Panama Investor Blog

Panama Investor Blog

So you’re thinking about Panama? Maybe as a place to invest, live or just spend a few months a year.  Well, you need to do your homework and there is no better place than the Internet to find out about Panama. But, you will have to wade through a lot of information in order to get to what you hope is the truth.

That is, unless you consider a free subscription to Sam Taliaferro’s Panama Investors blog. Why trust Sam? What makes him such a reliable source?

It is not because Sam has lived in Panama since 1997 or because he has invested millions of dollars into Panama’s real estate and resort markets. It is not because he is credited with having started the current Real Estate boom that is bringing billions of dollars of foreign direct investment into the country or the fact that he has been quoted by such important publications as the Economist, Fortune, Financial Times and hundreds of blogs and news articles around the world. It should not be because he is married to a beautiful Panamanian woman and that they have three beautiful Panamanian children. None of these are good enough reasons to trust his judgment.

The real reason can be summed up in two simple words, honesty and Integrity. Sam has the honesty to tell it like is, the good, bad and ugly of Panama, and has been doing so for nearly three years with his Panama Investor blog. He has the integrity to tell you the truth about important issues that may affect your investment, lifestyle or security in the country, even when it may hurt his own investments. This is why thousands of people from all over the world subscribe to this hard-hitting, “tell it like it is” Panama Investor blog.

At least once a week Sam sends out an email to his subscribers with the weeks headlines that may include information on the many changing laws regarding immigration, taxes, security, banking, real estate, structuring and many other subjects. He regularly post articles from local papers and translate what he considers important to his readers. He also regularly posts about tourism and master planned communities all around the Americas in order to compare them to the real estate opportunities that lay in Panama.

Sam spends hours each day scanning the many news articles that come out and filters it down to the important information you need to know. Each post provides commentary on why this matters to him and why it should matter to you. Over 3000 posts are archived in categories so you can find information on just about every investment subject.

So if you want to read blogs or websites that tell you all the great things about Panama, this is not the one for you. But if you want to know about the safety of investing or living in Panama, from someone who really cares about the future of the country, you should subscribe. After all, it’s free, so what do you have to lose except some valuable time. Let Sam spend his valuable time so you can maximize yours!

Panama to develop 31 hydro projects of 1,047 MW by 2013

When coupled with new wind farms, this will nearly double Panama's current energy generation and make it possible to eliminate existing oil fired energy generators. Panama should be a net energy exporter within the next few years.

From Hydro review

Excerpts: Panama's utility regulator predicts the nation will add 31 hydroelectric projects totaling 1,047 MW through 2013.

Autoridad Nacional de los Servicios Publicos (Asep) said 15 of the projects are under construction “with a healthy rate of progress,” while the other 16 are in final design. The agency said the projects represent investment of US$2 billion, giving a strong boost to the Panama economy.

“This gives peace of mind that the market is growing because they can meet demand in coming years,” Asep said.

Panama’s current installed capacity is 1,663 MW, compared to peak demand of 1,120 MW, Asep said. Demand is expected to total 1,373 MW by 2013.

read the rest of the story here..

Growth rate predictions increasingly somber

Governments and economist are typically over optimistic in times of financial trouble and my bet is Panama growth could go negative before the end of the year. After all, it had been revised down from over 7.5% to now 2.8%. Not much further to go to be in negative territory.

The Indesa consulting firm revised downward its forecast for the country's economic growth yesterday, bumping it from 3.2 percent to 2.8 percent.

Indesa economist Guillermo Chapman indicated that the .04 slide was not entirely a surprise to the firm and had much to do with the depressed economic state being felt the world over.

"The global crisis is having a severe impact on the growth of Panama, which we and other analysts had anticipated. The main mechanism of transmission has been the sharp fall in exports," he said.

Similar readjustments were made by other consulting groups as a consequence of the global recession. The IMF, for example, lopped off several points to its original 7.8 percent prediction for Panamanian growth this year, lowering it to about 3 percent.

Panama's first wind farm a big one

La Prensa
Fersa Energies Renovables, SA, a Spanish company operating in three continents, won permission to build the first wind farm in Panama.

