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Business & Economy Briefs


US-RP free trade probably won’t be finalized this month

Negotiators from Panama and the United States are scheduled to meet here between October 18 and 23 to try to reach a bilateral free trade agreement. It had been widely predicted that a deal would be struck at this fifth round of talks. Now, however, that seems unlikely, and a sixth round of talks has been tentatively scheduled for November 29 through December 3 in Washington. It is not expected that the results of the upcoming US election will make much difference in American trade policy with respect to Panama.


Public deficit limit suspended

On September 30 the Legislative Assembly approved on third and final reading, by a 52-12 vote, the law that limits the government’s spending deficits to two percent of the Gross Domestic Product. The Moscoso administration circumvented this law by various accounting tricks and by leaving a pile of unpaid bills waiting for the Torrijos administration. The new government has instituted a few initial austerity measures and will take more drastic steps in its 2005 budget, but requested and has now received an exemption from the law’s application through the end of 2005.


APEDE thinks government’s growth estimate low

Economic statistics in Panama have long been problematic for a long time, for many reasons. For example, it is nearly universally accepted among economists that official unemployment figures are understated. Add the Moscoso administration’s reputation for manipulation and the incoming Torrijos administration’s determination to state things as they are, and you had the new administration dismissing the former administration’s projection of five to six percent Gross Domestic Product growth for 2004 and offering its own estimate at three or four percent. The Panamanian Business Executives Association (APEDE), thinks that the former administration was closer to the truth on this point. APEDE president Enrique De Obarrio told El Panama America that he expects the actual number to be between five and six percent.


Bocas protests

Many activities in much of Bocas del Toro province were paralyzed for three days by a banana strike, road blockades and a closure of the dock in Almirante prompted mainly by the high electric rates that Bocas Fruit Company, a subsidiary of Chiquita Brands, charges to customers in Almirante and Changuinola. On October 1 the company raised rates from 15 to 17 cents per kilowatt hour, on top of a $1.64 basic monthly charge, while most of the rest of the country is paying about two-thirds of that rate. The electricity rate increase and ensuing protests added to a union walkout that was already underway over the firing of 11 banana workers. Several days’ worth of local banana production had to be destroyed and road transport was disrupted until the government created a commission to investigate and mediate the electricity dispute, which brought down the blockades. The labor issue may be more difficult to resolve, as the company boycotted mediation efforts by the Ministry of Labor.


Medicine shortages at Seguro

After the alarm was raised that the capital’s main public health care facility, the Arnulfo Arias Hospital Complex, was running out of more than a dozen particular medications, that facility stopped filling prescriptions made out by doctors at other public and private hospitals and clinics. (Certain medications, for example the lithium carbonate taken for bipolar depression, can be prescribed by private physicians but are only available through Seguro Social and not private pharmacies. Moreover, many clinics, hospitals and pharmacies run by the Ministry of Health or the Social Security Fund (CSS) itself don’t stock all the medicines they prescribe and thus send patients to the pharmacy at the Arnulfo Arias Hospital Complex to get their prescriptions filled.) For more than a week a number of patients were caught in a situation in which their prescription medications were not available. However, CSS put in a $15 million emergency medicine purchase order to alleviate the shortage, and says that the restrictions at the hospital complex will be lifted.


Catastro vows crackdown on shoreline incursions

Catastro, the office in the Ministry of Economy and Finance in charge of official surveying and the care of nationally owned real estate, is warning that it’s about to crack down on those who have illegally appropriated public property on the nation’s beaches or sea bottoms. That would apply to people who build within 22 meters of the high water lines along our two oceans, as well as those who have installed docks or landfills or buildings on pilings over the sea bottoms. In many parts of the country, particularly Bocas del Toro, Darien and Kuna Yala, it is customary to build houses on stilts over the water. Enforcement of laws concerning docks and landfills has also varied considerably from one locale and one administration to the next. Then there is a long-standing and  persistent trend, both by foreign resort investors and from beachfront property owners, to lay claim to beaches that by law are public property and sometimes to assert those claims by force of arms. But the new Catastro director, Benjamín Colamarco, says he is going to enforce the law and that his office will not look favorably in cases in which people have encroached upon public property and then after the fact seek concessions to legalize what they have done. Part of the problem that he faces is that a number of projects were built while applications for concessions like docks were pending in the bureaucracy.


Panama Ports “equalization” under attack

Commere and Industry Minister Alejandro Ferrer calls the “equalization” law by which Panama Ports Company, a local subsidiary of Hong Kong-based Hutchison Whampoa, “improper” and wants to set aside the tax, rent and fee breaks that would amount to more than $1 billion over the 50-year life of the concession for the ports of Balboa and Cristobal. The former administration’s “equalization” decree by which this was done is under challenge in the Supreme Court over various alleged irregularities in its adoption. Other ports, which also got costly breaks in other forms because their contracts provided that they would receive comparable benefits to their competitors, stand to also be affected. Panama Ports isn’t talking much to the press, but in a letter to the government that was then leaked to some of the dailies, has asked for a negotiated out of court settlement. Meanwhile, The Panama News and other media have been receiving anonymous emails, most likely from port interests, defending the concept of “equalization.” The Panama Ports contract allows for periodic renegotiations, so it would seem that the Moscoso administration’s generosity will not long endure.


