Panama Investor Blog

S. Korea's veiw on Panama

I found this to be an interesting article from the Korea Herald about the relationship between Panama and the government of South Korea. Besides the fact that things are hunky-dory, a number of interesting statistics come to light.

Panama aims to be center for Americas

2010-08-22 17:47

One of the first things noticed during the recent meeting of the leaders of Panama and Korea was their compatibility that soon grew to a friendship based on mutual interests.

Both President Lee Myung-bak and Panamanian President Ricardo Martinelli are from the private sector, which gives them a certain expertise in advancing the business activities of the two countries. After all, what’s good for business is good for both nations.This mutual respect has propelled the relationship of the two countries into a sphere that has never been seen before in the 48 years of formal ties between Panama and South Korea.

But that is just the tip of the iceberg because sometime this fall, the Panamanian leader will return Lee’s visit with a three-day stint in Seoul. “I think relations between both countries are waking up,” said Panama Ambassador Jaime Lasso Del Castillo to The Korea Herald.

First and foremost for both countries is trade and that famous and important lifeline known as the Panama Canal. Panama is the third destination for Korean exports to the area and the Central American country has the second largest free economic zone in the world after Hong Kong.

“This means all Korean goods come to Panama and then are exported to other parts of Latin America,” he said. The canal, which connects the Atlantic Ocean with the Pacific Ocean, is an engineering marvel that is currently going through a $6 billion facelift. Upon its completion in 2014, the Panama Canal will be able to handle supertankers and the largest of the modern container ships including United States navy supercarriers.

The biggest part of the embassy’s business in Korea is taking care of everything that has to do with the shipping industry and the canal. Sure there is trade, investment and every other gamut of diplomatic promotion, but over all, shipping takes up most of the time of the eight-member staff at the embassy.

“We mostly conduct registration for the flags of convenience,” he said. “That’s business because every merchant ship in the world has to have a convenience flag. Out of all countries using the Panama Canal, Korea ranks fifth and the Panamanian Embassy in Seoul handles about 600-700 ships navigating the world’s waters.

“We handle 20 percent of the world’s market, which adds up to about 10,000 merchant marine ships,” he said. Korean firms are also interested in Panama’s mining sector, particularly copper, where Korean companies have been focusing their new mining exploration businesses in Mexico, Peru and Panama.

The free trade agreement is also an important part of the future of both countries.  “The FTA is a good instrument because you can regulate many different items,” Lasso said. He added that in the agricultural sector, there are virtually no conflicting items except for beef, but by the looks of things, Panamanian beef might not hit these shores for a long time.

Panama has been in talks with the local authorities concerning beef imports, but in the last five years the process has only moved up three steps out of an eight step certification process. Lasso would also like to see direct flights starting to operate for the sake of using Panama as a hub. “Panama is already a hub for connections from many countries, not only international flights, but also telephone and Internet,” he said.

In the coming weeks, both countries will move further in dealing with the double-taxation issue with the goal of signing a treaty during the Panamanian president’s visit.

Also discussed will be the issue of e-government. “Korea is very good at it and it’s something we want to achieve. I believe Korea can help us achieve our goals in this regard,” Lasso said.

Concerning the Central America Integration system -- an economic, cultural and political organization of Central American states -- their main goal nowadays is getting all their eggs in one basket to further the trade between themselves and the rest of the world. 

By Yoav Cerralbo (yoav@heraldm.com)

Disappointed in Panama

The title of this blog post should be "disappointed in the CATO institute" for publishing this rather one sided  article written by Juan Carlos Hidalgo. It also appeared in National review online. I support and respect the CATO institute, so when I read this article I was indeed surprised and disappointed. My friend Bob Bauman of the Sovereign Society wrote me last week asking for my comments and unfortunately I only today got around to answering the major issues raised in the article regarding the Martinelli Administration.

Let me be clear that I am not an apologist for President Martinelli and IMO he has made some errors in judgement in his first year, but I believe it comes more from his lack of political acumen rather than his lack of desire to make Panama a great place to live and invest. I don't believe he is motivated by power or greed, but by his vision to make Panama the "Singapore of Latin America". My readers know that I am often critical about some of his policies, but overall I believe he is going in the right direction. With that in mind I am posting the article by Hidalgo and my comments below each point he raises.

