Panama Investor Blog

New Tourism Law Shrouded in Mystery

By Paul McBride, CEO

Prima Panama, S.A.

Earlier this week we received a copy of a proposed law, to be enacted by Presidential decree, which will dramatically change the organizational structure and powers of Panama’s tourism authority.

We have provided links to the original Spanish draft of the law and the English translation at the end of this article.

At first impression, the new law has many provisions that are actually very good for the tourism industry.  For instance, the restructuring of the transportation system where the tourism authority will establish quality standards and, most importantly, allow licensed tour buses and vehicles to operate anywhere in the country is a huge benefit.   The idea of creating a national tourism directory also has merit.

The concern we have is that this law has clearly been written to give the tourism authority a tremendous amount of power to implement the new tourism master plan.  If you read the draft carefully, you’ll see that the new National Tourism Council has oversight over the tourism authority but no input into the development of the master plan.  They simply oversee over the implementation of the plan.  So, the tourism master plan will be approved outside of the purview of the National Tourism Council and after the current IPAT board of directors is dissolved.

The tourism master plan features prominently in the law and is referenced no less than 13 times in the document.  It is the master plan that is really important here.  This proposed law gives the new tourism authority all the power it needs to implement the plan.

The real problem is that the master plan is being created without any input from the tourism industry and in total secrecy.  We contacted several members of IPAT’s current board of directors and none of them have seen any details concerning the new tourism master plan.  If this proposed draft is allowed to become law before anyone gets a chance to see the tourism master plan, then the new tourism authority will have unchallenged power to implement the directives outlined in the plan, without any input from those affected by the plan.  In addition, the law is written so it will be nearly impossible to change the plan.  The new National Tourism Council is stacked with government personnel (there are only 4 private sector members) and it does not have the authority to change the master plan.  The council merely has oversight on the budget and general administrative issues. 

Overall, many of the objectives of the proposed law are good ideas.  The law will provide for some continuity in the tourism authority and, in general, provide direction for the development of tourism in Panama.  However, until the tourism master plan has been released for public debate and all those affected by the plan given the opportunity to voice their opinions, we must lobby to prevent this law from being enacted .

The government has asked for input from the private sector for consideration by the President's cabinet by January 29th.  Remember, this law can be enacted by Presidential decree.  We strongly encourage hotel operators, tour companies and anyone with an interest in the furture of tourism in Panama to contact their industry associations to make their voices heard on this very important matter.

Download proposed_ipat_law_espanol_11808.doc

Download proposed_ipat_law_english_11808.doc

Parents to face fines for kids’ criminal activity

Wow, now thats a novel approach.  I would bet most of those kids committing these kinds of crimes either have only one parent or none and they are probably poor. If the parent can't pay I suppose they will be put in jail and then were in worse shape than before. What is is the solution? How about education and opportunities. Now that would be a novel approach here in Panama.

Responding to a wave of teen violence, police will be fining parents for the criminal activities of their children.

That decision was announced yesterday after a meeting among Ministro de Gobierno y Justicia Severino Mejía, Attorney General Ana Matilde Gómez, Panama City Mayor Juan Carlos Navarro, Policía Nacional Director Rolando Mirones and the Arzobispo Metropolitano Dimas Cedeño.

Mejía said that parents who do not have the money to pay the fine will "have to sweep the streets."

The announcement was met with harsh criticism.

"This is crazy," the former director of the Policía Técnica Judicial Jaime Jácome said. "This is a folly."

Former Ministro de Gobierno Alejandro Pérez said the decision was "ridiculous."

"We are talking about murders being committed," he said. "They should face 20 years in prison, not a fine."

read the rest of this at La Prensa....

Spanish developers hope Panama will be better than their cooling market

Seems the market in residential tourism in Spain is slowing dramatically just when there is a lot of invetory on the  market. Some adventurist Spanish developers have moved into the Panama market in hopes that it will continue to be strong in the face of a global real estate deflation. Lets hope they are right!

From La Prensa

Developers seek new opportunities in Eastern Europe and Latin America, including Panama.

Big companies are moving into the office, commercial, and industrial real estate markets.

LA PRENSA

Recession: According to the Spanish housing ministry, total home sales during the second quarter of 2007 fell 16% compared with the same period in 2006. 975424

As the real estate bubble in Spain deflates, Spanish investors and developers are looking for new markets that don't show the signs of exhaustion symptomatic of markets in Europe and the U.S. Some have already made inroads in Eastern Europe and Latin America.

Adolfo Olloqui, vice president of the Spanish Corporación Iberoamericana de Negocios, says "the recession in Spain has forced developers to seek markets with new potential, as is the case in Panama."

