Special Features

Doing business with the government

By: Staff at Panama Offshore Legal Services / E-Mail: info@pos-inc.com || Phone (507) 227–6645

Are you interested in being contracted to complete a job for the government of Panama? It’s possible! With so many infrastructure projects planned all over Panama, foreign and national companies alike are taking advantage of the opportunity to be contracted by the government to carry out jobs that contribute to to the growth and improvement of the country.

Doing business with the government of Panama can be profitable, especially because of the many tax breaks available. There are three ways to do business with the government. These are concessions, procurement, and direct contracts. The most popular concessions are for constructing, maintaining, and operating infrastructure projects.

Big benefits

The tax benefits that apply to these types of government contract concessions are very attractive. Exemption is available from the value added tax, import duties, stamp tax, income tax during construction and for the first five years of operation. A partial exemption applies after the fifth year. There is also an exemption from the withholding tax on interest payments made to financial institutions that finance the project.

Areas of work

Different rules apply for concessions concerning telecommunications, power generation, mining, ports, media, and airports.

The governmental agency, institute or ministry which regulates the specific area under which the project will take place is also the same entity that will prepare the tender documents for the project. Concession agreements must be written in Spanish. These documents provide that the governmental agency may terminate the contract at will by paying indemnification to the bidder. These contracts also contain a diplomatic claims waiver when the bidder is a foreign person or entity.

The process

The procurement allows for any individual or company, either national or foreign, to bid on Panama government contracts.

The government has a website with information about future public contracts and the bidding process is referred to as “Panama Compra”. The website is www.panamacompra.gob.pa.

A Notice of Purchase is published in the Panama Compra website and in national newspapers. An Open Meeting for all projects valued in excess of $175,000 is called by the governmental agency in order to explain the project and answer the questions posed by the interested parties in attendance. And based upon this meeting, the agency may amend the tender documents. Bids written in Spanish must then be submitted either directly to the government agency’s office or online through the Panama Compra website.

In cases considered urgent and in the public interest, government agencies may be allowed to negotiate directly with any provider without the bidding process.

Most tender documents require the posting of a 10% bond of the total contract price by every bidder. When the contract is awarded, the losing bidders receive a refund.

Getting the contract

Contracts are awarded based on the qualification of the bidder and the best bid and accordance with the requirements set forth in the tender documents. After the contract is awarded, the governmental agency and the winning bidder execute a formal contract following the terms and conditions set forth in the tender documents. This contract is then recorded and approved by the Comptroller General.

Just like concessions, the procurement contract provides that the governmental agency may terminate the contract at will by paying an indemnification to the bidder. These contracts also contain a diplomatic claims waiver when the bidder is a foreign person or entity.

Any fees or tolls charged by the private company will be supervised by a government regulatory agency. The Cabinet Ministers award infrastructure concessions.

Contracts at the Canal

The Panama Canal Authority (ACP) has different rules concerning procurement of goods and services.

Contracts are special concessions. They do not fall within the above-mentioned procedures. Under what is known as “contract-law”, these contracts are negotiated and approved by the Executive Branch with further approval from the National Assembly which creates a special law protecting the foreign investor.

It can only be amended by consent from the private company and enactment of a new law. Due to the length of time it takes for this process, the government reserves the right to use this procedure for large projects affecting national interest.

If a disagreement arises in any of the cases, special courts resolve any disputes which can only be appealed to the Panama Supreme Court.

Strong Spanish investment is present in Panamá

Spanish investment in Panamá
President Ricardo Martinelli met with the Spanish Minister of Industry,
Tourism and Trade, Miguel Sebastian, during his visit to Panama in October.

Spain has an extensive investment portfolio in Panama. Many big Spanish multinationals are major players in the Panamanian economy. Their involvement spreads across various industries – telecommunications, infrastructure, transport, tourism and more. Telefonica, Union Fenosa, BBVA, FCC and other giants have firmly established businesses on the Isthmus. Spain ranks within the top three countries with investments in Panama, next to the UK and the US – and the number of Spanish investors keeps growing.

In October, Panama’s Minister of Economy and Finance, Alberto Vallarino, visited Spain where he discussed opportunities for Spanish investment in Panama. His visit was reciprocated this month by the Spanish Minister of Industry, Tourism and Trade, Miguel Sebastián, who visited Panama. He met with Panamanian President Ricardo Martinelli and other government officials. The purpose of this visit was to boost relations between Spain and the region as well as to give support to Spanish companies doing business here.

Also in October, a bilateral agreement between Spain and Panama to avoid double taxation was signed. It is expected to boost economic relations, trade and the flow of investment between the two countries. Panama is an attractive partner – and not only for Spain. During the global economic crisis, Panama was one among very few countries that did not see its Gross Domestic Product (GDP) in decline. In fact in 2009, at the height of the crisis, Panama´s GDP grew by nearly 3% and for the year 2010, Panama’s economy is expected to register growth of 7%.

