested to invest in the panama in the western hemisphere.

    HOA Management Charlotte

  • http://www.goedkoperdankopen.nl/ goedkoper

    I’m sure that many investors would like to open their business into this country. The state could benefit from it also and if there will be more investors that will going to invest more business, more job will be open to the people also.

  • Dan Gleesack

    this is pretty stupid and obvious.

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