business

It is believed that Osama bin Laden's Al Qaeda network owns a number of ships, any one of which could be converted into a floating bomb that could devastate a port city or the Panama Canal locks. Thus the United States has imposed new Customs regulations requiring shippers to certify the contents of containers that they will be sending into US ports, and tighter Coast Guard regulations requiring more advance notice of ship arrivals. The Panama Canal Authority has followed suit, doubling the advance notice that ships intending to transit the canal must give from 48 to 96 hours. The extra time will allow for more thorough checks that might prevent a seaborne attack.

The long delayed presidential decision on the minimum wage was finally announced on July 2. The wage, which differs between rural and urban areas and between economic sectors, will go up 4¢ per hour, or $7.68 per month for most Panama City workers who are earning the minimum. Business leaders don't much like the increase and labor unions tend to think it's too small, but for increasing numbers of Panamanians labor laws and minimum wages don't mean much because the economic crisis has forced them into the informal economy.

Jan Dehn, a Latin American economic analyst for Credit Suisse/First Boston's emerging markets department, has upgraded his prediction for Panama's real Gross Domestic Product growth during 2003 from 1.5 percent to 2 percent. However, he says that a lot of politics are in play and the growth may not be sustainable. "The governing Arnulfista party and its presidential candidate are trailing far behind in the polls, so we expect pressures for fiscal spending to mount," Dehn pointed out, adding on the other hand that "the economic recovery has begun, at last. Rising domestic credit in the banking system supports the view that domestic demand is increasing." If the Moscoso administration goes on too wild a spending binge, however, the bank may lower Panama's credit rating toward the end of this year.

According to a report in La Prensa, foreign private bank deposits in Panama's banks are down by 14.1 percent as compared to the levels at this time last year, while private Panamanian bank deposits are up 16.2 percent for the same period. A big part of the drop in foreign money in Panamanian banks is attributable to the collapse of the Argentine economy, but otherwise the numbers suggest that Panama's banking center is financially stable.

From the moment that the bribery allegations and feud within the Rodin family became public, a lot of observers have believed that the bottom line of all the controversy over the CEMIS multi-modal airport expansion, container handling and industrial park project is an attempt to wrest control from promoter Martin Rodin. The use of government influence to force someone with a good business idea out of the picture and deliver the fruits of his or her labor or invention into the hands of certain well connected families or individuals is, after all, a time-honored way of doing business here. CEMIS has confirmed that there are now talks underway with several potential buyers, including a group of Chinese investors. It's not clear whether the whole project is for sale or if Martin Rodin is merely looking for some new partners.

As of July 1, the Panama Canal Authority began requiring transiting vessels to use the Automatic Identification System (AIS), a electronic navigation aid that allows canal traffic controllers and security personnel to know exactly where each vessel is at any given time. All ships over 300 net tons or more than 20 meters in length must have an AIS system, and those that don't will be required to rent one from the authority for $150. In July of next year all vessels will be required by the International Maritime Organization to be equipped with the devices. The AIS will help prevent accidents in low-visibility situations and also improve the canal's defenses against a possible terrorist attack.

After a controversial term as rector of Florida State University’s Panama branch in which virtually all tenured faculty members were driven out, enrollment declined and allegations spread over the Internet in the course of a messy divorce became the talk of campus, Dr. Jeremy Brown has accepted an undisclosed administrative post with a university in the United States and will be leaving FSU-Panama as of August 10. At this point no permanent successor has been named. Battle lines were drawn around Brown when he demoted professors Richard Koster and Miguel Antonio Bernal, resulting in their departure, and then criticized them in La Prensa for not being full-time employees. The controversy heightened when Brown was accused in a widely distributed email, apparently from his ex-wife’s lawyer, of making his girlfriend the FSU-Panama registrar. Earlier this year Florida State’s inspector general came here to investigate a number of the controversies surrounding Brown. FSU- Panama was once mainly oriented toward US military personnel and dependents, but now most of its students are upper middle class Panamanians who received their primary and secondary educations in English. The university, located by the Bridge of the Americas in La Boca, is a major component of the City of Knowledge.

