Panama Investor Blog

Panama gets two more cellular providers

I remember about 10 years ago when Panama got it first cellular provider. If memory serves me Cable & Wireless paid $70 million. Movistar came in several years ago and now a two more providers are coming into the market. One has paid $86 million so I would expect the other to have made a similar payment for the rights.  That should be at least $320 million for all four. Where does all this money go?

Digicel acquires US$86 million licence in Panama
                published:                 Saturday | May 10, 2008

                 

Denis O'Brien's Digicel Central American Holdings Limited (DCAHL) has snagged a new licence in Panama, paying out US$86 million for a third foothold in that region.

DCAHL, which is a separate entity from Digicel Group Limited and Digicel South Pacific Limited - but all owned by O'Brien - said the licence was acquired Wednesday through its wholly owned subsidiary, Digicel (Panama) SA under competitive bid.

Its rivals in that market are Movistar (Telefonica) and Cable & Wireless, but also America M-vil which also received a licence.

Digicel Central America is already operational in El Salvador, where investments over a year have reached US$190 million and mobile coverage 95 per cent.

It will roll out in Honduras later this year.

In Panama, a country of more than three million, Digicel is promising to grow the mobile market there by 30 per cent in five years.

"Significant investment in Panama is planned to build a world-class network and operation that is set to stimulate growth in the mobile market by increasing mobile penetration within the next five years from approxi-mately 60 per cent to 90 per cent," the company said in a statement, without disclosing the size of the capital spending planned.

Digicel Panama will create 300 direct jobs, but, possibly through the dealership network that it builds in each market, says indirect employment could rise to 1,000.

Doting China Still C.R.'s Sugar Daddy

I find the relationship between Costa Rica and China to be full of hypocrisies. Costa Rica is called the Switzerland of the America's and is touted as being the most eco-friendly nation on the planet. They are the highest educated of all the Central American countries are are 99% Christian in their faith.  Much of the country is protected with national parks and not a week goes by where the environmental agency is not shutting down some development for damages to the environment.  Their president has even received a Nobel peace prize and is always preaching about human rights. On top of all that they have no military and their constitution prohibits it. Read a paper he wrote on Democracy in LAtin America here.

Yet, they give the boot to a democratic nation of Taiwan in exchange for a financial relationship with China.  The Chinese are polluting the world, destroying their own environment, have a miserable human rights record, and are devout communists and atheists. These two countries could not be further apart on almost all important issues. Every time I read about the many activities these two countries are working on, I realize how money is put ahead of honor and dignity as they will sell out to the highest bidder, no matter what their political, environmental or human rights beliefs. Maybe I'm being too hard on Arias, maybe he believes he can have a positive impact on them. Read the whole sordid story.

The honeymoon is over, but China is still showering Costa Rica with gifts.

Since cutting ties with Taiwan last June 6, the Costa Rican government has been reaping the benefits that accompany friendship with the growing economic and political giant.          

The two nations have swapped secrets and signed a laundry list of accords promising collaboration in areas ranging from technology to free trade, sports to fine arts.

A month barely passes without an official diplomatic mission between the two. This week alone, Vice Premier Hui Liangyu visited San José, while Costa Rican Foreign Trade Minister Marco Vinicio Ruiz flew to China to talk business.          

During Hui's visit, China promised Costa Rica a $10 million check, 200 police cars, 40 scholarships and a credit line for small businesses.

On the other side of the Pacific, Ruiz continued negotiating a possible free-trade agreement between the two countries. The minister also attended meetings to discuss Chinese-directed public works projects on Costa Rican soil.          

“The Central American countries hold a very important strategic position,” Chinese spokesman Tiam Qi said in San José this week. “We want to cooperate with those countries.”

Foreign Minister Bruno Stagno said he was not expecting so much so fast from the Chinese.          

“This relationship has an intensity and velocity that is truly surprising,” he said.

Read the rest of the story at the Tico Times

Read Costa Rica News, Travel and reviews for another perspective.

Vacation Homes in Costa Rica being razed for building in national park

I posted an article last week about Spain tearing down homes of retirees. Now our neighbor to the west, Costa Rica, is having similar problems. It seems that unscrupulous developers with the help of corrupt local municipal government have built homes on National Park property. In addition many large tourism project that include residential components are under scrutiny by officials for damaging the environment.

Excerpt: The Hyatt Regency Azulera, a $300-million luxury beachfront resort under construction in Brasilito, is among more than a dozen developments under investigation for possibly causing environmental damage, said an Environment Ministry administrative court yesterday.          

