Following the previous chapter’s analysis of the market structure of the high-technology (high-tech) ecosystem in Panama, this chapter focuses on the policies and regulations shaping a potential semiconductor ecosystem in Panama. It starts with a review of the institutional framework and recent policy actions aimed at developing the semiconductor industry. This chapter then focuses on policies relating to science, technology, innovation and entrepreneurship, as well as business support measures and reforms to improve the business environment. This chapter concludes by analysing policies for developing the human capital required for the semiconductor ecosystem.
Promoting the Development of the Semiconductor Ecosystem in Panama
Abstract
On 30 April 2024, Panama published Executive Decree No. 7 (hereafter the Decree) which introduced a dedicated institutional framework for the development of the semiconductor and microelectronics industries.1 At the core of the institutional framework is the newly created Commission for Innovation in Microelectronics and Semiconductors (CIMS), which brings together key governmental and non‑governmental stakeholders to direct Panama’s semiconductor policy. The Decree also commits to launching a National Strategy for the Development of the Semiconductor and Microelectronics Industry (hereafter the National Semiconductor Strategy). Importantly, the Decree signalled Panama’s long-term commitment to joining the global semiconductor supply chain. This section provides a brief overview of relevant Panamanian institutions and strategies, explaining how each can contribute to the country’s ongoing efforts to develop a semiconductor ecosystem.
3.1.1. Institutional framework
As set out in the Decree, the primary purpose of the CIMS is to co-ordinate across the wide range of institutions responsible for developing and growing Panama’s semiconductor industry. Composed of 17 representatives from government, academia and the private sector, the CIMS has many functions which include: drafting the National Semiconductor Strategy (see also Section 3.1.2); producing the Strategic Action Plan for the National Semiconductor Strategy’s implementation; proposing policies, legislation and other governmental initiatives to promote the semiconductor ecosystem, while ensuring alignment with industry needs; stimulating collaboration amongst Panamanian stakeholders on human capital development and research and development (R&D); collaborating with international partners in the field of semiconductors (MICI, 2024[1]).
The importance of co-ordination across government stakeholders and engagement with non-government stakeholders is clear from the wide-ranging membership of the CIMS, listed in Table 3.1.
The Decree also establishes two new institutions to support the work of the CIMS. The first is the position of National Commissioner for Panama’s Semiconductor and Microelectronics Industry (hereafter the Commissioner), who is distinct from the 17 members of the CIMS listed above. The Commissioner serves as the secretary of the CIMS and their responsibilities entail, amongst others: designing, publishing, implementing and monitoring the National Semiconductor Strategy and Strategic Action Plan; co-ordinating the actions of organisations involved in Panama’s semiconductor industry; promoting Panama’s participation in regional and international semiconductor initiatives; advocating for Panama’s government to domestic and international semiconductor stakeholders; and working with Panama’s National Council for University Evaluation and Accreditation (Consejo Nacional de Evaluación y Acreditación Universitaria de Panamá, CONEAUPA) to streamline the processes for issuing accreditation certificates to universities and university programmes that meet the semiconductor industry’s quality standards (see also Section 3.3.2 on CONEAUPA’s role). A dedicated technical team will be supporting the Commissioner in coordinating and implementing the National Semiconductor Strategy and Strategic Action Plan, and in engaging more actively with national and international stakeholders in the ecosystem for semiconductors.2
The National Commissioner must hold a doctorate degree (PhD) and is appointed by Panama’s president, selected from a shortlist of candidates drawn up by the CIMS. The National Commissioner must also be affiliated with the National Secretariat of Science, Technology and Innovation (SENACYT). In August 2025, Decree No. 192 appointed Darío Solís Caballero as Panama’s first National Commissioner for the Semiconductor and Microelectronics Industry (Government of Panama, 2025[2]).
Source: MICI (2024[1]), “Decreto Ejecutivo No. 7 que establece lineamientos para el desarrollo e impulso de la actividad de microelectrónica y semiconductores”, https://www.gacetaoficial.gob.pa/pdfTemp/30021_C/104538.pdf (accessed on 22 July 2024).
The second new institution is the Technical Advisory Council on Microelectronics and Semiconductors (CTAMS), which provides technical-scientific advice to the CIMS. The CTAMS plays a strategic and advisory role in supporting both the Commissioner and Panama’s president, by providing technical and scientific guidance on national decisions related to semiconductors and microelectronics. While the CTAMS operates independently in terms of composition and appointment from the CIMS, it supports and strengthens the institutional framework led by the Commissioner. This structure was designed with the aim to ensure that Panama’s policy decisions affecting the ecosystem for semiconductors are grounded in international best practices and expert knowledge.
The CTAMS is composed of seven experts, either Panamanian nationals or non-Panamanians, who have backgrounds in science, industry or academia related to microelectronics and semiconductors. These seven experts are put forward by the CIMS and appointed by Panama’s president. The presidential involvement increases the CIMS’s political authority and strengthens its ability to co-ordinate across multiple institutions. Also in August 2025, Decree No. 193 appointed the first seven members of the Technical Advisory Council (Government of Panama, 2025[3]).
In addition, the CIMS created three sub-committees aimed at providing technical input and coordination in their respective areas: Executive, Human capital development and Secure transport and trade (Box 3.1).
The work of the CIMS is currently supported by three technical sub-committees. The composition and operating modalities of the sub-committees may evolve over time.
Executive sub-committee
This sub-committee includes high-level representatives from the Ministry of the Presidency, SENACYT, MICI and the Ministry of Economy and Finance. It serves as a platform for high-level coordination and alignment among key institutions involved in the ecosystem for semiconductors, supporting a coherent implementation of the National Semiconductor Strategy.
Human capital development sub-committee
This sub-committee includes representatives from SENACYT, the Ministry of Education, Ministry of Labour and Workforce Development, as well as stakeholders from academia and education institutions and industry stakeholders. This sub-committee focuses on skills and talent development, advising on curriculum alignment, certification processes, workforce development programmes, and coordination between academia and industry in areas relevant to microelectronics and semiconductors.
Secure transport and trade sub-committee
This sub-committee includes stakeholders and experts focused on logistics, customs, security, and international trade. This sub-committee aims to ensure secure, efficient and reliable movement of semiconductor-related goods and sensitive technologies, and support policy coordination on logistics, infrastructure, and trade facilitation.
Source: Input provided by Panama for this report.
Figure 3.1 summarises the primary institutions responsible for shaping Panama’s emerging ecosystem for semiconductors. The rest of this section describes the roles of the institutions represented on the CIMS, in the order that they are listed in Article 5 of the Decree. The section then turns to other institutions relevant to Panama’s ecosystem for semiconductors that are not represented on the CIMS.
The CIMS is chaired by the Ministry of Commerce and Industries (Ministerio de Comercio e Industrias, MICI). MICI is responsible for international trade, promoting industrial development and regulating industry. It oversees business and commercial activities in Panama, including business registration, the special economic zones (SEZs) and special investment incentives programmes for multinational corporate headquarters and manufacturing firms (see Section 3.2.3 for additional details on Panama’s SEZs and special incentives programmes). In addition, MICI is responsible for a range of agencies that also deal with other areas relevant to the semiconductor industry, including intellectual property (IP) rights and technical standardisation.
SENACYT is the lead government agency for science, technology and innovation (STI) policy. It has a crucial role to play in Panama’s ecosystem for semiconductors by providing grants and other funding for R&D, supporting entrepreneurial projects and developing human capital for a future semiconductor workforce. SENACYT also co-ordinates between academic and industry partners in Panama’s STI ecosystem. It is represented on the CIMS by the National Secretary of Science, Technology and Innovation. SENACYT’s role is analysed in greater depth in Section 3.2.1.
The Ministry of Foreign Affairs (Ministerio de Relaciones Exteriores) is responsible for Panama’s international relations and co-operation, instrumental for positioning Panama in the global context of semiconductors. Its network of embassies has signed memoranda of understanding (MoUs) with overseas institutions with expertise in semiconductors and microelectronics (see Sections 3.2.1 and 3.3.2).
The Ministry of Economy and Finance (Ministerio de Economía y Finanzas) oversees economic policy and manages public finances, including fiscal policy and resource allocation. In particular, the ministry will assess recommendations by the CIMS regarding funding needs for semiconductor policy and consider incorporating these recommendations into the annual budgets of the relevant institutions (MICI, 2024[1]).
Source: OECD analysis of MICI (2024[1]), “Decreto Ejecutivo No. 7 que establece lineamientos para el desarrollo e impulso de la actividad de microelectrónica y semiconductors”, https://www.gacetaoficial.gob.pa/pdfTemp/30021_C/104538.pdf.
The Ministry of the Presidency (Ministerio de la Presidencia) houses the Presidency, Vice-Presidency and Cabinet and is the co-ordinating ministry for the executive. As Panama pursues its forthcoming National Semiconductor Strategy, the Ministry of the Presidency’s ability to drive executive priorities will be important in steering semiconductor policies. The ministry and the CIMS will need to be well aligned with one another to ensure good co-ordination.
The Ministry of Labour and Workforce Development (Ministerio de Trabajo y Desarrollo Laboral) monitors the labour market, oversees vocational training, sets skills standards, certifies workers and authorises special work permits for foreign workers, amongst other functions. One of the CIMS’s proposed responsibilities, as outlined in the Decree, is to shape Panama’s migratory and labour regimes to ensure that semiconductor firms can meet their employment needs (see Section 3.3.5). The Ministry of Labour and Workforce Development will likely have a significant role in pursuing these objectives.
The National Authority for Government Innovation (Autoridad para la Innovación Gubernamental, AIG) is responsible for the digitalisation of government services, the modernisation of the public sector (including the streamlining of administrative processes) and other initiatives to improve Panama’s business environment (see Section 3.2.3).
In addition to the government representatives outlined in the preceding paragraphs, the CIMS also includes representatives from outside government. Representatives from scientific and academic organisations include universities (the Technological University of Panama [UTP] and the University of Panama), the country’s leading institution for vocational education and training (Specialised Higher Technical Institute, Instituto Técnico Superior Especializado, ITSE) and specialised institutions (National Metrology Centre of Panama [Centro Nacional de Metrología de Panamá, CENAMEP] and the Georgia Tech Panama Logistics Innovation and Research Center). The CIMS also includes representation from public-private organisations and the private sector, such as the Chamber of Commerce, Industry and Agriculture of Panama, the National Competitiveness Council, the Panamanian Chamber of Information Technology, Innovation and Telecommunications, the American Chamber of Commerce and Industry of Panama (AmCham Panama), as well as a representative from Panama’s SEZs.
It is worth noting which institutions are not represented on the CIMS. Perhaps most notably, the Ministry of Education (Ministerio de Educación, MEDUCA) is absent from the CIMS, even though it is expected to play a vital role in developing semiconductor skills and talent. MEDUCA’s responsibilities include primary and secondary education, encompassing both academic and technical programmes, curriculum design and standards, teacher training and management of the school network. Although MEDUCA is currently not represented on the CIMS, ITSE – which co-ordinates technical and highly specialised tertiary vocational education and ultimately falls under the responsibility of MEDUCA – is a member of the CIMS. Moreover, MEDUCA is represented on the CIMS sub-committee on human capital development, through which its expertise can inform discussions and shape policy.
Other ministries and agencies that are important for the ecosystem for semiconductors but are not represented on the CIMS include the:
Investment Attraction and Export Promotion Authority of Panama (Autoridad para la Atracción de Inversiones y Promoción de Exportaciones, PROPANAMA), an independent public agency created in 2021 to attract foreign direct investment and promote exports.
Panama Canal Authority (Autoridad del Canal de Panamá), responsible for managing the Panama Canal, including its operations, maintenance and development.
National Customs Authority (Autoridad Nacional de Aduanas), responsible for customs and trade facilitation, including modernisation and digitalisation of customs.
Ministry of Environment (Ministerio de Ambiente), responsible for environmental policy, including planning and managing water resources, critical for semiconductor manufacturing (see Section 2.2.1).
The National Secretariat for Energy (Secretaría Nacional de Energía), responsible for electricity policy. Electricity is another critical input for semiconductor manufacturing.
National Authority for Public Services (Autoridad Nacional de los Servicios Públicos) that regulates public utilities such as water supply, energy and telecommunications, including tariffs for utilities and the issuing of permits.
Ministry of Public Works (Ministerio de Obras Públicas), responsible for managing public infrastructure projects, for example constructing and maintaining the national road network.
Panama’s National Council for University Evaluation and Accreditation (Consejo Nacional de Evaluación y Acreditación Universitaria de Panama, CONEAUPA), responsible for ensuring the quality and standards of higher education institutions in the country.
In general, the membership of the CIMS appears to strike an appropriate balance between, on the one hand, seeking the input from a wide range of institutions and, on the other, remaining coherent and focused. Nonetheless, the CIMS should still seek out the perspectives of some of the government agencies listed above, in addition to labour unions (e.g. in relation to semiconductor workforce and training) and civil society (e.g. on the socio-economic and environmental impacts of the semiconductor industry). This engagement could take place through the CIMS sub-committees, the Technical Advisory Council or more informal fora. Panama should also set out the procedure by which an institution can be added to the CIMS, in case the CIMS membership needs to adapt to changing policy or industry trends. It is important to take a holistic approach in developing the forthcoming National Semiconductor Strategy and Action Plan.
3.1.2. The National Semiconductor Strategy
Executive Decree No. 7 of 2024 sets out the objectives of the National Semiconductor Strategy (Box 3.2). These include: developing national capacity for R&D and semiconductor design, manufacturing and distribution; training the domestic semiconductor workforce and attracting international talent; supporting technological entrepreneurship; promoting research collaborations and technology transfer, both domestically and internationally; establishing mechanisms for ensuring semiconductor standards and metrology; and facilitating investment in the semiconductor sector. In July 2025, Panama announced that the National Semiconductor Strategy would prioritise the semiconductor design and ATP segments of the value chain and would be supported by USD 104.9 million in public investment over the five year period 2025-2029 (Presidencia de la República, 2025[4]). The details for implementing the National Semiconductor Strategy will be set out in a subsequent Strategic Action Plan (MICI, 2024[1]).
