business & economy

Also in this section:
Panama Canal expansion project selectively hyped
Intellectual property rights and public health
The Panama News readership figures
Teachers in search of jobs
Business & Economy Briefs

Business & Economy Briefs

New state power company

On March 29 the Cabinet Council approved the creation of the Empresa de Generacion Electrica, a state-owned power generating company. Because the Panama Canal Authority (ACP) had sold some of its power to the national grid, it's not strictly speaking the first public venture into the electricity business since the privatization of the old IRHE utility company by the Pérez Balladares administration. It is, however, a step away from the ACP's decision to stop selling power generated at its Madden and Gatun dams and a governmental straying from the worship of the private market that has been something of the official state religion in recent years. The policy change comes in the wake of abusive electric company practices that added to high world energy prices to drive electric bills higher than are politically acceptable. The new company's announced purpose will be to generate power in such a way as to drive the spot market prices down.

Utilities' books open to public inspection

The privatized utilities have lost court cases and their claim that their records are confidential. Cable & Wireless Panama, the UK-based telephone company's Panamanian subsidiary, and also the electric companies created out of the breakup of the old state-owned IRHE utility, have the government of this country as its junior (49 percent) partner. The Supreme Court has ruled that this means that its documents are public records that in general are open to inspection by any person. The Cable & Wireless case arose on a Transparency law request by Partido Popular activist Guillermo Cochez, while the electric companies ruling was the result of a lawsuit brought by outgoing national ombudsman Juan A. Tejada.

Torrijos names administrators to new authorities

The implementation of the presidential legislation by decree that was enacted during the January and February assembly recess is underway. President Torrijos has named Víctor Urrutia as the head of the National Public Services Authority that was created to oversee the discredited Ente Regulador; and Pedro Meilán to head the National Authority for Consumer Protection and Defense of Competition which replaces the dysfunctional CLICAC. Meilán is a lawyer, while Urrutia has degrees in chemistry, physics and electrical engineering. They have both served in government posts more or less related to their new duties.

Cell phone competition in 2008

The market for cell phones was supposed to open to new competitors in 2007, but the Public Services Regulating Board (Ente Regulador) has given the Cable & Wireless / Telefonica duopoly an extension of their exclusive deal until October of 2008. It seems that the Ente Regulador intends to behave similarly to the way it has with respect to fixed line telephony, in which the Cable & Wireless monopoly was supposed to end in 2003 but continues to this day. Instead of free competition in cell phone service, the Ente Regulador has decided that it will only allow one more cell phone frequency, and that it will take 18 months to deal with the details of who gets the concession. The board left open the possibility, however that more than one company might share in the concession for that third frequency. The likely bottom line is a continued oligopoly in the sector and the artificially high cell phone rates that generally go along with such a situation.

Canal breaks records

In two days the Panama Canal broke two records, that for tonnage passed through the canal in one day and that for the number of ships with a beam of 91 feet or more in one day. A record 27 "super" sized vessels transited on March 12, and the following day a record 1,070,023 tons of ships and cargoes passed through the waterway. In recent days the lines waiting outside the entrances to the canal have been visibly longer, having been anchored in such a way as to make a subliminal statement that the canal needs to be expanded.

US twists arms to make retirees use direct deposit

On April 1 the US government held an international direct deposit "Enrollment Fair" at the Hotel El Panama, to get federal retirees to sign up for direct deposit services for their pension and social security checks. People who had checks coming could pick them up at that event. However, those who did not pick up their checks at that weekend event were unable to get paid until the end of the week. "We apologize for any inconvenience" the Federal Benefits Supervisor said in an email to protesting pensioners, but it seems that the delay, which was planned in advance but not announced beforehand, was a very deliberate policy of the Bush administration. The switch from passing out checks at the consulates to direct deposit is one of several budget cutting moves that's part of Washington's overall shift of priorities to pay for the Iraq War.

Bond risk down

The JP Morgan bond rating service has given Panamanian government bonds a 175 risk rating, the lowest it has ever been. At the beginning of the year it was at 196. The reason for the better rating is that the company believes that Panama has good economic prospects for the rest of this year. The lower risk rating will allow the government to borrow money at lower interest rates.

COPA wins arbitration with mechanics

A labor dispute that was sent to arbitration by the Ministry of Labor Development when an airline mechanics' strike during Carnival was threatened has been resolved in favor of the company. COPA Airlines will give its 162 mechanics one-fifth of the increase they had been demanding in their initial negotiations with the company and half of their final offer. Depending on skills classifications and seniority, the mechanics will see their paychecks increase between $30 and $105 per month. The union wanted compensation comparable to those paid in North America, but the company successfully argued on behalf of a pay scale based upon what Colombian and Costa Rican airlines pay.