The Environmental Tribunal is in the northwestern province of Guanacaste this week for the latest of its surprise inspections aimed at catching land developments that are violating environmental regulations.

         

The Tamuz of Tamarindo, also in Brasilito, Punta San Francisco in Tamarindo, Bahía del Sol in Playa Potrero, Mar Serena in Zapotillal de Cabo Velas and El Castillo residences in Zapotal de Carrillo are all projects currently under investigation, according to the tribunal.

         

In addition, inspectors stopped three construction projects and opened cases against 17 vacation rental homes, some now slated for demolition by the government, that were built inside the borders of the Las Baulas National Park, in Playa Grande. Despite being within a national park, some of the projects had municipal construction permits and approval from the Environment Ministry's Technical Secretariat (SETENA).

         

“Practically all the Playa Grande area, inside the Las Baulas National Park” was divided into lots and had for sale signs, “put there in their majority by Century 21 real estate agency,” said a tribunal press release.

         

Costa Rica to Invest $87 Million in National Food Plan

Costa Rica is moving quickly to minimize the impact of global food price increases.

Excerpt:

To help staunch the looming food crisis, Costa Rica has begun thinking about how to help its citizens. And to start, four weeks from now, the Costa Rican government plans to give ¢50,000 monthly (approximately $100) to 16,000 poor families to supplement what income they have.

The money will go to 16,000 female heads of households, living in poverty, and with at least one child under age of 12.

Yesterday, it was announced that the government will allocate $70 million to prevent a Costa Rica food crisis. Part of this official plan is to strengthen the local agricultural sector, helping it to produce more rice, beans, and corn, three of the country’s most important staples.

Still, no matter how stimulated Costa Rica’s agricultural sector, there will be plenty of Costa Ricans and other nationals unable to put the most basic food on the table. For this reason, the government will step in to help its citizens from going hungry, providing much needed relief and financial stimulus to the country’s poorest families.

Read the story on Costa Rica Pages

Earthrace reaches Panama Canal

Although having little to do with developing and investing, this article has a few fantastic photos of this most interesting vessel that is vying to beat the around the world record. There has been concern that the delays in the canal transit would spoil their attempt. Looks like their on track for success. Its now Day 12 of the 2008 Earthrace RTW record attempt and the boat has so far covered 4970nm. She is racing to beat the 1998 speed record of 74 days 23 hours and 53 minutes.

Click for further information on
                                                       Earthrace Round the World Record attempt 2008                     
                     

Boston Globe does Boquete

This is a well done travel piece that first appeared in the Boston Globe about tourism in Chiriqui and Bocas del Toro where the writer spent a week exploring. From his style of writing you can deduce that he is not too happy with the changes brought by the development of the areas. I find it interesting that while chastening the developers and foreigners who have brought these changes, he also quotes a local complaining how they have so little and need help. "We need shoes," he says. "That's what we need — we need support."

The only way I see them getting help is through the investments, job opportunities and philanthropy of the foreigners who come to reside here. The indigenous people have lived in poverty for generations and only now are we starting to see real change taking place in their condition. These changes will more greatly affect the young generation that take advantage of the opportunities brought to them.

Excerpt:
When Isla Parida, 10 miles off Panama's Pacific coast, became part of a national park more than a decade ago, locals were told they could no longer plant crops. Bernal says he sold 100 of his acres to a U.S. investor for a very small sum. "Why should I keep the land, if I cannot take advantage of it?" he asks.
Now even this hillside, once property of his brother, belongs to an American. Bernal stays as a caretaker.

The tourism ministry has launched a new campaign ("Panama — It will never leave you") and blogs and newsletters parse the latest legal changes for foreign retirees looking to buy a place of their own.

Nowhere is the investment as intimate as in the lush foothills of Baru Volcano, where Americans retire in mass to Boquete.

By 8, night has fallen on the town. Huddles of workers wait on corners for buses and vans to carry them toward home. Shadowed signs on the edge promote Coldwell Banker, Banco Universal, Kohler sinks and the Hacienda Los Molinos, which promises, in English, "A Fabulous Lifestyle in Boquete."

Largely obscured, too, are twists and turns of side streets that lead toward Valle Escondido, or Hidden Valley, a place secluded by design. Past a guarded gate, then up manicured lanes serving stucco homes and well-watered fairways, more than 100 people gather around an indoor pool for the Boquete Jazz Festival.

The emcee switches easily between Spanish and English. The Panamanian musicians are genuine, and the jazz is good. The collar-shirted crowd in rows of straight-backed chairs sits still.