Panama is planning to support its National Semiconductor Strategy with USD 104.9 million of public money over the five-year period 2025–2029. These funds will be implemented directly by public entities such as SENACYT, MICI, MEF, and academic institutions involved in the Strategy, as well as through the National Fund for the Semiconductor and Microelectronics Industry of Panama (see below), which can also leverage private capital.
Annual disbursements are planned to peak in 2026 and 2027, during the main implementation phase. The final years (2028–29) will be dedicated to consolidation, strategic evaluation, and ensuring long‑term sustainability. The public investment is structured around four strategic components, aligned with the objectives of the National Semiconductor Strategy:
Human capital development: This is the main area of public investment, with a total allocation of approximately USD 75.2 million, covering programmes such as technical and professional training, curriculum reform and certification schemes, and scholarships and faculty development. These funds also support the creation and operation of C-TASC, a national training centre focused on semiconductor design and ATP (see Section 3.2.1 for details).
Infrastructure and legal framework development: Approximately USD 13.1 million will be allocated to support regulatory improvements and institutional capacity building, as well as to invest in infrastructure required for the semiconductor design and ATP segments.
Business ecosystem development: Business development is expected to benefit from approximately USD 11.2 million to support initiatives to attract foreign direct investment, promote high-tech entrepreneurship and startups, foster industry-academia collaboration and technology transfer; and help integrate local firms into global value chains.
Security: An investment of approximately USD 7 million is planned for cybersecurity measures and protection of critical infrastructure, data integrity and supply chain risk management, as well as support the technological resilience of the national ecosystem for semiconductors.
Source: Input provided by Panama for this report.
The Decree highlights the need to align the National Semiconductor Strategy with existing government strategies, notably the National Strategic Plan for Science, Technology and Innovation (PENCYT), the Strategic Plan for Government (PEG), the National Logistics Strategy, the National Energy Plan and the National Strategic Plan for the Development of Metrology Infrastructure.3 This is an important acknowledgement of key policy areas for the development of a semiconductor ecosystem in Panama. PENCYT’s objectives and incentives are particularly relevant to the semiconductor industry, so it is analysed in Section 3.1.2.
The Decree also describes some of the forthcoming legislation which will support the development of Panama’s semiconductor ecosystem. The CIMS is required to propose a bill to the National Assembly, which would contain the following incentives:
a 30% R&D tax credit for semiconductor and microelectronics firms.
a tax deduction for specialised training and science, technology, engineering and mathematics (STEM) education for Panamanian citizens.
programmes for supporting Panamanian technology entrepreneurs for semiconductor-related projects.
special migration and hiring regimes for semiconductor workers and simplified procedures for hiring of qualified foreign personnel.
the creation of a National Fund for the Semiconductor and Microelectronics Industry to finance initiatives that help develop the semiconductor ecosystem. The national fund would be managed by SENACYT and can be funded by the public sector as well as through donations from private entities and international organisations. The fund should be sufficiently flexible to foresee investments across a range of industries (for example, high-tech industries) to mitigate possible demand-side challenges which could arise from a narrow focus on semiconductors.4 According to the Decree, the fund is expected to allocate its funds as follows:
25% to promote technology entrepreneurship related to semiconductors and microelectronics.
25% to promote R&D in the field of semiconductors and microelectronics.
25% to promote the training of semiconductor and microelectronics talent.
25% for activities defined by the fund manager (SENACYT).
According to the Decree, international semiconductor and microelectronics firms will also be eligible for existing incentives, such as those under the Special Regime for Multinational Headquarters (Régimen Especial de Sedes de Empresas Multinacionales, SEM), the Special Regime for Manufacturing Services for Multinational Companies (Régimen Especial de Empresas Multinacionales para la Prestación de Servicios Relacionados con la Manufactura, EMMA) and the benefits granted to firms under the free zone and SEZ regimes. SEM, EMMA and other special regimes are analysed in Section 3.2.3.
The Decree requires SENACYT and UTP to create a Center for Advanced Semiconductor Technologies (C-TASC) to specialise in semiconductor R&D (see Section 3.2.1 for a detailed discussion of C-TASC). Finally, the Decree tasks MICI with creating a one-stop shop with information to simplify the process of investing in the semiconductor and microelectronics industries.
In this way, the Decree provides the institutional and policy framework for Panama’s semiconductor ecosystem, with the expectation that it will be developed further by the forthcoming National Semiconductor Strategy. There are several policy instruments, managed by the agencies described in Section 3.1.1 above, that could contribute to the National Semiconductor Strategy. Some of these policy instruments are discussed in greater detail in Section 3.3.
Although Panama does not currently have a domestic semiconductor industry, several actors across government, academia and the private sector have been actively working on the foundations necessary for attracting high-tech industry, as part of Panama’s plans for the development of a robust industrial and manufacturing sector, set out in Panama’s previous (2019-2024) and current (2025-2029) Strategic Plans for Government (Government of Panama, 2019[5]; 2024[6]).
A resilient semiconductor ecosystem requires a science and technology system, composed of higher education and research institutions in collaboration with governmental actors and industry, which can foster innovation and high-tech development in support of the potential semiconductor industry and relevant upstream and downstream industries. This section analyses Panama’s technology and R&D landscape, policies to stimulate innovation and entrepreneurship, and measures to support business and improve the business environment.
3.2.1. Technology and R&D
In seeking to develop a domestic semiconductor ecosystem, Panama faces the dual challenge of low investment in R&D and low volumes of technology and manufacturing activity in the economy. Despite recent efforts, outlined below, Panama’s support for R&D and investment in technology could be strengthened further and patenting activity is weak. This can partially be attributed to the relatively small scale of Panama’s manufacturing sector, particularly in the high-tech sector. See Section 2.1.4 for a detailed discussion on R&D investment and patenting activity.
Existing policies and programmes
As Panama’s lead agency for STI, the mandate of The National Secretariat of Science, Technology and Innovation (SENACYT) allows it to create, fund and run public programmes designed to further Panama’s science and technology efforts. The head of SENACYT, is appointed by Panama’s president and ratified by the National Assembly, as set out in Law 55 of 2007 (Asamblea Nacional, 2007[7]). Nonetheless, the national secretary is largely insulated from politics as they are required by Law 50 of 2005 to be drawn from the scientific community and possess a PhD (Asamblea Nacional, 2005[8]). Moreover, SENACYT’s autonomous governance structure and long-term planning (see also Box 3.3) helps ensure that actions on science and technology policy are relatively independent of the political cycle and build on consistent priorities across government administrations. As Panama works to develop its semiconductor ecosystem, it should continue this long-term approach to science and technology policy and its consensus-based approach to setting policy priorities.
SENACYT is an autonomous government institution whose mission is to transform science and technology into tools for Panama’s sustainable development. SENACYT aims to achieve this by strengthening, supporting and promoting STI in Panama to increase productivity, competitiveness and modernisation in the private sector, government, academic and research sectors, and amongst the general population (SENACYT, 2019[9]).
SENACYT takes many actions to fulfil its mission, for example: strengthening Panama’s research capacity by funding a wide range of scientific fields; supporting human capital development and programmes related to STEM education; working towards increasing the number of scientists and their scientific production; and promoting innovation as a vehicle to achieve competitiveness. SENACYT’s actions are directly guided by the National Strategic Plan for Science, Technology and Innovation (PENCYT) which is published every five years.
SENACYT was created by Law 13 of 1997, although it was not until subsequent reforms in 2005 (Law 50) and 2007 (Law 55) that SENACYT assumed its current mandate as an autonomous co‑ordinator for STI (SENACYT, 2019[9]). In particular, Law 50 of 2005 expanded SENACYT’s authority, giving the autonomous institution responsibility for policymaking and implementation over a broad portfolio that included R&D policy and funding (Asamblea Nacional, 2005[8]).
Sources: Information provided by Panama in the policy questionnaire used for this report. SENACYT (2019[9]), “Sobre Nosotros”, Secretaría Nacional de Ciencia, Tecnología e Innovación, https://www.senacyt.gob.pa/sobre-nosotros/ (accessed on 19 August 2025); Asamblea Nacional (2005[8]), Ley No. 50 de 2005, https://docs.panama.justia.com/federales/leyes/50-de-2005-dec-23-2005.pdf (accessed on 7 October 2025).
Every five years, SENACYT drafts the PENCYT, which is recommended for approval by the Interministerial Council for Science, Technology and Innovation, and then approved by the Cabinet Council. The previous 2019-2024 PENCYT focused on key sectors including agriculture, energy, water and the environment, health and industry. While the previous PENCYT contained no specific provisions regarding semiconductors, it did place particular emphasis on areas adjacent to semiconductors, such as the fourth industrial revolution, information and communication technology (ICT) and manufacturing (SENACYT, 2020[10]). In contrast, it is encouraging that the new 2025-2029 PENCYT does make explicit commitments related to semiconductors (see the next section on planned policies and programmes).
In recent years, Panama has taken measures to boost R&D activities in the economy. SENACYT has an important role to play and has prioritised increasing investment in R&D and technology transfer. For example, the previous 2019-2024 PENCYT aimed to double the amount of R&D investment from 0.16% of gross domestic product (GDP) in 2018 to 0.33% in 2024 (SENACYT, 2020[11]). The new 2025-2029 PENCYT acknowledges that Panama did not reach this target – PENCYT estimates that R&D investment is approximately 0.20% of GDP in 2024 – but aims to go even further and increase R&D investment to 1% of GDP by 2029 (SENACYT, 2025[12]). As of 2022 – the latest year for which the Network of Science and Technology Indicators (RICYT) has data for cross-country comparisons – Panama’s R&D was 0.18% of GDP, below countries such as Costa Rica (0.34%), Mexico (0.26%) and the regional average for Latin America and the Caribbean (0.56%) (RICYT, 2022[13]).
According to its 2024 annual report, SENACYT had a budget of USD 65.2 million for 2024, up from USD 55.7 in 2023 (SENACYT, 2025[14]; SENACYT, 2024[15]). Within SENACYT’s overall 2024 budget, USD 55.8 million was available for investment in SENACYT projects and the remaining USD 9.4 million covered SENACYT’s running costs (SENACYT, 2025[14]). However, of the USD 55.8 million allocated to SENACYT projects in 2024, only USD 35.7 million was actually disbursed: approximately USD 16 million was spent on scientific research, approximately USD 8 million on innovation and competitiveness, just under USD 5 million on technological development and just under USD 5 million on metrology and standards (SENACYT, 2025[14]). SENACYT also allocated parts of its budget to education programmes, professional programmes, scholarships and conferences. The composition of SENACYT’s 2025 investment budget illustrates how these priorities translate into concrete spending, as detailed in Box 3.4.
SENACYT’s total investment budget of USD 73.6 million in 2025 covers several areas of intervention with main categories of programmed expenditures as follows:
Scientific research (USD 34.1 million): Scientific research is carried out by SENACYT’s 11 public interest associations (AIPs, see Box 3.2) in different scientific areas, including metrology and standards development.
Technological development (USD 8.2 million): This area of investment includes applied research projects and university–industry collaboration, prototyping, validation, and technology scaling, supporting scientific events and enabling platforms for emerging technologies (e.g. AI, robotics, IoT), and research projects aligned with sustainable development goals.
Innovation and competitiveness (USD 4.3 million): Investments foreseen in this area include seed capital, innovation vouchers and other financial support for innovation projects in SMEs, support for tech-based startups and knowledge transfer mechanisms, as well as partnerships with business chambers, non-profit organisations and other organisations to promote innovation and entrepreneurship.
Human capital development (USD 7.7 million): These resources, managed by SENACYT’s Capacity Development Directorate, support scholarships for national and international studies, postgraduate studies, short-term research stays, and specialised STEM training, as well as talent return programmes to attract talent from the diaspora.
Critical and emerging technologies (USD 2.5 million): Resources for critical and emerging technologies include targeted investment in priority areas such as artificial intelligence, quantum computing, cybersecurity, and other high-impact emerging sectors.
National Research System (SNI) (USD 3.4 million): These resources fund salary supplements to researchers affiliated with accredited institutions to support Panama’s research capacity.
STEM education and science outreach (USD 2.4 million): Resources managed by SENACYT’s Learning Directorate to support initiatives to promote science, student fairs, teacher training, educational materials in science and technology, and similar activities.
Externally financed resources (USD 10.2 million): these are loans from IDB and CAF to implement international co-operation programmes focused on strengthening infrastructure, talent and innovation.
Other transversal actions (USD 1.1 million): Includes institutional and programmatic support activities that facilitate implementation and monitoring of SENACYT’s strategic priorities.
Source: Input provided by Panama for this report.
Since 2004, SENACYT has funded 857 R&D projects with a total of USD 73.85 million. SENACYT’s funding for R&D projects has increased gradually over time, albeit from a very low base. Between 2004 and 2009, SENACYT funded 189 R&D projects with USD 9.1 million (an average of USD 1.8 million per year). Between 2019 and 2024, SENACYT funding increased to USD 34.8 million for 292 R&D projects (an average of USD 7.0 million per year) (SENACYT, 2025[12]).
A very small amount of SENACYT funding has aimed to support semiconductor R&D specifically. Since 2017, SENACYT has invited proposals for semiconductor-related projects. For example, it has granted 14 awards in areas relating to the study of nanostructures of metal oxide ceramics with potential technological use, the development of versatile electronic cards for sensors, and devices for digital telecommunications. Since 2021, SENACYT has been funding six projects with a combined investment of USD 725 thousand.5 While this experience of funding semiconductor R&D suggests that SENACYT will be a valuable member of the CIMS, the amount of funding disbursed is relatively low. The 14 semiconductor-related R&D projects only received a combined USD 1.45 million from SENACYT; 91% of the funding awarded went to academic institutions, mainly UTP and the National University of Panama. The low levels of R&D funding awarded to industry is due, in large part, to the lack of demand for R&D support from Panama’s industry, given that its economy is primarily services-based and manufacturing makes up a relatively small share. Nonetheless, to incentivise greater private investment in R&D, SENACYT could look to direct a larger share of its R&D funding to joint academia-industry initiatives.
