A Strategic Hub for Innovation in Latin America and Beyond

A Deep Dive into Panama's Digital Transformation Plans

---

The increasing integration of Information and Communication Technologies (ICT) across nations and sectors is fostering digital exchange and development. We must ensure this trend positively impacts our economy, governance, and society, fostering increased competitiveness, national growth, and global prosperity.

The exponential transition and acceptance towards the so-called Digital Economy and Industrial Revolution 4.0 is also evident, through its multiple disruptive applications that impact the dynamics of national competitiveness, business models, global trade opportunities and the generation of value in response to new consumer demands.

In the current volatile global landscape, discerning investors, multinational corporations, nascent enterprises, and pioneering founders are compelled to identify environments characterized by robust economic expansion and enduring sustainable development. Panama, strategically located at the crossroads of the Americas, is rapidly emerging as a premier destination, offering a unique blend of technological advancement, robust infrastructure, and an unwavering commitment to inclusive and sustainable growth. 

This article explores why Panama is a prime investment destination due to its strategic location, its digital transformation goals, and its commitment to sustainable growth, thus offering an ideal business environment with geographical advantages, stability, trade agreements, and special economic zones. Panama's 10-year ICT strategy and proactive legislation aim to make it a digital innovation hub by enhancing its infrastructure, traditional sectors, social protection, and digital governance. 

Panama's Digital Leap: A Hub for Next-Gen Business

“Multiple areas within Panama’s economy and society offer interesting opportunities to stimulate start-ups and model transformed delivery of service whether in trade, ecology, tourism or other services based on its already established base of multinationals and its privileged connectivity.” Source: DIGITAL GOVERNMENT REVIEW OF PANAMA © OECD 2019

Panama has made significant strides in its digital transformation agenda, demonstrating remarkable resilience and foresight, particularly during recent global challenges. This commitment to digital progress has created a fertile ground for next-generation businesses.

The country’s 10-year strategy for information technology and communications sector (ICT) development consists of a public-private and academic partnership that seeks to turn Panama into a center for digital innovation.

Panama has passed laws to attract tech companies and promote technology, research, and development. Executive Decree 455 of 2018, for example, ensured strategic continuity for the country’s digital economy goals. This is highly advantageous, since it helps the country provide value in the face of new industry demands. 

The country further enhances its appeal with special economic zones and regimes, such as the City of Knowledge, a platform for research, learning, innovation and creativity, from which innovative solutions to global problems are generated, making a lasting contribution to the development of Panama and the world. Panama offers a strategic business environment with modern infrastructure and attractive tax, migration, and labor benefits, specifically designed to help companies thrive.

Panama is actively fostering a vibrant digital ecosystem. There's a strong push to promote computer programming services and application design. This focus extends to financing technology-based "startups" and facilitating access to appropriate financing terms for small and medium-sized enterprises (PYMES). The country is promoting the facilitation of financial innovation via the incorporation of Financial Technologies (Fintech). This is the reason for the recent launch of the Panama Financial Innovation Hub, a platform designed to foster dialogue between regulators and innovators in the financial sector, promote financial inclusion, and strengthen system stability. 

Building a Resilient Future: Panama's Commitment to Sustainable & Inclusive Growth

Beyond its digital prowess, Panama is deeply committed to sustainable and inclusive growth, making it an attractive long-term investment destination. Sustainable economic growth is highly dependent on the efficiency of industries and the structures that facilitate their performance. Panama is actively strengthening several fundamental areas to solidify its position as a key investment destination: strategic infrastructure, traditional sectors with future potential (like tourism, manufacturing, agribusiness, financial inclusion, health, and education), and global economic ties. This showcases a broad scope for digital innovation beyond just tech-specific businesses.

The country is focused in advancing towards a more flexible and robust social protection system aiming for the creation of an interoperable platform to expand the coverage of the National Registry of Beneficiaries. This initiative is expected to facilitate the design of predictive analysis tools to anticipate crisis scenarios, including algorithms to classify population vulnerability, such as to climate change. For businesses, this will translate into greater social stability and more accessible data for strategic decision-making.

