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Business & Economy Briefs

Business & Economy Briefs

EXPOCOMER to coincide with regional summit

The annual EXPOCOMER trade fair has declined as a public attraction in recent years, with the Chamber of Commerce seeking to limit access to the event to buyers and sellers to an ever greater extent. Still, it's an important business event that also attracts regional political leaders looking to boost their national economies. This time around it will be the occasion for more political visits than usual, because a summit among Panama, the Central American countries and the Dominican Republic will take place at the same time, on March 9. The main topic on the agenda will be the resumption of talks for a regional free trade agreement. Talks for a Panama-Central America free trade pact broke down in 2002, mainly over agricultural issues.

Panamanian students do poorly on entrance exam

The Panama Technological University (UTP), which was formed when the engineering department of the University of Panama seceded in the 1970s in order to get serious about academics and leave many of the old political games behind, has always had a strict entrance exam and prospective students' performance on it have been one of the principal objective measures of how much secondary school graduates know and which high schools are doing better or worse than others. This year the UTP has adopted international standard exams, so that it can be compared with other schools in Latin America, and according to La Prensa it turns out that on the 1600-point combined scale the 5,675 applicants scored an average of 957 points, significantly lower than what their peers in other Latin American countries average. The main weaknesses tended to be in algebra, trigonometry, English and solving brain teaser analytical problems.

Seguro now taxing in-kind benefits

As of March 1, cars, meals, gasoline, clothing, insurance, memberships in clubs or associations and other such in-kind benefits paid by employers to employees will be considered income the same as wages or salaries for purposes of calculating Social Security Fund contributions. Private pension payments and educational benefits, however, will not be treated as income. It should mean $4 to $5 million more in revenue for Seguro Social, according to El Panama America. By and large, business groups whose executives receive the lion's share of such benefits are not happy about the new policy.

Comptroller: 6.4% GDP growth in 2005

The Comptroller General's office has issued its report on the nation's economy in 2005, and says that the Gross Domestic Product went up 6.4 percent. Financial services, seaports, air transportation, hotels, Colon Free Zone exports and telecommunications all experienced double-digit growth, while the Panama Canal, real estate, private education, rental, mining, construction and agricultural sectors' performances were below average. The report said that last year ended with 9.8 percent unemployment, 2.9 percent inflation, a public debt of $10.268 billion and an $817 million balance of payments deficit.

MEF: cost of living up 3.7 percent in 2005

The Ministry of Economy and Finance does a rough measure of the cost of living called the "canasta basica," the total price of a collection of common household staples that includes foodstuffs and cooking gas. According to the ministry that cost of living index went up 3.7 percent. However, left out of the equation was the cost of transportation, which according to the Comptroller General's figures went up some 9.2 percent, mainly due to higher fuel prices.

Minimum wage up 8%

In an agreement between the National Council of Private Enterprise (CoNEP) and the CONATO labor federation, the private sector minimum wage was raised eight percent across the board. For most metro-area minimum wage workers that's a raise from $263 to $284 per month. (There are differences in minimum wage levels according to industry sectors and the various regions of the country.) SUNTRACS construction workers union leader Genaro López, who formally participated in the negotiations but was treated along with other labor militants by CoNEP and the PRD-aligned CONATO as if they did not exist, dissented from the deal and denounced it as betrayal of working people. Depending on whose figures one cares to believe, the settlement may or may not keep minimum wage workers' pay up with inflation, but it clearly represents no gain in their standard of living.

Government will pay its workers at least minimum wage

Government jobs, especially those which carry with them opportunities to extort bribes, can be quite lucrative. However, many government workers are part-timers and many have earned less than the minimum wage for private sector workers. However, shortly after the CoNEP-CONATO agreement on private sector minimum wages, President Torrijos announced that his government's policy will be to apply it to its own employees, which means that some 20,000 poorly paid full-time government workers will be getting a raise to $284 per month.

Banana strike may end Chiquita privileges

On the surface, it made no sense. COOSEMUPAR, a banana workers' cooperative that's deeply in debt, went on strike against itself. However, that cooperative operates plantations in the Chiriqui lowlands that a Chiquita Brands subsidiary used to run, and which were devolved to the co-op with an exclusive marketing agreement in favor of Chiquita. But bad weather has ruined much of the production at Chiquita's plantations in Ecuador so without COOSEMUPAR fruit the company can't meet the demands of its customers in North America. Thus the 2,400 members of the co-op, which is some $34 million in debt, walked off the job on March 6 as the world price of a box of bananas was at $6.50 to $7 but Chiquita was offering $5.28. After an intervention by the Ministry of Labor Development the strike ended later that day, with the co-op winning assurances that the contract with Chiquita would be revised. The government itself has a direct interest in the dispute, as most of COOSEMUPAR's debt is owed to public entities.

Problem with US Social Security checks

Postal service between the United States and Panama has been deteriorating over the past few years, with fingers pointed in various directions but the apparent main cause being US "anti-terrorist" measures. A milestone in the downward spiral was the loss of February's Social Security checks to be distributed by the Federal Benefits Unit here, according to that institution because they failed to arrive at the post office. Not to worry, the FBU assured. The checks will be replaced.

Torrijos vetoes lifeguard law

President Torrijos has vetoed a proposed national lifeguard licensing law and create a technical board to carry it out. The president called the measure impractical, pointing out that the board would have powers that other similar licensing boards do not.

Estimates of lost revenue in a US-RP free trade pact

There has been no final agreement on the ultimate details of a free trade deal between the United States and the Republic of Panama, and most of the details that have been agreed are still being kept secret from the public. Thus there is no basis for precise calculations about economic effects, but the whole concept of getting rid of tariff barriers carries with it the corollary that revenues from import duties go down. In El Panama America, the Chamber of Commerce estimated that it will be about a $40 million loss for the government in the first year. In La Prensa, the Ministry of Economy and Finance was estimating a loss of some $234.6 million over the first four years. Of course, were the government's rosy predictions of more and better-paying jobs as a result of free trade to come to pass, that would mean more income tax revenues for the government; while the dire consequences of increased poverty and unemployment that some skeptics make would make the hit to the government's revenues even worse.

Banco DISA account holders win a little victory

The Supreme Court has ruled for Banco DISA account holders and against the National Bank of Panama over $5.5 million that the latter bank was claiming as an nonreturnable deposit on a $29.8 million transaction that took place in 2000 and 2001. It likely means that after all the lawyer bills are paid and the litigation subsides, the account holders will get about 70 cents on the dollar for their deposits. Banco DISA collapsed in a chain reaction of failures precipitated in large part by its investment in pyramid schemes that went bust.