In addition to directly supporting R&D projects, SENACYT has pursued public-private partnerships to leverage private R&D investment. In particular, SENACYT has been highly active in creating and supporting a range of public interest associations (Asociaciones de Interés Público, AIP). AIPs are a class of public-private enterprises receiving government and private funding to carry out activities – such as R&D – on a not-for-profit basis in sectors which are of national interest but are deemed by Panama’s government to be insufficiently developed (see Box 3.5).
SENACYT helps manage ten AIPs involved in a wide range of research (SENACYT, 2025[16]). Four of these AIPs are analysed below, and their research focuses on ICT (INDICATIC), metrology (CENAMEP), digital connectivity (INFOPLAZAS) and biomedicine (INDICASAT).6 These AIPs aim to stimulate R&D by establishing dedicated research institutes and facilitating dialogue and co-ordination between the public sector, academia and industry. This can reconcile the R&D interests of the government with the interests of the market. In theory, AIPs’ dual funding model – from both public and private sources – is also an advantage, as it can partly insulate the AIPs from public funding constraints or changes in funding priorities. In practice, however, it is unclear what share of AIPs’ funding come from private entities. Figure 2.19 shows that almost 60% of R&D funding in Panama comes from the government; the domestic private sector’s contribution is virtually non-existent. Therefore, Panama should evaluate the impact and success of the AIP model to consider how best it could be applied to semiconductors and advanced manufacturing.
SENACYT, in collaboration with UTP, created the National Institute for Advanced Scientific Research in Information and Communication Technologies (INDICATIC) in 2019 as an AIP. The general objective of INDICATIC is to strengthen national capabilities in ICT and recruit researchers and technologists to perform R&D in the field of ICT. INDICATIC’s initial lines of research focus on artificial intelligence and management of large scientific databases. INDICATIC works in close contact with Panama’s local industry to provide services that address their most important needs (INDICATIC AIP, 2024[17]).
The National Metrology Centre of Panama (Centro Nacional de Metrología de Panamá, CENAMEP) is responsible for establishing and maintaining national standards of measurement and is a member of the CIMS (see Section 3.1.1). CENAMEP became an AIP in 2007 and offers advanced laboratory services for mechanical and electromagnetic calibration, as well as training and capacity-building services for quality control and metrology. CENAMEP can support the emergence of Panama’s semiconductor ecosystem by developing and adapting standards, reference materials and advanced analysis.
INFOPLAZAS is an AIP that operates more than 400 ICT centres around Panama, including in remote or poorly connected regions (INFOPLAZAS AIP, 2024[18]). The entity aims to improve digital connectivity and reduce the digital divide by providing community members with access to internet-connected technology and opportunities to participate in the digital economy. INFOPLAZAS also offers short training courses on ICT skills.
AIPs in Panama date back to 2006, when their regulatory framework was first set out by Executive Decree No. 440. This framework was modified in 2010 by Executive Decree No. 1099, before AIPs’ status was enshrined in 2018 by Law 39.
According to their legal framework, AIPs belong to a special classification of not-for-profit entities. To be recognised as an AIP, an entity must submit an application to Panama’s Ministry of Government containing a signed charter, approved organisational statutes, minutes from the approval of organisational statutes, a list of members on the Board of Directors from both the public and private sectors, and a five-year plan. Through this application, the applicant must prove that its activities are not-for-profit, in the national interest and target an area that is currently insufficiently addressed by other entities in Panama.
Recognised AIPs are authorised to use public and private financing, including from international organisations, to carry out their objectives, representing a partnership model between government and the private sector. They can also enjoy greater flexibility in managing their budgets and using their funds, when compared to public sector organisations. AIPs are also characterised by the following key features:
Incentives: Although there is no inherent tax incentive associated with AIP status, AIPs may request recognition as non-profit organisations of public interest, which can make them eligible for certain tax benefits, subject to MEF’s review and approval. Moreover, all AIPs linked to the national science and innovation system receive direct public subsidies to support their operations and activities. These subsidies are specifically aimed at advancing national priorities in sectors such as health, education, environment, technology, and scientific research.
Autonomy: AIPs operate under a private legal regime and enjoy significant autonomy in their operations. They are governed by a Board of Directors composed of both public and private sector members. While the institution that provides public funding (e.g. SENACYT) often holds the presidency of the board, it does not directly control the day-to-day management of the AIP. Strategic decisions are made collectively by the board, and operational decisions are carried out independently by each AIP’s executive team, based on the mandates approved by the board.
Foreign talent: AIPs also benefit from additional flexibility in hiring international talent compared to public institutions. Since AIPs operate under private law, they are not bound by the same civil service hiring restrictions. Given that AIPs can hire following the general labour and immigration laws applicable to private organisations in Panama, they can respond more quickly to talent needs, especially in highly specialised fields such as science, technology and engineering, where domestic supply may be limited and international recruitment is essential.
While individual AIPs are assessed on their impact, it would be important to carry out a comprehensive evaluation of the AIP model and its effectiveness and efficiency.
Sources: Government of Panama (2006[19]), “Decreto Ejecutivo No. 440”, https://docs.panama.justia.com/federales/decretos-ejecutivos/440-de-2006-sep-21-2006.pdf; Government of Panama (2010[20]), “Decreto Ejecutivo No. 1099”, https://www.senacyt.gob.pa/wp-content/uploads/2017/03/Gaceta-Oficial-26698-c.pdf; Government of Panama (2018[21]), Ley 39 de 2018, Gaceta Oficial. Additional information provided by Panama in the policy questionnaire used for this report.
The Institute for Scientific Research and High Technology Services of Panama (Instituto de Investigaciones Científicas y Servicios de Alta Tecnología, INDICASAT) is an AIP with the dual purpose of providing biomedical research and R&D services to industry (INDICASAT, 2024[22]). SENACYT founded INDICASAT in 2002 as a research centre to increase Panama’s STI capacity. In 2007, INDICASAT became an AIP under the new legal model, retaining its research capacity in the natural sciences and its existing academic partnerships, while extending its capabilities to provide clinical trials and technological services to industrial partners. The AIP structure has allowed INDICASAT to provide STI infrastructure and training, while building capacity and demand for commercial R&D in Panama.
Although none of these four AIPs directly support semiconductor R&D, they can contribute to developing the enabling environment required to attract semiconductor investment and establish a domestic semiconductor industry. Moreover, Panama has also confirmed that its new Center for Advanced Semiconductor Technologies (Centro de Tecnologías Avanzadas en Semiconductores, C-TASC) will follow the AIP model (see next section for a more detailed discussion of the C-TASC).
Planned policies and programmes
While not every goal set out in the previous 2019-2024 PENCYT was achieved, Panama continues to make steady progress towards establishing a network of entities capable of producing and incentivising R&D and technological innovation. Moreover, the new 2025-2029 PENCYT will introduce a Program for the Development of Microelectronics and Semiconductors (PROMISE), which has two workstreams on semiconductor R&D and the development of semiconductor skills. The PENCYT outlines plans to invest USD 36.5 million over five years to establish C-TASC (SENACYT, 2025[12]).7 Given their shared interest in semiconductors, it is critical that the new PENCYT and the National Semiconductor Strategy are well aligned (see Section 3.1.2 above), to avoid duplication, ensure synergies and the efficient use of public resources.
At the core of Panama’s planned programmes for semiconductor R&D is the new C-TASC, an AIP established by UTP and SENACYT and benefitting from private sector engagement from the Panamanian Association of Business Executives (Asociación Panameña de Ejecutivos de Empresa, APEDE) and the Chamber of Commerce, Industry and Agriculture, which sit on C-TASC’s board of directors (UTP, 2024[23]). As outlined in Section 3.1.2, Decree No. 7 of 2024 sets out the objectives of C-TASC, including: advanced semiconductor and microelectronics research; collaborative R&D with academic institutions and firms; training programmes in the field of semiconductors and microelectronics; the provision of infrastructure and resources for semiconductor and microelectronics start-ups; the commercialisation of technologies developed at C-TASC; and strategic alliances with other research centres and firms, both domestic and international (MICI, 2024[24]).
C-TASC facilities will be located on part of the UTP campus. Its R&D and training programmes will focus on seven main areas: semiconductor supply chain and business intelligence; integrated circuit design; advanced data techniques; pilot plant and manufacturing; cybersecurity and IP; semiconductor materials; and engineering applications for semiconductors. C-TASC will co-invest in R&D and technological innovation to help create a market for the abovementioned areas and related services that Panama would develop. As an AIP, C-TASC can also benefit from funding from the private sector (see Box 3.5). C-TASC’s board of directors held its inaugural meeting in June 2024 (UTP, 2024[23]).
In addition to the C-TASC initiative, SENACYT has taken the lead in co-ordinating efforts within academia and between academia and the private sector to develop R&D and innovation capabilities as key components of a semiconductor ecosystem. Figure 3.2 summarises SENACYT’s role in co-ordinating Panama’s institutions with a possible stake in the development of a semiconductor industry.
To this end, SENACYT has established a working group composed of SENACYT, UTP and ITSE. Between 2023 and 2025, each member of the working group signed an MoU with Arizona State University (ASU), a leading United States institution in the fields of semiconductors and microelectronics (UTP, 2024[25]; ASU, 2024[26]; ITSE, 2025[27]). Although the MoUs foresee the possibility of joint research projects, the partnerships with ASU are expected to focus primarily on semiconductor training and workforce development and are discussed in greater detail in Section 3.3.2.
Recommendations
As explained above, Panama plans to leverage its AIP public-private partnership model to expand capacity for R&D and innovation and enhance public-private-academia collaboration. The creation of the C-TASC AIP at UTP to serve as an R&D centre with laboratory space and project funding for seven areas that are key to the semiconductor ecosystem is an important milestone towards strengthening semiconductor research and innovation. In establishing C-TASC, Panama may wish to draw on best practices for publicly funded innovation infrastructure. Programmes involving publicly funded shared facilities typically exhibit several key traits. For example, they respond to demand from local stakeholders; address a bottleneck that inhibited research or innovative activity; reduce or remove prohibitive fixed costs associated with developing and maintaining key equipment or services; feature a sustainable business model, such as a fee-for-service; and enable positive spillovers, as innovative applications developed by the technical community become available for local commercial adoption (OECD, 2020[28]; 2023[29]; 2024[30]).
Given the very low share of domestic private investment in R&D, Panama could also consider enhanced efforts toward leveraging private capital for semiconductor-related R&D and innovation through, for example, the introduction of an R&D tax credit or incentives for the private sector to hire researchers. However, the low share of STEM graduates from tertiary education in Panama contributes to a relatively limited pool of potential researchers, which could act as a further bottleneck to increasing private R&D. In the short term, to mitigate the effects of this bottleneck, Panama could consider facilitating the process of hiring international researchers (see also Section 3.3.5).
Leveraging private sector funding for semiconductor R&D is key, but Panama’s biggest challenge currently relates to building a semiconductor innovation ecosystem without a substantial domestic industry for semiconductors or high-tech manufacturing. While Panama should continue efforts towards developing local capabilities for R&D and innovation in semiconductor fields, these should occur in parallel to actions to stimulate entrepreneurship and contribute to the development of domestic firms that could support the semiconductor industry. This is analysed in the next section.
Overview of selected education, research and innovation stakeholders in Panama
Source: SENACYT (2024[31]), “Panama: Building a semiconductor ecosystem”, Presentation by SENACYT at the fourth meeting of the OECD semiconductor informal exchange, Secretaría Nacional de Ciencia, Tecnología e Innovación network, Mexico City, 12-13 February 2024.
3.2.2. Innovation and entrepreneurship
Panama would benefit from further developing its entrepreneurial ecosystem to facilitate the creation of new and innovative firms aimed at providing services and other inputs to semiconductor manufacturing firms. For example, the creation of local semiconductor design ventures or suppliers of specific material inputs and services would play a vital role in supporting the development of an ecosystem for semiconductors in Panama and the region.
Semiconductor manufacturing requires a significant number of different material inputs and services (see Annex A) and, given the vulnerabilities in certain semiconductor supply chains, the location from which these inputs and services are sourced is important. The existence of local suppliers in Panama could be particularly appealing for semiconductor firms that are considering investments in semiconductor manufacturing capacity. Therefore, supporting the development of a vibrant high-tech entrepreneurial ecosystem is critical: in the near term, the creation of local suppliers could enhance Panama’s ability to attract investment from semiconductor firms; in the longer term, these investments could generate positive spillovers.
Data can provide some context to Panama’s entrepreneurial environment. Over the past decade, Panama has demonstrated negative growth in the creation of new firms. However, during that same period, it has surpassed regional and OECD averages for new firm creation. The number of new registered limited liability firms created per year in Panama has dropped from over 30 000 in 2013 (12.25 new businesses per 1 000 working-age individuals) to only 13 000 (4.55 per 1 000 working-age individuals) in 2022 (World Bank, 2024[32]). In the high-tech sector specifically, the number of firms rose from 812 in 2018 to 912 in 2022, according to the National Statistics and Census Institute (INEC) business registry. The provinces of Panamá and Chiriquí recorded the highest net entry of high-tech firms, with 46 and 36 new firms respectively. In contrast, Herrera and Los Santos registered the lowest net firm entry, with decreases of four and three firms respectively.
While Panama is producing fewer new firms each year, the number of annual new firms per working-age population is still high relative to other countries in the region. In 2022, Panama registered 4.55 new businesses per 1 000 working-age individuals, above the Latin America and Caribbean average of 3.7 and higher than Mexico (0.88) and Uruguay (3.13), yet lower than Chile (10.82) and Costa Rica (5.80) (World Bank, 2024[32]). Panama also performs better than the Latin American average for ease of starting a business, assessed by procedural burden and total cost (World Bank, 2020[33]).
