Panama Investor Blog

What are the top 5 important issues that will affect Panama's development over the next 10 years?

A few weeks ago I received the email below from Raluka Benko, a student in Zurich Switzerland.

Dear Sam,

within our MBA program, my colleagues and I are working on an assignment regarding Panama.
In this respect, we were more than happy to discover your blog and all the information you published. Many thanks for all this!

As part of the assignment, we are also required to get in touch with people knowledgeable of Panama and willing to share with us their opinions.

We would like to include in the assignment some of your comments which are available on the blog site and additionally we would very much appreciate if you could briefly share with us your opinions regarding:

1. Which are 5 most important issues that will affect Panama's development in the next 10 years? Why?
2. What measures should be taken for these issues to be properly solved?


Thank you very much for your reply and kind help!

With best wishes,

Raluca Benko
MBA student at University of Strathclyde, UK (Zurich center)

I did not respond beyond suggesting that they review the archives to get the information they needed. I was pleasantly surprised to receive the following report that I believe covers a great deal of the top issues Panama contends with.

Steel imports a telling tale

I find it amazing that Panama ranked as the second largest customer for rebar in the world for U.S. exports according to the American Iron and Steel Institute. This is well before the needs of the canal expansion. Maybe they are buying very early.

US Rebar Exports Way Up In June As Panama Sees Big Influx
August 18, 2009
Steel Business Briefing

US rebar exports nearly doubled from May to June, with a large portion going to Panama, according to a Steel Business Briefing analysis of figures just released by the US Department of Commerce (DOC).

In June, 51,726 tonnes of US rebar were exported globally, up from 26,804 t in May. Panama was the second-largest recipient of those exports, receiving 18,263 t, up from zero in May and only 1,438 t in April.

Canada imported 30,443 t of US rebar (up from about 25,000 t in May), the DOC figures reveal.

Rebar made up about 86% of the 21,205 t total volume the US exported to Panama in June. The Panama Canal is undergoing a more than $5bn expansion project to add a third lane.

Overall US mill exports totaled 640,337 t in June, up 11% from May, as SBB reported late last week. Most of the tonnage went to Canada (315,452 t) and Mexico (129,944 t). Panama, Nigeria and India saw lower volumes but were the biggest gainers on a percentage basis.

Total US exports are still far below their September 2008 high of 1.26m t.

FDI ranks Panama 4rth for best foreign investment opportunities

With a ranking of 4rth place out of 31 Latin American countries Panama has a ways to go in order to be the most attractive in the world to do business, but at least we are in the top rankings and moving up. Foreign Direct Investment Magazine ranked Panama in fourth place behind Puerto Rico (First), Costa Rica (second) and Dominican Republic (third). A panel of three judges graded 31 Central American and Caribbean destinations across seven categories to determine final rankings. The categories scored were: economic potential, business friendliness, quality of life, human resources, infrastructure, cost effectiveness and FDI strategy. Each category was scored on a 10-point scale.

According to FDI Magazine, two programs, known as FDI Markets and FDI Benchmark, were used to generate scores for the rankings. FDI Markets is a database that tracks foreign direct investment on a real-time basis while FDI Benchmark is a database that ranks global locations on how appealing they are to foreign investors. FDI Magazine reports that the data compiled by FDI Markets and FDI Benchmark provided an objective measure to create the “Countries of the Future” rankings.

This information was set under six categories: economic potential, human resources, cost effectiveness, quality of life, infrastructure and business friendliness. A seventh category was added to the scoring – FDI promotion strategy. In this category, 14 Caribbean and Central American countries submitted details about their promotion strategy and this was judged and scored by our independent judging panel.   

Here is a PDF with more information.Download Carib and Central Am rankings

Miami is out and Panama is in

Simon Black, international traveler and investor, has written an article about how investment is and will continue to move out of Miami and seek another home. He list a number of options, but ends up selecting Panama for a many reasons. An interesting article with an interesting take on our world in Panama.

The Capital of Latin America

Simon Black

For Latin Americans, Miami has been a lot of things– the major financial center, the cultural Mecca, prime tourist destination, the business capital, and a symbol of international success.

The city made its riches and opportunities available to all nationalities, reaching the point during the most recent real estate boom where one could become financially successful and never speak a word of English.

Truly, Miami was a frontier island between North and South, sort of a Hong Kong of the Americas, infusing business savvy and capital with cheap labor and an extraordinarily large market.

