Author: Roberto Fong Sittón – Lawyer
Panama, despite being a small country, stands out for its constant economic growth. This growth is largely due to Foreign Direct Investment (FDI).
According to data provided by the Ministry of Economy and Finance (MEF), Panama reached $1,611.2 million of Foreign Direct Investment in the third quarter of 2021, representing 3.6% of the total Gross Domestic Product (GDP).
To guarantee the legal stability of investors, Panama created Law 54 of July 22, 1998, entitled “Measures for the Legal Stability of Investments”. The main purpose of this law is to promote economic development in the country, as well as to establish a solid legal framework that provides security and a guarantee of stability to investors, both domestic and foreign.
This regime establishes guarantees so that there are no abrupt changes that may affect the rights and financial projections of investors, once they are already established in Panama.
The registration process for companies is in charge of the National Directorate of Industries and Business Development (DINADE), of the Ministry of Commerce and Industries. The process is relatively simple and only requires granting power of attorney to a lawyer to manage the registration by providing the company’s documentation, the investment plan, among other documents described in the Law.
Registration provides protection for a term of ten (10) years and provides stability in fiscal conditions, in customs regimes derived from Special Laws, labor regime, among others.
This Law is applicable to companies engaged in the export of agricultural products, agroforestry, construction, electricity generation, mining, port development, electricity distribution, production of alternative energy fuels, commercial air services, among others.
The Law on Legal Stability of Investments emerges as a solid foundation of guarantees and strategies that not only foster an enabling environment for investment in Panama, but also play a vital role in stimulating economic development and business flourishing in Panama.
