Panama Investor Blog

Another mega project for Panama

Superman had Metropolis and Panama now has a Megalapolis (hotel) and now a Panatropolis  advertised as the "global hub of the new world".  All are meant to sound big and on the normal scale of things they are. I first heard about this project from one of the developers about 6 years ago. Back then it struck me as a viable idea because they were putting in showrooms similar to what they have in the Colon free zone so that buyers would only need to fly into the International airport and shuttle over to the nearby showrooms to make their purchases. This would save a lot of drive time traveling to Colon where there are few hotels and restaurants to accommodate clients. Of course this will further dash the hopes of Colon ever becoming a vibrant city as been hoped by so many administrations.

From this video we learn that the Panatropolis is to encompass residential and commercial along with hotels, a golf course an many other amenities. A virtual city will be built near the Tocumen international airport. Many things have changed since that first look such as a world economic recession and the announcement of about $15 billion in infrastructure into the country. It will take a number of years to build this project out and only time will tell if the idea for a Panatropolis is a good one. See youtube video here.

 

More multinationals come to Panama

Panama continues to attract multinational companies and this article from La Prensa tells us who they are.

Machine translated from La Prensa

Three new multinational companies have chosen Panama to establish their regional headquarters. It is Germany's Bosch and Kuehne + Nagel and Spanish Puig.

Bosch provides services and technology in sectors such as automotive, consumer goods and industry. With 300 subsidiaries and a presence in over 60 countries, the company posted sales in 2009 by 53 billion dollars.

Kuehne + Nagel is a logistics service provider. It has over 900 offices in 100 countries and 55 000 employees.

Since late last year the company has its management in Panama for Central America, staying in Buenos Aires headquarters for the entire region. A month ago he received a license from the Panamanian government as regional headquarters of multinational companies.

In addition to making decisions for America, the company also has to Panama as a distribution center for the company for the entire region.

"We chose Panama for its location, opening connections, by size of business," said Ricardo Ortiz, manager of Kuehne + Nagel Sales of America, which advances the idea of the company's medium term is to expand in the country, distribution activities.

The latest company to join the list of multinational companies in Panama has been the Spanish Puig, firm in the industry of perfumes, cosmetics and fashion brands such as Carolina Herrera, Nina Ricci, Paco Rabanne and Prada, said the Ministry of Commerce and Industries a statement.

The company, based in Barcelona, annual revenues of 300 million billion dollars in 2009 and generates 17% of its sales in Latin America.

With these three companies and are 43 multinationals have set up their regional headquarters in Panama under the umbrella of Act 41 of 2007, which provides tax benefits, immigration and labor to multinationals. In addition to the local employment generated and the image as a business platform that projects, these companies often move executives to the country, people of high purchasing power who buy or rent apartments and become, somehow, the driving forces the local economy.

Procter & Gamble, Maersk, Sinopec, Cemex, BMW, Nestle, Adidas, Caterpillar and Sanofi Aventis are among the multinationals that have their regional headquarters in Panama.

Cielo Paraiso Opens 18-Hole Championship Golf Course in Boquete

I had an opportunity to visit Cielo Paraiso (Paradise Sky) last month and I must say it is beautiful and the views are  truly incredible. It had been well over a year since I have had the time to visit and they have made a great deal of progress under very difficult circumstances. Not only have they been struggling, as most residential projects with a challenging economy, but the man who's vision it was to build this project, Radeep Lal, passed away earlier this year of a heart attack. Raydeep and his wife Colleen came to Boquete about 10 years ago and were determined to build an 18 hole championship golf course and residential community. Radeep loved to play golf and he loved Boquete, so the building of Cielo Paraiso was to be a dream come true.

Radeep will be greatly missed, but fortunately his wife Colleen shared that vision and with the help of Radeep's family they have continued working on the project and completing the golf course. Cielo Paraiso will be a standing legacy to the vision and determination of Radeep and Colleen Lal. His dream has come true and all of us in Boquete and Chiriqui province will greatly benefit.

All of the infrastructure such as roads, water, electric have been completed and the first nine holes of the golf course have been playable for over a year. Now they have completed the back nine and in a few more months of grooming, the entire course will be ready to play. Here is a story from Sportgrass.com with more details.

Cielo Paraiso golfers enjoy serene, hilly terrain with a 360 degree view

Boquete, Panama (NYSE) 26 October 2010

Cielo Paraiso is the first 18-hole championship golf course level in Boquete, Panama, opened in January 2011. The course marks the end of the first phase of the Gladstone Developmentâ? S new residential resort development, Cielo Paraiso, which also completed 14 houses and 30 homesites for sale. Set in the picturesque mountains of Boquete, Panama, the 750-acre development of the newest and most exclusive residential areas resort community in Central America.

