PANAMA - THE PTY INVESTOR'S BLOG

Iran, Venezuela plan to build rival to Panama Canal

2010-11-19T07:18:00.000-08:00

source: Panama Investor Blog

I have heard these kinds of rumblings before, but it appears to have gotten legs where they are starting to do some work on the San Juan River on the border of Costa Rica and Nicaragua. It is interesting to note that Vanderbilt used the San Juan river to carry gold rush prospectors back in the mid 1800's from the Caribbean to the Pacific. I have serious doubts whether this new venture will come to fruition for a number of reasons. First, if you google map the area between the lake and the Pacific you see that it is not an easy task to make a canal in that area even though it is only 20 KM. From the east side of lake Nicaragua to the Caribbean the San Juan meanders more that 175 km.It will take much more than simple dredging to make it passable for large ships. I think this is just more hyperbole from the likes of the three stooges to try and see how the U.S. will respond. This article states that the U.S. is concerned and looking into the matter.

Panama sees 56% growth in foreign direct investment Q1

2010-07-01T19:37:00.000-07:00

This brief was sent in by Gary and is from JP Morgan, via Prima Panama

Panama

According to preliminary estimates released by the Comptroller General’s office, foreign direct investment (FDI) totaled US$609 million (2.3% of GDP) in 1Q10, up 56.4% from US$389 million (1.6% of GDP) in 1Q09. The sharp increase in FDI inflows was driven by reinvested profits, which more than doubled to US$387 million during the three-month period led by higher investments in Colon Free Zone enterprises. On a sectoral basis, the principal beneficiaries of FDI during the first quarter were the hotels,
telecommunications, agriculture, livestock, and real estate sectors. Panama’s FDI fell 26.1%y/y to US$1.8 billion in 2009 amid the global recession, matching the 25% plunge the IMF has estimated for all emerging markets. As the global economy recovers from its recent slump and financial flows to developing
countries strengthen, the Martinelli administration expects FDI inflows to surpass US$2 billion (7.6% of GDP) in 2010. (Franco)

Panama hopes to beat the global financial crisis

2009-03-15T08:23:00.000-07:00

By Jeremy Schwartz - INTERNATIONAL STAFF for the statesman.com- PANAMA CITY — Cranes hover over the skyline like futuristic insects, buzzing around half-finished skyscrapers that make Panama City look like Miami or Hong Kong. If any country is poised to withstand the ravages of the global financial crisis, it just might be tiny Panama, which has quietly become a regional economic powerhouse in the past five years. Fueled by a superheated real estate market, windfalls from the Panama Canal and a burgeoning banking system, economic growth hit 9.2 percent in 2008 after soaring to 11.5 percent the year before. As nations from the United States to Japan confront shrinking economies in 2009, officials in Panama are predicting relatively robust growth of 4 or 5 percent this year. "This global crisis arrived in a moment in which we find ourselves stronger than we have been in the past," Minister of the Economy Hector Alexander said. "In Panama, the dominant topic isn't the recession." (more) (See Comments)
Editor's Comment: There's one part in this article where an economist named Gordon is quoted as having said "...the percentage of Panamanians laboring precariously in the nation's informal sector — doing things such as selling fruit at intersections — has risen from 33 percent in 2001 to 44 percent today." That's just plain wrong. In fact, the informal employment market has dropped substantially in the past five years to their lowest levels in modern history. There are now more formal jobs - positions in which the employees receive a standard wage, pay income taxes, and appear on the rolls of social security - than ever before. In fact back just eight years ago unemployment was pegged at about 15% or higher, and "underemployment" (informal or non-reported positions) were much higher than they are now. Without a doubt, the entire labor force in Panama has been moving towards formalization. Unemployment is down to about 6% or less. And this guy Gordon's statements are just flat-out incorrect.

(Comments Conclude, Article Continues)

While unemployment has soared in the United States, the unemployment rate in Panama fell from about 14 percent in 2004 to 6.5 percent last year. And as the U.S. is adjusting to life with 12-digit budget deficits, Alexander said Panama is hoping 2009 will be its third consecutive year with a budget surplus.

But the nation hasn't been immune to the global recession. Its real estate market might be heading for a sharp downturn.

Matt Landau, a New Jersey native and Panama City investment consultant, said real estate sales have declined precipitously in recent months, especially among the U.S. and European buyers who largely fueled the boom.

