Here is another great article that I read in Newsroom Panama about the continued challenge facing companies that want to do business here in Panama.   SINCE the introduction in 2007 of a program to smooth the way for foreign companies to establish regional headquarters in Panama multinationals have flocked into the country, contributing massively to the economic boom. Initiated by the previous government, the SEM ( Headquarters Multinational Enterprises) programhas attracted 106 foreign companies, as recorded by the Ministry of Commerce and Industry ( Mici ).

Two recent arrivals on the Isthmus are Quala Inc., from the British Virgin Islands and Devanlay, from France. Quala Inc., sells personal products , and Devanlay SA., distributes Lacoste shirts , but companies along with the other 104 registered, they are not here because of the size of the local market.
“One aspect is clear : the industries that come to Panama cannot think only in terms of our domestic market of 3 million people ,” said José Pacheco Deputy Minister of Foreign Trade, in a recent interview for the Oxford Business Group’s British Journal of Economic Research.
“Our main advantage for producers is our logistics platform. A Panama – based industry can distribute its products to countries in Central America and the Caribbean more easily than elsewhere , not only because of our facilities and the number of vessels using our ports … but also by the large number of free trade treaties  we have.”
Pacheco said that since August 2007, when the special regime was created, the foreign businesses have contributed $700 million to the economy, “without the indirect investment that arises from the purchase of cars by executives , as well as rentals and purchases of houses and other expenditures”
The World Bank recognizes that money from outside Panama’s borders , injected into the economy , accounts for 9 % of the country’s GDP.

The Incentives Act of August 2007 , created exemption from income tax for the SEM companies for services performed outside the country , along with immigration and labor benefits, which have add to the strength that the economy has enjoyed locally in recent years reports La Prensa.
Other benefits such as connectivity provided by five telecommunications fiber optic cables that pass through Panama , “ensure excellent voice and data services” said deputy minister Pacheco, and investment grade rating agencies have, add to the attractions for big business in Panama.
CHALLENGES
there are many challenges ahead to continue to attract these businesses .
Both Pacheco and President of the Chamber of Commerce, Industries, José Luis Ford, agree that it is the lack of a qualified personnel that is the main deficiency of a country with 3.4 million inhabitants, whose labor force corresponds to a third of that figure.
Ford notes that one of the functions of a special SEM commission is to guide the Government in to supply these needs , especially technicians and staff who are fluent in English.
The Deputy Minister said that the Government through the Inadeh (National Institute of Professional Training for Human Development )” empowers labor in key activities” adding that ” there is a key feedback from the public and private sectors about these shortcomings . ”
But a country growing in all directions cannot wait for Inadeh. Schools and public and private universities to do their part, “It is a burden that can be very expensive ,” says Ford
” The only way for to Panama to meet the demand for staff will be the same way the Canal and the railway were built . We are experiencing a massive building program, all without structures for the need to import massive workforce to meet the needs of this great development.”