|
|
 |
|
|
|
Business & Economy Briefs
Colon multi-modal project renegotiated, approved
After talks among the Moscoso administration, the Legislative Assembly's leaders, the Consorcio San Lorenzo and Colon business groups that objected to the government's initial terms, the concession for a multi-modal container transportation center at and around France Field went back to the Cabinet Council, then came back to the legislature, for reconsideration and changes. As originally written the contract would have granted an 80-year tax-free concession for a France Field to be extended into an international airport, container transport links between the Manzanillo International Terminal and Coco Solo Norte ports and the Panama Canal Railroad, and adjacent hotel, commercial and industrial developments. Although the objections of the Colon Free Zone Users' Association and the Colon chapter of the Panamanian Association of Business Executives (APEDE) seem to have been remedied by an agreement to limit the concession to 30 years and the tax breaks to no more than the Free Zone gets, the project still draws opposition from those who don't want to see further destruction of Limon Bay's remaining mangrove forests, people who consider the project as currently contemplated to be a bad urban planning decision for Colon, and those who think that Panama could get better terms for the development. Labor and community groups are divided over the proposal, which promoters say will create 40,000 jobs for economically depressed Colon. Detractors, wary of similar promises made in connection with every significant development in Colon in recent years, estimate that the number jobs actually created would be in the hundreds rather than the tens of thousands and that few of the better-paying positions would go to unemployed Colon residents. The modified proposal was approved by the legislature and will be signed by the president, but there will probably be court challenges to it.
US, RP talking about tax information sharing
The governments of the United States and Panama are discussing a possible agreement to share tax information about their citizens. Such a deal could end bank secrecy and Panama's accustomed role as an offshore financial center. Negotiators for Panama say that the talks are just in the exploratory phase, and that some agreement will be necessary to keep the country off of international financial blacklists. A draft of the agreement published in several of the daily newspapers shows a wide-ranging plan by which the United States could obtain banking and other financial information about any person, whether or not an investigation or legal proceeding is underway, and it would be a crime to reveal to the person about whom the information is sought that such data has been revealed. The suggested agreement has been greeted with strident criticism by leaders of Panama's banking industry and legal profession, but in a statement that can be found in the Opinion section of this issue of The Panama News, the US Embassy argues that the deal would promote tourism here. President Moscoso has promised that any agreement would be subject to a national consensus on the issue and ratification by the legislature.
Taiwan may pull out of Fort Davis
A project that had been announced with much fanfare during the PZ&Mac255;rez Balladares administration --- the director of ARI at the time even promised that it would create 20,000 industrial jobs for Colon --- appears to be on the verge of failure. The Taiwanese foreign ministry has told Panama that it would like to withdraw from the Fort Davis Export Processing Zone, because few businesses want to invest there. At the start, Taiwanese businesses were led to believe that if they set up factories at Fort Davis they would not have to comply with Panamanian labor and environmental laws, a promise that could not be kept. When it turned out that they would not be able to dump toxic wastes into Gatun Lake or send hit men after union organizers, and might even have to file environmental impact statements and obey minimum wage laws, most of these would-be investors lost interest. Businesses at the Davis Export Processing Zone employ only a few hundred people and almost all of the management positions are held by foreigners.
TRICOM wins a round, opponents appeal
Panamanian consumers may have come a bit closer to a third choice for mobile telecommunications services, but will have to wait for the Supreme Court for final word. On December 20 the First Superior Tribunal vacated a circuit court decision barring TRICOM, a company based in the Dominican Republic that wants to offer trunk system mobile phone services here, from continuing its work of installing the system. However, on January 10 the Supreme Court agreed to hear an appeal and thus suspended the lower appellate tribunal's judgment while it hears the case. The superior tribunal had held that the circuit court erred by intruding into the jurisdiction of the Public Utilities Regulating Entity, which has sided with TRICOM. UK-based Cable & Wireless and US-based BellSouth allege that TRICOM's contract with Panama violates their exclusive cell phone concessions, while TRICOM and its backers argue that a trunk system is different from a cellular system and thus there is no conflict. To a user there is little difference between the two systems. TRICOM's presence on the market would make a big difference for BellSouth and C&W, as those two companies don't compete on the basis of regular prices offered for their services and thus Panama has higher cell phone rates than those in most other countries. The dispute has continued in advertising wars, with BellSouth running a series of ads demanding "judicial security" and comparing the TRICOM concession with changing the rules of a game in progress or unilaterally altering the terms of a signed contract. TRICOM has taken out ads disputing BellSouth's claims. Neither the business community nor public opinion in general appear to have been moved by BellSouth's appeals. The battle is also being fought electronically, with Cable & Wireless refusing to allow TRICOM to link into its system so that trunk phone users can call regular telephones in Panama, a practice for which the Regulating Entity has imposed a $5,000-per-day fine on C&W. Cable & Wireless had cited the now-reversed lower court ruling as justification for defying the regulators' order to allow TRICOM access to the phone system. While the case is before the Supreme Court no fines will accrue.