"When I first got here (about four years ago), people were buying (properties) for $200,000 and then flipping them for double or more in six to 12 months," he said. "That was happening even up to a year and a half ago."

Now, Landau said, Panama City is bracing for a glut of high-priced condominiums.

And as global trade is pummeled by the recession, Panama Canal officials expect the number of cargo ships passing through the waterway — and the tolls they pay to the Panamanian government — to fall almost 6 percent this year.

Even there, Panama has an ace up its sleeve in the form of a $5.2 billion Panama Canal expansion, which will widen the canal's locks to allow larger ships to pass through.

Although recession wasn't on the minds of Panamanian voters when they approved the expansion in 2006, officials see the megaproject as a perfectly timed stimulus that will directly create nearly 7,000 jobs in a country of 3 million and spark the creation of thousands of secondary jobs, just as the economy begins to sag.

"It's as if we are increasing public sector spending by 35 to 40 percent," Alexander said. "Today it works as a fiscal stimulus."

Percentagewise, the canal expansion dwarfs any stimulus project the United States is planning. The project represents nearly a quarter of Panama's $23 billion gross domestic product. By comparison, the $787 billion stimulus package in the U.S. represents about 5 percent of America's $14 trillion gross domestic product.

Counternarcotics officials have long suspected that Panama's boom has also been aided by an influx of money from criminal organizations. According to the U.S. State Department's 2008 International Narcotics Control Strategy Report, the country's construction and offshore banking sectors are particularly susceptible to money laundering.

But Panama's economy has been helped by a stable and peaceful political scene, which the nation has enjoyed since the 1989 ouster of dictator Manuel Noriega.

When Noriega was captured by U.S. troops, Panama's economy was in shambles, paralyzed by an economic embargo of Noriega's regime. Successive democratically elected administrations have focused on economic recovery, enacting reforms and privatizing sectors such as telecommunications and electricity.

But some critics say Panama's spectacular economic growth in the past five years has left out the majority of its people.

"The problem is that the growth has stayed in a few hands," said Rolando Gordon, a University of Panama economics professor. "The economic boom hasn't been able to resolve any of the great social problems of the country."

Gordon said government statistics obscure the fact that even as the country's economy exploded, the percentage of Panamanians laboring precariously in the nation's informal sector — doing things such as selling fruit at intersections — has risen from 33 percent in 2001 to 44 percent today.

Gordon added that public schools are underfinanced, and access to drinking water remains problematic for many Panamanians. At the same time, the price of basic foodstuffs has increased.

"This boom we're having is tremendous," taxi driver Jose Cano said. "But for the poor, the humble, we aren't seeing the boom. The price of food is going up. I have my own taxi, so I'm doing pretty well, but there are a lot of people who are recycling cans and stealing scrap metal."

Ivanka Trump: It's Time To Party In Panama

2009-03-04T07:23:00.000-08:00

Our newly disovered financial guru, Ivanka Trump, says that Panama’s real estate market is the strongest in the world. Ivanka, the executive vice president of development and acquisitions her fathers Trump Organization, impressed us mightily when she appeared on SquawkBox last week. It wasn’t so much that a pretty young thing turned out to be smart that caught us off guard. Lots of pretty girls are smart. But we had kind of figured that a scion of a celebrity family like the Trump’s would be a bit dim. In fact, she shines. “I have projects all over the world [and] have a unique sense of the global real estate climate and submarkets,” she tells Latin Business Chronicle. “With great conviction, [I can say that] Panama is one of the strongest, if not the strongest, real estate market. Our biggest problem is not having enough inventory. We only have a small percent of the building left.”

Apparently, Panama is pouring huge tax incentives into real estate development. She contrasts this with America, where taxes are going up. And the Panama Canal is still going strong.

Of course, both factors raise red flags. The Panama Canal is heavily exposed to international trade and shipping, both of which are looking at huge downturns as the world slips deeper into a recession. And tax incentivized building can often lead to unsustainable bubbles.

She also may be talking her book here. The Trumps have a major development underway in Panama. That said, this also gives her a unique perspective on the opportunities in Panama. So perhaps we shouldn't make too much of the conflict of interest.

