Panama Investor Blog

News Briefs

Canal revenue up despite drop in cargo

The Panama Canal will end the 2009 fiscal year with a 10 percent increase in revenue compared with 2008, despite the global economic crisis, said Canal Authority Manager Alberto Alemán Zubieta.

BNP Paribas to close units on OECD's "grey list"

PARIS, Sept 28 (Reuters) - French bank BNP Paribas (BNPP.PA) is to close subsidiaries located in countries on the OECD's "grey list" of nations which have not fully implemented global tax standards.

Panama still on OECD "grey list".

UPDATE.  Panama remains in the "gray" of the Organization for Economic Cooperation and Development (OECD), which yesterday issued a report showing recent progress in implementing standards of transparency and exchange of tax information. Among the Central American countries, Costa Rica and Guatemala went up to the "gray list", which also includes Chile and Uruguay. Switzerland is another country that has managed to change category.

Panama agrees to host two U.S. naval bases

Panama will sign before October 2009 a treaty with the United States on the opening of two U.S. naval bases on its territory, a senior Panamanian government official said on Sunday, RIA Novosti reported.

Varela denies installation of U.S. naval bases in Panama

With regards to the potential signing of a security agreement between Panama and the United States (U.S.) to combat drug-trafficking in the region, Vice-President and Foreign Minister Juan Carlos Varela denied the claim made last Saturday by Minister of Interior and Justice José Raúl Mulino, that U.S. naval bases would be installed in Panama.

Panama: Colon Airport Project Moves Forward

Plans for the new international airport will be completed in the next days. Its first stage will require an investment of $40 million.

Panama Canal awards $89.6 mln expansion contract

PANAMA CITY, Sept 28 (Reuters) - The Panama Canal Authority said on Monday it awarded Belgian firm Jan de Nul NV an $89.6 million contract to dredge the canal's Atlantic entrance as part of a $5.25 billion expansion of the canal.

Panama to Get New Direct Flights From Major U.S. Cities

PATAGONIA, Chile -- During our coverage of TravelMart Latin America 2009, Travel Agent learned that Panama is roughly three weeks away from announcing new, direct Copa Airlines flights from New York, Los Angeles and Miami. The flights will be Copa’s first direct flights from those cities to Bocas del Toro, Panama, says Fernando E. de Leon de Alba, deputy general administrator for the Authority of Tourism of Panama.

Latest update on Trump Ocean Club

Another positive report showing first half 09 sales and financial status of the TOC. Interesting statement at the end. "If every buyer defaulted at closing and there was no cash remaining in any of the escrow accounts, the company would be able to sell each unit at an average 58% discount of current prices to generate $220 million, the amount outstanding on the bonds"

From JP Morgan: Trump Ocean Club: Total Return Proposition Still Attractive


*    We maintain our overweight recommendation on the TOCLUB 9.5% '14s (B1/NR/B+) based on the company's demonstrated ability to weather the sharp global real estate decline and relative attractiveness of the bonds. The Notes are currently offered at 85 for a YTM of 15.1% and YTC of 30% or 19.4%, assuming the bonds are called in November 2010 or 2011.

*    Sales totaled US$17.6 million in 1H09, an average of US$2.9 million per month, helping the company maintain its collateralization ratio, albeit tight, in line with the minimum 1.25x level, by generating enough receivables to offset the decline in receivables from collections. Management expects sales of approximately US$11 million during the August-November period. As a result, we expect 2009 sales to reach approximately US$33 million.

*    Collections totaled US$20.4 million in 1H09, mostly resulting from the payment of the final bulk deposits due in May, but also from 2009 sales and the company's accelerated payment discount program. Collections allowed the company to quickly replenish its Debt Service Reserve Account (DSRA) after its May coupon payment and fund working capital needs. Management does not expect to have any issues refilling its DSRA account after its November 15 coupon payment, which is already pre-funded.

*    The company's liquidity position remains strong with US$123.9 million in cash as of 2Q09, US$123.8 million of which is restricted, mostly in the Construction Escrow Account.

*    The construction of the building, which has been fully financed with the 2014 Notes, is expected to be completed by August 2010 with delivery of certain units expected beforehand, allowing the company to collect final payments before final completion.

*    If every buyer defaulted at closing and there was no cash remaining in any of the escrow accounts, the company would be able to sell each unit at an average 58% discount of current prices to generate $220 million, the amount outstanding on the bonds.

