Business & Economy briefs

Japanese ambassador warns Panama
In his farewell address to Panama, outgoing Japanese ambassador Yasuyuki Fujishima said that Panama's economic progress is lagging behind that of neighboring countries and warned that if the expansion of the Panama Canal results in higher tolls shippers in his country will look for alternative routes. He criticized Panama's lack of long-term economic planning and said that to avoid being left behind, this country must invest more in education and industrial infrastructure. Fujishima added that Japanese high-tech companies don't want to come to Panama because wages are too high and infrastructures are inadequate.

One bidder for France Field
On June 12 Consorcio San Lorenzo, a group composed of three Panamanian companies and three foreign firms, was the only bidder for the concession to expand France Field into an international airport capable of handling Boeing 747s and to build an adjacent industrial park. If it gets final approval, the Panamanian-US-Austrian group will invest some $400 million over 10 years and ultimately provide jobs to between 5,000 and 10,000 people.

New Free Zone Users' Association president
On June 19 new officers of the Colon Free Zone Users' Association, which brings together the merchants who do business in the duty-free import-export zone, took office. The association's president for the next year is Digna Donado, who at her inauguration noted that the Free Zone suffered a decline of some 30 percent in business volume in 1999 and, though business has gradually picked up since then, has not fully recovered. She said that her priorities are to oppose any moves to tax business in the Free Zone, eliminate other countries' discriminatory taxes or customs procedures imposed on merchandise coming from the duty free area, and to do a better job of promoting Colon's import-export business abroad. One of her first major tasks as president will be acting as organizer and hostess for an hemispheric gathering of free zones, which will take place in Colon at the end of August.

Preparations for phone monopoly's end
The Public Services Regulating Entity has announced that it will start the process of granting fixed-wire telephone concessions in July. UK-based Cable & Wireless Panama has a monopoly over such services, and over international telephony, which will end in 2003. The government wants to start the process of ending this monopoly early, so that concessionaires will have time to install their systems and go into business the moment that C&W's monopoly ends. In a presentation last year to the American Chamber of Commerce, Cable & Wireless said that it would remain in the fixed line telephone business but predicted that this sector would gradually become a minor aspect of the telecommunications industry. BellSouth, which presently has a cellular phone concession in Panama, is widely reported to be interested in a fixed line concession, as are the Panamanian telecommunications company Medcom and several other US and European companies.

Government pact with Philip Morris to educate kids about cigarettes
Education Minister Doris Rosas de Mata and the Philip Morris tobacco company have signed a pact to bring the Marlboro manufacturer's "Yo Tengo P.O.D.E.R." campaign about tobacco, alcohol and drugs into the public schools. The message, purportedly anti-smoking, is that kids have the power to make decisions about vices. During a presidential trip to the United States last year, Philip Morris threw a gala reception in New York for President Mireya Moscoso.

Representantes complain about ARI
A committee of 11 representantes from Colon, Panama City and Arraijan whose corregimientos include parts of the former Canal Zone is pressing the Interoceanic Regional Authority (ARI) to change its ways. The local officials say that ARI is poorly run, that it makes decisions that have negative effects on their communities, and that their constituents don't figure in the authority's plans. The representantes' specific complaints include ARI's destruction or planned destruction of most of the athletic facilities acquired under the 1977 Carter-Torrijos Treaties, the authority's sale of homes in the former Canal Zone on the basis that they are situated in "garden communities" and then subsequent efforts to sell and develop all of the green areas in said neighborhoods, and the unavailability of reverted buildings for municipal purposes, despite many vacancies.

ARI complains about Grupo Shahani
ARI has complained that the Grupo Shahani development consortium, which is building the Amador Resort & Marina project on Perico Island, has fenced off a public beach and widened the causeway with landfill, all in violation of their contract. The consortium says that access needed to be widened to accomodate the heavy trucks used in construction of the $35 million development, and that the beach was little-used and trash-strewn to begin with, and dangerous to the public while construction is ongoing.

Foreign Ministry to move again
The Foreign Ministry, which moved to Quarry Heights in 1998, is planning to move again, this time restoring the Edificio Bolivar in the Casco Viejo at a cost of at least $1.5 million. The Interoceanic Regional Authority had planned to make Quarry Heights a "diplomatic city," but found few countries willing to pay high six-figure prices for the right to tear down and replace old wooden military housing at the former US Southern Command headquarters. The new move, planned for 2003, is being promoted as an effort to upgrade the Casco Viejo.

Gualaca to get archaeology museum
In a break from the usual past practices, in which development projects made Panamanian archaeological treasures disappeaar, the Esti hydroelectric project in Chiriqui is going to result in a new museum in Gualaca. Construction workers for the project's developer, AES Panama, encountered a pre-Columbian site last year, and since then archaeologists have been digging and studying and have recovered more than 200 artifacts from a little-known ancient culture. Now the National Cultural Institute (INAC) says that the objects that have been found will be kept in a new museum near where they were found in Gualaca.