Designed by J. Michael Poellet for the protection of native flora and fauna habitat Cielo Paraisoâ?  While playing the beautiful yet challenging course, the players also have a spectacular view of the Baru Volcano, the Jaramillo and Talamanca Mountains and the Pacific Ocean, dotted with islands. The 7200-meter par 72 layout includes forests, meadows, valleys, ridges and riparian coupled with dramatic elevation changes make for a signature golf experience.

Our goal with Cielo Paraiso was to build a course to blend in perfectly with the unique topography of the land  said course designer J. Michael Poellet. I truly believe that we created one of the most visually stunning courses in all Central / South America.

Scenic home sites are currently available for purchase at Cielo Paraiso, starting at $ 150,000. These spacious home sites ranging from ¾ acres to over 2 acres of picturesque places on the property and offer sweeping views of the Pacific Ocean, and Jamarillo Talamanca mountain, Volcan Baru and golf course.

Cielo Paraiso is a unique opportunity, a piece of Boquete, one of the most sought after destinations in Panama for those who want to live or invest in a comfortable house and more popular destination in Central America,says Gladstone President Colleen Lal. The wonderful climate throughout the year and the natural beauty of Boquete region makes a perfect location for an active lifestyle, the Championship golf course, hiking, bird watching, mountain biking, rafting, and may include many other activities.

Gladstone Development is currently working on the plans for Phase II of development, a collection of well-equipped options that are smaller will contain. This idea was received well by buyers looking in Boquete.  Although our home sites are a very affordable option in Boquete, we plan to diversify our product mix to accommodate the demand for customers looking for a smaller second home. Lal says. The master plan for Phase II will be released in 2010, with construction starting early 2011.

Conveniently located just 30 minutes from David, the capital of Panama Chiriquà province, is the target of Boquete in the country situated on the most mountainous region, at 1,200 meters (3,600 feet). Situated between the Caldera River, which lies to the east, and Baru Volcano to the west, Boquete enjoys a comfortable climate, ideal for outdoor enthusiasts. Known as the Valley of Flowers and Eternal Spring,  charming Boquete has established itself as one of the fastest growing retirement and tourist destinations in the western hemisphere, with its serene beauty and variety of outdoor activities. The lush vegetation and vibrant population of rare birds and the possibilities for hiking through the Volcano Baru, the highest point of the country concerned have established Boquete as one of the world's 5 top eco-tourism destinations.

Recently, the AARP is ranked Boquete as one of the top destinations to buy a house, Panama offers first-world infrastructure of roads, business services, healthcare and telecommunications. A growing retirement and investment refuge with a more affordable standard of living, Panama has a sophisticated capital, incredible rain forests, and some of the best ecotourism in the world, bird watching, scores of exotic beaches and islands, snorkeling, diving, sport fishing, rafting, climbing, fine restaurants and a variety of historical sights.

 

What is the solution to Panama's customer service challenges?

Panama bills itself as a service economy, but you would not know it from the kind of service you get in the country. We all lament on the poor customer service in Panama, whether it is in a store, restaurants or  banks. You just shake your head and wonder why they don't get it. Panama has never really had to compete in the world as they had bank secrecy and a canal that no one else had. But things have changed dramatically and Panama is now going to have to compete with other countries for everything.  I often hear folks say that the lack of customer service in Panama is cultural, which my be the case in the past, but good customer service can be learned and Panama must learn soon if it wants to keep that service economy going. The fact is that good customer service is a matter of training, training and more training and it starts with the owners and managers and works its way down to the security guard standing in front of the business.

This article below was written by Ahden Bush, President of Institute of Customer Service-Panama at my request. I have worked with Ahden at our resort in Boquete and I believe her methods for improving  customer service in Panama will be most effective.

Why Panama must develop a culture of good customer service

The government of Panama talks about its pillars for growth.  However, a critical questions remains, what is the foundation under the pillars?   An important corner stone under the pillars is customer service excellence. This corner stone cannot be ignored.  If it is, it happens as a detriment to the foundation.  What has to happen to optimize Panama’s key advantages? 

Customer service excellence is THE business driver in today’s world and will be for many years to come.  An IBM global study of CEO’s across 60 countries found 88% of the executives believe getting closer to the customer is the top business strategy over the next 5 years.

