The international press keeps reporting that the global banking crisis is global. That seems like truth, but they are giving you incorrect information. Although the crisis that began in the American banking sector has spread across the globe, and has hit most major banking center it has not hit the banks in Mongolia. Nor has it hit the banks in the Republic of Panama. In the case of Mongolia, there are no close ties to the global economy. This means there is no exposure to the toxic assets that flood the global system. In the case of Panama, with its close ties to the global economy, it must be “luck.”

More than 100 American banks have been closed by regulators between 1 January and 15 October 2009; another 400 banks have bad assets in excess of net assets and are teetering. They have not been closed because the FDIC is woefully underfunded and can not ensure the deposits represented by these banks. Otherwise, they would be gone. Smart Americans are looking for a safe place to put their money, and quickly.

So it appears that the Mongolian banking system is going to see huge influx of American money seeking safe haven… But let’s take a look at Panamanian “luck” first. The banks in Panama have not suffered in this crisis for precisely the same reason that Mongolian Banks have not suffered, no exposure. No exposure to the greed that permeated the global banking system; no exposure to ridiculous Ponzi schemes; no exposure to borrowers who had absolutely no ability to make good; no exposure to borrowers who had no ‘skin’ in the game.

Understand that Panama has no central bank to act as a lender of last resort.  Since there is no one to “bail them out,” Panama banks are still conservative in their approach to business. They create only safe, well-collateralized, properly documented loans. The financially deadly concepts of subprime mortgages, 10% down, 5% down or even No Money down loans, and NINJA (No Income, No Job or Assets) loans are concepts that do not exist here. Panama banks still require a 25% down payment from Panamanian residents and 30% from non-residents. They simply have not created for themselves the same types of risks that are causing the global financial problems.

That’s not to say that these good outcomes were strictly the result of market action and corporate prudence. Panama’s National Banking Commission ensures depositor safety. Monthly audits detect problems before they get out of hand.  The NBC is empowered to deal with potential problems and to direct banks actions to remedy any situations. Banking superintendent, Olegario Barrelier, told Reuters “At the moment our banks are good, very good. They are healthy, they are liquid, capital is nearly double what is required. They are being financed by local deposits and are not dependent on external financial markets.” He said the global crisis would eventually slow Panama’s economy rather than create havoc in the financial system.

Panama uses the U.S. dollar; there are no exchange controls to prevent the ready flow of monies into or out of the country; there is a stable government; the Canal and the Colon Free Trade Zone encourage free trade. Panama has a top notch telecommunications system, an excellent legal framework that allows 100% foreign owned investments, and a strategic location with access to the entire western hemisphere.

Mongolia or Panama? Panama is obviously the correct choice.

And “luck” didn’t have a thing to do with it.

The Republic of Panama is consistently near the top of the list of countries with the best access to capital. The latest Milken Institute ‘Capital Access Index” published in 2008 looked at one hundred twenty-two countries worldwide. The Researchers gathered information from seven essential elements that facilitate access to capital. These extremely smart people then used 56 different variables drawn from these sectors to generate the index. The maximum index achieved was Canada (7.90). Panama’s index was 5.56, which ranked it in 38th position, placing it ahead of all of the BRIC economies.

This result should not surprise anyone. The Republic of Panama is a great place to do business, just as it has been for decades. I live here and I have the experience of doing business here every day. It’s a wonderful experience. This is a nation that does business on an international scale and accommodates the wants and needs of international businessmen. Panama has always respected the entrepreneur and the go-getter. Great places to do business attract investors who want to do business there. I know that sentence sounds like circular logic, but self-reinforcing phenomena often seem that way.

Panama has also been consistently ranked amongst the world’s freest economies with an open door policy for foreign investment that provides important incentives to business. In 2007, Panama attracted $6.2 billion in foreign direct investment… from the U.S. alone, says the Office of U.S. Trade Representative. Enactment of Law 41 in August of 2007 has made investment in Panama an even more attractive proposition. Through the first quarter of 2008, 15 companies had taken advantage of the benefits offered under Law 41. I see no reason why this trend would not continue.

The success of Panama as a place to do business is no accident. All the key elements are here – A stable constitutional government, an economy based on the U.S. dollar, low inflation, no foreign exchange restrictions, equal treatment of foreign and local citizens, and a favorable tax system. The workforce is literate (91.9% literacy) and largely bilingual / multilingual.