Disappointed in Panama

Ricardo Martinelli's May 2009 election as president of Panama seemed to bode well for the country's development prospects. During his campaign, he promised to implement bold market-oriented reforms, such as a flat tax (which would have been the first of its kind in the Americas), freer trade, an end to some government subsidies, and less bureaucratic red tape. Unfortunately, not only have those promises gone unfulfilled, but Martinelli's presidency has been marked by interventionist economic measures, cronyism, the erosion of democratic checks and balances, and even harassment of independent media.

The Panamanian president has raised the minimum wage by 30 percent, a reckless move in a country with 6.5 percent unemployment and an informal sector that accounts for approximately 40 percent of the labor force. He has nationalized two privately managed highways, at a cost of more than $1 billion. He has created new government agencies as well as new entitlement programs. He has also announced lavish public-works projects, such as a publicly financed skyscraper in Panama City that would be the tallest building in Latin America. Last week, the Martinelli administration announced a 2011 budget of $13.9 billion, which represents over 50 percent of the country's total GDP, making Panama one of the biggest public spenders in the region.

Issue- Minimum wage-I have written about my objections to this law, but the fact is that the unions wanted a doubling of wages and the increase he agreed to was considerably less than what they demanded. The increase in minimum wage went from $357 to $416 a month, a 16.5% increase that started January 1st 2010.   The writer states that this increase was a "reckless move in a country with 6.5% unemployment". But consider that this is probably the lowest the unemployment has EVER been in Panama and is well below any other country in Latin America. Latin leaders always must play a balancing act between the unions, which are populist driven, and the private sector. Although few businessmen liked the wage increase, they see it as a cheap way to keep the populous happy and they just pass the increase on to the consumer.

In order to finance his spending spree, Martinelli has relied on issuing new debt and raising taxes; he has increased the value-added-tax rate by 40 percent and created a new monthly tax on gross income. Martinelli has even said that he would use social-security funds for certain projects, such as the nationalization of the highways. His government has also weakened Panama's century-old dollarization system by ordering the minting of $130 million in coins during the next five years. That's almost double the amount minted since 1904. (Under Panama's monetary framework, the government mints "Balboa" coins — the country's nominal currency — in the same denominations and worth the same value as U.S. coins.)

 I certainly have my concerns about the spending spree, but the increase in VAT is 40%,  going from 5% to 7%, still the lowest in Latin America. Costa Rica is nearly double this amount (13%) and has little infrastructure to speak of compared to Panama. The tax on corporations actually was lowered and income on foreign income is still not taxed.

The writer criticizes the government for "weakening Panama's century-old dollarization system by ordering the minting of $130 million in coins during the next five years." I used to work with the Royal Canadian Mint who mints the coins for Panama. $130 million is about $25 million a year and is the amount of loose change  that ends up in peoples coin jars, worn out or lost. These are not notes and can hardly have much of an effect on the $25 billion GDP over each of  those 5 years.

Cronyism seems to be the norm in Martinelli's Panama.

However, Martinelli's most distressing moves have been his attempts to undermine the checks and balances of Panama's democratic system. Upon taking office, he pledged that two upcoming appointees to the Panamanian supreme court would be selected through an open nomination process, with significant public involvement. When he found the recommended candidates objectionable, he ignored them and appointed two close associates.

One of the appointees, José Abel Almengor, had been Martinelli's security secretary. The other, Alejandro Moncada, was removed in 2000 from the now-defunct Technical Judicial Police for serious ethical breaches. His wife now works with Martinelli's wife.

Cronyism seems to be the norm in Martinelli's Panama. For example, an accountant from Martinelli's supermarket business has been appointed as general comptroller; public procurement processes have been ignored; and government contracts have been arbitrarily granted to relatives and political associates. Furthermore, an institutional crisis broke out last January when the supreme court, at the Martinelli administration's request, suspended the attorney general under questionable charges of "abuse of power" (in Panama the AG's office is part of the judicial branch). Her replacement worked in Martinelli's presidential campaign.