While it is relatively straightforward to create a firm in Panama, new enterprises face a challenging path to success. Having high firm entry and exit rates can help introduce dynamism, foster innovation and support productivity gains, as they often indicate low entry barriers and suggest efficient resource allocation. However, the firm exit rate in Panama is relatively low. Between 2015 and 2022, the closed business density averaged 3.2 closures per year per 1 000 working-age individuals, never falling below 1.7 closures (World Bank, 2024[32]). During that same period, the global average was 5.6 closures. Panama’s relatively low rate of firm exits could limit the reallocation of resources to more productive activities. Therefore, to strengthen business dynamism, policies should focus not only on facilitating firm entry but also on creating the conditions that enable surviving firms to expand and thrive (Calvino, Criscuolo and Menon, 2016[34]).
Existing policies and programmes
To support the creation and growth of new firms, both the private sector and Panamanian government have pursued programmes aimed at nurturing entrepreneurship.
Through the Authority for Micro, Small and Medium-Sized Enterprises (Autoridad de la Micro, Pequeña y Mediana Empresa, AMPYME), Panama’s government offers technical support, training and some capital for entrepreneurs, although the budget for these schemes is limited. AMPYME is responsible for the National Business Development System (Sistema Nacional de Fomento Empresarial, SNFE), a technical unit that firms can join via a free registration process. After registering, new firms can access funds, including a technical assistance and training fund, a seed capital fund and a microfinancing fund (AMPYME, 2024[35]). The seed fund offers entrepreneurs who successfully complete a competitive evaluation process up to USD 2 000 in grants for fixed assets, raw materials and inputs (AMPYME, 2024[36]). Although the relatively small value of this seed funding is not necessarily suitable to support high‑tech entrepreneurship, it can nonetheless make an important contribution to self-employment initiatives and micro or small enterprises.
To access capital from SNFE funds, entrepreneurs are required to participate in AMPYME training programmes (AMPYME, 2024[36]). These programmes include technical training to promote business creation, management and business growth, as well as specifically targeting young, female and student entrepreneurs (AMPYME, 2024[37]). AMPYME has also partnered with Visa to support micro, small and medium-sized businesses with their digital transformation and online payments (El Capital Financiero, 2022[38]).
In addition to AMPYME’s resources, SENACYT has annual calls for grants for new, innovative and scalable businesses. For example, in August 2025, SENACYT launched the Panama Innovates (Panamá Innova) scheme to invite grant applications from innovative ventures. For the first time, the call for grants explicitly mentioned semiconductors as one of the eligible sectors. SENACYT offers a maximum grant of USD 150 000 per project (SENACYT, 2025[39]). SENACYT also provides capacity-building programmes for entrepreneurs (SENACYT, 2024[40]). Through these mechanisms, it funds entrepreneurial activity in high-tech areas. Section 3.2.1 contains information on additional SENACYT funding programmes, with a focus on R&D.
The City of Knowledge (Ciudad del Saber) defines itself as an “innovative community” and brings together a cluster of research and education organisations, firms and non-governmental organisations (NGOs) in Panama City (Box 3.6). The City of Knowledge provides a range of services, including its Innovation Center for start-ups. The centre in its current form dates to 2014, although the City of Knowledge has provided start-up incubation support since 2000. It currently offers four programmes for entrepreneurs: the incubation programme for early-stage start-ups; the acceleration programme for more mature start-ups; a programme for female-led ventures; and a programme for social entrepreneurship, often with a focus on humanitarian or cultural causes (Ciudad del Saber, 2023[41]).
The City of Knowledge is a complex of more than 200 buildings across 141 hectares located on the site of the former Fort Clayton United States military base in Panama City, close to the Panama Canal. The City of Knowledge was established under Decree Law No. 6 of 1998 and today hosts 81 high-tech firms, 27 academic institutions offering 150 programmes, 18 United Nations agencies and programmes and 39 international organisations and NGOs. SENACYT is also headquartered in the City of Knowledge. The City of Knowledge is managed by the private, non-profit City of Knowledge Foundation (Fundación Ciudad del Saber).
The City of Knowledge provides its members with office space, laboratories, internet access, reliable power and other infrastructure and utilities. In addition, it offers a generous range of tax exemptions and a flexible immigration regime, analysed in greater detail in Sections 3.2.3 and 3.3.5 respectively.
Source: Ciudad de Saber (2023[41]), “25 años: Hacia la utopía posible”, https://issuu.com/ciudaddelsaber/docs/libro-25-cds-issuu.
The incubation programme provides four months of training to start-ups at the minimum viable product stage. The City of Knowledge Innovation Center offers the training in partnership with Bridge for Billions, an international programme that provides an online incubation platform for early-stage ventures. To date, more than 200 entrepreneurs and over 58 start-ups have completed the incubation programme (Ciudad del Saber, 2025[42]). The acceleration programme is a three-month programme for start-ups that have already developed a proof of concept and a clearly defined roadmap for growth. The acceleration programme makes available seed funding for selected start-ups. As of 2022, the City of Knowledge had invested USD 520 000 in 18 start-ups (Ciudad del Saber, 2023[41]). According to stakeholders interviewed for this report, some start-ups that have received seed capital from the City of Knowledge go on to receive matching funds from SENACYT.
AMPYME, SENACYT and the City of Knowledge Innovation Center all support entrepreneurship and nurture start-ups in Panama through slightly different mechanisms. In theory, these support mechanisms could also be adapted to support entrepreneurship in the ecosystem for semiconductors.
Panama has also worked to promote innovation and entrepreneurship through policies related to IP. The generation of IP and its protection through patents serves as a common proxy for measuring an economy’s level of innovation. Applications filed under the Patent Cooperation Treaty (PCT) – a proxy for high‑potential patents – spiked in Panama in 2016 and 2018 (see Section 2.1.4 in Chapter 2) and SENACYT credits this major upwards trend in PCT applications to an initiative at UTP financed by the Development Bank of Latin America and the Caribbean (CAF). CAF and SENACYT partnered to offer capacity-building workshops at UTP to generate technological patents using the CAF Method for the Accelerated Development of Technological Patents (Box 3.7), which then expanded to a programme offered to researchers and private sector professionals (CAF, 2016[43]; UTP, 2017[44]). Given the initial surge in PCT applications in 2016 and 2018 that can be attributed, at least in part, to this programme, Panama could consider pursuing similar capacity-building workshops again in the future.
CAF collaborated with SENACYT to generate an increase in the number of technological patents in Panama. Week-long capacity-building workshops were offered at UTP beginning in 2016 and were available to participants from the university and business communities.
The CAF-led training emphasised the identification of patentable ideas, the transformation of concepts into patentable formats and, finally, the filing of inventions through the PCT. SENACYT committed USD 800 000 to finance the patenting process for ideas that emerged from these workshops (CAF, 2016[45]).
Ultimately, the first two editions of the workshop in 2016 and 2017 generated 220 patentable concepts, enough to merit a third iteration in 2018 (CAF, 2018[46]).
Sources: Information provided by Panama in the policy questionnaire used for this report; CAF (2016[45]), “Panama aspires to become one of the countries with the largest number of technological patents in the world”, https://www.caf.com/en/currently/news/panama-aspires-to-become-one-of-the-countries-with-the-largest-number-of-technological-patents-in-the-world/; CAF (2018[46]), “CAF and SENACYT promote generation of innovative technology with a global approach”, https://www.caf.com/en/currently/news/caf-y-senacyt-promueven-la-generacion-de-tecnologia-innovadora-con-enfoque-mundial/ (accessed on 9 October 2025).
Planned policies and programmes
Developing an entrepreneurial ecosystem also requires fostering an entrepreneurial culture, strengthening technical support for start-ups, and efforts to promote technology transfer and the commercialisation of innovation. In Panama, researchers, universities and research centres struggle to take advantage of knowledge creation and transfer, including through IP, as illustrated by the patent data shown in Section 2.1.4 in Chapter 2.
To address these IP challenges, Panama is undertaking several initiatives. The General Directorate of Registration of Industrial Property (Dirección General del Registro de la Propiedad Industrial, DIGERPI), which is affiliated with the Ministry of Commerce and Industries (MICI), is developing a draft law that seeks to harmonise IP policies and technology transfer regulations across different institutions. If approved, this draft law is expected to strengthen Panama’s IP and technology transfer capacities with the aim of fostering technological entrepreneurship.
In addition, in 2023, Panama received approval from the Inter-American Development Bank (IDB) for a USD 25 million investment loan, with Panama providing additional financing of USD 12.5 million, to foster research and innovation for productivity (IDB, 2023[47]). More specifically, “Component 2: Business innovation and entrepreneurship” of this IDB loan aimed to fund the creation or expansion of at least three technology transfer offices to support researchers at research centres and higher education institutions to take full advantage of the IP generated (IDB, 2023[48]). Furthermore, the loan will support the training of at least 15 technology and entrepreneurship managers.
The IDB loan will also finance three incubators to support start-ups in the fields of ICT and biotechnology. Two of these incubators will be based in the City of Knowledge and on UTP’s central campus.8 These investments are expected to improve further Panama’s IP management, facilitate the commercialisation of research and technology and link Panama’s knowledge-generating institutions with the productive sector.
The IDB loan will build on an ongoing project to develop Panama’s start-up incubation and acceleration ecosystem. Since 2021, SENACYT has been working with the City of Knowledge to support the expansion of high-impact incubation. The two organisations signed a co-operation agreement to collaborate on their Programme for Strengthening Incubators’ Methodology and Training. As part of this programme, the City of Knowledge Foundation and the University of Texas at Austin selected five high-potential Panamanian start-ups to visit and learn from Austin’s innovation ecosystem. As a result of a trip to Austin, two of the start-ups, Fitwave (sports technology) and PROM Counselors (education technology), received recognition from start-up accelerator Sputnik ATX. PROM ranked in the top 60 out of 1 200 applications and Fitwave was 1 of only 5 start-ups selected to receive investment of USD 100 000 and join the Sputnik ATX acceleration programme (SENACYT, 2023[49]).
The next phase of this incubation programme would be funded by the IDB loan. Resources from the loan and part of SENACYT’s budget would finance further projects selected for incubation and acceleration. The growth of a vibrant incubation and acceleration ecosystem could also benefit entrepreneurs or researchers who might wish to start a semiconductor-related start-up, for example in the fields of semiconductor design or semiconductor materials and services.
Recommendations
Panama faces important challenges as it seeks to develop an entrepreneurial ecosystem adjacent to the semiconductor value chain. Currently, the opportunities for start-ups in Panama exist primarily in the areas of tourism or logistics (SENACYT/AU Austin, 2022[50]). Panama’s lack of a sizeable manufacturing sector and the dominance of the services sector (see Section 2.1.2) may constrain the development of innovative and high-tech manufacturing start-ups.
In addition to the lack of an established manufacturing sector or domestic semiconductor industry, new enterprises that could contribute to the semiconductor value chain may struggle to secure the necessary funding to scale up. Both government and private sector programmes exist to connect entrepreneurs with resources, provide training and invest (limited) seed capital. However, Panama would benefit from a more co-ordinated investor network to help scale up small and medium-sized enterprises (SMEs).
Furthermore, some of the government grant programmes for entrepreneurs change annually, based on evolving priorities and funding availability. As a result of this policy uncertainty and the shifting government programmes, only a limited number of Panama’s new enterprises are able to access early-stage funding and the support necessary to scale up, even though many new enterprises are created in Panama each year (SENACYT/AU Austin, 2022[50]).
Panama could use several tools to facilitate access to finance for its start-ups and SMEs, including those in the semiconductor industry and adjacent industries. For example, Panama could consider establishing a dedicated early-stage financing vehicle to support the development of local innovative firms, including those providing material inputs and services to semiconductor businesses, as well as start-ups in semiconductor design.9 The financing instrument could take the form of a public-private seed co‑investment fund with the appropriate design to leverage private capital (Wilson and Silva, 2013[51]). The specific design of such an instrument would benefit from a detailed analysis of the entrepreneurial and seed capital ecosystems in Panama to identify amongst other aspects:
whether public-private investment should be made pari-passu (i.e. on the same terms) or whether there should be asymmetric funding between the public and private sector to upside leverage or downside protection to the private investors.
whether the fund should have stringent constraints on sectoral investments or allow fund managers to optimise allocation within predetermined boundaries.
whether any tax incentives to encourage the private sector to invest would be warranted, including tax incentives for investments in start-ups and incentives on capital gains tax provisions, rollover and carry-forward of gains or losses: for example, Panama already offers reduced capital gains tax rates to firms operating in certain special tax regimes (see Section 3.2.3) so the proposed early‑stage financing vehicle must ensure that it leverages existing tax incentives to avoid duplication.
considerations about the legal structure of the fund, including whether it would be a limited liability partnership and whether it would have tax flow-through (taxes levied on the investors instead of the fund/partnership).
In addition to this early-stage financing vehicle, Panama could also consider a formal initiative to attract seed and early-stage capital from the private sector. There seems to be a limited number of sources of seed funding for small and new ventures, despite the availability of both foreign and domestic capital (see Section 2.1.4). A programme to attract capital for semiconductor ecosystem start-ups and SMEs could build on the establishment and activity of the National Fund for Semiconductors, in co-ordination with PROPANAMA, the investment promotion agency.
Promoting the development of formal networks of entrepreneurs, business angels and early-stage investors focused on semiconductors and other high-tech sectors could complement the abovementioned financing instrument for semiconductor ecosystem start-ups. The development of such an investor network would benefit from the forthcoming database, managed by UTP, that actively tracks Panamanians studying semiconductor-related fields both within the country and abroad (see Section 3.3.4).
Another possible option available to Panama and its regional partners would be to establish a regional capital fund of funds, in collaboration with international financial institutions. The European Investment Fund is one example of a regional fund helping develop risk capital markets and support entrepreneurship and firm growth in the European Union. A regional fund in Central America would provide opportunities to foster collaboration and harness synergies between the strengths and capabilities of different countries in the region and help unlock capital for investment in promising regional semiconductor-related projects. A regional fund would also require a pre-determined exit strategy so that, in the long term, private investors take the lead in developing the region’s risk capital market.
To complement these financial mechanisms, Panama could also look to strengthen the technical support for start-ups and expand the capacity of existing start-up incubators and accelerators. Implementing SENACYT’s plans for additional business incubators and technology transfer offices, supported by a loan from the IDB, would be an important step in this direction. Panama could also consider leveraging funding from the National Fund for Semiconductors to support capacity building for start-ups within the semiconductor ecosystem.
