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President Ricardo Martinelli appealed for calm, blaming the protests on 'agitators'
Hundreds of demonstrators in Panama burned tyres and clashed with police hours after the National Assembly approved legislation allowing the sale of land in the duty-free zone of Colon.
Protesters fear the new legislation will cost jobs and cut incomes.
More than 2,000 companies operate in the lucrative free trade port area, at the Caribbean end of the Panama Canal.
President Ricardo Martinelli appealed for calm and said the sale of state-owned land will benefit the region.
He said "agitators" and "small-minded interests" were behind the protests in the city of Colon.
According to the law, 35% of the proceedings generated by the sale of land will go to a trust for "social investments" in the area.
The other 65% will go the central government in the Central American nation.
"We do not want the land to be sold because these are assets that belong to Colon," Felipe Cabezas, head of the Colonense Broad Movement, told the AP news agency.
The city of Colon has one of the largest free trade ports in the world, in operation since the 1950s.
It sits at the end of the Panama Canal and just outside the former Panama Canal Zone.
The canal, linking the Atlantic Ocean to the Pacific, is Panama's main source of revenue.
Panama has been running the waterway since 1999, when the United States handed over control.
Work in the expansion of the canal has been going on for years and should be completed in time for its centenary in 2014.
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