FREE: JOIN 100,000+ READERS   
≡ Menu
SOVEREIGN MAN

Panama, Inc.

If he keeps this up, they might start calling it Panama, Inc.

Panamanian President Ricardo Martinelli has been in office less than 6-months, yet to the extent that it is politically possible, he seems bent on running Panama with the same vision as when he ran the chain of supermarkets that made him one of the country’s wealthiest men.

Step 1– eliminate corruption in the government. All side deals and back room handshakes that were entered into under previous administrations are now off the table.  Martinelli has been leading from the front, personally strong-arming several businessmen who had been paying off bureaucrats for years.

His efforts seem to be working. In the past, anyone in the government beyond the level of basic peon used to be Old Faithful when it came time to accept ‘expedite fees.’ Not anymore. People are actually focused on doing their jobs and playing by the rules.

Martinelli is also keen on business and tax reforms.  He proposed a flat tax during the campaign and will likely push for relaxing Panama’s strict labor code to make it easier for entrepreneurs to hire and fire employees.

He is also taking advantage of historically low interest rates to make some much needed investments in the country’s infrastructure; as a business owner, he would do the same thing– capitalize on cheap money to invest in positive NPV projects that will generate a return for shareholders.

As such, the Panamanian government recently issued $1 billion in 10-year notes, yielding 5.224%.  This is about 1.8% higher than the US 10-year yield. The issuance coincided with S&P’s very enthusiastic upgrade of Panama’s credit rating, which is now one level below investment-grade.

$1 billion is a lot of money in Panama, roughly 6% of GDP. It would be like the United States issuing $1 trillion in debt, all at one time… it’s an enormous amount of money, but Panama’s dollarized economy can handle the inflows.

With so many capital-intensive public projects like highway construction, the Canal expansion, airport renovations, etc., the money will likely be spent quickly. But considering the direction that Panama is headed, Martinelli will likely come away looking very smart for making these investments with a cost of capital at only 5.224%.

At the moment, he has popular support as well.  His approval ratings are just about the highest in the western hemisphere at over 90%, compared with Barrack Obama’s 53%, Hugo Chavez at 46%, and Argentina’s Cristina Kirchner at a laughable 20%.

So what does all of this mean for banking and real estate?

Panama still has banking secrecy and will likely be, along with Hong Kong, the last holdouts that will buckle to the OECD’s offshore witch hunt. But that’s not necessarily the reason you want to consider Panama for international banking.

Panama’s banking system is very mature and offers a variety of unique products and services– online wire transfers to anywhere in the world, debit/credit cards, and personal attention from a private banker. Furthermore, it is actually possible to obtain a loan in Panama, which is next to impossible in many other jurisdictions.

Most importantly, though, Panamanian banks are well capitalized; they largely dodged the meltdown that wrecked havoc in North America and Europe, and their balance sheets remain strong.

Regarding real estate, I have been very vocal about my thoughts on Panama’s future; it is not without its problems, but given the maturing economic growth engines and massive infrastructure development that is underway, the country is clearly on an upward trajectory.

Martinelli’s actions are keeping Panama on the right track, and I believe the country will remain a safe long-term bet for investors and residents, as long as you don’t end up with the wrong people.

Like any boomtown, Panama has attracted its share of shady characters. You see the same types of folks in Dubai, New York, and even here in Bangkok.

The problem is that many gringos rely solely on Google for their ‘due diligence’; they do a search for “Panama Property” and the first presentable looking, English speaking bloke who pops up becomes ‘their guy’.

This sort of thing is truly dangerous, yet it happens all the time. I personally have burned through dozens of bankers, lawyers, and real estate agents in Panama who didn’t measure up, either lacking competence, character, or both.

The fact is, some Panamanians have made a science out of taking advantage of gringos coming down to Panama.   These guys look good, sound good, but absolutely cannot be trusted.

Over time, I assembled a list of the most intelligent, honest people that I have worked with in the country, as well as a list of people who should be avoided like the plague. The whole thing was packaged together in what I called the “Panama Black Paper.”