The fact that Miami is so close to the United States and participated in the US banking system (the world’s #1 tax haven for non-US citizens) was a major benefit to individuals and businesses.

Naturally this is all changing now.

Read the rest of the story at The international Man website.

Transformation of Panama

Bob McMillan was the commissioner of the Panama Canal for the U.S. before its handover in 1999 to the Panamanians. Here he gives his opinion of what the recent election of Ricardo Martinelli means to the U.S. and Panama interests. He makes a mistake in his analysis and that is he states that the PRD retained control over the assembly which to me understanding is incorrect. In any case he sees a bright future for Panama under the new leadership.

Excerpts: Panama has a new democratically elected President. The May 3, 2009 presidential election in Panama was an extremely important event. Years ago the question was whether Panama could continue to transform into a real democracy? With four democratically elected presidents since 1989, eyes were focused on 2009 when the two front runners were Balbina Herrera, a Panamanian leftist with an anti-U.S. past and Ricardo Martinelli, a businessman and chairman of the Panama Canal Authority from 1999 to 2004 during the Presidency of Mireya Moscoso. He was very directly involved in the plans for expansion of the Canal. Everyone in Panama expected a close race with many Panamanian leaders expecting Balbina Herrera to win.

Read the whole article on Antonnews.com

Panama Real Estate: Hopes Run High for the New President

This article from Nuwire Investor is pretty accurate. of course it helps that I am quoted a number of times in it.

Excerpt from Nuwire; Panama's most recent election was full of surprises.  For one thing, Ricardo Martinelli, who in his first presidential bid in 2004 only got 5.3 percent of the vote, won the contest.  Equally striking is the fact that Mr. Martinelli won 61 percent of the votes, making him the first president in the country's modern history to be elected into office with an absolute majority.   

So, who is this man that has caught Panama's ruling party, the PRD (Revolutionary Democratic Party), by complete surprise? The 57 year old Ricardo Martinelli is a conservative tycoon who owns a spectrum of businesses including supermarkets, banks, and agricultural companies, according to Time magazine. The U.S. educated candidate campaigned promising change and voters decided he is the man that can deliver. "The Martinelli victory breaks the Latin Left’s 2009 electoral winning streak of Venezuela, El Salvador, and Ecuador," said Ray Walser, a fellow at the Heritage Foundation, a conservative American think tank.

Read the rest of the story here

Panama revolt of 1959

This week marks the 50 year anniversary of a very interesting story about Panama that I had not heard before. There have been many attempts to "take over" Panama in the past few hundred years, but none that involve such people of notoriety as actor John Wayne and Margo Fonteyn, one of the world most famous ballerinas.

I found two interesting links that tell the story. First is a video showing American military with some Cuban "gorilla's" who apparently were hired to help with the revolt. In the short video, I could swear one of the Cubans is Che. Click here and check it out yourself.

Then comes this story "Bullet ballet" from Time magazine dated May 4rth 1959.

Excerpt:Margot Fonteyn—Dame Commander of the British Empire,* star of Covent Garden's Royal Ballet, top ballerina of the Western world—cast a large, limpid brown eye through her camera view finder and pressed the little button. A flashbulb's white glare froze a busy scene against the black of a tropic night on the Gulf of Panama, in the Pacific. Dame Margot's husband Roberto ("Tito") Arias—scion of one of Panama's 20-odd leading families and recently (1955-58) his nation's Ambassador to the Court of St. James's—was happily at work transferring machine guns, pistols and other trappings of rebellion from an outboard-motor boat to a shrimp boat.

Read the rest of the story here

The New Panama Red

This article from Forbes starts out talking about the Russian war ship passing through the canal and Conde Rice's quick trip to visit Panama. As a side note I was told a U.S. nuclear sub just passed through the canal last night and I would assume that this is also in response to the Russian move. In any case the Forbes article parrots the many benefits of Panama that I have commented on numerous times  so I won't rehash. I suppose its a  good thing that Panama gets positive press along with a visit from a high U.S. official. The world reads it and believes there is a place in the world that is untouched by the world recession. Come on down!

Excerpts: The free trade spirit permeates Panama. It operates the world's second-largest free trade zone after Hong Kong. Its overall economic growth rate matches that of China. Panama has posted 23 consecutive quarters of economic growth, growing gross domestic product by 11.5% in 2007. This is double the pace of the rest of Latin America and well ahead of the U.S.

