Business & Economy Briefs

If one believes the Comptroller General's figures, Panamanian unemployment has dropped below 10 percent for the first time in decades, down to 9.6 percent. The numbers are based on the annual household poll, whose methodology has been criticized by economists for many years as understating the true extent of unemployment by several percentage points. As usual, labor leaders criticized the government's numbers for being at odds with reality, specifically noting that they are out of synch with a sharp decline in direct foreign investment in the economy and because they consider that the person who had a regular job and lost it so now sells things on the street is still employed as before. The criticisms of the methodology, however, are not new, and if the figures that show a drop in the jobless rate from 11.8 percent last year to 9.6 percent this year may be low in both instances, they probably do genuinely reflect an improvement in the employment picture.

The regulations for the Alternative Calculation of Income Tax (CAIR) for small businesses have finally been issued, and there are some surprises that small business owners mostly don't like. There is no change on the minimum threshold of $800 per month that a business must make before it needs to start reporting income and paying taxes on it. Individuals will be charged 6 percent on gross income, while juridical persons (corporations, cooperatives and so on) will pay 4.67 percent. Income made abroad in tax-free places will be treated as if it were made in Panama. The values of company cars, cell phones provided by the business and other sorts of in-kind compensation or expenses will be treated as if they are ordinary salary. In the daily newspapers the reactions of leaders of the various business groups tended toward annoyance, but without panicky declarations about how businesses would fail because of the regulations.

As of November 14, it will cost $3.80 rather than $2.70 to travel by bus between Panama City and Anton. The fare from the capital to Penonome will be $4.35 (up from $3.50), to Aguadulce $5.25 (from $4), to Chitre or Santiago $7.50 (from $6), and to Las Tablas $8 (formerly $6.50). Fares on routes within the Interior are also up, on an average by about 20 percent. A bus fare increase for the Panama-Colon metro area is under consideration by the Land Transport and Transportation Authority (ATTT).

The Seguro Social dialogue, after much delay, finally got around to the key issue of pensions, and though nothing has yet been resolved the labor/left proposals were rejected out of hand as expected and all other proposals on the table include elements of privatization, beyond the half-billion-dollar line of credit to the private sector that the original Law 17 granted to the private sector. So on November 8 the FRENADESO strikers' umbrella group, the SUNTRACS construction workers' union and the CONUSI labor federation walked out of the talks. The following day in Santiago police arrested FRENADESO leader Andrés Rodríguez and SUNTRACS leader Genaro López --- not for any specific charges, but just so that the governor of Veraguas could lecture them about his power to arrest those who protest the Torrijos administration's policies. With lawyers en route, the two labor leaders were released after an hour's detention.

President Torrijos has signed legislation extending and modifying the tax breaks on new construction. The tax exoneration, formerly for 20 years on all new construction or renovations worth 90 percent of the value of the building improved, was theoretically abolished as part of Mireya Moscoso's tax reforms but never actually withdrawn. The new system of exonerations will apply to all new construction for which permits are issued before September 1, 2006. The break used to be for 20 years, but under the new legislation it will be 15 years for improvements valued at up to $100,000, 10 years for those between $100,000 and $250,000, and five years for buildings worth more than a quarter-million dollars.

Hundreds of cattle have died, and many more have become sick, from a bacterial bovine pneumonia outbreak at cattle ranches in the Azuero Peninsula in and around Tonosi district. Health ministry officials have moved in to take various samples, impose some temporary restrictions on movement of animals in the affected areas and to dispense antibiotics to fight the disease. It is believed that more than a month without rain and unusually low temperatures in the area have contributed to the disease outbreak.

In an effort to halt erosion and increase the water supply on three rivers that are important sources of drinking water for local communities, the National Environmental Authority (ANAM) has announced reforestation plans along the Chiriqui, Zarati and La Villa rivers, the first in the province of the same name and the latter two in Cocle and Los Santos provinces respectively. The reforestation will be done with native species of trees that can hold down the soil and provide shade, without taking more water out of the river systems than they conserve for them. Tree nurseries will be established and reforestation education programs will be conducted as part of the three-year effort.

Eduardo Real is the new Panamanian ambassador and consul in Singapore. He is the brother of Ubaldino Real, the Minister of the Presidency. While wearing his consular hat Eduardo stands to get a percentage from every ship registration made or seafarer's certificate issued at the Singapore consulate. As one of the busier consulates for this sort of maritime business, the appointment likely represents income in the millions of dollars.

The contracts to administer the SIACAP public employees' voluntary retirement pension plan (which is in addition to Social Security into which government workers pay) have been awarded to HSBC Investment Corporation Panama and to the PROGRESO consortium of banking and insurance interests. The companies will each run one-third of the $506 million fund between 2006 and 2010, with the Social Security Fund managing the other third.

Tourism Minister Rubén Blades wants to put an end to the annual confusion about organizing local carnivals. In the capital there is usually a last-minute arrangement for each year's Carnival, while at the biggest Carnival spots in the Interior there are frequent power struggles within or between the private Calle Arriba and Calle Abajo organizations that do most the work of putting on the festivities. To Blades, however, this is wasteful and gets in the way of an orderly international campaign to bring tourists to Panama for Carnival. Thus he's proposing a national Carnival commission with a five-year mandate to give the stability he wants.

At one time it was the Pension Garcia, one of the grand buildings of the Casco Viejo, completed in 1921. But after a useful economic life as a hotel, then as an apartment building, it fell into condemnation and control if not title passed into the hands of the Housing Ministry (MIVI). A big fire in Santa Ana in the mid-1970s led MIVI to move several dozen displaced families in, and thereafter it became a slum where no one paid rent, where plumbing and wiring was torn out and sold for scrap by junkies, and in the end gangs turned it into a “no go” area even for the police. Title to the building is still in private hands, and by some estimates MIVI theoretically owes the owners upwards of half a million dollars. The building was evacuated on MIVI's orders, with the last residents leaving on October 27. The building's restoration appears to be only vaguely planned. Whether it's fixed and by whom depends on negotiations between the owners and MIVI, both of whom would have various claims against one another. MIVI encourages private owners of Casco Viejo properties to renovate, but is prepared to declare eminent domain on properties whose owners decide to leave them in an abandoned state. The ultimate goal is a matter of dispute, with some community activists claiming that the government intends to remove all poor people from the neighborhood but MIVI saying that this is not so.

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