European style socialism comes to Panama

Last Thursday and Friday, IPAT (now officially the Panama Tourism Authority) hosted two very important seminars on subjects that are critical to the future development of tourism and residential construction in Panama – “Residential Tourism” and “Territorial Ordering”.

Leading the presentation was Mr. Miguel Rodriquez, an academic, consultant and land use official from the Canary Islands in Spain. Mr. Rodriquez’s experience comes primarily from his home country of Spain and specifically from the Canary Islands.   Tourism is one of Spain’s leading industries and each year the country receives over 35 million visitors.  The Canary Islands are one of Spain’s most popular destinations and over 12 million people visited this tiny island chain last year.  The Canary Islands have less than 7,500 square kilometers of land and a population of fewer than 2 million people.  Incredibly, they have over 350,000 hotel rooms squeezed into this small area.

It wasn’t surprising to learn that Mr. Rodriquez takes a very strong position against development in general and residential tourism in particular.  This is only natural considering that his home country has seen nearly unlimited development over the past 20 years and he has witnessed the problems this has caused.  In his view, in order to prevent overdevelopment the government must take an aggressive role in deciding who can build, where they can build, what they can build and how they should run it once it is completed.   According to Mr. Rodriquez, only the government can properly determine the right mix of development for the country.   But, this doesn’t mean that he’s against capitalism. On the contrary, Mr. Rodriquez went on to point out that, “By enacting these regulations and restrictions, we can assure the profitability of the business sector”.  How government policy can “assure the profitability of the business sector” was not explained.

This is European socialism at its finest.  In Mr. Rodriquez’s view the government is best suited to choose which builder is best, what areas can be developed, what business activities can be allowed and even setting the standards for operating the smallest details of your business.  For example, Mr. Rodriquez believes that government should set standards down to “the type of sheets used on the beds in tourist hotels”.

It was encouraging to note that “residential tourism” is at least being recognized during these presentations as a legitimate sector of the tourism industry.  However, Mr. Rodriquez felt that residential projects play a limited role in tourism development and, if fact, take resources away from the industry.

On “territorial ordering”, Mr. Rodriquez was clear – the government must take steps to designate certain development zones in the country for specific uses.   Each area of the country must be studied to determine carrying capacity as well as environmental, economic, social and cultural issues.  He believes that the tourism authority is best suited to address these issues and must work in a “multidisciplinary” fashion with all the other affected government agencies to come up with a comprehensive tourism development plan.  Key to this plan is the establishment of “buffer zones” where no development of any kind is allowed.

Why is all this important?  The recently passed tourism law allows for the creation of a multi-year tourism master plan. Central to this master plan are the concepts of “residential tourism” and “territorial ordering”.  In his introduction to the presentations, Panama’s minister of tourism, Mr. Ruben Blades, took pains to point out that the views presented by Mr. Rodriquez were his own and did not reflect the position of the government.   However, it was clear that the tourism authority was sympathetic to the arguments of Mr. Rodriquez.

It was interesting to see that quite a few people from the various government ministries were in attendance at these presentations and it was encouraging to hear the questions they asked.  There was healthy skepticism expressed about the level of control and restrictions that Mr. Rodriquez advocates.  Overall, the people attending the presentations understood the dangers associated with uncontrolled development but they also saw the need to protect the rights of private property owners.

In the end, the argument is about balance.  In Spain and the Canary Islands, the uncontrolled building of the past 20 years resulted in the real need to control growth, protect the environment and create strategies for sustainable development.  However, the experience of the Canary Islands is not necessarily applicable to Panama.  In Panama, our growth cycle is just beginning and we need to determine ways to encourage rational development in a way that benefits the country and provides incentives to investors.   If the restrictions and regulations proposed by Mr. Rodriquez are adopted in the new Tourism Master Plan, development of any kind may stop altogether.

As the new Tourism Master Plan for Panama is developed, it is important that all sectors of the tourism and real estate industries participate and make their voices heard since the policies created by this plan will have wide reaching implications in the future.