Panama Investor Blog

What's the real scoop on Honduras?

Honduras has been in the news a lot the last two weeks and I am sorry to have heard so many come out against the so called coup that removed Zelaya from office. I can understand people reluctance to support any kind of government overthrow by the military, especially with the history of Central American countries, but if you look a little deeper into this story you will find there is more to it than that and his removal from office was both justified and necessary. Here is an email from an expat who has lived in Honduras for a number of years and he shares his knowledge of the ouster and what lead up to it. This makes me feel more positive about Central American security when I see the people turn away from Chavez type dictatorships. For another look at the issues you may want to read the Honduras Trinuna "Will Obabam blackmail Honduras into installing a bullying would-be dictator?"
Hat Tip to Yari.

(What follows was written by Mitch, who has been living in Honduras since 2002. This is the best, blow-by-blow description I've seen to date of what happened in Honduras, and the events leading up to the removal of Zelaya as the president there.)

"I don’t profess to be an expert at Honduran politics or constitution, but I have been here a while and stay pretty involved with what’s going on in Honduras and especially Roatan. For those that don’t know me, I’m an American investor that has lived in Honduras full time since 2002. I’m very active on several commissions and have met with minister level executives=2 0of the Honduran government many times in the past few years. (more)

There have been a lot of comments, descriptions, and hypothesis over the past few days. I’ve spent a LOT of time reading Spanish and English reports, talking to a lot of people on the islands and on the mainland, and listening to the local politicians. I’d like to present my take on what’s happened. This is especially for Nick who’s been posting on the Roatan Tourist discussion group, but hopefully it will help clarify some points for others as well.

Mel Zelaya was elected 3 ½ years ago with an underwhelming 49% of the vote. He was seen as a fairly conservative member of the liberal party. The general feeling when he was elected was that he wasn’t the greatest pick, but his background as a wealthy logger and rancher coupled with his more liberal social policies would probably be OK.

Campaign promises made in the inaugural address-Must read

I encourage everyone living in Panama to read the new presidents first address to the nation. If you are considering living or investing here you should read it as well. In this speech Ricardo Martinelli lays forth what he expects to accomplish and although it is a tall order, he believes it is possible to accomplish.  He realizes we are heading into very difficult economic times, but see's it as both a challenge and opportunity. I sincerely hope that he can accomplish his goals as he paints a very bright future for Panama.  These changes will not come easy, especially his idea of "Debureaucratize". But he certainly understands Panama's problems with government inefficiency being right at the top of the list!
Thanks to Eric Jackson for having the speech translated into English. You can read it at Eric's Panama News website.

Panama: Investors Bullish on Martinelli-LBC

Latin Business Chronicle has a special report on the election of Ricardo Martinelli and the jest of the report is that he is business friendly and considered to be more right leaning than most of the Latin American leadership.

Excerpts: “I’m very positive on Martinelli,” says ">Kathryn Rooney, senior emerging markets macroeconomic strategist at Bulltick Capital Markets. “He’s extremely market-friendly and will continue the positive trend of the economy.” She especially singles out his plans to lower taxes and improve relations with the United States"

Among Martinelli’s other top priorities is infrastructure projects – including a new subway in Panama City – and securing passage of the US-Panama free trade agreement. It was signed two years ago, but has been delayed by lawmakers.">Although President Barack Obama has stated that he favors the FTA, there are growing demands from Democratic lawmakers and some officials to delay approval until Panama passes several tax and labor reforms. officials have stated that they want Panama’s tax laws changed so it won’t continue being a tax evasion haven for Americans. “The tax issue – that could be worked out on the side [independent of the FTA],” McMillan says.

For even more indepth look at his policies, read Bob Baumans blog.

Martinelli takes the reigns

Amidst much fanfare Panama's newly elected president takes the helm of leadership. I watched the televised inaugural address with my wife and we were impressed by both his candid words and style. Most people I have spoken to believe that the new president is honest and capable of handling the countries affairs. I too have high hopes for him as he begins to tackle the many problems facing this small nation. Here is La Prensa's take on his first address.

Excerpts from La Prensa: Speaking to a crowd of dignitaries, world political leaders and special guests, Ricardo Martinelli promised to bring the same principles from his business career to the halls of government after he was sworn in as the country's president yesterday.

Martinelli, who brought together several opposition parties under the banner, "Alliance for Change," said that he will reduce red tape and offer a leaner, more efficient government.

