Week in Review August 14

LAST TOUCH

Grupo Unidos por el Canal consortium (GUPC) has not yet finalized the “minor works” of the Panama Canal expansion. The Panama Canal Authority (ACP) reported in a statement that the contractor has not yet confirmed a new completion date but that, according to its records, the list of minor work and outstanding defects has a breakthrough of a total of 99% for both the Cocolí locks on the Pacific and the Agua Clara locks on the Atlantic.

ACP WIN

The Panama Canal Authority (ACP) won in arbitration one of the claims filed by Grupo Unidos por el Canal (GUPC) for $192.8 million. The Arbitral Tribunal, constituted in accordance with the arbitration rules of the International Chamber of Commerce (ICC) issued its final decision in favor of the ACP with respect to the claim on temporary coffer dams at the Pacific entrance of the Canal. The decision is, in the opinion of Jorge Luis Quijano, the entity’s administrator, “the basis” for pending claims whose arguments are “beginning to collapse”. Quijano said that “every claim will be resolved fairly even if the waterway is far away.”

PILOT EXPENSE

The costs of the Canal payroll, accounting for 23.4% of projected revenue for the fiscal year 2017 – $2,865 million – could increase to $60 million per year if a request from the Union of Canal Pilots (UOCP) is accepted that they be assigned on board all vessels less than 65 feet and 125 feet in length. The letter of request was signed by the secretary of labor affairs of the UPCP, Alvaro Moreno, and sent to the administration. If the request is implemented, the local maritime industry would be the hardest hit, because those costs would have to be passed on to shipping companies, warned administrator Quijano.

BUDGET OK

The Cabinet approved the draft budget of the Panama Canal Authority for the fiscal period from October 1, 2017 to September 30, 2018, amounting to $3,375.5 million, including direct contributions to the Treasury of $657.2 million.

HEFTY FINE

The Attorney General, Kenya Porcell, announced the signing of an agreement with Brazilian construction company Odebrecht, which includes paying a fine to the State of $220 million, taking statements from four senior executives of the company and the delivery of information linking natural (individuals) and legal persons (companies) in Panama with bribes paid in Panama.

ACP LAND USE

President Juan Carlos Varela considered that the lands that are part of the operations of the Panama Canal have to be incorporated into the “logistical platform” of the country. The president made his comments when participating in the forum “Global Opportunities Chile-Panama in the region of the expanded post-Canal.” in which he considered that there should be integration between the inter-oceanic route and the ports, airports and the Panama-Colón highway to make freight transport more efficient.

CFZ WORKING

In the face of the comments by some economists that the Colon Free Zone (ZLC) is reinventing itself and that it is the multinational companies that are increasing the figures of the Free Zone, not the traditional companies, of which many have already bottomed out, the President of the Colon Free Zone Users’ Association, Usha Mayani, said that businessmen are still producing and leaving profits in Panama.

PAPER SUPPORT

Directors of the Chamber of Commerce, Industries and Agriculture of Panama (CCIAP) showed their support for the Editorial Grupo El Siglo and La Estrella de Panamá (GESE) which face the sanctions of the US government. Inocencio Galindo de Obarrio, president of the CCIAP, said that La Estrella de Panamá is a newspaper that has collected the history of this country, “even before being an independent nation”.

INVESTORS

Companies such as Huawei, Hewlett – Packard or Under Amour are some of the multinationals that heavily push the commercial activity of the Colon Free Zone (ZLC) through their regional distribution centers. The Comptroller’s Office reported that the trade movement in the January-May period of this year was $8,372 million, 10.3% more than in the same period of 2016.

TAX BREAK

A total of 135 Multinational Enterprises (SEM) offices have benefited from the tax and labor benefits of Act 41 of 2007 and have installed their regional offices in Panama, which represents an investment of more than $820 million. The last to take advantage of the SEM law was the pharmaceutical company GSK, which groups in one place the headquarters for Central America and the Caribbean of its pharmaceutical division and the hub of demand and supply for Latin America.

TRUCK SCHOOL

Panamanians who carry out procedures to extend their licenses to operate cargo transport or who already have the document, must receive mandatory training at the National Institute of Vocational Training for Human Development (INADEH). This was agreed at the second meeting that the director of the Transit and Land Transport Authority (ATTT) Julio González, had with the presidents of the cargo transport guilds of Panama, West Panama, Chiriquí, Colón and INADEH authorities, among them, the Assistant Director General, Juan Bravo Girón.

