Panama

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1. Introduction

A. History And Background

The Republic of Panama is located in the narrowest and most central part of the American Continent and forms the isthmus that links North and South America. Logistics, tourism, agriculture and financial services have developed as growth engines upon which the country has developed a sustainable competitive advantage. Not by chance, the famous Panama Canal was built across 80 kilometres from north to south, connecting the Atlantic and the Pacific Oceans, thus becoming the shortest maritime route between the North-eastern part of Asia and the west coast of United States and between the west coast of South America same as Europe to the west coast of United States. The country's population is 3.1 million. The currency is the US Dollar (USD).

In recent years, Panama's economy has experienced a boom, with growth in real gross domestic product (GDP) averaging over 8 per cent from 2006 to 2008. The Panamanian economy has been among the fastest growing and best managed in Latin America. Like most countries in the world, Panama felt the impact of the global financial crisis, with a 3.2 per cent growth registered in 2009 in comparison to 10.1 per cent in 2008. However, in 2010 the economy resumed its growth rate, registering an increase of 7.5 per cent. For 2011, Panama is expected to have a growth in GDP of 9 per cent.

The expansion project of the Panama Canal, a number of mega-projects and the commitment of Panama to comply with international standards in the provision of corporate and financial services are expected to boost and extend economic expansion for some time.

Panama also enjoys a sophisticated and well-regulated banking system (in accordance with Basel Committee Principles and Objectives) and hosts 91 private banks and 60 trust companies. The system is supervised by the Superintendence of Banks.

B. Legal System

The country's legal system is based on civil law tradition. There are, however, significant exceptions to the civil law background, namely the Negotiable Instruments Law of 1917, the corporation law and the rules on maritime proceedings. The concept of trusts has been well received in Panama, whose hybrid trust law introduced some basic principles of the common law tradition, while trust ownership, trust settlements, recognition and enforcement follow civil law. Panama's private interest foundation is a Roman/civil law tradition entity with similarities to a trust and is used for estate planning purposes.

Editorial Board
LeRoy W Watson III TEP
Arias, Fábrega & Fábrega, Panama City, Panama
Luis Chalhoub TEP
Icaza, Gonzalez-Ruiz & Aleman, Panama City, Panama

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