Canal and infrastructure projects

During his visit, Miguel Sebastián met with Spanish companies in Panama to assure them of the Spanish government’s. One of them was Sacyr-Vallehermoso, the Spanish company leading the consortium that was contracted to build the third set of locks for the expansion of the Canal. This contract is worth over 3 billion dollars. Two other Spanish companies, FCC and Typsa, are also participating in this project. The Canal and its expansion is currently one of the biggest engineering works in the world.

FCC has also won a contract for the construction of the Metro in Panama City, worth over 1.4 billion dollars. This project is a part of a five-year infrastructure plan that includes new ports, tunnels, bridges and urban transport. The whole effort has a budget of 13.6 billion dollars.

The new Hotel Riu Panama Plaza
The new Hotel Riu Panama Plaza
is an impressive landmark building
along Panama City’s busy Calle 50.


Telefónica is a Spanish telecommunications company operating in Panama since 2004, when it acquired 100% of Bellsouth Panama. Now it is the strongest competitor of Britain’s Cable & Wireless, the first foreign communications firm to enter the market in the 1990’s.

During his visit, Miguel Sebastián discussed the further involvement of Spanish companies in the communications sector, particularly the deployment of Digital Terrestrial Television (DTT). Panama, along with Colombia and Uruguay has chosen the European DTT standard DVB. DVB standard is open and not controlled by patent holders or intellectual property rights.

This makes it easier to develop and offer new services and applications. It also allows the use of the cheapest receptor equipment on the market. Spain is a pioneer in Europe at implementing DTT and has successfully introduced the analogical blackout two years earlier than the EU had planned.

Launching of Iberia’s direct flights from Madrid to PanamaSilvia Cairó, director of international sales for Iberia and Fernando de León, vice Minister of Tourism of Panama at the Hotel Riu in Panama City for the launching of Iberia’s direct flights from Madrid to Panama.


Panama is working hard to become more than the hub of the Americas. The goal is to become a world hub, now that more European airlines are offering direct flights from Panama City. One of them is the Spanish carrier Iberia, which strengthened its presence in Panama and the region when it began direct flights between Panama and Madrid in October. In the northern winter season, Iberia offers four direct flights on Monday, Wednesday, Friday and Sunday.

This November Panama was the host of the leading annual airline industry event in Latin America and the Caribbean, called ALTA.

The pool area of Hotel Riu Panama Plaza on Calle 50
The pool area at the already-popular Hotel Riu Panama Plaza on Calle 50.

The hospitality industry

Numerous Spanish-owned restaurants enjoy great success in Panama City – restaurants like Ángel, Taberna 21 and Can Masoliver, just to name a few .

On a much larger scale, the Riu Plaza Panama Hotel just opened in the capital. The Spanish chain chose the city’s bustling Calle 50 as the location for its new $120 million dollar hotel. The stately building has 35 floors, 645 rooms, many bars and restaurants, and 21 different salons for events and conferences. The Riu is one of the most impressive hotels in the capital city and the brand is considering opening up a beach hotel.

To conclude his visit, the Spanish minister underlined that Spanish investment has been very successful in Panama and that they consider Panama to be one of the most stable economies in Latin America – the reason why Spain is interested in increasing investment in such sectors as energy, tourism and infrastructure.

Adiós to the Diablos Rojos, in comes the new Metrobus

By Lada Winter

Adiós to the Diablos Rojos
Out with the old, Panama is saying goodbye to its love/hate relationship with the Diablos Rojos.

Public transport in Panama City is about to make a major improvement. The infamous Diablos Rojos (Red Devils) – old US school buses – known for their colorful and creative paint jobs, will no longer be heard barreling up and down the avenues and streets of Panama City. The first shipment of the new Metro Busses has arrived in Colón.

Although the Diablos Rojos formed an integral part of Panama City and do posses a certain charm, most users of the public transport system are pleased with the prospect of the air-conditioned replacements. Now perhaps public transportation can become a more viable option for those who customarily take taxis around the city. It is safe to say that all are happy with the promise of decent public transportation.

Here comes the new Metrobus
In with the new, Panama City is welcoming the Metrobus.

The Presidential Minister Jimmy Papadimitriu announced recently that the first ten buses that form part of the new public transport project Metrobus were delivered and will start doing the first runs on December 18, along the Corredor Sur, the Southern Corredor from the city center to near Tocumen Airport.

These are just the first of 120 buses that are a part of the first stage of Metrobus. The buses are operated by a Colombian-Panamanian consortium called Mass Transit Panama, under a contract worth $269 million.

So what will happen to all the Diablos Rojos? They will return to serve their original purpose – Diablos Rojos will once again become school buses. The Ministry of Education (MEDUCA) will take over them once their technical condition has been checked and necessary repairs are made. The time has come to say good bye to the Red Devils and welcome brand new form of public transport in the City – the Metrobus.

