An Entrepreneur’s Guide to Panama’s Business and Tech Scene
Home to four million people, Panama is typically synonymous with its infamous canal. And that’s not a bad thing. Most of Panama’s GDP still comes from the canal tolls revenue.
Entrepreneurs flock to Panama because of its weather and relatively cheap cost of living. While countries like Thailand perhaps provide even cheaper day-to-day costs, Panama allows those who want to work on US time zones to do so easily.
Perhaps more enticing are those tax benefits. People consider Panama a “tax haven” because the government does not tax income generated outside of Panama. And Panama’s currency, the Balboa, remains at 1:1 with the dollar, which is relevant especially considering the high fluctuating economies that exist in Latin America.
Entrepreneurs looking to relocate or even start a business or hub in the country have numerous advantages. There is more and more tech innovation, whether led by government initiatives or by startups, which makes Panama a place that offers both support and opportunity.
Entrepreneurial support in Panama
The first thing people read about Panama’s entrepreneurship climate is La Ciudad del Saber or The City of Knowledge. This is a massive set of buildings located across from the Panama canal, entrepreneurs, scientists, government organizations, and NGOs are invited to work together to create social change. This is a great starting point for entrepreneurs or people new to the country.
The Founder Institute in Panama City will work with founders as early as the idea stage to help them get their ideas off the ground. However, entrepreneurs should know that this pre-seed program is so challenging that it results in less than 30 percent graduation rate. Other groups operate in the region such as Entrepreneurs’ Organization to help startups find resources and connect.
Panama is also home to a sort of ‘off the beaten path’ type of incubator. Kalu Yala is an incubator-type program located in a new sustainable village 50 minutes outside of Panama City. The program unites “entrepreneurs, artists, scientists and modern day romantics” to work on environmentally and socially responsible projects. The incubator allows startups to test their sustainable ideas in a unique environment; essentially they can test their ideas’ “off grid” usage, in a rural setting to explore the impact of climate on their product or service.
Local entrepreneurs operating in Panama
What’s truly interesting is that Panama is one of only seven countries around the world where women partake in business at rates equal to men's. The Global Entrepreneurship Monitor (GEM) found that the ratio of men to women entrepreneurs is about equal in Panama. And again, since only seven countries around the world have achieved this, Panama is clearly taking a gender-blind approach to helping entrepreneurs.
Panamanians also have a lower than average fear of failure rate. For entrepreneurs that want to set up a local office or work with locals to get a business going, Panama is an excellent choice. The GEM study asked people involved in any stage of entrepreneurship if fear of failure would prevent them from starting a business. The global average that said ‘yes’ was 36.2 percent, and in Panama, this number was only 19.4 percent.
Technology opportunities and government support
Back in 2017, the government launched an initiative called Smart Nation, which basically wanted to turn Panama City into a smart city. Projects included free Wi-Fi, digital screens at bus stops, and the installation of small amplification antennas to provide a better service to the community.
The Panamanian capital now has 100 connected stops, and it looks like the government has continual plans to expand this technology. There’s clearly support for connected programs, so tech entrepreneurs in this arena may find opportunities and funding.
It’s also worth noting Panama 4.0 Digital Agenda (Agenda Digital Panamá 4.0), which seeks to advance technology in the country and help its citizens adapt to technological upgrades. The program is part of the Authority of Government Innovation (Autoridad de Innovación Gubernamental), and it really works to get citizens connected. The initiative seems to get more people online, digitize police records, and develop a smart, digital identity card.
It seems as though the government wants to do more than it is, which is necessarily a bad thing. Other governments either block or do nothing to foster innovation, but Panama’s does have efforts to connect the country.
That’s not to say the government is perfect. Everyone has heard about the Panama Papers, so corruption and scandal certainly loom over this country.
Building a business in Panama
For entrepreneurs that want to start a business in the country, that process is pretty easy. According to the World Bank’s Doing Business report, it takes six days to start a business in Panama. To give that some context, the average for Latin America is 28.5 days. Plus, new regulations have eased this process in areas such as accessing credit and resolving insolvency. And, a new online tax filing system made starting a business even simpler.
Panama experiences year after year GDP growth, creating a stable financial environment for business endeavors. Tech entrepreneurs can find plenty of opportunity in the country and locals who embrace the startup life and are unafraid to take risks.
To learn more about the technology scene in Latin America, download 200+ Fast Facts about Technology in Latin America, a country-by-country guide to the technology landscape in 22 Latin American countries.