The company, based in Barcelona, won approval to develop the wind farm of 225 megawatts Toabre and connecting to the national grid of Panama, said President José María Roger, in a telephone interview yesterday.

Fersa is strengthening its presence abroad, where they benefit from government incentives to develop renewable energy as well as countries seek to reduce dependence on fossil fuels and control the emission of greenhouse gases.

In contrast, Spain is seeking to limit the wind under a plan for 2010 to 2020 renewables, according to the daily El Economista.

"Project funding Toabre be ready by early October and construction should begin later this year," said Roger.

FERS, which will implement the project through its subsidiary Toabre Panamanian Enrilews SA, which owns 92%, has provisional approval for another wind farm in Panama, a development of 246 megawatts.

Flat tax moves closer to reality in Panama

In a Spanish article in La Prensa economy section the Ministry of Economy and Finance states it is preparing to present to the assembly tax reforms including a flat tax proposal.

Here are some excerpts in English: The working agenda of the new Minister of Economy and Finance (MEF), Alberto Vallarino, for the first 100 days of this government, has six priorities. And among them is the first implementation phase of tax reform: send the Assembly a draft to amend "certain very specific taxes, such as the casinos," and a "moratorium law to collect overdue taxes."

 The application of tax model a flat tax, which involved in part a reduction in the rate of income tax (ISR) to companies and the elimination of exemptions to the dealer and the end of the alternative calculation of the ISR ( CAIR) will come later, after a thorough diagnosis.

  "We are going to send the Assembly a budget for the remainder of 2009, including some of the campaign promises, including increased pay for police, $ 100 per month for adults older than 70 years without pension coverage and Network of Opportunities, and a subsidy program for buyers of social housing, "Vallarino said.

Foreigners accused of forcing land sales

I was amazed at this story in La Prensa where the writer seems to be painting a picture of and idealized paradise and then throws in wild accusations at the end of the story. I have seen such accusations before and I doubt seriously the validity of them. I can't imagine foreigners resorting to violence in order to acquire land for development, especially in an area so remote as Bahia Honda. The story was in Spanish from La Prensa and I have translated some excerpts. Anyone with more knowledge about the allegations please comment.

Excerpts from La Prensa: Bahia Honda is one of the villages closest to the Coiba National Park, but residents say they no longer enjoy the tranquility offered the place years ago. The natural wealth has attracted foreigners to buy land and, according to neighbors, in some cases forcing the occupants to sell.

The issue, say, has reached the point that some ranches have been burned because the owners refuse to sell.

For these cases, neighbors have brought complaints to the Mayor's Soná and the Public Ministry of Veraguas, but not yet opened an inquiry.

Chiriqui province sees 60% drop in investments

Blame it on the world economy, but you can also blame it on the fact that 2008 was a banner year for our town and province. This article from La Prensa highlights some of the investments and tax revenues the province has seen over the last few years. Having lived here for 10 years I can say that David and the surrounding area has seen some spectacular investments in everything from shopping centers to office buildings. Maybe it was time for a breather, but all the construction has brought employment and prosperity that everyone would like to see continue. The article is in Spanish but I am posting some excerpts in English.

Excerpts: Sources at the Ministry of Commerce and Industry reported that in the first six months of 2009, a thousand 211 active companies made an investment of 11 million 28 thousand dollars, while in the same period of 2.008 million 162 companies invested 27 million 317 thousand U.S. dollars, reflecting a fall in investment of around 60%.

The new governor of the province, Enrique Fernandez, warned that the effects of the global economic crisis have affected to some extent on investment in Chiriquí. However, expressed confidence that the new government is capable of preventing the crisis from having big consequences.

While new investments in the first half is only 40% during the same period there was a growth in tax collection of the City of David.

  The treasurer of the Municipality of David Ricardo Medical, said that for the fourth consecutive year of the first half revenues exceeded those obtained in the same period last year.

 By June 12 this year, they have raised 2 million 206 thousand 227 U.S. dollars (See chart comparing tax collection).