Then they go on to talk about the big three, Construction and demand by the U.S. baby boomers, Canal Expansion project and the Free Zone.

Read the story here...

Conflict between government, developers and the "original people"

I found an article by Eric Jackson on his Panama News to be particularly interesting as a clash between civilizations is taking place here in Panama. It involves the indigenous people of the country and their complaints against the government who they believe are not dealing fairly with them on a number of issues. The growth in tourism and development is one area of contention. The government is being accused of wanting to make part of the Indian land a national park and a major hydro electric project and not protecting their land from encroachment by developers.
In this 21st century where we are building city skyscrapers, enlarging airports and grand infrastructure projects, the "original people" are trying to hold on to their culture and lands that they have lived on well before the Spaniards and other races took over. You can go to Eric's Panama News to read this insightful report.

Excerpts: On November 14 and 15 in the Kuna Yala village of Mandi Ubgigandu almost all of Panama's top indigenous leaders met for an unprecedented summit.

The gathering denounced the creation of national parks and protected areas that encompass or encroach upon indigenous lands --- it's not that they're against environmental protection or ecotourist activities, but they do object to the national government asserting control over indigenous territory in this fashion.

A resolution was passed that called for reform of the national government's agencies that deal specifically with indigenous affairs; and for the reorganization, renovation and democratization of COONAPIP, an organization that was created by indigenous leaders but has since become a political patronage appendage of national governments.

"The Original People currently live under threat, trampled upon, violated and as victims of every sort of imposition by the National Government," the summit concluded. It officially backed the complaints of Panamanian indigenous communities that are now pending before the Inter-American Human Rights Commission.

read the whole story

Panama, 105 YEARS AS REPUBLIC

This weekend we celebrate one of Panama's two independence days. this one from Colombia. Here is an interesting article about the history of this separation. From La Estralia

PANAMA. This Monday November 3, Panama will be celebrating the 105th anniversary of its separation from Colombia, which marked the rise of its identity as an independent republic.

After more than 300 years under Spanish rule, the isthmus of Panama’s independence from Spain was officially declared on November 28, 1821, alongside an intent to join New Granada, Ecuador and Venezuela’s in Simon Bolivar’s newly founded Republic of Colombia. For the years to come the isthmus would remain as a province of Gran Colombia even after Venezuela and Ecuador pulled out.

On separate occasions, the isthmus reiterated its independence for short periods of time, always re-establishing ties with New Granada in the end.

For instance, in November 1840 the isthmus declared independence during a civil war and under the leadership of General Tomas Herrera, named itself the “Estado Libre del Istmo” or the Free State of the Isthmus. The new state established external political and economic ties and drew up a constitution which included the possibility of Panama rejoining New Granada as a federal district. In June 1841 Tomás Herrera became the President of the Estado Libre del Istmo. But when the civil conflict ended Panama again became part of Colombia.

From then onwards Panama’s union with the Republic of Colombia was assured with the help of the United States.

Under the 1846 Bidlack Mallarino Treaty, the US received rights to build railroads through Panama, and in return the US could intervene militarily against revolt to guarantee New Granada’s control, as well as to protect its investments.

The US and Colombians joined forced on at least three different occasions to suppress attempts by Panamanian Liberals to seize control of the Isthmus.

In an unexpected twist of fate, diplomatic ties between the US and Colombia soured when President Theodore Roosevelt decided to take over the construction of the Panama Canal after the French’s failure, but received little or no support from the Colombian government.

Unwilling to alter his terms, President Roosevelt saw an opportunity in the separatist attempts, and encouraged a minority of Conservative Panamanian landholding families to demand independence, offering them the military support once reserved for Colombia.

With the weight of the U.S. military support (the U.S. prevented the Colombians from sending reinforcements by sea with a small naval force in the area), Panama finally separated from Colombia on November 3, 1903 and Dr. Manuel Amador Guerrero, a prominent member of the Conservative political party, became the first president of the Republic of Panama.

Almost simultaneously, Frenchman Phillipe Bunau-Varilla, who had worked on the first canal attempt, signed the Hay-Bunau Varilla Treaty, granting the U.S. the rights to build and indefinitely administer the Panama Canal, and with it opening an entire new chapter of Panamanian history.