In the first world we frown on nepotism and cronyism because we come from a society where there are many qualified people to choose from when looking for a candidate for a position.  In Panama there are few qualified candidates and fewer still you can trust. You need to put people in place you know and trust, even if it is a family member or previous employee in your private business. There is no professional civil servants in Panama.

The Panamanian media have been highly critical of Martinelli, at times drawing veiled threats from the government. For instance, the president asked TV stations to "self-regulate" their news coverage in order to reduce "violent content" in their news hours. Soon afterwards, a congresswoman from Martinelli's party introduced legislation to create a government board to "regulate the self-regulation" and extend it to newspapers and radio. A similar body existed in Panama under the dictatorial Noriega regime. The Inter-American Press Association (IAPA) has expressed "concern" about the bill, which, according to Robert Rivard, director of IAPA's Committee on Freedom of the Press, would constitute "a backward step for freedom of the press" in Panama. There have also been reports of journalists' being harassed by the authorities.

"The Panamanian media have been highly critical of Martinelli, at times drawing veiled threats from the government. For instance, the president asked TV stations to "self-regulate" their news coverage in order to reduce "violent content" in their news hours."
News in Panama should be rated triple x because to sell news they will show the disfigured bodies of those in auto accidents or victims of a drug crime lying in a bloody heap in the street. These are not fleeting glimpses but video shown over and over. I don't care for it and certainly don't like my children being subjected to it. I believe he is asking for civility in the media rather than sensationalism. The papers can and do say anything they like about him and his administration.

Martinelli, whose coalition enjoys a comfortable majority in the unicameral Panamanian national assembly, still has four more years in office. The direction in which he's taking his country should worry those who once marveled at Panama's rapid transition toward full-fledged republican democracy. Rather than making progress, Martinelli is undoing it.

Juan Carlos Hidalgo is project coordinator for Latin America at the Cato Institute's Center for Global Liberty and Prosperity.

More by Juan Carlos Hidalgo

$ 13 billion budget, utopia or reality?

This is the article title in La Prensa regarding the increased government spending for 2011. Although there has been increases in tax revenue, all is dependent on the world economic climate and things are not looking so rosy. Yet governments continue to increase spending based on an optimistic view of the worlds economy. This article gives us a good overview of all the areas of expenditure and expresses some of the concerns about meeting them. I especially like this question from the writer. "The projected behavior of debt, the budget of 2011 and all strategic plans of government find their reason for being in a strong pace of economic growth. What if this assumption is not met?" Good question.

Machine translated from La Prensa.

Roberto Gonzalez Jimenez
rgjimenez@prensa.com

This week began budget hearings in the National Assembly of the various government institutions for the next year.

From the discussion on the Budget Committee there may be some modification in the distribution of resources among the entities. What will not change, said the Economy and Finance Minister, Alberto Vallarino, is the total budget: $ 13.009 Billion, the highest in history.

This amount is shared between the central government, decentralized institutions, which stresses the Caja de Seguro Social-owned enterprises, as Tocumen, SA or the Colon Free Zone, and financial intermediaries, among which are the National Bank of Panama , the Savings Bank or the National Securities Commission.

But the amount of $ 13 billion raised several questions: Is it viable to have a budget 23% higher than the previous year? Where did you get this additional income?

The Government said the growing economy and tax reform will generate more revenue. "The constant is higher budgets every year," said Vallarino.

The forecast of gross domestic product growth for 2011 is 9.5% in nominal terms and 6.5% in real terms. That rise in revenue to the state.

For its part, the tax burden will grow as a result of tax reform. Brush each tax revenues of $ 6.8 billion more than the current force.

Only with the transfer tax on personal property and services (ITMBS), whose rate is 7% since 1 July, the government hopes to raise $ 226.8 million more than this year.

In direct taxes, which include income taxes for individuals and corporations, among others, is projected revenue of $ 1.655 Billion.