The Spanish real estate market clearly moved into a recession in 2007 after many years of vigorous growth.Ignacio Pindado, CEO of the consulting firm Grupo i, noted that "in 2006 the market didn't enjoy the same rhythms of absorption as earlier." In 2007 demand dropped and unsold houses sat on the market.

The global economic situation has contributed to the slowdown in real estate, as have climbing interest rates in Europe. The U.S. subprime crisis has affected Spain as well. According to Pindado, most people don't understand what's happening very well, "but they've been dissuaded from buying a home.

Read the whole story here....

Memberships are Vital to Panama's LifeFlight Operations

Press release from: LifeFlight Panama

Dieses Bild im Großformat speichern

(openPR) - Fast response and less trauma during emergency medical helicopter transports are two important benefits a new service to Panama will provide. However, as with most helicopter emergency medical services around the world, the membership model along with community support, has proved to be the the most effective way to generate the necessary funding required to provide a good service.

"Community support is so important for this type of operation, especially in Panama," said LifeFlight Panama's Jim Thomson. "The more people that join, the better it is for everyone as these funds enable us to buy more/better aircraft, with increased capabilities for a better and safer life saving service for the community."

With operational costs for aircraft increasing, memberships enable those costs to be spread over a larger number of people, instead of the extraordinary costs of a single flight. LifeFlight Panama's memberships are based on a per household basis for residents. Tourist memberships are on a per person basis for 30, 60, and 90 days depending on the time needed. The costs are $204 yearly per household of 6 and tourist rates start at $29 for 30 days coverage. "Without memberships, a mission to Coronado and back to Panama City would cost over $8,000, and a mission to Bocas del Toro would be over $30,000," said Thomson. "Clearly, the benefit of membership means less financial stress when members call upon the service."

LifeFlight Panama's first aircraft, a Bell 206 LongRanger III, is being completed with modifications better designed for operations in Panama's unique flying environment. Delivery is expected in the USA in February 2008.

Helen Tonkin
LifeFlight Panama
Ocean Plaza, #1601
Ave. Aquilino de la Guardia & Calle 47
District of Marbella
City of Panama
helen@lifeflightpanama.com
Tel.  +507-340-6270 or 6272
Fax.  +507-340-6277

LifeFlight Panama will be the first dedicated Helicopter Emergency Medical and Air Ambulance Service based in Panama City, Republic of Panama. LifeFlight services will be supported by membership subscriptions and a foundation enabling it to fly for humanitarian as well as commercial purposes. LifeFlight will provide a rapid response for those living, working, visiting and travelling in Panama using a Bell LongRanger III helicopter with a range of 300 nautical miles.

U.S. Decline Makes History-IHT

There is no question that the real estate market is in a dramatic downturn, but the question on everyones mined is how deep and how long will the decline last, and how will it affect our market. Here are some interesting statistics from the International Herald Tribune.

Boosters in the U.S. may decry the media’s characterization of the housing industry’s woes, but there’s no mistaking the terrible numbers released yesterday by the National Association of Realtors.

Sales of single family homes were down 13 percent for 2007, the worst decline since 1982. The median price for a single family home fell 1.8 percent, the first annual decline on record, going back to 1968, the NAR reports. It may have been the first annual drop since the Great Depression in the 1930s, NAR economist Lawrence Yun told the Associated Press.

For a sense of the semi-delusional boosterism that still exists in many parts of the U.S., read the NAR’s press release, which touts that total sales were the “fifth highest on record.”

But the NAR stats only hint at the real extent of the problems. The national numbers are balanced by many small- and mid-sized regions which fared relatively well compared to the sharp declines in markets like California and Florida.

Read the rest of the sory at IHT

Immigration reforms will have to be modified

Good news here.

From La Prensa today

Following criticism of the government’s proposed immigration law from various groups, the Cabinet has decided to ask the Asamblea Nacional to participate in the preparation of a "much more integrated" draft.

The move was reported to La Prensa by the ministro de la Presidencia, Rubén Arosemena Valdés, after an informational meeting last Wednesday with staff of the Dirección Nacional de Migración, which prepared the draft. "The draft is extensive and goes into too much detail, which is a mistake," he said.

The Mesa Nacional de Migrantes y Refugiados de Panamá (Menamire) is the latest group to express its displeasure with the proposed immigration reforms. The Colegio Nacional de Abogados (CNA) and the Consejo Nacional de la Empresa Privada (Conep) strongly criticized the government's proposals earlier this week.

Made up of the Comisión de Justicia y Paz, the Vicariato de Darién and the Instituto de Estudios Nacionales, among others, Menamire has called for wider discussion of immigration law reform. It also warned the government not to let its interest in security and investment cloud its vision of immigrants' human rights.

Panama's ambassador to the U S offers this about the economy and residential tourism

Excerpt:  Panama seems to be attracting a lot of retirees from the United States these days. Are you trying to take business away from Florida?

