Panama Market Entry

Panama Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

The Panamanian market is relatively open and competitive. Selling through local sales representatives can be an effective form of distribution. In general, however, the distribution network is not as strong as in large countries such as Mexico or Colombia. In many cases, end customers can therefore be approached directly, as no local distributors may exist in the given sector at all. In particular, large multinational corporations realize their sales within the framework directly. Check smber for agriculture and fishing facts of Panama.

It is advisable that the entry into the Panamanian market be supported by a marketing study, which, depending on the sector, can be prepared by the Trade and Economic Section of the Embassy in Bogotá or the Foreign Office of PaulTrade. When approaching the clientele with an offer, it is important to show maximum flexibility to the demands of the Panamanian side. Some clients prefer ex-works, others the whole package. At this stage, the Czech company should be as open as possible, and if the Panamanian partner wants a price including transport to the port, it is good to comply. It’s a good idea to quote the ex-works price + shipping, and not include it in the final price. Often, a foreign company will price the transport itself and see exactly whether their route or the Czech route suits them. The offer can be formulated in Spanish, but Panamanians can also use English. It should be accompanied by promotional materials, samples, references (where the company exports, with whom it cooperates, etc.). An exporter entering the Panamanian market should have thought through the provision of service or service requirements. He should also have calculated what funds he is willing to invest in sales support and how he will finance the business transaction and whether he will insure the customer’s insolvency risks.

For distribution, you can also use the networks of capital-strong department stores that have their branches in most important places. However, these sales houses mainly sell high-quality goods. The market is dominated by American companies, which compete to a lesser extent with suppliers from the EU.

Forms and conditions of operation on the market

The establishment of an office, representation, or joint venture is one of the most suitable forms for achieving the required efficiency in the realization of business interests. In the preparatory phase, however, it is necessary to expect a complicated and lengthy administrative procedure. Therefore, despite the significant financial burden, it is often advantageous to use the services of specialized local law firms. Consultation with the Trade and Economic Section of the Embassy of the Czech Republic in Bogotá or with the Foreign Office of PaulTrade Mexico is appropriate.

Marketing and communication

Both for the acquisition and for maintaining the permanent presence of already established companies on the Panamanian market, intensive promotion is a must. It must be taken into account that the Panamanian market is strongly influenced by the advanced sophisticated marketing of the USA, and therefore the prerequisite for effective advertising should be its originality and a clear identification of the added value of one’s own product. For a company that wants to operate in the Panamanian market, it is important to go to the country in person. Taking into account the small number of these events, Panama fairs and participation in them is more of a supplement. Due to the absence of trade fairs, Panamanian companies go to Colombian, Mexican, American, and European trade fairs.

Issues of intellectual property protection

The conditions for the protection of intellectual property are listed on the websites of the Ministry of Economy and Finance and ProPanama

Public procurement market

The system of providing information on state tenders is relatively inflexible in Panama. The announcement of tenders is communicated with a delay, the closing dates are in most cases only a few days from the date of announcement of tenders. In addition, notices about the announcement of tenders usually do not contain complete, commercially clear information about all conditions. The conditions of tenders are generally characterized by considerable complexity, with the simultaneous requirement for the preliminary payment of relatively high participation and guarantee fees. Knowledge of the local mentality and perfect fulfillment of all tender conditions are a must. For these reasons, it is advisable to look for a reliable representative who notifies the Czech business entity in advance of the government’s intention to announce a public tender and submits an offer that corresponds to the announced tender conditions, incl. dates and form of tender submission. Without a representative, successful participation in these tenders is practically impossible.

Payment terms, payment ethics and resolution of commercial disputes

Possible resolution of disputes related to business operations before Panamanian arbitration authorities must be resolved only through a local attorney. However, the chance of success is minimal. Therefore, it is generally recommended to enshrine in the relevant commercial contract a clause on the jurisdiction of the arbitration court of the exporting country, for the resolution of any disputes arising from the given transaction.

Most often, the deal is agreed on the basis of prepayment, by default 30-50% is paid at the time of ordering and the rest against the documents after sending the goods. For larger orders, you can also use a documentary letter of credit, a documentary direct debit with deferred payment in various forms. In some cases, especially when establishing new business contacts, it is appropriate to request an advance payment from Czech entities. Satisfactory payment discipline prevails in the country, trade debts tend to be the exception rather than the rule.

Visas, fees, specific conditions for traveling to the territory

A bilateral agreement on the abolition of the visa requirement for citizens of the Czech Republic and Panama is in force, with the total length of stay not exceeding 90 days. The agreement prohibits citizens of both countries from performing any gainful activity during their stay. The Ministry of Foreign Affairs of the Czech Republic draws attention to the importance of the entry stamp issued by the Panamanian migration officials in the passport when entering the territory of Panama. If it is not granted when crossing the Panamanian state border (especially when crossing the border via land crossings), it must be explicitly requested. When subsequently leaving the territory of Panama without a stamp, there is a risk of a high financial fine (up to USD 1,000) or deportation. More information about the options for residence permits in Panama can be found on the Migración website

It is relatively safe in the capital and in major tourist locations, but in many other places the risks of being mugged are high. Some districts of the capital are especially dangerous in the evening and at night – for example Chorillo and Curundú, in the city of Colón, the waterfront area. The security situation is more complicated in the border province of Darien, whose eastern part adjacent to Colombia, it is not recommended to travel to. Among the health risks, it is primarily the risk of malaria, and vaccination against hepatitis A/B can be recommended.

The Ministry of Foreign Affairs of the Czech Republic recommends that all travelers inform themselves about the current security conditions on the website of the Ministry of Foreign Affairs and register in the DROZD database for travelers.

Panama Market Entry