business

The Denmark-based multinational shipping line Maersk Sealand, one of the world’s two largest companies in its field (along with Taiwan’s Evergreen) will be making Panama its Latin American and Caribbean headquarters. Previously an office in the United States had served as home base for all operations in the western hemisphere.

According to the Panama Canal Authority (ACP, by its Spanish initials), the fiscal year that ended this past September 30 was a great success, with increases in the number of transit and the tonnage of cargo passing through the canal, and a new safety record. Only 10 “official accidents” were recorded, the first time since 1923 that the figure has dropped so low, and when one considers the number of transits then and now it amounts to an all-time canal safety record of 0.71 such accidents per 1,000 transits, down 22 percent from fiscal 2003. “Official accidents” are those mishaps about which a formal investigation is requested and conducted. The canal noted a 10 percent increase in tonnage and a 6.7 percent increase in transits over the previous year, which it largely attributed to a rise in shipping to and from Asian ports. On the down side, the ACP reported a 17.4 percent increase in the average time it takes for a ship to get through the canal, from 22.70 to 26.66 hours, but added that for vessels that came here having first made reservations there wasn’t much change in Canal Waters Time.

Relations between Panama and Argentina have been strained by a Panamanian Supreme Court decision holding the Argentine government liable here for canceling a $32 million contract with a Panamanian company. The court has frozen the assets of the local branch of the Banco de la Nacion Argentina, which in turn has prompted public protests by Argentine Ambassador Ernesto Pfirter, which in turn has led to charges by presiding magistrate José Troyano that Pfirter is improperly interfering in Panama’s affairs. The Torrijos administration has not meddled in the court case, but has disassociated itself from Troyano’s remarks.

The Torrijos administration has rejected the Colombian government’s suggestion to build a road that would close the 160-mile gap in the Pan-American Highway at the Panamanian-Colombian border. The decision was not unexpected, as the Colombian side is a war zone, the Panamanian side is composed of forested parks and indigenous areas whose defenders say would be negatively affected by a road and the unbroken jungle serves as an effective barrier against hoof-and-mouth disease, a cattle plague that South America has and we don’t.

The “canasta basica,” or price of a selection of staple items typically bought by a Panamanian household, went down again in October, from $188.01 to $185.24. It was the second straight month of falling prices. Most of the items in the selection are foods, so current high energy prices are only indirectly reflected in the official cost of living. Economists and people living on the economy frequently question the validity of the canasta basica, but whether or not it’s a good reflection of the cost of living it is the point of departure when Panama’s minimum wage is periodically reviewed.

Parts of the Panama City - San Miguelito metro area have been subject to water shutoffs because the water in Madden Lake is so muddy that the intakes at the IDAAN water and sewer utility’s Chilibre water treatment plant have been clogging up with sediments and thus the plant’s production has been cut. The problem is caused by a combination of heavy rains and deforestation on the upper Chagres River, which have led to the highest sedimentation levels at the lake in at least 30 years.

The Ministry of Economy and Finance’s Catastro office will soon start a reassessment of real estate valuations across all of Panama City. The last time such a task was undertaken was in 1973, and the situation has become so divorced from market realities that some lands in Paitilla are assessed at $2 per square meter. There will surely be weeping, wailing, gnashing of teeth and political pressures applied, but if Catastro goes through with the plan it will mean a substantial net increase in the property taxes that are paid.

From now through December 24 you can pay old traffic tickets and avoid the penalties for late payments, which can be as much as $50 per ticket. Payments may be made at any of the offices of the Transit and Land Transportation Authority (ATTT).

Those who pay their overdue bills to the IDAAN water and sewer utility during the month of December will receive a 10 percent discount. However, to qualify one must pay the entire amount in arrears. The utility figures that about $40 million in collectible arrears are outstanding.

During the Moscoso administration there was no memorandum of understanding between the International Monetary Fund and Panama in effect, nor did the IMF review this country’s finances. The Torrijos administration, however, let the IMF come in to review this countries public finances while letting it be known that it was not interested in a memorandum of understanding. (In these types of agreements, the IMF has usually demanded the transfer of most public services to multinational corporations, the elimination of government spending for social purposes, reduced taxes for companies and wealthy individuals and tax increases for people on the lower end of the economic scale. After the economic collapse of Argentina, which had dutifully followed IMF prescriptions, the Washington-based fund’s proposals find many fewer takers in the region.) The preliminary report of the IMF auditors was favorable about cost-containment measures that the Torrijos administration has taken, and expressed the hope that the Legislative Assembly would take up the subject of tax reform --- in order to raise more money for the government --- sooner rather than later.

The Standard & Poors bond rating service is keeping Panama’s government bonds at a BB rating --- a couple of notches below investment grade --- with a negative outlook. In the company’s opinion, not much has changed in government fiscal policy since Martín Torrijos took over the presidency from Mireya Moscoso, and meanwhile the structural problems with the Social Security Fund remain unresolved and the red ink continues to flow there.

