Panama Business & Economy Briefs

The Torrijos administration has issued a 15-year energy plan, couched in mostly general terms. Panama will be more thoroughly explored for hydrocarbon resources, a regional oil refinery will be built here, the public transportation system and government workers’ job hours will be revised to save energy and ethanol production will be promoted. The first of these things to be done will be the changes in public employee's work shifts, designed to minimize rush hour congestion in the capital. In order to avoid bus and taxi fare increases, the Torrijos administration previously cut gasoline and diesel taxes and is promoting a scheme to convert part of the capital's taxi fleet to run on liquefied propane gas.

On August 12 one of the beacons that helps planes land safely at Tocumen Airport went out. The problem? Maleantes stole nearly a kilometer of the power line, most likely to sell for scrap, and the line they took happened to be the power supply for that beacon. The electric companies complain that this sort of theft has been a growth industry this year.

The Caribbean coast of Veraguas and adjacent parts of the Ngobe-Bugle Comarca, one of the most isolated and impoverished regions of Panama, will get electricity for the first time next year. The Social Investment Fund says that it has budgeted $7.5 million to extend electric lines to the area, home to about 150,000. The public schools and health clinics will be the hooked up to the national power grid, and those residents who can afford it --- a distinct minority --- will be able to light their private homes or businesses.

A Dichter & Neira poll commissioned and published by La Prensa indicates that public confidence in the dialogue about Seguro Social reforms is low. Some 55.9 percent of those asked said they don't think the dialogue will resolve anything, against 38.1 percent who think that it will. Those with positive expectations are roughly equal in number, and surely by and large the same people, as those who think that President Torrijos is doing a good or excellent job. But a lot of people who like what the president is doing in general seem to take exception to his performance on the Social Security Fund issue. Some 62.3 percent of those surveyed had a negative view of the role that the government has played at the negotiating table, as against 32.4 percent who were positive. The labor/left FRENADESSO strikers' front also leaves most of the public disenchanted, with 51.1 percent expressing negative views of their performance in the dialogue as against 43.5 percent who give them positive marks.

The Torrijos administration has yet to appropriate funds to pay the judgment handed down by the Inter-American Human Rights Commission awarding damages and back pay to 255 workers who were fired in 1990 for striking against the old state-owned IRHE and INTEL utilities. However, on August 17 the Cabinet Council approved a resolution that will rehire the workers, although it’s not clear in which jobs. (The companies that they worked for were privatized and no longer exist as such.) There was a reference to compensation for the families of 15 fired workers who have since died. The move may be a step toward settling the case, or a trap by which the government seeks to show that the people have found other work or don’t want their jobs back and thus should be denied the award that the commission handed down several years ago but which successive governments have failed to honor.

Bolstered by a $1.2 million government subsidy, Panama's industrial tomato growers have signed a three-year deal with Nestle, the Swiss-based multinational that processes harvests that several dozen Los Santos farmers produce. As part of the program most of the tomato growers will switch to other crops over the next few years, and Nestle will pay $3.92 per quintal through 2008, which is at the moment higher than the prevailing world price (about $3.50) but may be a bargain for the company if prices rise.

This country's seafood producers have appealed to the government to intervene with Mexican authorities, who have declared Panama a risk for vibrio cholerae, the bacteria that cause cholera. That finding happened several months ago, and under Mexico's sanitary procedures requires a bacteriological inspection of all incoming Panamanian seafood. But then the Mexicans delay or just never release the test results. The argument is one of a series of non-tariff trade barrier disagreements between Panama and Mexico.

Cemento Bayano, which is a subsidiary of the Mexican-based multinational cement company CEMEX, has bought Concreto y Construcciones, which was part of the Grupo Shahani holdings. The move gives CEMEX a 70 percent share of the Panamanian cement market and is one more step in an consolidation process that has been underway in this country's building materials sector for about the past two years.

The Bonyic hydroelectric project, which has sharply divided Panama’s indigenous Naso (Teribe) nation, may not happen because of a lack of financing. The project, supported by King Tito Santana, has been the central issue behind a bloodless coup, some disputed Naso congresses and an election for king that the was boycotted by Tito Santana’s opponents. The Inter-American Development Bank has rejected an application to finance the project, but the promoter, Hidro-Ecologica del Teribe, says it will seek the backing it needs from private banks. The Naso faction opposing the project and the king is backed by several environmentalist and other non-governmental organizations, some Panamanian and some international. Tito Santana has on a number of occasions complained that non-Naso non-governmental institutions are improperly interfering in decisions that are rightly up to the Naso people to make.

The fall of Grupo ADELAG stands as a classic example of why many business groups complain that there is no judicial security in Panama. In the legal tangle that has followed upon the $120 million failure of a strip of businesses on the Tran-Isthmian Highway and Avenida Brasil, we have seen Arthur Andersen fined $100,000 for cooked book offenses similar to those for which US authorities punished the late accounting firm because of their work for ENRON. ADELAG's principal owners, Aquilino and Carlos De La Guardia, transferred assets to third parties in anticipation of the collapse and were charged with crimes for doing so, but eventually and for some creative legal reasons the charges were dropped. Now, with the acquiescence of a civil judge, shares in the International Thunderbird Gaming Corporation, a Panamanian company that runs casinos, have been transferred from companies into which the De La Guardias had deposited them to third parties. Transfers in ownership of gambling interests are supposed to be approved by the Gaming Control Board (JCJ), which did not happen in this case. All of this has prompted three of ADELAG's creditor banks, Banco Continental, Primer Banco del Istmo and Banco Aliado, to take the unusual step of buying full-page ads in the daily newspapers to denounce the decision as contrary to law, prejudicial to their interests and inimical to casino licensing laws that require owners of such establishments to be known and persons of good character. The bottom line? It seems that casino stock worth some $3 million will not be in the pot from which creditors will be reimbursed for some of their losses.

One of the less publicized but very important things that happened at the recent Association of Caribbean States summit in Panama was a lot of economic networking among the small countries of the region. The government of Trinidad and Tobago has announced that during the meeting it and Panama signed an agreement that will result in commercial passenger flights between the countries. When, how often and by which carriers are details yet to be revealed.

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