Between 1950 and 1994, a corner of Hong Kong hosted the most extreme urban experiment of the twentieth century: Kowloon Walled City. On roughly 2.6 hectares, about the size of a couple of city blocks, close to 33,000 people came to live. There was no building code, no permitting and no planning. Because of a diplomatic gap, neither the United Kingdom nor China truly governed it. It was, quite literally, a city without urban planning law.
The result still fascinates and unsettles. The buildings grew into one another until they formed a single mass of ten to fourteen storeys, bound together by a tangle of cables and pipes, with alleys that never saw the sun. Workshops, noodle factories, unlicensed dentists and doctors, homes and shops were all stacked on top of each other. And yet it worked: there were neighbours, an economy and informal rules. That is why it is often romanticised today as an anarchist utopia.
That nostalgia deserves resistance. Kowloon also meant fires with no way out, overcrowding, contaminated water and people trapped in structures nobody could vouch for. The absence of rules did not bring freedom for everyone. It produced a spontaneous order that favoured those who already had power and left the risk with the weakest. Hong Kong demolished it in 1993 and 1994, and the site is now a park.
From Hong Kong to the Transístmica highway
There is no need to look that far. San Miguelito, just outside Panama City along the Transístmica, began in the middle of the last century as an informal settlement, driven by migration from the countryside to the capital. Land was occupied and whole neighbourhoods went up before there were laid-out streets, land titles or zoning. For a foreign buyer, that history is the reason possession rights and registered title are not the same thing in Panama, a gap our guide to land titling in Panama explains.
Around 1970 the State recognised that reality and made San Miguelito a district (distrito), Panama's unit of local government. Over the years, planning, infrastructure and services followed, unevenly and still unfinished. Today it is one of the most populous districts in the country.
The comparison is not a judgment on people who built where they could. Informal housing is almost always a rational response to a lack of affordable homes. What the comparison offers is the same phenomenon at two speeds. Kowloon shows what happens when the rules never arrive. San Miguelito shows what happens when they arrive late and have to order what is already built, at a much higher cost.
Planning law as a function
The question of red tape or necessity hides a trap, because it mixes two different things. Urban planning law as a function is not paperwork. It solves problems that no single neighbour can solve alone: structural safety, emergency exits, drinking water, light and air, a street wide enough for an ambulance, and a building that neither blocks the neighbour's sun nor drains its water onto the lot next door.
Economists call these externalities and common goods. Sensible individual decisions, added up without coordination, produce a collective outcome that is bad for everyone, and Kowloon is the empirical proof. In Panama, that coordinating role is played by land-use plans and zoning codes, described in our guides to land-use planning and to zoning in Panama.
When regulation turns into red tape
Bureaucracy is the pathology of that function. It is the permit that takes years for no reason, the procedure that only exists to extract a bribe, and the rule that protects whoever has already built while shutting the door on whoever arrives next. When planning law becomes inaccessible, expensive or arbitrary, it stops ordering the city and pushes people into informality. Put another way, too much bad regulation produces more Kowloon, not less.
The same tension shows up in Panama's newer rules for large projects, such as the 2026 regulations on environmental impact assessment. Their value depends on whether a developer can actually comply with them.
What Panama can take from both cities
The honest answer is that urban planning law is necessary, and for exactly that reason it cannot be red tape. A good planning rule protects the essentials, which are life, health, coexistence and the rights of third parties. It also has to be simple and achievable, and it has to deal with the real city, informal neighbourhoods included, instead of pretending they do not exist.
Kowloon teaches that a city without rules is not free. It is dangerous for whoever has the least. San Miguelito teaches that ordering a city late is extremely expensive. The lesson for Panama is not a choice between control and freedom. It is to set, in good time, rules that people can actually follow.