business & economy
Business & Economy Briefs
Cuts in senior citizen and retiree discounts
With little fanfare, legislation to cut senior citizen price discounts is making its way through the National Assembly. Introduced by Leandro Avila (PRD-San Miguelito), the former public employees union leader who earlier sponsored the government's unpopular Seguro Social reforms, the proposal would reduce discounts on movies, sporting events and other entertainment services from 50% to 20%; fares on inter-urban buses from 30% to 20%; hotel and pensionado rooms from 50% to 30% on weekdays and from 30% to 15% on weekends; Panamanian passports from 50% to 25%; and telephone rate discounts from 25% to 15%. Reductions in the senior and retiree discounts for air fares, real estate taxes, household appliances and insurance premiums are also under consideration. The proposal, called Anteproyecto de Ley No. 179, is in the legislature's Labor and Social Welfare Committee. Retirees and senior citizens who are residents of Panama --- whether Panamanian citizens or not --- have long enjoyed a wide range of price discounts, but the Torrijos administration is committed to neoliberal economic policies that cut back the living standards of Panama's older generations as a supposed way to improve the business climate.
RP interest rates up quarter point
Following the lead of the US Federal Reserve Bank as they usually do, banks here have raised interest rates by one-quarter of one percent. For somebody making mortgage payments on a $90,000 home, for example, this would typically mean a rise in monthly payments from $506.95 to $520.72. Since it appears that the Fed will be raising rates again this year, Panamanian interest rates are also expected to go higher.
International loan to fix the Transistmica
On May 17 the Cabinet Council approved a loan agreement with the Corporacion Andina de Fomento by which the Panamanian government will get an $80 million line of credit to finance improvements to the Trans-Isthmian Highway and the roads and streets around Colon's three container ports. Under the Pérez Balladares administration the government contracted with Mexican promoter Máximo Haddad's PYCSA construction company to build and operate, in addition to the still uncompleted Corredor Norte, a Panama - Colon toll road. Despite multiple major breaches in the contract with PYCSA it has never been voided, but the part about the road connecting Colon to the capital has pretty much become a dead letter. Poor conditions along the present highway have been the cause of many accidents and protests by residents of communities that the road serves, and improved road ingress and egress has for many years been a top demand of the Colon Free Zone's merchants.
Chiquita, Italian company fight for bananas
A proxy war between Chiquita Brands and the Italian Ale Fruit company is being fought within the COOSEMUPAR banana workers cooperative, which runs the plantations of what used to be the Chiquita Brands subsidiary Puerto Armuelles Fruit Company (PAFCO). Chiquita had an exclusive marketing agreement, by which it was paying well below the world market price for bananas and the co-op was going ever deeper into debt and looking to the government for a bailout. The co-op workers' union, SITRACHILCO, approached Ale Fruit and negotiated a more favorable marketing deal. However, the co-op board of directors was approached by Chiquita, which made them an offer. The directors now want to stay with Chiquita and say that the union that represents the co-op members has no right to talk to anyone about banana marketing. It seems likely that the Chiquita - Ale Fruit battle will end up in a rank-and-file challenge to the co-op board of directors, and then wind up in Panamanian courts. If the government's finger tips the balance in the dispute, one factor to consider is that Vice President and Foreign Minister Samuel Lewis Navarro is a major shareholder in Chiquita.
SUNTRACS sets May 29 strike date
There have already been brief street-blocking protests, but things might get disruptive for real on May 29 if the Panamanian Chamber of Construction (CAPAC) and the SUNTRACS construction workers union don't agree on a new contract by that date. SUNTRACS is Panama's most powerful and militant private sector union, but tends to know what the market will bear. The problem is that prices have been going up almost across the board and the government has slashed workers' expectation of future Social Security retirement benefits, so workers will have a lot of lost ground to make up. SUNTRACS represents more than two-thirds of Panama's 15,000 or so construction workers and recently re-elected Genaro López, who famously said "I try to be a good communist," as their leader. If SUNTRACS walks out, look for pitched street battles between workers and cops and monumental traffic jams in Panama City, not only around construction sites but also near the University of Panama where the campus radicals would take actions in solidarity.
