Panama Investor Blog

Venezuela's Chavez devalues currency again

You have to feel the pain of the Venezuelan citizen who not only lives under such an oppressive government, but sees his income unable to cover ever increasing food costs and his saving destroyed without the ability to move out of local currency.Yes, the solution is dilution!

I received this from just such a citizen bemoaning his fate as the devaluation is expected to continue all of next year.

Report from Rueters

Excerpts:

Intended to spur local production in the largely import-dependent nation, the announcement followed a central bank estimate that the economy contracted 1.9 percent during 2010 -- Venezuela's second straight year of recession.

The central bank said it would eliminate the exchange rate of 2.6 bolivars per dollar, which had been available for essential imports such as medicines and some foods, accounting for roughly a third of all forex transactions.

The socialist government hopes the move will attract foreign funds, improve its balance sheet and make the local private sector more competitive.

Venezuela already has one of the world's highest inflation rates, estimated by the central bank at 26.9 percent in 2010. The price rises threaten to alienate Chavez's core support in the country's slums and poor rural areas.

As of January 1, in a still-complicated currency control system, dollars will be available at state-controlled rates of 4.3 bolivars per dollar for some preferential goods and 5.3 bolivars via the central bank's SITME exchange system.

The bolivar was previously devalued in January of this year, meaning many foreign companies in Venezuela took a cash hit to their 2010 results.

That move had sent Venezuelans rushing to shops to make purchases before prices rose, but there was no immediate evidence of similar panic buying on Thursday.

In office since 1999, Chavez has blamed the country's economic problems on the global financial crisis as well as on reduced oil exports from OPEC quota cuts.

He contends, however, that strong social indicators show socialism is benefiting Venezuela's 29 million people and hauling many out of poverty.

Critics say Chavez is leading the economy to ruin citing nationalizations, the byzantine system of currency controls, subsidized oil supplies to allies like Cuba and China, and other policies aimed at entrenching his socialist agenda.

 

Good bad and ugly for 2010

As the Chinese like to say, "May you live in interesting times", and Panama has not disappointed. As I review this years many posts I am struck by how many both good and bad things I have found to share with my readers. Most of the bad have to do with loss of privacy, corruption and poor education while the good continues to be Panama's economic activity while the rest of the world is wallowing in mediocrity at best and depression at worst. I believe December has been Panama's worst month as the the tax information exchange agreement with the U.S. came just days before the wikileaks debacle. I consider these two revelations to be the worst of Panama because both of them could have been avoided while most of the other bad and ugly are innate in the country and will take a generation or more to see significant change for the better. I have limited these posts to only Panama although there are many posts this year about the bad and ugly that indirectly affect Panama taking place elsewhere in the world, especially the U.S.. Happy New Year!

Enjoy!

The Good

Lonely Planet say's Panama in top ten must visit in 2011

Telecom status in Panama looking good!

Overview of new flights to Panama

Direct flights Tocumen-David-Bocas Del Toro

Panama bay clean up on the way

President Martinelli on Fox News-a must see!

One millionth canal passage gets free toll!

Foreign Direct Investment increases 26%

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

Panama's economy grew 6.1% in the first half

Foreigners can now stay in Panama 180 days on tourist visa

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

Panama gold exports increased from $1.5m to $23.8m. in first half of 2010

Latin Technology: Panama now in second place

AARP rates Boquete "best place to retire"

U.S. NEWS say's Boquete top place to retire on S.S.

The Best Foreign Retirement Havens- Forbes

S&P upgrades Panama to BBB-

Panama Cuts Corporate Tax from 30% to 25%

The Bad

Skilled manpower a big challenge for Panama

Panama inflation, ouch!

The latest polls on Panama Public Education

Been screwed by a developer? Who ya gonna call?

Panama Health System Forced to Recruit Foreign Medical Staff

$ 13 billion budget, utopia or reality?

Panama needs over 12000 hospitality workers!

The Job-Killing Impact of Minimum Wage Laws

IMF now happy with Panama finances

New phallic shaped financial tower has Panamanians feeling screwed

Panama's luxury apartment glut expected to be between 5-8000.

Disturbing new U.S. law aims to end individual foreign bank accounts

And just plain ugly

Wikileaks a diplomatic "disaster" for Panama

U.S. & Panama Tax agreement in English

Panama receives very poor score when it comes to corruption

Panama caves in to OECD demands

Notaries: Property Fraud is a daily battle

Is this the end of Society Anonymous (S.A.) in Panama?