AIR FUELLERS

Tocumen International Airport received technical and economic proposals from companies interested in supplying lubricant and jet fuel. Among the companies that submitted their proposals are Consorcio Menzies Aviation, CLH Aviación S.A., Consorcio Allied Aviation and Consorcio Latam and Aviation Logistics.

WASTE COST

Maintenance work on the sanitation project in the capital city and the Bay of Panama has an annual cost of $30 million. The consortium of Operational Services of Wastewater of Panama (Soap) is responsible for these tasks that will include the third stage of the project, which is currently being built. The consortium opened the second center of operations in the district of Tocumen. The first one is installed in Costa del Este.

US PRAISE

The US Embassy in Panama highlighted bilateral cooperation on security matters and called it “a milestone” that Panamanian officials have reached 20,000 records in the biometric database shared by the program called “Bitmap”. According to the North American ambassador, John Feeley, Panama is the “world champion in a fingerprint base” with 20,000 captures, which are given through the Bitmap that allows preservation of a biometric base of each person that enters and is shared with the US.

FARM SUPPORT

President Juan Carlos Varela and José Graziano da Silva, director general of the United Nations Organization for Food and Development (FAO) agreed to promote agricultural development in the provinces of the country by taking advantage of the construction of new roads. According to Varela, the government invests $408.6 million in indigenous areas.

After ballots were cast by 50,000 Venezuelans in Panama were qualified to exercise their right to vote against the constituent assembly in that country, the director of the National Immigration Service (SNM) Javier Carrillo, announced the new number of Venezuelans in Panama, estimated to be between those legalized, with dual nationality in process and those with tourist visas, approximately 79,990 citizens of Venezuelan origin.

MIGRANT SURGE

The country is experiencing migration that has grown with impetus in the past five years. According to the National Immigration Service, there are 304,986 foreigners in the country. To reach this number, the foreigners identified in the 2010 demographic census are taken into account and include those who completed their formalities between 2010 and 2017. The World Economic Forum recognizes that the performance of the country in the past decade is generated, in large measure, by the import of talent.

MONEY FLOWS

The assets of the national banking system grew very modestly in the first four months of 2017, compared to the same period in 2016, according to the Comptroller’s Office. Official statistics show that assets totaled $98,643 million in the first quarter of 2017, slightly higher than the $98,258 in the same period of the previous year, which is equivalent to a growth of 0.4% during this year. According to the Comptroller’s report, the low growth of bank assets was due to the drop in liquid assets (-9.5%) and the deterioration of the external credit portfolio (-13.4%).

INTEREST UP

All interest rates are increasing in Panama, which is equivalent to an increase in the financial cost for individuals and companies. According to figures from the Panamanian Superintendence of Banks, the economic activities most affected by the increase in interest rates were industry, commerce, livestock, agriculture, the Colon Free Zone (ZLC) wholesale and retail trade.

GOOD LOANS

Panamanian lending continues to be one of the most attractive in Latin America, despite the rise in interest rates in recent times, said Carlos Troetsch, president of the Panama Banking Association (ABP). “We have a very attractive credit offer. Anyone who has traveled to other countries in Latin America will have realized that the quality of our financing and the amount are very attractive,” the banker said. Panama’s banking center, he said, “has managed to maintain the active interest rate between 5% and 8%,” figures that are “very manageable” and do not pose any threat to economic activity.

PLANTING TIME

The Del Monte subsidiary in Panama will start in May, 2018, the first banana planting in the province of Chiriquí, under a contract signed with the government that allows it to invest more than $100 million to reactivate this fruit production in the area. “According to the projection presented by the company Del Monte, it will start in May, 2018, the first planting of 970 hectares of the 4,000 hectares that are scheduled to grow bananas,” Humberto Serrano, a member of the Banana Commission of the Presidency and legal advisor of the municipality of Barú, told the news agency Acan-Efe.

VOTE FRAUD

The Government of Panama and the Episcopal Conference issued statements about the Venezuelan political crisis. The government announced its support for the measures taken by the US Government in terms of imposing sanctions on Venezuelan officials who urged the convening of the constituent assembly, whose delegates have been chosen and will not be recognized by Panama.

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