Click here <https://mm.jpmorgan.com/stp/t/c.do?i=898A3-58&u=a_p*d_327926.pdf*h_3v424jbk>  for the full Report and disclaimers.


Jacob Steinfeld <http://www.morganmarkets.com/analyst/F090486> 
(1-212) 834-4066
[email protected]

Government to crack down on tardy developers in Casco Viejo

The old city of Panama has tremendous potential for tourism. Its narrow streets and beautiful architectural facades from an earlier century could attract many just as Cartegena does in Colombia. One of the issues that has held the area back is that many Panamanians had bought old buildings at very low prices years ago with the requirement that they renovate them within a certain time period of purchase. Unfortunately, few did the renovation and no previous government had enforced the agreement, until now. I think this is an extremely important decision by the government in order to get the old city looking like it did when it was originally built.

From La Prensa: The government intends to expropriate buildings in Casco Viejo that were acquired by investors to renovate, but who have not yet started work.

The implementation of this measure was promoted by María Eugenia Herrera, general director of the National Institute of Culture.

"At Casco Viejo, we are lacking people who invested to build fast," she said.

This is one of the steps being taken by the government to preserve the area, which has been named a World Heritage Site by the United Nations. The area, however, is considered in danger because of lack of work to preserve it.

The National Institute of Culture has submitted a draft to UNESCO with corrective actions to be implemented to safeguard the area, including providing for the removal of overhead wires and repairs to the streets.

"There is a master plan, but we can not anticipate how it will be carried out because first we have to do consultations," Herrera said. "UNESCO may propose alternatives, and we have to see what is most viable."

The government is also facing a deadline for submitting master plans for Portobelo and San Lorenzo, which will run between 2010 and 2013. Herrera said that the priority in these cases is restoration and conservation, while later stages will focus on how to market the area to tourists. The government has already allocated $250,000 to do routine maintenance at these sites.

The fact that Panama is preparing and submitting these action plans to UNESCO does not guarantee that these ´places will not be included in the list of "at risk" World Heritage Sites next year.

"Panama has failed to fulfill its obligations for a long time, and has not sent in the required reports," said Sebastian Paniza, president of ICOMOS Panama, the technical advisory body of UNESCO. "But it can avoid inclusion on the list if there is a willingness to improve things."

Latest information on Alien found in Panama

As I said in a previous post regarding the recent alien story, I usually don't post such subject matter, but this one has turned out to be rather intriguing. After posting the story last Thursday I received a phone call from a high level government official in the new Panamanian administration. He told me that several days ago a U.S government G5  landed at the old Howard Air force base where the frozen body of this creature was loaded and taken away. I asked him if he had seen the body personally and if there were more photos available. He said, yes he had seen it and that Panamanian zoologists and medical doctors  had examined the body and had taken numerous photos. He said it definitely was not a hairless sloth and that they could not identify what it was. I asked him if he could get me some photos and he said the "U.S. government guys" had demanded all photo's and all instruments used in the examination of the body to be turned over to them. Any materials that came in contact with the body were also handed over. Everyone who was involved in the examination was debriefed and told not to talk to anyone about it. He said the cave the creature supposedly came out of has been thoroughly examined by both the Panamanian and U.S. government. The cave has been sealed with steel and concrete and Panama national guardsmen are standing guard there now.

He said he had taken some photos with his cell phone and he would get some of them to me soon. I asked him why he was sharing this information with me and he said it was because he "believes it is a huge story and the world should know about it, and people would believe me because I don't hype". 

Now, I really don't know what to believe. I personally don't believe in alien creatures from another planet are here on earth and especially in Panama. Although in the movie Godzilla, that creature was also attracted to Panama for some reason and left his footprints across the isthmus. But one has to wonder, if these aliens are so intelligent to be able to get here from another world millions of light years away, why would they allow themselves  to be killed by a group of teenagers. Why not pull out the old ray gun and blast them?  And, why would the Panamanian government give up this creature's body so quickly to the U.S. government? It could be be a huge tourist attraction bringing millions of people to the country just to get a look at it. They could display it in the new Gehry museum.

Again, I don't know what to believe but, this high level government official is someone I trust and have known for a long time and he has provided reliable information in the past. There is no reason I can think of for him to lie about it, unless he is trying to make a fool out of me, which I seriously doubt. So, when I get the photos I will post them if the black helicopters don't whisk me away beforehand.Stay tuned!