Panama could also look to develop a dedicated platform with centralised information on government resources and programmes designed to support the commercialisation of innovation, business creation procedures and existing support for start-ups and SMEs. Panama should also encourage entrepreneurship more broadly, to promote an entrepreneurial culture through information programmes for students (including in secondary education), researchers and the broader population, expanding on existing initiatives by SENACYT.
This type of dedicated platform and information programmes could be integrated into the one-stop shop for semiconductors and microelectronics that MICI is responsible for establishing, in line with Executive Decree No. 7 of 2024 (MICI, 2024[24]).
3.2.3. Business support and business environment
Panama offers a comprehensive, albeit slightly overlapping, system of tax incentives to support firms operating in Panama and attract multinational firms. Many of Panama’s business support policies and programmes are the result of initiatives to develop specific sectors of Panama’s economy, including manufacturing and attract the headquarters of multinational corporations.
In addition to this direct fiscal support to businesses, Panama also provides indirect support through the streamlining and digitisation of government services to increase the ease of doing business. Both the direct fiscal support and the improvements to the country’s business environment could also benefit firms in the semiconductor value chain.
Existing policies and programmes
Executive Decree No. 7 of 2024 explicitly states that semiconductor and microelectronics firms should seek to access the tax incentives available under the Special Regime for Multinational Headquarters (SEM) and the Special Regime for Manufacturing Services for Multinational Companies (Normativa de las Empresas Multinacionales para la prestación de servicios Relacionados a la Manufactura, EMMA) (MICI, 2024[24]).
SEM is intended for multinationals looking to establish their regional headquarters or administrative offices in Panama. To be eligible for the regime, the multinational must have assets of at least USD 200 million or provide services to at least seven of its subsidiaries. It must also receive the SEM licence from MICI (MICI, 2024[52]). Since SEM was established by Law 41 of 2007,10 186 firms have obtained a licence to operate under the regime – including Ericsson, Huawei, LG, Philips, Samsung, Sony and other high-tech firms – representing USD 1.24 billion in investment (MICI, 2025[53]; 2024[54]). It is important to note that SEM does not require these firms to carry out their manufacturing activities in Panama. Instead, multinationals under the regime are permitted to provide services to their international subsidiaries or business group, such as the management of firm operations, logistics and storage services, accounting, the development of blueprints for designs or construction, technical, financial and administrative assistance, and some forms of R&D of products and services (MICI, 2024[55]).
The second regime, EMMA, has a greater focus on manufacturing, as it aims to attract investment from manufacturing firms looking to establish new manufacturing or distribution facilities in the region. Multinational corporations are eligible for EMMA on the condition that their total assets are at least USD 75 million or that they provide services to at least three affiliates or subsidiaries. Corporations must also receive their EMMA licence from MICI. The licence entitles firms to provide their affiliates in the same business group with services including, but not limited to: product manufacturing; assembly, packaging, maintenance and repair; analysis and testing; product development; research or innovation; logistics, storage and distribution (MICI, 2024[56]). This suggests that firms involved in semiconductor ATP – a part of the value chain that Panama is expected to target – would be eligible to operate under EMMA. The regime was established in 2020 by Law 159. As of 2024, only two firms had obtained their licences to operate under EMMA (MICI, 2024[57]). Several factors might contribute to the low demand from firms for the regime, including the dominance of services over manufacturing in the Panamanian economy, and the fact that EMMA is a newer regime that is less well established than other SEZs (see below), both in Panama and elsewhere in the region.
Table 3.2 summarises selected tax incentives under SEM and EMMA. Other tax incentives for some of Panama’s SEZs are analysed later in this section. It should also be noted that investments under both regimes are eligible for protection under Law 54 of 1998 on the Legal Stability of Investments, which “freezes” the legal and regulatory conditions at the time the investment is registered so that the investment is not affected by subsequent changes to, for example, tax or labour laws for a period of ten years (MICI, 1998[58]).
While the regimes can apply to firms operating in any geographic location within Panama, other tax incentives depend on a firm’s location. For example, Panama’s three leading SEZs – the City of Knowledge (see also Section 3.2.2), Colón Free Zone and Panamá Pacífico – require firms to be physically located within them.
Notes: By way of comparison, the standard tax rates for firms in Panama (i.e. those that do not benefit from special tax incentives) are as follows: corporate income tax: 25%; ITBMS: 7%; capital gains tax: up to 10%. In general, income derived from local Panamanian operations is subject to income tax; foreign sources of income are not taxable.This table includes only selected tax incentives. For the full list of tax incentives, please consult the relevant legislation. SEM and EMMA also offer labour incentives, which are analysed in Section 3.3.5.
Sources: OECD analysis of AmCham Panama (2024[59]), Doing Business in Panama, 2024-2025, https://panamcham.com/es/doing-business-panama-report-nueva-edicion; MICI (2024[60]), “EMMA-Beneficios”, Ministerio de Comercio e Industrias.
Colón Free Zone was established in 1948, and its legal framework is set out in Law 8 of 2016. More than 2 600 firms operate within Colón Free Zone, which is situated over more than 1 000 hectares on the Caribbean side of the Panama Canal. Recently, Law 412 of 2023 expanded the list of authorised activities for firms in Colón Free Zone to include the manufacture of high-technology products and components, services related to the establishment and development of centres for scientific research and innovation, and services related to supply chain management (Asamblea Nacional, 2023[61]). Firms with an operating permit for Colón Free Zone are exempt from a wide range of taxes including, but not limited to, corporate income tax, import and re-export taxes, sales tax and production tax, property transfer tax and property tax on land.
As outlined in the previous section, the City of Knowledge hosts more than 200 firms, research, education and academic institutions, intergovernmental and non-governmental organisations, with an emphasis on science and technology. To operate in the City of Knowledge, organisations must submit a detailed proposal to the City of Knowledge Foundation explaining their objectives, the nature of their activities and how these align with the goals of the City of Knowledge. Organisations registered with the City of Knowledge benefit from exemptions on import tax and ITBMS (equivalent to VAT) on machinery, goods and supplies necessary for project development. They are also exempt from taxes on the transfer of funds abroad, when carried out for the purposes of the project. Organisations active in high-technology projects also benefit from exemption on corporate income tax and other direct, indirect and national taxes, and taxes on capital, including patent or license taxes (AmCham Panama, 2024[59]). These incentives last for 25 years and can be renewed. Organisations operating within the City of Knowledge also benefit from strong connectivity provided by fibre optic technology and a reliable electricity supply (Business Panama Group, 2025[62]).
Panamá Pacífico SEZ has attracted over 300 firms, focused primarily on logistics and distribution, maritime and aviation, the film industry and high-tech manufacturing. Located close to Balboa Panamá Pacífico International Airport, the SEZ’s main tax incentives are set out in Law 41 of 2004, which exempts firms from ITBMS (VAT), import taxes or duties, export and re-export tax and stamp duty. Additionally, firms operating in the sectors listed in Article 60 of the law – which includes the manufacture of high-tech products or components – benefit from additional exemptions on corporate income tax and dividend and complementary taxes (Asamblea Legislativa, 2004[63]). Panamá Pacífico also offers reliable utilities infrastructure to its firms and high-speed connectivity (Panamá Pacífico, 2023[64]).
In addition to these three specific SEZs which tailor their incentives to support certain sectors, Panama also offers a more generic, one-size-fits-all regime of free trade zones (zonas francas, FTZ) to promote export-oriented manufacturing and services. These FTZs are exempt from corporate income tax on some goods and services sold internationally – including high-tech products – but corporate income tax is levied on income from goods and services sold domestically, within Panama. Firms in the free zones are also exempt from customs duty on inputs and products required for the firms’ operations and face a dividend tax rate of 5% (AmCham Panama, 2024[59]). As of May 2025, Panama had 16 active free zones and 5 under development (GA Tech Panama, 2025[65]). Table 3.3 compares the main tax incentives of the SEZs and the FTZs. Their labour incentives are analysed in Section 3.3.5 below.
As with SEM and EMMA, Article 16 of Executive Decree No. 7 of 2024 also encourages semiconductor firms to make use of Panama’s SEZ and FTZ incentives (MICI, 2024[24]). However, this is an indication of the potential complications arising from Panama’s overlapping incentives regimes: a firm can be eligible for both SEM and EMMA as well as the SEZ regimes. Despite the generosity of Panama’s special regimes, there is a risk of administrative complexities or confusion for prospective investors.
In addition to the special tax regimes analysed in Tables 3.2 and 3.3, Panama also offers tax incentives for certain types of firms. For example, in order to incentivise the creation of new domestic businesses and the formalisation of informal entrepreneurial activity, Executive Decree No. 145 of 2020 offers a two-year tax exemption for SMEs (as defined in Figure 2.4 in Section 2.1.2) that register with the AMPYME business registry (Government of Panama, 2020[66]). Furthermore, Law 189 of 2020 modified the Panamanian tax code, allowing businesses classified as SMEs and earning under USD 500 000 per year to qualify for a progressive corporate income tax rate ranging from 7.5% to 22.5% (Government of Panama, 2020[67]). For context, the standard corporate income tax rate in Panama is 25% on income earned from Panamanian operations.
Beyond direct business support through tax incentives, Panama also looks to support firms by improving and streamlining the country’s business environment. For example, Panama received a loan of USD 60 million from the IDB in 2022 and a USD 350 million commitment from CAF in 2021 for digital transformation of the public and private sectors, including the digitalisation of government services such as business and tax administration (IDB, 2022[68]; CAF, 2021[69]).
In addition to this funding, the 2019-2024 Strategic Plan for Government included a list of priorities for digital government, many of which centred around business support (Government of Panama, 2019[70]). Among these priorities were a full digitalisation of tax payments, a reduction of excess procedures in government processes and building a digital portal specifically for SMEs (Government of Panama, 2019[70]). The National Authority for Government Innovation (AIG) has co-ordinated many of Panama’s modernisation and digitalisation initiatives. As set out in Table 3.1 above, the AIG is also a member of the new Commission for Innovation in Microelectronics and Semiconductors (CIMS).
Notes: By way of comparison, the standard tax rates for firms in Panama (i.e. those that do not benefit from special tax incentives) are as follows: corporate income tax: 25%; ITBMS: 7%; capital gains tax: up to 10%. In general, income derived from local Panamanian operations is subject to income tax; foreign sources of income are not taxable. This table only compares incentives relating to three main taxes. Please note that firms in Panama are exempt of corporate tax on income earned from activities outside of Panama, whether derived from the sale of goods or the provision of services performed abroad.
The tax exemptions shown in the table (including in the Colón Free Zone, Panamá Pacífico, Free Trade Zones and the City of Knowledge) apply only to authorised activities expressly listed in the legislation governing each regime. Activities outside the authorised scope remain subject to the standard corporate income tax. Access to and maintenance of benefits may additionally require compliance with economic‑substance requirements (e.g. adequate personnel, assets and decision‑making functions). ITBMS and import‑duty exemptions apply only to goods and services required for authorised operations or for re‑export activities, depending on each regime’s framework.
For the full list of tax incentives, please consult the relevant legislation. Labour incentives are analysed in Section 3.3. The number of organisations operating in the City of Knowledge includes firms, government agencies, NGOs, intergovernmental agencies and universities.
Sources: OECD analysis of Panamanian legislation and AmCham Panama (2024[59]), Doing Business in Panama, 2024-2025, https://panamcham.com/es/doing-business-panama-report-nueva-edicion; GA Tech Panama (2025[65]), “Vistazo General”, Portal https://logistics.gatech.pa/plataforma-logistica/activos-logisticos/regimenes-especiales-de-inversion/regimenes-especiales/zonas-francas/vistazo-general/ (accessed on 10 October 2025).
As of 2023, AMPYME has digitalised its processes for SMEs. Registration for the business registry is now digital, and additional information and applications for financial support programmes can be accessed via the Panamá Digital portal (AMPYME, 2024[71]).
The General Directorate of Revenue (Dirección General de Ingresos, DGI), part of the Ministry of Economy and Finance, has also digitalised much of Panama’s tax collection and payment through the ETAX 2.0 system, which firms and individuals can use to register and pay taxes online (DGI, 2024[72]). This is complemented by an active social media outreach campaign to inform taxpayers of digital procedures for tax payment.
The Georgia Tech Panama Logistics Innovation and Research Center (GTP) is another important entity working to improve Panama’s logistics and trade systems and broader business environment. Overseen by SENACYT, the GTP is a non-profit private interest foundation dedicated to developing Panama’s logistics and trade capabilities, which could become key for semiconductor supply chain resilience. The GTP provides models of Panama’s existing logistics network, develops tools to support logistics decisions and trade analytics and creates data repositories.
Despite Panama’s sophisticated digital customs system, consultations with stakeholders carried out for this report indicated that the existence of separate customs regimes for each of the different SEZs may make tracking shipments across regimes challenging. One stakeholder suggested that different digital customs systems and dashboards would pose a challenge for the semiconductor industry, as it would be challenging to track individual components across separate customs workflows.
Additionally, gaps remain in the approvals and permitting process for certain materials that may be important to the semiconductor industry. These gaps are partly a result of the fact that permitting processes still run through individual ministries, rather than through a centralised customs authority, and are not yet fully digitalised. One example is that the registration for imports of hazardous chemicals is processed through the Ministry of Health and not through the National Customs Authority (ANA). If Panama does decide to make ANA responsible for the centralisation of this permitting process, it would need to ensure that either ANA’s personnel is suitably equipped with the right expertise to assess hazardous chemicals and other types of imports, or that ANA is capable of close co-ordination with the Ministry of Health and other relevant government agencies.
Finally, also in relation to customs, Panama is developing a revised legal framework to provide increased confidence and certainty to firms handling dual-use materials. Some semiconductors and their inputs can be classified as dual use, since they can have both civilian and military applications. Panama is aiming to harmonise its regulations with international frameworks and best practices – working with the United States Department of State Export Control and Related Border Security (EXBS) programme – to promote both operational agility for firms and guarantees for national security.
