The Republic Of Panama: A Hub For Multinationals

Author:Mr Alvaro Tomas and Carlos Ernesto González Ramírez
Profession:Morgan & Morgan

What has made corporate stalwarts such as Maersk (shipping), Procter & Gamble (consumer goods), LG (electronics), Caterpillar (construction equipment), CEMEX (construction materials) , Nike (sports equipment and apparel) and Heineken (breweries), just to name a few, choose to establish their headquarters in this small country with a population of merely 3.5 million? The answer lies in great part in the vision of a well-known lawyer who, given all the benefits Panama already afforded foreign companies, decided to take it to a whole new level.

We all know that Panama has a privileged geographical position, nestled between the two America's and a stone's throw away from the Caribbean. Almost 5% percent of the entire world's trade goes through the Panama Canal. We know that it uses the US Dollar as currency, has a solid and competitive financial center, an enviable port and logistics system, the second largest free zone in the world, a service based economy and the region's best airport and cargo facilities. Moreover, it enjoys a good climate the whole year round, its tourism industry is growing at breathtaking speed, its is free of natural disasters, its capital -Panama City- is filled with world class hotels and restaurants and as our most recent elections (held on May 4th, 2014) showed the world, the political and social stability of a democratic country.

The lawyer who fathered this law, Dr. Eduardo Morgan González, states "the sole purpose of this law was to introduce special legislation to attract and promote investment, create jobs and transfer knowledge and technology, in the process making the Republic of Panama more competitive in the global economy by optimal use of its geographical position, physical infrastructure and international services."

So our esteemed colleagues can have a better understanding of the benefits that Law no. 41 of August 24, 2007 may offer corporate clients searching for a place to establish their base of operations for Latin America, we summarize the most important aspects of said piece of legislation:

Definition of Multinational Headquarter ("MHQ"). A global or regional headquarter is defined as a legal entity that provides services of the following nature or any combination thereof:

Management and/or administration of companies belonging to an economic or corporate group in a specific geographic area or globally, including strategic planning, business development, managing and/or training of personnel...

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