Some locals have profited by trading generations of farmland for developers' money, and they celebrate new shops and services that have come to Boquete. The restaurant owner, a Panama City native with a business degree, talks of others — more than half, he estimates — pushed out by high prices. He resents that many American newcomers do not even try to learn the language.

Read the story at Sun Sentinal

Panama; Hottest beaches of Central America-MSNBC

According to this article from MSNBC, Panama has two of the hottest, sexiest, sensual, sultry, exotic  beaches in Central America. What are they selling?

Excerpt;

The appeal of Central American beaches is an offbeat and organic sexiness that blends together visitors of varied ages and economic backgrounds.

These days there are many rivals for Central America’s hottest beaches. And it goes without saying that sultriness is at least somewhat in the eye, or heart, of the beholder. However, the beaches in this list stand out in terms of raw beauty, exotic draw and high potential for pleasure. They have all of the components to allow for a sexy, sensual experience and leave it up to you enjoy it on your own terms—whether that be swimming in the surf with new friends at sunset, whiling away the day in romantic privacy among the sand and palm trees, dancing at a torch-lit nighttime beach party or communing with capuchin monkeys, fluorescent green parakeets and your own hard-won solitude.

Long heralded as the Next Costa Rica, Panama is actually a more culturally diverse and, in some parts, cosmopolitan country with the driving forces of the Canal and bustling Panama City. It has two entries in the list, one on the English-speaking island of Bastimentos in the north and the other on the indigenous Kuna islands of San Blas in the south. Panama is brimming with surprises from secluded islets untouched by time to wooden Caribbean-style homes on stilts along delicious stretches of sand.

Read the whole steamy story here on MSNBC

Pacific coast heavily developed and needs an int'l airport

The areas just west of Panama City (I call the gold coast) has been under development for many years, but this last two years have seen a significant increase in the number of hotels and residential projects. This article brings to light the need for another airport to serve that area as the number of hotel rooms is increasing. This stretch of Beach front land has the highest concentration of tourism in the country. Not considering traffic it takes at least two hours to get to the furtherest one from the international airport. Most large scale developments in the world need to be within 45 minutes of an airport to make them practical for tourism.

Excerpts fro LA Prensa;

The hotel Breezes Panamá is a $30 million project with 294 rooms. The hotel will be managed by the Jamaincan chain Superclub and is expected to generate, directly or indirectly, more than 600 jobs, according to an Ipat report. The hotel will be located between San Carlos and Río Hato on the Interamerican highway.

The other project, Nikki Beach Playa Blanca is a $33.2 million project with 159 condominium units, whose owners may rent them tourists. The complex also includes permanent homes.

Nikki Beach Playa Blanca will employ 600 people directly and 1,800 indirectly. The complex is currently under construction in Farallón and is expected to be operational in March 2009, according to Nicole Ángel, the project's marketing director. The Nikki Beach project covers some 18 hectares.

A bit farther down the highway, toward the interior of the country, lies the Buenaventura complex. That development is 80 percent finished and includes both residences and a second Hotel Bristol with 130 rooms. It should be ready by the end of 2008 or early in 2009.

The Royal Decameron and Playa Blanca developments have been operating nearby on the Pacific coast for several years. The prolifieration of hotels and residential communities in the area has prompted Ipat to promote building an airport for flights chartered directly from Europe.

Lack of water forces island tourism to shut down

Water is a most precious commodity and many take it for granted until you don't have any. The island of Contadora has always had challenges with having enough water, but this is the first time I have heard they had to shut down and turn away business. Water is in short supply all over the country this time of year as we transition from dry season to wet. Soon the problems will be an abundance of it. The lesson here if you are planning to live in Panama, be sure that there is adequate water supplies where you will reside.

Excerpts from LA Presna; The Punta Galeón, which has capacity of 130 people, not only lost revenue from guests, it also had to give paid days off to 15 of its 35 employees. Other hotels on the island also suffered from the lack of water, but they did not have to close their doors.

The Villa Romantica managed to get by with reserves from its own tank. The Hotel Contadora desalinated sea water. "If we didn't have these [desalination] machines, we would have had to close the hotel," said sources in the hotel's administration. The Perla Real had to buy water. Sources say it paid $126 per thousand gallons of water, 10 times more than Idaan's rate of $12.35. A ship laden with 150,000 gallons of water finally arrived on Contadora on May 3. "That ought to be enough until the rains fill the lagoon," Ducruet said. The decline in revenues suffered by other businesses that rely on tourism, such as restaurants and tour operators have to be added to the hotel's economic losses.

The damage done to the island's image and to the country as a whole as a tourist destination has yet to be calculated. Sources at the Instituto Panameño de Turismo have pointed out that the tourism potential for Contadora has deteriorated because of the incident.