• 53% of consumers will recommend a company to someone else because they received outstanding service, a higher percentage than if they received a lower price or top quality product.  This includes business to business and consumer to consumer.
• 86% of consumers quit doing business with a company due to a bad customer experience.
• 82% OF CONSUMERS THAT HAD A BAD EXPERIENCE TOLD OTHERS ABOUT IT – up 22% since 2006. 

But there are two big problems in offering excellent customer service – one is the rules and expectations have DRAMATICALLY changed in how to offer customer service excellence, and, second, Panama has a critical need to raise the bar of customer service excellence to match the challenges and opportunities being presented as a global hub.

What are the most immediate challenges?  One is a belief held by many Panamanians that Panamanians are not customer service oriented and the other is the need for the country to come together as a huge team to grab this challenge with a belief that Panama can become recognized worldwide for its customer service excellence by 2020 or before.  This is forcing business leaders and employees alike into uncharted territory but methods and processes are readily available.  Already several companies with Panamanian staff have been recognized both regionally and globally for customer service excellence.

What are the benefits to raising the bar for customer service excellence?  Every worldwide study shows substantial increases in profits as loyal customers return more frequently, pay more for what they buy from a trusted provider, and give referrals. 

Here in only one example from literally hundreds is a report from Forrester Research that annual revenue gains from a MODEST difference in customer service can total from $117M to $311M for large hotels.   In another example, a technology company increased it’s sales by 45% in one year with a deliberate focus on customer service.  In Panama, a transportation company raised their customer loyalty scores from detractors to promoters in only two years.

What is being done to educate businesses and direct customer contact employees to help increase Panama’s customer service excellence image?  Several initiatives are underway. 

One is the Institute of Customer Service-Panama as a professional advocacy body based on best practices for customer service excellence along with support and training for management and direct customer contact employees, a weekly educational news letter focusing on the new world of customer service with many how-to steps provided, an online library, assessments, Executive Conversations and so on.  A Knowledge Board is being formed to bring together people in Panama with a broad background in customer service excellence with the goal of creating a focal point of coordinated knowledge that everyone can access.    

Bottom line for customer service excellence, and THE MOST IMPORTANT ASPECT of customer service excellence and too often not mentioned is: Customer service excellence is about universal respect.  Yes, there are huge profits, but, again it is really making people’s lives better – everyone’s and we need that in today’s world.   

Artificial Island Project "Ocean Reef" to begin

This is a project that I have been hearing about for sometime, but until this week when the President help lay the first foundation stone in the bay, I was skeptical that it would ever come to fruition. It appears to be a series of three made made islands just off of Punta Pacifica. Sounds kind of like a Dubai project does'nt it?  The video below is well done and the only thing that is missing from this near perfect computer generated graphics is the Trump Ocean Club.

 

60 companies and 2,852 workers in Howard

The Panama Pacifico special economic zone operated by London & Regional have been very successful at attracting new businesses to the area. This article from La Prensa highlight many of these new businesses.

Machine translated fro LA Prensa

Electronic products, garments, chemicals, and naval components are already produced in the Panama Pacifico Special Economic Area.

Rafael E. R. Berrocal
rberrocal@prensa.com

The Panama Pacific Special Economic Area, located in the former Howard military base, seems to have begun its takeoff after more than 10 years of studies and tenders. Within its 2 000 5 hectares have been set up 60 companies, most of them linked to high-tech processes and logistics. All arrived in search of tax incentives that are granted within the enclosure.

In total, the developer London & Regional must have invested in infrastructure and promotion of $ 140 million for next year.

The program has already had its first results, and some companies are starting their productive, others are in the final stages and adequacy of their facilities.

Official figures from the agency administering the special economic area show that, to date, the activity of these companies has generated 2 000 852 thousand direct jobs and 200 jobs possible. In addition, estimated at 40 000 indirect jobs.

The report also details that these first 60 companies have already paid the state 57.3 million dollars in income tax, insurance, education and social insurance fees.

Among the companies that have already begun the process of production from Howard is Samtec, which is dedicated to making the connection tape for electronic circuits.

Another is Green Ivory companies that produce tagua buttons for clothing brand like Ralph Lauren and Abercrombie.

Klaus Calderon, owner of Green Ivory, said that Ecuador has moved its operation to Howard by the incentives offered in the area, which make up the difference in the cost of labor to other countries. Ivory Green invested $ 6 million in specialized equipment and made in Italy, which are being calibrated.

Calderon said his goal is to buy raw materials in Panama and, in consequence, is scheduled to drive the creation of a school in Chepo that allows farmers in these areas have knowledge about the specifications of the tagua you need. Among the tenants of Howard's BASF, a German company that is dedicated to the production of additives for concrete. 