Recommendations
Panama has digitalised many – but not all – of the critical business support procedures, including tax collection and SME resources, and the previous 2019-2024 Strategic Plan for Government indicated that completing the digitalisation process and reducing procedural burdens were high priorities (Government of Panama, 2019[70]). However, semiconductor firms may find gaps in certain registration or administrative processes with the Government of Panama.
Ongoing efforts towards the modernisation and digitalisation of government services could provide an opportunity to combine and digitalise all platforms used for international trade, including customs, those used by SEZs and FTZs, as well as all other entities that might need to be consulted for imports and exports (e.g. registration with the Ministry of Health for imports of hazardous chemicals). It would also be important to enhance efforts to digitalise all business creation and licensing processes, including the application and approval for special business incentives.
Currently, there are several regulations and special regimes that confer specific benefits for firms and investors meeting certain requirements. However, some of these regimes are challenging to identify, unclear and may overlap. For example, tax and labour incentives can be based on participation in an SEZ programme, EMMA or SEM, or both. Furthermore, customised incentives or SEZs could be considered for potential investors under different conditions, as described above.
Panama should consider simplifying the framework of incentives and work towards harmonisation and clearer communication to highlight the attractive business environment for semiconductor firms. A one‑stop shop with information comparing the benefits and requirements of each regime would be helpful. Executive Decree No. 7, which has tasked MICI with creating a one-stop shop to provide information on procedures and requirements, technical support and inter-agency co-ordination for semiconductor sector investors, is a crucial step in this direction (see Section 3.1.2 for further details).
Human capital development has been a longstanding priority of Panama’s broader strategic push towards the manufacturing and high-tech sectors. Panama has a small manufacturing base, representing only 17% of total employment in the industrial sector in 2022 (ILO, 2024[73]). Panama’s education and skills systems and labour market face steep challenges to meet the human capital needs of the semiconductor industry. The country does not currently have a domestic semiconductor industry, so there is no existing job market for specialists pursuing advanced training in semiconductor-specific fields. With limited demand for semiconductor skills, or advanced industrial degrees in general, Panama faces the challenge of developing human capital in a sector with little to no current workforce demand.
As a result, Panama faces a “chicken-and-egg” problem: on the one hand, it is necessary to develop the semiconductor industry to create semiconductor-related jobs and demand for relevant talent; on the other, a pre-existing supply of semiconductor talent is a key consideration in the semiconductor industry’s investment decisions, particularly given the tight global labour market. Without a large pool of semiconductor talent, it could be a significant challenge for Panama to attract a major multinational semiconductor facility or develop a domestic semiconductor services industry capable of participating in the global value chain.
Talent can take considerable time to develop, so Panama could prioritise developing semiconductor‑specific skills in anticipation of a domestic semiconductor industry. There are nevertheless important risks associated with developing semiconductor-specific talent without an existing semiconductor industry, including the opportunity costs associated with the focus on semiconductor skills, the potential for labour market imbalances and for brain drain. To mitigate the opportunity costs of focusing on the skills needs of the semiconductor industry, it would also be important to develop transferable skills that can be used in other industries, such as those outlined in Section 2.3.2.
To mitigate the risks of brain drain to other economies with more established semiconductor ecosystems, it would be important to combine higher education efforts with investment in semiconductor research, innovation and entrepreneurship (see Section 3.2.2) to stimulate the emergence of domestic semiconductor or semiconductor-related firms, thus providing opportunities for highly qualified individuals to remain in (or come back to) Panama. If implemented successfully, these types of actions could also start to overcome the chicken-and-egg problem outlined above.
Panama currently faces several systemic obstacles to human capital development, particularly for the highly and moderately skilled technical workforce necessary to support semiconductor ATP facilities. These obstacles include insufficient STEM and English language skills, a lack of university courses and vocational or technical certification programmes that train individuals to participate in the semiconductor industry, and a high degree of informality in the Panamanian labour market.
To build human capital, Panama must enhance its education pipeline, establish short-term certifications to help align the labour market towards semiconductor industry needs, develop specialised training programmes in partnership with the semiconductor industry and foreign institutions specialised in semiconductors, and simplify the process for multinational firms to hire talent from abroad. Panama could also focus beyond skills development with policies to enforce compliance with labour laws and encourage employment formalisation and workers’ transition to the formal economy.
3.3.1. Primary and secondary education
Panama faces two significant challenges in primary and secondary education: fostering a high level of educational attainment nationwide – particularly in STEM subjects and English, which are foundational for semiconductor skills – and supporting the transition to skilled formal employment.
Educational attainment in Panama is relatively low, as the country struggles with high drop-out rates and faces challenges with students completing secondary education. In 2023, the mean level of schooling in Panama was only 10.68 years, equivalent to completing lower secondary education (UNESCO, 2023[74]). Meanwhile, according to the August 2023 labour market survey from INEC (n.d.[75]), 18.3% of the workers had only attained primary education. Moreover, just 58% of Panamanians aged 25 to 64 had completed secondary education in 2021, far below the OECD average of 82% (World Bank, 2023[76]; OECD, 2023[77]).
To develop a more skilled workforce for semiconductors, Panama must enhance education in both STEM and English, starting from childhood. This requires both an increase in education investment and curriculum reform. Panama appears to be taking some positive steps in this direction. In 2023, Law 362 stipulated that, starting in 2024, Panama’s annual investment in education should be at least 7% of GDP. According to this law, 5.5% of GDP would be allocated to the Ministry of Education (MEDUCA), public universities, the Panamanian Institute of Special Qualification (Instituto Panameño de Habilitación Especial, IPHE, for children with disabilities) and SENACYT (Government of Panama, 2023[78]). The remaining 1.5% of GDP would go towards other programmes in the education sector.
In terms of curriculum reform, MEDUCA oversees Panama’s curricula for primary and secondary public education and has been pursuing reforms to better align the curricula with the needs of Panama’s evolving economy. Law 378 of 2023 established the framework for the implementation of Panama’s Policy on Education for Sustainable Development, which sought to realign Panama’s primary and secondary education with the skills and competencies necessary for Panama’s future (Government of Panama, 2023[79]). Law 378 placed particular emphasis on curriculum reform, external partnerships and the training of teachers to better deliver STEM education and digital transformation (Government of Panama, 2023[79]). In addition, Law 380 of 2023 highlighted the key role of teachers in improving education quality and created the Institute for the Improvement and Wellbeing of the Educator (IPEBI), which is an AIP dedicated to the training and working conditions of teachers (Government of Panama, 2023[80]). The successful implementation of these reforms has the potential to better prepare teachers in primary and secondary education and ultimately support students to pursue technical and STEM education at the tertiary level.
While MEDUCA’s mandate covers Panama’s education system as a whole, SENACYT focuses on education and research related to science, technology and innovation (STI), including for primary and secondary schools. As indicated by the OECD Programme for International Student Assessment (PISA) test results in Figure 2.42, the performance of 15-year-old Panamanian students in mathematics and science is lower than their counterparts in Chile, Costa Rica, Mexico or Uruguay and well below the OECD average. Low achievement in mathematics and science in secondary education prevents from pursuing STEM in higher education. SENACYT manages several ongoing initiatives to address this challenge.
SENACYT’s Department of Innovation in Science and Technology Learning pursues programmes and grants to increase interest and achievement in STEM. The We Build Mathematics programme, for instance, has trained teachers from different regions of Panama in the instruction of different fields of mathematics education, both in-person and virtually. By 2020, the programme had supported the training of more than 2 500 teachers in both primary and secondary education (SENACYT, 2019[81]).
The same SENACYT department has also promoted the ongoing training of teachers in science and technology, and led to the creation of science clubs in primary and secondary schools to offer students an extracurricular space to study science through hands-on activities (SENACYT, 2024[82]). SENACYT has also promoted other extracurricular opportunities to develop technology-based learning in topics such as robotics and digital education. For example, the RoboCup Junior competition has allowed 1 621 students to improve their technical and teamwork skills over the past 5 years.
Furthermore, according to information provided by Panama for this report, SENACYT’s Let’s Do Science (Hagamos Ciencia) programme aims to improve science education for fourth- to sixth-grade pupils by training teachers and school leaders in science projects and best teaching practices, reaching 23 schools, 120 teachers and 3 400 pupils over a 2-year cycle. SENACYT also promotes STEM skills development amongst even younger learners, by introducing children in kindergarten to the basics of mathematics, reaching 2 500 pupils and 120 teachers.
English language skills are also critical for managing specialised semiconductor equipment and engaging with suppliers and customers in the global semiconductor value chain. However, there is still significant room for improvement in English language attainment, as Panama ranked just 71st out of 113 countries in the most recent EF English Proficiency Index assessment (see Section 2.3.1). Moreover, consultations with stakeholders stressed the importance of continuing to invest in language skills, notably by increasing the number of English teachers.
One means of achieving this was the Bilingual Panama (Panamá Bilingüe) programme. Established by Law 18 of 2017, Bilingual Panama aimed to develop teacher capacity in English language instruction and increase the number of hours of English courses taught at the primary and secondary education levels (Government of Panama, 2017[83]). Bilingual Panama provided teachers with both English-language training in Panama and then sent them overseas to English-speaking countries for English immersion programmes at universities, with the aim of improving the teachers’ levels of English and providing them with new teaching methods. According to one estimate, Bilingual Panama trained more than 9 500 teachers in English and received funding from CAF (CAF, 2019[84]).
Ensuring that students in primary and secondary education learn the fundamentals of the English language would also allow them to take advantage of the opportunities for English instruction offered at later stages of their education. For example, ITSE runs “English laboratories” for students and UTP grants them access to its Foreign Language Centre (see Sections 3.3.2 and 3.3.3 for further details).
Recommendations
In 2020, only 294 students graduated in electronics from upper secondary level, of which 90% were men. This indicates considerable potential to develop the pool of talent for semiconductors by incentivising students, notably women, to enrol in relevant fields such as electronics (see Section 2.3.1 for details). To avoid expanding electronics education and skills at the expense of other fields important for Panama’s development, Panama should focus on enhancing STEM education more broadly through, for example: teaching STEM skills from a very young age; engaging girls in STEM; promoting the use of technology-based teaching methods (including digital tools); promoting hands-on learning; introducing STEM role models; and providing students with real-world STEM applications. Panama should consider expanding the STEM programmes managed by SENACYT – subject to a successful evaluation of their impact – such as the Let’s Do Science programme aimed at training teachers and school leaders in scientific research projects and best teaching practices.
Panama should invest in a dedicated English programme for teachers, including in partnership with foreign institutions. The country should consider setting national objectives for the number of STEM graduates by education level, their proficiency in English language and the competencies of teachers. It would be important to monitor and evaluate progress towards these goals, producing information and statistics on progress and outcomes that is published on a regular basis and with sufficient detail. Such data could help inform the assessment of progress towards STEM and English goals, and support the adjustment and improvement of curricula or create specific courses, as needed.
3.3.2. Tertiary education and relevant university programmes
At every stage of the semiconductor value chain, particularly design and fabrication, firms require workers with specific technical skills, typically acquired from advanced engineering university degrees. For ATP facilities, the demand for human capital can partially be met by specialised short-term training programmes, but there is still a need for highly skilled workers with advanced degrees to fill some roles. According to the August 2023 labour survey from INEC, only 29.4% of Panamanian workers completed university education, with just 17.5% of workers in the manufacturing sector reaching this level (INEC, 2023[85]). In terms of relevant semiconductor courses, in 2023, 1 671 students were enrolled in electrical engineering courses, of which only 18% were women. Given Panama’s lack of a domestic semiconductor ecosystem, the number of existing programmes to train a highly skilled semiconductor workforce is limited.
Panama’s higher education system gives universities full autonomy over curriculum development and course offerings (RecoLATIN, 2019[86]). In Panama, there are both public universities, which are created by laws that grant them autonomy over academic activities, and private universities, which are created by “decree laws” as non-profit organisations to manage their own operations (RecoLATIN, 2019[86]). In response to challenges relating to the quality of higher education, Law 30 of 2006 created Panama’s National Council for University Evaluation and Accreditation CONEAUPA, presided over by the Minister of Education (Government of Panama, 2006[87]). This law was later replaced by Law 52 of 2015, which updated the responsibilities of CONEAUPA, as well as the processes for universities to achieve and retain higher education accreditation (Government of Panama, 2015[88]). CONEAUPA’s responsibilities are nevertheless restricted to evaluation and accreditation, and do not include curriculum development and course offerings.
Currently, the structure of CONEAUPA, the process for curriculum review and the emphasis on university autonomy do not give the Ministry of Education the ability to guide national programmes at the higher education level (RecoLATIN, 2019[86]). Although Law 52 of 2015 requires universities to update their courses every six years to reflect the latest scientific and technical developments, this may not be sufficient for universities to keep pace with the rapidly evolving field of semiconductors (Government of Panama, 2015[88]). Therefore, efforts to develop a workforce capable of supporting the semiconductor industry would need to be pursued through government-academia partnerships or institution-to-institution co‑operation.
Currently, there are two main universities that are well positioned to provide training in areas of relevance to the semiconductor industry. UTP is a public university responsible for scientific-technological higher education. As of 2023, it had almost 27 000 students enrolled, with approximately 12 000 pursuing degrees related to the high-tech industry, such as electronic engineering, physical sciences and computer systems. Box 3.8 summarises UTP’s process for updating its curricula. The University of Panama is the largest university in Panama with about 70 000 students in 2023. It offers courses and research in several different areas and includes a Faculty of Computing, Electronics and Communication. As explained in Section 3.1.1, both universities are represented on the new CIMS and contribute to the design and delivery of the forthcoming National Semiconductor Strategy.
Given that the semiconductor industry does not currently operate in Panama, educational partnerships with international universities are critical for Panama and its university sector to gain the experience and skills required to develop a semiconductor workforce. The government of Panama signed an MoU with ASU to promote co-operation in advanced technologies. The MoU identified six broad areas of co‑operation, including but not limited to: developing technical and professional education programmes with Panamanian institutions; the joint development of programmes related to semiconductor and emerging technologies; the exploration of funding sources for developing the Panamanian workforce in these key sectors; and a feasibility study on establishing a Global Centre for Workforce Development in Advanced Technology in Panama (EOP, 2023[89]).
