Panama Investor Blog

Panamanian Judge sentenced to Prison after being suspended and placed in house arrest

 

 

 

 

 

 

 

 

 

 

 

 

 

For the first time in Panama, a three-member judicial panel sentenced a suspended Panamanian Supreme Court Justice Alejandro Moncada Luna to five years in prison for unjustified enrichment in an unusual case of corruption that captured this Central American nation's attention.

Not knowing under what terms it actually happened, the tribunal approved on Thursday an agreement in which former high court justice Alejandro Moncada Luna pleaded guilty to the charges. He was transferred to jail. Moncada Luna had been under house arrest during the judicial process.

In 2009, Moncada Luna was named to a 10-year-term as one of nine Supreme Court justices under the administration of then-President Ricardo Martinelli.The three-member panel suspended Moncada Luna as a justice in October and placed him under house arrest. It was the first case of a criminal conviction against a member of Panama's highest court, making it a historical event. 

Panama's Growth Continues to Surprise

Although the pace of growth has declined, the Panamanian economy remains the most dynamic in the entire continent.

On average, the projections from diferent sources suggest that in 2014 and 2015 the expansion of gross domestic product (GDP) will be of 7%, well above the average of 1.2% this year in Latin America, according to the World Bank.

The Ministry of Economic Affairs and Competitiveness said yesterday that the second quarter GDP showed a 6.3% increase from the same period of 2013, after reporting a total of $8,657.4 million.

All sectors increased their value in that semester, except for hotels and restaurants; the supply of electricity, gas and water and the agricultural sector.

The fastest growing sector was construction (15.5%), followed by transport and communications (7.7%) and trade (3.3%). All of which are extreamly important for the economy.

For the Executive Secretary of the Secretariat, Michelangelo Esbrí, these figures show that the Panamanian economy "is alive, it is thriving and is not stagnant."

He also stated that foreign direct investment (FDI) in the first half was for $2,575.4 million, 26% more than the previous year. This is a quite surprising figure, and hopefully it will continue to grow as more incentives are provided to foreighn investment.

Panama and Colombia: Negotiating a Tax Information Sharing Deal

Yesterday Panama and Colombia come to a middle ground and were given 1 year for the purpose of negotiating an agreement to avoid the issue with double taxation, which can include provisions for sharing financial information from both countries. With a memorandum of understanding between governments settled, issues from the bilateral trade agendas will come to agreements.  

 

The big issue for Panama was the classification as Tax Heaven by the Colombian government and was added to their grey list. After this meeting, President Juan Manuel Santos signed a decree that stipulated the exclusion of Panama from this list, which was a requirement imposed by the Panamanian government to negotiate a tax deal on equal terms and without coercion.

 

The Vice President of Panama Isabel Saint Malo stated that with these measures of discrimination being removed, they had agreed to an agenda of conversations to fight the money laundering and the financing of terrorism and to stop double taxation. We were signing the decree through which we will remove Panama from the list of tax havens, after they sign a memorandum of understanding where they commit to a date by which to negotiate a deal," President Juan Manuel Santos said.

 

On the exchange of tax information from the accounts of Colombians in Panama, which is the primary objective of the neighboring country, Saint-Malo said “we are of the opinion that it is in the best interest of our country to explore the feasibility of an agreement to avoid double taxation which guarantees the users of our platform that services will be preserved and Colombian investment is encouraged in our country. "

 

The withdrawal of Panama from the list of tax havens of Colombia sent a couple of messages to the rest of the world, first, respect for our tax system; second, that Panama will claim the space for dialogue to evaluate alternatives; and third, that we are not willing to negotiate under pressure or to the race. "

 

For its part, the Government of Colombia said in a statement that the memorandum of understanding is the basis for negotiating a double taxation agreement and will include a clause of financial reporting standards of the Organization for Economic Cooperation and Development (OECD).

 

Colombia also referred to the agreement to cooperate on money laundering through the Unit of Financial Information and Analysis (FIAU, equivalent of the Financial Analysis Unit) and cooperation with international organizations. "This agreement reinforces that we seek and have established with all neighbors, to cooperate on all issues," said Colombian Foreign Minister.

 

"It's what we wanted from the start," Santos said. "It's good news for everyone."

With this being settled for now, we can move on knowing that Panama’s reputation is still protected and that even though some countries from around the world want to consider Panama as a tax heaven, it will continue to be what it is and regulations will take place in due time. 

