Panama Investor Blog

New government agency plans to streamline foreign investment

This certainly comes as welcome news if it is done properly. They have what is called a Ventana Unica or one window at the Panama Pacifico project that has been very efficient according to my contacts at that project. Now the government is planning to make it easier for all foreign investment eliminating much of the bureaucracy when dealing with many different agencies. Lets hope they get this right!

Machine translated from Panama America

Direct foreign investment increased by 56% or the equivalent of $ 219 million during the first trimester of the year, compared with equal period of 2009 according to figures from the Comptroller General of the Republic of Panama.

These results have been recorded, despite the familiar stumbling block: the bureaucracy that exists to deal with for a new company on Panamanian soil.   Henry Kardonski, general manager of Panama Pacifico, attested to that deficiency.

  However, this problem from now on will no longer be the same.  Now investors will have the opportunity to find all the information they need to know if they want to settle in the country, through the Agency for Investment Promotion and Export (PROINVEX).

  That means that businesses associated with agricultural exports, tourism, logistics, among others, will only have access to this single window, where you can view stats and everything about the business climate in Panama.

  Even know which areas are covered by the laws of incentives such as the Free Zone of Colon, Panama Pacific and processing zones, said in a tone pleased Roberto Henriquez, Minister of Trade and Industry.

  Henceforth, Henriquez Proinvex expects, as a business tool-doubling foreign direct investment.  Or at least those are the long-term projections. For their part, Kardonski, acknowledged that after having finalized this initiative, the time to set up a company would be reduced by only a matter of weeks.

Panama do$e have one of the large$t known copper depo$it$ in the world!

Several months ago I posted about Panama having one of the world largest copper deposits. I was a bit skeptical about such a grandiose claim but, after reading this report from Inmet mining it seems that indeed it is true and they are preparing to go after it. I know many people are justifiably concerned about the environmental impact of such an operation. After all, these are open pit mines and one would think they will leave great scars on the countryside along with the pollutants that typically accompany mining. Many people are dismayed at a recent law that allows the government to circumvent certain environmental studies if it is deemed of strategic importance. On the surface it looks like the government just wants to rush in and start laying waste in their efforts to profit from such a find.

But, after reading the report in its entirety, I find that the issue of environmental impact studies have already been completed to the tune of $15 million. What the government appears to be doing with the new law is mitigating the possibility of lawsuits being filed that could tie up the project in court for many years.

When you look at the benefits to the people of Panama to be able to exploit such a natural resource I believe it is well worth the risks to the environment. When I fly over Panama between Chiriqui and Panama city see a land that has been stripped of just about every tree for cattle ranching. Only the inaccessible land is left with forests. Even the national parks have been encroached upon in the effort to supply one hectare of crazing for each steer. We hear little from the environmentalists about this even though the cattle are always eating and the jungle doesn't get a chance reclaim it. The reclamation of a mine when done properly should leave the land looking like it did when they began. In fact if you just let the jungle here do its thing it will quickly do its own reclamation.

The tailing's and potential pollution of the water table are another issue, but from what I read in the report they are taking significant steps to control this and the kind of technologies used in mining today are significantly more advance than those used in the past. I don't profess to know much about the industry, but I have seen reclaimed open pit mines and from reports of reclaimed land, ground water was not affected adversely.

What's in it for Panama?

First is the over $5 billion dollars in investment going into getting the mine operational over the next five years. This money will be spent on labor and a lot of materials that will be supplied by Panama. I would not doubt that at least 50% of that money stays in Panama and there is a significant multiplier effect that will boost the economy significantly. Then there is 2% that Panama gets of the gross which may represent a very significant portion of the net. It will certainly be in the billions of dollars which if used wisely can really benefit the people of Panama.

Remember that Panama is on an infrastructure spending spree and they are going to need income to repay the debts. I would rather they take out of the ground rather than my pocket in the form of higher taxes. I have not calculated the total expected return, but the company is using rather conservative estimates for the expected prices of metals such a $750 an ounce for gold which is currently trading at over $1250 an ounce.

I am sure this post will get a lot of comments regarding the environment and the potential for the lack of wise uses of funds received, but I would first ask you to read the complete report and do a little google research to see how mining is done today. Here is the report in its entirety.

Washington Post on retiring to Panama

Nothing new in this other than Panama is getting great press and that will help sop up some empty apartments in the city.

Washington Post
By Laura Cohn

Sunday, June 27, 2010

When Sid and Barb Williams began searching for the perfect place to retire, they never thought they'd wind up living outside the United States. But they kept hearing about the benefits of retiring to Panama.