Panama continues use of banned toxic pesticides

"Panama has no rule of law"

Panama's Property tax ploy

 

Over 70 companies now at Panama Pacifico

The new master-planned community at Panama Pacifico passed the 70 mark this December, with more than 70 companies now onsite, operating, or moving to this Special Economic Area.  Located adjacent to the Panama Canal and an easy 15-minute drive to urban downtown Panama City, Panama Pacifico started construction this past month on its third office building offering 12,000 m2 of Class-A space for lease.  For industrial users, three more warehouses are currently under construction with first space availability this March.  In the new Town Center, in addition to the first two residential projects under construction, renovations have begun on the historic Olympic-size outdoor pool into a new recreation center.  Infrastructure on a new sports park with future football, soccer, basketball and tennis facilities is also now underway.  If you are interested in learning more about the residential and commercial opportunities available in this landmark community, visit PanamaPacifico.com or PacificoTownCenter.com for more information.

Small hotels want higher occupancy

As a small resort operator i can sympathize with other owners who are seeing lower occupancies this past year while city hotels have seen a significant increase. I don't expect those good times to last in the city as the number of hotels coming on line in 2011 will surely lower both the occupancy and rates. But trying to operate a small hotel in the interior of the country has its challenges and many owners are looking to the tourism authority for help with more promotions.

 

From La Prensa;

Small hostels seeking to awaken the interest of national and international visitors through its tourist attractions, including beaches and vegetation.

incentive. Small hotels want to design a strategy to promote travel to the interior. LA PRENSA / David Mesa1487123

MINERVA BETHANCOURTH
mbethancourth@prensa.com

Hotel occupancy in the metropolitan city is going through a good time. From January to October grew by 16.5%. However, the small hotels of 5 to 50 rooms located within the country registered a decline in hotel occupancy.

Although there is no year-end report, the president of the Association of Small Hotels of Panama, José Thomas, alleges that in November the occupation was 49%.

The representative of an association that brings together 59 hotels totaling 600 rooms ensures that for the holidays and year-end room occupancy was lower than last year.

Thomas said that next year will hold a meeting with representatives of the Tourism Authority of Panama to devise a strategy to raise the hotel occupancy inside the country, noting the further promotion of business tourism.

Eco-tourism and beach needs more publicity claim. The investment is pouring into the country-in the coming years will increase from 17 thousand to 23 thousand rooms, is concentrated in the district of Panama.

Food production at risk in Panama

For many moving to Panama and especially the Chiriqui highlands, the fact that it is the bread basket of the country was a major attraction. At a time with food prices are escalating, the fact that less land is being cultivated for food production could not come at a worse time. This article from La Prensa gives us the reasons and ramifications along with some interesting statisitcs.

La Prensa

Business & Economy

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Agricultural sector in crisis

Bajan hectares

In the past five years in Panama have stopped cultivating about 35,000 hectares, with a noticeable drop in rice.

GRAIN. During the 2010-2011 crop season in the country is 58 000 hectares of cultivated rice. In Panama, the annual per capita consumption is 154 pounds, the highest in Central America. LA PRENSA / Jihan Rodríguez.1486945

Aet Elisa Tejera C.
atejera@prensa.com

The agricultural sector did not stabilize, and increasingly less land devoted to food production.

In the past five years in Panama the agricultural landscape has been in decline, have stopped cultivating about 35 hectares, food imports have increased and the country's food security is at risk.

The lack of agricultural policies that encourage the production, poor access to financing, the contraction of international markets and bad weather were the final blow to finish buried in 2010 in a sector that is stumbling.

The production of vegetables, coffee, corn, cucurbits (melon, squash and watermelon), beans and bananas are some of the crop losses were by 40% due to excessive rains.

Virgilio Saldaña, president of the Association of Producers of Chiriquí highlands, described as disastrous this year that is ending, where vegetables, mainly potatoes and onions, were lost in the field by excessive rains.

However, Saldana said, the producers have not only had to deal with climate variability and high production costs, but also to uncontrolled imports.

It is estimated that 2010 closed with some 220 million pounds of onions imported, 44% of annual consumption in the whole country is 500 million pounds.

In the Chiriqui province between 2002 and 2009 some 941 farmers abandoned crops traditionally planted, according to a report of the Chamber of Commerce in this region.

Some migrated to livestock producers or other type of crop and others simply left agricultural activity. The main drop was recorded in crops such as rice, coffee, banana, sorghum, corn and potatoes.

Francisco Antúnez, a member of the Union of Nontraditional Agroexporters Panama, warned that failure to establish policies designed to encourage production, the country depends on imports, threatening food security.

During the 2010-2011 crop season in the country will be cultivated only a few thousand 500 hectares of cucurbits, where three years ago 6 000 hectares were planted.

For this year, shipping to Europe and United States non-traditional products such as watermelon, melon, pumpkin and pineapple fell 40%, causing a considerable decline in a sector that the country regularly generated revenues of 100 million dollars annually.

"Three years ago cucurbit production generated about 20 thousand jobs, a figure that has dropped to 6 000 jobs. In the agricultural year 2009-2010 the export of cucurbits generated revenues of $ 52 million, which could fall to $ 30 million next year, estimated Antúnez.

