Panama Investor Blog

"Direct Foreign Investment" Sustains Economic Growth in Panama

How can the Gross Domestic Product (GDP) grow 6.2% in a country where construction workers paralyzed most of the ongoing projects, including the expansion of the Panama Canal; a nation where the crisis endures in the Colon Free Zone (CFZ), due to a great debt of Venezuela to companies operating in the Free Zone, totaling USD 1,7 Billion; and where hotel occupancy is at its lowest point (67% in 2010 and 53% in June 2014)?

How can Panama be the country with the highest economic growth in Latin America and the Caribbean, if in the first half of this year - exports of goods in the nation grew only 0.1%, agricultural production continued to deteriorate, had to take cost-saving measures energy, falling production of hydraulic and thermal energy; and transit of vessels through the canal declined in the first six months of the year?

How is it that Panama's economy grows 6.2%? The government has just approved a cut in public spending of about $ 500 million, based between their technical arguments, which was not fulfilled in the first half with the programming of the collection of current revenues of the central government.

FOREIGN DIRECT INVESTMENT

What, then, is the macroeconomic variable that sustains economic growth in Panama of 6.2% in the first half? 
It Is Foreign Direct Investment (FDI), which grew 26% in the first six months of 2014 compared to the same period last year.

To get an idea of ​​the impact of FDI in the first half of the relationship of this variable with respect to real GDP was 15%.

In recent years, FDI has been a significant variable in the growth of the economy.

From 2000 to 2013, it went from $ 624 million to $ 4.65 Billion, an increase of over $4 Billion during these thirteen years, an expansion of 646% in this period.

One explanation of why FDI grows so strong in Panama is because foreign companies are constantly buying Panamanian companies. This phenomenon has involved almost all activities of the country, but mainly in the banking, industrial and trade sector.

If it is good or bad to depend on foreign investment for the growth of a country, that is another debate. At this time Foreign Direct Investment is what keeps Panama growing…

 

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Panama: Fastest Growing Economy in Latin America - 6.7% in 2014

LaPrensa - Panama will grow 6.7% this year, which will make it the fastest growing economy in Latin America, according to the latest projection of the Economic Commission for Latin America and the Caribbean(ECLAC.

The Ministry of Economy and Finance (MEF) of Panama said the new estimate after learning that "progress ECLAC match those announced by the MEF, which place the performance of the local economy with a positive change this year will range between 6 % and 7% ", a result that would be below 8.4% in 2013.

Behind Panama is Bolivia with (5.5%), Colombia, Ecuador, Nicaragua and Dominican Republic (all with 5% growth)

Across the continent, Venezuela only experience negative (-0.5%) growth.

The growth forecast for all l Latin America and the Caribbean was reduced from the 2.7% to 2.2% forecast last April.

According to the Economic Survey of Latin America and the Caribbean 2014, since 2011 the economic growth of the region has been slowing, a trend that continues this year.

"In particular, during the first months has seen a sluggish due to a stagnation of gross fixed capital formation and slowing growth in private consumption. Counterpart has accelerated government consumption and net contribution exports has been more favorable than in the same period last year. growth for the exercise of economic activity in the region of 2.2% is expected, "said ECLAC in its report.

 

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Electrical interface: It is expected that Panama and Colombia will be connected by 2018

By 2018 it is expected that Panama and Colombia are connected by electrical interconnection, so said the president of Colombia, Juan Manuel Santos.

Santos told reporters said some studies for the interconnection will be in October this year. "The timeline presented to us is that some studies will take a year, then the construction process and implemented, so we hope that in 2018 we have connected to Panama and Colombia will be in October," he said.

 

For his part, President Juan Carlos Varela Varela said that coordination with security agencies of both countries plan to provide security to the construction site of this important project, as well as near the inhabited areas.

The project involves the construction and operation of a transmission line to direct current electric power with a 300 to 400 megawatts and a length of 590 kilometers, of which 310 are developed in Colombia and the rest in Panama.

Other topics addressed by the leaders was boarder security, tourism promotion and cooperation on trade and investment.  

For sightseeing, the two countries agreed through increased connectivity of several cities in Colombia to Panama by air, especially at the airport in Rio Hato, to 120.7 kilometers west of Panama City, and by sea between the cities of Cartagena and Colon.

MEF blames "World Economic Crisis" for $2.7 Billion loss in Panama Canal Operations between 2014 - 2019

The Ministry of Economy and Finance foresees a loss of approx. 2.7 Billion Dollars due to the World Economic Crisis and delay of the expansion between 2014 and 2019.