John Carney - Wall Street Journal

5 Good Reasons to Buy Property in Panama

2009-02-26T14:19:00.000-08:00

Detailing five very good reasons why it is still a great idea to invest in some stunning property in Panama – whether you’re an investor or a new home seeker. The world is in financial crisis, globally speaking real estate markets are in decline, no banks are lending money for consumers to buy houses with, and chances are there has never been a worse time in our recorded history to buy property – and yet, in our opinion there are still at least 5 good reasons to buy property in Panama! You may have read the hype that the boom is continuing and that every property that’s for sale in Panama is a sound investment bet – well, that’s not entirely true. But neither is the negative hype about the market being saturated with greedy speculators and that Panama is heading for an almighty crash. There are 5 very sound and solid reasons why property in this stunning Central American nation is a good bet for long-term investors, holiday home seekers or even retirees and early retirees… (more)

1) Tourism is Increasing in PanamaPanama is a first world nation offering the associated comforts, and at the same time it is an ‘undiscovered’ gem of a nation where it’s possible to get truly away from the madding crowd and discover hidden coves and beaches, stunning rainforests, amazing flora and fauna, unaffected people and communities steeped in history and culture. In other words, Panama has something for everyone – and it’s cheap too, relatively speaking! All of these are reasons why the country has been welcoming increased numbers of tourists year on year – in fact, it has welcomed a 12% increase annually since 2004.

Hotel occupancy rates are exceptionally high, new airline routes are opening up bringing travellers direct from nations such as Italy and the Netherlands for example, and the government in Panama is continuing to plough substantial funds into the promotion of the nation internationally.

All this bodes very well for anyone who is interested in buying property in a country with a healthy and affluent outlook for the long-term. It means that desirable homes will make good rental properties, and that as more people arrive and learn about the delights of Panama, so more people will think over the long-term about relocating to live there – thus giving a property owner an exit strategy.

2) Desirability of Panama and its Property Product. Panama has it all – from a bustling and cosmopolitan capital city to tiny rural enclaves, from high rise luxurious real estate, to beach huts and fabulous fincas. Therefore, yet again there is something of appeal to everyone. So whether you want to live on the coast and be a beach-bum or you want to live the high life in Panama City, you can when you choose the right type of home for you in Panama. This makes the nation a great choice for anyone thinking about moving abroad – because you can likely find your perfect home in this one nation – no matter what it is you’re looking for in a property!

3) Property in Panama Can be Competitively Priced. Because the really booming times in Panama’s recent history are currently over, there are many speculators keen to exit the market and consolidate their debts, there are developers doing their best to off-load already constructed stock, and there are private vendors willing to accept below asking price offers for property. What’s more, away from the glitzy, modern high-rise property market in Panama City, most real estate in Panama is sold on a more personal basis. You’ll find that those who are selling a family home for example, are far less likely to want to sell to an anonymous buyer from abroad and far happier to sell to you if you befriend them, enter into direct negotiations with them and remain calm, open and friendly throughout. These sorts of vendors would rather sell to you for a lower sum if you take this approach, than they would to an overseas buyer they have never met who is dealing with a slick real estate agent and offering them their asking price!

In other words, Panama is a market where there is a lot of room for movement when it comes to asking prices – no matter which approach you take and which properties you’re looking at. And it’s also a market with some exceptional bargains.

4) Long-term Potential for Profit. Panama’s canal extension project is on track, tourism numbers are consistently rising well, the government and business environment are stable, fiscally speaking Panama is affluent and successful, the ‘pensionado’ scheme attracts more wealthy ‘retirees’ annually and the real estate market’s transparency is improving. These are all very good reasons why Panama has exceptionally good long-term potential in terms of its property investment prospects. Whilst things are looking less favourable at the moment due to the current state of the global financial market, those who look to the long-term and take anything but a speculators approach to the market stand to reap the rewards eventually.

5) Lifestyle. The final reason why we feel that property in Panama is a good bet is simply because the lifestyle available in Panama is fabulous! It’s once again the case where you can get what you want from life – so, if your idea of heaven is shopping in glitzy boutiques, working in the City, dining out in posh restaurants and living in luxury – you can have that lifestyle in Panama City. Or, if you prefer the thought of living in a friendly expat community close to the sea and with wonderful views and a very laid back pace of life, this type of lifestyle is also possible. Alternatively, those who want to get away from it all or who want to live on the beach, in the mountains or perhaps in the local community can also find a property that will give them the lifestyle they want.