Panama has Free Trade Agreements with the United States, Europe, Asia and Latin America countries, and is a member of the World Trade Organization (WTO). Panama is active in the Caribbean Basin Initiative. The Economic Commission for Latin America and the Caribbean, the Organization of American States, and the Interamerican Development Bank have given Panama positive ratings. Panamanian government bonds are consistently graded B+ or higher by Standard & Poors ratings service.

The Republic of Panama does not simply rely on its strategic location, privacy haven reputation, and low cost of living to attract foreign investment. While the various political parties have their differences, they all recognize the goose that laid the golden egg is business. The Colon Free Zone and City of Knowledge initiatives, as well as Law 41, are major efforts to ensure that corporations of all sizes will find Panama an attractive place to do business for many more years into the future.

Panama has international credibility. It’s easy to make a statement like that and then talk about all the qualities of a place in glowing terms and not really make any specific quantitative claims that can be pinned down. But the proof is on the pudding, or rather in the evidence. In the case of the Republic of Panama, it is easy to make the claim and easy to back it up.

One of the things that I think speaks volumes to this idea is the consistent inflow of foreign investment capital. In another of my articles, I discuss the details of how and why foreign capital flows into Panama. I think an investment of $6.2B (US) by U.S. companies alone in 2007 is strong proof of credibility.

Mercer Multinational Consultants reported on quality of life and personal safety in 215 cities worldwide. Panama City, the national capital, was ranked 96th, which places it above all other Central American cities. Mercer created these ranking by analyzing social, political and economic environment, health, education and transportation factors for each city.

A major consideration in making the choice to do business in Panama is quality of life. Panama City is cosmopolitan and offers excellent living conditions. Office, commercial, industrial and housing spaces are available, as are skilled, multilingual employees. Panama City is 5th in Latin America behind San Juan, Montevideo, Buenos Aires and Santiago de Chile. Panama City is first in Central America, 12 places above San Jose, Costa Rica.

With an index of 91.4, Panama City is the third safest city in Latin America, only behind San Juan, Puerto Rico and Santo Domingo, Dominican Republic according to a report by International Scope.

With an 8% increase in GDP, Panama was the leader in economic growth in Latin America during 2008. Much of this due to the fact that Panama has a US dollar-based economy, low inflation and little foreign exchange risk, an absence of exchange controls, favorable and equal tax treatment of foreign and local citizens.

Panama has a stable Constitutional government with a keen understanding of its reliance on international trade. The Economic Freedom Index for 2009, a joint publication of The Heritage Foundation and the Wall Street Journal, ranked Panama 55th of 157 countries. Citizens and expatriates alike have freedom to make their own decisions for their benefit and for the benefit of their families.

You may argue that some of these are not indications of ‘credibility’ per se, but they are certainly evidence that something special is going on here in Panama; something worthy of international attention. Something worthy of your attention.

Panama has been very much in the public eye recently, with the installation of the new business friendly President Martinelli this first of July. Panama still offers and will continue to offer excellent alternatives for privacy, banking and asset protection.

For some time now we have been working with Peter Macfarlane, joint editor of The Q Wealth Report. We have recently helped Peter prepare a new report which is essential reading for anyone interested in doing business in Panama. And best of all, you can get your copy absolutely free – no cost or obligation.

How do you know where to get started? Whom can you trust? Panama seems to be full of lawyers, company formation agents and even realtors eager to sell you Corporations and Private Interest Foundations, with little practical information on how to use them. How do you tell the good lawyers from the bad? What can you really do with the sheaf of papers in Spanish that you will receive? And is Panama right for you, when compared to other offshore tax haven jurisdictions?

To receive your copy go here: Free Panama Offshore Banking Report
Here are some of the things you will learn in this FREE REPORT:

• A very important question that most foreigners should ask their Panama lawyer but don’t – and how dealing with lawyers in Panama is NOTHING like dealing with lawyers back home
• Why nominee directors really have more control of your company than promoters of offshore services will tell you… why this is not good… and a simple but effective way to protect yourself
• Is it really possible to open bank accounts by mail in Panama banks?
• A very important fact you should know about Bearer Shares
• Minimum opening deposits in Panama banks
• Which banks in Panama specifically are the best and worst for foreigners?

PLUS: Gold bullion (gold coins, gold bars etc) is the ultimate in solid money to protect your assets from inflation. Can you buy it in Panama? Is it a good deal? Find out in this report.

Remember this report could be yours Free in the next few minutes. To get your copy, go here:

Free Panama Offshore Banking Report

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