According to studies presented by the MEF last April in regards to the period between 2014 and 2019 the Panama Canal will represent approx 7,2 Billion Dollars income to the Nation – This is being compared to the what the Authority of the Panama Canal (ACP) in 2006 presented for the expansion of the canal saying it would represent approx 10 Billion Dollars for this same period.

According to the chronogram agreed in the construction and design contract of the third set of locks, the expansion should have started operations in October 2014, but because of delays it will be operative beginnings of 2016.

With this known, the government of Juan Carlos Varela will not be receiving $653.8 million which were planned to have for 2015 and another $765 millions less in 2016. Amounting to $1.4 Billion loss, because of the "World Economic Crisis" and delays of expansion detween 2015 and 2016. No more than $400 million loss each year between  2017 - 2019 expected. 

 

Related articles

Checking out the Panama Canal expansion

Varela's Government may invest a sum of $ 19.5 billion in Panama

Transactions in Expo Chiriquí exceed 10 million dollars

There were Approximately 12 million dollars in banking and real estate transactions, in the second version of the Expo Chiriquí fair which occurred on July 2nd and culminated on Sunday July 6^th.

The fair offered about 70 projects to visitors and buyers according to informed, Ramon Horseman President of this event which was made altogether with the Panamanian Chamber of Construction and Grupo Trac.

Expo Chiriquí is not only a real estate fair, since also it contemplates other sectors like transport, hotels, services; what in opinion of its directors, it activates the economy to the being contracted to people and companies of the region in this scope.

 The number of visitors goes up to around the 10 thousand people.

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Food production at risk in Panama

Chiriquí: Valley of the Moon - A destination worth Investing

Panama is one of the most Economically Stable places where Multinationals can have their Operations.

Panama has played its cards right when it comes to business, because of the enacted tax breaks and broad economic incentives it is becoming an allure for companies looking to relocate.

There are many exemptions and benefits offered by the Law 41. It exempts money earned abroad from income tax. This is the biggest benefit that multinationals get especially that they only operate in Panama but render services abroad. Panama's infrastructure and location also allows these corporations to operate from a strategic point without undergoing the usual red tape for foreign owners and CEO's.

Hiring personnel and staff have also become easy through the said law. It allows international companies to hire foreign born employees without worrying about immigration restrictions. This even includes visa assistance to employee's families which allow them to stay in Panama even without obtaining work permits.

It is also a big plus that the country uses the US dollar as its official currency. Multinationals have the convenience of being in a global banking hub, as well as having a strategic geographical location which connects the North and South America.

Companies from around the world have already began their Latin American presence in Panama.

A few companies that have decided to benefit from Panama's laws include: Procter and Gamble, Caterpillar, Dell, Hyundai Heavy Industries, , Western Union, 3M, Vanity Fair, Peugeout, Roche and Merck.

Executive relocations mean furnished rental demand and increased home sales in certain sectors of Panama City for example in Panama Pacifico. 

The Panamanian Government has made key decisions to continue alluring foreign investment, with its continuous pursuit to improve infrastructures around the country such as airports, metro system, bridges, roads and more – We see a bright future in Panama for the decades to come. That is – if, we began to improve the overall distribution of resources to continue receiving the waves of people entering Panama and thus be more self-sustainable, independent and free when uncertain times come (we all remember the world economic crisis and to many degrees people believe we are yet to experience the unfolding of the global monetary system) – time will tell. 

Until then, Panama seems to be in an advantageous country for business - because of its geographic position, strategic importance (Panama Canal) and continuous economic growth.

The Panama Canal: Money making Machine

Ocean Reef – A beacon of Luxury in the City of Panama

 Have you ever dreamed of living on mainland, and yet reap all the benefits of living on a high-end gated community in an island, 360 view of the ocean with your yacht docked next to your home, viewing the entire city and yet not be in it? Well, we can help you with that and make that dream a reality. Panama has evolved in the real estate market, and demand for exclusive and luxurious homes continues to grow. Following the road past Punta Pacifica in Panama City you will find something truly spectacular. An artificial island built right on the corner of this area was created to satisfy a need of land and is now one of the most exclusive places to live in Panama. The development consists of two islands (originally 3 named La Niña, La Pinta and La Santa Maria named after the 3 ships used by Christopher Columbus) and a marina, all connected to the mainland. So far, the first island on the west has been successfully built and about 80% of the lots have been sold. This first one has a total surface of 87,552.96 mts2 and 72 lots for sale.  The second island of 103,251 mts2 is designed and scheduled to start construction within a year or so.