Hopefully this article has demonstrated that property in Panama can be a solid investment purchase, a lifestyle home choice or just a great buy for long-term potential appreciation…and that you can find whatever it is you’re looking for in Panama.

The World's Top Property Hotspots for 2009

2009-02-06T19:16:00.000-08:00

Oxford 26 January 2009 - International real estate investment specialists Property Frontiers have named their top six property investment hotspots for 2009 – and the list contains some surprises. Panama, the Central American republic tops the list due to a strong economy, a favourable tax regime and offshore banking attracting businesses from across the globe. Investors can choose a variety of different options, from hotels enjoying high occupancy rates, to offices, and beachside resorts. The expansion of the Panama Canal looks set to underpin future economic growth. The Malaysian capital Kuala Lumpur is a thriving city with affordable property and accessible cheaply with a new budget airline linking direct to London with flights from just £99. Outside of Kuala Lumpur is the teeming tourist playground of Sabah on North Borneo,Where Brazil is a booming economy and with sun, samba and a cheap cost of living, is taking over from Florida as the fun capital of the world – and is the same flight distance from London as Miami.

Tourism is lifting off around the northeast city of Natal, which boasts average daily temperatures of 28°C all-year-round and mile after mile of sandy, palm fringed beaches. If traditional buy-to-let is the target, Sao Paulo is one of the world’s largest and fastest growing cities with an insatiable demand for quality accommodation. Slovakia’s High Tatras national park offers all-year round tourism as a UNESCO area of outstanding natural beauty. In the summer, the mountains are an attraction for walkers and golfers, while in the winter cheap skiing lures visitors from all over Europe.

The USA is tipped as one to watch as prices bottom out. Apartments in Florida are selling at 54% lower than their launch price, and according to the builders, at less than their build cost and offer an instant 6% rental return. Coming in last is the UK, with property bargains piling up at auction houses and market commentators still forecasting that prices are stagnating or still falling in most areas. “In real terms the pound is at a point not seen for 10 years. This offers a fantastic buying opportunity for international investors. As a company we have never seen so many enquiries from our international investors looking for UK property. A combined depreciation of the pound and the market now makes UK property some 54% cheaper than a year ago.

source: Panama-Guide.com

Consumer confidence high in Panama

2009-01-27T09:25:00.000-08:00

Although the rest of the world's consumer confidence may be in the toilet, Panama's is still riding high. As this particle points out, it is due partially to a 13th month year end mandatory bonus and Panamanian's belief in a brighter future.

Excerpt From La Estralla:

Jacques de Raucourt of GFK Marketing Group, the company that carries out the consumer’s confident surveys for the Panamanian Chamber of Commerce said the increment of the index in Panama was directly related to the high level of commercial activity in December, mainly because during that month the Panamanians receive more income, like the 13th month payment and other incentives.
Consumers expectations about the financial situation of their homes went up to 118, five points higher that in November, which indicates optimism for the future.

With U.S. economy stuck, economists look abroad

2009-01-12T09:35:00.000-08:00

By Jack Chang, McClatchy Newspapers WASHINGTON — As U.S. consumers stop spending and investors keep their money to themselves, government and business leaders hoping to get the country's ailing economy moving again are playing one of their few remaining cards. They're trying to sell more U.S. goods overseas despite the decline of both global demand and U.S. competitiveness. Exports currently make up about 13 percent of the country's total economic activity, far less than the 70 percent taken up by production for domestic consumption. But that's where economic growth can still happen, analysts say, especially as the domestic housing and credit crises promise to freeze spending at home for at least another year. Economists and business leaders suggest the incoming Obama administration implement export-friendly measures such as streamlining U.S. customs operations, negotiating more free trade agreements and developing industries such as alternative energy that can become the next generation of U.S. economic powerhouses. (more)