Martinelli takes the reigns

Amidst much fanfare Panama's newly elected president takes the helm of leadership. I watched the televised inaugural address with my wife and we were impressed by both his candid words and style. Most people I have spoken to believe that the new president is honest and capable of handling the countries affairs. I too have high hopes for him as he begins to tackle the many problems facing this small nation. Here is La Prensa's take on his first address.

Excerpts from La Prensa: Speaking to a crowd of dignitaries, world political leaders and special guests, Ricardo Martinelli promised to bring the same principles from his business career to the halls of government after he was sworn in as the country's president yesterday.

Martinelli, who brought together several opposition parties under the banner, "Alliance for Change," said that he will reduce red tape and offer a leaner, more efficient government.

He said that he will end the tradition of elected leaders "arriving clean and leaving millionaires," which reiterated one of his most popular campaign slogans, and said that the needs of the people will come first in his administration. One of his promises was to provide a pay increase for police officers, viewed as a way to reduce crime, and to give a pension to indigent senior citizens of $100 per month.

Read the rest of the story here...

 

Only 200,000 tourists visit Costa Rica, not 2 million

Costa Rica has a similar problem of collecting good data on tourism as Panama. As this article in AM Costa Rica  points out, although the official tourism number are 2 million, when you take out all the central American visitors and the residential tourists who come and go about 4 times a year, the real number of free spending tourist is closer to 200,000. This seems rather low to me, but Panama touts similar numbers and when we break it down we come up with fewer than 100,000 actual tourists. As I have pointed out a number of times, most people visiting Panama are here for business. A tourist will go into the country side to the see the flora and fauna and get a feel for the culture of the country. The sheer lack of hotels in the interior and low occupancy rates tell the real story. Glad to hear we are not so far behind our neighbor to the north.

Tourism institute seeks help in branding the country.

With a tourism industry in distress and an erosion of the nation's worldwide image, government officials want to put a new face on the country.

In a message sent out over the name of Carlos Ricardo Benavides, tourism minister, residents here and individuals elsewhere are invited to have their say on what the new Costa Rican image might be. There is a survey posted to a Web site.

In the e-mail  Benavides explained that what officials hope to obtain is more than a logo or a slogan. They seek to demonstrate the social values held by the people here. He said that the effort would require intense work but did not specify how much the Instituto Costarricense de Turismo might have budgeted for the process.

Benavides said that qualitative and quantitative techniques will be used to focus on the new image.

The institute has been slow in adopting valid methods. In fact, despite having identified a New Jersey family as the 2 millionth visitor in 2008, the institute does not really know how many tourists entered Costa Rica.

Boquete town budget dependent on foreign direct investment

When I first came to Boquete in 1997 the entire community was dependent upon agriculture. The town budget was made up of a hodgepodge of incomes, from water rights to road signage and of course liquor sales at the local bars. An article in La Prensa this week brings to light with numbers just how important foreigners are to the local community in just the town budget, not considering the employment that goes along with all this foreign direct investment. I must say that I was surprised to see that construction, which is 99% directly related to FDI, brought in over $661,000 dollars with liquor a distant second at $26,000 in 2008. Unfortunately, construction is dropping significantly and this year it is on track to be about 30% lower.

What is important to understand is the significant economic impact FDI has had on this small community. When you consider that the construction income represents about 2% of the construction costs it becomes clear that foreign dollars were and are pouring into the area to the tune of hundreds of millions of dollars a year.

I have written a number of posts about the changes that we have seen in this small town over the last 5 years. Hundreds of new businesses opened by locals. New private schools and medical centers. Shopping centers, hotels and restaurants. And of course, thousands of jobs. Boquete is a perfect example of what can happen with residential tourism when done in a responsible manner. Not that there have not been mistakes along the way, but overall there is a good balance of construction and care for the environment. Almost all of the developing has been done on cow pastures or agricultural land and the amount of land is relatively small compared to the amount of land in the area. It has recently been reported that about 500 foreign families live in the Boquete area which in the scheme of things is pretty small in a population of 15000. These 500 or so families have had a significant positive impact on the local community and not just in money. Forging friendships and even marriages, business relationships and the exchange of ideas and philanthropic pursuits.

