Panama Business & Economy Briefs

Business & Economy Briefs

One-day “warning” strike on September 4

The public sector doctors whose organizations are allied in the National Medical Negotiating Committee (COMENENAL) are the latest part of the labor movement to authorize a one-day strike on September 4. Look for strong support from the strike by construction workers, teachers, Seguro Social employees, public university workers and Coca-Cola employees. However, the great majority of the Panamanian work force is not unionized. The two labor/left umbrella organizations, FRENADESO and ULIP, will be participating in the strike, which, after a somewhat disappointing turnout at the August 14 labor march has been billed as a “warning” and a possible build-up to something more militant at a later date. There will likely be student demonstrations to support the strike. The PRD-aligned organizations and company unions, mostly members of the National Council of Organized Labor (CONATO), are opposing the strike and offering to negotiate with business groups about wage increases to keep up with inflation in exchange for unspecified labor concessions. However, last year CONATO agreed with business leaders to a minimum wage that has so far cost the lowest-paid workers about one-quarter of their purchasing power and it's far from clear whether the council, which split over the minimum wage deal, would be in a position to realistically negotiate anything with anybody.

Bus drivers want $170 grand apiece for compensation

The Movimiento de Bases Transportistas y Usuarios (MBTU), one of the factions that has emerged from the breakdown of the old metro area bus syndicate leadership in the wake of President Torrijos's repeated threats to eliminate the owner-operated bus system, says that the price of its members being put out of business is government compensation of $170,000 per driver. The membership's preference, however, is to stay in business as owners and not as employees. The MBTU has about 500 members and is part of the national strike movement led by militant labor unions. It is not yet clear whether the group will honor the September 4 one-day strike.

Inmet takes over Petaquilla Copper

The Canadian-based international mining company Inmet has succeeded in its takeover bid of Petaquilla Copper, paying $2 US ($2.20 Canadian) per share for stock that had been selling below $1 US at the end of June. Petaquilla Minerals, which was a minority shareholder in Petaquilla Copper, remains under the control of scandal-tainted former Cocle governor Richard Fifer and in possession of the Molejon gold mine project, which recently lost a Supreme Court case in which its claim to immunity from environmental laws was rejected. On the news of the takeover stock in Petaquilla Minerals rose about 10 percent. Inmet hopes to get the copper mining project, which would also yield molybdenum and gold, producing sometime in 2013. The company is sure to face opposition from environmental groups as the vast mining concession is in the ecologically sensitive Meso-American Biological Corridor, but on the other hand, due to its broad international experience Inmet would be more accustomed to dealing with environmental regulations and maintaining reasonable relations with neighboring rural communities than Fifer had ever intended.

Business grows at 8.2% --- but inflation's higher

The Comptroller General's office has announced that for the first half of 2008, the Panamanian economy grew 8.2 percent. This figure, from the Comptroller's Monthly Index of Economic Activity (IMAE, by its Spanish initials), is down from 10.4 percent in the same period last year. However, the Colegio de Economistas projects that this year's inflation rate is 8.7 percent. The IMAE measures about three-quarters of the nation's economy, while the Colegio bases its economic growth and inflation rates on the Gross Domestic Product, and that went up 9.6 percent for the first half of this year and is projected to be about 9 percent for the whole year. What does it all mean? With hyperactive pre-election government spending and the canal expansion project, formal employment is fairly steady and lower than the 15 percent or so that prevailed through the first three post-invasion presidencies. However, traffic through the canal and commerce through the Colon Free Zone are down and expected to stay down for at least another year, and standards of living are down for most people as a result of inflation.

Colamarco: committee to decide tax hike for Cinta Costera

Is this Version 7.0, or a later one? Now Minister of Public Works Benjamín Colamarco says that he has created a special committee to consider the details of the special tax assessment by which nearby property owners will pay for the Cinta Costera landfill / road / private hotel and private club expansion project. But he told La Prensa that he won't even reveal who's on the committee until next December.

Government sells its shares in the Sheraton

The Sheraton Hotel, formerly the Caesar Park and before that operated by the Marriott chain, had long been partially state-owned, as it was part of the development scheme by which the ATLAPA convention center was built. Long-running and fruitless efforts to sell ATLAPA are a separate story, but the Torrijos administration has sold the public stake --- 10 percent of the shares --- in the Sheraton, to the hotel's current holding company Nuevos Hoteles de Panama SA for $2.3 million. As part of the deal, the government also withdrew its claims for about $3 million that it claimed that the old hotel management owed it. And who's behind Nuevos Hoteles de Panama SA? Well, one of the directors is presidential cousin David Saied Torrijos. Opposition politicians are complaining that the transaction was done without putting the shares up for public bidding and in such a way that the government was grossly underpaid.