Fitch Affirms HSBC Bank Panama & Sub's Ratings; Outlook Positive

2009-01-04T08:57:00.000-08:00

NEW YORK--(BUSINESS WIRE)--Today Fitch Ratings has affirmed HSBC Bank Panama (HBPA) and its subsidiary Primer Banco del Istmo's (PBI) ratings as follows: HSBC Bank Panama: --Foreign Currency Long-term Issuer Default Rating (IDR) at 'BBB+'; --Foreign Currency Short-term IDR at 'F2'; --Individual Rating at 'C/D'; --Support Rating at '2'. The Rating Outlook is Positive. Primer Banco del Istmo: --Foreign Currency Long-term IDR at 'BBB+'; --Foreign Currency Short-term IDR at 'F2'; --Individual Rating at 'C/D'; --Support Rating at '2'. The Rating Outlook is Positive. HBPA and PBI's IDRs reflect the support from its parent (HSBC, rated 'AA' by Fitch Ratings) and are constrained by Panama's country ceiling rating. The individual ratings reflect HBPA and PBI's strong franchise, market share and improving revenue diversification; they also factor in the challenges of their merger and the weakening economic scenario. (more)

In Fitch's opinion, considering HBPA's (and PBI's) size, importance and key role in HSBC's strategy in the region, support from its parent should be forthcoming, if needed. An upgrade in Panama's country ceiling rating (reflecting a strong economy) would allow HBPA's and its subsidiary's IDRs to be upgraded. A disruptive integration of PBI, declining asset quality or weaker capitalization could pressure individual ratings.

HBPA's performance in 2008 is driven by stable margins and increasing non-interest revenues that offset modest loan portfolio growth (+2.2% for the year to date at August 2008). Margins are somewhat underpinned by decreasing funding cost while growing fees and commissions supply about 25% of operating revenues. Operating costs have increased, reflecting the on-going integration effort that involves significant investments in premises, training and an IT overhaul. Provisions have gradually returned to normal levels hence resulting in higher efficiency and improved profitability.

The loan portfolio is widely diversified and little concentrated while asset quality and reserve coverage improved within HSBC's stricter credit policies. The investment portfolio is smaller, less risky and a substantial liquidity cushion is in place. Deposits, which are broad-based and little concentrated, increased in line with assets and funding costs eased as institutional funding declined. Capital was strengthened by fresh capital injections (about $156 million) and retained earnings (over $160 million), hence BIS capital ratios attain 10.9% at August 2008 (11.4% in 2007, 9.4% a year earlier).

Going forward, moderate loan growth should be driven by corporate lending and later on by retail lending; margins should remain under pressure, but funding costs are likely to stabilize/decline. Operating costs should start declining in 2Q09, after the integration is completed while credit cost should stabilize in line with asset quality. Efficiency and profitability should improve only by 2Q09 while capital ratios should remain fairly stable. The merger has been delayed by the IT overhaul; however, these glitches do not change Fitch's belief that the completed merger will result in a very sound, efficient and competitive regional player as originally planned.

HBPA is 100% owned by HSBC; its operations are highly integrated within HSBC's regional franchise where it is considered a key subsidiary. A universal bank active in consumer, commercial and corporate lending, HBPA holds 21% of the system's assets at September 2008; it merged with Grupo Banistmo (PBI's parent) in July 2007 creating Panama's largest bank and a major regional player operating in Central America and Colombia.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

A Tree Grows in Panama

2009-01-03T11:15:00.000-08:00

By ANDREW C. REVKIN

While working in eastern Panama between 2002 and 2006, four young Peace Corps volunteers conceived of a plan to help restore the region’s disappearing tropical forests, provide income for struggling landowners and make money for investors and themselves.

It’s one thing to have an idea and another to start a business, of course. But the partners — using skills gleaned from academic programs in business, design and international relations — have pulled it off.

Their company, Planting Empowerment, leases land in the region — a pocket of biological riches that has been eroding under decades of slash-and-burn farming. Money from investors is used to plant and tend about 500 trees an acre that, in 25 years, should become a source of valuable tropical hardwood.

The key to the model is the concept of leasing, according to Damion Croston, a 29-year-old graduate student at Ohio University who is studying international development. (Another founder graduated in May from Thunderbird School for Global Management in Phoenix. The two others have degrees from Johns Hopkins and Virginia Tech.)

When land is bought outright for tree plantations, the farmer is displaced. But Planting Empowerment is using only uncultivated, deforested parcels of a farmer’s land, allowing agriculture to continue on other parcels. A lease clause prevents the use of the money to buy and clear more land. And to guarantee that the tree canopy is always increasing, trees are planted on different tracts at different times; as one patch of trees matures and is harvested, others will be in various stages of growth.