It also provides the state capital income of $ 919 million, $ 1.400 billion more than in the budget this year.

This kind of revenue will come from the sale of assets and credit resources, as a result of the maturity of bonds or loans.

The revenue forecast will be tested in the course of the year. The challenge is that the income level meets the budget, which this year has not always happened. The Government can no longer wield the much-used argument that the budget was prepared by the previous administration.

The Government in its task of raising revenues this year, has turned up to collect 5000 tons of scrap generated revenues of $422 thousand.

Execution

Economist Rolando Gordon said the budget increase is possible if the economy continues to grow. "But remember that there are still problems in the international economy and that could affect local," he added.

Gordon said he had more doubts about the Government's capacity to implement investments that are being raised than the very fact of obtaining resources.

One of the shortcomings of the current administration has been the weak budget implementation. In the first half of 2010, investment fell 10.2% over last year.

Among the investment projects to be implemented next year include the construction of the Metro, which will receive $500 million, although the game could change with the winning proposal, the extension of the road Divisa-Las Tablas, with $ 117 million; sanitation for the Bay of Panama will receive $ 97 million, $ 80 million for the road David-Boquete, expansion of the highway Arraiján-La Chorrera receive $ 70 million, and completion of the second phase of the coastal strip and the beginning of the third allocated $48.3 million.

These are some of the proposed investment which in total, will add about $500 million.

Expenses

However, the majority of the budget (53%) will be used to defray operating expenses of the state.

Professional services-the State payroll, representing an expenditure of $ 2. 590 Billion, a 11.5% increase this year. The promise to cut spending seems to have no reflection, for the moment, in the 2011 budget.

The Government has argued that a number of special laws which force up wages of certain officials, causing reduced the margin.

For Gordon, who also referred to these special laws, said the case for increased spending to appoint more doctors, nurses, policemen and reinforce certain social, not a bad investment appeal. "It would be well if it is to increase staff," he said.

Another promises to keep is the revision of subsidies, far from diminishing, are increasing.

The "100 to 70" will claim $ 84 million, the energy subsidies for those who consume less than 500 kilowatts will be a charge of $ 65 million, $ 140 million will go to the scholarship program of educational assistance and economic aid, which includes the Universal Fellowship.

The education sector that has traditionally been allocated more resources without visible results, will be one of the main sources of investment.

The Ministry of Education has the largest budget within the Executive: $ 1143.6 million.

The Ministry of Health, another of those who have shown little efficiency, has the second largest budget, $ 1.078 million.

Also highlight the large budget of the Ministry of the Presidency - $ 774.6 million, "which is assigned the Secretariat of the Metro, and the newly created Ministry of Safety, which set aside $ 420.1 million next year.

The increased costs will make the fiscal balance of the nonfinancial public sector, which is regulated by the Social Responsibility Law  to again be in deficit.

Program a deficit of $436 million, equivalent to 1.5% of gross domestic product (GDP) to exceed, if not fail to government estimates, the $ 29 billion.

Public debt, therefore, continue to grow in absolute terms. Probably ended the year with about $ 12 billion, but its relationship to GDP would fall below 40%.

The projected behavior of debt, the budget of 2011 and all strategic plans of government find their reason for being in a strong pace of economic growth. What if this assumption is not met?

What’s Behind Your Cup of Joe?

This is a great article on coffee, the worlds favorite drink. As Boquete produces the best and most expensive coffee in the world, I thought it appropriate to post this story which is a bit off my beaten path.

From Conducivemag.com

Ah, coffee. What would we do without you? For centuries, people have worshiped the brew. It has long been such a prominent feature in social life that it has been memorialized in music, poems, literature, and film. For many in the United States, coffee, anyway you brew it, is an important part of a daily routine. It is habitual–perhaps even ritual. It is a stimulating narcotic, experienced as a need, and can produce emotional sensations. It is often used as a reward to mark goals achieved–”Just ten more TPS reports and I can go for a coffee break!” It is a place to go, a state of mind, a social occasion, and a source of comfort for over half the adult population of the U.S. on a daily basis. Due to its mass consumption both here and around the world, coffee is the second most valuable export commodity for developing nations after petroleum, according to John Talbot, a sociologist at the University of West Indies in Jamaica. The global economic significance of coffee is astonishing.