Post-election jam-through for US free trade pact?

The Associated Press quotes US Chamber of Commerce president Tom Donohue to the effect that in the lame duck session after the November elections the US Congress is likely to ratify free trade agreements with Panama and Colombia. US labor and Democratic sources tell The Panama News that while this is a possibility, in the event of a Democratic victory at the polls the more probable course of events would be that Congress would leave these issues for the incoming Obama administration. It appears that the chances for approval of the Panama deal are greater than the one with Colombia, but the Democratic leadership in Congress insists that the treaties be taken up in order of their submission, which would put Colombia before Panama and could mean that failure of the Colombian deal to pass would make the Panama treaty a dead letter. But with some defeats suffered by Colombia's FARC rebels and the extradition of erstwhile paramilitary allies of President Álvaro Uribe to the USA, a number of congressional Democrats would be willing to overlook the family drug dealing fortune that allowed Uribe to rise to political prominence and the direct involvement of the president and many of his closest political allies in a series of paramilitary massacres. However, US labor unions that form an important Democratic Party faction are not so willing to forgive the dozens of murders of Colombian union leaders on Uribe's watch.

ACOBIR predicts lower housing prices

José Boyd, the president of the Real Estate Sellers and Promoters Association (ACOBIR) expects the trend in housing prices to be downward. He told El Panama America that there is a correction underway after the end of a speculative period and that housing prices are stabilizing at lower rates.

New taxi fares in effect

On August 14 --- theoretically --- a new, more expensive set of taxi fares went into effect. There is a new and somewhat complicated map of zones and sub-zones, with the basic taxi rate set at $1 --- or $1.40 for two passengers --- and a charge of 35¢ each time a zone line is crossed. However, there is not likely to be any fare in increments not divisible by a quarter because it's a pain to deal in nickels and dimes. Moreover, as cabbies were charging and riders were paying as a matter of course more than what the previous rate structure allowed, the increase is going to make fares more than what they as a practical matter were but maybe not as steep an increase as people expect. This reporter was used to paying $1.25 between Perejil and the Casco Viejo when the prior legal rate was $1 (and not complaining, because higher fuel prices were affecting cabbies severely) and now the drivers want $1.50. The problem with the new fares is that the map is confusing and not well publicized. Then there is the gringo surcharge, wherein some cabbies will overcharge anyone whom they think they can get away with overcharging, but that has long been a problem. Riders should not quibble over quarters, expect to pay $20 between Tocumen Airport and just about anywhere else in the city and expect to pay several dollars extra just to cross the Bridge of the Americas --- but if the cabbie is demanding $12 to take you from Via Veneto to Amador, you should know that this is several times the legal fare.

Central America - Panama banking soft

The Fitch bond rating service reports that throughout the Panama and Central America region the banking business is soft, with an increase in non-performing loans leading many banks to toughen their requirements for lending money. (Here in Panama, banks are moving to make it impossible for those making $500 per month or less to get home or car loans or credit cards.) The Fitch report noted that the regional banking industry's growth was substantially lower for the first half of this year as compared to the previous six months.

Miramar parking expansion underway, sort of

Miramar Development Corporation, a company controlled by the Bern family, had just begun work on expanding their parking area on the Cinta Costera landfill when the city engineer came on August 26 and ordered work stopped. The problem for the city was a lack of permits. The problem suggested in La Prensa is the usurpation of public land, but the Ministry of Public Works maintains that the Berns had a right to do this under the original contract for the Hotel Miramar. The problem with the government's argument is that the concession contract by which the Miramar exists in the first place was rejected by the Comptroller General years ago.

2,506 new public employees in three months

La Prensa reports, based on a Comptroller General's summary of public payrolls with the exceptions of the Panama Canal Authority, municipal governments and bomberos, that in the past three months the public payroll has grown by 2,506 spots, to 163,281. These figures also do not include the massive addition of temporary workers, mostly PRD activists, to the Land Transportation and Transport Authority (ATTT) as part of the rearrangement of Panama City's traffic and bus routes. This is a fairly common phenomenon with national elections a little more than eight months away. The historical evidence is that these public hiring binges do little to affect the outcome of an election.

Former Caja de Ahorros manager ordered to stand trial

Lourdes Villalaz García, the former general manager of the state-owned Caja de Ahorros bank, has been ordered to stand trial along with three subordinates, Francisco De Gracia, Jaime Cohen Salerno and Otto Aguilar Rivera, for allegedly improperly putting several persons on the institution's payroll as administrative aides. The allegedly improperly hired persons were give salaries of between $1000 and $5000 per month in 2003 and 2004, as the Moscoso administration was trying to use political patronage in a fruitless effort to win keep the Arnulfistas in power in the May 2004 elections.