Medical gas price fixing conviction

The Ninth Civil Court has convicted two companies, Aceti Oxígeno SA and Distribuidora de Gases SA, for fixing the price of the tanked oxygen used in the nation’s public hospitals in 1998 and 1999. The individuals involved in creating the illegal monopoly were not charged. The companies face maximum fines of $100,000.


Legislature extends exemption for new construction

One of Mireya Moscoso’s least popular tax changes was a gradual phasing out of the 20-year tax exemption on new building construction. As a matter of tax and urban planning policy that exoneration is likely to be reviewed in more detail during the Torrijos administration, but meanwhile the Legislative Assembly has extended the 20-year break for construction for which permits are issued before the end of 2005.


Rosas scams voided by new Education Minister

During the Moscoso administration the public education system became a MOLIRENA fiefdom and thus an extension of the Rosas family business, wherein hiring, promotion and contracting decisions were made on the bases of nepotism or political patronage. Education Minister Juan Bosco Bernal has begun to undo some of that, with his first important step the declaration that five of the top national administrative posts are vacant because, although they were supposed to have been filled on the basis of merit according to a civil service system of sorts, former minister Doris Rosas de Mata ignored legal procedures and rigged the processes to put her people in those posts.


City debt moratorium

Those who pay their unpaid back taxes, fines, rents or fees owed to Panama City’s municipal government in full before the end of the year will receive a 10 percent discount against the total bill including late fees, according to a partial amnesty law passed by the city council and approved by Mayor Juan Carlos Navarro. During the economic free-fall between late 1998 and mid-2002 many of the city’s businesses stopped paying municipal taxes, and the move is being made to try to bring as many as possible of these businesses out of the informal economy and into a more regular relationship with the city. Municipal authorities have also in recent weeks been shutting down street vendors who have not paid for their city street vending licenses.


Building height law repealed

An old law that a few months ago was interpreted by the Supreme Court to in effect ban the construction of all buildings more than 12 stories tall --- including works already underway --- has been repealed in a rare unanimous vote by the Legislative Assembly. It is not uncommon for Panama City neighborhoods to experience traffic gridlock when new highrises cause drastic increases in the number of people living or working there, so the law’s repeal may not be the last word on policies about building heights.


Luciani expects big layoffs at CSS

After Dr. Juan Jované was removed as director of the Social Security Fund (CSS) a year ago, allegedly for inefficiency, some 7,000 people were added to the institution’s payroll. Now the man chosen as the next director, René Luciani, says that he’s going to have to eliminate about that number of positions, or more, to get the CSS budget under control. The unions are threatening to strike if he does.


Naso assembly approves hydroelectric project

A bitter dispute over a hydroelectric project on the Teribe River seems to have been resolved in favor of the project. At an assembly of some 700 members of the Naso Congress, King Tito Santana’s recommendation that the Bonyic Hydroelectric Project should be built was approved. The former president of the Congress, Alfonso Villagra, led the opposition to the project.


Palermo quits Ente Regulador

José Domingo Palermo Trujillo, the president of the Public Services Regulating Board (Ente Regulador) has resigned with one year and three months left on his term. The board has been criticized as a tool of the privatized utilities and for its attempts to force dissident law professor and activist Miguel Antonio Bernal to abandon his radio talk show because he lacks a degree in journalism. The Ente Regulador’s most outstanding accomplishment during Palermo’s presidency is the continuation of Cable & Wireless’s monopoly over fixed-line telecommunications, which was supposed to end nearly two years ago.


Prison terms in BANAICO case

Years after the fact, the collapse of the BANAICO bank has resulted in prison terms and fines for four of its leading characters. Basically the bank was used by Colombian druglords, and when it was about to collapse this criminal element and a privileged few other were given advance warning, so that they withdrew their funds and both avoided and precipitated the final collapse. Afterwards all manner of fraud and self-dealing was uncovered. Headed up the river are Manuel Salvador Morales, who was chairman of the board, former general manager Bruno Bemporad, assistant manager Marta Ramos de Mattaden, and account officer Irasema Subía. This prolonged case may be more noteworthy for the bank officers not investigated or charged and the questions not asked by prosecutors than for this final result.


US student visas going up

Going to LSU to major in drinking beer for a few years until coming home to take an executive post with the family business? For you, and for more serious-minded Panamanian students seeking a US education as well, the American visa will now cost $100 more. The increase will be lower for students who are on exchange programs, which are more typically at the high school level.


Also in this section:
Business & Economy Briefs

Panama Canal cargo tonnage way up
The Internet prompts Third World revolution
Our September statistics

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