I know many will say that I paint and idealized picture of things, but when you consider where we have come from, it is truly a huge advancement, and it has come at very little cost to the community. If you were to really look at things in a fair and balanced light I think you would have a difficult time coming up with any type of business model that would be as self sustaining and with the least negative impact on the community.

Read a machine translation of the article below.

Luxury car sales reflect the hard economic times

The market for luxury cars is small in Panama but still reflect the consumer optimism in the number sold. As this article in the Panama Star points out, "

The first victim of the deceleration was luxury cars sales which, according to statistics from the Comptroller’s Office declined during the first trimester of 2009 by 37 percent.

The luxury car market, which started this year on a high, does not fare well if we taken into account that between January and March 2009 209 units were sold, compared to the sale of 391 cars during the same period of 2008.

Among the luxury brands in question are: BMW, Mercedes Benz, Audi, Lexus, Porsche, Hummer, Jaguar, Cadillac and Maserati.

Read the whole story here...

Hoteliers complain of unfair compititon.

As more buildings are completed without people who plan on living in them, the owners turn to the potential revenue source of operating as a hotel. This is all well and good when the demand for rooms is greater than the supply, but this year thousands of more hotel rooms will be coming available precisely at a time when many high rise building will be finishing too. Developers have a legitimate complaint regarding the 10% tourist tax that should be collected if you act as a hotel. Of course the hotels could just lower rate in order to be more competitive, but occupancy rates are already way down and all areas of competitiveness must be looked into. I find it difficult to believe that some nightly rental apartments  are experiencing occupancy rates of 70-80%.

From Financiero
RONI MARION LAWSON
rlawson@prensa.com rlawson@prensa.com

ATRACTIVO. Cute. Alquiler a corto plazo de apartamentos.  LA PRENSA/David Mesa Short-term rental of apartments. LA PRENSA / David Mesa

El sector hotelero está  inconforme con las actividades comerciales que realizan los propietarios de apartamentos que lucran con alquileres de corto plazo. The hotel industry is unhappy with the commercial activities performed by apartment owners who profit from short-term rentals.

Estos alquileres son promocionados con tarifas diarias, semanales y mensuales,  compitiendo de esta forma con los hoteles y centros de hospedaje autorizados por la Autoridad de Turismo de Panamá (ATP), sin pagar el impuesto de 10% diario por cada cliente recibido. These rentals are advertised rates daily, weekly and monthly, thus competing with the hotels and accommodation centers authorized by the Tourism Authority of Panama (ATP), without paying the tax of 10% per day for each client received.

Este es el argumento que utilizan los  representantes del sector de turismo para considerar la actividad, como una “competencia desleal”. This is the argument used by representatives of the tourism sector to consider the activity as an "unfair competition".
Jaime Campuzano, presidente de la Cámara de Turismo de Panamá  (Camtur) explica que “están compitiendo de manera ventajosa, ya que no pagan impuestos”. Jaime Campuzano, President of the Chamber of Tourism of Panama (Camtur) explains that "are competing so advantageous because they do not pay taxes."

Por esta razón,  el sector turístico a través de Camtur está solicitando a la ATP  auditorías en los establecimientos en cuestión y que  se aplique la regulación competente. For this reason, the tourism sector through Camtur ATP is requesting the audit on the premises in question and apply the regulation authority.

A petición de Camtur, la entidad realizará las investigaciones y luego expondrá los detalles frente a una comisión, formada por representantes de los operadores de turismo y  hoteles. At the request of Camtur, the entity will carry out research and then explain the details in front of a committee formed by representatives of tour operators and hotels.

Algunas de las empresas que se dedican a promocionar el alquiler de apartamentos a corto plazo, con autorización de los propietarios  son Panama Rental Solutions y Panama Corporate Living. Some of the companies engaged in promoting the rental of apartments in the short term, with the permission of the owners are Panama Panama Rental Solutions and Corporate Living.

