Dateline: Panama City, Panama
The flight down from Cancun was a comfortable reminder that airline service outside of the United States and Europe is the real “first world” service. The two-hour flight featured a full meal service with beverages and flight attendants who actually seemed pleased to do their jobs. Less pleasing was the numerous forms I had to fill out and the security and customs lines I had to wait in upon arrival.
I have found that living in Central America is, unsurprisingly, much more Americanized than living in Asia. Get off a plane in Kuala Lumpur and the immigration officer will barely ask you a single question. Even in Panama, the experience is more formal.
However, Panama City’s dumpy airport aside, Panama has long been on my list of “new safe havens” and a place worth investigating. A lot of comparisons have been made about Panama.
I have mentioned that it may be the future Singapore of the Americas. For years, some have made the argument that it is the “Switzerland of the Americas”. Titles aside, let’s review five reasons why Panama may be one of the freest countries in the world.
1. At the Crossroads of the Americas
This can be a good or a bad thing, but for westerners, the benefits likely outweigh the downside. For one thing, living in Panama is easy.
If you want to invest here, you can easily manage your money and still be within easy striking distance of your home country. Panama is also poised not only to benefit from an increasing number of medical tourists and expat retirees, but also from a capital flight in South America.
Countries like Venezuela and Argentina suffer from high inflation and wealthy citizens from there and elsewhere are coming to Panama. Even as the government is trying to make it harder for immigrants from some countries, there is a straightforward path for anyone with a little money, westerner or not. Panama’s use of the US dollar can be viewed as either a blessing or a curse; the country has no interest in issuing a balboa currency.
2. The Country is Open to Foreign Investment
As a small country, Panama has a few options: spit in the face of foreign investment and languish, live off of its resources independently, or welcome foreign investment and thrive.
For the most part, Panama has chosen the former.
For years, Panama has been a safe haven for those seeking to park capital at the crossroads of North and South America.
While Panama does have forestry resources as well as copper and hydropower, there is no oil in Panama and the government realizes that foreign money pouring in is the reason high-rise condos dot the Panama City skyline like a mini-tropical version of Manhattan.
3. Panama has no Central Bank
Panama isn’t some banana republic, especially not these days. My friend Cody Shirk believes private property rights are stronger here than in his native United States. And for those who believe a country without a centrally planned economy is a pipe dream, I present Panama.
The country hasn’t had a central bank since its independence over 100 years ago. They have no currency of their own, save for a few balboa coins that mirror the US dollar. ATMs here dispense greenbacks. The macroeconomic view here is good.
I’ve said for some time that Panama City isn’t exactly a cheap place to live for expats. But the free market is at work here; I have yet to see a government-regulated metered taxi, for instance. In fact, the Mises Institute conducted a survey before the global recession that suggested that inflation in Panama is actually a point or two lower than it was in the Land of the Free.
4. There is no Panama Military
Panama is one of only a few countries in the world – another being Costa Rica – to abolish its standing army. Instead, Panama has the Panamanian Public Forces, a barely paramilitary organization that acts as a police force. Like any good country with positive momentum, Panama learned the lessons of its past.
The country remembers the scuffles of 1903 when part of the Colombian army broke off to join the Panama independence movement and make the “Department of Panama” a sovereign state. And when the Noriega regime invited a US military invasion, the country learned the lesson of remaining peaceful.
As a result, the country has positive relations with the rest of the region and the world, without being a stooge for The Land of the Free.
5. There is no History of Civil War
You can say freedom has been in the bones of Panamanians, ever since the last civil war within the country that led to the Free State of the Isthmus. There is no great history of civil war, and the only dark period was CIA asset Manuel Noriega’s reign over the place.
Panama enjoys all of the freedoms US persons and other westerners do, from the First Amendment freedoms of the press and free speech to freedom of religion. Anyone can live in Panama as is easily noticeable when one spends just a few minutes exploring the capital city’s vibrant downtown area.
While some in the country aren’t thrilled with 20% of their population being from Colombia, any westerner can come here and live freely with the full support of the government. This is evidenced by the world’s easiest second residency for westerners, the Panama Friendly Nations Visa program.
Of course, no place is perfect. Panama falls into some of the stereotypes the Latin world is known for, including slower service. Personally, I like things to move like a Swiss train, and if that’s what you’re after, Panama may not be the place for you.
However, even if you choose not to live in Panama, it is a good place to invest or store your cash. In the same way, Singapore is a great wealth hub for those living in Southeast Asia, Panama is a hub for those in Latin America. I do draw some comparisons between Panama City and Makati in Manila, Philippines.
Panamanians and the expats here may find that unfair, but Panama City has somewhat of the same feel: a little provincial, a lot of construction, and a feeling that things aren’t quite as modern as they could be… but in a good way. In both cities, skyscrapers dot the skyline. Both countries are havens for expats, yet lack a highly motivated workforce. Both the Philippines and Panama have easy second residency programs.
Panama has a lot of advantages, especially for US persons or Canadians who want to get outside of their home country while retaining easy access to the motherland. Just as with an emerging market with a slow-moving population, opportunities are plentiful here.
It’s just a matter of finding yours.