The company representatives said that the aim will be selling additive in the region and for major projects in Panama, as is the extension of the Canal. Wartsila, Finland, is another company which is already operating in Howard. Its operation involves the rectification of pieces of large ships.

Olmedo Alfaro, the new administrator of the agency's Panama Pacific Special Economic Area, said that after the Panama Canal, this is the most important project for the state. He said that if the current investment schedule for $ 705 million by 2015, should have created 11 000 382 jobs by the year 2017 and 40 000 for 2047.

Alfaro said that management will be vigilant that companies comply with the promised investment and implement transformation of matter with high technology. Otherwise, he warned that the suspension shall incentives for those who violate the rules.

One company that is about to begin operations is 3PL, regional distributor of Procter & Gamble, the largest manufacturer of consumer goods in the world. To do this, 3PL has rented the largest winery in Howard's 10 thousand square meters.

Albacrome adds to the list of companies that operate from Howard. The company, based in El Salvador, made an investment of 21 million dollars in printing machinery, making purchase contracts with publications such as Cosmopolitan and Vanity Fair.

Gisela Porras, Panama Albacrome manager, said that within six months of operation the company has achieved a turnover of interest in countries like the Dominican Republic and Colombia. Are added, in addition, Caterpillar, Dell, 3M, ST Aerospace and INTELDAT.

Another of the big firms that explores Howard is installed in Sony Corporation. The Government will also promote this center of operations in South Korea, which are based manufacturers such as LG and Samsung.

President Martinelli on Fox News-a must see!

This is a great video with the president. With Panama's economic numbers looking so good, Cavuto asks him what he is doing right and what advise he would give to Obama. Great answers. I think this under 5 minute video will do more to put Panama in the minds of Americans than anything done before.

The Tower of Discord

The controversy surrounding the government plans to build a $200 million dollar tower on the site of the old U.S. embassy seems to draw criticism from a number of sectors. To begin with there are those who believe the government should not be in the business of building financial towers of which a good portion must be  leased out in order to justify it. This will compete with private interest just at a time when an over abundance of commercial space will be coming available. And with that kind of a situation wouldn't it be more prudent to wait for the prices to come down on office space and make a deal with a private company? Some believe the US embassy represents an important part of Panama History and heritage and should be converted to a museum. Others just opposed the the design which appears to be in shape of a phallic symbol. I would rather the government use the $200 million in education where long term tangible results will benefit the country.

In any case, the government is set on doing this project and I am sure there will be many controversial moments between now and 2013 when they expect to move in.

La Prensa

Roberto Gonzalez Jimenez
rgjimenez@prensa.com

It is a project that leaves no one indifferent. The Government intends to build a skyscraper over 300 feet in the land on which sits the old U.S. Embassy on Avenida Balboa.

The Financial Tower, as it was called, would house the offices of the Banco Nacional de Panama, the Superintendency of Banks, the Superintendency of Insurance, Securities and Exchange Commission, the Tourism Authority of Panama, the Ministry of Energy and the Authority Utilities.

The Ministry of Economy and Finance (MEF) issued its Statement of Objections to hire the conceptual design and plans, in a tender that has a reference price of $ 8 billion. The construction is estimated at $ 200 million.

In the statement of objections has been included preliminary design. For this work, the MEF hired directly by $ 300 thousand at Skidmore, Owings & Merrill (SOM), a firm that participated in the design of Burj Dubai's Khalifa, the tallest building in the world.

According to official documentation, "the proponents can improve this information." The U.S. firm proposes a building height of 333 meters and 69 floors in a cylindrical shape, similar to the Torre Agbar in Barcelona or the Gherkin (cucumber) in London.

The offices occupy 55 floors. For state entities would be 30 thousand square meters and private offices, whose sale is to finance part of the building, would cover 40 thousand square meters.

In the last three plants would have a restaurant, a lounge and an observatory triple height spaces that would have independent access to public office.

In an adjacent lot would be built after a 12-storey building with a capacity of 200 thousand parking spaces. In the last two projects a government conference center, connected to the office tower by a bridge.

Another thousand parking spaces, are authorized in two underground levels located under the main tower, the building of underground parking and the park area of Santo Tomas Hospital. In the basement level under the main tower would also be a food court.

The tenderers must include in their design a proposal for connectivity to the coastal strip and the stations of Metro Line 1 which will be on Avenida Justo Arosemena.

The government's goal is to start work in 2011 and end in 2013 to match the opening of the building with the celebration of the fifth anniversary of the discovery of the South Sea.