UTP conducts comprehensive reviews of its degree programmes and majors every five years. The reviews serve the dual purpose of accreditation for individual degrees and accreditation for the entire university.
During these reviews, UTP creates a database that captures the needs expressed by firms operating in the local ecosystem. The data are then compared with the range of academic programmes offered by UTP to identify any gaps or mismatches between the skills demanded by industry and the skills provided through UTP’s educational offerings.
To address immediate skill gaps, UTP also provides flexible learning opportunities, including:
Short courses and diplomas: UTP offers courses ranging from a few weeks to two years. These short-term programmes meet areas of interest and needs of the industry.
Certifications and postgraduate degrees: Specialised programmes taught by subject matter experts, who may or may not be affiliated with UTP.
UTP’s MoU with Panama’s Chamber of Commerce of Multinational Companies also allows the university to understand these firms’ skills needs and challenges, which further informs its curricula updates.
UTP’s system for updating its curricula and filling immediate skills gaps could also allow the university to support the development of a domestic semiconductor workforce.
Source: Information provided by Panama in the policy questionnaire used for this report.
The MoU also encouraged ASU to identify opportunities to partner with specific government and academic institutions in Panama through additional agreements. Consequently, ASU signed a further MoU with UTP in 2024 to promote academic co-operation, the development of semiconductor training and research programmes, student mobility and exchanges of professors and faculty members (UTP, 2024[25]). As part of the ASU-UTP partnership, some of ASU’s microelectronics programmes are now available to UTP for implementation, initially with ASU support but with the intention that these programmes can be delivered in the future by newly trained Panamanian talent. For example, ASU is offering semiconductor bootcamps and online micro-credential courses to some UTP students. Furthermore, ASU and UTP are working on the design and implementation of an English language programme specifically relating to the field of semiconductors. These efforts would build on UTP’s existing Foreign Language Centre, which teaches English, French, German, Japanese, Korean, Mandarin and Portuguese.
A key part of the ASU-UTP partnership is the development of the Center for Advanced Semiconductor Technologies (C-TASC) on the UTP campus. C-TASC is Panama’s flagship semiconductor R&D initiative, but it is also expected to have a significant impact on the development of semiconductor skills. It is anticipated that C-TASC will contain seven laboratories for activities across the semiconductor value chain, with equipment and infrastructure to offer applied training programmes. These facilities include plans for a clean room facility and pilot plant, offering professionals and students in Panama the opportunity to develop semiconductor-specific skills even without a domestic semiconductor industry (SENACYT, 2024[31]).
ASU also signed an agreement with SENACYT and Panama’s Institute for Training and Use of Human Resources in 2024. The agreement makes Panamanian students – particularly those at UTP and ITSE – eligible to apply to ASU’s bachelor’s, master’s and doctoral degrees and graduate and professional certificates in semiconductor-related disciplines. Their studies will be supported by a scholarship programme administered by UTP and SENACYT. The partnership aims to train 500 engineers and technicians over 5 years. In May 2025, SENACYT awarded 20 scholarships to Panamanian students to study master’s or doctoral degrees in semiconductor-related fields at ASU (SENACYT, 2025[90]; ASU, 2024[26]). See also Box 3.9 for information on a range of SENACYT’s scholarships.
Beyond the country’s partnership with ASU, Panama also has agreements with the Chip Integration Technology Center in the Netherlands and Japan’s Kyoto University (SENACYT, 2024[31]). UTP and Chiba University in Japan have trialled an academic exchange programme: in 2024, UTP professors provided online courses to Chiba University students which covered subject such as the Panama Canal and logistics; in return, three UTP students and one professor visited Chiba to learn about semiconductors, artificial intelligence and data science (UTP, 2024[91]). UTP is exploring institutional partnerships with three Costa Rican universities – Costa Rica Institute of Technology, the University of Costa Rica and Fidélitas University – to offer UTP students training from Costa Rican professors. SENACYT also supports programmes for stays and academic mobility, with 168 students and teachers in research stay activities in 2022. More recently in June 2024, the Ministry of Foreign Affairs signed an MoU with Purdue University in the United States, which covered semiconductor workforce development (MIRE, 2024[92]). These partnerships are central to Panama’s strategy to increase the number of highly skilled graduates with semiconductor-specific skills.
SENACYT has an annual budget of USD 29 million to support undergraduate and postgraduate scholarship programmes at national and international universities. In the past 20 years, SENACYT has provided 700 postgraduate scholarships (including at least 250 at PhD level) in fields related to STI. SENACYT’s funding supports students to carry out studies in high-tech fields and seeks to identify and promote Panamanian talent in highly specialised fields, including semiconductors. The scholarship funds are complemented with additional resources to support research, including grants, equipment and infrastructure.
According to Law 475 of 2025, recipients of scholarships to study at international universities must return to Panama within 90 days of completing their studies. These students are then required to reside in Panama for the same length of time that they had been studying overseas with the SENACYT scholarship. If they do not return to and reside in Panama, they may be obliged to pay back, in full or in part, the value of their scholarship. This incentivises Panamanian students with SENACYT scholarships to return to Panama, bringing with them their skills and experience.
Once they have returned to Panama, the Programme for the Incorporation of Scholars (Programa de Inserción de Becarios) is designed to support students with SENACYT scholarships to integrate the Panamanian labour market. This programme helps SENACYT alumni enter the industry, as SENACYT funds 100% of their salary for the first year and 75% of their salary for the second. In 2022, 34 alumni were recruited to the programme. It might be important to consider whether the salary subsidy could lead to a moral hazard (for example, incentivising firms to hire SENACYT alumni even if they do not strictly need to carry out this recruitment and/or the alumni may not be the appropriate fit for the role). Nonetheless, this programme helps retain this talent in Panama by providing former students with employment opportunities in the high-tech industry, supporting knowledge transfer and providing the industry with highly specialised and up-to-date knowledge.
SENACYT also awards semiconductor-specific scholarships. As explained above, in May 2025, it awarded 20 scholarships to study advanced degrees in semiconductor-related fields at ASU.
SENACYT also supports teacher training with scholarships for training abroad. For example, four professors from UTP were recently trained in semiconductor ATP at the Chip Integration Technology Center in the Netherlands.
Source: Information provided by Panama in the policy questionnaire used for this report and Asamblea Nacional (2025[93]), Ley No. 475, https://www.gacetaoficial.gob.pa/pdfTemp/30308_A/GacetaNo_30308a_20250625.pdf (accessed on 16 September 2025).
The ability to hire and recruit foreign professors can be a further factor limiting the development of Panama’s high-tech workforce. This is the result of challenges relating to work permits, quotas on foreign workers which can require the approval of the Ministry of Labour and Workforce Development, accreditation and qualification requirements in Panama, universities’ language requirements and other administrative procedures. However, the City of Knowledge (analysed in Box 3.6) is one exception to this, as it provides a streamlined process for hiring international professors and teachers, thereby facilitating a more diverse and international academic environment. The AIP model (see Box 3.5) also provides solutions for the hiring of foreign professors. Section 3.3.5 below provides a more detailed discussion on Panama’s limits on foreign workers. Online courses provide an alternative option for tapping into foreign knowledge of semiconductor skills.
Recommendations
It can be particularly challenging to tailor the university and tertiary education curricula to the needs of the semiconductor industry in the absence of such an industry. Panama should continue to include more higher education institutions – both domestic and international – in its partnerships for developing the semiconductor workforce, building on the strategy developed by SENACYT. The new C-TASC, with equipment and infrastructure to offer advanced training programmes, is a particularly important step to start developing semiconductor-specific skills in anticipation of a domestic semiconductor industry.
Tapping into the semiconductor knowledge available abroad through enhanced international collaboration is key to bringing in the necessary semiconductor-specific knowledge and helps tailor courses to the latest technological developments and industry needs. It is important to strengthen the engagement with ASU, Purdue University, Chiba University and Kyoto University, amongst others. Panama could also consider collaboration with higher education institutions with semiconductor-specific curricula in the region, such as the Costa Rica Institute of Technology or the National Technological Institute of Mexico. This collaboration could take the form of dual degrees for students to spend part of their education in these institutions, thus expanding the pool of semiconductor talent in the region. The system of scholarships provided by SENACYT for students and teacher training abroad (see Box 3.9) could support such initiatives. Panama could also consider supporting internships or work placements in the semiconductor industry overseas so that students and professionals can gain practical, first-hand experience. Just as SENACYT requires its scholars studying at international institutions to return to Panama, it would be critical to ensure that Panamanian interns overseas also return or support the emerging Panamanian ecosystem for semiconductors in some other way.
Panama should establish targets for the numbers of teachers and instructors in key semiconductor fields. Panama should also consider attracting university professors from other countries, by streamlining immigration procedures, to meet capacity that cannot be developed organically by training Panamanian professors in semiconductor-adjacent industries. Given institutional barriers to hiring professors from other countries – except under some SEZs and regimes such as the City of Knowledge – Panama should also consider alternatives, such as online courses, which can provide semiconductor-specific training at scale while universities in Panama develop semiconductor educational programmes with the requisite capacity.
3.3.3. Vocational education and training
Vocational education and training (VET) and short-term certifications can help address skills mismatches or underemployment in the labour market, as well as train individuals in the specific skills necessary to support the semiconductor industry. Although the share of graduates from non-university vocational education declined from 19.2% in 2012 to 16.7% in 2021 (INEC, 2023[85]), Panama has the basic institutional infrastructure to support a robust vocational training and reskilling programme. Panama has two entities responsible for co-ordinating technical and vocational education and continuing workforce education: ITSE, which focuses on advanced and specialised technical education, and the National Institute of Vocational Training and Training for Human Development (INADEH), which focuses on a broader set of vocational training programmes and workforce development.
ITSE offers two- or two-and-a-half-year courses belonging to one of four schools, including the School of Digital Innovation and School of Industrial Technology (ITSE, 2024[94]). Within the digital innovation school, students can choose one of the following courses: Big data and data science; Cybersecurity; Software development; or Artificial intelligence. Within the industrial technology school, available courses include Industrial electricity and Industrial maintenance. Courses are intended for students who have completed secondary education but choose to pursue a technical track over a university degree (ITSE, 2024[94]). Some of ITSE’s two- to two-and-a-half-year courses could be adapted to help meet semiconductor industry labour demand. Courses are subject to an academic and technical evaluation every two years with the participation of industry and with the aim of adapting the curriculum to industry needs. In the absence of a domestic semiconductor industry, ITSE could initially seek the input and participation of the semiconductor industry elsewhere in the region, so that the curriculum reflects their needs. Panama could also benefit from its ongoing engagement with international fora working on semiconductors skills, such as the OECD Semiconductor Informal Exchange Network.
At the end of the 2024, ITSE had 3 094 students enrolled in its programmes; 63% were men and 37% were women. The School of Industrial Technology had 839 enrolled students (27% of the total) and the School of Digital Innovation had 523 students (17%), with 46% of students aged between 21 and 30 years old and 45% aged between 15 and 20 years old (ITSE, 2025[95]).
ITSE’s training strategy combines a theoretical phase with practical, hands-on experience. ITSE collaborates with various industries such as ICT, logistics or aviation to provide students with internships or apprenticeship opportunities, which typically take the form of final projects or work experience with industry towards the end of their ITSE course. Currently, it appears as if ITSE only offers professional experience to its students towards the end of the course. Subject to the requirements of the local industry, there could be scope for ITSE to go further and offer dual education programmes, which combine academic studies in a classroom with professional experience in a firm throughout the duration of the programme. Although Panama does not currently have a semiconductor industry, ITSE could encourage the first cohorts of students to initially seek placements with firms in sectors with similar skills demand to semiconductors (see Section 2.3.2 and Figure 2.50).
ITSE, which is a member of CIMS (Section 3.1.1) and also part of SENACYT’s semiconductors working group with UTP (Section 3.2.1), can support VET programmes for semiconductors and is expected to play an important role in the development of a technical programme for semiconductor ATP in Panama. As part of Panama’s plans for semiconductor skills development, SENACYT launched an specialised short-cycle training in advanced electronic design, including a PCB design course delivered at UTP, covering industry standards (IPC), advanced PCB design for high-complexity environments, and signal integrity and electromagnetic interference (EMI) management, to strengthen technical capabilities and support integration into global value chains (SENACYT, 2026[96]). A “train the trainers” programme for ITSE instructors is currently being planned, focusing on a one-to-two-year technical training programme to be established in anticipation of the establishment of semiconductor manufacturing in Panama.
As part of its vocational training courses, ITSE requires the mastery of English language. Students must complete a minimum of five English courses to reach the equivalent of B2 level in the Common European Framework of Reference for Languages. ITSE’s “English laboratories” provide students with the tools necessary to achieve this level of language proficiency and promote an interactive and participatory approach to language learning.
In addition to specialised technical training programmes provided by ITSE, Panama also offers short-term certifications through INADEH. INADEH targets a wider range of individuals compared to ITSE, including the unemployed, workers seeking to improve their skills and workers considering changing professions. INADEH has 25 centres located across Panama, offering more than 800 courses across 25 industries, including electromechanics, English language, ICT, mechanics for automobiles and mechatronics. This demonstrates INADEH’s potential to deliver training that could address some of the semiconductor industry’s workforce needs. INADEH courses take tens or hundreds of hours to complete, either in person or online (INADEH, 2024[97]). In 2024, INADEH trained 181 024 individuals (66% women and 34% men) and issued more than 125 000 certificates (INADEH, 2023[98]). Due to the short nature of most of its courses, INADEH can complement ITSE with more targeted training and certifications, as well as contribute to reskilling programmes.
Recommendations
Without a domestic semiconductor industry, VET programmes with a focus on semiconductor skills might be particularly challenging during initial efforts to develop the semiconductor ecosystem. While focusing on similar skills in other sectors could be one avenue to pursue (see the discussion in Section 2.3.2), engaging in international collaboration with education institutions and industry abroad would likely be the most impactful strategy in the shorter term. Nonetheless, in such a scenario, it would be important for these Panamanian VET students on placements in education institutions or industry abroad to contribute to the development of Panama’s semiconductor ecosystem. For example, in situations where these overseas VET placements are supported by public funding, Panama could consider imposing a similar set of conditions as the SENACYT scholarships to require VET students either to return to Panama to work or repay their funding (see Box 3.9).