If I were a strongman - by Jack

A while back, Time Magazine published a story implying that somehow the current president of Panama was leaning toward becoming the new Panamanian strongman. First of all, it’s a dumb term. At least half of the people in the U.S. think that so-called ex-strongman Noriega, used to be a weightlifter. And the other half still can’t find Panama on a map. The main problem with the story however was that it was simply ill-informed.

In no way is a democratically-elected president with a one-term limit going to become a strongman (a term the article repeated for effect). While ol’Jack is certainly not in favor of the proposed beer tax, I kinda like the anti-corruption, businessman-politician man-in-charge; even if he does call the private schools a bunch of “toffee noses.”

The hubbub did get me thinking of what I would do if by some strange quirk of luck I became the new Panamanian strongman. If such a fantasy came true, what ham-fisted policies would I put in place? I’m not talking about actually trying to collect taxes and overdue traffic fines or punish corruption or promote tourism, because those are actually good ideas. No I’m talking about real strongman stuff.

So, if I was a strong man, would I finally be able to lift my own groceries into my trunk outside the Riba Smith? Okay, I´m obviously having trouble with the use of the term, not unlike my lovely wife who suggests that if I were really a strong man, then I could resist looking at those young ladies in thongs at the beach. Or that if I were strong, man, I would be able to give up smoking; but I’m weak. Okay?

However, if ol’Jack was the... a.. strongman of Panama, here is how I would rule:

  • Upon entering the country, backpackers would be required to switch their knapsacks around so that they would be frontpackers and no longer bump into people with their humps. If they refused, they would be deported to Costa Rica.
  • All restaurants would be required by law to provide substantial napkins.
  • Lonely, bored and irritable expats would only be allowed to blog on the Internet once a month, with 150 word limit. We need to worry about the image we put out there, people.
  • The new buses would all be painted white and called Angels Blancos.
  • The dress code for next year’s parades would go in a decidedly different direction.
  • The entire month of November would be declared a national holiday.
  • Fireworks would be required for holidays, saints’ days, birthdays, weddings, christenings and all other celebrations. (Hey wait a minute—that’s already a rule.)
  • The mayor would have to pick up the garbage himself, with his new set of advisers on the truck.
  • I would simply turn the gigantic Panasonic sign off.
  • Spanglish would become the official language.
  • I would lower the tax on cigarettes, but institute new taxes on car horns and large SUVs. (The average housewife in Punta Pacifica doesn’t need a truck suitable for hunting moose to go shopping at MultiPlaza.)
  • I would do everything I could to ensure that Casco Viejo remain a protected UNESCO historical site.
  • I would require every new expat to subscribe to The Visitor/El Visitante—no more free papers/periodicos no por libre – ¡no mas!

Reader’s letter

Reader’s letter - www.BocasYoga.com

Dear Editor,

Thanks for the shout-out in “El Visitante”. What a pleasant surprise! Thank you for mentioning that we only have certified teachers here at Bocas Yoga. It’s very important to have that training, study and discipline when holding the trusted position of being a yoga teacher. I have a special guest Anusara Yoga teacher again (highly, highly trained) – so excited!

I’m glad you chose to print the nature photos of yoga. But actually practicing in nature is not that great – it looks good in photos, but for alignment (which is a huge deal), the shifting sands and uneven surfaces are not ideal for yoga at all. That’s why my custom hard-wood, polished floors are perfect for yoga, also the containment of the good-energy of having four walls is perfect for yoga, stability, privacy, plus having my stereo, mirrors and A/C are nice luxuries, something we don’t get outside.

Anyway, I’m happy with the mention, so thank you. Would love to show you the studio in person the next time you’re in Bocas! You’ll have to come for a visit!

Lots of love,
Laura Kay

Beach airport should be at Rio Hato, according to CAF study

Beach airport should be at Rio Hato
This map shows the location of the proposed international airport
sites in Panama’s interior near the Pacific beaches.

There is a lot of excitement in Panama’s interior at the prospect of building a new international airport near the Pacific coast beaches. It has been decided that it will benefit tourism to have an airport close to the area where the many tropical resorts are gaining popularity. This way, travelers will not have to spend time in the capital in order to reach their beach destination.

The first list of possible sites included Penonomé and Aguadulce, two provincial population centers located under two hours from the capital, between the beaches and the country’s central mountain range.

However according to a recently-released feasibility study conducted by the Andean Development Corporation (CAF), neither Penonomé nor Agadulce are appropriate locations for the new international airport. There is no existing infrastructure in either and the construction of the new airport would cost too much comparatively.