Canal profits go into national treasury
Since the canal came under Panamanian control at the end of 1999, it has been run on a for-profit basis by the semi-autonomous Panama Canal Authority. Under the Americans' Panama Canal Commission and its organizational predecessors, the canal was run on a break-even basis. Because the authority is a public entity, the distinction between for-profit and non-profit organizations is not as big as many might presume. However, one of the differences was recently highlighted when the authority's administrator, Alberto Alemán Zubieta, handed President Mireya Moscoso Rodríguez a check for $35.7 million. This represented the fiscal 2001 profit realized by the canal, which was a little more than double the amount that had been projected in the authority's budget. The money goes into Panama's public coffers, which have been seriously depleted by a reduction in tax collections due to the economic problems that are affecting the country.
National debt down
The Ministry of Economy and Finance says that it reduced the national debt by about $11 million by way of a recent purchase of some $140 million worth of outstanding bonds with lower-interest Brady Bonds. Panama's foreign debt is about $6.28 billion.
82,000 new high school grads
The Ministry of Education has announced that more than 82,000 youngsters graduated from high school in December. Panama, a demographically young country with a weak economy, has a chronic problem creating enough jobs to absorb the tens of thousands of youth who join the labor market every year.
Assembly passes first job incentives
As tens of thousands of job seekers were graduating from the public schools, the Legislative Assembly passed a law giving employers a 100 percent tax break on the wages and social security payments for giving a youngster his ro her first job. Whether the incentives become law depends in large part upon a compromise between the executive and legislative branches on the 2002 national budget. If no accord is reached, the 2001 budget --- which did not include this tax break --- will apply in 2002.
Panama Canal Authority directors approved
After delays of many months, the Legislative Assembly has approved President Moscoso's appointments of Mario Galindo, Guillermo Quijano and Antonio Domínguez hijo as directors of the Panama Canal Authority. Galindo and Quijano have long political experience and Dominquez is the son of Arnulfista insider Antonio Domínguez. Moscoso's appointments to the canal authority are in line with those of her predecessor, who also looked to family and partisan credentials rather than experience in maritime or canal affairs when choosing directors.
Food processors short-weight products
According to the Free Trade and Consumer Affairs Commission (CLICAC), a nationwide investigation has found that some 100 food items produced and packaged in Panama consistently contain less of the products than represented on the label. The commission declined to name the offending companies, which will apparently only receive warnings about the practice.
Constantino replaces Adames at CLICAC
Businessman Cesar Constantino has been nominated and confirmed as director of the Free Trade and Consumer Affairs Commission (CLICAC). He replaces Rommel Adames, who served in that post for the past year despite the Legislative Assembly's rejection of his appointment last June. Adames was voted down largely because one of the first things he did after he was nominated was to ask the Electoral Tribunal for a list of PRD members working at the commission, so that he could fire them. The tribunal refused the request but a wave of partisan firings ensued anyway. The legislature first sat on the Adames nomination, then, after the Supreme Court decided that he could occupy the post and collect the large salary that goes with it (but not decide important cases) until another person was appointed in his stead, the deputies turned down Adames by a party-line vote. The Constantino nomination, on the other hand, was unanimously and almost immediately approved by the Legislative Assembly.
Rodríguez Bethancourt named to utilities board
Carlos Rodríguez Bethancourt, an engineer, has been appointed by President Moscoso to serve a five-year term on the Public Services Regulating Entity, which oversees the electric and telecommunications industries that were privatized during the Pérez Balladares administration. His nomination to replace Rafael Moscote was ratified without much fuss in the legislature.