Los apartamentos que administran estas empresas  tienen una ocupación del 80% y 70%. The apartments they manage these companies have an occupancy of 80% and 70%.

info panamacorporateliving.com info panamacorporateliving.com

Study finds disparity between spending, learning

Here are some interesting statistics regarding education costs in Panama. Having raised three children through the system here I can add some further data regarding private institutions. The average private school tuition for elementary in the interior is about $90 a month. In Boquete there are 4 private schools charging about this amount or a little more. As this story points out, improvements in the educational system are challenging and most people know that it is the teacher unions that cause most of these challenges. Being state run they have no intensive to improve or bring in new ideas. But having a choice as we do in Boquete of 4 schools to choose from keeps all of the private schools on their toes. With public eduction eating up 18% of the state budget getting the unions de fanged should be a priority for this new administartion.

Excerps from La Prensa: Panama spends an average of $1,228 on each student in the public school system, according to a study by the consulting firm Goethals and an economic audit under the leadership of Mary Echarte, an analyst at the Latin American Economic Research Foundation.

That figure was far above those reported by the Ministry of Education (Meduca), whose spokesmen said that the country spends about $760 annually on every elementary and middle school student, and roughly $450 on kindergartners and preschoolers. Data on high school students was not available.

“We still do not have statistics for 2008,” reported the Meduca press office. “This is the official data from 2007.”

Meduca was allotted $ 968.2 million in budget funds this year, or 17.5 percent of the total state budget, of which $799 million goes toward operating expenditure and the remaining funds are designated for special programs.

This year, Panama is investing in education about 6 percent of its 2008 gross domestic product (GDP), researchers pointed out that those funds are not spent in an effective manner, impeding improvement to the quality of education received by the 700,000 students nationwide.

The study noted that state spending per pupil is higher than the monthly tuition fees and in many private schools, where the scholastic experience is often superior to that found in public schools.

Panama Real Estate: Hopes Run High for the New President

This article from Nuwire Investor is pretty accurate. of course it helps that I am quoted a number of times in it.

Excerpt from Nuwire; Panama's most recent election was full of surprises.  For one thing, Ricardo Martinelli, who in his first presidential bid in 2004 only got 5.3 percent of the vote, won the contest.  Equally striking is the fact that Mr. Martinelli won 61 percent of the votes, making him the first president in the country's modern history to be elected into office with an absolute majority.   

So, who is this man that has caught Panama's ruling party, the PRD (Revolutionary Democratic Party), by complete surprise? The 57 year old Ricardo Martinelli is a conservative tycoon who owns a spectrum of businesses including supermarkets, banks, and agricultural companies, according to Time magazine. The U.S. educated candidate campaigned promising change and voters decided he is the man that can deliver. "The Martinelli victory breaks the Latin Left’s 2009 electoral winning streak of Venezuela, El Salvador, and Ecuador," said Ray Walser, a fellow at the Heritage Foundation, a conservative American think tank.

Read the rest of the story here

Nowhere left to hide your money

As Mark Nestmann points out in this brief from the Sovereign Society newsletter, article 26 of the model tax treaty pretty much takes away any protection you once may have had from your home tax authority should they decide to look into your foreign financial affairs. If you are not already a subscriber to the Sovereign Society I encourage you to do so. Accurate and timely information is their mainstay.

Remember that it is not illegal to have offshore bank accounts or corporations. It is illegal to not report those facts and any income derived from offshore activities. Don't shy away from going offshore because of scare tactics. Just take advantage of the greater opportunity to make money offshore and protect your assets from frivolous lawsuits. Just remember to pay the government of your home country their "rightful" share.

By Mark Nestmann

If you invest or do business internationally, you need to know about double taxation agreements, more commonly called "tax treaties." These agreements are designed to avoid or at least minimize double taxation. However, they have another, less publicized function: to facilitate information exchange to help enforce domestic tax laws.

One of the consequences of the political firestorm in recent months over bank secrecy laws in Switzerland and other offshore financial centers is that information exchange through tax treaties will become increasingly common.

Tax treaties are based on a model treaty prepared by the Organization for Economic Cooperation and Development (OECD). The OECD regularly updates its model treaty. Each successive model provides tax authorities greater powers to retrieve financial information from the other signatory. This is accomplished via the "Exchange of Information" provision in the model treaty; Article 26.

