Wednesday, April 5, 2017

Panama and Tourism investment

Panama's Ministry of Economy and Finance has announced that it projects the country's economic growth for 2017 at 5.8 per cent, the highest rate among all Latin American economies, citing strong performance in a variety of sectors including construction, mining, finance and public services, as well as public infrastructure and energy generation. 

Panama has increasingly become more popular for foreign investment due to its stable political environment. It boasts a skyline of nearly 80 high-rises, some more than 70 stories high, a $5.4 billion canal expansion, the first natural gas Generation Plant in Latin America a 1.1 billion investment and the sleek new air-conditioned Metro. From a foreign investment perspective, Panama is growing economically stronger, with a steadily growing GDP, a pro-business government and a rising real estate market.

Panama’s FDI growth also reflects the number of multinational companies opening headquarters in Panama City, providing a steady stream of new renters and buyers for the real estate market. The majority of the FDI in Panama in 2016—64.5 percent–was from foreign entities reinvesting in Panama, according to coverage in La Prensa. 

Thanks to tax incentives and government promotions, investment in the tourism sector is at an all-time high.
A quick Google search for "Panama" brings up white sandy beaches, impressive skylines, and the works (and of course the canal). The challenge now is to translate a pristine image into real tourism dollars. A deeper dive uncovers statistics and policies that are already turning these ambitions into reality.

Tourism is also interconnected with the wider economy, as related growth drives construction of hotels, retail spaces, and aircraft purchases and much more. Investment dollars are flooding in.

Companies in the private sector are also responding to legal incentives to invest in tourism. Law 80 of November 8th, 2012 went into effects in 2014, and provides tax exemption in order to encourage private investment. The incentives include import taxes, consumption of certain goods and services taxes, docks and airports taxes, capital tax, real estate tax, and income tax. What makes this law stand out is the scope of activities that it governs. The law is proving to be a boon for the marine sector in general, and for marine tourism in particular including constructing piers, ports, and medium-scale marinas. Article 4 of the law grants complete exemption from import duties on material and equipment imported for ports and piers for five years. In addition, there is a 15-year exemption from paying taxes on improvements made to existing ports and their.

Firms that service tourism related firms may now claim certain exemptions as well. Activities here include: construction of new works and hosting public service activities with a minimum investment of $250,000. For investments in indigenous (rural) areas, this minimum is lowered to $100,000. Remodeling and equipment of more than $100,000 is also exempt. The exemptions cover tourist accommodations with at least 50 rooms; tourist accommodation services with a minimum investment of $8 million; related investments (golf courses and tennis courts, restaurants, convention centers, marinas, and other facilities within this category) that are integrated to hotel investment and/or part of the same project.

Beyond just saving money, Panama has made it much easier to start up a company, which allows the sector to respond quickly to demand. If a certain area or activity surges in popularity think new beaches, sharing economy exploits, and novel sleeping arrangements entrepreneurs can tap into these revenue streams without delay. The government is also streamlining its concession process.

Panama's government is partnering with private sector actors like Copa Airlines to put bodies on the beaches, the Tourism Authority of Panama (ATP) has budgeted $12 million from June to December 2015, as part of a $100 million project though 2019.

In general terms, tourism and travel directly accounted for $3.3 billion, or 7.4% of GDP. . One encouraging sign is an increase in tourism related capital investment. Up from $584 million in 2010, investment is expected to reach $928.5 million this year and eventually, $1.56 billion by 2025.

Last year, the sector directly supported 136,500 jobs, or 7.7% of total employment. This statistic is expected to rise by 1.9% to 163,000 in 2025, holding a steady 7.7% of the total employment .

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