Paris To Panama? What Were We Thinking?
In the past few months, since my “How To Retire Overseas” book was published, I’ve been interviewed by at least two dozen members of the media…and every one of them has wondered:
“You moved from Paris to Panama two years ago? Why would you do that?”
Here’s the truth. If we had no children, no business, and no agenda beyond pursuing the best possible quality of life, we’d have stayed put in Paris. For us, the City of Light (from which I write you today…we’re here for the month of July) is the best place in the world to call home.
However, about 2 ½ years ago, I did have another agenda. Having sold out my participation in the International Living group, where I’d been publisher for more than 23 years, I decided I wasn’t ready for retirement. What I wanted to do, I realized, was to start over…to build a new business from the ground up.
France, I knew from experience, was not the place for this. The French are not the nasty, rude people many Americans imagine them to be, but one French stereotype is real: They have little tolerance for the entrepreneurial imagination. The red tape, the bureaucracy, the taxes, and the labor law in this country make it one of the least appealing places on earth to start or operate a business.
Lief and I knew we’d have to relocate if I wanted to make a real go of a new business venture. But where?
We took stock of our previous entrepreneurial adventures. By that time, we’d run businesses in the United States, Ireland, France, Nicaragua, Honduras, Ecuador, Nicaragua, Mexico, and Panama.
When deciding where to base a business, you want to consider five things: the labor pool (how educated and at what cost); the infrastructure; relevant tax rates; the doing-business climate; and local labor law. Considering the world map and taking into account our own experiences, we concluded that, all things considered, Panama is the top choice worldwide if you’re in the market for a place to launch the kind of business I was in the market to launch.
No place in the world is as entrepreneur-friendly as the United States when it comes to labor law. Nowhere else, for example, can you fire at will (without incurring costly consequences). The rest of the world favors the employee over the employer. We used to joke in France and Ireland that employees were for life. You hired a new one understanding that you were taking a big risk and incurring a long-term liability.
This is much less true in Panama, but, still, sometimes, we miss the good old days in the States when we could ask an employee to leave on the spot–without written notices, without witnessed warnings, without the calling of tribunals–if his performance warranted it.
That aside, Panama checks every box you want checked when you set out to start a business. We’ve been delighted by the eclectic pool of labor we’ve been able to tap into in Panama City. In our downtown office today, we have a Romanian, a German, two Russians, three Americans, and four Panamanians. All are educated and hard-working.
In our high-rise office, we have high-speed wireless Internet, a VOIP phone system, and a telephone number that’s toll-free when dialed from the United States. As we’ve grown, we’ve been able to source bigger and more sophisticated IT and web-support systems, including an American IT pro in the city who responds immediately to our calls for help.
Panama business taxes? We aren’t liable for any. Structure your business in this country properly, and you won’t be either. Depending where and how your revenues are sourced and, again, how your company is set up, you can operate corporate tax-free.
The doing-business climate? Panama’s current President Ricardo Martinelli, a successful businessman himself, couldn’t be more pro-entrepreneur. Martinelli has made it his administration’s mission to make Panama the most business-friendly jurisdiction in the hemisphere, and he’s making good progress.
At a recent American Chamber of Commerce meeting I attended, the Vice Minister of Commerce reported to the assembled group on his ministry’s efforts to attract mega multi-national companies to Panama. They’ve signed on more than 40 big-time international operations to date. Their goal is 100 by year-end.
What’s getting the attention of the presidents and CEOs of some of the world’s biggest companies?
They’re looking at the same things I looked at 2 ½ years ago–the labor pool, the tax situation, the infrastructure, and the doing-business climate.
For them the stakes are much bigger. For my part, I can tell you that our little operation is thriving.