Early tax treaties gave signatories wide latitude to turn down requests for information under Article 26. Signatories could turn down requests for information under several different rationales, all based on the concept of "comity;" i.e., the recognition accorded by one nation to the laws and institutions of another.

For instance, a signatory could turn down an information request if it concerned a tax not imposed by that country (“domestic tax interest”). It could also invoke a "dual criminality" requirement: if the conduct in question wasn't illegal in both countries, the request wouldn't be honored.

However, in 2000, the OECD completely revamped Article 26 to expand the scope of information exchange. Bank secrecy laws, dual criminality requirements, and domestic tax interest requirements could no longer be invoked to prevent information exchange. These provisions have gradually made their way into the international network of tax treaties.

Therefore, if a particular country agrees to implement information exchange arrangements "consistent with OECD standards," the laws you thought might have prevented your financial information from being disclosed to your domestic tax authorities may no longer apply. Almost every country with strict bank secrecy laws, including Andorra, Austria, Belgium, Liechtenstein, Luxembourg, Monaco, and Singapore, has announced it will comply with the expanded version of Article 26. Panama has not provided specific assurance on this point, but has made a commitment for "effective exchange of information" in accordance with OECD standards.

Still, there are limits to Article 26. The OECD model only requires treaty signatories to exchange information on request. That is, the country requesting information must know that your assets or accounts are in a particular jurisdiction—and likely, in a particular institution—before it can request information.

These limits are unlikely to satisfy the more rabid advocates of full disclosure. You can likely expect the next round of the OECD model tax treaty to include a provision for mandatory "automatic" exchange of information between tax authorities.

In the meantime, the handwriting is definitely on the wall. Offshore bank secrecy laws will not protect you from having your account information turned over to your domestic tax authorities. If you have unreported offshore accounts, you need to deal with the problem now—not later. A good start would be a call to an attorney specializing in criminal tax defense.

Nikki Beach to double room capacity

I am surprised to see the Nikki beach announcing a doubling in the size of the hotel project from 156 to 300 units in the economic climate. The developers and promoters are certainly optimistic about the future of tourism in Panama. I wish the the best of good fortune!

Excerpts from LA Presna:

“We did redesign some of the architecture and engineering, because when the project was launched in November 2008, when the hotel went from 156 rooms to 300 rooms. That redesign took over six months,” said Maruquel Gálvez, of RG Inmobiliaria, developer and owner of Nikki Beach Playa Blanca, Casa Grande Bambito and Playa Blanca Hotel. Gálvez explained that many of the modifications were made to accommodate a casino within the complex.

“Now we have a tower structure that’s more robust, lower and wider,” he added. “And despite changes in the original schedule, the date of opening of the hotel holds for 2012 and we’re already in the pre-sales stages.”

The architectural and engineering firms TSYA and BMA are collaborating on the project, while Destiny Real Estate is responsible for its sales and marketing.

Millionaires Go Missing

This article in the Wall Street Journal points out that as taxes increased in Maryland, those with the money to pay them moved. How many people in the U.S. will be considering moving further than just another state with its own fiscal problems? Time to move to Panama IMO!

Excerpts from WSJ: Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy.

One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

Read the whole story here....

American capitalism gone with a whimper

Very interesting article from Pravda;

Excerpts: It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights.

Must read....

Sales slow in Boquete-Buyers market!

According to this story in La Prensa Tuesday, homes sales has slowed dramatically in Boquete since the economic tsunami made landfall. Real estate agents say it is only down 50%  and the mayor says more like 90%. They both may be right because the mayor's office issues building permits and real estate agents sell finished products. A number of people have had to sell their second homes in order to take care of other bills back home. I know that our market of $200-400K homes has virtually dried up. Now we see over a million dollar homes moving. This is not surprising as we market to those with money who are wanting to protect it.

We have seen a significant slow down in new home construction and those developers I know are operating at a snails pace trying to conserve cash until things turn around. What does this mean for prospective buyers? The time is ripe to buy as you can take your pick and negotiate great prices and terms. I would bet that within a year, Boquete will be back to being a bargain that it was when I began building Valle Escondido and marketing Boquete as "twice the lifestyle, half the price".