DHL center opens

More good news from the transport industry.

Excerpts from LA Prensa;

"This is the biggest, most modern and technologically advanced center in the region," Getzler said. The facility measures 8,300 square meters. "It's three times bigger than the previous facility."

DHL's new headquarters has the capacity to handle up to 5,000 packages an hour, which represents a 250 percent increase in deliveries.

DHL’s next investment will be in its air fleet. "We're going to bring in a Boeing 757," Arranz said.

DHL employs more than 400 people and moves around 20 tons of material daily.

Bush vows to help Panama clinch free trade agreement

Great picture of the two leaders in Washington. They spoke about;

FTA-Gotta have it!
Canal Expansion-Gotta build it!
Price of food-Gotta lower it!
Drugs-Gotta stop it!

That's it. So if you want to read it with fluff you can go here.

Caterpillar to build regional corporate HQ in Panama

Let's move some dirt! This comes as good news for Panama construction companies and economic ministers too. They will spend $25 million on the facility and employ 300. Thats great news.

Excerpt:

The office added that Caterpillar, as part of its investment in the Panama, already has an international call center operating here that employs about 130 people and has trained 700 heavy equipment operators for the efforts to expand the Canal and carry out other infrastructure projects in the country.

Read the whole story at Trading Markets

Decline in remittances will have a major impact on Central American countries

It is amazing how much money is sent back to Latin countries by  Latins working in the U.S.. Over $66 billion according to this interesting article from Latin Business Chronicles. I was even more surprised to see that Spain is second only to the U.S. for remittances back to Latin America. Now with both countries facing an economic slowdown, especially in the construction industries, remittances are expected to decrease significantly.  Add this to a soft dollar and higher food costs and this source of income to poor families really start to feel the pain.   As a percentage of remittances to GDP the numbers are much more significant for the smaller Central American countries.

Excerpts; Until now, these remittances have helped to reduce poverty, promote growth and reduce economic volatility in Latin America.A decline in remittances is all the more worrisome if you take into account that the two nations that send the highest volume of remittances, the U.S. and Spain are both undergoing an economic slowdown.

“If we add up all the remittances taken in by Latin Americans, we see a greater amount [of money] than the total sum of foreign investment and development assistance to Latin America.

These remittances have an advantage, in that they do not have to comply with conditions that, in many cases, don’t really help development. Nor must they pay the interest and dividends required by foreign investments.”

“in some countries, remittances reach about 10 percent of the [Latin American country’s] Gross Domestic Product.”

Macías offers a similar solution. “Remittances are sent because there is an absence of opportunities for a significant number of people living in several [Latin American] countries. The most appropriate thing would be to create sources of employment that enable people to lower their dependence on other countries [from which the funds are sent].

What's it worth to save face? A lot, if its other peoples money.

An article in La Prensa today points out that the Panamanian government was paying substantial sums to lobbyist in Washington to push for the FTA, even to the point of paying long after it became  impractical because of the Pedro Miguel Gonzalez scandal. Seems the U.S. government is not alone in squandering tax payer money. I wonder what the U.S. was/is spending trying to get it passed? Maybe Pedro will offer to pay everyone back.

La Prensa

The time lost in negotiating a free trade agreement with the U.S. because Pedro Miguel González was elected and allowed to remain president of the Asamblea Nacional, though he has been indicted in the U.S. for the murder of an American serviceman, has cost Panama and its citizens dearly.

According to official documents currently available, it appears that the Panamanian government paid large sums of money to lobbyists and lawyers during the long periods when the agreement was obviously dead in the water.

Raúl Romero, a Panamanian friendly with President Bush, was paid $183,750 by the Panamanian government between January and August of 2007. The lobbying firm Parven, Pomper, Schuyler continued to receive $15,000 a month, and the law firm of Akin Gump Strauss Hauer & Feld received $17,000 a month at times when it was clear that Congress was not going to approve the treaty.

Panama Has no Army; Give it Military Cash, Anyway

An obscure Pentagon report has been brought to light by a blog site called "Danger Room, What's next in National security" . It seems the U.S. congress was asked just last month to financially support the Panamanian military, when by Panama's constitution they can't have one. So what's up with that? Conspiracy theory or maybe the U.S. is concerned about the security of the canal. Great link to Van Halen's Panama performance on Youtube.

Excerpt: Panama has no military forces, strictly speaking. So, why, you might ask, is the Pentagon insisting on giving the Central American country cash to train its "troops?"

Funny, Congress was wondering the exact same thing. 

