The Panama of South America

Sept. 21, 2008
Panama City, Panama

PLUS: Why Antigua…The Real Belize…The Secret Of Palanca…And The Great Catalan Yard Sale…

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Dear Overseas Opportunity Letter Reader,

When I was just starting out covering this retire overseas beat, Jane Parker was already a seasoned pro…running tours and writing columns, articles, even a book on the subject.

In 1987, Jane was researching chapters for her Adventures Abroad title (that would be published a few years later, www.amazon.com/adventuresabroad). One of the countries she intended to feature was a place nobody else at the time had probably ever considered: Uruguay.

She planned to travel to the country for research, and, I’m still not quite certain why, she suggested to the Uruguayan Ministry of Tourism people sponsoring her trip that they invite me to go along with her.

At the time, Jane had more than a decade of international travel and retire abroad scouting experience under her belt. I was the young editor of International Living. I didn’t appreciate it fully at the time, but, today, looking back, I see what a generous gesture Jane made, arranging for me to tag along with her.

For two weeks, she and I traveled Uruguay, from Montevideo to Punta del Este, from gaucho country to charming Colonia. I spoke not a word of Spanish and had little idea, in truth, what I was doing. So I listened and I watched, as Jane asked questions to draw out the benefits and the advantages for the foreigner of living and retiring in this little country next-door to Argentina.

At the time, if an American, for example, knew Uruguay at all, that was what he knew. It was the other country at the bottom of the world alongside Argentina.

In truth, this remains largely true today. The outside world knows little and probably thinks less about the place some who do know refer to as the “Switzerland of South America.”

I met Uruguay 21 years ago. I didn’t fully appreciate Jane’s invitation to explore the country with her as my guide…and, frankly, I didn’t fully appreciate the country either.

My frame of reference then was too limited. I took for granted what Uruguay had to offer, because I didn’t understand yet that not all countries could compete.

Today, now that I’ve been around (and around) this retire overseas block, this country stands out more and more for me. I see that, in fact, few countries can compete.

Yes, in ways, Uruguay is the Switzerland of South America…but, the better I become acquainted with the place, the more I see it as the “Panama of South America.”

There’s no great building boom taking place in Montevideo, as there is in Panama City today. That’s not the point of comparison I mean to make.

Uruguay, though, offers tax and residency benefits, as Panama does. It’s one of those zero-tax jurisdictions international tax guru Chris Rusch has been telling you about.

It’s also one of the easiest places in the world (like Panama) to establish foreign residency…and, once you do, it is perhaps the easiest place in the world to obtain citizenship and a second passport. Easier than Panama…and, having acquired second citizenship in Uruguay, you don’t need to renounce any previous citizenships (as, technically, you must do in Panama).

Furthermore, the foreign residency-to-second citizenship process can be accomplished in as few as 12 months. As Uruguayan legal eagle Juan Federico Fischer told you last week:

“Uruguay is one of the best offshore havens in the world right now. It imposes no currency restrictions—so money can flow in and out of the country with no withholding taxes, waiting periods, or conversion to local currency—and no restrictions on foreign ownership of property.

“You can avoid exchange risk by keeping funds in the country in foreign currency (U.S. dollars and euro are most common). In fact, more than three-quarters of the funds on deposit in Uruguayan banks are held in dollars.

“Furthermore, as a foreign resident of this country with no local income, you have no local tax liability. All foreign-sourced income and assets abroad are tax-free. You don’t even need to report their existence to the Uruguayan authorities.”

Uruguay is not only an offshore, tax, foreign residency, and second citizenship haven…it’s also a beautiful country. Even back in 1987 I was able to appreciate this much about the place. Punta del Este is one of the most impressive beach zones in the world and an international jet-setter sun-and-sand mecca.

Furthermore, back then…and still today…Uruguay is also one of the most affordable places in the world to call home. Our editors have done the sums. You could live well in this country, if you own your own home, on as little as $1,038 per month. Here’s the budget to prove it.

Kathleen Peddicord

P.S. Interested to see Uruguay yourself? Friend David James, the man behind Sugar Loaf, the premier private residential and resort community just outside Punta del Este, is extending a limited-time, first-come-first-served, space-available invitation. “Come on down to Uruguay,” David says, “and stay one week as my guest.” You can take him up on his offer here.

P.P.S. What else this week?

n “Over our six years in Cataluyna,” wrote new correspondent Lucy Culpepper, “our Catalan neighbors grew to embrace our customs and habits and we theirs. My offerings of outgrown children’s clothes no longer insulted them, and Olga’s sour made with fizzy mineral water grew on us.

“But even after six years of exchanging ideas and traditions, the good people of Catalonia were not prepared for our yard sale…” Read all about the Great Catalan Yard Sale here.

n New correspondent Michael Paladin spent 10 years searching for Paradise. Finally, he settled in Antigua, Guatemala. As he explains:

“I considered Havana, Granada, Merida… Those places are great, but they’re not Antigua.

“I value old buildings, good infrastructure, access to a decent airport, great restaurants, and bookstores. Antigua has all those things, plus movies, concerts, salsa halls…and a wider assortment of restaurants than Sausalito or San Jose. And colonial architecture? Antigua was the original Spanish capital of the region…”

n Over the past couple of decades, the world has come to appreciate the cayes off the coast of mainland Belize, Ambergris, et. al, for their white sand, swaying palms, and azure waters. The property market in this part of the country went haywire as a result. Prices catapulted.

But it was never Ambergris that got my attention. I was drawn to the other Belize, the real Belize, as I’ve come to think of it, deep in this country’s Cayo…with its jungle and Mayan ruins, rivers and waterfalls, caves and rain forest…

n Way back in May, before we left Paris, Lief began the work of trying to open a Panama bank account for us. He corresponded by e-mail with attorneys, assistants, and bankers in Panama City. He placed phone call after phone call…and he hit road block after road block. But he wasn’t deterred.

“We’ll get the account opened as soon as we’re in the city,” he figured, “and are able to go in person to the bank.”

We’ve been in Panama two months now…and, still, no local bank account.

“Pull,” my assistant Marion replied the other day as we recounted the sad and sorry tale of our ongoing banking-related struggles in this country.

“The Panamanians call it ‘pull.’ Without it, you get nowhere.

“In Spanish, it’s ‘palanca.’ You can be a Ph.D. You can be president of a company. These things mean nothing unless you have palanca…”