At least one person, a 9-year-old boy, died on Friday in violent protests over a new law allowing the sale of state-owned land in a dilapidated port city within the duty-free zone next to the Panama Canal.
Several residents and police were also injured in Colon, Panama's second-largest city, in a third day of protests against the plan, which the National Assembly approved early on Friday and President Ricardo Martinelli signed into law hours later.
Hundreds of people burned tires and threw objects and shot at police, who fired back and used teargas to disperse the crowd. Local authorities instituted a 4 p.m. curfew.
Three police officers were shot and five injured, a police spokeswoman said. She said the boy was shot in the chest with bullets not used by police.
Local media reported as many as three dead, 16 injured, and 40 arrested, but police could not confirm that late on Friday.
The government argues that the sale of the land will yield greater revenues than continuing to lease it, which brings in about $33 million a year.
About 2,000 companies rent land and employ about 30,000 people in the Colon Free Trade Zone, the largest such region in the Americas.
Critics have denounced the government plan as an irresponsible political maneuver to cover government spending and keep the deficit low. They say selling the land will harm residents of Colon, which has one of the highest rates of poverty and crime in the tiny Central American country.