Investors, who must plunk down a minimum of $7,000, have so far been mainly family and acquaintances, Mr. Croston says. But Planting Empowerment is now selling $50 and $100 forest savings bonds with an expected return, after lumber is harvested, equivalent to 7.8 percent a year. Some income from the plantings, now on 50 acres, is possible after five years, when foresters start thinning the dense stands of young trees to make room for others to grow to maturity.

The business plan has won recognition in college-sponsored competitions aimed at fostering socially responsible ventures, including those at the University of Washington, Notre Dame, Yale and the University of Texas, Austin, where Planting Empowerment was second out of more than 1,000 ideas.

To promote sustainable economic opportunity, Planting Empowerment intends not only to pay indigenous people for the use of their land but also to provide some higher-level employment and a share of profits.

“We believe,” Mr. Croston says, “in a more inclusive sort of capitalism.”

2008-12-18T14:06:00.000-08:00

By DON WINNER for Panama-Guide.com - I've said it before a dozen times, the only people who are really taking a risk in the Panamanian real estate market are the speculators. Everyone is playing the "what's going to happen" game in this economy, and thankfully Panama is in an excellent position to weather the storm quite nicely. Bank reserves have tripled in the past three years, the economy grew 11.5% in 2007, should come in at around 9.2% for 2008, and is expected to continue the run of growth in 2009 at about 7.5% or better. Demand for real estate in Panama has fallen sharply with the onset of the global crisis as retirees worriedly pour over the reports on what's left of their 401K's and retirement investments. They can't sell their empty nests and it's harder for potential buyers to obtain mortgages in a tightening credit environment. Unemployment is on the rise, car makers are being laid off, and in general we're looking at a period of tough times in the US, Europe, and Asia, a malaise that will most certainly cause significant economic harm in Panama and the rest of Latin America. But here's the good news... (more)

Oh, Woe Is Me... Not so much. There are a whole raft of things working in Panama's favor that will help this relatively tiny Central American nation come through the storm with flying colors - such as;

The Banking System is Solid: Foreigners love to bitch and complain about the Panamanian banking system; it's hard to open an account, they need a lot of paperwork, you have to put down 20% or 30% in cash to get a mortgage, you have to have life insurance, etc. In fact, the Panamanian banking system is relatively skittish compared to the guys in the United States who played fast and loose and who are now getting hurt. Panamanian banks didn't play those games, and the banks are in great shape. That means there won't be any local failures or collapses like those in New York and London. Those same things we like to bitch and complain about are the things that kept the Panamanian banking system out of the muck.

The Financing Is In Place: If you look out upon the skyline of Panama City and you see a construction crane, that means those developers and builders have already secured financing to build their projects. For the most part they had to sell about 50% of the units in pre-construction sales contracts in order for the banks to turn loose the funds. Generally speaking, builders don't start to build unless they have financing, and banks won't finance unless they have reduced their risk to practically zero. Banks love zero risk.

The Profit Is In The Other 50% - Builders and developers make their money on the second half of sales, after the building is built (or while it is being built). The first 50% is just to pay the cost of construction and to get things done. The second half is the income. So guess what? If market forces bring down prices and builders reduce prices to "dump" the remaining inventory, then that just means they end up making less profit in the end but so far no one is losing any serious money. The banks are covered, the builders are covered, and the buyers get a nice place for a lower price. Where's the pain?

Cement Doesn't Rot: All of the high-rise condominiums in Panama are made out of poured concrete, cement, ceramic tiles, glass, and steel. They still have all of the wonderful features that made them attractive in the first place, such as sweeping views of the Bay of Panama, a great location right in the middle of the city, modern design, fantastic social areas, security, etc. Anyone who bought one of these units can just sit tight and wait for a few years for things to turn around and the relative value of these properties will return promptly. The builders can literally sit on unfinished inventory and simply wait for the market to turn around. When it does, they can put these units back on the market. In the meantime, they can just sit there, and so what? The builders will realize their profits later. Between now and then they will probably be able to eat. Thanks for being worried.