PYCSA's rating down again
The Standard & Poor's bond rating service has demoted the commercial paper issued by the Mexican-based PYCSA construction consortium from CC to D after the troubled builder and operator of the Corredor Norte defaulted on June 15 bond payments and announced that it does not have the resources to comply with its contractual commitment to build a Panama-Colon toll road. As more politicians are advocating a rescission of PYCSA's 30-year concession to build and operate the Corredor Norte and the Panama-Colon Autopista, the consortium is blaming the Ministry of Public Works for its woes, claiming that new entrance ramps to the Corredor Norte have been delayed by design changes that the ministry has demanded. The interchange of accusations may be preliminary to a lawsuit by either the consortium or the government, but regardless of the merits of the various claims, Standard & Poor's finds that Panamanians who have a choice will forego the Corredor Norte's convenience in order to avoid paying the tolls, and mainly on that basis considers PYCSA's bonds to be junk. The lower bond rating makes the possibility of financing for the Panama-Colon Autopista even more remote.

Sand mining companies fight back
Four sand mining companies whose permits to extract some 18 million cubic meters of sand from the bottom of the Gulf of Panama along a stretch running from Chame to Rio Hato were suspended by President Moscoso are making their case in full-page ads in the daily newspapers. The companies deny that their activities can affect tourist development along the beaches, arguing that their permits do not allow them to dredge sand any closer than eight kilometers to the shore, and note that the sand they mine is transported to the Panama City metro area by sea rather than by the sand trucks whose weight tends to break up the roads. Meanwhile, however, the Decameron resort in Farallon warns that it will not invest anything more in Panama if the mining is allowed to resume, and La Prensa reports that the companies share the same officers and legal representative, and suggests that they may be fronts for the Shahani group, whose sand mining in the Pacora River and landfill along the Amador causeway have been the sources of significant public controversy. Under Panamanian law corporations are called "SA" - sociedad anonima - and their ownership is not a matter of public record.

RP cancels ship registries
El Universal reports that the Maritime Authority of Panama has pulled the Panamanian flag off of more than 100 ships, mainly because they failed to meet international safety standards. In various ports around the world, particularly in Russia, Panamanian-flag ships have been subjected to time-consuming special inspections because of repeated accidents involving unseaworthy ships registered in Panama. For several years Panama has been making an effort to raise standards for ships flying the Panamanian flag, and now it is paying special attention to ships with problems that have been documented by inspectors in other countries as well as in Panama. Panama, followed by Liberia, is the leading nation for ship registries, owing to the low registration fees, lack of taxation and - formerly, it seems - lax regulations.

Gatun Lake water causes health problems
The Health Ministry reports an outbreak of hepatitis A and amoebic dysentery in the La Chorrera community of Lagartera Grande. More than two dozen dysentery and a dozen hepatitis cases have been diagnosed, and the cause has been identifed as the use of untreated water taken from Gatun Lake. The government has installed a small water chlorination plant for the neighborhood and ECOFOREST, SA, a company that is conducting reforestation work in the area, is offering residents PVC pipes to connect their homes to the plant. The epidemic is an indication that repeated warnings about a serious deterioration in Gatun Lake water quality by the Smithsonian Tropical Research Insitute's Stanley Heckadon and various environmental groups have not been unduly alarmist.

Pork producer fined
The National Environmental Authority (ANAM) has fined the Compañia Agricola Industrial SA (CAISAR) $10,000 for dumping waste from the sewage and offal pond at its facility in the Arraijan neighborhood of Nuevo Emperador into a nearby stream. For the past several months the city of Arraijan, the Health Ministry and ANAM have been cracking down on a number of pork producers who operate in the area, about whom downwind and downstream neighbors have often complained.

Santiago suspends recycling contract
Santiago's city council has indefinitely suspended a contract to allow CREDISOL, SA to run a recycling project next to the city dump in the corregimiento of El Espino. After numerous complaints from neighbors, the council found that the company had failed to comply with many of the commitments made in the contract it made with the city last February, and that the project was operating illegally because no environmental impact study had ever been submitted to the National Environmental Authority. One of the neighbors' main concerns was the odor from slaugherhouse offal and bones, with uncovered trucks bringing the material through El Espino to the company's facility.

Bone meal in animal feed banned
Had Santiago not shut down CREDISOL's slaughterhouse recycling activities in El Espino, the Ministry of Agricultural and Animal Raising Development (MIDA) would have. The ministry has issued a decree banning the use of bone meal, offal or other bovine products in animal feed. The measure was taken in order to prevent mad cow disease from afflicting Panama. To date this country has not seen any cases of the bovine spongiform encephalopathy, or mad cow disease, that has appeared in Europe, but it is a matter of some importance to Panamanian ranchers that foreign customers are reassured about the quality of the meat they export. The ban does not extend to the use of fish meal in chicken feed, a process upon which the La Chorrera corregimiento of Puerto Caimito depends for its living, nor does it affect common pork production practices.

Petro Autos get Hyundai dealership
In the wake of the Grupo Adelag's collapse, which took with it the Hyundai dealership on the Transistmica, Petro Auto, which has previously done business in the interior, has obtained the exclusive rights to market the South Korean cars here. The new dealership will operate just up the street, at the old Smoot & Paredes premises. Panama's ailing economy has been especially hard on car dealerships, especially those that don't cater to the luxury market.

Gatun shopette for rent
The Panama Canal Authority is offering to lease Gatun's building 36, which was built to house a small and hitherto unsuccessful store around the corner from the locks, for at least $1,248 per month, or $8 per square meter. The building may only be used for a souvenir shop, a tourist information center, a grocery store or a cafeteria.