Colon 2000 shuts out taxis
Telling cruise ship passengers that it is unsafe to take a taxi in the city of Colon, the Colon 2000 cruiser port has directed tourists to its guided bus tours instead. The practice has led to protests by Colon taxi drivers, many of whom are accused of grossly overcharging tourists. If one excludes the taxi overcharge factor, the allegation that Colon taxis are dangerous for tourists is not well founded. It appears that the main reason for the cruiser port's action is to grab a bigger share of the tourist dollars at the cabbies' expense.
Bridge bids based on incomplete plans
The bidding for a second bridge over the canal, won on December 10 by the German consortium Bilfinger-Berger for $90.9 million, was somewhat irregular. The designs for both the bridge itself and for its foundations were incomplete, which may be one of the reasons why most of the companies that had expressed interest in the contract pulled out of the bidding process. The Panamanian Society of Engineers and Architects (SPIA) has for some time warned that the planned bridge's location may present problems due to unstable soil conditions and to unexploded ordnance around its western approach. Panamanian law requires that plans for a government construction project must be complete before a bidding process may proceed.
13,000 in arrears with Seguro Social
More than 13,000 businesses and individuals are delinquent on their payments to Panama's social security system, to the tune of some $30 million. Most of those in arrears are in Panama and Colon provinces, where most small businesses have been affected by the economic crisis. Among the businesses in arrears is the Sun Publishing Company, the corporate parent of The Panama News.
University takes sides in Penonome pushbutton row
The promoter, Eros Nos, SA, says that it plans to build a "short-term lodging facility," but the Catholic Church and municipal officials in Penonome say that what is really contemplated is a new "pushbutton" place of assignation and they disapprove. The Ministry of Commerce and Industry and the governor of Cocle have issued some of the necessary permits, but the city refuses to sign off and now the Cocle Regional University Center (CRUC), which is located near the site proposed for the project, has joined the opposition. The administration has criticized the project, a student committee has been formed to moblize public opposition and law students at the University of Panama branch are organizing a possible legal battle to stop the development.
IMF urges changes in BDA
The results of an International Monetary Fund study of Panama's Agricultural Development Bank (BDA) have been released, along with recommendations for changes. The IMF thinks that the bank should become more commercial in its operating procedures, but not to the extent that it becomes just another private bank subject to the Banking Superintendent's regulations. To make the changes that the IMF wants, the legislation that created the bank would have to be amended.
Colombian beer monopoly coming
Because Panama is the commercial and shipping Crossroads of the World, it would be most difficult for any person or company to acquire a total beer monopoly. We import too many brands. However, in domestic beer production there are two significant brewery companies, Cerveceria National and Cerveceria Baru, both of which until recently had their own political parties. (Solidaridad, founded by Cerveceria Nacional's Samuel Lewis Galindo, retains its ballot status and the use of Cerveza Balboa's colors for its party emblem; JJ Vallarino's MORENA party, which lost its official status as the result of a poor showing at the polls in 1999, used Cerveza Soberana's green and gold on its partisan symbols.) Now, however, the dominant shareholders in Cerveceria Baru have approved the company's sale to Colombian-based Grupo Bavaria, following the earlier footsteps of their counterparts at Cerveceria Nacional. Grupo Bavaria has announced that most of the managers and employees of the companies it is buying will be retained, that new beer brands will be introduced onto the Panamanian market, and that Panama will become its regional export center.
Weeden calls for salary cuts
Faced with a severe budget squeeze caused by reduced tax collections in a weak economy, Comptroller General Alvin Weeden has proposed a reduction in the salaries of Panama's best-paid public employees. In particular he cited the $10,000 per month paychecks that the Electoral Prosecutor, members of the Free Trade and Consumer Affairs Commission and Electoral Tribunal magistrates receive.
Colon garbage contract questioned
On December 28 the city of Colon approved a 25-year contract with AGUASEO, SA, a company that's based in Arraijan, for garbage pickup and solid waste management. The deal has prompted criticism and questions, most notably from Arnulfistas who don't like the city's mayor, Matilde Rosales de Ardines (also an Arnulfista), or who suspect that some PRD legislators own stakes in the company. The company has little experience in the field, but it claims to have relationships with Panamanian and European companies that do have the needed expertise. Comptroller General Alvin Weeden is reviewing the contract and may reject it if he finds that it's improper.