The Central American country not only offers a warmer clime than their hometown of Cincinnati but also provides a lower cost of living, generous financial incentives for retirees, and a reliable and affordable health-care system. Plus, Panama uses the U.S. dollar, so there's no need to hassle with foreign currency.

After visiting, the Williamses were so entranced by the area's beauty and value that they decided to go for it. In 2008, just as the stock market began to head south, they did, too. For less than $250,000, the Williamses bought a three-bedroom, three-bathroom (plus maid's quarters) condo in a new nine-story building overlooking the Pacific Ocean.

Today, they are happy about their decision and their timing. "We could have retired comfortably in the U.S.," says Sid, 66. "But we live three to four times better down here."

Read the rest here....

"Flipping is dead"

As everyone knows flipping a condo before completion was a world wide sport and Panama was a hot spot as other places quickly cooled when money became tight. But as this article in International Property Journal points out, the party is over here in Panama too. I posted many times about the speculative bubble I saw building back in 2007-8. I am not Nostradamus, but it was obvious to anyone who looks at the world from a conservative standpoint that it was just unsustainable.

There will be a great deal of mostly mediocre product coming on the market in the next two years and deals will be had. The good news is that Panama  is not depending on construction as an economic engine as in the past. The many infrastructure projects although creating loads of debt, will help drive demand for apartments as more and more multinationals come here seeking opportunity where few exits in the rest of this crazy world.

Excerpt from IPJ:

A new report doesn’t mince words about the state of the residential investment market in Panama.

“Flipping is dead,” concludes the analysis by Alternative Latin Investor.

There is “unanimous consensus” that the market has “fundamentally changed,” the report says.

And, the report notes, Panama’s commercial property market remains strong. “Commercial units are still being completed and absorbed at a stable rate with a good majority of preconstruction buyers also committed end users, whether that be to occupy or lease,” the report says.

Panama to "become an icon on the use of technology"

Panama is "investing" $415 million into free internet service throughout the country and making all government documents paperless. I assume this will include scanning all past documents as well. One would think this could bring a new level of transparency to the government. On the other hand it could create more problems than it solves if accessed by miscreants or through government abuse. The system is only as good as the wizard behind the curtain.

The scanning program about two thousand eight hundred procedures among its objectives to achieve "Panama paperless" from January 1, 2012

  Panama (Bloomberg) .- With the desire for a "Panama without paper" from 2012, the government announced an investment in the next four-year-about 415 million dollars to digitize all paperwork in government offices.

  The $ 415 million is the sum of the investments of the past 20 years in this area, "he told a forum on the administrator of the National Authority for Government Innovation, Eudoro Jaén.

  The scanning program about two thousand eight hundred procedures among its objectives to achieve "Panama paperless" from January 1, 2012, said Jaén.

  The idea is that documents must be submitted by users of the system each time you make a step, can be checked electronically to be stored digitally.

Another initiative for state agencies is to have a single telecommunications platform, using Internet technologies.

The official said that part of the investment also includes the distribution of 22 points in 651 cities across the country in the free wireless internet service.

 "We are the first country in the world in offering free internet, Jaen said that service officials said reached 2.3 million potential users.

The investment aims "to make Panama an icon on the use of technology," said Jaén.

Panama soon to be major energy hub

Panama will soon be able to distribute electricity throughout Central America, making it a major player in energy distribution. With all of the new hydro electric power coming online in Chiriqui over the next few years, Panama should do very well selling power at low demand times when the multitude of air conditioners are turned down in the city.

Excerpts from Reuters

>

* Will connect six nations, 37 million consumers

* Project seen reducing power shortages, cutting costs

* Panama also working on Colombia cable for 2014

By Daniel Wallis

CARTAGENA, Colombia, June 24 (Reuters) - Panama said on Thursday a 1,788 km (1,110 miles) electricity transmission line serving 37 million people across six Central American countries should be operational by the first quarter of next year.

The transmission line is expected to reduce power shortages, cut operating costs and attract foreign capital to the region, as well as optimizing the sharing of resources like hydropower.

One feasibility study in the 1990s estimated SIEPAC could trim charges for electricity consumers by up to 20 percent.

"We're working on these projects with Central America, now we're working with Colombia, and we'll look to see what other opportunities there may be," Urriola said.

"We want to become an energy hub for Central America."

A generation after it shed a tradition of military rule, analysts say canny fiscal management and good stewardship of the canal have made the tiny country a model of success for today's frontier markets.

