PANAMA CITY, May 5 (Reuters) - Panamanians began voting

in Sunday's general election to choose one of eight contenders

to be the nation's next president in a race where much of the

attention has been focused on a corruption-tainted former

president holed up in Nicaragua's embassy.

Following weeks of campaign events that featured catchy

reggaeton songs and popular entertainers, over 3 million voters

will decide who is best placed to fix Panama's pressing economic

problems, tackle corruption and restore the country's reputation

as an investment haven.

Jose Raul Mulino, a former minister who replaced popular

ex-president Ricardo Martinelli on the ballot after Martinelli

was barred from running due to a money laundering conviction, is

leading in opinion polls.

Mulino has promised to usher in prosperity and to keep out

of jail Martinelli, who has played a key role in the elections

from within the walls of Nicaragua's embassy in Panama City.

Nicaragua granted the former leader asylum but

Panamanian authorities have blocked him from leaving the

country. Mulino visited Martinelli at the embassy after casting

his vote.

Romulo Roux, in his second bid to win the presidency, and

ex-president Martin Torrijos have alternated between second and

third place. Trailing closely behind is Ricardo Lombana, who

also ran in the past election, and current vice president Jose

Gabriel Carrizo.

"My hope is that the new government will face corruption and

poverty. I hope that this time they keep their promises,

otherwise they will have to deal with the people," said Amalia

Brown, 80, a retiree, after casting her vote.

Panama's electoral rules do not require a run-off, making

Sunday's result final. Campaigns have said they will send

volunteers to the polls to oversee voting and ensure a fair

election.

No single party is forecast to win control of the

legislature, where 885 seats are up for grabs.

Lawmakers across different parties who backed a

controversial government contract with Canadian miner First

Quantum have faced a backlash that could hurt their support.

Many Panamanians took to the streets last year to protest

the Cobre Panama mine contract, which opponents argued lacked

environmental guarantees and was riddled with corruption.

Panama's top court ruled the contract unconstitutional in

November.

Panama's next government will have to contend with a

troubled pension fund system, high levels of public debt and the

loss in income from the closure of the mine, which accounted for

about 5% of gross domestic product.

Corruption has become a hot-button issue for voters. Local

media has recently reported on generous student loans and

scholarships granted to the children of politicians and wealthy

high-profile families.

After a record 520,000 migrants last year crossed the

treacherous jungle that connects Panama and Colombia, known as

the Darien Gap, migration is also on voters' minds. Some

candidates have vowed to open up the path, which could increase

migration flows into Panama, while others want to boost controls

to shut it down completely.

The next administration will also inherit problems faced by

the Panama Canal, which saw revenues tumble after it was forced

to cut ship crossings due to a prolonged drought.