business & economy

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US-RP free trade rushes to ratification here, still uncertain in USA
First big canal expansion contract goes to canal administrator's relatives
Trying to attract tourists back to the USA

Persistent poverty
The Panama News readership figures
Business & Economy Briefs

Business & Economy Briefs

"Trade Promotion Agreement" passes

With 16 deputies staying away and a bunch more sending their suplentes to cast the decisive vote, the National Assembly ratified the US - Panama Trade Promotion Agreement with only three dissenting votes and one abstention. Vanguardia Moral's Mireya Lasso and Panameñistas Miguel Fanovich and Enrique Garrido cast the nay votes, while MOLIRENA's Wigberto Quintero, who made a scathing critique of the deal during the debate on second reading, abstained. None of the deputies who voted for the treaty actually read it, as the 1,200-page Spanish text was unavailable in time to be read before the vote. The big hurdle that the treaty must jump will be a September vote in the US House of Representatives.

Transmilenio appears to be defeated

At least during the Torrijos administration, it appears that the "articulated" bus system wherein the present diablo rojo converted school buses that are run by owner/operators organized into syndicates would be replaced by one or a few companies running larger mass transit bus lines in the metro Panama City area has become a dead letter. The "Transmilenio" system first tried in Brazil and spread to a number of other cities in its original concept calls for special lanes for special buses, lanes that other city traffic physically can't use. Otherwise the larger "articulated" buses onto which passengers step on and off at curb or platform level, having paid their fare to enter the platform so that there is no delay in paying a bus driver, would not be able to move faster than city traffic and the system's whole point would be defeated. The Torrijos administration had concentrated its attention on the larger, hinged in the middle buses to the exclusion of thought about the special lanes --- really, the administration brought to us by the ad cartel was thinking in terms of buzz words rather than reality --- and made all sorts of plans for vehicular overpass and other construction projects ahead of the 2009 elections. Then somebody pointed out that these roadwork projects conflicted with the necessary development of the special bus lanes. So never mind, the administration says. The project can't be started until at least some time in 2009, by which time we will be into an election year in which the Torrijos administration's term will end. Bus driver syndicates are not doing much to hide their jubilation, and critics of the syndicates are generally unhappy with the diablos rojos' new lease on life.

Howard development contract signed

On July 11 the national government signed a 40-year contract with the UK firm London & Regional to design and manage the former Howard Air Force base into a commercial, industrial and transport center. The company is committed to investing $705 million, most of that within the first four years. The master plan should be ready within three months.

De La Espriella, Chapman on ACP board

President Torrijos has appointed Ricardo De La Espriella, who was a figurehead president of Panama during the military dictatorship, and Guillermo Chapman, who was minister of economic development in the Pérez Balladares administration, as members of the Panama Canal Authority board of directors. Also reappointed to a new term was board member Adolfo Ahumada.

HSBC says BANISTMO deal not as good as thought

For months rumors had been circulating in Panamanian banking circles, with various spins, that the assets that UK-based HSBC bank received in the Banco del Istmo purchase were not what they were supposed to be at the time. Now the weekly Capital Financiero reports, based on a filing with the Comision Nacional de Valores, that BANISTMO, which reported a profit of some $87.5 million in 2005, lost $36.1 million in 2006 and that the difference wasn't a sudden turn in the bank's fortunes but that BANISTMO hadn't been using international Generally Accepted Accounting Principles. Well, duh now --- Panama has a different set of accounting rules and the Supreme Court actually prohibited the change to Generally Accepted Accounting Principles a few years ago. So the real questions are who pulled a fast one on whom, which HSBC managers are going to be jettisoned and what colors their parachutes will be.

Public debt up to $10.7055 billion

Whether or not this country's 2007 economic growth rate will be eight percent as the Torrijos government claims, Panamanians are clearly seeing an increase in the Gross Domestic Product. People might think, then, that the government would be taking in more money in taxes and fees and paying down its debt. However, the national debt is actually increasing, and reached a record $10.7055 billion by the end of May, according to government figures published in El Panama America.

Panama sues Colombia before WTO

Colombia's off-again, on-again restrictions against mostly Chinese-made shoes and textiles coming through the Colon Free Zone are now up to a World Trade Organization tribunal to judge. On July 11 the Panamanian government filed a complaint with the WTO, which will try to mediate the dispute before it gets to a trial. Colombia defends the restrictions by citing smuggling, bogus paperwork to evade taxes and money laundering in the Free Zone, but Panama says that these are just pretexts used to protect Colombia's shoe and garment industries against competition.

Liter of milk goes up a dime

The cost of living is rapidly increasing in Panama, and maybe the best sign of that is that consumers now pay 80 cents for a liter of milk, up a little more than 14 percent from the previous 70 cents. The usual explanation is high world oil prices rippling through the economy.

Big crowds for farm protest sales

Farmer and rancher groups, fed up with what they say are low prices paid by the supermarket chains and other middle dealers, have been conducting a series of unique protests, selling their farm products to the public at the prices that they get from those who ordinarily buy wholesale from them. That has caused some shortages in the stores and tended to raise prices, but more than anything else has attracted huge crowds to the sales in San Miguelito and David, with people lining up in the pre-dawn hours to be able to find what they want when the selling begins in the morning.