What’s Behind Your Cup of Joe?

Panama plant will build wind power equipment

This is one of the first manufacturing operations I have heard of in Panama. Interesting and expected statement from the company, "Benalal argues that it has been difficult to find qualified personnel in Panama, so there are workers from other regions who will be working for the project  locally."

Machine translated From La Prensa

alex e. hernández
aehernandez@prensa.com

Panama may be after Brazil and Mexico, the third Latin American country to have a center of manufacture and maintenance of wind power equipment.

The project is part of the Panamanian Technology Industry Company (ITP) Spanish capital to invest, with some delay as planned, $ 10 million in the first phase of the complex.

Maxo Benalal, executive director of ITP, said the project was delayed a year due to the international financial crisis, but said that everything is scheduled to begin construction in September.

ITP is currently developing two wind projects, one in the province of Veraguas and one on the Bugle Ngäbe region, which together represent an investment of 300 million dollars.

In addition, ITP develops a wind project for another company in Nicaragua and the Dominican Republic building two, one of them himself and the other in alliance with another energy company.

Benalal argues that it has been difficult to find qualified personnel in Panama, so there are workers from other regions are working for the project in the locality.

To move these workers into the country, the firm held in the coming weeks a restructuring of its subsidiaries engaged in the design of wind farms and currently operating in other countries.

Where are the $3 billion in roads being built in Panama?

Thanks to La Prensa we now have a complete picture of where the roads will go and the cost of them. Many of us have been concerned about a proposed road from Boquete to Bocas del Toro. They are preparing to start the construction of a four lane highway from David to Boquete and then it is to continue over the mountain range to Punta Robalo  on the Caribbean. My concerns have been mitigated to some degree through some conversations with folks in the know here in Panama. The road will not go through Boquete, but will turn east somewhere between Caldera turn off and Alto Boquete. But the question still remains, why spend the hundreds of millions to build this road?

Well there are a number of reasons that justify the building of the road of which tourism represents a relatively small part. It has more to do with natural resources such as hydro and mining and the ability to access them. More on this later.

Chiriqui refinery could be back on track thanks to Obama

If you drive between David and Bocas del Toro, you will see a large pipeline running along the road near lake Fortuna. This pipeline was put in may years ago to run oil from the Pacific to the Caribbean. Over the last year they have reversed the flow to go from the Atlantic to the Pacific and built large container tanks on either side in order to increase storage capacity. This is nearly a $500 million investment into the new system. During the last administration there were serious negotiations going on between a consortium including Occidental Petroleum and Panama to put in an oil refinery in Chiriqui which was an investment of about $8 billion. During the 2008-2009 economic turmoil this project was put on hold, but recent mandates by the U.S. government to stop all oil production in the gulf have made it more viable to put in the refinery. I have heard rumors that the Chiriqui refinery is back on track, but one more major hurdle of dealing with the workers unions that must be settled. Current labor laws are prohibitive for large investments of this kind.

Here is a machine translation of the article from La Prensa

Rafael E. R. Berrocal
rberrocal@prensa.com

Petroterminal of Panama, a joint venture where the Panamanian State has a 50% stake, completed its first phase of expansion within a project whose total investment amounts to 480 million dollars.

This made it possible to reverse the transfer of oil from the Atlantic to the Pacific through its inter-oceanic pipeline, to increase their reserve capacity of 5.6 million barrels to 9 million.

Despite this, the company moves from one ocean to another, only 300 thousand barrels of crude oil for Castor Petroleum, Tesoro Panama Company and British Petroleum. But Petroterminal hopes to increase this flow in the short term to use his maximum capacity racking that is 800 thousand barrels of oil.

The manager of the company, Luis Roquebert, said he is running the second phase of expansion that includes construction of 10 storage tanks for British Petroleum, increasing the park to 27 tanks with total storage capacity of 14 million barrels . "When these tanks are completed, British Petroleum crudes should be bringing any other country in Africa and the Atlantic area," said manager Petroterminal.