In an April 23 missive to Defense Secretary Robert Gates, Inside the Pentagon reports, House Armed Services Committee Chairman Ike Skelton and the panel’s ranking Republican, Rep. Duncan Hunter, said they wouldn't approve for the Panama proposal.

Have read here.....

BoB Reaches Panama Investors

BoB writes the Boom or Bust Miami blog about Miami Real Estate and I posted an article he wrote last year about "Knowing your competition", where he compared the real estate markets of Miami to Panama. Here is what he had to say about that link;

"I was pleasantly surprised to see a recent BoB article, Know Your Competition: Panama City (Part II), get read over 500 times, this morning alone, by readers of a prominent Panama investment blog. This proves how receptive investors in Panama are to the notion of competing with Miami. A link to BoB’s article appears on Prima Panama’s blog, the country’s foremost real estate and resort investment blog. The article’s true purpose is to increase awareness among well informed Miamians that their city is not alone in vying to be the legitimate Gateway to the Americas. Panama investors are keen to notice.

Sometimes it is interesting to go back and reread an article forcasting the future after it becomes the past. Much has taken place since that article was written. Now if you will link over to Boom or Bust Miami, you can rattle his cage a bit more.

Why wouldn't you buy in Panama?

I ran across this press release this morning and thought I would share it with my readers. I would say that for the most part this information is accurate and paints a very healthy investment climate. I am concerned about the future with the rising prices of everything, but when you compare Panama to anywhere else, it is a lot better here. For those who have not heard of many of the benefits, here they are.

From Live PR
Since 2006 the average price was $1780 to 2008 the average price is $2890 pre m2 giving a 25% increase in price per year.

Rental demand continue to increase. Hotels have an 80% occupancy levels and room fees have nearly doubled in the past few years.

Shortage of private rental accommodation for, the majority of new home owners are happy to rent there units out on a monthly basis, the need for apartments to be rented on a short term basis is very high. Short term rentals rental yields are between 10% - 15%.

Ideal place for buyers in Europe with a weak dollar against the British Pound and the Euro. The Panamanian Balboa is tied at $1 to 1 Balboa so the European buyer can take advantage of the weak dollar in Panama.

The Expansion of the canal.
The new canal expansion program is underway. This will allow more ships to travel through the locks brining more money into the country in the form of toll fees.

Read the rest here...

Iberia Adds 4rth weekly flight to Panama

Iberia airlines is strengthening its presence in Guatemala and Panama. Today, May 5th, it is launching a fourth weekly flight from Madrid to the capital cities of the two Central American nations.The flights depart from Madrid at 12:30 h. on Mondays, Tuesdays, Thursdays, and Saturdays. Timetables facilitate connections with another 34 Spanish cities, Iberia’s 41 European destinations, and 10 cities in Africa and the Middle East.
The aircraft used on the route will be Airbus A-340s, both the 260-seat 300 and the 352-seat 600 model, equipped with Iberia’s lavish Business Plus class, with more room, more comfort, and a gourmet meal service deigned by the renowned chef Sergi Arola, Business Plus passengers also get free VIP parking at the airports of Madrid, Barcelona or Valencia for seven days, special check-in facilities, and use of the fully equipped Velázquez VIP lounge at Terminal 4 at Madrid-Barajas, among many other advantages.

The fourth weekly flight was added to meet demand which has grown steadily since the route was launched in October 2004.

Read the complete release here...

Panama loses and then finds ancient bridge of gold

An article appeared in the La Prensa about the discovery of an important ancient bridge that had been damaged and then stored in the old city and then found. What I find so fascinating about this is that the bridge was used by the conquistadors to transport the plundered gold from throughout the Americas on their way to to Spain. If you know any of the history of the conquest of the new world it would probably impress you as much as it does me. Most of the gold and silver passed across this one point on its way to transform all of Europe. Panama has always been a cross roads and this piece of history is an important part of the incredible story of Panama. I hope they rebuild it and put it somewhere for all to see.

Pieces of 16th century bridge rediscovered

Carlos Lemos/LA PRENSA

disinterest: Inac has not announced plans to restore the bridge.1021744

Several fragments of a bridge once connecting the Camino de Cruces where it crossed the Río Curundú, near the present-day Hospital Santa Fé in Balboa, were discovered in storage area in Panamá Viejo.

Archaeologist Stanley Heckadon indicated that he had pushed for years to ensure that the Instituto Nacional de Cultura (INAC) preserved the structure, which was built between 1515 and 1519. He explained that a project undertaken by Ministerio de Obras Públicas (MOP) in 1997 had caused the bridge to collapse, and Inac had neglected to take action to restore it.

