Panama Investor Blog

General economic boom boosts wages across the board

This story from La Prensa  shows clearly how market demand drives wages and not government mandates. With maids now making two and three times what they made just two years ago you can see that it is the foreigners who are driving up demand and wages for domestic help. Many Panamanians are dismayed at the increase cost of domestic help because for generations they have paid very little. I remember when we first moved to Boquete a live in Maid was paid about $90 a month.  Whenever I tell Panamanian friends what we pay our household help many would say that we are ruining the system by overpaying. The fact is that people will pay more to domestics and any worker until they feel it is not worth the price or they just cannot afford it any longer.
The same is true for construction workers, waiters and taxi drivers. When there is demand prices go up. For Panamanians to really increase their economic standing, they must become better educated and skilled. Then they can command comparable wages to the first world and the cost will be worth it.

Demand for services and skilled labor has increased the average salary earned by blue-collar workers

A growing population of ex-patriates has contributed to the overall rise in wages

LA PRENSA/ David Mesa

salaries surge: Because of the real estate development craze citywide, the Ministerio de Trabajo y Desarrollo Laboral (Mitradel) reports that some construction workers are earning up to $3,000 a month. 1017704

The last four years of the strong economic growth has served to better not only the salaries of Panama´s white-collar professionals. Although bank executives, Canal workers and merchants in the Colón Free Zone have enjoyed a boost in pay; domestic employees, waiters, taxi drivers and laborers who depend on the minimum wage have noticed a difference in their earnings.

"I earned $125 two years ago and now I´m paid $250 to do the same work," said Lucía Quero, a maid in the home of a Venezuelan couple.

Lucía´s story is echoed by dozens of other domestic employees who are earning double or triple the wage they were earning two or three years ago. Most of those interviewed work for families with a higher purchasing power, usually foreigners from the United States, Canada, Europe, Colombia and Venezuela.

Read the whole story at La Prensa

Buddha Bar update

Although I had posted information on this chic operation coming to Panama, this press release gives us some more information about it. I wonder if Buddha is OK with the use of the name associated with entertainment?

After Success with the Rich and Famous Worldwide, Buddha-Bar Expands to the
   Luxury Hotel World, Selecting Panama as First Foray into the Americas

    MIAMI, April 23 /PRNewswire/ -- For almost one hundred years, The
Panama Canal has served to connect the East to the West; now, Buddha-Bar --
the unique concept that has become an international phenomenon, is set to
accomplish the same goal. With their first Oriental inspired Luxury Hotel
in the Americas set to open in fast growing Panama City, Buddha-Bar will
expand on their vision, bringing a sumptuous hotel, restaurant and spa to
this thriving metropolis. As seen with their monster success in Paris,
Buddha-Bar creates an exotic journey that includes eclectic design,
hypnotizing music, and magical food mixing the boldness of Asian flavors
with the delicacies of France. The unique group will open their first hotel
in Prague this summer.

    With more than 10 years of experience that began in Paris and expanded
to cities like London, Cairo, Beirut, and Dubai, Buddha-Bar uses their
"East meets West" sensibility to create celebrity-filled hot-spots wherever
they go. Employing original music that carries a worldwide cult-following,
and exotic Pacific-Rim food, these pioneers created the concept of
"entertainment".

    

Costa Rica tourism number are up!

We can glean some interesting statistics from this article about tourism at the Liberia airport in Costa Rica. First and foremost is the fact that 76% of their tourist come from the U.S. and the rest from Canada. They also have a high return traveler of over 48%. How much of this is residential tourism is not stated. From the Tico Times Daily news.

                                                      

Costa Rica's Guanacaste           still tops with N. Americans

By Leland Baxter-Neal Tico Times Staff | lbaxter@ticotimes.net

Despite a sputtering U.S. economy and concerns over runaway development in the region, Costa Rica's northwestern Guanacaste province continues to put up record tourism numbers, according to statistics released yesterday.           Tourist arrivals at the Daniel Oduber International Airport in Liberia, Guanacaste's principal tourism hub, rose 13% in the first three months of the year compared to the same period last year, according to a marketing study commissioned by the Guanacaste Chamber of Tourism (CATURGUA).             Citing numbers from the Civil Aviation Authority, CATURGUA reported 156,028 tourists came through the airport from January through March, considered the peak of the year's tourism high season. Tourism numbers begin to drop off after March as the country enters its rainy season, and commonly don't spike again until December.           Tourism Minister Carlos Ricardo Benavides, speaking at a press conference yesterday held to announce the new figures, highlighted the good reputation Costa Rica appears to be enjoying among the visitors to Guanacaste.           “That 96% say that they are going to recommend us seems to me a fantastic product, considering that the majority of people that arrive in this country do because it was recommended by a friend or family member,” Benavides said. “It's not all destinations in the world where people tend to come, or return again, with the frequency that you see in Costa Rica.”           According to the CATURGUA study, carried out by the marketing firm C&D Consultores, 48% of the tourists interviewed had already been to Costa Rica on a prior trip, up from 36% during the 2007 high season and 28% during the 2006 peak.           The research found that nearly three out of four (74%) visitors came from the United States and the rest (26%) came from Canada.           C&D Consultores interviewed 300 passengers at the Daniel Oduber airport, approaching passengers seated in seats pre-selected by the firm.