However, the company not only looks forward to its three existing customers will increase the traffic of oil contracts. "We are looking for new clients and business opportunities that lead to better utilization of our system," said Roquebert.

The company recognizes that the operations of Castor and Tesoro Petroleum Company Panama have been a "little slow" during this first year, because they are in full development of its logistics procurement of various oils in the Caribbean and the Atlantic.

The crude is being received in Petroterminal mainly from Colombia, Venezuela and some African and North Sea.

The current market for these items are the refineries in the U.S. west coast, "but China is the long term as a great power that much demand for that oil and we are preparing," said Roquebert.

Project developer tells us what lured Trump to Panama

Nothing new in this article about the Trump project, but a nice puff piece for the developer to send around and maybe get a few sales, not that they need them.  Machine translated from Americaeconomia.com

The factors that lured Donald Trump to raise its mega building in Panama

Between January and February of next year will be delivered properties of the magnificent tower Trump Ocean Club, whose construction boosted the American tycoon.  This is the first venture led by his daughter, Ivanka Trump.

The sea, a distance of just over 70 miles between the Atlantic Ocean and the Pacific, as well as legal certainty and economic stability, were some of the reasons that influenced so that the U.S. tycoon Donald Trump, decided to invest in Panama and combine to build a monumental tower-shaped candle, Trump Ocean Club , in the elegant area of Punta Pacifica in Panama City.

Not surprisingly, Panama has shown this year of improving conditions for attracting investment, through developments such as the recognition by the rating agency Fitch Ratings investment grade "BBB", a positive rating to which also joined Standard & Poor's and Moody's, and the eyes of international experts who recognize the phenomenon of the Panamanian economy, with one of the fastest growing in recent years in Latin America, through a growth rate of over 11 % in 2007 and 10.7% in 2008, but especially from 2.4% in 2009, the year of the Great Depression.

AméricaEconomía.com met at its offices in the Panamanian capital Panamanian developer Roger Khafif, president of K-Group and partner in the Trump Tower, where the delivery of properties is planned for January or February next year, on which the structure completed in May, so now it works in their finishes.

While Trump had previously stationed in Panama, bringing to this Central American country the 2003 version of Miss Universe beauty pageant, according to Khafif magnate's final decision was further enhanced by positive factors like tax incentives Panamanian security the country and that their costs are not affected by the hurricane season.

The draft agreement between Donald Trump and Khafif was an estimated investment of U.S. $ 250 million, but is expected to exceed U.S. $ 400 million, and will feature 70 floors and it is estimated that surface will occupy about 260,000 square meters.

But the idea of building the sail-shaped tower was also aided by the "housing boom" in Panama (on the rise that had its peak between 2006 and 2008).

  "We saw this background that Panama itself could be a mega him," recalls Khafif, and from its offices Obarrio sector adds that one idea led to another, as thought at first build several towers in the area of 110.00 square meters I had. However, when it came to the conclusion that I needed a good brand, it was proposed nothing less than to make an appointment with Donald Trump, an approach that, to his fortune, was facilitated by a mutual friend.

  For some analysts the "housing boom" of Panama took off earlier, in 2004, a fruit seed was in 2007 when building permits were given a value of $ 1.3 million for the lifting of first homes in the capital Panama, and a second home in the Pacific and Atlantic. A boom was fueled by the growing construction of luxury properties and the increase in migrants from countries such as Venezuela and Colombia, which eventually affect the increase in rents and prices of houses and apartments that were placed for sale.

Target audience. In the opinion of the president of K-Group, with the "housing boom" the intention was to think of a project aimed mainly to foreign customers, rather than Panamanians, who wanted to invest in luxury property for multiple uses.

A target audience that would like to be part of the Trump Ocean Club , mega structure with 369 apartments, 600 condominiums, shops, restaurants and an office tower.  If at first was thought to offer the property in the Miami market, eventually imposed large U.S. cities, countries like Canada and Venezuela, and Europe.