He said that he will end the tradition of elected leaders "arriving clean and leaving millionaires," which reiterated one of his most popular campaign slogans, and said that the needs of the people will come first in his administration. One of his promises was to provide a pay increase for police officers, viewed as a way to reduce crime, and to give a pension to indigent senior citizens of $100 per month.

Read the rest of the story here...

 

Many believe Martinelli will be good for business

This article in the Tico times presents some interesting information and insight into the challenges ahead for the new administration. Definitely worth reading the entire article.

Excerpts: “Frankly, the business sector is going to love Martinelli,” said Heather Berkman, a Latin America analyst for the consulting firm Eurasia Group. “He's planning on cutting corporate taxes to implement the flat tax, and he came out last week saying he would resist any legislation requiring more tax transparency and information sharing – which the U.S. Congress has been demanding as a precursor to movement on the Panama free-trade agreement.”

Though Martinelli has called the trade agreement his “number one priority,” his administration has denied that Panama is a tax haven and has rejected the possibility of giving up tax information.

“The free trade agreement and sharing tax information should be dealt with separately,” Martinelli's top economic advisor Frank de Lima told Bloomberg. “We are aware that times are changing, but we will not succumb to pressure from the U.S. so that they can start fishing expeditions to look for their citizens.”

“Local banks, though they maintain a high level of health, have restricted local credit because of the foreign banks' lack of liquidity,” said Fernando Duque, president of the real estate development company Buenaventura, in an e-mail. “Obtaining new credit for real estate projects in Panama City has almost entirely been paralyzed.”

Duque said that he expects the Martinelli administration to continue to invest in Panama's growing tourism industry.

“Panama has been betting on tourism as one of its fastest growing industries, and in this moment there are projects totaling about 1,500 rooms, principally in Panama City,” he said. “However, for tourism to develop in other areas, state infrastructure is necessary.”

Martinelli campaigned on promises to attract foreign investment and build better infrastructure and a subway system for the traffic-choked capital. He also inherits plans for an already partially funded $5.25 billion expansion of the Panama Canal.

Duque said he expects the canal expansion project to begin this year and “neutralize” the economic effects of the slowdown in new construction.

Read the entire article here

Panama's new president receives rave reviews

Ricardo Martinelli won last Sunday's presidential election and the all the major news outlets ran with the story this week. 

However, TIME magazine had  a very good analysis of the election and what it means for the country, and for those of us living in the country, for the next five years.

Excerpt:

Panamanians take justifiable pride in their operation of the Panama Canal. Since the U.S. handed the famous waterway over to Panama nine years ago, the independent Panama Canal Authority (ACP) has run it more efficiently, more safely and more profitably than the Americans did. Too bad, most Panamanians say, that their government is still best known for the kind of corruption and waste that has marred the small Central American country's reputation ever since pirates haunted the Caribbean. If they could just run the nation the way they run the canal, Panamanians believe, they could become a world-class maritime commercial and financial center — the Hong Kong of the Americas. Or maybe give Miami a run as the unofficial capital of Latin America.

Click here for the rest of the article

A Victory for Freedom in Panama

Our friends at the Heritage foundation came out with this news release about the Martinelli victory this weekend. As they are a conservative think tank I believe their headline speaks volumes about their expectations. I have received hundreds of emails, mostly from Panamanians who are ecstatic about the election results too. I have not seen such enthusiasm for new leadership since Obama became leader of what was once the "beacon of light on the hill". Maybe Panama will be the new beacon, but.... lets not get carried away. I too am hopeful about this new administration.

A Victory for Freedom in Panama

Conservative supermarket tycoon Ricardo Martinelli resoundingly won Panama’s presidential election Sunday with more than 60% of the vote. Already Martinelli is pushing for a free trade deal with the United States. Heritage fellow Ray Walser puts the victory in context:

The Martinelli victory breaks the Latin Left’s 2009 electoral winning streak of Venezuela, El Salvador, and Ecuador. The average voter in Panama is betting on a dynamic and productive relationship with the U.S. and has demonstrated confidence in continued strong ties between the two nations. It is incumbent on the Obama Administration to reach out quickly to President-elect Martinelli in order to develop an agenda of close cooperation and mutual benefit. Specifically, the Obama Administration should do the following:

• Establish a timetable for submitting the 2009 Trade Agenda agreement for Congressional approval;
• Act quickly to strengthen regional law enforcement and counter-drug cooperation with Panama and make sure that Panama receives its full share of Merida Initiative funding; and
• Embrace President-elect Martinelli’s interest in combating corruption and strengthening the effectiveness of government institutions by working with Panama on rule of law and anti-corruption measures.