Panama could enhance technical semiconductor skills by further strengthening VET programmes, building on the existing institutions and academic and industrial clusters. For example, ITSE and INADEH could work with Panamá Pacífico and the City of Knowledge to certify their employees for certain technical proficiencies and organise student placements with firms.
Reskilling programmes tied to apprenticeships could also help firms fill the need for workers and be more responsive to skills demand. Panama should consider dual education programmes – in which students combine classroom instruction with on-the-job training in a firm – to develop semiconductor-specific dual education tracks in the future.
3.3.4. Labour markets and skills
Beyond the need to develop a labour market for a nascent industry, Panama currently faces several structural labour challenges. Informal labour is relatively widespread in Panama. Informality – which refers to employed workers not affiliated to social security systems or without a written work contract – affected 49% of Panamanian workers in 2024. This is slightly higher than the regional average for Latin America and the Caribbean (47.6%) and significantly higher than countries such as Costa Rica (37%) (ILO, 2025[99]). Informal labour is associated with low-skilled, low-productivity jobs, which helps to explain why, as of 2019, the average wages for Panama’s informal sector were approximately half those in the formal sector (World Bank, 2023[76]). The results in Section 2.3.3 point in the same direction, showing that individuals without a written contract earn considerably less than those with a permanent formal contract.
The relatively high rate of labour informality in Panama reduces the available pool of skilled talent for the semiconductor industry. According to the August 2023 labour market survey from INEC, workers without written contracts have lower levels of education, with 38.6% having completed upper secondary education and only 11.9% holding university degrees. In contrast, workers with permanent contracts are more likely to have higher education, with 47.2% having university degrees.
Due to inadequate public or employer-driven training programmes, informal workers tend to face limited opportunities to upskill or reskill, leading to persistent informality, low-wage jobs and ongoing gaps in skills supply from informal workers and skills demand from formal jobs (OECD, 2024[100]). The 2018 OECD review of Panama’s labour market concluded that there was a significant gap between the workforce’s skills supply and employers’ skill demand, with 46% of Panamanian firms reporting difficulties in finding the necessary skills to operate (OECD, 2018[101]). A more recent analysis of global talent shortage found that, in 2024, 63% of firms in Panama reported difficulties in finding skilled employees (ManpowerGroup, 2024[102]). While the OECD analysis found some movement towards higher paying, underfilled industries among workers with tertiary education, the share of workers that had majored in STEM fields changed little between 2015 and 2022.
The semiconductor industry requires, as a baseline, professionals trained in engineering, computer science or, at a minimum, general STEM education. However, in addition to a relatively small industrial sector, only 14.8% of tertiary education graduates in Panama earned a degree in a STEM field in 2023 (UIS, 2025[103]). This is approximately 9 percentage points lower than in Mexico and 3 points lower than in Costa Rica. Economies with high informal employment, such as Panama, often experience significant skill mismatches that hinder technological adoption and productivity gains. This could act as a barrier to the creation of high-tech firms in Panama or an international semiconductor firm’s decision to invest in Panama.
Recommendations
To develop a semiconductor labour market, Panama must enhance its education pipeline, establish short‑term certifications to align the supply of semiconductor skills with industry needs and develop specialised training programmes in partnership with the semiconductor industry and foreign institutions.
Increased information and transparency about semiconductor skills demand and supply in Panama would help ensure an efficient market for semiconductor labour. Panama can take two complementary approaches to enhance transparency in the semiconductor labour market. First, it should consider leveraging and optimising existing initiatives to develop a centralised and integrated jobs platform. This could build on the Panama Jobs (Empleos Panamá) platform, managed by the Ministry of Labour and Workforce Development, and the Panama Explorer platform, managed by investment promotion agency PROPANAMA, to integrate a broader range of jobseekers and employers across all sectors of the economy and all special regimes. For this type of centralised and integrated jobs platform to be genuinely useful, it would depend on the voluntary and active participation of Panama’s high-tech sector, including any future semiconductor industry. If done well, such a platform could bring together employer networks, labour market information and reskilling opportunities in a single place.
Second, in parallel, UTP intends to create a centralised database of Panamanians who are studying, or have previously studied, semiconductor-related fields both at domestic Panamanian institutions and overseas. UTP’s database will be complemented with information on recipients of scholarship awarded by SENACYT, the Institute for Training and Use of Human Resources and the United States Embassy, as well as surveys of graduates in semiconductor-related disciplines. An anonymised version of this UTP database could be linked to the centralised labour market platform (described in the previous paragraph) and made publicly available.
Linking the UTP database – which provides insights into the supply of semiconductor skills – with the centralised labour market platform – which provides insights into the demand for these skills – could help Panama identify and begin to address skills mismatches. These insights could also inform UTP’s updates to its curriculum (see Section 3.3.2 and Box 3.8) and updates to VET curricula too. Strong anonymisation and safeguards are particularly important in a country such as Panama with relatively small university and VET systems, which could theoretically make it easier for individuals to be identified. It is therefore essential that the appropriate data protection and privacy measures are in place, for example as described in the OECD Privacy Guidelines (OECD, 2023[104]).
Furthermore, addressing informality requires a broad suite of policies to ease transitions into formal jobs. Informal employment tends to consist of a two-tier system. For lower-tier workers – defined as those earning below 50% of the median earnings of their country – skills development, education and social protection are particularly important policy interventions. Upper-tier informal workers – who tend to be more skilled and have relatively higher wages – could be supported through stricter compliance with labour laws, and enforcement of social security and tax regulations to encourage formalisation (OECD, 2026[105]). More generally, awareness-raising campaigns can be effective in highlighting to workers and firms the benefits of formalisation and encouraging them to comply with their labour and tax obligations. Prioritising policy interventions in the sectors and regions with highest rates of informality should also be considered (OECD, 2026[105]).
3.3.5. International workers
Currently there is no demand for semiconductor-specific skills in Panama because there is no domestic semiconductor industry. However, if local skills demand increases rapidly, the human capital available in Panama would not immediately be able to meet such workforce needs because efforts to train domestic semiconductor talent, described above, will require time. Therefore, in the meantime, Panama should facilitate the movement of skilled international workers, professors and trainers to grow and develop Panama’s semiconductor workforce. Panama should look to leverage the migration and labour incentives of the special economic regimes analysed in Section 3.2.3. In parallel, further enhancing collaboration with other countries, notably those in the region, could help achieve long-term benefits from sending students and teachers for training in semiconductor knowledge and skills.
Executive Decree No. 7 of 2024, which announced Panama’s intention to develop a National Semiconductor Strategy, implicitly acknowledged some of the barriers to hiring foreign talent. Article 13 called for a “framework of migration incentives to attract specialised human talent to Panama, which includes specialised work permits for highly qualified professionals in areas related to semiconductors and microelectronics and residence programmes for investors and entrepreneurs who wish to establish firms related to semiconductors in Panama” (MICI, 2024[24]). As Panama contemplates the design of semiconductor migration and labour incentives, it is important to consider how these incentives might interact with existing regulations on the hiring of foreign talent (Table 3.4).
Panama’s Labour Code states that, in general, foreign workers cannot make up more than 10% of the workforce of firms in Panama. This limit on hiring foreign workers is increased to 15% of the workforce for specialised or technical workers, defined as workers who can prove their specific and deep knowledge in a scientific, technical or other field that benefits the firm’s activities (MITRADEL, 2023[106]). Panama’s Ministry of Labour and Workforce Development (MITRADEL) has the authority to raise the 15% cap on hiring specialised or technical talent from overseas if the conditions of the labour market so require and according to the economic activity and size of the firm. Panama has substantial discretion to decide whether to raise this cap: Article 17 of the Labour Code sets very broad conditions for raising this cap, which simply requires “a recommendation from the relevant Ministry and approval by MITRADEL”. Although the ministry is capable of raising the cap on foreign workers, the existence of a cap nonetheless acts as a barrier to the recruitment of foreign talent by firms in Panama. Despite these limits on hiring foreign talent, Panama has facilitated this process for some of its special regimes. In addition to the tax incentives summarised above in Table 3.3, firms operating under the City of Knowledge regime also enjoy favourable terms for hiring foreign workers. There is no limit on the number of foreign workers these firms can hire to work as researchers, technical staff or instructors (MITRADEL, 2023[106]). The relative ease with which organisations in the City of Knowledge can hire foreign workers would create opportunities for foreign experts and highly qualified professionals to teach and train local Panamanian talent, which would be key to the development of the semiconductor ecosystem as described in the preceding sections.
Source: OECD analysis of legislation listed in the table.
Firms in the Colón Free Zone are exempt from foreign labour limits for hiring executives and other senior appointments, but remain bound by the standard 10% and 15% cap on foreign labour for other types of employees. Panamá Pacífico faces the standard 10% and 15% cap for all of its foreign hiring.
Firms under SEM and EMMA are exempt from foreign labour limits for hiring executives or other “trusted staff” (personal de confianza) (MICI, 2024[107]; 2024[60]). Under both regimes, firms’ foreign executives are granted “permanent” visas that are valid for five years and can be extended for an additional five years. Five years after the approval of their initial visa, foreign employees gain the opportunity to apply for permanent resident status in Panama, which can facilitate the integration of foreign professionals into the local community over time. Under SEM and EMMA, foreign staff providing operational, technical or training services are granted “temporary” visas for two years, renewable. This is designed to facilitate the transfer of knowledge from foreign staff to the local workforce.
Recommendations
As Panama continues to develop its migration and labour regimes for semiconductor and microelectronics talent, in line with Article 13 of Executive Decree No. 7 of 2024, it could leverage some of the existing special regimes. For instance, the model of the City of Knowledge – which facilitates the hiring of foreign research, scientific and technical talent – is probably more directly beneficial to the development of a domestic semiconductor workforce than the model of SEM or EMMA – which facilitates the hiring of foreign executives. Foreign experts and highly qualified professionals hired through the City of Knowledge could then teach and train local Panamanian talent, which would be key to the development of a domestic semiconductor ecosystem.
Given that EMMA and SEM are not location-specific, they can be combined with the logistical advantages and other benefits of an SEZ such as Panamá Pacífico. Although firms in Panamá Pacífico must comply with the Labour Code’s default limits on foreign workers, the SEZ offers some other migratory benefits such as a one-stop shop for visa procedures and work permits, and special visas for workers.
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← 1. The terms “semiconductors” and “microelectronics are closely related but distinct. Semiconductors – including, but not limited to, integrated circuits, transistors or light-emitting diodes – are a type of microelectronic component. However, microelectronics is a broader category that does not only encompass semiconductors and also includes other components such as resistors, capacitors or inductors. For more information, please see OECD (2024[110]).
← 2. At the time of writing, SENACYT was providing institutional and operational support to help fulfill the National Semiconductor Commissioner’s responsibilities.
← 3. For further details, please consult: National Strategic Plan for Science, Technology and Innovation (PENCYT) 2025-2029 (https://www.senacyt.gob.pa/wp-content/uploads/2025/05/PENCYT-2025-2029.pdf), the Strategic Plan for Government (PEG) 2025-2029 (https://www.mef.gob.pa/wp-content/uploads/2024/12/GacetaNo_30186b_20241227.pdf), the National Logistics Strategy (https://www.senacyt.gob.pa/wp-content/uploads/2020/12/12-Estrategia-Logistica-Nacional-2030-Documento-Final2017.pdf), the National Energy Plan (https://www.senacyt.gob.pa/wp-content/uploads/2018/12/3.-Plan-Energetico-Nacional-2015-2050-1.pdf) and the National Strategic Plan for the Development of Metrology Infrastructure (https://cenamep.org.pa/wp-content/uploads/2023/07/LIBRO%20-%20CENAMEP%20-%20PARA%20PLATAFORMA%20DIGITAL.pdf).
← 4. This fund serves as one of the instruments through which public investment outlined in Box 3.1 may be channelled to support the semiconductor ecosystem.
← 5. Since 2021, SENACYT has funded six semiconductor‑related R&D projects with a total investment of USD 724 649. These projects focus on: i) metal oxide nanostructured materials for solar cells and sensors (USD 194 659); ii) magnetic and structural properties of lanthanide and transition‑metal compounds (USD 60 000); iii) development of energy‑storage devices using sustainable materials (USD 200 000); iv) investigation of heat plumes and flames as conductors of electric current (USD 70 000); v) electrical, optical, magnetic and structural properties of metal‑oxide nanostructures for technological applications (USD 100 000); and vi) a project selected under the 2025 call (focused on new development stages of metal‑oxide semiconductors for solar cells and sensors) which has been approved for USD 99 990 but is not yet contracted.
← 6. The remaining six AIPs managed by SENACYT cover marine conservation (COIBA), political and social sciences (CIEPS), agriculture (CIPAC), education (CIEUDA), vaccines (CRIVB) and infrastructure and co‑ordination for the national research system (SNI).
← 7. The USD 36.5 million referenced in the 2025–2029 National Strategic Plan for Science, Technology and Innovation (PENCYT) is part of the USD 105 million allocated for the implementation of Panama’s National Semiconductor and Microelectronics Strategy. Specifically, this amount falls within the USD 75.2 million earmarked for human capital development, which includes specialised training programmes, scholarships, curriculum alignment, faculty development, and the creation of the Centro de Tecnología Avanzada en Semiconductores de Panamá (C-TASC).
← 8. UTP is one of the institutions in Panama that already has clearly defined internal regulations and experience in the process of technology transfer to industry.
← 9. One possible source of capital for this early-stage financing vehicle is the National Fund for the Semiconductors and Microelectronics Industry, analysed in Section 3.1.2. According to Executive Decree No. 7 of 2024, the National Fund is expected to allocate 25% of its funds to promote entrepreneurship related to semiconductors and microelectronics. Panama could consider putting a subset of this 25% towards the early-stage financing vehicle, described here.
← 10. SEM was subsequently amended by Law 45 of 2012 and Law 57 of 2018.