What's So Great About Panama?
Dec. 9, 2008
Panama City, Panama
PLUS:
- Other Countries Are Cheaper...So What Makes Panama
So Hot?...
- Retiree, Business, Banking, Tax, Offshore, And
Investment Advantages, Too...
- Five Years Of Better Than 8% Annual Growth...
- Tax Hikes In Ireland...
- La Purisima In Nicaragua...
AND:
- The Coming Powerhouse That Is Romania...
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----------
Dear Overseas Opportunity Letter Reader,
A fellow reader writes:
"You mysteriously refer to 'the
advantages of Panama' without explaining. For those of us
considering other countries that may be cheaper (and cheaper certainly helps
to solve a lot of problems right now), what are those advantages?"
Panama is the world's top retirement, business,
tax, and offshore haven right now because it boasts:
Affordable First World Health Care
Panama's health-care facilities, built to U.S.
standards while the U.S. was running the Panama Canal, are the best in
Central America. You'll find nearly every health-care service you could need
at a fraction the cost and with a level of personal service (remember house
calls?) you may have forgotten ever existed.
Generous Incentives for Investors
The World's Best Program of Discounts
and Other Benefits for Retirees
As a Panama pensionado, you save on
almost everything, from in-country airfares, hotel stays, and restaurant
meals to prescription drugs, even closing costs when buying a home.
Real-world Infrastructure
This is being put to the test...and failing in places.
Still, especially when considered within the context of the region, Panama's
infrastructure is of the real-world, as opposed to the developing-world,
variety...and it's being improved all the time. This country boasts great
roads, high-speed Internet access, cable TV, reliable electricity, drinkable
water, and edible fruits and vegetables.
Great Shopping
Thanks to its position as one of the world's
premier trading centers (and its Canal), you can find anything you might
want in this country--everything from Benetton and Burberry to the latest
electronic gadgets and any American comfort food you could name.
One of the World's Biggest
International Banking Centers
One of the World's Few Remaining
Offshore Havens
Serious Tax Advantages for the
Foreign Resident
Residents pay tax in Panama only on money earned
in Panama. When it comes to taxation, this is as good as it gets for the
foreign resident or retiree.
Furthermore, Panama boasts other tax pluses,
including a 20-year property tax exemption on new construction.
A U.S. Dollar-based Economy (since
1904)
Americans face no currency-exchange risk.
A Stable Political System
A Safe and Secure Environment
Panama is one of the safest places in Central
America. There are poor areas and a definite division between the "haves"
and the "have-nots," but there is little violent crime. I feel safer walking
the streets of Panama City, even alone, than I do the streets of Baltimore,
Maryland, where I grew up.
Panamanians are friendly and welcome foreigners,
both as tourists and as residents. And, after eight decades of American
involvement in the running of the Panama Canal, they're well-accustomed to
Americans among them.
The family circle is important in Panama, much
more so than in the United States, as is religion.
A Natural Wonderland
The world doesn't know it yet, but Panama is a
natural wonderland. Its expansive rainforests are among the richest and most
complex on the planet. It's the only country where jaguars and pumas prowl
only a short drive from the capital. It's also the only country where you
could spend the morning diving in the Caribbean, then the afternoon swimming
in the Pacific.
Panama's vast, road-less jungles are home to more
than 940 recorded bird species and 105 endangered species, including the
Central American tapir, the American crocodile (my son's favorite), the
scarlet macaw, and many species of eagle.
Off Panama's shores are some of the best diving,
surfing, boating, deep-sea fishing, and snorkeling anywhere.
A Fast-growing Economy and a Bright
Economic Outlook
"Despite slowdowns and meltdowns elsewhere,"
I wrote earlier this week, "Panama's economy continues to fire on all
cylinders, expanding quicker than most any other in the world. It's all
thanks to the continued surge in construction, transport, and commerce. The
Panama Canal expansion project is in full swing...a new highway is being
built between the country's two main cities, Panama and Colon...and downtown
in the capital is being completely reconfigured with a new, widened central
thoroughfare, a city bypass system, and a broad, grassy stretch of parkland
along the bay.
"You can't appreciate the rate at which this country is growing unless you
come and spend time here yourself. Don't come to Panama City for peace and
quiet right now. This place is on fire."