Panama is an important U.S. ally in the Americas. President-elect Martinelli’s victory now offers the opportunity to strengthen this relationship—to the benefit of both countries.

Panama elects a new President

Panamanians went to the polls Sunday and overwhelming elected Ricardo Martinelli as president in one of the biggest landslides in Panama's history.  Just a short year ago the current PRD government  looked like they were a lock to win a second 5 year term in the presidency.  However, deteriorating economic conditions, rising crime and a growing backlash to perceived corruption made the PRD vulnerable.  Mr. Martinelli took advantage of these weaknesses and ran an effective campaign that resulted in a sweeping victory.

Last week, the Bookings Institute published a very insightful analysis of the election and I think it is an accurate depiction of the political realities here in Panama.

Mr. Martinelli is a successful businessman and he understands the current economic climate.  I believe his election will bring a positive change to Panama. 

Congratulations to Mr. Martinelli and his Alliance for Change party.  Panama faces many challenges in the coming years and we wish him all the best.

Martinelli for President

I have been blogging now for over three years and in the many thousands of posts I have written, I try to stay out of politics. Although much of what I write about is politically incorrect, I am careful to point to flawed policies rather than pointing the finger at any particular party or individual.

There are good reasons for me to stay apolitical in Panama. First and foremost is the fact that Panama is a very small country and I live here and have significant investments in the country. Making enemies of politicians can be hazardous to your business especially when you are a developer needing a mirad of government approvals. Most business owners I know support both parties in an effort to cover all the bases.

But something different is happening in this upcoming election. For the first time a third party is well ahead in the polls and an "outsider" could possibly take the reins of leadership. A recent pol by Angus Reid shows Ricardo Martinelli with 50% of the vote cmpared to 28% for the incumbant party.  The front runner, Ricardo Martinelli, is a successful businessman who also has experience serving in government office. He shows compassion for the people and is very outspoken about the need to care for those less fortunate in Panama society. He has expressed concern about the paralysis Panama experiences because of the corruption throughout government and like the current president, has pledged to do someithing about it. He realizes the importance of foreign direct investment in Panama and has expressed novel ideas on ways to increase it.

I have met with Ricardo Martinelli on several occasions. He takes the time to read my blog and has called to comment to me on several posts he found of interest over the past few years. He met with me about the 90 day visa issue last year and then voiced his concern on TV and radio, which I believe helped in pressuring the administration to change its position. This shows he understandes how foreigners percieve the Panama and the investment potential we bring to the country.

He has stated that upon his becoming president he would appoint Jaime Figueroa as the new head of Tourism. Jaime is a knowledgeable person about the tourism industry having worked in it for a number of years. He even had his own company catering to foreigners who came to live in Panama called "ALL In One". I met with Jaime recently and rather than tell me what he was going to do should he get into office, he asked my opinion of steps he could take to make things more conducive to both tourism and foreign residents alike. This was very refreshing because it shows his willingness to listen to others and value their input rather than just dictating policy.

If Martinelli wins the election, he will be taking the leadership at a most difficult economic time for Panama and the world. I believe there are a number of steps Panama could take to mitigate the negative effects of the economy and the election of Martinelli may the the most important first one. This is why I have decided to come out in support of Martinelli for President.

U.S. - Panamanian Partnership

Voice of America has an article and podcast on relations between the U.S. and Panama. This is a very upbeat editorial "reflecting the views of the U.S. government".

Excerpts:
Despite the increasing importance of air transport, the U.S. is the canal's primary user, and more than half of the seaborne traffic passing through the Panama Canal each year has a U.S. origin or destination.  Both countries reap the economic benefits:  the U.S. gets safe, efficient passage for its goods, and Panama earns significant revenue.

U.S. trade is growing faster with the countries of Latin America than with any other region, except Africa, and Panama is one of the United States' most important trading partners.

Last year, bilateral trade between the U.S. and Panama totaled $4.1 billion, up by nearly one billion since the previous year. One third of Panama's imports come from the United States, and 36 percent of its total exports are bound for the U.S.

Story and podcast