business

The government is done talking with labor and management for the time being and will soon announce its proposed changes to the Social Security Fund (CSS). Despite the secrecy about the details of a plan that will surely entail sacrifices that will offend certain social sectors, CSS director René Luciani did tell La Prensa that the plan to rescue the fund from its actuarial problems will be phased in over several years and will have to be maintained for several decades to work. Over the past two years business interests have promoted a plan that would put control of most or all of the retirement fund in the hands of private banking and insurance consortia, while labor unions have generally backed a plan to plug the deficit by transferring the remaining unsold properties of the former Canal Zone to the CSS. Neither of those ideas are likely to be embraced by the Torrijos administration. There will probably be increases in employers’ and employees’ payroll contributions to the fund, and benefits are likely to be cut, for example by raising the retirement age or scaling back future benefits.

The Union of Banana Exporting Countries (UPEB) was never so successful as, say, OPEC. However, despite UPEB’s failure the notion of solidarity among banana exporting countries has never died. Thus in Ecuador on January 26 President Torrijos, along with his host President Lucio Gutiérrez of Ecuador and Presidents Álvaro Uribe of Colombia, Abel Pacheco of Costa Rica and Enrique Bolaños of Nicaragua, signed an agreement to resist the European Union’s 230 euro per ton banana import duty. Honduras also sent a lower level delegation to the meeting in Quito, and between them the countries participating in the summit supply nearly three-quarters of the bananas that people in the EU countries consume. The exporting countries complained that the EU duty violates World Trade Organization rules.

Fuerte Amador Resort & Marina (FARM) has invested in a business development on Flamenco Island at the end of the Amador Causeway, which is a private concession on public property. To control traffic and limit the use of their parking lots by people who don’t patronize their businesses, FARM set up a toll booth at the entrance to the island and charged $2 per vehicle to pass. But the Interoceanic Regional Authority (ARI) never approved the toll or the toll booth, and which the ARI directors were considering a resolution calling upon FARM to cease and desist from charging tolls, a group of students and employees from the University of Panama moved in with sledgehammers, destroyed the gate and damaged the toll booth. Police arrested 21 persons who allegedly participated in the protest and demolition, but the detainees were promptly released pending further investigation. ARI ultimately passed a resolution ordering FARM to stop charging tolls and remove its gate and booth, but the company has appealed for a reconsideration.

The Panama City municipal government is owed some $120 million in back taxes and fees, and doesn’t have the staff with the right preparation to do an effective job of collecting these debts. Thus the mayor has recommended that the city hire Cobranzas del Istmo SA, a private collection agency, to do the job. The matter will be taken up by the city council in February. The city has hired private collectors in the past, with modest success.

The Panamanian government is a 49 percent shareholder in Cable & Wireless Panama, but despite that relations between the government and the company are not well. At issue now is some $11 million that C&W is charging the government for calls by legislators and judges. The government says that the company owes a contractual duty to provide these services free of charge, but C&W says that just because Panamanian law provides that individual legislators and judges get free phone service does not mean that the government does not have to pay the cost. Meanwhile, the Supreme Court has held the legislators’ free phone service illegal, because the resolution that established it was passed by only a legislative committee and not the entire assembly.

After receiving conflicting recommendations from Panama Technological University (UTP) and the Panamanian Society of Engineers and Architects (SPIA), the Ministry of Public works has decided that the Albrook overpass, which has cracked due to its sinking into ground that was a mangrove swamp 100 years ago, must be reinforced before it can be safely used. That’s expected to take about one year if new major complications don’t arise.

After a process that percolated up and down the lower courts for nearly five years, the Supreme Court has sentenced Ayub Bhiku, the owner of Autos Harum, to six years and three months in prison for the sale in 2000 of a Mazda 626 with many problems. Earlier Bhiku had received a five-year sentence from the trial court, but he appealed and this past Christmas Eve he was acquitted by the Superior Court. Prosecutors appealed that decision and the high court’s penal bench reversed it, finding that in this and a number of other instances Bhiku went to elaborate lengths to deceive customers about the mechanical problems of the cars that he sold. Bhiku, who was not immediately remanded to prison, will have the opportunity to avoid incarceration by payment of a large fine.

Marine shrimp and langostinos won’t be on sale for Lent this year, as the Panama Maritime Authority (AMP) has declared a February 1 through April 11 ban on the catching or sale of marine shrimp. If this is like most recent years, there will be another shrimping moratorium later in 2005. The ban does not apply to river shrimp or those crustaceans raised in tanks or ponds. The annual shrimping moratoria are declared to avoid the destruction of the marine resource by overfishing.