First Out Of The Gate: The fundamentals which created the "Panamanian Miracle" are still in place for the most part, and it's the international situation that's throwing some cold water on the fire. Sooner or later things will turn around, and when that happens you'll see that Panama has weathered the storm in fine shape. Really smart investors will bottom-feed here and there to look for opportunities as they arise with an eye toward the midterm future. The $5.25 billion dollar (plus) expansion of the Panama Canal is going full speed and will continue through 2014. The Panamanian economy is still solid and stable, and there are several significant infrastructure projects ongoing that are stimulating the economy. Some sectors will take a hit, others will hold fast, and still others will grow during this global recession. But when the smoke clears, Panama will be very well positioned to right to the head of the pack, again.

The Richest Country in Latin America? Really? No, not yet. Actually, using data from the end of 2007, Panama was the 7th richest country in Latin America behind Chile, Mexico, Venezuela, Brazil, Uruguay, and Argentina. Historically speaking, Panama was both helped and hurt by the domination of the United States for all those years. The Panama Canal brought jobs and stimulated the economy, but only to a certain point. Now, with the reins removed and with Panama cashing in on their newfound position as toll-taker for world shipping, the Panamanian economy is smartly stepping forward and improving in all measurable areas. Before too long, and it might take another ten or fifteen years, Panama will slowly move up through the ranks to take it's place as the richest country in Latin America. It's going to happen, and it's only a matter of time. Just remember you heard it here first.

GDP Per Capita Is What Matters Most: Panama's Per capita GDP (2007) was $5,970 (Source), up from $3,939 in the year 2000. The overall size and weight of a national economy matters, but a better measure is compare economies in terms of size of their relative populations. Consider the following chart, prepared using data from the end of 2007. Clearly Panama is the #1 Central American economy in terms of GDP per capita. The nation's economy continues to improve, fueled by year after year of continued and steady growth, while others such as Venezuela falter;

Sometimes Small is Good: There are only 3.3 million people living in Panama, so big economic improvements are spread across the board relatively quickly. Unemployment is down to 5.6% and falling. Foreign Direct Investment continues to pour in from around the world. Easing prices for fuel, food, and consumer goods are putting more discretionary funds in the hands of consumers. There is upward pressure on wages as skilled and experienced workers get better and better positions and employers have to fight to keep their valued employees. Being a small country with solid economic fundamentals means Panama will be able to literally dodge most of the really big bullets coming from this global slowdown. There will be impacts, but those effects will be relatively dispersed and mitigated.

Clueless Chicken Littles: As always, there are always people waiting for their chance to scream "fire" at the first possible instance. And as usual those people are, for the most part, dead wrong and pretty much clueless. For instance real estate prices in Panama are established by market forces. Sellers offer products and buyers make offers - and if those two can come to an agreement and meet in the middle then the sale is closed. If they can't come to an agreement then (obviously) the sale does not take place. I've seen some articles lately literally chastising real estate developers, screaming that they should "wake up" to some version of a new reality and lower their prices. Not to worry - simple market forces of supply and demand will establish the value for every piece of property for sale. No need to tell sellers (or buyers) what to do, prices and relative value will be established for them by the big picture.

To Lose Money: For the most part, anyone who finds themselves trying to sell a property might end up making less profit than they had planned or hoped. So far, I've still not heard of one person who has been forced to sell their property for less than what they paid for it, realizing a net loss. So it's still a good marketplace, just not as incredibly lucrative as it has been for the past several years. But less profit is still profit, not loss. My advice - plan to get rich more slowly. Patience.
That's About It For Now: Panama will miss the worst of it. The fundamentals are still in place. Specific sectors will take worse hits than others, and overall the economy will continue to grow. And, once it's all over, Panama will be ready to spring ahead like the virtual rabbit in the toad race, compared to others in the region that will take more substantial hits. So strap on your helmets, hunker down for awhile, and ride it out. Panama is a great place to be right now.

Copyright 2008 by Don Winner for Panama-Guide.com.

Panama to Maintain Growth Amid Crisis, Torrijos Says

2008-12-15T07:54:00.000-08:00

Dec. 10 (Bloomberg) -- Panamanian President Martin Torrijos said his country will maintain high levels of growth and a low jobless rate next year even as the credit crisis triggers a worldwide economic slowdown.

The Central American country’s economy will probably expand between 6.5 percent and 8 percent in 2009 and 9 percent this year, Torrijos said in an interview with Bloomberg Television today in Panama City. The U.S. recession won’t impede financing for his government’s $5.2 billion project to expand the Panama Canal, he said.