Controversial park sale doesn't happen, yet
A few years back the legislature set aside an area of some 15.2 wooded hectares near the old Fort Clayton for a new building for itself. Immediately environmentalists protested --- the land is adjacent to the Metropolitan Nature Park and within the boundaries of Parque Nacional Camino de Cruces. Or in the latter case, arguably "was," as the legislature could arguably be said to have legally redefined the limits by setting aside the woods to be torn down for their new building. The protests stopped the legislature from proceeding in that locale, so the assembly decided to put the property up for sale. That started the protests again, to the extent that nobody put in an offer at the scheduled May 11 bidding --- nobody wanted to buy a lawsuit against the Committee to Defend Urban Forests and Las Cruces Trail National Park and friends. Rogelio Paredes (PRD-Arraijan), who heads the legislative committee trying to sell the land, complained about the constant agitation and vowed that the bidding would be re-scheduled.
Balbina threatens owners of Casco Viejo ruins
During the Pérez Balladares administration the government passed a number of laws making it easier for property owners to evict tenants in the Casco Viejo in order to remodel the buildings there, and various incentives for restoration. But what happened was that a lot of owners threw the people out, boarded up their properties and put up "for sale" signs, while many other speculators bought the ruins of old buildings and held onto them in hopes that prices would go higher and they'd make a lot of money. Now Housing Minister Balbina Herrera is threatening to take ruins held by speculators by eminent domain, and to fine property owners who have failed to maintain their buildings as required by law. The prior warning is to be taken with the knowledge that the government doesn't have the funds budgeted for massive condemnations, but the people who have boarded up buildings that were being used and are not fixing them may have something to worry about. Then there's third government threat looming over some speculators --- those who bought properties in the Casco Viejo with loans from state-owned banks and are doing nothing to improve them may get their loans called in.
Free Zone to take over Davis?
The Davis Export Processing Zone, an industrial park at the former Fort Davis that the Pérez Balladares administration promised would create many thousands of jobs but has actually created fewer than 100, is probably gong to be transferred to the Colon Free Zone. La Prensa reports that the Ministry of Economy and Finance has approved the move, but it still needs to be accepted by the Free Zone directors.
Colon representantes demand bridge
The old Interoceanic Regional Authority (ARI) master land use plan had a bridge over the northern end of the Panama Canal, but the Moscoso administration never liked predominantly black Colon anyway so put the second bridge over the canal on the Pacific side. Now the Panama Canal Authority says it wants to close the swing bridge at the Gatun Locks and replace it with a ferry to connect Colon's Costa Abajo with the rest of Panama --- and that to be followed by another bridgeless body of water to cross, the entrance to the proposed third set of locks. But to someone needing to get to an emergency room, waiting for a ferry, or potentially waiting twice for two ferries, can mean life or death. Thus all of the representantes from the Costa Abajo's Chagres and Donoso districts, plus those from Escobal and several others from Colon district, have formed a committee to press for a bridge over the canal on the Atlantic side. There have over the years been various bridge or tunnel plans drawn up, but these seem to be no more a priority for the current administration than they were for prior ones.
Small dolphin park planned
An American investor, Robin Bennett Friday, says he'll open a $2.5 million marine park in San Carlos district's corregimiento of El Higo. The park, which would have the region's first dolphin display, would open in 2007. First, however, he'll have to get a permit from the National Environmental Authority (ANAM). The environmental impact statement has been filed, but not yet approved or rejected. There may be opposition, as there are environmentalists and animal welfare activists who for various reasons don't like captive dolphin shows.
La Prensa reports that the Ministry of Agricultural Development (MIDA) will have fewer seeds to distribute to needy farmers this year. About 500 farmers get seeds from MIDA, but the ministry has to pay higher prices lately, largely because increased fuel prices have made it more expensive to dry, treat, package and transport seeds.