This cake is big enough so everybody can have a little piece of it.

The reason why everybody is moving to Panama is we speak your language, and we carry your currency. It's a safe country, it's nearby, there are 16 nonstop flights daily from the United States to Panama. So there are many things we offer - and it's cheap; it's affordable.

Tourism is a growing industry for Panama these days. Once again, is your country trying to step on Florida's turf?

No, we're competing more with our Central American neighbors, especially Costa Rica.

How do the recent turmoil on Wall Street and the specter of a recession in the United States affect Panama's economy?

Everybody says that when the United States economy sneezes, all of Latin America gets a cold. That hasn't been the case, luckily. Our structures are standing on their own feet. We're finding out now that Panama has been undervalued in its real estate markets and other areas.

So you think there will be economic stability in Panama even if the United States has a recession?

We certainly hope that we will not be affected. So far, so good.

Read the rest of the story at Tampa Bay Online

Business leader calls for upgrades at David airport

I thought this was already a done deal some time ago. Seems somebody misled the peple of David!

The Aeropuerto Internacional de David "Enrique Malek" is getting busier, and users are saying that it needs to be upgraded.

"We are facing an increase in demand, so we are faced with the need to make improvements to the aiprort's infrastructure," said Gregorio Montecer, an official with the Autoridad Aeronáutica Civil (AAC).

The airport has a master plan which outlines a number of planned improvements, including the construction of a fire station, erecting perimeter fencing and improving parking and access roads.

Apart from these projects, the AAC plans to put out for bid in March a project to expand the airport's tarmac that will double the number of planes the facility can accommodate.

Future plans call for the expansion of the airport's terminal.

"With regard to the expansion of the terminal, the analyses have been completed and we are developing a proposal to expand the areas for arriving and departing passengers," Montecer said. "We are seeking funds to do this work because it is not in the 2008 budget."

The terminal's expansion will cost an estimated $500,000.

Enzo Polo, president of the Cámara de Comercio e Industrias de Chiriquí, has proposed the creation of a consortium to develop the airport so that it can be equipped to handle the needs of incoming tourists.

He said this will be a necessity once Grupo TACA begins offering flights from Costa Rica to David in February four times a week. About 50 people are expected to be on each flight.

"We are going to see serious problems at customs and immigration if something isn't done," Polo said.

Torrijos to stop smoking

The president has decided to decree that no one can smoke in public places. I remember ten years ago when I came to Panama, even though I did not smoke, I liked the fact that people could do so if they wanted. I had just left the U.S. where the anti smoking laws were being implemented across the nation and I felt this was another example of government telling people what is good for them. Well now they have arrived on these fair shores.

La Prensa today
President Martín Torrijos will sign a law banning smoking in public places at a ceremony at 8:30 a.m. today at the Instituto Oncológico, the public hospital that treats cancer patients in Panama.

The bill will go into effect three months after the president gives his approval and the bill is published in the Gaceta Oficial.

The law, which was approved by the Asamblea Nacional last year, prohibits the advertising of tobacco products and bans smoking indoors in public places, even in those businesses where smoke extractors have been installed.

A total of 2,300 people in Panama die each year due to tobacco-related diseases, including lung cancer, which is the most common.

Problems in U.S. markets are good for Panama?

Here is an interesting spin about the Panama economy from La Prensa today. Lower rates mean better mortgage rates.  Obviously a rather short sighted economist wannabe! Come to think of it, that is the same strategy Bernanke is using in the U.S..

Panama looking good to investors

The cost of financing in Panama will be cheaper in the months ahead, experts say.

The situation in the U.S. will make Panama a more attractive place to invest.
LA PRENSA

Going down: Lower interest rates and tax cuts in the U.S. will have an effect on foreign investment here.974337

The sharp reduction in U.S. interest rates announced by the Federal Reserve (Fed) on Tuesday will lower financing costs in Panama, according to finance specialists Luis Navarro, José Abbo and Frank De Lima. Moreover, "[T]his reduction will stimulate investment in Panama," said Navarro, who is the associate director of Indesa Capital.

In their opinion, local interest rates could go down significantly in the future, and the drop will be felt in the first six months of the year. However, they will not fall as far as in the States. "Here, because of the risk factor, Panamanian rates will always be higher than in the U.S.," De Lima said.

Bankers are going to have to reevaluate the cost of capital for projects that they are interested in financing in order to take greater advantage of the situation. But the U.S. situation is also going to make Panama appear a more attractive place to invest.

"The flow of foreign investment will keep coming, with more enthusiasm, in search of better returns, taking advantage of the strength provided by the Panamanian market," said Víctor Mojica, manager of Tesorería e Inversiones at Multibank. It will be an interesting scenario in which local banks will have to figure out how to deal with excess liquidity, he concluded.