  Is that the developer, Panama is becoming the "South Miami,''a country that has marked difference with the strict U.S. immigration policy, releasing the visa requirements to enter the country, especially for investors . Moreover, President Ricardo Martinelli has sent a mandate to the entire public service for the life of these migrants is the best experience.

  Khafif stresses that it has sold 88% of the project, an auspicious time began to grow when "we ran a pre-sold 60% of the project.  And in fact we realized that the funding formula was through bonds, because Panama was impossible to get the amount of money we were looking for. "

  Trump Ocean Club was launched in New York on the same date it was approved in Panama's referendum on the expansion of the Panama Canal.  A great match for the employer, who expects the building to become, as the Canal in Panamanian emblems another for their unique architectural features, including access to the Island of Pearls ", and glamor Donald Trump attracts corporate, in this case with more familiar presence, and it is the first venture led by his daughter, Ivanka Trump.

Dubai. If you think a sail-shaped building, it is impossible not to evoke the Burj Al Arab, Dubai, the second highest luxury hotel in the world, with 321 meters. But Khafif stresses that are similar but each time have been consulted about this issue, "we have found that there is a sail design invented by the Phoenicians.And when they saw that we are not copying the inside or the outside of the structure (of the Tower of Dubai), have not returned to say anything, "he says.

  Asked about other real estate projects to those who could join Trump in Latin America, Khafif acknowledge that you will make a break for now, due to the housing crisis in the U.S. and Europe.  "When things improve, we are going to have a couple of ideas that maybe we can develop," he adds.

  For now, all his attention and that of Trump is set in the Trump Ocean Club Panama City, a project that has already Khafif seduced by a couple of famous American and European artists, as well as members of the monarchies of the Middle East .

Half billion dollars believed lost on ITBMS by tax evasion

Panama is getting very serious regarding tax collection as I pointed out in a post several weeks ago and it appears they will get even more aggressive as they identify areas where large tax leaks are occurring. Anywhere folks can make cash deals to eliminate sales taxes you can be sure they will take advantage of it. Even though the free zone in colon is to be exempt from taxes, this does not apply if the goods are going to end up in Panama. Many folks head to the free zone jewlery stores to buy goods they wear as they walk out of the zone and no one is the wiser. I guess they will have to begin strip searching to nail this one down. In any case, this half billion expected loss over a four year period is probably more guess work, like the U.S. believing that bizillions are lost to offshore tax evasions. Either way it justifies more aggressive tactics by the powers that be.

Machine translated from La Prensa

economia@prensa.com

Tax evasion of transfer tax on goods and services (ITMBS) reached $ 511.6 million between 2004 and 2008, estimated  the Ministry of Economy and Finance (MEF) in the Economic Report January to April this year, reported the entity.

ITMBS evasion has grown at a rate of nearly 40% in 2008 alone and amounted to $ 126.6 million.

The MEF attributed partly to blame indifferent consumers not to require their right to receive proof of payment, when they go to sites with preferential terms such as the Colon Free Zone and the duty free stores.

The MEF data did not include estimated tax evasion in 2009 and 2010 and during the administration of Ricardo Martinelli.

One of the major changes in the tax reform which entered into force in July was ITMBS raise the rate of 5% to 7%, with the aim to raise revenue by more than $ 200 million.

Panama needs over 12000 hospitality workers!

A recent article from La Prensa highlights the challenges facing the hospitality industry in Panama. They expect another 10,000 rooms to come online in the next few years and there is already a shortage of skilled hotel workers. Everyone I know in the industry complains of this situation and there seems to be little being done to mitigate the situation. I guess like many things in Panama, they will put that fire out when it is burning out of control.

A list of the new hotels, their opening dates and number of rooms is included in this article.

Hotels are looking for 12 000 employees

International standards provide that each room requires a minimum of 1.2 employee.

Alex e. hernández
aehernandez@prensa.com

The Panamanian hotel industry is experiencing a unprecedented growth. About 10 000 new rooms built over the next three years.

Currently rise 10 hotels, including the Doubletree and the Hilton chain Riu Spain. Both will be inaugurated before the end of the year. Furthermore, in the next 12 months will begin to build another six projects.