In the meantime, said Heckadon, MOP workers had removed the 24 pieces, each weighing several tons, transferring them to the Panamá Viejo area where they were recently rediscovered.

Lineth Montenegro, Inac´s director of Patrimonio Histórico, said that "Inac could not do anything if the bridge was not declared ´historical.´ Yes, the structure had a value, but it was never declared a piece of historical heritage."

 

 

Costa Rica to Invest $15 Million to Boost Local Food Production

Food shortages are in all the news these days. Latin American populations are keenly aware of rising food costs where a major portion of what they earn goes to buying the basic food stuff. How these countries politicians handle this dilemma will weigh heavily on the stability of the region. I will be posting information on this subject regularly with this in mind.  Costa Rica is taking steps to increase their food production by allocating funding to help farmers. They currently produce only 48% of the rice they consume and want to get it to 80%. How long will that take I wonder? From the Costa Rican Pages.

Excerpt: As we know, a high percentage of Costa Rica food is made with one of these three basic grains (rice, beans and white corn for tortillas). Although the national productivity for those three grains is relatively low compared to other countries, the funds will also include investments in new technologies, new varieties and seeds that are more resistant to disease and offer higher production yields.

Read the entire article here.

"The Trump Mystique

This press release put out by the Trump Ocean Club got by me last week. Kevin Brass from the International Herald Tribune sent it to me wanting to know what celebrities have been buying in Panama that the release speaks about. Maybe some of you know about them and will share it.

Excerpts;
Not all Panama City buildings, though, have the guarantee of Trump distinction and quality,which has resulted in an influx of marketing "tricks" to boost slow (or non- existent) sales.

TOCs competitors have used all kinds of silly methods to save their projects, such as paying a celebrity to say they are "owners", throwing million dollar parties, giving away cars, etc.

In reference to the recent celebrity tales heard around town, celebrities that buy in a Trump building know they will never broadcast their information. TOC respect's their client's privacy immensely, that's whatmake it so exclusive.

Who comes up with this stuff? Read the entire hyperbole here...
Trump Ocean Club Only Needs One Star: Trump

Red Frog Beach update

The Red Frog Beach project in Bocas Del Toro is an important one for that area as well as Panama. It is an ambitious project built on an island in one of the more difficult areas of the country in which to take on such a project. The challenges range from material acquisition and logistics to labor and financing. As a developer I sympathize with the difficulties these folks have faced. I have visited the property on several occasions and some of the property buyers receive my blogs and write to me regularly. Everyone wants to know, "When will this project get back on its feet and start building again?"
I recently asked the developer to give me an update and he has promised to do so in the near future, but I wanted to share some information with my readers that is from one of the homeowners. Mick Orton loves the project and the area and still looks forward to one day spending a lot of time there. Mick sent me the following information and asked me to share it with you.

Construction at Red Frog Beach on Bastimentos in Bocas del Toro has been silent for over a year. As an investor this made me very nervous that our home on the Caribbean would never be built. After all, we had dreams of keeping our boat at the boat slip, dining in the fine restaurant that they promised would be built, cooling off in our own private pool, waking up to the gentle crashing of waves of the ocean, lounging on the beach and maybe even surfing or waterskiing. Before construction stopped, several homes were finished, and many were under construction. When got our call to pick our options and colors we thought we were nearing the finish line. Then came word of a strike and pending financing problems. Months went by with no resolution to the problems that plagued Red Frog, and we got concerned.

During that time, not a lot of news was coming from the developers other than the 1 hour monthly conference calls. As a result, several owners started blogs like our Red Frog Blog and Red Frog Beach Forum to keep the buzz going, to stay informed and keep the dream alive. Some chose to use it as a negative forum, but mostly the comments were pleasant and upbeat. The general consensus was (and still is) that we owners wanted this project to succeed, and felt that the developers had the best of intentions to complete it.

Much has changed since we first invested in Red Frog. The government has made several revisions to the tourist visa and property tax exemption laws, not necessarily for the better. (Thanks to the Prima Panama Newsletter and Blog we are keeping a close eye on those changes.) We also found that with the housing and mortgage chaos in the United States, the Panamanian banks and lenders were also affected negatively. And though we were originally told the developers had funding sources for construction on rights of possession land, as money tightened up, these sources disappeared.

The situation has been very complicated with so many rights of possession lots and contracts coming due, it was time for the developers to begin looking for alternatives. Most recently we have seen a major push to move much of the equity from later phases into phase 1 with the introduction of fractional ownerships. Many of the people who were in the project early have seen their financial situations change and were very happy to participate. Money is getting tighter, and fractional ownerships are a great solution for many of the people involved. Another move by the developers to get this project back on track has been to make concessions to owners in order to get around problems with rights of possession land. I feel Red Frog has been exceedingly creative in working with the owners to turn this thing around and get back on course.