Drivers licenses to cost $40

Used to be that unless you had outstanding tickets you could get your driver's license renewed for free. But as of July 23, it will cost $40. The government says the charge is to cover the cost of the new licenses, which are more difficult to falsify.

Another luxury high condo tower project folds

Park 32, a luxury condo high rise project for the Costa del Este area, is the latest upscale development to fold, only a few days after the announcement that the 104-story Ice Tower on Avenida Balboa wouldn't be built. The high rate of failure for highly touted expensive Panamanian developments, and the general practice of preselling the units, mainly to speculators and repaying deposits without interest has by many industry analysts had a chilling effect on the high-end Panama City real estate market. How chilling? Well, enough so that ACOBIR, the real estate lobby, is actually calling for regulations to limit such abuses as pumping unrealistic projects and getting the interest-free use of the suckers' money before the developments get called off.

ICA wants to make new landfills

People have long suspected that Boca La Caja would be eliminated as a hardscrabble artesanal fishing neighborhood and now the incursions of luxury condo towers and theft of public parks is being followed the announcement that, if the Mexican ICA construction company gets its way, there will be three new peninsulas of landfill built for upscale development on the ocean side of the Corredor Sur Causeway, closing off the Boca La Caja from Panama Bay and adding about 18 hectares to Panama City's land surface. La Prensa, which described the project as "Pharaonic," reports that the process of getting the needed government permits is underway.

High court rules for Clayton and Albrook neighbors

The Housing Ministry (MIVI) has been fairly solidly in the developers' corner in recent years, and has been supportive of a request to eliminate building height restrictions at Clayton and Albrook. But most of the residents of these former US military bases don't want all the extra traffic, noise, litter and pressure on water, sewer and storm drain utilities implicit in high rise development and neighborhood associations in the two areas sued to set aside a MIVI decree lifting the height restrictions. The Supreme Court's Third Bench has ruled in the neighbors' favor,  holding that the ministry didn't give the proper notification or hold public hearings as required before making such a change.

City warns about PanCanal View

The promoters of PanCanal View, a purported high rise development overlooking the Panama Canal, were at the Canal Zone reunion in search of people to put their money down to reserve their units. Alas, the word got out, as city officials no doubt hoped that it would, and there were few takers. The city has rejected several applications for permits for the project and the city is warning that publicity and pre-construction unit sales for the project are fraudulent and probably criminal.

Police fire shots to break up labor protest

The Isla Vivero residential and resort development project in the Perlas Islands has had its share of controversies, and not it has labor troubles. Members of the SUNTRACS construction workers union walked off the job on July 11 to demand overtime pay and the proper employer contributions to the Social Security Fund, and the National Police were called in when the union set up a picket line. The cops fired shots into the air to rout the SUNTRACS members.

Labor Ministry orders safety officials at construction sites

Faced with a SUNTRACS threat of a national construction strike over safety issues in the wake of more than a dozen building site deaths this year, Labor Minister Reynaldo Rivera has decreed that there must be at least one government safety officer at every construction site. That has not only not prompted any messages of congratulations from the militant construction workers' union, it has set off protests from the Panamanian Chamber of Construction (CAPAC), which pans the decree as both unnecessary and a back-door government tax scheme to make builders pay fees of between $10,000 and $100,000 for the service. Even among some developers there is acknowledgment that it's probably a good idea to have a safety officer present on high rise construction sites, but the idea that this is needed even for small single story construction is rejected even by many a labor militant.

BNP insists on putting DINA buses back on the road

The fatal bus fire of last October 23 was deadly because the Guatemalan-made DINA bus had no emergency exit and an air conditioning system that used an explosive chemical, which exploded and left passengers trapped in an inferno. Survivors and families of the victims rather immediately demanded action against the importer of the bus and officials of the Banco Nacional de Panama (BNP), given that the latter insisted as a condition of the loan to the bus owner/operators that they must buy that unsafe make of bus with the loan money. Prosecutors refused to deal with the bus safety issue, jailing the bus driver, his brother the owner of record and a mechanic that worked on the bus. However, lawyers for several victims filed private criminal charges and against the Public Ministry's opposition a court added former BNP officials and the importer to the list of defendants. On another front, after much public pressure the Land Transportation and Transit Authority (Transito) finally took all the other DINA buses off of the road. But now the BNP is insisting that Transito back down, arguing that if the DINA buses are not allowed to operate the loans it granted won't be repaid.