CRITICAL

The government's proposal has been rejected from various sectors. The disappearance of the building that housed the U.S. embassy means, for many, a way of not respecting the history.

"The Panamanians have to start preserving the heritage we have. Why not a museum or a cultural attraction? "Asked Ivan Carlucci, former president of the Panamanian Association of Brokers and Real Estate Developers (Acobir).

As in other projects, the State shall assume the duties private sector activities, such as the sale of offices, but industry members said one tower will not affect the market.

The president of the Panamanian Chamber of Construction said that "at the beginning is a high investment, but will serve to reduce public spending on rent, we support it." Carlucci, however, think that in a tower more than 35 plants, the costs grow exponentially and that there were other cheaper solutions.

Also interpreted the project as a way to satisfy the megalomaniac ambitions of the Government, when in the same town there without addressing basic needs, for example, refuse collection, water or the creation of sidewalks and public spaces.

COASTAL BELT

SOM's proposal also includes a recreation of how the future would be in Panama City with the new tower and the extension of the coastal strip to the Amador Causeway.

You can see the location and concept of the convention center that the Government plans to build in Chorrillo and the completion of the promenade on a breakwater, creating more space in front of the Museum of Biodiversity.

It is not said, however, if the coastal strip would cross the Old Town with a skirt tunnel or if, as some time has considered the Government, a project that has raised the alert about the risk it would have on the historic, declared World Heritage Site.

Santa Maria mega project still a go

When I first heard that the Santa Maria project was to be built between Costa del Este and the Tocumen airport I was skeptical. Panama was in the height of the building boom and as my readers know I was predicting a bust since early 2007 which came in late 2008. This was/is a very ambitious project of million dollar  homes, golf courses shopping centers and more and what made it seem possible at the time were the players involved. The biggest names in Panama were involved who have both the reputation and resources to make it happen. But as it looked into my crystal ball it just seemed to me their timing was wrong. I had not heard much about the project of late, but in this weeks La Prensa they report it may soon begin to take shape. I certainly wish them a lot of good fortune in this endeavor.

Excerpts: 30 years ago few would have imagined that in the land where the landfill of the city and in the mangrove area of Juan Diaz build homes which would be reflected more than a million dollars and apparently many are willing to buy to be near the city.

Eduardo Ameglio, current president of the National Council of Real Housing and one of the first to purchase a property in Costa del Este, recalls that 12 years ago square meter of land ranged between $ 90 and $ 130, a high cost for the time, but laughable when compared with current prices over $ 2000 and $ 3000 per square meter.

The construction of the two corridors, plus the South that the North, said Ameglio, was pivotal to the construction of high value projects.

Martin Sosa, director of the project, said the complex will be developed on 285 hectares and currently work in the first phase of the residential area comprising 115 hectares.

Sosa explained that last year there was a perception that the project had succumbed to the international financial crisis, because there was no movement of machinery, but explained that it was all part of filling jobs that were made in this area for its proximity to mangroves.

The first phase of the project which includes housing whose base price starts at $ 500 000 and the first nine holes of golf designed by Nicklaus Design, is scheduled to be delivered in November 2011.

Although not specify the total amount of investment, Sosa acknowledged that more than $ 100 million, funds provided in part by investors and by means of a loan involving five banks, led by Banco General.

But this is not the only project that is running this group of entrepreneurs across the South Corridor, on the road to Llano Bonito, stands the Santa Maria Business Center, where 85 lots will be paved in 33 hectares for buyers to build their facilities.

Panama: Hilton Hotel to Open Before 2011

With all the new hotels opening in Panama I wonder when the rates will drop. It is so amazing how the rates have mostly doubled in the last three years to where a decent hotel is $200 and up for a nights stay. Of course it is those high rates and high occupancies that have drawn all these hotel flags to Panama. But the fact is the property is owned by investors who acquire the flag name and management for a significant fee. I expect occupancies will drop as more competition comes online and then a rate battle must ensue. The lower rates will make it more attractive for tourism and hopefully things will balance out.

Source: pa-digital.com.pa
Tuesday, June 29, 2010

The $25 million, 213-room Doubletreee Hotel by Hilton will open by the end of 2010.

Satis Patel, president of Blue Star Hospitality, the administrator of the franchise, remarked that the hotel will employ 200 people when it opens.

“Patel commented that hotel occupancy has been low in the past two years, as a result of the global crisis, but the situation has not been as bad as in other countries where they operate”, reported pa-digital.com.pa.

Read more at the source article by Michelle Domínguez (only in spanish)