Week in Review
SAVINS FUND PASSES
The bill creating the Panama Savings Fund (FAP) was approved in third reading, under which the Government will increase by about $310.5 million their spending power in 2012. This rule raises the limit allowed in the deficit to one billion dollars and for the current year the gross domestic product (GDP) is expected to increase according to the Ministry of Economy and Finance (MEF). The increase comes from the passage of raising the deficit ceiling from 2% to 2.9% this year or nearly a third more than allowed by the waiver requested by the administration of Ricardo Martinelli.
Panamanian Foreign Minister, Roberto Henriquez, recalled to Spanish businessmen that Panama is a “safe and reliable” place for foreign investment, with “modern laws” that would prevent what happened “in other parts of South America.” “Panama is open to the world and has good experience in trade integration agreements. Our policy is one of openness and expansion, with respect to foreign investment,” he stated. Panama has become the niche market that Spain seeks to conquer through investments in 2012. At the end of 2011, total foreign direct investment (FDI) in Panama amounted to $2.8 billion. Of this, 14% was from the Iberian peninsula. The increase in the presence of Spain was not a surprise, because last year during the Panama Invest 2011, in the city of Madrid, the government promoted the Isthmus and the canal as a global business platform.
The Third Chamber of Administrative Litigation of the Supreme Court set aside Resolution AG-0139-2009, which declared Donoso as a protected area in the province of Colon. This decision surprised environmental organizations, as in December 2011 the full Supreme Court denied a guarantee of the company Minera Panama seeking to stay the same resolution. “These are the contradictions that make us doubt the seriousness of this State organ,” said Felix Wing, executive director of the Center for Environmental Advocacy.
The movement of TEUs, or containers of 20 feet in length, increased 21% during the first quarter of this year, according to preliminary figures from the Panama Maritime Authority (AMP). This is 1,796,000 TEUs moved in the entire port system of the country between January and March, or a variation of 315,241 more than in the first quarter of 2011.
PHONES GOOD BUSINESS
Cable & Wireless Panama SA (CWP) reported revenues of $601 million in the fiscal year ended 31 March 2012, according to the results of fiscal year 2011-2012 (April 1, 2011 to March 31, 2012) released at the London Stock Exchange, England, by Cable & Wireless Communications (CWC). During the 2011-2012 fiscal years the company maintained its performance levels and generated returns to shareholders, including the Government of the Republic of Panama, which holds a 49% stake. The possibility of the Government selling 49% of C & W and sending the money directly to state coffers, instead of the new Panama Savings Fund (FAP), does not worry its partners. In contrast, C & W executives expect the government’s decision to make the company the majority shareholder and buy 5% more of the shares, thus totaling 54%.
The gambling business in the country continues to rise, because in the months of January and February this year it posted earnings of $364.8 million, equivalent to about $6 million a day. The latest figures from the Comptroller’s Office include the sales of National Lottery and gambling in casinos, bingo halls, sports games and the racecourse.
Each day that passes a new element is added to this controversy. There are warnings about possible cost overruns on the proposed expansion of Tocumen road, emerging from data in the public act won for widening the highway to six lanes. It turns out that the group Sacyr, which is currently leading the project to expand the Panama Canal, proposed $148 million for the work. $83 million below the price submitted by the consortium ICA-MECO, which eventually won the contract for $237 million.
The exclusive suburbs of Punta Pacifica, Costa del Este and nearby areas have been the first valued by the Department of Revenue in its plan to increase revenue. The property line maintains a monthly imbalance in revenues. In March this year, $15,740,000 was reported, $10,446,000 less than estimated by the DGI for this period.
Although the government raised the minimum wage, Panamanians feel that their dollar is worth less every day. This is because they could previously buy several products with a dollar, but now its purchasing power has declined. “One thing is the perception and the other are the figures, which show that the average salary has increased more than the cost of living in the past five years,” said Frank De Lima, Minister of Economy and Finance.
A new subcategory of immigration for foreigners living in the country was approved by the Ministry of Public Security, according to Executive Decree 343 of May 16, published in the Official Gazette 27,038. This is the “permanent resident alien status for specific countries that have friendly professional, economic and investment relations with Panama.” To apply under this subcategory, foreigners from 22 countries whose residence is in Panama can exercise economic or professional activities.
A statement of Charles Jumet, president of the company Ports Engineering & Consultants Corp. (PECC), admits paying bribes to former Panamanian officials between 1997 and 2003, and was admitted as evidence at a trial that will be held for libel and slander placed by former president Ernesto Perez Balladares against former Comptroller Alvin Weeden. In 1997, the government of Perez Balladares gave PECC a direct grant of State for aids to the navigation of ships.
GOLD FOR CANADA
Gold may be one of the main items to be exported after Canada ratifies the FTA with Panama. The entry into force of the trade agreement is expected by officials and businessmen of both countries. However, there is still a need for it to be approved by the Canadian Parliament, which will be verified in two stages, said Sylvia Cesaratto, Canadian Ambassador to Panama.