Prosecutor wants fraud conviction in Banco DISA case

The legal fallout from the 2001 collapse of Banco DISA is far from over, with a plethora of spinoff civil, criminal and administrative cases still pending. The trial in the main criminal case, however, in which Jorge Endara Paniza y a Rafael Endara Jiménez were accused by the government of fraud and tax evasion, has come to an end. The prosecutor asked the trial judge for a conviction on the fraud count and the dismissal of the tax charges. If the judge finds that way, Endara Paniza and Endara Jiménez could get three-year prison terms. There are a bunch of privately filed criminal charges ranging from bankruptcy fraud to defamation still floating around in the case. Banco DISA is particularly noteworthy both as an example of rabiblanco fortunes inflated by accounting smoke and mirrors and as an example of US economic aid --- the bank was founded on US loan guarantees that were supposed to assist Panama's development but were basically doled out because JJ Vallarino, who had the Coca-Cola bottling concession at the time, was one of the principals.

Former port workers before the legislature again

In 1996 the then state-owned ports of Balboa and Cristobal were privatized, and under Panamanian labor law the 2,279 port workers were owed severance pay, compensation for untaken vacations and other compensation. The government said it was up to the company that won the privatization concession, Hong Kong-based Hutchison Whampoa, to pay. The company said it was up to the government to pay. Years later, President Torrijos admits that the workers are owed the money, but they still haven't been paid. So the workers recently met with the National Assembly's Labor Committee to press their claim. Unfortunately, compensation for the workers is not in this year's national budget. The Panamanian government is very bad about paying former employees what they are owed. Courts have ordered back pay for a group of employees who were fired from formerly state-owned utilities in 1990, the government has exhausted all appeals and lost them, and the people are still waiting to be paid.

Protests both ways in oil spill case

Petroterminales de Panama (PTP), is a mixed state and privately owned company that owns the Puerto Armuelles to Chiriqui Grande oil pipeline and the oil tank farms at the terminals on each end. Earlier this year a broken valve resulted in a big oil spill at Chiriqui Grande, ruining the fishing for a lot of local people who depend on it for a living. A lawsuit was filed and a judge ordered the sequestration of a sufficient amount of oil in the PTP tank farms to pay for the damage. However, that petroleum that was sequestered belonged to Castor Petroleum, a third company based in Switzerland that had nothing to do with the oil spill. The principle of that, and the general notion that assets can be seized to ensure payment for environmental damages, has prompted howls of protest from Panama's Chamber of Commerce, the Panama Bankers Association and other business groups. It has also brought bus loads of Bocas del Toro fishing families into Panama City to demand adequate security for the payment of damages. The Supreme Court is considering an appeal of the sequestration order. If that order is vacated as a practical matter there will never be any compensation for the damaged fishery. Most of those who have lost their livelihood are of the indigenous Ngobe nation and Panama's business leaders notoriously disregard any economic assets or rights that indigenous people possess, as is their defense of PTP's and the oil company's rights and the dismissal of the fishing rights here.

Violence during Petaquilla pollution investigation

Journalist Blas Julio, who was in rural Colon province covering church and university investigators who were looking into complaints that Richard Fifer's Petaquilla mining company has damaged streams upon which local campesinos depend, was struck by a rock by an unidentified person while visiting the Coclesito parish priest's house on July 7. The investigators from the Catholic Justice and Peace Service (SERPAJ) and a University of Panama committee had been taking water samples from local streams allegedly affected by runoff from the mining project (which, according to the National Environmental Authority, has been deforesting the land without a proper environmental impact study or permit) and meeting with people with complaints about the project when someone threw a rock, striking Julio in the back.

Power struggle leaves Chepo city workers unpaid

The way it's supposed to work, a mayor is supposed to nominate a municipal treasurer, the representantes are supposed to approve or reject the nomination, and once a treasurer is approved she or he must sign the payroll for the national Comptroller General to approve the payment of municipal workers' salaries. In Chepo there is an immense multifaceted brawl between Mayor Raúl Acevedo and the representantes and one of the battle fronts is that the council has rejected three Acevedo nominees for treasurer in a row. No city treasurer? Then the Comptroller won't approve the payment of city workers. The standoff has left the municipality's 90 employees unpaid for more than a month.

Colon city council against dolphin capture

On June 26 the Colon city council unanimously approved a resolution opposing any capture of dolphins or whales from Panamanian waters for commercial purposes. They opined that this would be harmful to the reproduction of marine mammals. One of Colon's great attractions is that if you take a boat ride just outside the breakwall the dolphins will often come swimming in your wake, and this is one aspect of the economically depressed city's attraction as a cruise ship destination.

Strange line item, considering...

In the ongoing controversy about the Ocean Embassy application for a permit to catch up to 80 wild dolphins from Panamanian waters, both the company and the government have steadfastly denied that there is any intention to export dolphins from Panama. Opponents of the dolphin capture proposal, citing the history of the people who run Ocean Embassy and the number of dolphins that the company has asked to be allowed to capture, say that the plan surely is to catch dolphins for export. Meanwhile, in the Trade Promotion Agreement that the legislature just approved but still must be ratified by the US Congress to pass, there is this line item in the agreed upon US duty schedule: Panamanian dolphins and whales can be exported to the United States duty-free.

US-RP free trade rushes to ratification here, still uncertain in USA
First big canal expansion contract goes to canal administrator's relatives
Trying to attract tourists back to the USA

Persistent poverty
The Panama News readership figures
Business & Economy Briefs