New Easy Retirement Residency in Panama

October 22, 2012


Furthering its reputation as one of the world’s top choices for foreign retirees and expats, Panama, through a series of presidential decrees beginning in May 2012, has made a significant addition to its already generous list of residency programs. Panama’s pensionado program, which allows retirees who can show an income from a pension or Social Security of at least $1,000 per month, is the gold standard of overseas retirement residency options. Now, with what is being referred to as the “Specific Countries” program, this Central American country is opening its doors even wider to citizens of countries deemed “friendly” by the Panamanian government.

 

Panama is experiencing unprecedented growth. As a result, one of this little country’s biggest problems is a limited workforce. This nation of 3.5 million people doesn't have enough educated, trained, qualified, English-speaking labor to go around. Panama has been attracting foreign investors and entrepreneurs, big and small, in ever-growing numbers for the past half-dozen years at least. The country has made it very appealing to do business here, and more foreign businesspeople are taking notice of this fact all the time. Now these business folks are noticing something else—the job market is getting competitive. Salaries are rising, and often, even if you're willing to pay top dollar, you can't find the staff you need for the job you're trying to get done.

 

The long-term solution is education. Panama must train up her own sons and daughters to continue to fuel the country's growth, and efforts to that end are under way. But that takes time. Where are all the foreign businesses basing themselves here going to get the labor they need today? Panama’s President Martinelli recognized that the only possible solution would be to import it.

 

That’s the motivation behind this new residency option. However, you don’t have to be in the job market to benefit. Retirees, too, can take advantage of what amounts to one of the easiest foreign residency options available anywhere in the world. All of Panama’s other options for foreigners interested in establishing residency in this country take time and require various applications and renewals. As a result, this country's immigration department is overwhelmed. Processes that should take weeks take months, and processes that should take months can take years. The new Specific Countries option cuts through all the red tape.

 

Forty-seven countries are currently included on the list, as follows:

Andorra

Argentina

Australia

Austria

Brazil

Belgium

Canada

Chile

Croatia

Cyprus

Czech Republic

Denmark

Estonia

France

Finland

Germany

Greece

Hong Kong

Hungary

Ireland

Israel

Japan

Latvia

Liechtenstein

Lithuania

Luxembourg

Norway

Malta

Monaco

Montenegro

Netherlands

New Zealand

Poland

Portugal

San Marino

Serbia

Singapore

Slovakia

South Africa

South Korea

Spain

Switzerland

Sweden

Taiwan

U.K.

United States

Uruguay

 

If you hold a passport to any one of these countries, you, your spouse, your parents, your children under age 18, your children with disabilities, and your children aged 18 to 25 who are single and registered at a university can all claim residency. And this is not temporary residency requiring a series of renewals, as with most visas, but permanent residency immediately.

 

In addition, you can also qualify for a work permit under this program. This can be an advantage even for “retirees”. Some retirees would like to work if given the opportunity, and not all retirees can afford not to work. Panama’s pensionado visa specifically restricts holders from taking a job. Qualify for retirement residency in Panama under the new Specific Countries program, however, and you can also get a job if you’d like one.

 

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.

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The Panama real estate machine has developed a bad habit.  The non-exclusive real estate listing.  For some reason, in Panama, people feel that it is better to list with 3, 4 or more agents at a time in order to sell their properties.  At one time, this may have helped.  Before the internet was here, or large real estate publications it may have been difficult to find properties and the more agents you had advertising yours, the better.  Most still operate on this philosophy.  More agents equals more exposure.  Right?

 

The problem with listing with several realtors, is that not a single one of them is wise to aggressively advertise that listing.  If he does, the potential of another realtor selling it becomes higher, and if that happens, the advertising realtor does not get compensated for the advertising expenditure.   

 

In order for a realtor to be held accountable for selling your property, he must be the only one with the listing.  It is in this way that you, the seller, are able to police the activity.  If the agent isn't doing his job, you fire him.  If 7 agents aren't doing their jobs, who cares, none of them have invested a penny for fear of spending only to lost the sale to another one of the 7.

 

If I am the only one listing your property, I must advertise, I must produce results, and once I invest my time, money and effort into the listing, I become very invested, and need to sell it to regain my expenditures.  It is a far better system.  I advertise on every site, signs, papers etc to make the sale happen, compared to the non-exclusive listings, who get a spot on my page and I wait for the phone to ring.  I sit and wait to see if I am the one realtor out of the other 6 to get the phone call on the property.