Banana workers ordered reinstated
A labor tribunal in Santiago has ordered the reinstatement of 139 workers who were fired by the Puerto Armuelles Fruit Company (PAFCO, a subsidiary of Chiquita Brands) in October, after an unsuccessful strike and deadlocked contract negotiations. The company had fired 278 workers, but only about half of them appealed to the tribunal. The decision mandates rehiring with back pay, but its implementation may be delayed pending appeals.
Closed banana farms may become co-ops
The Chiriqui Land Company and the Puerto Armuelles Fruit Company, subsidiaries of Chiquita Brands, are negotiating with their employees' unions to sell the closed Zapote, Ceiba, Malagueto and Guayacan farms, which would be converted into worker-run cooperatives. By shifting its banana production to nominally independent co-ops, the ailing Chiquita hopes that it can somewhat insulate itself from unions and labor laws.
Rice farmers occupy ministry offices
On December 27 rice growers from Cocle, Veraguas and Chiriqui provinces occupied the offices of the Ministry of Agricultural Development for several hours. The farmers, concerned that they hadn't received the subsidies provided for in legislation passed several months ago, came to the capital for a meeting of the Special Contingency Fund Credit Commission and were displeased to find that the meeting wouldn't take place due to the lack of a quorum.
PYCSA raises Corredor Norte tolls
The Mexican PYCSA consortium, which built and runs the Corredor Norte but has defaulted on its commitment to build a Colon-Panama autopista, has raised the tolls it charges. The company said that despite increasing traffic on the Corredor Norte, it is still losing a lot of money on the project.
Las Lajas beach access fee suspended
The most popular beach in Chiriqui province, at Las Lajas in San Felipe district, won't be charging people to use the beach after all. The Las Lajas junta comunal had hoped that the beach fee would give it badly needed funds, but the representantes from San Felix's other corregimientos passed a resolution requiring the proceeds to be split evenly among all of the impoverished district's neighborhood governments. Meanwhile, many people objected to any beach access fee at all, arguing that this would be a violation of the constitutional provision that the beaches are the common property of all Panamanians. The dispute, and the collection of entrance fees, was put on hold when Chiriqui governor Miguel Angel Fanovich suspended the fees by way of a January 10 decree.
Kunas demand compensation for airport closure
The Kuna General Congress is demanding $7,200 for the closure of the airstrip on the island of Ogobsucun by a contractor installing optic fiber cables for the Cable & Wireless telephone company. According to an agreement reached last October, the airstrip would be closed for 15 days while cable was installed across the airstrip, and the contractor would repair any damage to the community's main transport link with the outside world. Cable & Wireless's contractor, Supreme Air Freight de Panama, SA, left deep ruts in the airfield and didn't bother to comply with its commitment to fix the problem. The airstrip remained unusable by aircraft for the rest of 2001. Cable & Wireless, which according to the effects of many actions it has taken in Panama apparently does not care about about its public image, neither compelled its contractor to fix the airport nor did the work itself. Finally, in early January the community hired another company to repair its airstrip and now it wants to be repaid. The Kunas are looking to Cable & Wireless rather than its contractor for payment, and are threatening to seize phone company installations if indemnification is not rapidly forthcoming.
Banistmo's purchase of Honduran bank put off
Part of Alberto Vallarino's plan to be a bigger regional player have been delayed, as the deadline for Banistmo's purchase of Grupo Ahorro Hondureño came and went without the deal being closed. Banistmo says that the purchase isn't necessarily off, but that it wants to see the Honduran financial group's year-end figures before proceeding.
Restaurant deal apparently off
The Ministry of the Presidency has suspended bidding on the contract to feed the presidential guards. The proposed contract specifications for meals for the Institutional Protection Service had been written to require that bidders had to be chains of at least four establishments, with at least six executives working for them and providing 24-hour services. Although the objections expressed when the specifications were made public were based upon the appearance that they had been written to ensure that only one bidder would qualify, the contracting process was suspended because the qualifications required of bidders had not been published in a daily newspaper as required by law. The bidding process will begin anew in January.
Hospital America purchase on
The National Economic Council (CENA) has approved a $5.2 million appropriation for Seguro Social to buy the Hospital America and its equipment. The privately run hospital went out of business due to the economic crisis that has affected the entire private health care system, aggravated by bad publicity resulting from the death from antibiotic-resistant "flesh-eating bacteria" of a woman who gave birth there. As hard times have reduced the demand for private health care services, patients have shifted to the social security system, which has thus needed to expand its facilities.
|
|
|
©2001 The Panama News |
 |