 

 

 

"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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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

Gulf oil disaster may be coming to an end

I see a lot of dooms day prophesies about the gulf oil disaster lately and the one thing I have learned about such forecasting is that they are usually wrong. It is not to say there are not serious problems in the world and that this is not one of them, but I believe that the leak can be stopped and it is not the end of the world as we know it. A reader sent me this video showing how close BP oil is to stopping the leak and I think it important for this to be shared with as many people as possible. There are enough things in the world to fear without this being one of them. The companies involved have used this technique 40 times without fial and are expecting similar results. In any case we will know soon enough.

Panama ranks 60 in Economic freedom index

You would think Panama would rank higher in economic freedom but no, it is surpassed in central America by both Costa Rica at #54 and El Salvador at #32. What holds it back? The usual culprits of rule of law and corruption along with a number of other issues brought about because of it. We can only hope that Martinelli's recent activities to curb corruption will result in higher marks next year.

Source: The Heritage Foundation

Excerpt from :Central American Data
Friday, January 22, 2010

In Central America, El Salvador leads (32 in the world), followed by Costa Rica (54), Panama (60), Guatemala (83), Nicaragua (98) and Honduras (99). El Salvador and Guatemala climbed positions in the index when compared to 2009, while Costa Rica, Nicaragua, Panama and Honduras fell lower.

In Latin America, Chile was the surprise, as it made it to the top 10 of the world.

According to the Heritage Foundation, who develops the index in association with The Wall Street Journal, "economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself".

Read more at the source article

An alarming commentary in The Wall Street Journal

Although this does not directly affect Panama yet, it is of such importance that I wanted to share it with my readers. Bob Bauman wrote a great overview of what is going on in his Offshore Blog.

Excerpt:

Americans (and those from every nation) who love their country should indeed read this amazing, alarming document. And when you do read the 181 pages of this draft "United Nations Framework Convention on Climate Change" you’re in for some nasty surprises.

Americans in the Dark

If you haven't heard about it, that's because none of our otherwise talkative political leaders have told us what the drafters have already put together for national leaders to consider and possibly sign at a global conference on "climate change" in Copenhagen Dec. 14 - 21.

Enter Lord Christopher Monckton (below). The UK Conservative Party member and former adviser to U.K. prime minister Margaret Thatcher gave an address at Bethel University in St. Paul, Minnesota, last month that had made quite a video hit.

So far there have been more than one million hits on the YouTube post of his address. It deserves millions more because Lord Monckton warns that the aim of the Copenhagen draft treaty is to set up a super world transnational "government" on a scale no one has ever before seen. He asks the valid question: "Is Obama poised to cede U.S. sovereignty to the UN?" You can guess the answer.

Read the whole story here

$40 Million for Vegetable Gardens Program in Panama

I think this is a great idea and I only hope it is implemented properly. Teaching people how to grow there own food and supplying them with the means will insure they don't grow hungry in lean times.

Source: elsiglo.com
Monday, August 10, 2009

In its first year, 25.000 people will receive free supplies and farming practice assistance, both in rural and urban areas.

The "Urban and Rural Vegetable Gardens" project aims to make food cheaper for consumers. Every year it will add 20.000 beneficiaries, for a total 5 years.

It will be executed in two phases. "The first phase is intended for urban plantations with planted surfaces between 500 and 2.000 square meters", reported newspaper Elsiglo.com. "The second phase will include people living in the capital city, who normally reside in reduced spaces. In this case, growing will be done on prefabricated pots, and will enjoy the same benefits as the first phase".

Caribbean Rescue - Private Sector steps in to lend a hand

This post is about the efforts of the private sector working with the government to help with the recent flooding on the Caribbean coast of Panama.

The pairing of the private and public sector in times of need:

The Foundacion Desarrollo del Caribe (FDC-Panama) executed supply delivery missions throughout this past weekend along the Caribbean Coast. Unsatisfied with the complete lack of aid reaching the region of the country between San Miguel De La Borda and Guazaro, the FDC-Panama took action to provide much needed supplies, medical care, and logistical support to the stranded villagers. A convoy including a twenty-foot container, a Diablo Rojo, and two pickup trucks were filled with food, medical supplies and gasoline and were driven to San Miguel De La Borda, which was used as a staging point to deliver supplies to the villages beyond the reach of the road. Members of the FDC-Panama including: CrownLand Investments; Archer Group Investments; Donnie Estrada, the Foundations Founder and President; Jesse Levin, logistics coordinator and other members including Cesar Guevara through monetary, time, and equipment contributions coupled with the joint efforts of the Red Cross and the Special Boat Unit of the National Police in Colon Worked together from the 28th of November through the 1st to deliver thousands of pounds of food, fuel, and medical supplies and care.