The Asociacion de Profesores de Veraguas, a provincial chapter of one of Panama’s several teachers’ unions, is threatening to walk off the job if the government’s plan to establish 65 classrooms designed to teach students with hearing or visual impairments along with kids who don’t have these disabilities. The teachers complain that a pet project of the First Lady’s is being imposed without consultation and without the necessary preparation of the teachers who are supposed to implement the program. But the government counters that such mainstreaming has been under discussion here since the late 1990s.

Education Minister Juan Bosco Bernal told El Panama America that the nation’s public schools have been suffering from shortages of English, physics and mathematics teachers. Legislation passed during the Moscoso administration requires the study of a foreign language --- in the great majority of cases English --- at all levels of education, which is behind the shortage of English teachers.

In its second annual edition, the Panama Jazz Festival turned out to be a growth industry. By the time the sun went down over the Plaza Catedral, where the January 22 free concert part of the festival was held, the plaza itself was overflowed with people and there were large crowds on all the side streets. By all accounts that was a much larger crowd than last year’s event attracted.

The Panamanian system of classifying rice into “especial” and grades A and B has been suspended for six months while it’s under review. The categories are based on the percentages of broken or discolored grains. The immediate cause for the change is an infestation of the nation’s rice fields by the spinky mite, which has reduced the harvest. The proponents and beneficiaries of the measure are the millers, who will see the quality of the rice they sell but not the prices they charge declining during the shortage. For consumers the rule will be to doubt any representations made about the quality of rice for the next few months. The lower-quality rice will not, however, pose a threat to human health or taste very different.

According to reports in the British, Colombian and Panamanian press, Colombian-based Cerveceria Bavaria is for sale and the British SAB Miller is interested. Bavaria, you may recall, bought a controlling interest in Cerveceria Nacional (Balboa and Atlas beer brands, etc.) and the local Pepsi bottling franchise a couple of years ago. Bavaria, in turn, is controlled by one Julio Mario Santo Domingo, a Colombian industrialist who owns, directly or through his companies, some 70 percent of the shares. The nearly simultaneous sales of Cerveceria Nacional and Cerveceria Baru (Soberana and Panama beer brands, the Coca-Cola bottling franchise, etc.) meant that a national brewing industry that had long been owned by Panamanians quickly passed into the hands of foreigners. The economic sub-text to the story was that by and large the hundreds of millions of dollars that passed into Panamanian hands in these sales were not invested in Panama. That economic reality was mentioned at times during last year’s election campaign, usually to illustrate arguments that the former administration’s corruption had made Panama unattractive for large investors. But some of the sellers of the breweries were central figures in campaigns against Mireya Moscoso’s nominee and large investment decisions are usually based upon several factors, so the political spin about the investment of brewery sale proceeds was probably too simplistic. The easier thing to see was the disappearance of some national beer brands, and that process could continue if and when Bavaria is sold.

Soon after her husband assumed the presidency, First Lady Vivian Fernández de Torrijos complained that over the years a number of adjacent property owners had laid claim to parts of Parque Omar, typically by building fences that encroached upon the public park. The nation’s official surveyors and cartographers --- the Ministry of Economy and Finance’s Catastro office --- were put on the case. Warnings were issued that fines and demolition orders will be issued to those who have encroached. Property title searches began. And then La Prensa’s Mónica Palm reported that one of the entities with structures crossing its lot line into public property is a company named Rio Grande Enterprises SA --- whose president is Anagrethel de Lewis, the wife of First Vice President and Foreign Minister Samuel Lewis Navarro. The property, which encroaches onto some 1,172 square meters of the park, was purchased from another company in 2000 with the lot line problem already existing.

One of the most abused tax dodges of recent years has been by way of the reforestation tax incentives. It was improperly given to criminals who cut down wild forests and replaced them with stands of teak, to people who didn’t actually own title to the land as required, to landowners who actually didn’t do any reforestation and to other similarly abusive types. Now as part of the tax reform package the government is seeking to eliminate the reforestation tax breaks, but National Environmental Authority (ANAM) director Ligia Castro says that her authority is drafting a proposal that would subsidize those who are actually investing money in reforestation projects. The details of any such legislation would surely be the subject of much commentary and lobbying by environmentalist groups and those with financial stakes in reforestation.

Panama’s National Securities Commission (CNV) has issued a warning about a purported online securities broker calling itself Tower Securities Online and implying that it does business here on its website. In fact no such company is registered as a securities broker here, and moreover it would probably not be allowed to do so because its name is too similar to Tower Securities Inc, a division of the Tower Bank that is licensed to deal in securities here. Tower Securities Online is not related to Tower Bank or Tower Securities Inc.





Also in this section:
Torrijos blinks, but tax hike on track
No deal in 7th round of US-RP free trade talks
Stowaways, ship delays in US waters and RP ISPS implementation
Business & Economy Briefs

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