 

Ocean reef residents, club members and guest will enjoy a host of sumptuous amenities in a development that has much to offer. Lush landscapes, parks and recreational areas like tennis and others are featured prominently through the project. The two islands will be connected to the mainland by two bridges, making the commute to and from the mainland in the 160-meter (525 feet) bridge in only 5 minutes. It has a gate with 24 hour restricted access and monitored by trained security staff that will ensure the safety and privacy of the residents. We believe some homes will build a wall around it to increase safety, but diminishing the view. After all it is an island, so security must be a priority.

 

Having most of the lots and homes surpass the 1 million price tag makes this area a prime sector, where only a select few will manage to be part of, if they act quickly. We recommend checking this out, for it’s an investment worthwhile. Lots for the second island are increasing in price since demand is high. Out of the 72 lots available on the first island only hand full are left and surprisingly more than 90% of buyers have been Panamanian. Designs for homes are spectacular, and the marina will be something out of this world for it will be a Residential Marina and there will be limits on transient vessels and short-term rentals. The residents at Ocean Reef will have priority over non-resident whose lease agreements will be revocable with timely notification. An underground passageway was created to access the marina without having to drive above ground; a fleet of electric vehicles will be used for suppliers and workers.

 Grupo Los Pueblos are the ones who made this Island a reality since they focuse on innovative and unique developments of the highest standards and great magnitude. They have limited the development to 138 lots between both islands, unless a 3^rd or 4^th are created in the future. Over the years they have built thousands of homes and condos, several shopping malls, offices, and mixed-use complexes in Panama. Without doubt they are experts in real estate and construction management giving their costumers a sense of confidence in their investments. With this Master piece development, perhaps now Panama has made a statement and can be taken more accurately when referred as the Dubai of America.

 

 

For more information check out their website, or feel free to contact us!

Retirement has a Throne

Every year a country of this Planet is proclaimed the #1 place to enjoy the rest of your life after retirement, and its no big surprise that Panama earned this title amongst our civilization. The Annual Global Retirement Index (now on its 23^rd year) ranks the best international retirement destinations, and together with factors provided by InternationalLiving.com ranging from the price of groceries and average temperature, to utility costs and the friendliness of locals, the editors assess the results. After they do all the math, the result concludes that there is simply no other place where retirees can get more for their buck.  PANAMA is the place to be!

Panama is rapidly becoming a Capital for the world to invest into and this brings lots of incentive programs to make it a place worthy of spending the rest of live in. Having the American dollar as a currency and English as a widely understood language, it’s a magnet for retirees moving from the US and the world. This Central American nation has several significant reasons for obtaining this title, such as its pensioner residence program that offers discounts on real estate loans, medical expenses, pensioners entertainment expenses and much more. But most significantly the immigration process has been simplified for foreigners.

Panama has introduced new visas in the past year, that have made it easier to gain residence; and having a population of around 4,000,000 with a growth of 75,000-80,000 a year, has been a factor that encouraged major advances in infrastructure and boosted the economy in many ways. But besides many factors that make this country a “Happening” place, the low cost of living, the heavenly climate found across the country and the incredible scenery all around are key factors of this judgment.  

Some quotes from an Article on Forbes regarding this announcement are:

 

“If you’re planning to retire abroad—because you want to live better for less, diversify your investments or enjoy a greater degree of adventure—you should consider Panama…”

 

“Panama ranked No. 1 this year because it offers a “great combination of variety and value,” “No matter what it is you’re hoping to find, Panama is a good place to look for it.”

 

The Top 10 places on the list were:

1- Panama

2- Ecuador

3- Malaysia

4- Costa Rica

5- Spain

6- Colombia

7- Mexico

8- Malta

9- Uruguay

10- Thailand

Contact us if you are considering Panama for your next social or economic adventure! – we will gladly help you out, and point you to the right direction based on what you desire.

Is Panama experiencing a commericial property bubble?

It appears that Panama's real estate bubble has shifted from residential towers to commercial office space and hotels. A trip through the city shows many towers under construction and although a good number of them are residential projects getting closer to completion, there are many that are either hotels or commercial towers. Hotel occupancy in Panama has been on the decline and occupancy rates that were in the 80% plus has now dropped to the med 60% level. On top of this decline is another 10,000 plus hotel rooms coming on line over the next year or so. The Megapolis alone is 1500 rooms and it is one of several dozen hotel projects underway. Then there are the commercial towers which depend on the continued flow of multinational companies coming to Panama to open up shop. Thus far Panama has done well with filling up this commercial space, but just as in the residential and hotel construction, the developers appear to have gone overboard in their estimation of absorption and odds are there will be a lot of overhang in the market within a year or so as these buildings come online. I believe it is reasonable to expect prices of hotel rooms and office space to become highly competitive over the next year especially if the world economy gets the double dip many are expecting.