Government belatedly moves toward deal with cheated ex-employees

In 1990 the Endara administration fired hundreds of workers at the old state-owned IRHE electric company for going on strike, alleging that it was part of a coup attempt. After exhausting all recourse within the Panamanian courts the workers appealed to the Inter-American Human Rights Court, which found in their favor and awarded them compensation. Three successive Panamanian administrations had thumbed their noses at the judgment, but now the PRD faces an election time when its chances are not assured and most of the fired workers were PRD members or supporters at one time. Thus the Torrijos administration is offering a payoff staggered over several years --- mostly not during his administration --- to settle the case. Most of the workers, or in some cases their surviving families, have taken the deal, but others are demanding an immediate payment in full. Meanwhile, former employees of the ports of Balboa and Cristobal who lost their jobs in the port privatization during the Pérez Balladares administration --- also mainly PRD members or supporters --- are seeing some light after more than a decade of circular finger pointing (the government sending the workers to Hutchison Whampoa, that company sending them to the government) for payment of an indemnity that nobody denies is due to them. The Panama Maritime Authority, successor to the old National Ports Authority, says it's meeting with legislators to see if the $7.3 million plus about 12 years' worth of interest interest owed to the workers can be found in this year's budget. Any such settlement would need the president's support.

Rubén Blades and Willie Colón in May 4 trial

Panamanian singer and composer Rubén Blades and Puerto Rican trombonist Willie Colón, who together must be counted as major pioneers of salsa music, will begin a civil trial before a federal jury in Puerto Rico on May 4. Colón alleges breach of contract by Blades, which kept him from getting paid. Blades told The Panama News that the promoter cheated both Colón and himself, neither of whom were paid for the concert they gave. The promoter is in prison and is probably uncollectable, but the question to be resolved is whether Blades can be held liable for the loss.

RP-DR open skies pact

On August 24 Panama and the Dominican Republic signed an open skies agreement, which lets the airlines of each country set their routes and frequencies of their flights between the two countries' international airports without much government intervention.

Carpenter falls to his death

On August 21 42-year-old carpenter Luis Felico was installing a safety railing around the eighth floor of a building under construction on Via Argentina --- and not wearing a safety harness --- when he fell to his death. Felico, a SUNTRACS member, was the seventh Panamanian construction worker to die on the job this year.

Colegio Javier move closer to completion

For some time now one of the most academically renowned high schools in Panama, the Jesuits' Colegio Javier, has been known to be planning a move from its long-time location in Perejil. On August 14 the Gactea Oficial published a notice of the sale of a nearly seven-hectare lot in Clayton by the Organizacion de la Enseñanza Catolica, the foundation that handles the school's property. There is no word yet on when the move will be made or what will become of the old school complex.

Reverted Areas mining concession

The notice in the August 26 edition of the Gaceta Oficial didn't really say specifically where the non-metallic mining (stone quarrying) concession is located --- it just made reference to a map that wasn't attached. But the concession granted to Constructora Alfa SA covers 64.68 hectares and is located in the Panama City corregimiento of Ancon, which is the Pacific side of the former Canal Zone. The best known old quarry site in that area is Quarry Heights, on Ancon Hill, part of which is a residential area and the rest of which is a national park. There are, however, other stone outcroppings in Ancon that might be mined --- most of which have neighbors who would rather not have that activity in their back yards.

Despite protests, dams approved

Despite a string of militant protests by farmers, environmentalists and indigenous communities that stand to lose their water supplies, the Torrijos administration has approved a concession that will allow ALTERNEGY SA to install two hydroelectric dams in Chiriqui's David district, flooding out parts of the Bijagual and Las Lomas corregimientos and driving out those whose lands won't be directly flooded but whose farms and homes depend on the now privatized water supply.

Bovine rabies outbreak

Cattle ranchers in the eastern part of Chiriqui province are dealing with an outbreak of paralytic rabies, a form of the disease that particularly affects cattle herds but can also infect dogs. The health and agriculture ministries are thus carrying out an emergency program to vaccinate all cattle and dogs in the area, and all area dog owners are being urged to take their pets to the schools in Lajas Arriba, Lajas Abajo, El Maria and El Nacito for free immunizations.

Avoid thrombosis

This is not a good time to go to one of Panama's public health care facilities complaining of thrombosis, that clotting that clogs blood vessels and can be life threatening. Those conditions are treated with anti-coagulants, usually while under observation in a hospital setting. However, the government health care systems have run out of anti-coagulant medications. There is circular finger-pointing, with allegations and denials about the principal one that is used, warfarin, not being properly registered and thus being excluded from the shopping list. It seems to be just another in a planned rotation of medicine shortages by which the government saves a few dollars at the expense of public health and hopes to create an irate constituency that might be ready to accept privatization of the health care system as a means to get the medicines they need in stock.