Panama business & economy briefs

Business & Economy Briefs

New license deadline extended

Reports are that the long and crazy lines to get the new driver's licenses have shortened considerably, but as the year's end approached some 90,000 drivers didn't have the new cards, in many cases because the Transito Authority hadn't made provisions that would allow them to do so. Thus the deadline to get the new license has been extended until February. The people most affected by the authority's disorganization have been foreign residents and drivers in the Interior, the former because the digital information for the new licenses were taken from the Electoral Tribunal in the case of citizens but that institution doesn't keep such data for non-citizens and that latter because in this as well as for many other things for many years the Interior has been an afterthought for the people running the national government.

New home tax break extended

Notwithstanding promises to reform the tax system and collect more that are periodically made to international lenders, Panama has again bowed to construction and real estate interests and extended the 20-year exemption from property taxes on new construction, this time for buildings started by December 31, 2009. Although most of the beneficiaries of this tax break are Panamanian, a disproportionate share goes to foreigners who buy more expensive properties so there is a bit of criticism of the move as a subsidy for outsiders. There are also historic preservationists who don't like the tax break because it encourages the demolition of older buildings, including historic sites and examples of outstanding architecture from yesteryear. But the construction industry is one of the engines of Panama's current economic growth and successive governments have been hesitant to slow it down.

ASEP: we have enough electricity but should raise rates

The Torrijos administration is promising that in 2010 a power grid connection with Colombia will give Panamanians cheap electricity. The Public Services Authority (ASEP) says that we will have have sufficient electrical power for 2008 and 2009. However, ASEP also says that we need to raise Panama's electricity rates, which are among the highest in the Americas, by about seven percent per year. See, here the law of supply and demand is that major corporations and the in general rich demand more money and the government supplies it to them. Actually, a lot of reasonably well-off business owners are protesting January rate hikes because they say the higher cost of power will make their companies less competitive in the world.

Windmill farms for Cocle

A Spanish company, Fersa Energias Renovables SA de España, says it plans to invest more than $1 billion in two windmill farms, located at Mendoza and Toabre in Cocle province, that will generate 400 megawatts of power. The plan is to supply both the Panamanian market and through the growing regional power grid, export some of the electricity to neighboring countries. The Spanish company bought a controlling interest in an already existing but undeveloped concession from a company called Enrylus, and expects to begin installation of windmills this coming May.

ACP moving along on canal expansion contracts

The Panama Canal Authority (ACP) has approved the qualifications of four international consortia to bid on the contracts to design and build the new locks. There are some 30 companies, including most of the world's major construction and design firms, in the consortia. Bids are due next August, and will be selected on the basis of design concept as well as price so may not go to the low bidder. The Atlantic and Pacific side locks contracts may go to different bidders. The ACP is also set to ask for bids to plant and maintain trees on hundreds of acres of its land that is now covered with elephant grass, so as to make up for forested areas that will be cut during the canal expansion project. The reforestation job requires that the areas be planted with a mix of native species of trees.

Comptroller rejects Electoral Tribunal contract

Comptroller General Carlos Vallarino has refused to sign a $3.695 million no-bid contract by the Electoral Tribunal to have US-based L-1 Identity Solutions create an electronic voter verification system for the May 2009 elections. The tribunal, which has a two-thirds PRD majority, has already stricken some 90,000 names off the voting rolls for failure to vote in recent elections or for registrations in the wrong places and there is always the possibility that a new voter identification system could be misused. In any case, tribunal first put the contract out for bids, didn't like the result and conducted a no-bid process that gave the contract to L-1 Identity Solutions, which was created in 2006 by a merger of Viisage and Identix and is one of the world leaders in biometrics and other automated identification technologies. Sagem Securite, a French rival for the Electoral Tribunal contract, had complained and pointed to a scandal wherein the company was paid for fingerprint identification work that it didn't do in Costa Rica and Vallarino pointed that out in a letter to the tribunal. Vallarino also noted the lack of a bidding process, the Panamanian subsidiary's not having been vetted due to its recent establishment and insufficient justification for throwing out the prior bidding process as reasons for rejecting the contract.