This article speaks to the HOPE that many have for the continued flow of multinational companies to relocate to Panama.

From La Prensa;

Roberto Gonzalez Jimenez
[email protected]

The skyline of Panama change at top speed. Under the cranes that are on the horizon, few would dare to diagnose that the world has experienced one of the worst economic crisis in history.

Part of this phenomenon can be attributed to the dynamism of tourism and corporate projects. "Faced with declining high-standard housing, the sector was redirected toward the construction of hotels, shopping centers and office buildings.

And for residential housing of a modest profile, "said Jaime Jované, president of the Panamanian Chamber of Construction.

"This movement, together with investment in public works, has allowed the construction industry to remain at acceptable levels," he added.

Some of the stars of the future skyline of the city will be office buildings, with innovative designs such as the Revolution of 50th Street Tower, a 52-story tower that offers high offices of 145 thousand square meters.

Also on 50th Street stands the Financial Tower, with 56 floors will house, among others, the offices of Tower Bank.

Punta Pacifica is building another giant of office tower: the Oceania Business Plaza, a project with two towers, one 56 story's and another of 44.

The corner of Balboa Avenue and Aquilino de la Guardia is a clear example of the shift in construction.

In this batch was planned the Ice Tower, a building of over 100 floors for hotel and residential use.

Declared infeasible, the developer changed the project to one of 63 heights in the same structure combines a five-star hotel and office space of 108 thousand 400 square meters.

In Costa del Este, another sector of the city where corporate activity grows, the market, among others, the Costa del Este Financial Park (45 floors) and the Prime Time Business Tower (20 levels).

CAPACITY MARKET

All these projects, ranging in price from $ 2500 and just over $ 3,000 per square meter, will be delivered between the end of this year and 2012.

In 2013 there will have to add the offer of the Financial Tower, the skyscraper to be built by the Government in the former headquarters of the U.S. Embassy on Avenida Balboa, which will become the tallest in the city.

The government has planned the sale of 40 thousand square meters of offices to the private sector to finance part of the construction of the tower.

With an offer of that magnitude in the next three years, the question is whether demand will be strong enough to absorb it, or whether, by contrast, have a situation similar to the reality in upscale residential sector, where many apartments remained unsold.

The industry insiders say the level of sales of the projects indicates that the market can absorb the new supply. Bet, moreover, the success of Panama as the headquarters of multinational companies.

"Panama is becoming a business hub with companies setting their base of operations for the region," said Ivan Carlucci, former president of the Panamanian Association of Brokers and Real Estate Developers (Acobir).

Since 2007, through Law 41, Panama offers tax and labor incentives for multinationals to provide services to third countries from Panama.

According to recent reports by the Ministry of Commerce and Industry, about 40 companies have benefited from this law to settle in Panama.

Only in 2010 have received their license as Multinational Companies Headquarters in Panama firms such as SAB Miller Central, Otis, Ericsson, Adidas and Sanofi Aventis, among others.

Not in all cases these companies occupy large office spaces or large staff bring to the country.

Some have done so, as the case of Procter & Gamble's U.S. East Coast.

To Carlucci, who estimated that only a multinational can claim between 3000 500 and 6000 meters squared offices, with the arrival of these companies also streamlines the rental and sale of apartments.

The challenge of Panama and its authorities is to continue the promotion abroad and not worsen the conditions that have made Panama an attractive place for investment.

Panama construction down 30%

LA Presna

Roberto Jimenez Gonzalez
[email protected] [email protected]

The value of construction, additions and repairs adopted in Panama in the first four months of the year was $ 339.7 million, 30.7% less than the $ 490 million recorded in the same period the previous year, the Comptroller General of the Republic. 

The greatest fall occurred in the province of Panama, where the value of permits increased from $ 428.3 million to $ 223.8 million. 

The month of April was the least bad, since only a drop of $ 407 thousand (-0.4%) than the same month last year. 

The decline was reflected in the residential sector (-39.4%) and the non-residential (-21.4%), projecting a contraction in construction activity in the future. 

The production of ready-mix concrete, which shows the current level of activity, also fell abruptly, from 706 000 cubic 937 meters between January and April 2009, 463 000 cubic 668 meters this year.