Free Zone Shortfalls
Panama's free trade zone is a success, but it needs to invest more to improve infrastructure and security. Nobody is sure where the money will come from.
Panama has hinted that it might start taxing re-exports from
the Colón Free Zone (CFZ) to plug a growing fiscal gap.
Companies in the zone say that would spell disaster.
|Companies in the free zone
say the government must not tax re-exports.
The CFZ, created in 1948, is the largest free trade zone in
the Americas and second in the world after Hong Kong. More than
2,000 companies and 25 banks operate within Panama's trade
zone, which reported $12.2 billion in sales in 2003. Through
November 2004, sales were up 18.5%. But government fiscal
reform plans threaten to dampen the outlook for 2005, says CFZ
General Manager Nilda Quijano.
Companies operating in the zone, which is based in
Colón, Panama's second city, may only import products
for processing and re-export. Vendors must re-export 60% of
their goods - currently untaxed - and employ at least
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