 

The credit crunch hits Miami

As we try and read the tea leaves of the economic future, the Miami economy may be a good indicator of what lies in store for the rest of the country as well as Panama. This article was sent to me by a reader and is from the BBC.

Excerpts;
              At first sight there seems to be little sign in Miami that the turmoil in the financial markets is having any effect on the real economy.

 

                  There are plenty of cranes on the horizon, working on multi-million dollar blocks of condominiums.                   

All along the seafront of Florida workers are building new blocks of flats, many sold to speculators and investors, hoping to hire them out to holidaymakers.

But first impressions can be deceptive, because after a while you realize that although there are plenty of cranes finishing off blocks, there are precious few foundations being dug.

                                     Empty sites                                      

                  That is bad news for America's huge retail sector.                   

Many of the shopping centres in Miami look busy enough, but there are a surprisingly large number of empty sites in amongst all the big stores.

The Falls mall is targeted at the wealthy middle classes, with its massive water feature and branches of Macy's and Bloomingdale's department stores.

                  In this economic downturn, even the wealthy are feeling the pinch, according to general manager Julie Goldman.                   

"I think it affects everyone," she says. "People who have means made some investments that looked good at the time and then we all know the market changed and surprised everyone."

                  When even the wealthy of Miami are feeling the pinch you know that the American economy must be really suffering.                   

It all adds up to a real recession, with falling demand across the economy, lack of investment, job losses and real pain for many people.

                                     Pulling back                                      

                  And it isn't going to end soon, Miami-based economic consultant Dr Tony Villamil believes.                   

"Consumers make up two thirds of spending in the US and they have pulled back," Dr Villamil, the former under secretary of commerce for economic affairs says.

                  "As a result we are seeing a recession.                   

                  "I think we will be working this out for the rest of 2008 and the first half of 2009."                   

Although this downturn may have started as a credit crunch and a mortgage crisis, it is now hitting Americans where it really hurts.

Panama--Still the World´s Number-one Overseas Retirement Option

The Asian perspective of the best places to retire.

The cost of quality retirement living options in the United States has risen well beyond the budget of the average would-be retiree. The current meltdown in U.S. housing costs doesn´t change this fact. Most Americans are worried they´ll never be able to afford to chase their retirement dreams. The answer is to think outside the box--the box being the United States. This isn´t a new idea, but it´s truer and truer, as ever-increasing numbers of Americans consider leaving the States in search of a quality retirement lifestyle they can afford.  the gateway to the Americas.

The Six Best Overseas Retirement Havens For 2008-- Where To Retire Well On Less Than $1,500 A Month.

The cost of quality retirement living options in the United States has risen well beyond the budget of the average would-be retiree. The current meltdown in U.S. housing costs doesn´t change this fact. Most Americans are worried they´ll never be able to afford to chase their retirement dreams.

The answer is to think outside the box--the box being the United States. This isn´t a new idea, but it´s truer and truer, as ever-increasing numbers of Americans consider leaving the States in search of a quality retirement lifestyle they can afford.

Once you expand your retirement options to include those outside this country, you realize you can enjoy a rich and satisfying life even on a modest budget.

Specifically, the editors of Live and Invest Overseas have identified six overseas havens where you could retire and live well on $1,500 a month or less:

Read the rest of the story at Asia property report.

Panama FTA: Uncertain Fate

Excerpt from Latin Business Chronicles

Peter Hakim, president of the Inter-American Dialogue, believes the Panama FTA's main obstacle is the issue of Pedro Miguel Gonzalez, who was elected president of

Panama

's national assembly last year despite being wanted in the

United States

for killing a

U.S.

soldier based in

Panama

in 1992. (He has been acquitted by a Panamanian court, but

U.S.

authorities maintain he is guilty). Gonzalez belongs to the ruling PRD party and was allegedly elected congress president despite concern by President Martin Torrijos, who has been widely praised by local and foreign investors for his pro-business policies.

"Consideration of the Panama FTA has been delayed because the country’s parliament elected a leader who is accused in the

United States

of murdering an American soldier - although he was found not guilty by a

Panama

court," he says. "He is scheduled to leave office in September, which will open the way for approval of the Panama FTA, although this could be delayed if the White House and the U.S. Congress have not made any progress toward an agreed-upon [Trade Adjustment Assistance]."

The condo boom moves on to Latin America

This from the Miami Herald.

BY MATTHEW HAGGMAN

mhaggman@MiamiHerald.com

DONNA E. NATALE PLANAS / HERALD STAFF

Edgardo Defortuna , condo developer and head of residential real estate brokerage, is looking to invest in building condos on the Pacific coast of Mexico.