Instead the CAF suggested that the new airport should be built in one of three different locations, two of them located even farther west. The old US Air Force strip at Rio Hato could make a fine airport in the Coclé province (a site that was originally considered along with Penonomé and Aguadulce). Rio Hato is very close to the beaches. Or there are two national airports in Santiago (even further west) or Chitré (further southwest) in the Los Santos province.

Of the three, the CAF considered the existing Rio Hato strip to be the best location as it has the most adequate existing runway and the best climate conditions. The central location of Rio Hato and its proximity to top beach locations are also major factors in the selection process. The proposed Rio Hato airport is also surrounded by government-owned land, allowing for significant savings.

Starting a movement

Great turnout at Coronado blood drive

By: Jamuna Burry of Playacommunity.Com

Coronado blood drive
Members of Panama’s beach community from in and around
Coronado are part of a movement to increase blood donation to save lives.

The newly-created Pana-Expat “Blood For Everyone!” Campaign launched its first ever Blood Donation Drive in the Pacific beach town of Coronado last Saturday. The multi-drive campaign goes beyond simply getting someone to donate blood once. There are elements of education, the development of an emergency blood donor call list, and encouragement of more frequent blood collections. The effort brings together Panama’s National Blood Program, Hospital Santo Tomas, Hospital del Nino, Foundation Gotitas de Vida and Sangre (FUGSAVINI) under

Laura Alexander, the owner of a popular social expat website and outing group, (www.expatexplorers.com) is the driving force behind the movement. Inspired by a recent increase in need for donations, she used her network in Panama to connect people and organizations which resulted in the campaign.

Dr. Carols Montero, who is Chief of Hematology at Panama’s Hospital Nacional is the man in charge of the National Blood Program. He stressed the need for support from private and government agencies. “We would like to see daily donations”, he said, and encouraged people to organize and promote blood drives in their own areas.

The recent blood drive was made possible with help from volunteers from beach area expat communities. Sheila Scott and Louise Belisle of The Coronado Social Association along with Playacommunity.com helped spread the word. Space was donated by the annual Craft Show organizers and the La Carreta Restaurant donated an air conditioned room for blood collections and storage.

Panama has the lowest voluntary blood donation rate in Latin America, due to local suspicion about collection practices. “Among other incorrect beliefs, is the fear among many Panamanians that they will catch a disease from the needles”, explains Laura Alexander, one of the volunteers at Saturday’s event. Panamanians need to be educated that blood donations are not only safe, but blood donations made in advance are crucial to saving lives; which someday could be their own.”

Saturday’s effort collected 24 units of blood. “This can save around 70 people”, Dr. Montero explains. When asked if the blood drive obtained the number of donors they hoped for, Montero said, “We didn’t just do good, we did excellent”.

An emergency blood donor call list is being created with information like blood type, names and contact information of people willing to donate blood in case of an emergency.

For more information about Pana-Expat “Blood For Everyone!” Campaign, to add your name to the donor list or to help bring a clinic to your area, email blood4everyone@expatsinpanama.com.

“Cold Chain” system makes progress

From The Bulletin - TheBulletinPanama.com

'Cold Chain' system makes progressTechnology used in the agricultural census. Tecnología utilizada en el censo agropecuario.

The Minister of the Presidency, Jimmy Papadimitriu presented the results of the agricultural census, which revealed that 80 percent of the plant and vegetable production takes place in the highlands of the country as well as the province of Chiriqui and the rest in Herrera, Los Santos and Cocle.

The Cold Chain system is part of the campaign promises of this administration to push production in seven other provinces, and provide fresh products to consumers in cities such as Panama, Penonomé, La Chorrera, Santiago, Colon, Las Tablas and Chitre.

The plan is to lower the high costs and improve the quality of agricultural products.

In an accountability report on the project, the secretary of the Cold Chain, Fernando Duque, announced the progress made in the process of study and modern design of the new specialized public market in the district of David, Chiriqui, to be built on the former grounds of the workshops of the Ministry of Public Works. This work must be completed between 12 and 18 months. The project will have ample parking and public spaces for consumers to buy fruit, vegetables and legumes, fresh meat and fish.

Other services will also be available, such as banking, pharmacies, etc.

Reader’s letter

Dear editor, dear sir:

A comment regarding the article “My corner “Chino” store” By Evan Forbes of EyeonPanama.com.

A couple of trips ago – from my home in Dallas, Texas – I went into a Chino [Chinese-owned neighborhood mart] near the hotel I was staying at and while lined up and awaiting to pay for my purchase, I set a previous purchase down on some boxes of goods nearby.

I forgot to pick them up when I left and when I returned to my room I could not figure out where I might have left them. Three or four days later, I happened to be back at the Chino and while there, spied my package just exactly where I had left it. I picked it up – held it up – the clerk smiled and nodded, and went about her business. I paid for my new purchase and walked out with a nice warm feeling – there ARE nice, honorable people left in the world.

E. G. Adams