(TODAY PANAMA) WSJ.com – Business founder and writer Kathleen Peddicord makes the case in this article that Panama City is the ideal venue for the entrepreneurial expat. Below are tips for aspiring startup founders mulling a move to Panama. Entrepreneurs eyeing other locations in Latin America will undoubtedly find them useful, too:
Panama Entrepreneur Tip #1:
Panama City is home to a bigger and better-educated pool of English-speaking labor than anywhere else in Central America and perhaps all of Latin America. However, a sizable percentage of it is what I’ve come to think of as “accidental labor.”
As Panama has become an easy place to establish legal residency and get a job, kids from across North America and Europe have been doing that. Not all of them are interested in working, though. Some are on walkabouts, the post-graduation equivalent of a gap year, wandering around to see what they might see and experience what they might experience. Now Panama makes it possible for them to get jobs and earn a little money to refill their coffers before setting out for their next stop. I’ve hired 20-somethings from Ireland, Canada, the U.S. and Australia who have worked for me for six months or so, long enough to save up enough to buy plane tickets onward. Just as I’ve trained them to the point of becoming worth something to the business, they bug out.
On the other hand, I’ve also hired 20-somethings from these countries who have been with me for years and whom I’m now counting on to help hold down the fort when I’m in Paris.
Panama Entrepreneur Tip #2:
Panama celebrates three independence days, all in November, plus 11 other national holidays each year. Almost everyone extends every holiday to include at least one other day off, officially or unofficially making a bridge between the holiday and the nearest weekend. In addition, Panama labor law calls for four weeks of paid vacation every year, starting from year one of employment, and stipulates that employees earn into a “sick leave fund” that allows for up to 18 sick days per year with signed doctor letters. I’ve been told by many, including my attorney, that signed doctor letters can be bought on most street corners for $5.
In addition, on pay days (twice monthly), every employer is required by law to distribute paychecks before lunch so that staff can go on their lunch breaks to their banks to cash their checks. This can be a three-hour ordeal.
When I bemoaned the staff-out-of-the-office reality of being in business in Panama, a friend in the U.S. asked if I hired extra personnel to cover. I don’t, but sometimes I wonder if I should. Few are the days when everyone in my employ shows up to work. You get good at workarounds.
Panama Entrepreneur Tip #3:
One of Panama’s biggest advantages is its position as a global banking haven. The country is home to 91 local and international banks. However, in today’s post-Fatca world, it’s not nearly as easy as it once was for an American to do business with any of them. This is an ever-changing playing field. We have known Americans whose accounts have been closed overnight and without warning, because the bank in question decided that the most cost-efficient way to comply with Fatca was to opt out of Fatca and divest itself of all U.S. account holders. Banks we work with have added fees meant to offset the costs of Fatca compliance measures and requested updated know-your-client information to meet Fatca demands, and every week a new rumor circulates about which banks will and will not welcome new American clients.
This isn’t specific to Panama. Banks worldwide are struggling to stay compliant with Fatca regulations. The point in the context of Panama is that, although the country is home to dozens of international banks, you can’t count on being able to open an account with any one of them if you hold a U.S. passport. On the other hand, because Panama is home to so many banks, if one refuses your business, you have other options.
Panama Entrepreneur Tip #4:
My final piece of advice for the expat considering starting a business in Panama would be to be prepared for the culture shock.
Panama’s is a booming economy, and all the foreign investment in the country can give you the impression that this is a real-world business culture. It’s not. For most, business is not the priority, and work is not a vocation but a way to pay the rent. You’ll encounter exceptions but should be ready for the typical Panamanian perspective on the employer-employee relationship. It’s not as contentious as it can be in France, but, in Panama, as in most of the world, labor law and the general sentiment favor the employee, not the employer. You must keep careful records and be able to document your position if you decide to let someone go.
All that said, I’m more convinced today, after doing business in this country full time for seven years, that Panama is the best place in the world to start an Internet endeavor. I don’t spend many days swinging in a hammock or lazing on the beach. Those pastimes are ever-available, but, for me that lifestyle has never been the point. I chose Panama because I believed it would support the business-building dream I conceived in 2008, and I doubt I would have been able to accomplish what I’ve accomplished these past seven years anywhere else.
Article originally appeared on Todaypanama.com