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Prostitution in Panama is legal and regulated. The main area of prostitution in Panama City is El Cangrejo. There are many foreign prostitutes in the country, especially from Cuba and Colombia  Panama was part of Colombia until To work as a prostitute, foreign prostitutes need an "alternadora" visa.
As this is stamped into their passport, many work unofficially on tourist visas to avoid effectively having "prostitute" stamped in their passport.
During the construction of the Panama Canal , many prostitutes came to the canal zone to service the needs of the workers building the canal.
Many were from the Caribbean , especially the English speaking islands. President Roosevelt launched an inquiry into the morality of these women, in case they had been brought in to work as prostitutes. After the completion of the canal, most of the migrant labour force left, leaving mainly US troops and civilians.
These US citizens became the main customers of the red-light districts in Panamanian cities close to the canal such as Panama City and Colon.