The Chavez business model strikes again

The benevolent dictator has come up with  a great method to take over an international firms assets, in this case an oil production company out of the U.S.. Just don't pay for the oil produced and when the company refuses to produce more on credit you just seize the assets claiming their lack of production is hurting the state. According to this article, over 60 companies shared the same fate last year. What's not to love about this guy? 

Bloomberg

Petroleos de Venezuela SA, the state oil company, is seeking the nationalization of 11 oil-drilling rigs owned by Helmerich & Payne Inc., which it accuses of trying to slow crude production in the South American country.

PDVSA, as the oil company is known, will seek National Assembly approval to seize the rigs in Anzoategui state after a payment battle with the Tulsa, Oklahoma-based company, Rafael Ramirez, oil minister and president of PDVSA, said yesterday in an e-mailed statement.

“There are rig owners that have refused to discuss payment rates for services and preferred to hide the rigs for a year,” Ramirez said. “It’s the specific case of Helmerich & Payne. We won’t allow them to sabotage our operations.”

Helmerich & Payne idled its drilling rigs last year after PDVSA fell behind with payments to service suppliers amid a drop in oil output and revenue. Ramirez, who said in January that debts to suppliers had “vanished,” has overseen the nationalization of ventures with Exxon Mobil Corp. and ConocoPhillips and the seizure of assets from more than 60 service companies last year.

Helmerich & Payne said today in a statement that it hasn’t received notice as of this morning from PDVSA or government officials regarding the nationalization of its rigs. The company said it has offered to sell rig assets to PDVSA, which has also expressed interest in buying the equipment.

‘Surprised’ by Announcement

“We are surprised by yesterday’s announcement only because we have been in ongoing efforts in a good faith attempt to accommodate a win-win resolution, including a willingness to sell rigs,” Chief Executive Officer Hans Helmerich said in the statement.

The company, which has operated in Venezuela for 52 years, said the total amount owed is about $43 million. It had a net book value of about $67 million of long-lived assets in the country at the end of its second fiscal quarter and another $5 million in equipment inventories.

It has a total of 253 U.S. and international land rigs and nine offshore platform rigs, the company said.

Helmerich & Payne Executive Vice President John Lindsay said during an April 29 conference call the company would keep the rigs idled until overdue debts were paid and accumulated bolivars were converted into U.S. dollars abroad.

No Work Return

“While we will continue to pursue future drilling opportunities in Venezuela for these 11 conventional rigs, we do not expect to return to work in Venezuela until additional progress is made on pending receivable collections and on conversion of local currency to U.S. dollars,” Lindsay said on the call.

Venezuela is the largest oil producer in South America and a founding member of the Organization of Petroleum Exporting Countries.

Helmerich & Payne fell $1.14, or 2.8 percent, to $39.27 at 12:27 p.m. in New York Stock Exchange composite trading. The shares, which have 12 buy ratings from analysts, 11 holds and 1 sell, have dropped 1.5 percent this year.

To contact the reporters on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net; David Wethe in Houston at dwethe@bloomberg.net.

Wartsila opens operations in Panama Pacifico

Jun 22, 2010 (Thomson Reuters ONE via COMTEX) --

Wartsila Corporation, Press release, 22 June 2010

Wartsila in brief:



Wartsila is a global leader in complete lifecycle power solutions for the marine

and energy markets. By emphasising technological innovation and total

efficiency, Wartsila maximises the environmental and economic performance of the

vessels and power plants of its customers.



In 2009, Wartsila's net sales totalled EUR 5.3 billion with more than 18,000

employees. The company has operations in 160 locations in 70 countries around

the world. Wartsila is listed on the NASDAQ OMX Helsinki, Finland.



www.wartsila.com


Wartsila, a leading provider of power plant and ship power solutions and

services, today opened new offices and a workshop in Panama. Located in the

International Business Park of Panama Pacifico, the new facilities are intended

to meet growing market demand from customers in the area. The new workshop

enables Wartsila to offer a wide range of services for engines, electrical and

automation systems, propellers and thrusters, and to provide reconditioning

services.



"Panama's strategic importance as one of Latin America's largest logistics

centres and as a major area for ship servicing will grow in importance along

with the expansion of the Panama Canal," says Markku Aspholm, General Manager,

Wartsila in Panama. "We see this as an excellent opportunity to offer

maintenance and spare part services to vessels waiting for access to the canal.

For ship owners, considerable downtime can be avoided through arranging

maintenance operations while their vessels are queuing."



Each year, some 15,000 vessels pass through the 80-kilometre canal linking the

Atlantic and Pacific oceans. By investing in new machinery, Wartsila has been

able to extend its range of workshop service offerings to customers to include

maintenance of two-stroke components, propulsion unit services, electrical and

automation services, and reconditioning services. The metallurgical repair of

propellers is another important service segment now being offered.



