Incentives at Panama’s export processing zones offer new opportunities for Vietnam
VOV.VN - With a specific legal framework and various tax, immigration, and labour incentives, Panama’s Export Processing Zones (Zona Franca) are opening up opportunities for foreign investors and enterprises, including those from Vietnam, to set up production, processing, and supply facilities for the Latin American and North American markets.
This was highlighted by the Panamanian side at the recent conference titled "Vietnam - Panama: Export Potential and Business Cooperation Opportunities," recently organized by the Vietnam Trade Office in Mexico in Panama City.
Vietnamese businesses were encouraged to explore and invest in Panama’s Export Processing Zones, which operate under a legal framework established in 2011 to attract foreign direct investment and create jobs.
Earlier, during his official visit to Vietnam in early October 2026, Panamanian President José Raúl Mulino emphasized the competitive advantages of Panama’s transport and logistics network, particularly the Panama Canal. He affirmed that Panama serves as a complementary partner and a gateway to the Americas, while Vietnam acts as a bridge in Asia.
Speaking at the conference, held exactly one week after the Panamanian President's visit to Hanoi, Cristina Danello, Advisor to the General Directorate of Export Processing Zones under the Panamanian Ministry of Commerce and Industries, stated that export processing zones have defined, fenced boundaries and can be established anywhere in Panama, with a minimum area of 2 hectares and an initial investment from US$250,000.
She described this initial investment as "virtually negligible." Panama’s Export Processing Zone model has operated for over 15 years, comprising 27 zones (20 active and 7 under development), attracting 201 companies with 282 business operations. Nearly half of these operations are in logistics, services, and processing of finished or semi-finished products. Notable models include Panaparc, the largest zone located near Tocumen International Airport, and the Fisheries Export Processing Zone, specializing in seafood exports with an adjacent seaport.
According to Danello, between 2019 and 2025, Panama’s Export Processing Zones attracted total investment of over US$365 million and created around 8,000 direct jobs, with investors expected to generate an additional 23,359 jobs in the coming time. In 2025 alone, total investment reached over US$109 million. Businesses operating in these zones are allowed to engage in manufacturing, assembly, processing, high-tech development, services and logistics, or real estate leasing.
Regarding incentive policies, Danello noted that businesses are not required to meet minimum capital requirements. Licenses are issued free of charge within a maximum of 90 days from application submission and remain valid indefinitely, subject to annual reporting obligations. Foreign companies are exempt from import duties on raw materials and machinery for production in Panama, income tax on export activities, and the 7% Value Added Tax (VAT) when purchasing local raw materials. Businesses must export a certain percentage of their products abroad, reaching 40-60% for some firms. Goods consumed within the Panamanian market are subject to standard taxes.
Addressing concerns about post-approval procedures, such as environmental assessments, fire safety, or blueprint reviews, which might cause delays for Vietnamese investors who place high demands on project timelines, the representative of the Panamanian Ministry of Commerce and Industries said that once a license is issued, the Ministry has statutory authority to step in to support and assist investors.
Rules of origin were also a key concern for investors. The ministry representative stressed that goods must meet rules of origin to be exported as finished products to the US. Investment from Vietnam should be tied to genuine local raw material supplies in Panama, such as processing and canning seafood products, rather than industries dependent on components or raw materials from third countries.
Danello clarified that the General Directorate of Export Processing Zones is the management agency and does not determine rules of origin; products seeking the "Made in Panama" label require individual evaluation of their added value ratio generated in Panama.
Concerning immigration, business owners and shareholders can obtain permanent residency from the start, while market survey investors are granted 9-month visas. The labor scheme is also more flexible than the standard Labor Code, allowing leave to be split and overtime paid at fixed rates. Vietnam produces many quality products that can be brought to Panama for finishing before re-exporting to Latin America and the US.
For instance, in aquaculture cooperation, Panamanian farmers can raise seafood in Panama using Vietnamese technology and expertise, while Vietnamese enterprises finish processing inside the Export Processing Zone. Alternatively, Vietnamese wood products and furniture can be brought into the zone for finishing, provided they have full origin traceability documentation.
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