The Minister of Agriculture, Emilio Kieswetter, acknowledged that the sector is in crisis. Rice, the staple grain in the diet of the Panamanian, is a crop that has reduced the acreage planted.

In 1994 the country grew about 75 thousand hectares of grain and in 2010 reached 58 000 hectares.

Sorghum has run a worse fate. 20 years ago in the country grew about 12 thousand hectares of corn and sorghum is now about to disappear, "said Kieswetter.

To try to revive the sector, the Ministry of Agriculture is working on a strategic plan at a cost of $ 700 million.

Initially, the plan will focus on boosting the production of milk, meat, rice, corn, potatoes, onions, beans and sugar cane, to try to minimize the cost of basic food basket, "said Kieswetter.

In order to reduce the cost of the basket will remove distortions in the domestic market and strengthen the capacity of storage and distribution of food, he added.

You can strengthen outreach programs, where the producer is able to provide direct technical assistance in the field and not only production but also administrative and post-harvest handling. SEE 38A

PRODUCTION FIGURES

500 000 - quintals of onions are consumed annually in the country.

250 - Acres of potatoes and onions have been cut in the last year.

105 - Farmers in upland Chiriqui, stopped growing vegetables in 2010.

VOICES RATED

Failure to establish policies designed to encourage production, the country depends on imports endangering food security. "
Francisco Antunez
Producer

The agricultural sector is in crisis, more and more producers leaving the business. To reactivate the plant is preparing a strategic plan.
Emilio Kieswetter
Minister of Measure

Lonely Planet say's Panama in top ten must visit in 2011

It never hurts to get this kind of press as the lonely planet guide seems to be in the hands of most folks visiting Panama.  The lonely Planet says;

"After an uncontrolled growth that resulted in the creation of casinos, gated communities and glass towers of the Trump name, the fall in investment has forced a return to basics," says the ranking is in the Page lonely planet.com.

The return to basics, she says, is for travelers a return to the real thing: local festivals and guesthouses with sand floor in the region of Kuna Yala.

As a developer of a gated community I take no offence as Panama was going off the deep end in its appetite to build in the hopes that they will come. As the guide points out, the worlds economy put an end to that crazyness and now the contry has returned to some level of sanity.

Panama continues to attract FDI

2010 was a good year for Panama in attracting foreign direct investment. With only the first 9 months accounted for they saw $669 million which is an increase of $189 million over last year. These numbers are still considerably lower than 2006-2008 but considering the world economic slump Panama is still doing well.

Panama population data

Today La Prensa came out with the final results of last years census showing a slight increase in the number of inhabitants to 3,400,000. A bit more than half are male but what I find most interesting is that fully 50% of the country's population lives in the city. That leaves a vast area available in the rest of the country for the other half. No wonder the stress builds so significantly when one makes a visit to the city and how peaceful it really is when getting back into the countryside. According to the experts (?) the population is expected to grow at a rather slow rae over the next 20 years.

La Prensa:

 

Final count: 3.4 million

According to the final statistics from the National Census 2010, 3 million 405 thousand 813 inhabitants in the country.

Aleida C. Samaniego
ansamaniegol@prensa.com

After the many criticisms and concerns that led to the preliminary figures of the XI National Census of Population and Housing VII, the National Institute of Statistics and Census (INEC) of the Comptroller General's Office finally informed how many of us: 3 million 405 000 813 inhabitants.

The head of INEC, Danis Cedeno, said the total figure, one million 712 thousand 584 were men and one million 693 thousand 229 are women, which means that the country had more men than women.

The province of Panama, meanwhile, is still reporting the highest concentration of inhabitants: 70 713 000 million people or 50% of the population.

The results presented yesterday by the INEC differ from those initially released: 83 000 237 people are more than 3 million 322 thousand 576 people who had counted at first.

Why the difference?

Cedeño said that inspections were carried out throughout the country to ensure the quality and coverage of the 2010 National Census, which took a team of the entity to visit again some homes.

"Most of these checks were carried out in Panama City, specifically in the districts of Las Mañanitas, Tocumen and December 24," said Cedeño.

INEC director attributed the errors that occurred during the census, lack of accountability of some enumerators and supervisors who failed to comply with the task of completely cover the assigned area. For counting were hired about 125 000 13 000 enumerators and supervisors.

Census omission

Cedeño also reported that the census is an estimated 3% default, but not until when developing population estimates, with the support of Latin American Demographic Center, which officially determine of the census, as was the case with surveys above.

This failure rate is within acceptable parameters, as experts point out that failure should not exceed 5%.

"The Census coverage was achieved in 95% and estimates that 3.5 million of the Panamanian population had was a medium scenario," said the head of INEC.

At the time of planning and organization of the census was established three scenarios of possible outcomes, ranging between 2.9 million and 4 million. Based on this projection was established 3.3 million.