Since the beginning I have been bullish on Red Frog. The project will bring much needed money back to the business people of the area and to construction workers as well as their families. I am told the area has been hurt by the work stoppage, and starting construction again will be a boom to the local economy as it was in the past. There is hope that complications will be worked out soon and construction could begin again within a very short time.

Mick Orton – Red Frog Beach lot owner
Sincerely,
Mick Orton

George W. Bush will welcome Panama President Martin Torrijos

Cuba Yesterday and tomorrow the White house.  I wonder what Maartin will say about the problem of the leadership in the assembly?

WASHINGTON
                    Petroleumworld.com, May 2, 2008

                   

          US President George W. Bush will welcome Panama President Martin Torrijos on May 6 for talks on issues including efforts to pass a bilateral free trade pact, the White House said Thursday.

"Panama is an important friend and ally of the United States," spokeswoman Dana Perino said in a statement. "This visit underscores the strong and deep friendship and cooperation between the United States and Panama."

They will discuss "our common commitment" to a free trade pact, expanding trade in the Western Hemisphere and globally, bolstering democracy and economic development as well as security cooperation in the region," she said.

              

                   

Immigration deports holders of fake documents

My bet is the government will pull a knee jerk reaction to the fake passport problem and cause us gringos more grief at immigration. Even though their statistics show of the 1000 fakes, most are of Latino decent, in todays world you must profile equally.

La Prensa

The Dirección Nacional de Migración y Naturalización has launched an investigation into the issuing of false passports, visas and other forms of identification.

Immigration assistant director Tayra Barsallo said that the investigation has not revealed any wrongdoing by the country's foreign consulates.

"We have not detected any link between Panamanian authorities and individuals engaged in this crime," Barsallo said.

The agency has deported or denied entry to about 1,000 people for having fake visas or for trying to use a false passports. These include 405 Colombians, as well as citizens of Nicaragua, Peru, the Dominican Republic and China.

The government has been tightening its immigration protocals as well as cracking down on the issuing of passports. The new immigration policies will go into effect later this year.

Holy kilowatt batman, electric prices to go up again!

Just more bad news in the form of ever increasing costs. We just went through a significant increase in the cost of eclectic in January and now the rates are scheduled to go up again in July for all but those who use tless than 500 kilowatt hours per month.  Hmmmm, I wonder where the government will get all the money to subsidize those who use below that amount.
I pity the rich folks who live where you need air conditioning. Here in Valle Escondido the average electric rate per household is about $60 a month because the average temperature is 75f. In the city with AC it is over $500 a month and climbing faster than the temperature.

From LA Presna

The country's three electricity providers have announced that they will be increasing rates again this year.

Elektra Noreste, Edemet and Edechi yesterday published proposed adjustments to rates that will go into effect July 1. Those rates have a 2 cent per kilowatt hour increase. Industry officials said the increase is necessary because of rising fuel costs.

The latest increase comes on top of a 4 cent per kilowatt hour increase that Elektra Noreste and Edemet enacted on January 1.

The government is expected to absorb most of the price increase. In January, it decided to subsidize the increase for 90 percent of the affected customers.

The customers bearing the brunt of the price hike will be those consuming more than 500 kilowatt hours per month. These customers do not receive subsidies from the government.

The rate hike has to be approved by the government, though it does not appear as though it will be opposed.

Wages to increase again?

With the ever increasing rise in food and fuel, the politicians are struggling with who should pay and they are looking to private enterprise to give bonuses to workers. The private sector wants significant changes to the labor law in order to improve productivity. This of course will not make the politicians popular so they are avoiding that ssue. It is a never ending battle that is now getting out of control because of outside influences in the price of food and fuel. I sympathize with all parties, except the politicians who got us into this the labor law problems to begin with. People have to eat and get to work and it is getting harder every day to do that. At the same time, business are struggling with these same high costs, but with a labor code design to encourage low productivity. This week we have labor day which is celebrated by not working, and at a significant cost to the employer and everyone else. All of this loss in productivity gets passed on to the end buyer in higher prices of everything.  A vicious cycle.

Chamber rejects call for wage hike

José Ramón Varela, president of the Cámara de Comercio, Industrias y Agricultura de Panama, said that businesses can't be expected to give higher wages to employees without getting something in return.

He was responding to suggestions by President Martín Torrijos that the private sector needs to respond to rising inflation rates.

