LATIN AMERICA

Panama gets high business rating

In Latin America only Chile is ahead of the Isthmus as a place for doing business, and the gap is narrowing fast

STAFF
fasvatstar@laestrella.com.pa

PANAMA. The latest report by Miami-based online journal Latin Business Chronicle rated Panama as the second best country in Latin America to do business

preceded only by Chile.

The index of 19 countries is the broadest measure of business climate in Latin America.

Rather than looking at the size of a country’s GDP or GDP per capita, it looks at five key categories and 27 subcategories to measure the recent, current and future business environment in a country.

They are: macro environment (country wide economic indicators), corporate environment, globalization and competitiveness, technology level, and political environment.

The top three spots this year were won by Chile, Panama and Peru. Chile obtained 17,055 points, Panama 17,027 points, and Peru 16,658 points in the 2009 index.

The honor of the best business climate goes to Chile this year, thanks to the best corporate and political environment in the region, on top of the second best score in technology level and third best in globalization/ competitiveness.

However, it failed to reach the top five in macro environment due to poor economic growth and rising inflation.

Panama reached second place once again, denoting the country’s business-friendly climate. It ranks second in macro environment, and in globalization/ competitiveness, fourth in political environment, and sixth best in corporate environment.

The gap in points between Chile and Panama reduced this year compared to 2008, reflecting Chile’s danger of losing the prized top mark next year were Panama to improve in any of the five main factors considered, according to Latin Business Chronicle editor in chief, Joachim Bamrud.

“If Chile does not move forward in reforms to improve its business levels, it can fall behind a Panama expected to move forward with the new President elect, Ricardo Martinelli, who promises to implement reforms such as lower taxes,” he said.

Peru holds third place, with the best macro environment in Latin America, and the fourth in corporate environment and technology level.

It was also one of only two countries that significantly improved its marks from the 2008 index.

Uruguay followed in fourth place, being the best country in technology level, Mexico ranks eighth, and Brazil ninth.

Outside of Venezuela and Haiti, in the last two positions, Argentina, Bolivia and Nicaragua are quoted as the worst countries to do business in Latin America by the Latin Business Index.

Venezuela received the last place for its worst macro and political environment in Latin America, and the third worst mark in corporate environment and globalization/ competitiveness.

The methodology used by Latin Business Chronicle differs from that of the World Bank, which surveys business culture by measuring the level of business regulations and enforcement in 181 economies around the world through standardized surveys administered to local experts, from lawyers and business consultants to freight forwarders.

According to the 2009 Doing Business report, Panama’s rank among the 181 economies surveyed fell 5 points compared to 2008, from 76 to 81 in ease of doing business.

Panama rates better than the regional average in: ease of starting/ or closing a business, duration and cost of registering property, credit information sharing and legal rights of borrowers and lenders, ease of importing exporting, and ease of enforcing commercial contracts.

The country fares worse compared to the regional average on: ease of dealing with construction permits, ease of hiring and firing workers, investor protection, and average rate and administrative burden of paying taxes.

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