The estimated investment by the Panamanian Association of Hotels (Apatel) in the next 36 months exceeds $ 2 billion, increasing the number of rooms to about 30 000 across the country.

Beyond the economic impact to the arrival of large chains such as Hilton, Ramada and Hyatt, this awakening hotel brings a challenge faced by other sectors of the economy, the availability of experienced workers and in the case of hotels, which manage a second language like English.

The numbers are compelling. Over the next three years the country must generate about 12 000 skilled workers to meet demand for new hotels.

This shortage has begun to stir the waters of the sector. On one side are the hotels in operation and seek to retain staff at the other extreme are those who seek to have qualified labor to begin operations.

According to Sarah Brown, president of Apatel, staff turnover in the hotel sector has increased in recent months, according to the projections of the trade, this trend will increase as new hotels open their doors, "although we do not with a record of movement of workers, "said Pardo.

He also indicated that there have been cases of employees with more than 20 years of working in a hotel that is changed to another for better pay offer.

The manager of a hotel, who asked that his name, said that over the past five months about 15 workers quit to join the new hotels opening this year. Most had more than five years of experience.

For Jorge Loaiza, President of Royal adviser declined, the so-called "personal cannibalism" has always happened and will be happening in the hospitality industry, while recognizing that it is not optimum.

In his view, there will always be companies that seek to gain the services of people with experience, but adds that the real challenge is to propagate the idea that within tourism, especially in hotels, you can get a paying job.

The skilled labor shortage is recorded at all levels, but high control or management positions are among the priorities of the hotels.

Managers, financial officers, directors and sales staff and coordinators of strategy are the most coveted jobs in the sector.

These people must have previous experience, because "it is not running a hotel than a traditional business, terms and methods are different," said the president of Apatel.

Given the shortage of Panama prepared, hotels described as positive the program developed by the National Immigration Service that allowed hundreds of immigrants legalize their immigration status.

"We understand that most of these people do not have a steady job, so now they are legalized they become another option for finding labor," noted Brown.

Representatives of Hilton Worldwide, to manage three of the five hotels that operate under this brand in the country, indicated that they have not yet begun its recruitment program, but rely on the country's ability to generate human resources required in the sector hotel.

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If the capital is a challenge to find skilled labor in other provinces is almost an impossible mission.

Fernando Duque, president of Buenaventura, a company that manages the hotel with the same name in the province of Cocle, said they had to work from scratch with the inhabitants of the area because the hotel experience was nil, even notes that many had never visited a hotel or restaurant.

Duke recognizes the effort made by institutions like the National Institute of Vocational Training for Human Development (Inadeh).

However, he believes we still have to improve skills and bring them to all corners of the country.

Currently, the Inadeh develops more than 30 courses related to tourism and its director, Temístocles Rosas, said that in collaboration with Apatel have trained over the past three years about 14 thousand people.

According to estimates by the institution, one of every two graduates of Inadeh is hired after performing their professional practice.

Inadeh is receiving advice of the French Society for the Export of Educational Resources and the U.S. firm Freeman Group to improve food programs, and training for maids, waiters, housekeepers, among others.

Quality of Service

The lack of skilled labor is not the only challenge facing the hotel industry. Raising levels of care also of concern to the union.

For years Panama has been below average on the quality of care offered to visitors compared with other countries in the region.

In 2008, a survey by Freeman Group indicated that the levels of care in Panama were 70%, 100% being the optimal service-while in other countries reached 80%.

Two years later, the same measurement on 54 hotels in Panama increased service levels to 84%, reaching to most Central American nations. To make this measurement is sent a person posing as guests, who use certain criteria gives a rating to the care provided from arrival to leaving the hotel.

As more hotels are built and to increase the supply, quality of service will mark the line that divides the hotels with high occupancy, those with cold rooms and empty.

Accommodation and education

755 000 - Visitors who entered Panama from January to May.

17.975 - Number of rooms available until December 2009.

16 - Number of schools that implemented a pilot scheme which included matters relating to tourism.