$29 million IADB loan for Bocas

The Inter-American Development Bank has granted a $29 million loan for "sustainable development" in Bocas. Half of the money will go to improvements in water and sewer services, and other projects to be supported will be a flood warning system on the Sixaola River, training for urban planners and ecotourist business operators, improvements in municipal tax collection services, a bridge over the Changuinola River and various agricultural and fisheries projects. The loan will be payable over 20 years (none of it due during the Torrijos administration) and will have an interest rate that varies with the market.

Fine and restitution for Bocas oil spill

The National Environmental Authority (ANAM) has fined Petroterminales de Panama SA $605,382 and ordered the payment of $1,399,296 in restitution --- not to the people whose livelihoods were affected but to ANAM --- for damage to wildlife in the Chiriqui Lagoon caused by an oil spill that happened when the company delayed repairs to a valve it knew was leaky. Affected communities and individuals are suing the company, but the courts have blocked their efforts to sequester company assets so the plaintiffs will most likely never see any compensation.

Expected complaint about Law 45

The National Assembly has passed Law 45, which prohibits such abuses as developers selling condos before they are built, then for whatever reason canceling the contracts and just giving the buyers their money back --- now they have to pay interest. The National Council of Housing Promoters (CONVIVIENDA), however, complains that the legislation will just drive up the price of housing when it's already going up because of more expensive building materials.

Price of cement up again

As of December 27, the price charged for a sack of cement by Mexican-based multinational cement maker CEMEX, Panama's largest cement company, went up seven percent. That follows two other increases during 2007 of 15 and 18 percent. Economists and people in the construction business are warning that this steep increase --- part of a worldwide phenomenon largely driven by China's growth --- threatens Panama's real estate development boom.

Four companies seek cell phone concessions

Wirefree Services Panama, Digicel Panama, Telemovil El Salvador and Claro Panama have all been certified by the Public Services Authority (ASEP) as eligible to bid for two available new concessions to operate cell phone networks in Panama. The bidding starts at $55 million, with the offers due in February and expected to be awarded in April.

New bank to be managed by folks displaced by mergers

Banking industry consolidation is predicated on the concept of cutting overhead, using fewer people to process more money. That has led to lots of management layoffs in the Panamanian banking industry, and now to new competition for the merged big guys. Capital Bank is the new kid on the block, which will go into business with a concentration on private and corporate banking from offices in the Global Plaza building on Calle 50 starting in January. The seed capital is tiny as these things go --- just $12 million --- but CEO and board chairman is Moisés Cohen, who used to head the Panamanian Banks Association and the general manager is Liliana Gómez de Oller, who worked for many years at BANISTMO and Banco Continental, both of which have been swallowed up in mergers.

Cerro Quema mine concession sold

Bellhaven Copper & Gold, Inc, a Panamanian mining company whose shares are traded on the Toronto Stock Exchange, has bought the 60 percent share that it didn't own in the Cerro Quema mining concession in Los Santos. It bought it from Central Sun Mining, formerly known as Glencairn Gold Corporation, for $2.5 million. A Colorado consulting company has been hired to do a study about the feasibility of its development. Bellhaven says that there are 451,400 proven or indicated ounces of gold on the property.

Lead-tainted Chinese food coloring seized

Health officials have seized more than 500 jars of Permicol Egg Yellow Powder, a Chinese-made food coloring that contains lead. Importer Aurelio Chen de León, who sold the stuff mainly to Chinese restaurants, has been hit with a million-dollar fine by the Panamanian Food Safety Authority (AUPSA).

One rumble too many

Panama City's municipal government has closed down the Restaurante Bar Montana on Avenida 12 de Octubre after considering a complaint about gunshots being fired in front of the establishment in an incident this past August. The bar's owners and employees have appealed to the National Ombudsman and say that they may sue, claiming that the city has overstepped its authority by punishing them for something that happened off of their premises and that 20 employees stand to lose their jobs. But the city says that for more than five years area residents have been complaining about shootings, brawls and rowdy behavior by people coming out of the bar and disturbing the peace and this latest event was the just the last bit of convincing that they needed before acting.

News \| Business \| Editorial \| Opinion \| Letters \| Arts \| Review \| Community \| Fun \| Travel Unclassified Ads \| Calendar \| Outdoors \| Dining \| Science \| Sports \| Español \| Front Page Archives	Volume 13, Number 24 Dec. 23, 2007 - Jan. 5, 2008