 

The same goes for buying.  Do you choose one realtor and count on his expertise and motivation to find you the perfect property or do you call 7 and tell each one what your looking for and wait for a phone call?  It's a no brainer!  Unless you are working with a realtor that just isn't cutting it, you are far better to stick with one skilled person.  

 

One of the reasons is the far too common non-exclusive listing parctice.  Hire more than one realtor, and you will end up looking at the same non-exclusively listed property seven times.  That's no fun!  

 

Another reason is again, accountability.  When I am the only one working for you, I certainly don't want to be fired! Especially after I have invested a large amount of time and you have given me your trust and loyalty.  I want to excell and do a great job and get paid for that effort.  A realtor that has to work for you with the expectation that you may buy from another does not get too excited to work for you.  Not really a nice thing, but a fact just the same.  It's the reason the commission structure was created, to motivate your agent to make the deal.  Without commission, the agent is working for 0 dollars.  It happens.

 

The question one has to pose when either buying, or selling a property is either A:  do I trust this one agent to work diligently for me and if he does not, is there something I can do about it?  YES!!

;or B: do I trust these agents to work diligently for me, and if they do not, are there consequences?  NO!!  Because anyone can sell your listing.  Anyone can act as an agent, so weather you fire one of the 7 agents or not, he can still bring a client and sell your property on a fluke.  

 

The bottom line is that a non-exclusive agreement with your agents is entirely fluke, because not one of them will give you their heart and soul.  An exclusive arangement gets you results!!

 

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Dear Live and Invest Overseas Reader,

 

Panama's President Ricardo Martinelli enjoyed approval ratings as high as 85% during his first months in office, back in 2009/2010. Today he's more a controversial figure than a beloved one. Current approval ratings say that less than half (maybe 40%) of Panamanians are happy with the job he's doing. Martinelli is a big, blustery, take-no-prisoners kind of a guy who makes a habit of pushing the envelope and, sometimes, crossing the line. I hear the complaints about him, from friends, staff, businesspeople we work with here in Panama. No question, Martinelli has made enemies.

 

But I've got to give it to him. Once he identifies a problem that he thinks could get in the way of his reaching his objectives, Martinelli takes action. Not mañana. Now.

 

One of Martinelli's biggest problems right now is a limited workforce. His little country doesn't have enough educated, trained, qualified, English-speaking labor to go around. Panama has been attracting foreign investors and entrepreneurs, big and small, in ever-growing numbers, for the past half-dozen years at least. The country has made it very appealing to do business here, and more foreign businesspeople are taking notice of this fact all the time. Now these business folks are noticing something else--the job market is getting competitive. Salaries are rising, and, often, even if you're willing to pay top dollar, you can't find the staff you need for the job you're trying to get done. I speak from experience.

 

Martinelli realized that, if he didn't do something about this quick, the legacy-level agenda he's been pursuing since the day he took office would be at risk. The long-term solution is education. Panama must train up her own sons and daughters to continue to fuel the country's growth. And efforts to that end are under way. But that takes time. Meantime, where are all the foreign businesses basing themselves here going to get the labor they need today? Martinelli recognized that the only possible solution would be to import it.

 

Panama offers a dozen or more options for foreigners interested in establishing residency in this country, but they all take time and require various applications and renewals. Plus, none of them translates to a work permit. (The pensionado visa, for example, specifically restricts holders from taking a job.) Meantime, this country's immigration department is overwhelmed. Processes that should take weeks take months, and processes that should take months can take years. The status-quo wasn't going to cut it, Martinelli recognized.

 

So he took bold action. He woke up one morning and decreed a new residency option, the "Specific Countries" visa. That was in May. In the less than five months since, the decree has been modified several times, because, frankly, it just wasn't thought through at the start. At first, the countries on the list numbered 22. The list was quickly revised to include 24 countries. In the past week or so it has been revised again and now includes 47 countries. If you hold a passport to any one of these, you, your spouse, your parents, your children under age 18, your children with disabilities, and your children aged 18 to 25 who are single and registered at university can all claim residency. And not temporary residency requiring a series of renewals, as with most visas, but permanent residency immediately.

 

Plus: You can also get a work permit. Now we're talkin'.

 

Except, wait. There's more. Within the past two weeks it seems another new permanent residency category has been enacted in this country, this one for professionals. To qualify, you must be coming to Panama to practice a profession that is not restricted to Panamanians only (such as the liberal professions) and you must produce an authenticated diploma from an accredited university showing at least a bachelor's degree. (This new "Professionals Residency," unlike the "Specific Countries" residency, does require the usual two applications.)