Panama also prioritizes inclusive development, particularly in housing. Implementing policies and programs for access to dignified housing is possible by offering suitable solutions for vulnerable groups and ethnic minorities. Crucially, this will need to include the use of eco-technologies and designs adapted to cultural and environmental needs, in order to generate significant opportunities in the smart and ecological construction sector (Proptech).

Innovations in Healthteach are also taking center stage. Consolidating an interoperable health information system that articulates different data platforms could help the government and its citizens to better utilize epidemiological statistics, optimizing medical attention. The use of ICT tools is essential for expanding the coverage and quality of services, especially for the most vulnerable. Furthermore, advancing electronic health records and ensuring interoperability between the Social Security Institution (Caja del Seguro Social) and the Ministry of Health systems are indispensable steps for more efficient population monitoring and support. This will open new avenues for innovation in healthtech and technological solutions for a globally demanding health sector.

Strengthening the Foundation: Digital Governance and Transparency

To ensure a robust and reliable environment for digital and innovative investment, Panama is diligently strengthening its digital governance and enhancing transparency. This impacts directly on the efficiency and transparency of the business environment.

Efforts include improving the transversal services of the Authority for Government Innovation (AIG)—such as interoperability, cybersecurity, cloud storage, and online processing—which encompass everything from ministries and municipalities to the Electoral Tribunal and the Public Registry. Robust digital capacities are being incorporated into public administration through professional careers in ICT areas, translating into greater agility in governmental procedures and services.

Panama is actively developing a National Data Strategy to foster a "data culture," aiming to inform decision-making. Key initiatives include optimizing the National Institute of Statistics and Census (INEC) information platforms and reforming INEC into an independent entity, which will ensure reliable data for business planning. Additionally, by enhancing the Comptroller General's capabilities with ICT tools, Panama seeks to improve control efficiency. This will be achieved by eliminating paper-based processes, digitalizing operations, and leveraging data for control actions, ultimately streamlining public management and boosting investor transparency.

The expansion of digital services is supported by key initiatives that facilitate interaction between businesses and government, and between businesses and clients. This includes the development of a digital identity and signature system, providing a single authentication mechanism for the public administration usable across various applications. It is fundamental that the offering of digital services guarantees inclusion and non-discrimination based on sex, disability, or race. Promoting digital skills among citizens for better utilization of ICTs, with a focus on vulnerable populations and in partnership with civil society and the private sector, will further strengthen the digital landscape.

Additionally, the Panamanian government is actively addressing cybersecurity threats, recognizing the disruptive and damaging potential of cyberattacks and cybercrime on businesses, communities, and individuals. Such security incidents can result in identity theft, extortion, and the loss of sensitive information, with significant economic repercussions. To counter these risks, the Panamanian President formalized the creation of the Government Security Operations Center (SOC Gubernamental) last week, on June 11, through Executive Decree No. 53. This center will be dedicated to protecting state services, information, and technological infrastructure.

The SOC Gubernamental will be the operational entity in charge of monitoring, preventing, detecting, and responding to cybersecurity incidents, with the goal of safeguarding the state's digital infrastructure.

In conclusion, Panama's strategic location, coupled with its aggressive pursuit of digital transformation, robust infrastructure development, and unwavering commitment to inclusive and sustainable growth, positions it as an unparalleled destination for global investment. The country is not just building an economy; it is cultivating an advanced, resilient, and socially responsible ecosystem ready for new levels of international partnership and business expansion.

Navigating the nuances of a new market requires expert legal guidance. Lex Innova Law Office stands as your trusted partner, offering comprehensive legal expertise and a deep understanding of Panamanian law to guide international investors through this promising landscape. 

What sets Lex Innova apart is our unique approach, combining profound legal expertise with keen business acumen to provide practical solutions that align with your strategic goals. Innovation is integral to our identity; it's woven into the very fabric of who we are.  

As a boutique firm, we pride ourselves on offering personalized attention and a collaborative approach, ensuring you receive tailored legal solutions that meet your unique requirements.

Committed to purposeful development, our practice aims to foster prosperity for future generations.

Discover how Panama's vibrant landscape can fuel your business growth. Contact Lex Innova Law Office today to explore tailored legal solutions for your investment in Panama.

connect@lexinnova.net