Grand new convention center planned

Here are some more details on the planned convention center. This will certainly be an important addition to the city, especially if it is privately managed as proposed.

La Estralla machine translated: MANUEL LUNA G.
[email protected] [email protected]

  An American company working in the design 

PANAMA.  Preparations for the construction of a new convention center at the end of Avenida de Los Poetas, Amador sector is progressing.

 The renowned American firm Skidmore, Owings & Merrill LLP (SOM) will deliver in the coming days a preboceto the project to the Panama Tourism Authority (PTA), which will serve as a starting point to call the public event.

 The ATP's general counsel, Ernesto Orillac, said the goal is for the new convention center starts to operate in 2013.

And said to be the best convention center in the Central American region and will compete with those in Mexico and Brazil.

 The new center will be built on a filled sea where he used material from the excavation of the canal and will be given in concession to private operators.

  You will have an exhibition area of 15 thousand square meters, three times the capacity of ATLAPA and will meet two or three exhibitions at a time.

 According to Orillac is necessary that Panama has a convention center, world class, considering that this type of tourism is the most consuming and longer stays in the country.

 The goal is to turn the country into the capital of the conventions of the Continent.

 Once this new project is built the convention center ATLAPA also be given in concession to private operators.

And is that authorities say it records annual losses in the order of a million dollars and has already served its purpose.

Construction Expo exceeds expectations

Of course the exhibitors say this every year so you really don't know until all of the official number are in. According to this article there were several significant incentives given by the government to local buyers. For first home buyers a $5000 check toward a home under %30,000. That's a better deal than the clunker program the U.S. government ran last month. I believe much of the success of the exhibitors was due to domestic purchasers rather than foreign buyers. Things are returning to normal in that regard.

Machine translated from La Estralla:  Members of the Panamanian Chamber of Construction (CAPAC) has reason to celebrate.

  The Capac Expo 2009 has exceeded expectations. They have not finished adding up the figures, but President of the Organizing Committee, Enrique Asensio, said that "expectations were exceeded and the exhibitors themselves were surprised by the large number of people who attended the fair.

By Saturday they had entered the convention center ATLAPA 27 a thousand people, three thousand more than recorded in the first four-day fair last year.

  And if we take into account that yesterday was the day where they expected the greatest number of visitors, the numbers may exceed 35 thousand visitors.

  Also during this event the Ministry of Housing approved the delivery of the first 100 vouchers for 5 thousand dollars each for the purchase of homes under 30 thousand dollars.

  The Capac Expo that opened yesterday closed its doors on 16 September with the participation of 325 exhibitors, including 165 housing developers, who submitted over 200 projects.

  Asensio said the machines which were displayed within the exhibition were sold out, mainly for work in expanding the canal and highway projects announced by the government.

The figures of the movement that led to the Capac Expo will be announced tomorrow, Tuesday.

  But it was learned that development companies as SuCasa Saturday had exceeded sales in the last version Capac Expo.

  Asensio explained that excelled in sales projects for the local market, as housing with fewer than 80 thousand dollars and apartments up to 100 thousand dollars.  Capac The leader of the respondents said that exhibitors had expressed satisfaction with the results.

Visitor arrivals down 19% first quarter

The first quarter figures for visitors to the country are significantly down over last year according to a report from the ATP. Of course 2008 was a banner year for Panama, but the nearly 20% slowdown in arrivals is concerning and shows that Panama is not immune to the economic conditions in the rest of the world. As most of these visitors are here on business it hurts the economy even more as the last paragraph points out in relation to the 55% decrease in construction permits.

Machine translated From La Prensa; Panama received 96 thousand visitors in July, up 18.9% or 23 thousand less than the same month in 2008, according to the Comptroller General of the Republic.

This is the third month with fewer visitors so far this year, behind May and June when the first infections were reported in the country of influenza A (H1N1).

  The July data makes the completion of a quarter of double-digit declines.  In May, June and July came to the country 54 thousand tourists less than the same period last year.

This trend has made the year and accumulated less than the first seven months of 2008 (-0.5%).  "July was the continuation of the curve that began in April with the economic crisis, influenza A and the transition of government," said Jaime Campuzano, President of the Chamber of Tourism of Panama, which already announced that in August and September, shows an improvement in tourist arrivals.

  Construction

  Comptroller's report also reveals that the value of building permits approved in July was $ 66.4 million, a 55.4% less than the same month of 2008.  The data is related to the rebound that occurred in June (there was a growth of 261%) when the deadline expired for residential projects receive the property tax exemption for 20 years.