"For Panama, the expansion in service business means increased job opportunities

and a better image, and we are proud to be part of that development," says

Aspholm.





Large modern facilities



The new International Business Park in Panama Pacifico is being developed into a

26-hectare industrial and logistics park with corporate offices, call centres

and facilities for distribution and light assembly companies. Hotels and the

on-site airport provide travellers with easy access. As Panama Pacifico is a

special economic area, certain industries benefit from special labour, legal,

customs, immigration and tax incentives.



Wartsila's newly constructed facilities consist of offices covering 440 square

metres and 1500 square metres of workshop space, a five-fold increase over

existing arrangements. The range of services offered will be extended and the

staff will be increased through the recruitment of 12 new employees. These new

recruits will receive orientation training at the Wartsila Land and Sea Academy.

The company will employ 45 professionals in Panama by the end of 2010.



Operations at Wartsila in Panama include customer support, workshop and field

services and the warehousing of selected components for engine and propulsion

systems. Key customers for the company include international shipping lines

whose vessels pass through the canal and visit its ports and shipyards.



A strategic location with increasing importance



Panama's strategic importance in Latin America has grown in recent years. The

expansion work to the Panama Canal currently being carried out will double the

canal's capacity by 2014. The new lock chambers will be 427 metres long, 55

metres wide and 18.3 metres deep, allowing the transit of vessels with a beam of

49 metres, an overall length of 366 metres and a draught of 15 metres. The

growing number of vessels passing through the canal will increase the need for

maintenance services, while the Special Economic Area will make the importation

of spare parts quick and easy.



Wartsila has been operating in Panama since 2007. In Central America, the

installed capacity of Wartsila power plants totals 1600 MW as well as one power

plant with a capacity of 96 MW. In Panama, Wartsila's installed capacity

includes ship power on 12 vessels.





Media contact:

Ms Marit Holmlund-Sund

Senior Manager, PR and Marketing Communications

Wartsila Corporation

Direct tel: +358 10 709 1439

Direct fax: +358 10 709 1425

e-mail:marit.holmlund-sund@wartsila.com

Internet:www.wartsila.com

Panama construction down 30%

LA Presna

Roberto Jimenez Gonzalez
rgjimenez@prensa.com rgjimenez@prensa.com

The value of construction, additions and repairs adopted in Panama in the first four months of the year was $ 339.7 million, 30.7% less than the $ 490 million recorded in the same period the previous year, the Comptroller General of the Republic. 

The greatest fall occurred in the province of Panama, where the value of permits increased from $ 428.3 million to $ 223.8 million. 

The month of April was the least bad, since only a drop of $ 407 thousand (-0.4%) than the same month last year. 

The decline was reflected in the residential sector (-39.4%) and the non-residential (-21.4%), projecting a contraction in construction activity in the future. 

The production of ready-mix concrete, which shows the current level of activity, also fell abruptly, from 706 000 cubic 937 meters between January and April 2009, 463 000 cubic 668 meters this year. 

Chavez 1/2 price supermarkets open

The great and benevolent dictator, Hugo Chavez, provides food at half the cost of other markets. How does he do these loaves and fishes miracles?

Simple, you take no risk and make no investment in land, building or people! You just expropriate the markets from the capitalists, put your name on them, and a miracle happens! With prices so much lower, soon there is no competition and then no variety of products and then no products at all.

Fortunately, with our President Martinelli owning a large supermarket chain we don't have to fear this scenario happening in Panama.

This story, like many they report on Latin wannabe dictators, comes from Xīnhuá,  the official press agency of the government of the People's Republic of China (PRC), and appeared in La Prensa this week.

XINHUA.  CARACAS, VENEZUELA

Venezuelan President Hugo Chavez, opened the first store of a supermarket chain that was expropriated by the state in February this year during a ceremony held in the center-west of Caracas, capital of the country. 

In radio and television chain, Chávez inaugurated a facility "Bicentennial Abasto", located in the popular area of La Vega, one of 22 parishes in Caracas. 

The establishment belonged to EVERY food chain, a business group in France and Venezuela, with 35 stores in 22 Venezuelan cities, which were expropriated by the Venezuelan Government in February this year. 

"These supplies generate a large positive impact on the Venezuelan population, because they offer food at prices below half the cost compared with capitalist markets," said Chavez.

On several occasions, the agent gave other names to grocery stores, the first one, Great Socialist Hypermarkets and then Abasto Success.  During a tour of the supermarket, Chavez said the products will be much cheaper than private competition.