I find it rather amusing that the town has hired additional engineers to help with the expected flow of building permits and now they have nothing to do. Welcome to the world of capitalism. You never really know what the market will do in the future.

Home sales slow in Boquete

Driving through Boquete, it is hard not to notice the "for sale" signs on a large number of houses.

The fact that these signs are in English, and not Spanish, is a testament to the real estate boom that has taken place here in recent years. The fact that these signs are in English, and not Spanish, is a testament to the real estate boom that has taken place here in recent years.

But now, the global financial crisis has started to take its toll. But now, the global financial crisis has started to take its toll. José Branca, president of the newly created Chiriquí Association of Real Estate Brokers, said that sales to foreign residents has fallen “dramatically” in the last six months and, in comparison with the past seven years, activity has declined 50 percent, he estimated. Joseph Branca, president of the newly created Chiriquí Association of Real Estate Brokers, said that sales to foreign residents has fallen "dramatically" in the last six months and, in comparison with the past seven years, activity has declined 50 percent, he estimated.

At least three residential projects have stopped work altogether, and many others are moving at a very slow pace. At least three residential projects have stopped work altogether, and many others are moving at a very slow pace. Mayor Manuel Ruiz has an even more pessimistic view, saying that “90 percent of the projects have been affected.” Mayor Manuel Ruiz has an even more pessimistic view, saying that "90 percent of the projects have been affected."

Howard, a "tax haven"?

With all the negative connotations associated with the term "tax haven" , the Colon free zone operators are labeling Howard's proposed benefits as providing just such a place. As if the Colon Free Zone has not taken advantage of that regime for many years. In order for the Howard mega project to be viable, they must receive significant tax breaks, especially in this economic climate. But the existing free zone does not want any competition, and saving a drive to Colon, would certainly give them the edge IMO.

From La Prensa Tuesday: A measure that would grant significant tax breaks to businesses operating within the former Howard Air Force Base is currently being debate in the National Assembly's Committee on Commerce.

The bill, which has received preliminary approval from the committee, grants various tax breaks to businesses locating in Howard, including exemptions for automobiles, machinery and raw materials. The bill, which has received preliminary approval from the committee, grants various tax breaks to businesses locating in Howard, including exemptions for automobiles, machinery and raw materials.

The bill has been viewed with a critical eye by business owners in the Colón Free Zone, who think that it may give businesses in Howard an unfair edge if it is approved. The bill has been viewed with a critical eye by business owners in the Colon Free Zone, who think that it may give businesses an unfair edge in Howard if it is approved.

Digna Donado, directors of the Association of Users of the Colón Free Zone, noted that the committee seems to be “in a rush” to pass the bill, which has been drafted without any input from various stakeholders. Digna Donado, directors of the Association of Users of the Colon Free Zone, noted that the committee seems to be "in a rush" to pass the bill, which has been drafted without any input from various stakeholders. Donado said the bill appears to make Howard a “tax haven.” Donado said the bill appears to make Howard a "tax haven".

“This bill should be reviewed with greater transparency,” Donado said. "This bill should be reviewed with greater transparency," Donado said.

Public payroll shoots up

I always find it interesting to stumble on statistics that are not usually readily available like growth in government payroll and the size of government in relationship to the size of the governed. You can tell a lot about a country by looking at these kinds of numbers.

Excerpts from LA Presna Tuesday:

Even as it has asked a number of departments to cut expenditures, the state increased its payroll by 10 percent in the first quarter of 2009 as compared to the same period last year.

Those costs went from $117.4 million in the first quarter of 2008 to $130.1 million in the first quarter of 2009, according to the latest report of the Comptroller.

Not surprisingly, the number of staff members also increased, from 160,775 employees in the first quarter of 2008 to 164,742 in the same period of 2009, an increase of 2.5 percent.

The total salaries do not include special allowances, 13th month payments or overtime. The roster of government employees also excludes those who work for the Panama Canal Authority, firefighters, municipal employees and those on short-term, professional contracts.

According to the report of the first quarter of 2009, 67 percent of the employees served in the areas of education, public health and safety. These employees accounted for 70 percent of the salaries.