Initially, I released only 25 copies because I did not want to inundate my trusted contacts.  I know that many subscribers were not able to get in on the first release, so after clearing it with many of my contacts, I’ve decided to release another 25 copies of the Panama Black Paper.

I plan on doing this on Tuesday, December 1st at a cost of $297.  I fully expect all 25 to sell very quickly again, so if you’re interested in getting access to my personal Panama rolodex, I suggest you fill out the following Pre-Notification Form.

By signing up for the early notification, I’ll email you a special purchase link at least two hours before The Panama Black Paper officially launches. 12/1/2009 update: We received a lot of feedback from subscribers around the world in ‘inconvenient’ time zones that would be unavailable for the pre-notification launch… I understand this more than most people– 12pm on the east coast is the middle of the night in Sydney. Consequently, we are sending out a public notification on December 1st will keep it open for 24-hours.

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.

Want more stuff like this?

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens. Click below to join our community of 100,000+ sovereign individuals.

SIGN ME UP FOR FREE

Comments on this entry are closed.

  • Nick

    Hi all,
    If you’re invested in Real Estate and have borrowed to do so may I urge you to hedge your risk by refinancing at a long term fixed interest rate.

    This isn’t my personal recommendation but that of Martin Armstrong in his latest essay on the RE market cycle.

    http://www.scribd.com/doc/22733555/A-Forecast-For-Real-Estate

    A the very least read this. He is probably the worlds foremost mind on cycles and is no idiot.

  • BEN BRABB

    I have sincere and serious interest in Panama. I have already had one less than pleasant business experience there. I have remitted my “pre-notification form”. I missed the “lottery” on the last offer and don’t want to miss out on it again. I would set an alarm to check my email every two hours if I only knew a block of time. Even 48 hours. For myself it is worth much more than the $297

    Ben

  • JP

    Simon- thanks for doing another release and keeping the pr ice low; how many thousands of dollars did you spend over the years to acquire those contacts?

  • Amy

    Hi Simon. I read some a few reviews of the Panama Black Paper in some user coments from old posts, it seems to be very helpful… can you plase make sure I am on the list? I missed out last time.

  • http://SovereignMan Barthalomew

    Hi Simon,

    Thank you for making your list available. I got a notice last time, but when I hit the link to purchase – the price had skyrocketed up, due to a problem with the site. I e-mailed about it, but got no response. The price I believe is higher this time, but I would very much appreciate being notified early so that I may participate this time.

    Thank you so much!
    Kind regards,
    Barthalomew

  • Betty

    Hi Simon,
    For those of us who paid for the Panama Black Paper, will we be emailed any future additions or updates to it?
    Thanks,
    Betty

  • http://None Mark Roger Detels

    Hello Simon,
    thanks for my 1st issue of Sovereign Man.
    And already it bears fruit!
    I will be operating out of Panama as of April 2010 and am keen on your Panama Report. Pl advise how to proceed to get one.
    Yours sincerely,
    Mark Roger
    UK

  • Greenhorn

    Simon I am considering to disolve my US citizenship,. I am not a man of great wealth. I am gravely concerned for my well being and safety here in USA on many levels. I abosolutely do not feel safe and have been threated by local police. I avoid any activities that expose me to public events or just being in public for fear of harrasment as I have experienced . I only ingage in essential activities. I live in a open prison called America. I am depressed etc.
    Can i gain citizenship from any country by means of polictical protection from the USA?
    I feel i need protection and security from a foriegn government other than my own.
    I am in fear of persecution for religous and social beliefs. My name is listed on the lawsuit .. Manhattan Declaration vs US Government in support of marriage between man & woman. for this decision I have taken has , in my opinion is/has my well being ar stake, Can I seek political protection or is there a REFUGE CLAUSE is to be considered for my situation in order to gain a new national citizenship?
    Simon will refugees from USA be a new trend to unfold.? i wish to be the first.??

Read more:
Connecting the Dots
Presenting the decline of the West in two easy infographics

Close