Overseas Business Risk - Panama

Information on key security and political risks which UK businesses may face when operating in Panama.

Political and Economic

Panama is a multi party democracy. There are three branches of government - the directly elected executive and legislative branches and an independent judicial branch. The Executive consists of the President and one Vice President. Since the restatement of democracy in 1989 there have been uneventful elections and orderly transitions of power. Political demonstrations occur occasionally in Panama City, mainly around Panama University, and the main road known as the “Transistmica”. In July 2010 there were violent demonstrations throughout the Province of Bocas del Toro. Protesters called for the repeal of Law 30 (popularly known as the “sausage law”). Confrontation with the police resulted in the deaths of several protestors with many wounded.

Since then the Government called for a national dialogue and several controversial elements of Law 30 where repealed. During February 2012 members of the communities of originary peoples coordinated a nationwide series of protests demanding the Government of Panama agree to the non exploitation of extensive mineral and water resources in their territories. The protests caused some disruption to the flow of traffic and the supply of goods and services in the West of the country. Panama’s largest workers union, Suntrac, on occasion holds demonstrations near to the numerous construction sites. The demonstrators usually throw rocks, stones and other items at passing cars. Sometimes they actually clash with the police. Panama has used the U.S. dollar as legal tender since 1904. There has never been any exchange controls or restrictions on movement of capital and investment restrictions are minimal. Inflation is relatively low, averaging less than 4% percent between 2005 and 2007. However the rapid growth of the economy in recent years have since brought that number to around 6%. Since 1999, Panama has been solely responsible for operating the Panama Canal and has initiated a process to employ former U.S. bases in commercial and tourism activities. The Panamanian economy grew by 10.6% in 2011.

With the Panama Canal expansion works having gone into full gear in 2011 and important current construction investments, (without regard to the Canal Expansion) taking place, the outlook for 2012 is promising. The strong start to the first two months of 2012 has resulted in the Ministry of Finance revisiting it’s projections and raising their growth estimates from 7.5% to 10% for 2012. The Panamanian economy is expected to continue to grow in the immediate future as Canal expansion, the new Metro line and other large infrastructure projects are expected to compensate partially for slowdowns of the US and EU economies.

More information on political risk, including political demonstrations, is available in the FCO Travel Advice.

Human Rights

Panama is a constitutional, multiparty democracy Some cases of violence have arisen during demonstrations. The constitution protects freedom of speech and press, but various organisations including the Inter-American Commission on Human Rights (IACHR), Inter American Press Association (IAPA) and the NGO Reporters Without Borders have criticized government efforts to censor the press.

The law recognizes the right of private-sector workers to form and join unions of their choice subject to the union's registration with the government. Some concerns have been raised about the right of forming Unions in specific strategic private sectors (i.e. Financial Services). Also, Panamanian laws prohibit public servants from forming unions, though it does permit public servants to form associations that may bargain collectively on behalf of members. The law provides private-sector workers the right to strike and grants public-sector employees a limited right to strike, except for those in areas deemed vital to public welfare and security, including police and health workers. Panamanian Labor law is considered to be over-protective of workers and has very demanding requisites for the termination of the labor relationship and substantial penalties in favor of the worker.

Ngabe-Bugle indigenous people have on repeatedly closed three sections of the Pan-American Highway passing through their autonomous territory to protest mining and hydroelectric concessions granted by the government. Riot police have used tear gas to disperse groups and detentions normally ensue with those arrested frequently released shortly thereafter without charge. The San Lorenzo Accord has been signed which set down conditions and terms for both parties in an attempt to end the protests.

Bribery and Corruption

Businessman reading newspaper

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Transparency International’s corruption perception index (CPI) ranked Panama 73 out of 178 countries in 2010 and 86 out of 180 countries in 2011. Read the information provided on our Bribery and corruption page.

Terrorism Threat

There is a low threat from terrorism in Panama. But you should be aware of the global risk of indiscriminate terrorist attacks, which could be in public areas, including those frequented by expatriates and foreign travellers.

Read the information provided on our Terrorism threat page.

Protective Security Advice

There is a risk of street crime and travellers should take sensible precautions. You should not carry large sums of cash or valuables in public. Deposit them in hotel safes wherever possible. Be vigilant when using ATM cash machines installed in public places, usually outside banks. There have been cases of people being attacked after drawing cash from these machines. There have also been instances of devices being inserted in ATMs, which allow cards to be cloned. Ensure that your personal belongings, passports and other travel documents are secure at all times.

Do not become involved with drugs of any kind or in any way. Possession of even very small quantities can lead to heavy terms of imprisonment (up to 15 years). The judicial process is slow and conditions in Panamanian prisons are harsh and not comparable to those in the UK.

Read the information provided on our Protective security advice page.

Intellectual Property

IP rights in Panama are territorial, that is your IP will only give protection if registered in Panama. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

Panama's judiciary is constitutionally independent but influenced by the executive. Businesses do not trust the system as an objective, independent arbiter in legal or commercial disputes. The enforcement of copyrights and trademarks, though still inadequate, is improving. Special intellectual property courts hear commercial cases alleging infringement, but redress remains slow.

Read the information provided on our Intellectual Property page.

Organised Crime

Panama is a relatively safe country in which to live and work. Although official crime statistics show increased levels of robberies, murders and assault in recent years as per 2007 figures, the majority of these crimes are driven by domestic violence and violence amongst members of rival drug gangs in the more deprived areas of Panama and are unlikely to affect most business visitors Burglaries have been committed by organised criminal gangs. It is reported that the perpetrators use ruses to gain the trust of the victims and gain access to their homes. In some instances, the criminals are suspected of using various symbols or drawings marked on perimeter walls or fences to communicate with other gang members. An organised robbery with several other gang members is then committed.

Read the information provided on our Organised crime page.