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Blueprint Panamanian Residency Through the Friendly Nations Visa Program SEPT 28TH At the time of publication, our research is current. However, sometimes updates are inevitable. If you saved this report on your computer long ago, you may be reading an outdated version. This link will take you to the latest report available. 2021 www.sovereignman.com Blueprint CONTENTS Panama Is Thriving .........................................................................................3 Panama Is the Singapore of Latin America ..................................................... 7 Put This Country on Your radar ......................................................................8 Obtaining Residency in Panama ......................................................................9 Residency Is an Important Part of Your Plan B ..............................................11 Important! August 2021 Update Starting from August 8, 2021, The Panamanian government made its very popular Friendly Nations Visa program much more restrictive. Starting from this date, it will not be possible to obtain permanent residency in the country under the conditions described in this Monthly Letter. (Only Italian citizens will still be able to benefit, since they are governed by a different legislation.) The program has since become more costly, and is no longer a “great Plan B option” as long as second residencies go. However, the remainder of this Monthly Letter, including the reporting requirements, remains relevant for existing residents. We will be updating those accordingly if anything changes in the future. A few weeks ago after our Total Access event in Medellín, Colombia, I flew to Panama at the invitation of an old friend of mine who has recently become the country’s Minister of Commerce. Looking out the window at the city below, I almost forgot where I was for a moment. The sprawling skyline of Panama City is more reminiscent of New York than of Central America. I’ve been coming to Panama since 2003… 13 long years. I even lived in Panama for a while. Each time I come back to the country, it becomes more and more obvious that it’s a country on the move. 2 SMB May 2016 Blueprint Map of Panama And notwithstanding the recent negative press, it’s definitely a place worth having on your radar… for a lot of reasons. Panama Is Thriving Before telling you the rest of my story, let’s go back in time to the beginning of the 20th century. Back then, the Unites States was planning to build (and control) a canal across Central America to allow ships to travel from the Pacific to the Atlantic without the need of going all the way south to the tip of South America. The French tried to build a canal in the 19th century, but failed spectacularly. Panama was still an integral part of the Republic of Colombia, and the Colombian government resisted the construction of the canal. So in 1903 J.P. Morgan engineered for Panama to break away from Colombia and declare independence. The obstructive government was removed, and canal construction started in full swing. Over the next century, US involvement had a tremendous impact on Panama and its economy: • The Panama Canal (the country’s biggest source of income) was 100% constructed and administered by Uncle Sam. 3 SMB May 2016 Blueprint Panama Canal • Panama became a dollarized economy. • Panama’s banking infrastructure was effectively established like the US banking system in the likeness of the same J.P. Morgan. While technically an independent republic, Panama essentially became another US colony, similar to Puerto Rico, but without the official status. On December 31, 1999, after almost 100 years of heavy involvement in Panama, the United States handed over the control of the Canal to the Panamanian government. The US military pulled out of the country after a century of dominant presence (and economic influence). US aid to Panama was halted. Many people were very skeptical about Panama at that point, wondering if Panamanians could survive without America’s heavy presence in the country. Could a “banana republic” administer such a complex thing as a canal? Times were uncertain and volatile, and by 2003 (the first time I landed in Panama), the country was going through a serious recession. I remember the 2003 Panama very well. Tocumen International Airport was not much bigger than some municipal airports I’ve seen in rural India. The arrival hall and immigration process were a total chaos. 4 SMB May 2016 Blueprint The first night I landed, I met a Peace Corps volunteer from Nebraska who was living in the country; we shared a taxi into town, and it was a dark and lonely ride. There were no lights, no traffic, no signs of life. Once we made it into the downtown area, the city itself was quaint at best. Back then, the only two positive things you could say about Panama were: 1) it was a US dollar economy (so no exchange rate hassles), and 2) you could safely drink tap water. But despite all the gloom, I could still feel that the place had huge potential. It was in the air. Panama was more stable that most other countries in Central America. It was very close to North America. English was widely spoken. And it was CHEAP. I started my investment career in real estate, so property was (and still is) the first thing I normally look at in any country. An oceanfront condo in downtown Panama City could be bought for $50,000 back in 2003. Everything else was also MUCH cheaper than in neighboring Costa Rica… yet Panama was just as nice. In 2003, it was obvious to me that Panama was a newborn baby in the world of investment opportunities. Panama City yachts 5 SMB May 2016 Blueprint Panama City at night I moved there full time for a while in 2007, and over the years I visited the country at least a dozen more times. Today, each time I visit it’s noticeably different. And better. On this past trip I was VERY impressed. Again, Panama’s skyline today looks similar to Miami or New York City. There are highways and toll roads. There are excellent hospitals and hotels. There are modern shopping malls. There is a proper Internet infrastructure. When I was there, a good friend of mine invited me to a speakeasy that he co-founded. We went into one of the downtown skyscrapers, went up the elevator and entered a place that looked like an average office. It was nothing out of the ordinary—just a few hundred square feet of generic looking office space. There was a door in the back of the office marked “Private”, and behind the door was a nightclub so tastefully appointed it might as well have been in London or New York. 6 SMB May 2016 Blueprint A Michelin-rated chef prepared us a meal that was easily one of the top five meals I have had in my entire life, topped off by one of the best wines I’ve ever had. I couldn’t believe this was all happening in a country that 13 short years ago was in such a pitiful state. And it’s amazing that a city of just 1.5 million people has a place like this. Or why a city of this size even has a subway system. Panama has it all now. And what is even more important, Panama has a middle class. And it’s not an India type of middle class with $600 in monthly income, but rather a middle class that can afford a comfortable house, a car, and send their kids to school. They can even take a proper vacation and travel in the region. This kind of lifestyle is now available to an average person in Panama. Panama Is the Singapore of Latin America Moreover, Panama now has a very robust and highly competitive financial sector, and the dollarized economy became a huge advantage for the country while the US dollar has been overvalued over the past two years. Beach in Panama 7 SMB May 2016 Blueprint And the Panama Canal proved to be a real boon for the economy and literally became an infinite source of income. Additionally, between the Canal and the banking sector, Panama has become an important financial and transportation hub. And while I really do not like metaphors such as “Uruguay is the Switzerland of South America”, I find Panama strikingly similar to Singapore in many ways: • Both Panama and Singapore are relatively low tax jurisdictions. • Both countries tax their residents based on territorial principle, meaning they do NOT tax income generated outside of their respective borders. • The service sector is very developed in both countries, with many multinational companies operating out of Panama today. • English is widely spoken in both places (though Singapore is definitely ahead). Panama is business friendly. I would go even further and say that in the not so distant future Panama City will displace Miami as the business capital of Latin America. (Miami’s location on US soil is still viewed as an asset, but this perception will likely be changing in future) Put This Country on Your Radar That’s why I think it is important for everyone to pay close attention to Panama. Panama is one of the few bright spots in this world and probably the only place in the Western Hemisphere that is growing at similar rates to South East Asia. Be it investing in property, stock market, or participating in private investments, fast growing economies always present many opportunities to investors. But this is not only about the economic prospects. Panama presents excellent lifestyle opportunities, and has lately become a very popular destination for North Americans and European retirees, rivaled only by Costa Rica in the region.

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