COPA's traffic jumps in March

Maybe the high readership numbers for this website in March were part of a larger economic trend of increased interest in and travel to Panama. That would be consistent with the March passenger numbers reported by mostly Panamanian-owned COPA Airlines, which use this county as its principal hub. According to a press release by COPA's holding company, COPA Holdings, its passenger traffic went up 23.6 percent. Part of this growth, however, was due to COPA's expansion, which includes the recent acquisition of AeroRepublica, a Colombian domestic airline.

Legislator defends his prof's salary

PRD deputy Dorindo Cortez represents Colon's city circuit, 3-1, in the National Assembly. He also gets a full-time salary from the University of Panama, for teaching law at its Colon regional campus. But the university wants to reduce him to part-time status, given that he pulls down a full-time salary with the legislature. Unfair, Cortez says --- he teaches classes from 7 to 9 a.m. every weekday and Thursday and Friday night classes. The move to reduce his status to part-time came after an audit by the Comptroller General's Office, but Cortez says what it's really about is a vendetta against him by former Arnulfista legislator Jacobo Salas.

Private criminal charges against Petaquilla

Two farmers in the San Jose del General corregimiento of Colon's Donoso district have filed criminal charges against Petaquilla Minerals for building a road that they say has affected the river along which they live and make their living. The complaint, filed under the nation's environmental crimes law, says that the company that former Cocle governor Richard Fifer promotes felled trees and used heavy equipment to move earth without the required permit from the National Environmental Authority or having done the required environmental impact study, and that these actions have caused sedimentation along the river bottom and increased the risk of their lands being flooded. The company denies the charges and claims that is has an agreement with local authorities to create the road. Fifer is in other legal trouble, for allegedly embezzling public funds while Mireya Moscoso's governor of Cocle.

Free trade talks with Ticos, Nicas advance

Since the announcement at the ExpoComer trade fair that long-stalled free trade negotiations between Panama and the Central American countries would resume, negotiators have been busy tying up loose ends in talks with Costa Rica and Nicaragua. Although in neither case had a final deal been reported at the time these briefs were written, it had been reported in several media that agreements were close in both sets of talks. With Costa Rica the sticking points had been the Ticos' hesitance to allow Panamanian companies into their mostly state-owned financial services sector. Panama, on the other hand, had been wary of allowing Costa Rican dairy products onto our market. The Nicaraguan talks had been stalled mainly over agricultural issues.

RP-Ukraine economic ties

The Republic of Panama and the Ukraine are not big trading partners, but on March 30 they did sign an agreement that could alter old profiles a bit. On that day the Ukrainians joined the World Trade Organization and as an adjunct to the deal Panama and the Ukraine signed a protocol on market access. Ukrainian industry has recently taken a somewhat higher profile in the waters to our southwest, as a US-Ukrainian-Russian-Norwegian private consortium is now launching communications satellites from international waters along the equator west of the Galapagos.

RP off the Russian blacklist

Until recently the government of Russia had imposed a series of restrictions on financial transactions involving Panama, because mobsters and tax evaders in the former country were known to hide their assets here. But as part of Russia joining the World Trade Organization, a bilateral accord between Russia and Panama that deals with many of these concerns has been signed and Russia has removed this country from its financial transactions blacklist. The agreement also contains a merchant marine clause that eliminates special surcharges and coast guard inspections for Panamanian-flag ship calling at Russian ports, which were imposed because of concerns about unseaworthy vessels registered in this country posing hazards in Russia's waters.

Korean volunteers coming

The governments of Panama and South Korea have signed an agreement that will bring about 15 Korean foreign aid workers to this country. The volunteers will mainly be lending technical assistance to this country's public school system.

Tocumen duty-free shop bidding again in May

The struggle for lucrative duty-free shop concessions at Tocumen Airport will resume in May, with bidding under different rules than previously adopted. This will be the third attempt. In the lame duck months of the Moscoso administration, pressure was applied to the directors of the state-owned Tocumen SA to grant duty-free concessions to members of the Moscoso family. Without actually telling the ex-president off, the authority's managers and employees delayed in following this order until Mireya's term ended and the issue became moot. There followed a process of writing specifications for bidding scheduled for November of last year. For some unknown but widely suspected reason the specifications were written in such a way that only one company would qualify to submit bids. A public uproar and various threats of legal action led to that process being quashed. Now there are six companies that have expressed an interest in the May bidding.

Albrook overpass opens

Way behind schedule, the vehicular overpass near the Albrook airport and bus terminal opened to traffic on March 26. The structure was built on insufficient foundations in an area that a century ago was mangrove swamp and began to sink before it was finished. After several attempts to reinforce the foundations the Ministry of Public Works declared it safe to use.