Banker Eduardo A. Masferrer, the former CEO of Miami's failed Hamilton Bank, was convicted on May 10 of 16 accounts of bank fraud by a jury in a Miami federal district court. According to federal sentencing guidelines it's likely that he will receive a 10 to 12-year prison term. In an earlier trial on the same charges last December, there was a hung jury and a mistrial was declared. The Panamanian banker of Cuban extraction was accused of hiding losses of some $20 million by the Hamilton Bank. This was done, according to prosecutors, by purchasing essentially worthless loan portfolios from Russian banks and misrepresenting their value in order to deceive bank shareholders. After US authorities took over the bank in 2002 the losses were discovered to be on the order of $160 million and the shareholders lost nearly all of their investments. Masferrer's lawyers argued that the Russian acquisitions were good-faith business transactions that went bad because of economic fluctuations in Russia. Originally charged along with Masferrer in the Hamilton Bank executives Juan Carlos Bernacé and John M.R. Jacobs, who made plea bargains and testified for the prosecution at the trial. Masferrer got his start as a banker in Panama City's banking center with the Banco del Istmo, but has not had anything to do with the management of that bank for many years. He moved to Miami and took over the Hamilton Bank in 1989, building it into a large operation by cultivating close financial ties with the city's Cuban-American political and business elites.
Gringo charged with human trafficking
Victor Politis, a 54-year-old US citizen and proprietor of the Cristal Moon bar in Calidonia, has been formally charged with human trafficking. It is alleged that he important Colombian prostitutes to work at his establishment, confiscated the passports and return flight tickets from the women and then changed the terms of the labor contract he had with the women. A couple of the women complained to the Colombian consulate here, and this led to the charges.
Year in jail for bus scam
The managers of Interamerican Motors, Carlos Fonseca and Antonieta Strah, have been fined $2000 each and sentenced to a year in prison for selling buses to 14 driver/owners who serve routes in Arraijan that were represented as new and of the Hino brand but were actually reconditioned and equipped with inferior Asia brand parts. The jail time can be avoided by paying an additional fine.
New boxing media
Roberto "La Araña" Vásquez's May 20 successful defense of his WBA Junior Flyweight championship at the ATLAPA convention center in Panama City was notable as a business story for two main reasons. It was the first time Panama had ever used "pay per view" marketing of a boxing match, and it was also the first time that a Panamanian athletic event was broadcast over the Internet. The online video was by El Panama America. In order to limit competition to MEDCOM --- largely owned by former President Ernesto Pérez Balladares and his relatives --- Toro's administration passed regulations forbidding newspapers to own television stations. But with the growth of the Internet and use of streaming video, that distinction may be circumvented. The El Panama America boxing broadcast --- which wasn't of such wonderful quality, but gave fans with Internet-connected computers a reasonable opportunity to see the fight --- thus may be a first step in a revolution that could topple the current Panamanains television oligopoly.
Oxy says Ecuador's action won't affect RP plans
Occidental Petroleum (Oxy) is studying the possibility of setting up a new refinery in the deressed Chiriqui town of Puerto Armuelles. There are still more than one year of studies to be done, above all about environmental impact, but if the project goes ahead after all of that, it would be a $4 billion investment. But would Oxy's recent ouster from Ecuador put an end to those plans? Company representatives told El Panama America that events in Ecuador won't affect its plans in Panama one way or the other.
Spanish firm wins Puerto Armuelles privatization concession
The Torrijos administration's privatization policy took another step with the National Martime Authority's grant of the public dock at Puerto Armuelles to SI Global, a Spanish consortium. SI will rebuild the dock and invest in grain storage, seafood processing and drydock facilities, at a cost estimated at between $9 and $11 million. The concession will have an extensible 20-year term. The government hopes to privatize six more ports in the course of this year.