Panama Investor Blog

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 on mistake in his analysis and that is he states that the PRD retained control over the assemly 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.

Panama: Good Outlook-LBC

There is an upbeat overview of Panama in this weeks Latin Business Chronicle. I know and respect all the parties quoted in the article, but I think they are spending too much time focusing on the past and how they wish things to be rather than carefully looking at what is happening in the present and how that will affect the future. The reason we read newspapers and receive special reports is to help us to navigate the  waters for a more secure future.

Latin Business Chronicle

Panama's economy continues to grow, helped by the Canal expansion, construction, tourism and telecommunications. >BY JOACHIM BAMRUD< >While concern about the impact of thecrisis is spreading throughout Latin America, at least one country is still dominated by general optimism: While stock markets were crashing in the United States, BrazilMexico, Europe and Asia, the Panamanian agency that runs the Panama Canal last week managed to raise $2.3 billion in financing for the expansion of the waterway. >"Despite the meltdown in the rest of the world...the effects have not reached here yet," says David Hunt, the executive director of the American Chamber of Commerce in Panama Robert McMillan, the former chairman of the Panama Canal Commission and author of Global Passage: Transformation of Panama and the Panama Canal, is also upbeat. "">The Canal expansion, coupled with tourism and second homes for Americans, signals only positives for economic and business development in Panama" he says."http://www.latinbusinesschronicle.com/app/article.aspx?id=2834">">Click here for the article on LBC;

Free zone business up, for now

The second largest free zone in the world is located in Colon on the Atlantic side of the country. Anyone who has ever visited this commercial center can attest to its vastness. It is a bustling area of showrooms and warehouses where shopkeepers and vendors from all over Latin America come to do their buying. Ships stream in from Asia loaded with electronics, clothing and a sundry of other goods everyday. What most people don't know is that the free zone operates also as a bank, where the operators loan out products to good customers on credit. I have had free zone business owners tell me they make much more money on interest charged to the resellers than on the markup on the goods they "sell". The first nine months of this year  saw an increase of 12% in overall transaction volume exceeding $13 billion dollars. The actual goods passing through the zone is about half that. Imports amounted to $6.4 billion, representing an increase of 16 percent, while exports totaled $6.6 billion, an increase of 8.5 percent. That spread would not seem large enough for a normal business to operate unless there was a significant profit made somewhere else in the transaction. Being tax free income certainly helps. With commodity prices dropping fast and the credit markets frozen, the rest of the year may not be so rosy for the free zone operators.

Read more about the free zone here at La Prensa

What!? No Hurricanes in Panama?

It is interesting to note that Panama is just outside the hurricane corridor of the Atlantic and In my 13 years in Latin America I have only experienced hurricane Mitch while living in Costa Rica as it went on to devastate Nicaragua. Due to the warmer currents at the equator, Panama really lucks out, which is good news when you consider that scientists are forecasting a busier than usual season this year.

NOAA now projects an 85 percent probability of an above-normal season – up from 65 percent in May. The updated outlook includes a 67 percent chance of 14 to 18 named storms, of which seven to 10 are expected to become hurricanes, including three to six major hurricanes of Category 3 strength or higher on the Saffir-Simpson Scale. These ranges encompass the entire season, which ends November 30, and include the five storms that have formed thus far. Read the whole story here....

A Growing Trend of Leaving America

Here is a most interesting article from U.S. News and World Report about people moving abroad and many to Panama. I know several of the people mentioned in this story and can vouch for the accuracy of the report. Many young people are leaving the U.S. even with young families to seek their fortune or just take it easier in Panama and other countries around the world. It appears to be a growing trend and from my personal experience, can be extremely beneficial to the host country and the newcomers alike. Read the whole story here or catch the highlights in the excerpts below.

Excerpts; In his recent book Bad Money, political commentator Kevin Phillips warns that an unprecedented number of citizens, fed up with failed politics and a souring economy, have already departed for other countries, with even larger numbers planning to do so soon.

John Wennersten, author of Leaving America: The New Expatriate Generation and a retired historian who has taught for many years abroad, says Panama is the "new new thing" for those who are part of what he calls "a long-term trend."

If the data collected in the seven polls conducted between 2005 and 2007 are fairly representative of the current decade, then, by a modest estimate, at least 3 million U.S. citizens a year are venturing abroad. More interesting, the biggest number of relocating households is not those with people in or approaching retirement but those with adults ranging from 25 to 34 years old.

While American relocators are in some ways typical pioneers looking for a new "West," they are also participants in a larger, international development, "a global economic shift," Wennersten writes, "that is fostering real economic growth in heretofore-neglected areas of the world, like Latin America, Eastern Europe, and Southeast Asia." U.S. citizens are certainly not the sole beneficiaries of this shift, but they are active players in countries where the privatizing of former state-run industries and the opening of new capital and trade markets are creating an array of opportunities.

One big question is whether America is ultimately gaining or losing from this movement of bold, talented Americans into other countries. The answer is not simple. Wennersten cites what he estimates is a loss of about $30 billion in payroll, but he considers the outflow of expertise an even bigger potential drain. "It's not the average guys who are going," he says. "It's these 'crea-tives' who will be establishing the paradigm of the future."

Whether the relocation trend is heading toward a zero-sum outcome is something that you can't help pondering when you meet young American expatriates in Panama. If what they bring here in terms of skills, knowledge, and energy is Panama's gain, is America necessarily a loser?

It may not be much of a stretch to say that today one of America's strongest exports is its skilled, energetic, and often idealistic relocators. If America's information-driven economy is the engine of globalization, it is fitting that Americans are working in those parts of the world that are being transformed by the process. They make up an entrepreneurial "peace corps"—establishing businesses, employing, instructing, setting examples, and often currying goodwill. It is a cliché, but still largely true, that many foreigners say that they distrust America but like Americans. These relocators have something to do with this.