               

What to do when you have a network of real-estate brokers selling new condominiums, but few new condos to sell?

Edgardo Defortuna, who has made millions selling South Florida condos, hopes one answer is found on the Pacific shores of Mexico.

Defortuna, who heads Fortune International, last year agreed to start selling condo units built by Miami's Related Group in Puerto Vallarta. It's part of a plan that he and Related CEO Jorge Perez hope will ultimately include more than a half dozen projects across Latin America and the Caribbean -- and provide a fruitful market until South Florida's formerly hot housing industry recovers from its cold snap.

Las Olas Resort in the Republic of Chiriqui

The Arauz family have owned 18 kilometers of ocean front farm land for many years in an area known as Barqueta in the Republic of Chiriqui.  Just 30 minutes from David, the provincial capital, they grew rice and raised cattle for 4 generations. About two years after I began building Valle Escondido, they decided to develop a 60 room resort hotel. I remember well Juan Arauz showing me his vision of what would soon become the Las Olas Resort. Juan was living in the U.S. at the time and was known as the feather king for having one of the largest feather companies in the world.

Just as many thought I was crazy to develop Valle Escondido in Boquete, many thought Juan had feathers in his head to develop a residential resort project in Barqueta. But Juan was determined to return to his family farm and build his dream.

Shortly after completing construction of the hotel they began to sell beach front lots. It was a huge success with demand for the ocean front lots far exceeding expectation. Last year they built their first condominium building and the beach front units sold out very quickly. Now they are opening another phase of beach front lots and condominiums that will probably sell just as fast. Although many projects in Panama are selling condominiums with ocean views, they are typically kilometers from the water. Los Olas beach front condo's are exactly that. The only thing between you and the ocean is a beautiful pool.
I paid a visit to the project this week and met with Juan's son, Anthony Arauz, the fourth generation of family who is "farming" this expansive property. Anthony is continuing his fathers dream of developing the area for residential tourism. Soon they will begin construction of an 18 hole golf course, marina and a number of other amenities that will add greatly to the value of the property owners. Take a look at my photo album taken this week to see just what they have accomplished. Las Olas resort is just another reason The Republic of Chiriqui  is the #1 retirement destination in Central America!

Billions in reverted property rotting

This is a well researched article that appeared in La Presna today about the many properties handed over to the Panamanian government by the U.S. that stands in disrepair and unrealized profit. According to this article, the value at the time of transfer was over $10 billion (not including the canal) which was more than the countries national debt. Instead of focusing on how to take advantage of this fantastic infrastructure, they have been left to the elements, which in Panama does not take long to be reclaimed by the jungle. I find it a sad state of affairs that after nearly ten years since the handover, the country continues to rack up debt at unprecedented speed and yet does little to lower it by selling these assets.

Billions in property rotting

Panama gained $10.8 billion in land, housing, and infrastructure when the U.S. military left in 1999

Most of the 14, 538 properties have fallen into disrepair; only a fraction of them have been sold.

LA PRENSA /Carlos Lemos

hidden treasures: The $10.8 billion properties include former U.S. military residences in Clayton, Howard Air Force Base, Fort Davis, and several abandoned buildings on the Amador Causeway. 1015018

The Panamanian struggle to reclaim the territories long-held by the United States military took time and required sacrifices. Ultimately, however, the properties gradually reverted to Panamanian control following the Torrijos-Carter Treaty in 1977 greatly increased the country´s collective wealth.

When the last troops packed up and left Fort Clayton, Howard Air Force Base and Fort Sherman, among other military stations, on December 31, 1999, the Panamanian government inventoried their gains. Left behind were 14,538 residences, buildings and facilities, including gas stations, municipal swimming pools and infrastructure galore. And that doesn´t include the many offshore installations, such as ports.

According to a report discovered by La Prensa at the Ministerio de Economía y Finanzas (MEF), the American inheritance was valued at $10.8 billion, a sum greater than the country´s total outstanding debt.

Read the rest at La Prensa

Panama battles to clear canal bottleneck

The canal is having problems with transit waiting and transit times. Although this article eludes to the issue of pilots being the problem, the canal authorities deny this and the pilots have made no comment. The ones I have spoken to tell me they are at odds with the work schedule and pay along with other matters. With financing issues being of major concern the canal authorities don't want t appear as if they are having problems with their operation. This needs to be resolved quickly.

Michelle Wiese Bockmann -                                 Friday 18 April 2008

                                                                

Ships currently face a minimum four-day wait.

THE Panama canal is struggling to control major congestion as transit times nearly double to a record 53 hours, while this week’s backlog averaged 93 vessels.

Queues have eased little from their peak in March, when 119 vessels waited as long as eight days to transit the major trade artery.

That is despite a series of measures to address the backlog, which has occured during its busiest time of the year.

Ships currently face a minimum four-day wait for the 80km journey through the canal. But more alarmingly, the journey time has risen by nearly 20 hours in one month, and now takes an average of 53 hours, based on March operational figures.

read the story at Lloyds