"I'm perplexed," one reader wrote in response.
I've read elsewhere how the Panama economy is expected to slow by 50% next
year. Am I missing something?"
First, let's get our bearings.
Panama's was one of the fastest-growing economies
in the world in 2007, with real growth rising to 11.2%. This following an
average growth rate of nearly 8% a year in 2004, 2005, and 2006. The canal,
the ports, and the Colon Free Zone benefited greatly from regional and
international trade expansion during this period. The construction industry
boomed, and the financial sector expanded. Unemployment fell to an
unprecedented low.
OK...that's recent history. What about right now,
as world markets are melting down and global economies are shrinking?
As we explained earlier this week, Panama's growth
continues.
That is not to say this country is going to see a
growth rate of better than 11% again this year. Projections are for 8%.
Only 8%. At a time, again, when most markets are
contracting. In the context of the current climate, 8% growth is tremendous.
Looking ahead, pundits are calling for maybe 5%
growth in 2009. Some doomsdayers are citing this as the end of the Panama
boom.
That's silly. How long could any market keep up a
growth rate of better than 8%? After five years expanding at that pace,
Panama will see "only" 5% growth in year six of this run.
Only 5%. Poor Panama...
Kathleen Peddicord
A Rolls-Royce Lifestyle on a Dodge Dart Budget
Retire in Style Overseas...and Live Better than You Do
Now...for as Little as $694 a Month
"Beachfront hideaway...elegant, big-city
apartment...hillside vineyard... In the States, it's only hedge fund
managers and their cronies who can afford an elite retirement like that.
"But overseas today, you can...and on a middle-class
budget. More than 441,000 retirees are already living well around the world.
I'd like to show you how to join them..."
---------------
"The Irish government has run up an
8-billion-euro deficit in 2008," Lief called out from his desk in the next
office this morning. "To make up for it, they've increased the maximum
tax rates for 2009, including the VAT rate as of Dec. 1, 2008.
Ireland already had one of the highest VAT rates outside the Scandinavian
countries at 21%. Now it's 21.5%. I'm not sure how much help that additional
half a percentage point will be in covering the 2008 deficit...
"The maximum income tax rates have also been
increased," Lief continued, "by 3%. Maybe it's a good time for the Irish to
think about retiring to Panama."
"In fact, the celebrations have already begun here in
Nicaragua," replied friend Tuey Murdock, living in Managua, when I
wrote to ask if she'd send a Christmas contribution for the dispatches I'm
preparing for Christmas week.
"Yesterday, Dec. 8, was the Day of the Virgin
Mary. The evening before is La Griteria (the
Outcry), when people take to the streets, singing and chanting, going from
house to house crying out, 'Who causes so much joy?'
"Others reply, 'The conception of the Virgin
Mary.'
"There are fireworks and firecrackers everywhere,
and the 8th is an official holiday.
"La Griteria falls in the middle of La
Purisima, the first part of the Christmas celebrations, starting
Nov. 28 this year and continuing through Dec. 13. For La Purisima, the
Virgin's image is taken out of each local church and carried in a procession
to a different home each morning. There are floats, decorations, and music
in the streets...and, of course, more fireworks.
"When the Virgin and the floats come to a
neighborhood for the day, all the homes are decorated in the same theme,
and, in the evening, everyone gathers in the day's chosen home for the
rosary and a small party featuring chichi (a traditional drink of
maiz). Then the procession returns the Virgin to the church so she can
be carried out the next morning to the next home..."
"Any information on Romania? My wife is a
dual citizen, and we've purchased a home there. I am curious as to what you
think."
-- Guy J., United States
Romania will be a powerhouse in Europe in another
5 to 10 years. It has a big population and lots of resources, plus it is
centrally located to be a hub between Europe and the Middle East and Asia.
The economy seems to have been hit by the current
global slowdown, but it's still moving forward and expanding. The one issue
with retiring to Romania is the weather. Bucharest sees extreme seasons, as
in much of the U.S., with freezing winters and hot summers. The mountains
offer a better choice, with snow in the winter but pleasant summers. If
you're a skier, Romania can make great sense for a second home or retirement
destination, as it's still very inexpensive relative to the rest of Europe's
ski destinations.
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