  The cumulative year remains a growth of 20.8% on the value of permits approved during the same period last year.

Eye on debt

The trouble with mountains of debt is that someday you have to climb and conquer that mountain. I find it somewhat amusing and disingenuous when people say that debt is good. Common sense tells us that the debtor is a slave to the lender and there is no doubt that the debt service to the lenders can be a tremendous burden to individuals and governments as well. An article in La Prensa puts the numbers down for Panama government debt to large multinational organizations like the world bank and the Inter development bank. Although these institutions can certainly be of help to small countries, they can also purposefully allow small dependent countries into debt service that becomes an impossible burden and can begin to compromise the country in a number of ways. 

A bestselling book about these issues was written by John Perkins called "The confessions of an economic hit man" where he states: Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign "aid" organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources. Their tools included fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.

Whether Perkins assertions are true or not, Panama must be careful with the amount of debt it is piling on, especially in times of economic recessions.

How important is English for Panamanians

An article in La Prensa today tells us that the government budget has been increased to teach English to school students in the country from $5 million to $5.8 million. As an employer in the hospitality business, I can report that it makes a big difference in employee pay and a big difference in our business. On average an English speaker will make about $150 a month more which in this business is about a 30% premium. I have heard people say that they like the fact that many people don't speak English because it forces them to learn more Spanish. Although this may be true for some, people who are coming  to Panama on vacation are not wanting to be frustrated  with communication as part of their itinerary. All tourist related businesses in Panama are desperately seeking English speakers.

When the real estate boom was in high gear, many English speakers flocked to get their RE License and many I know made small fortunes selling real estate throughout the country. What made this possible for them was their ability to speak English to the many North Americans coming to buy real estate. They could not have accomplished it without this basic skill.

Even today an English speaker is sought after by foreigners who move here to help them with many of the things associated with settling into the country such as getting electricity turned on, Cable TV, home repairs etc.. I know Panamanians who have turned this into a small business and make a good living from it here in Boquete.

At a dinner last week with the Tourism Head Salomon Shamah, he shared with us his concerns about the lack of qualified English speakers for the many jobs interfacing with tourists in Panama. He recently let a number of employees go who were working in important areas without English skills.

And on a recent visit to Panama Pacifico, London & Regional's new mega project, the sales manager told  me  that Dell's call center has about 1500 English speaking Panamanians working there now and more call centers are coming. These call centers are sucking up every English speaker in the Panama City area. They pay very well and the jobs are very stable.

All three of my children are bilingual and you can bet it is a major advantage to their future in Latin America. Many of the successful  business people I know in Panama and other Latin countries speak fluent English.

The challenge for Panama is to find qualified English teachers. All through primary and secondary school my children told me how the teachers who were to teach English in their classes could not speak it, and would call of them for help in class. Many of the teachers who are teaching as part of government programs do not speak fluent English either. So we have the blind leading the blind which is why the programs are not very effective. The money needs to go to fluent English speaking teachers who are brought in form other countries if success in getting more Panamanians speaking English is to be accomplished.

How important is English speaking for a young person in Panama? It can mean the difference between getting a good job with a future or working in menial labor position for life

Panama: Hotel Hot Spot

Although this article is dated back to February, it gives us a great overview of the new hotel projects coming on line. A number of new projects have been announced since the article was published. It is incredible that Panama continues to add to its already 17,000 rooms in the city by more than 50% over the next few years. This article covers hotel projects in the city and out to the "Panama Riviera", Santa Clara.

Excerpts from Hotelsmag.com

PANAMA CITY—Panama, the isthmus that connects North and South America and provides a passage between, is among the hottest destinations for hotel development right now, with 19 major projects comprising 4,119 rooms in development as of the close of the third quarter of 2008, according to Portsmouth, New Hampshire-based Lodging Econometrics.

Given that volume, Panama soon will overtake the ever-popular market of Costa Rica as the hottest development destination in Central America.

Panama City, where more than half of the country's 17,000 existing hotel rooms and most of the development projects are located, offers a perfect combination of business and leisure activities, according to Alvaro Diago, area president for IHG in Latin America. Diago works closely in that market with Herman Bern, a prominent local developer who has built, owns and manages two InterContinental properties, a Crowne Plaza and most recently a Holiday Inn hotel near the Panama Canal with an attached hotel school.

Read the rest of the story