In Panama I have found personal freedom, wealth protection, and privacy.  These things are not separate pieces but are all part of the fabric of the Panamanian way of life.  Any one of these without the other two is useless.  If I were to try to talk to you about one of these without talking about the other two, I couldn’t do it. So, trying to break each element out and write a paragraph on it simply wouldn’t work.  I will just write from the heart, and if it wanders a little, I apologize.

The Republic of Panama is a great place to do business, and with a little planning your business can operate on a tax free basis.  It is a great place to live and I enjoy living here.  The national capital, Panama City, is inexpensive when compared to other cities of the same caliber.  A building boom over the past few years has kept prices down by increasing the supply of new real estate.  Don’t be fooled – inexpensive doesn’t mean that you sacrifice your quality of life.  This is a city, and a nation, that does business on an international scale and accommodates the wants and needs of international businessmen.  For example, Copa Airlines flies modern Boeing 737’s to 40 major cities daily and was named Best Airline in Central America in 4 of the last 5 years.

Despite this international bent, Panama manages to keep its charm.  You can find both a trendy sushi dinner for $100 per head with quality that would please Gordon Ramsey, and a simple Mom and Pop restaurant offering scrumptious tapas and a good local beer for $5.  You have an amazing range of choices and the freedom of choice; freedom that extends far beyond dining.

Panama stands out as a tax haven and financial hub. Because of the Canal trade, Panama has well developed international trade and banking systems.  These two sectors depend on technology.  So, Panama has invested in creating one of the finest telecom and internet systems outside of Europe or the U.S.  Internet banking, credit/debit card services, and credit facilities are as readily available as they are in the U.S and Europe.  You can link your corporate credit card directly to your Panamanian bank. Panama does not have its own currency – it trades in the U.S. dollar – and there are no currency controls or restrictions.
When Noriega’s ‘friends’ operated the banks, they had a poor record of customer service.  They didn’t have to care.  When the markets opened to competition, banking services got much better. Domestic banks such as Multibank compete with international banks like HSBC in the local market, and both are trying to take market share from expatriate-oriented banks like Credicorp.

Panama banking privacy is good, and the law still allows offshore corporations with bearer shares.  The ability of non-residents to own bank accounts, Panama Corporations (IBCs), Private Interest Foundations and other similar tools make for a business-friendly environment.

The government has no reason to keep the residents under surveillance.  As an international banking center, if it tried to do that, there would be capital flight.  That would wreck the economy.  The new President, Ricardo Martinelli, who is in office until June 2014, promised to root out corruption.  Domestic spying is not on his agenda. Lord Acton said “Power corrupts; Absolute power corrupts absolutely.” The Panamanian government has power, but not absolute power.  The fact is it doesn’t have the ‘need,’ the financial resources, or the political capital necessary to spy on residents.  Not even dictator Noriega spied on the citizenry.

The success of Panama as a place to do business is no accident. A temperate climate, great beaches, convenient travel, and tax free status make it an absolutely alluring place to live.

When someone thinks of Panama, the first two things that come to mind are the Canal and ‘tax haven’ – usually in that order.  Yes, there is a huge canal here.  Yes, the Republic of Panama is a ‘privacy haven.’  But, that’s NOT all there is to Panama.

There are many other advantages to doing business here.  Panama’s location made it a strategic transportation link in the Spanish Empire’s effort to ship gold and resources to Madrid.  Panama, and Panama City, were established from the very beginning for the purpose of doing business on a global scale.  That heritage remains.  And despite being a modern city, Panama City has managed to retain its charm and ease of living.

A building boom over the past few years has kept prices down.  Panama City is inexpensive when compared to other cities of the same caliber.  Don’t be fooled – inexpensive doesn’t mean that you sacrifice your quality of life.  Panama does business on an international scale and accommodates the wants and needs of international businessmen, who tend to be fast-paced.  At the same, Panama offers beautiful beaches, a temperate climate, great restaurants.  High quality downtime; a little bit of ‘la dolce vita.’  What good is working hard, and what good are wealth protection strategies, if you don’t take the time to savor the fruits of your wealth?  You have an amazing range of choices here and the freedom of choice.

The government is stable and has a new President, Ricardo Martinelli, elected on an anti-corruption platform.  Martinelli, who will be in office until 2014, is a businessman, so the pro-business attitudes will remain.  Even in the worst of times, Panama has never suppressed its citizens or instituted currency controls.  There were periods of corruption, but there has never been oppression.  Panama has its own currency, but the U.S. dollar is the business currency.

Panama has well developed international trade and banking systems.  These two sectors depend on technology.  Panama has one of the finest telecom systems outside of the U.S. or Europe.  Five major global fiber optic networks cross Panama and provide international access.  Panama City, which is overlaid with several fiber optic networks, is a world-class mission-critical data and hosting center. This business segment continues to grow as foreign companies take advantage of this infrastructure.  Panama is a gateway to Central and South American markets.

Panamanian leaders recognized that the same strategic location that made it an important water transport link also gave it a competitive advantage in air transportation and logistics.  One of the best things about doing business here is the ease and comfort of travel.  Panama City is a great place to live and I enjoy living here, but sometimes travel is necessary.

The national air carrier, Copa Airlines, flies Boeing 737’s to 40 major cities daily and was named Best Airline in Central America in 4 of the last 5 years.  Copa has an outstanding order to purchase 21 new jets over the coming years.  Over the last decade, Tocumen International Airport has been transformed through the ‘Hub of the Americas’ project.  Copa’s partner KLM-Air France flies direct from Amsterdam, complementing Iberian Airway’s daily flights from Madrid.  Tocumen Airport is a great airport if you are coming here to do business, or if you are just looking for convenient connecting flights within the region.
Undoubtedly, Panama is a great base for business and banking, and for gracious expatriate living.  And with a little planning, that gracious living, la dolce vita, can be tax free.

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 centers 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.