Panama’s economy has been the fastest-growing in Latin America over the past two decades. The country was able to achieve a great economic breakthrough thanks to its activities in the Colon Free Trade Zone on the territory of the Panama Canal, as well as services in the financial sector of the state.
The favorable geographical location of the country, the presence of the Panama Canal and a highly developed Maritime industry allowed Panama to become the center of international trade in Latin America. Thanks to this, the country annually exports and re-exports goods worth about 32 billion us dollars.
Export and re-export Models
Located in the center of two American continents, and with access to the Pacific and Atlantic oceans, Panama has one of the most powerful re-export industries in the world.
The state exports more than 64% of various types of goods to the Caribbean and Latin America. Also, 24% of exports are to North American markets and only 4% are exported to Asia and Europe.
Panama has existing free trade agreements with the following countries: Canada, the European Union, Mexico, Colombia, Peru, Chile, Taiwan, and Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
Panama also has a trade agreement with the United States that allows the country to receive duty-free 86% of products. Free trade negotiations with South Korea are also underway.
What is the Colon Free Trade Zone in Panama?
The free Trade zone (CFD) is one of the free economic zones (FEZ) of Panama. CFZ was established in 1948 in order to expand the provision of services and generate additional revenue for the state budget.
The Free trade zone is located in the South-Eastern part of the city of the colon, at the entrance to the Panama Canal from the Atlantic Ocean; its territory is 2.4 square km. it is the largest port in North and South America, including three seaports: the international terminal Manzanillo, the container terminal colon and the port of Cristobal.
At the same time, CFZ provides a high level of transport logistics systems. CFG companies operate the Panamanian transit railway, modern road interchanges with access to the colon-Panama highway and Enrique Adolfo Jiménez airport. The volume of import and re-export operations in KFZ annually amounts to 20 billion us dollars.
What advantages do companies have in the Colon Free Trade Zone?
Companies engaged in commercial activities in the Colon Free Trade Zone can significantly reduce their tax and customs costs when re-exporting goods from Panama to other countries. Since the colon zone is used by companies for re-export, it includes a full set of services for processing imports.
Taking into account the principle of territorial taxation in Panama, companies receive tax benefits when re-invoicing goods that are re-exported from CFZ and sent abroad.
Panamanian corporations engaged in wholesale trade and interested in exporting products can significantly save time for their business by working in CFZ.
Retailers in Panama can directly establish contacts with distributors of trading firms, and conclude wholesale contracts, without having to visit sales offices in Latin America.