For the past month, we've been working on a report on these new residency and work permit options, to send to Panama Circle members and Panama Letter subscribers, but we can't finish it. Every time we think it's ready for production and fulfillment, we learn of new changes...or of whole new programs. We've had to stop the virtual presses three times. Friday, my Editorial Assistant David sent me this e-mail:

"I am sorry to report that I have nothing definite on the newest residency category, and, so, we can't finalize our report this week. I've searched in English and Spanish for news, and there's nothing. Not even on the government's website. At this point, it seems that it's in the pipeline, but I don't think it's been officially announced. Only certain attorneys, including Rainelda [our Panama attorney Rainelda Mata-Kelly] are aware of it. I've scheduled a meeting with Rainelda in her office next week so that I can get all the details and update our report in full."

 

That's how Martinelli is providing the educated, qualified, professional labor his country needs in a hurry. He's inviting professionals from around the world to come join the party.

 

However, Panama has another employment need, as well, for non-professionals. People to be maids, drivers, waitstaff, cooks, laborers... Neither is this shortage lost on Martinelli.  In fact, he seems to have observed, looking around his country, that loads of folks fitting those descriptions exist here already. Loads of folks who could fill those kinds of positions...but who can't get jobs, at least not legally. Not only can these folks not legally fill the positions that are standing empty, but the government spends a lot of time harassing them about their immigration and employment status.

 

Panama is home to a sizable illegal alien population, many of whom do work, when they can, off the books, but who worry all the time about being deported back home to Colombia, Venezuela, El Salvador, Honduras, Guatemala, Nicaragua, etc. These good folks want only to earn a living, to take care of their children, to send money back to their families. Panama, especially Panama City, is the region's land of opportunity, and thousands and thousands hailing from less prosperous parts of the region have made their way here in search of a chance.

Why not let them all stay, Martinelli seems to have wondered to himself? Why not make them legal, allow them to work, let them call Panama home without worry...and subscribe them to the tax roles? Instead of spending time and money to track and deport them, give them the legal right to live and work here. Let them fill jobs...and let them pay into the public coffers. Then, instead of costing the country money, they'd become a source of revenue!

So Martinelli has allowed a series of amnesty programs. I won't attempt to describe or detail them, because I can't follow any of the particulars and all the particulars seem to change all the time. Bottom line, these windows of amnesty seem to amount to masses of folks with no legal status showing up at specified immigration offices on specified days and waiting. Not in line, but en masse.

 

"Half of Panama was there...or more!"

 

That's how a friend described it, a friend who finds herself in the position of needing to be normalized. She, along with many thousands of others, stood outside the immigration office starting at 3 a.m. one morning last week. She was among the fortunate who managed to meet with an immigration official before the office closed for the day at 5 p.m. She got her residency permit and is now a legal Panamanian resident. However, she ran out of time for her work permit. She awaits a callback, another chance to wait outside the appointed office in the wee hours hoping to get in and processed before the close of business. And she's very happy to have the chance to do it.

Kathleen Peddicord

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Yes!!  Mortgages are available here in Panama on your vacation property or second home.  Although it is possible to finance directly through the banks, the best way is to go through a mortgage broker.   The reason is that there is a large abundance of paperwork and hoop jumping required.  There is nothing worse than starting the process with HSBC and getting close to the finish line 1 month down the road and finding out that there is one condition you cannot meet with them, but do not require with Scotiabank.  If only there were someone who knew that condition before hand and could direct you to the right bank to save a lot of time!

 

That's where a great mortgage broker comes in handy here in Panama.  To save timely delays and mistakes, and to keep your business in the right hands.

 

Here are a couple things you need to know about a mortgage with a bank in Panama:  

 

About the best rate is 6.5%, and they do not lock in...  Every mortgage that I know of here is variable.  

 

Life insurance is mandatory.  Unless you can guarantee the loan with cash.

 

If you are relocating, things get a little more difficult, so this is only a vacation residence.  

 

You will need to have an income and have to proove it.  Even if you are independently wealthy, a bank here is going to want to see how you are paying the bills.

 

The maximum age to hold a mortgage is 75.  That means that at the age of 75, you have to be mortgage free.  So, if you are 55, you can get a 20 year mortgage, if you are 65, 10 years, and if you are 70, it's difficult.

 

Ok, that is all I know about the mortgages, and it is not very much, so let me know if you need more info and I can get it; I also work with some great mortgage brokers, so this part becomes so easy with the right people on the job.

 

If you don't think a mortgage is right for you, and you want to keep your nest egg in it's current investment vehicle, then another option is to buy from a developer.  Some of them will finance their projects with as little as 10% down!!

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