The head of INEC said that the statistics presented, and you can review the basic results in the direction www.contraloria.gob.pa, "are the main characteristics of the population, and housing and households by province. It also includes comparative tables based on data from the last three censuses, which reflect the dynamics of the population.

On housing, the census included a million 63 000 409 homes. Of this total, in the province of Panama there are 544 000 379.

Slow growth

The results allow to point out that Panama has gone from a high population growth (a rate of 3.17 between 1911 and 1920), a slower growth between 1990 and 2000 (with an annual rate of 2).

Between 2000 and 2010, for its part, the rate of population growth is 1.84, a situation that, according to estimates, will continue over the next 25 years.

Statistical experts attribute this to the decline in fertility throughout the country.

100 cases of tax evasion detected DGI

For the first time Panama is getting serious about tax collection and the DGI (IRS) announced that they have found more than 100 case of tax fraud by various companies in the past 18 months. Actually I think that is a rather low number when you consider that tax evasion has been a national sport in the past. Now with the increased state budget they have had to get serious about tax collection, even to the point of hiring ex-IRS agents to teach them the ropes. First and foremost is highly publicized prosecutions in order to scare individuals into compliance. I would expect to hear more about this in the coming months and years. Here is an article from La Prensa on the subject.

The institution pointed out that without the internal complicity, the companies involved could not have committed the crime against the public treasury.

FISCO. LA DGI reported that most cases of tax fraud has been in business. PRESS / File1484388

Rafael E. R. Berrocal
rberrocal@prensa.com

The Internal Revenue Service (DGI) said it has discovered more than 100 cases of tax fraud in the past year and a half, most of them in companies engaged in business.

The Director of Revenue, Luis Cucalón, said it would keep in reserve the amount of involvement from the state and the names of companies, but cautioned that it is a criminal offense in which the fine reaches 5 to 10 times the amounts disappointed and 1 to 3 years in prison.

"Without the internal complicity in the DGI had not been such cases of tax fraud," said Cucalón without detailing whether officials of your institution is provided to help these companies to commit this crime.

The DGI said it would keep constant vigilance to prevent fraud. "Why set a date for a program that has had to operate forever," said Cucalón.

Trade is one of the main economic activities in the country, which operate more than 22 000 such companies that generate more than 99 000 places of employment.

Only in the first half retail sales amounted to 3,248 million and wholesale sales reached 4,444 million dollars. On the issue, the Chamber of Commerce, Industries and Agriculture said he was unaware the 100 cases of tax fraud were found by the DGI. "However, the Chamber of Commerce has always been a believer that tax laws must be met and it is for the DGI investigate any cases of this nature," the institution.

The Chamber of Commerce also warned that tax evasion can be proven to be causal to implement its code of ethics when those involved are members of the guild.

Another problem that is attacking DGI, through direct auditing companies, is tax evasion. In October, the institution announced that they have been able to raise 40 million in companies that found they were evading the tax authorities, most of them in the Free Zone of Colon and Panama City.

Until then the penalties for proven cases of tax evasion reached the 2 million dollars.

The Government has denied that tax audits against the companies are being used as a method of political pressure.

Argues that only part of the management of the institution to achieve the lofty goals of government tax. For 2011 the budgeted tax revenues were set at 3 billion 923 million dollars.

New Panama business website opens

The Panamanian government has made available a new website that focuses on business oportunities in the country. It is all in English so take a look here. Here is an artilce from La Prensa about what the new site has to offer.

On the site 'meetpanama' the President talks to investors, he suggests carefully check the information 'to build a strong relationship with Panama. "

persuasion. Martinelli encouraged to invest. PRESS1483625

Triny MARY ZEA
mzea@prensa.com

The level of investment in Panama, risk ratings, the country's domestic economic reports and even a hotline to talk with investment specialists are part of the information provided in www.meetpanama.com.pa.

The portal was announced by the president, Ricardo Martinelli last Thursday in Washington as part of its campaign to attract investors.

On the site the president gives a speech on video and in writing in English in which notes that Panama is a good place for business. "That is why we created this site to get you and the world, and tell the dynamic story of economic opportunities for Panama," says Martinelli.

For John F. Kiener, the Industrial Union, is "a well presented site promotion, similar to other countries where there is a message from the President inviting investment, and interactive information.

However, currently there is another site with similar information and the same goal: http://proinvex.mici.gob.pa/.

"They make the same efforts with double cost," said Roberto Alfaro, Business Council US-Panama. The Foreign Ministry, Ministry of Commerce Proinvest and now the presidency promoting investment in addition to the private sector, so Alfaro suggests synchronize efforts. The Presidency Press consulted for details of cost and administration of the portal, but no answer. On the web indicates that distributes HDMK, which charges the government $ 30 billion a month for the media strategy to the American public.