The Fitch bond rating service has assigned Panamanian government bonds a BB+ rating, which is well below investment grade but better than junk. The main reason given for the speculative grade was the country’s high public debt.

On November 15, after talks between Panamanian President Martín Torrijos and Mexican President Vicente Fox, this country’s Ministry of Foreign Relations issued a statement recounting the historical reasons for our banking and corporate secrecy laws and noted the blacklisting and other pressures brought against Panama by the the Organization for Economic Cooperation and Development (OECD), the Group of Eight developed countries Financial Action Task Force (FATF), the World Bank, the International Monetary Fund and the governments of Argentina, Brasil, Chile, Spain, Italy, Mexico, Peru and Venezuela. “The inclusion in these lists has carried with it the application of discriminatory measures such as surcharges, withholding and non-recognition of the costs incurred by natural or juridical persons resident or domiciled in those countries in their transactions with the listed countries.” The statement also recounted Panama’s initial agreement to begin sharing tax information with the OECD and the subsequent breakdown of that deal when the organization excepted European “tax havens” from the requirements it had sought to impose on Panama; and the problems that this country encountered when it was blacklisted by the FATF for failing to adequately cooperate in efforts against money laundering; and this country’s 2002 legislation applying reciprocal sanctions against countries that blacklist Panama. However, the ministry said that it is in the process of bilateral negotiations to end such restrictions, which it said had “achieved positive results in the case of Mexico,” and reiterated this country’s goal of getting off of all international financial blacklists.

Panama’s oldest newspaper, La Estrella, has been living through hard times since it was a Noriega mouthpiece in the 1980s. A few years ago control of the publication passed from the Duque family to a group of Arnulfistas headed by Mireya’s 1999 campaign treasurer Augusto “Onassis” García, and though its paid circulation remained the lowest of all Panama’s dailies, it was the leading recipient of government advertising throughout the Moscoso years. However, on August 31 the Mireyista gravy train came screeching to an abrupt halt and now García, along with many of his relatives, finds himself immersed in legal troubles. Thus García has stepped down as publisher, to be replaced by Simón “Bolo” Alemán, on an executive board that also includes prominent Arnulfista activist Antonio Domínguez as vice-president and Raúl Tapia as treasurer. Members of the Shahani family, Machetazo heiress Janet Poll, PRD business owners’ front leader Arturo Melo, and banker/developer Mayor Alemán, who was the campaign treasurer for former President Ernesto Pérez Balladares also figure among the major stockholders of the paper. Rumor has it that along with Onassis García the Mireyista editorial line is being ditched.

The three Novey hardware stores have been sold to Cochez y Cía, which is continuing to expand its holdings in the national building materials market. The expansion is happening with an infusion of cash from members of the Motta family, who bought a 30 percent stake in Cochez last year.

La Prensa reports that, due in part to lower than expected activity and also because of a reorientation of business priorities, the US-based Spherion Corporation is putting its call center here up for sale. Spherion’s core business is as a corporate headhunter, which screens and recruits applicants for jobs with its client companies.

Guys who go to the University of Panama’s San Miguelito Regional University Center and who are into that sort of thing will still have to go farther afield to satiate their lusts. The scheduled opening of a brothel in in the La Gran Estacion de San Miguelito, which is actually in Panama City adjacent to San Miguelito, and next to the university, has been put off indefinitely. Panama City Mayor Juan Carlos Navarro has denied the owners of La Mayor a permit for a house of assignation, the city’s representantes have denied them a liquor license and the provincial government has denied them a license to run a brothel.

The only way to drive to Colon’s Costa Abajo --- that part of the province’s coast west of the canal --- is to cross the swing bridge at the Gatun Locks. But that was not possible for more than one hour on November 16, because unemployed protesters from the Nueva Nacion movement blocked access to the bridge. At about the same time another group of workers who hadn’t been paid as scheduled the day before blocked the entrance to Colon City.

The studio where that Balboa monstrosity in homage to Arnulfo Arias was made has been evicted from its Curundu premises by the Interoceanic Regional Authority (ARI). Procesos Escultoricos Perseos was three years behind in the rent, so police and ARI officials moved in on November 18 and threw them out.

It’s the time of year when muggings, purse snatchings and pickpocketings and thefts from cars, stores and residences peaks. Police are warning people not to flash large amounts of cash, to beware of people hanging around banks and ATM machines, to take only the amount of money needed for purchases along when Christmas shopping and to watch out for suspicious activities in the neighborhood.




Also in this section:
Wicker businesses continue in temporary quarters
Loans by Caja de Ahorros probed
Panama close to acknowledging that it's a Pacific Rim country
Business & Economy Briefs

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