After having lost its bid to offer something similar to cell phone services in Panama, the Dominican-based Tricom telecommunications company may have gotten a foot back into the door of the Panamanian market. The Public Services Regulating Board (Ente Regulador) has ordered Cable & Wireless, BellSouth and Telecarrier to connect their systems to Tricom's business-oriented fixed line phone system. Theoretically, Cable & Wireless lost their fixed line phone monopoly at the beginning of this year, but the local subsidiary of the UK-based company has avoided competition by using various ploys to resist interconnections between its phone network and those of competitors. The strategy is monopolistic and it requires very tortured legal reasoning to argue that it's legal, but several members of President Moscoso's cabinet sit on the Cable & Wireless Panama board of directors and the goverment owns a 49 percent share of the company. The Ente Regulador's order, like those that upheld Tricom's attempt to offer wireless services but were later struck down by the Supreme Court, may be appealed.

In Panama, Cable & Wireless has a strong market position and the political connections to maintain it. Its parent, the UK-based multinational that used to be the colonial phone company in the old British Empire, has all but collapsed this year, amid scandals about rigged books that grossly understated its corporate debt. The latest step in C&W's worldwide retreat is its abandonment of web hosting services in the US, which were losing the company about $1 million per day. The closure of that part of C&W's business entails the layoffs of some 1,500 employees.

Without announcing the change to its customers or offering them a choice, Cable & Wireless Panama has installed a filter that blocks access to pornographic sites --- and a lot more. If, for example, The Panama News ran a science article about those blue pills that a lot of men take to deal with a particularly sensitive disorder, our use of the "v-word" would get us blocked from our C&W user readers for our purported obscenity. Cable & Wireless has blocked its ISP client's access to The Panama News in the past, responding to their complaints by falsely claiming that we had gone out of business. The new C&W filtering service does not work against Spanish- language sites.

The Supreme Court has ordered the government to pay two men more than $62,000 for the theft of 20 government bonds by employees of the old Ministry of Treasury and Finance back in 1994. Three employees were eventually ordered to serve one-year prison sentences for the theft, but the bonds' two owners were forced to sue for reimbursement. The crime took place during the public employee looting spree in the lame duck part of the Endara administration, when the 20 bonds were among a batch of 177 that went missing from the ministry's stamp office. At the time of the conversion, the intstruments were worth about $43,000, but after nine years of their money being in limbo, the two owners will collect that amount with interest --- that is, if the Moscoso administration, which is notorious for ignoring court judgments, decides to pay.

One of the officers of the Banco Bilbao Vizcaya Argentaria (BBVA) branch in Las Tablas, Javier González, has been ordered jailed on charges that he stole at least $1.3 million from the bank. It seems that to accomplish the crime, he would have had to obtain computer codes from other bank officials.

Liquidators for the collapsed Banco DISA, an enterprise founded on US loan guarantees in the 1960s that met its downfall over bad loans and its role in an investment pyramid scheme, say that if 25 lawsuits turn out in the bank's favor, then depositors will be able to recover about 70 percent of the value of their deposits. The biggest "if" is the $40 million suit by investors in The Providence investment scheme, which "guaranteed" high returns but whose assets were seized by the bank just before the bubble burst. If The Providence investors win their claim, then the bank will have very few assets available to repay its depositors.

The international Habitat for Humanity charity has announced plans to build 500 homes for low-income people in Panama, starting with construction projects in Arraijan, La Chorrera and Mañanitas. The group, in which former US President Jimmy Carter is the best-known volunteer, builds houses in 87 countries. In Panama Habitat intends to start out with a 10- house pilot project and make adjustments based upon the experiences of doing that.

Chicago-based Griffith Laboratories, a manufacturer of ketchup and other condiments that has contracts to supply such giants as McDonald's, Burger King and Kentucky Fried Chicken, has decided to rearrange its Central American and Caribbean operations, shifting production for Caribbean countries from Costa Rica to their factory in Panama. The Costa Rican factory, on the other hand, will take over production for the Central American market that had previously taken place here. The reorganization's net effect will mean an expansion of the plant here, and that will result in an undisclosed number of new jobs.

Retail company Grupo Machetazo has decided to close one of its Machetazo supermarkets and one of its Poll Mart department stores. The company's spokesman told La Prensa that it's not a matter of the company being in trouble, but of those particular locations being unprofitable.

Mexicana airlines, which used to offer flights between Tocumen and Mexico City, stopped serving Panama as of July 1. Its exit from the route, which it found unprofitable, makes COPA the only regular commercial connection between here and Mexico City.

Also in this section:
Business & Economy Briefs
Seguro Social strike
The Panamanian Diaspora
City of Knowledge

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