Panama Business & Economy Briefs

The leaking motorized catamaran Isla Contadora sank near Taboga on the afternoon of September 18, shortly after having set out from the island with 160 people aboard, had engine problems and slowly sank. All 153 passengers and seven crew members were rescued by Panama Canal Authority tugboats summoned by an emergency flare. The Panama Maritime Authority (AMP) is most displeased. On September 2 the vessels license to transport passengers was pulled after AMP inspectors found many of its documents out of order, its compass malfunctioning, its starboard rail broken and problems with its engines and hull. When the Isla Contadora left Taboga on the 18th, its engines broke down and with them the pumps that kept the vessel afloat despite the slow leak in its hull. The AMP issued a summary $10,000 fine and criminal charges are being threatened. In addition to boat having been used for passenger service after having been found unseaworthy, the authority is also investigating allegations that during the voyage in which it sank the person behind the wheel was both unlicensed and inebriated. The Isla Contadora is owned and operated by Canal and Bay Tours and sailed out of Balboa.

With an earlier goal unmet, arguments over procedures ongoing and the government yet to tip its hand on the key issues of the retirement age and how long one must contribute to the Social Security Fund to qualify for a pension, national dialogue facilitator Salvador Rodríguez has asked for an extension to the talks. The Law 17 reforms that sparked a strike and protests are formally suspended through late October and Rodríguez had hoped to get the dialogue concluded by the end of August. But now he’s asking the Torrijos administration for an extension until November 15 to make his report on the dialogue’s results.

The JP Morgan Emerging Markets Bond Index, which measures the risk of public bonds issued by the less industrialized countries against the risk of US government bonds, reported a risk factor of 222 points for Panama on September 16. That compares to 367 in September of 2004. Basically the change means that the New York investment house believes that the Torrijos administration has taken a number of steps that have made progress toward putting this country’s public finances in order.

In a September 13 meeting in Guatemala President Martín Torrijos agreed with his Brazilian counterpart, President Lula da Silva, that the two countries would work together to develop ethanol and biodiesel production facilities in Panama. Brazil has long experience in this area, as in the wake of the first world oil crisis in the 1970s it embarked on a strategy of alternative fuel development. These natural fuels are not necessarily as efficient as petroleum-derived products and they are not particularly cleaner to burn, but they tend to be more economical during times of high world oil prices like those through which we are living at the moment, plus they generate income for farmers in countries that produce them.

The 20-year property tax exemption for new buildings, proclaimed dead or dying since the middle of the Moscoso administration, has received another lease on life. The Torrijos administration has sent a proposal to the legislature extending this benefit to any building for which a permit is issued before September 1 of next year. The construction industry is powerful, the wealthy classes tend to prefer new houses to old estates and Torrijos has to votes in the legislature to get the laws he wants, so the tax break extension is likely to pass without problems.

The National Maritime Authority (AMP) is cracking down on yachties who anchor their boats along the Amador Causeway --- either side of it --- other than at an approved marina. The area is a restricted zone, and those who ignore the decree face fines of up to $1,300. There are several approved marinas, including the Balboa Yacht Club, along the causeway.

On September 14 the Cabinet Council approved a proposal to modify land tenure laws and rules about coastal development for the Bocas del Toro and Perlas archipelagos, Coiba and its surroundings and the shores of the Azuero Peninsula. The announced purpose of the proposal, the details of which have not been published, is to promote tourism by ending a lot of the confusion about island properties and tourism concessions along beaches.

The criminal case against 18 Ministry of Economy and Finance employees accused of systematically stealing money paid for Arraijan-Chorrera Autopista tolls is still pending, but meanwhile the ministry has apparently had enough of losses due to corruption and plans to hire a private contractor to run the autopista toll collection gate. Bids are to be opened on September 26, and the ministry hopes that after the private contractor is paid it ought to receive some $1 to $1.5 million per year.

As of October 3, most government workers will be on the job from 7:30 a.m. until 3:30 p.m. This half-hour shift in the working day is for the purpose of reducing rush hour traffic by getting the capital’s many public employees in and out of their offices before the main traffic rushes start, and thus saving a bit on the extra energy expenses implied in getting stuck in traffic.

The Cabinet Council has approved the resumption of an irrigation project that the Moscoso administration discontinued in 2000. For some $2.3 million Biwater International will rehabilitate irrigation water lines that serve rice farmers in Cocle and Veraguas provinces, and build a dam on the Guarare River to provide water for this purpose.

It seems that Cost Right’s papers were not in order. At least the documents with respect to 87 crates of pork and poultry products imported from the United States were not satisfactory to agricultural quarantine officers. Thus some 2,898 pounds of ham, chorizos, chicken and turkey went up in smoke. One of the trade issues between the United States and Panama is about non-tariff trade barriers, particularly the use of phytosanitary regulation. Both sides accuse the other of unreasonable application of health rules for economic protectionist motives.

The Social Investment Fund (FIS), with contributions from the province’s private port companies, has $24 million set aside for public works in the economically depressed Colon province and has begun to allocate the money. The first projects will be street improvements in Río Rita Norte, Medalla Milagrosa and Nueva Primavera.

The National Police are withholding payment to Cable & Wireless for the 104 police emergency line, alleging that they have been getting poor service. The national government is seeking offers from various companies for its fixed-line phone services and might eliminate its contractual relationship with the company altogether. The Panamanian government owns 49 percent of Cable & Wireless Panama, which won the privatization concession for the old public INTEL phone utility and has by various maneuvers attempted to retain its monopoly after its exclusive rights to run fixed line phone services expired on January 1, 2003.

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