"The government is asking us to give bonuses to workers, but without getting anything in return," Varela said. The chamber president said that the government should look at giving tax breaks to businesses in order to help them increase wages.

"But even with that help, it will be difficult for small- and medium-size businesses to increase wages," Varela said.

The chamber also wants the government to consider making changes to the labor code to cut down on absenteeism and low productivity.

"We must all work to make the system more efficient," Varela said.

The government has been struggling to contain rising prices, especially in the basic basket of goods. These prices have been increasing dramatically over the past few months, dwarfing the recent modest increase in minimum wage.

Varela suggested that the government offer tax breaks to companies that add employees as a way to combat unemployment.

Experts: Latin America Vulnerable

Although Central America is in much better shape than in past global downturns, it does not mean that we are immune from illnesses in other parts of the world, as this article points out from Latin Business Chronicles.

Excerpt:

The U.S. slowdown, and a possible spillover to China, will hit Latin America, experts warn.

But this doesn't mean the region is "immune" to the global downturn, which has primarily affected growth prospects in the G7 group of wealthy nations, he explained. In Latin America, the subregions of Central America and the Caribbean are the most vulnerable because they are small net energy and food importers, and depend on U.S. tourism and remittances, according to O'Neill. Mexico is also vulnerable because its exports to the U.S. account for about 25 percent of its GDP, he explained.

Latin America's poor will be hit the hardest, especially as migrant remittances from the US are not growing as fast as they once were, according to Nora Lustig, a professor at George Washington University and former head of the Inter-American Development Bank's poverty and inequality unit. Even though the region's macroeconomic outlook is not bleak, the U.S. slowdown will cause "moderate poverty" rates to increase by 1 percent overall and by 17 percent among remittance recipients, Lustig said.

CHINA EFFECT

Additionally, the region could be at risk as the U.S. downturn affects China's growth, thereby reducing the Asian giant's demand for Latin America's exports, Garcia said. Latin America has enjoyed a commodities bonanza in recent years, but if China's economy grows just 7 percent this year compared to 10 percent last year, Latin America will feel an impact.

"High concentration on few exports has become a rule, and that makes the region very vulnerable if terms of trade change," Garcia explained.

Meanwhile, rising prices for food staples are "a major crisis" for Latin America's poor, according to Lustig. Around the world, an estimated 105 million people will have become poor because of food price spikes since 2005, she said.

Read the whole story...

Homes Razed by Spain Stun Foreigners as Slump Deepens

Reading this article I can't help but think how easy it is to cozy up to the municipal authorities in Panama, or to pay off someone in the public registry to do something fishy. It happened in Spain and now they are tearing down the houses paid for by the owners who believed they did everything right.  Another good reason to get title insurance, but will they cover the home too?

Excerpt; Over the past decade, developers built about 100,000 illegal homes in Spain, and consumer advocates say thousands of those are now threatened with demolition as regional governments try to deter clandestine construction. The crusade may discourage the foreign buyers who fueled Spain's housing boom, deepening a slump that began last year.

Each of Spain's 8,111 town halls has the authority to make planning decisions and issue building permits with little oversight from the regional or national governments. As property prices soared, some local officials were drawn into schemes to profit from new home construction.    

      

The former head of urban planning in Marbella has been charged with money laundering and accepting bribes to issue building permits. When Juan Antonio Roca was arrested in March 2006, police seized 2.4 billion euros ($3.8 billion) of assets, including two hotels, sports cars and 103 horses. Roca denies any wrongdoing.    

      

``When everyone is making money, for example the real estate agent, the town hall and the administration, everyone turns a blind eye,'' says Bernardo del Rosal, former ombudsman for the Valencia region. ``The system as a whole fails and the law is worthless when that happens.''

Read the whole sordid mess at Bloomberg online.
    

Torrijos Thanks Cuba, Remembers Dad

Well I hope this is just playing politics and not a fostering of ideals, but you never know. A monument to Omar in Cuba with his son taking part in the ceremony seems appropriate I guess. I especially like the solidarity in acquiring the canal and sovereignty blurb. Again from the Cuban/English Prensa Latina

Havana, Apr 30 (Prensa Latina) Panama President Martin Torrijos praised Cuban solidarity with his country at a ceremony where the first stone was laid for a bronze monument to his late father Omar.

On this fifth visit to the Island, the statesman recalled support by Cuba and other Latin American countries to help Panama recover sovereignty over the canal which they now try to modernize.

The visitor expressed thanks foráthe project that will keep alive the memory and spirit of solidarity that Omar Torrijos represented, for the brotherhood between Cuba, Panama and all Latin Americans.

Read the rest here...