Corruption is Panama’s biggest challenge. Panama ranked 105 out of 180 countries in the 2021 Transparency International Corruption Perceptions Index. The U.S. and other international investors have voiced concerns about corruption and inconsistent treatment of investors and businesses. Instances of questionable government practices have directly affected U.S. investors from pursuing projects in Panama. These include bidding procedures, land titling, adhering to contract obligations, lack of payments, and a slow and lacking judicial system. The United States continues to stress the need to increase transparency and accountability in the judicial process and government procurements. The Panamanian government’s history of delaying payment to suppliers and contractors continues to be a liability that U.S. and Panamanian companies endure when doing business with the government. We encourage U.S. companies interested in pursuing public tenders in Panama to apply for support from the U.S. Department of Commerce’s Advocacy Center We recommend that U.S. citizens interested in purchasing property in Panama consult with a qualified lawyer, a list of which can be provided by the Embassy’s American Citizens Services section. The World Bank’s Doing Business 2020 report is being replaced by the https://www.worldbank.org/en/businessready report in 2023.
Panama’s inflexible labor laws are a source of concern for prospective investors. The process it takes to fire an employeeis excessively regulated which reduces labor mobility and inhibits hiring. While inexpensive in global terms, Panama’s minimum wage is relatively high in a Central American context, with required annual increases which vary in amounts depending on the sector. Also, competent technical employees fluent in English can be challenging to find. These labor issues, coupled with exceptionally high electricity costs, result in higher-than-average unit production costs in Panama. To attract more foreign investments, Panama have two regimes where they can benefit from: EMMA, to facilitate the establishment and operation of manufacturing multinational companies, and SEM, Panama’s Multinational Company Headquarters program (SEM).