“There are very good projections for Panama,” Torrijos, 45, said. “If there’s any country that has an advantage that will make the crisis the least traumatic possible, it’s Panama.”

A solid financial system, infrastructure projects, fuel and transportation subsidies and low interest rates for the agricultural industry will help maintain growth, Torrijos said. Panama’s economy has expanded for 23 consecutive quarters, including 11 percent growth last year. The jobless rate fell to 6.4 percent last year from 14 percent in 2001.

Panama signed an agreement yesterday with five overseas banks to receive financing to enlarge the canal. The $2.3 billion loan allows lower interest payments for the next 10 years as work gets under way to expand the 50-mile-long (80 kilometers) canal, which connects the Pacific Ocean with the Caribbean Sea.

The agreement for the loan calls for $800 million from the Japan Bank for International Cooperation and $500 million from the European Investment Bank. The other participants are the Inter-American Development Bank, the World Bank’s International Finance Corp. and Andean Development Corp.

Canal Authority

The rest of the funds needed for the project will come from contract awards and shipping fees, Panama Canal Authority Chief Executive Officer Alberto Aleman said today on a conference call.

“Yesterday’s signing shows the whole world that it’s a solid, viable project, that there’s confidence in the canal and its management,” Torrijos said before meeting today with U.S. Secretary of State Condoleezza Rice in Panama City. “This ensures the continuity of the canal enlargement.”

The canal authority is preparing for the expansion even as traffic through the canal fell 0.1 percent from a year earlier in the initial nine months of 2008, the first such drop since 2002. Transport fees may be raised at the end of next year if the global economic slump continues to curb use, Aleman said.

About 27 percent of the world’s container ships are too big for the canal, a figure that will rise to 37 percent by 2011, the authority has said. The expansion project is on schedule to be finished by 2014, Aleman said today.

Panama’s poverty rate dropped to 29 percent of the population last year from 37 percent in 2001.

The New Panama Red

2008-12-09T15:00:00.000-08:00

Last Friday, Dec. 5, the Russian Navy sailed a warship into the Panama Canal--the first time since World War II. This week Secretary of State Condoleezza Rice flies to Panama to reinforce U.S. interests in the Zone.

Although it sounds like a reversion to Cold War intrigue that would make you want to load up on swords, your better bet might be plowshares.

The free trade spirit permeates Panama. It operates the world's second-largest free trade zone after Hong Kong. Its overall economic growth rate matches that of China. Panama has posted 23 consecutive quarters of economic growth, growing gross domestic product by 11.5% in 2007. This is double the pace of the rest of Latin America and well ahead of the U.S.

Three things explain a continuing positive outlook for Panama.

First, the Panamanian construction sector is in hyper-growth mode. U.S. retirees are attracted there by the lower cost of living, a dollarized economy, English-speaking people and proximity to the states. Several high-profile real estate projects like the Trump Ocean Club are also drawing upscale jet-set buyer attention. Panama City is only a three-hour flight from Miami and has all the signs of a boom town, including building cranes on the skyline and traffic congestion.

Second, the canal widening construction project is boosting the Panamanian economy. This is the largest infrastructure project in Latin America with a price tag of $5.2 billion. This week, five major multinational agencies are expected to agree on a $2.3 billion, 20-year long-term financing. The project is already pumping money into the local service-based economy, which should easily reach the 7%-8% International Monetary Fund growth projections for next year,

Third, the economy of the Colon Free Trade Zone represents almost 8% of the entire Panamanian economy and another potential contributor to growth. Last year, trade between the U.S. and Panama amounted to $4 billion in goods. If the U.S. ratifies the U.S.-Panama Free Trade Agreement, tariffs on 80% of the industrial and consumer goods imported from the U.S. should be eliminated. Lower tariffs will make it easier for U.S. companies like Caterpillar (nyse: CAT) to compete for much-needed earth-moving equipment sales.

Panama Canal 'Open to All,' Including Russian Warships

2008-12-06T08:09:00.000-08:00

Panama said its canal is open to all, including a Russian warship sailing through the transoceanic waterway on Friday.

The destroyer Admiral Chabanenko is the first Soviet or Russian military ship to traverse the 50-mile waterway since World War II.

The U.S. government has shown little concern about the destroyer's trip through a canal that was off limits to the Soviet Union during the Cold War.

Click here for photos.

The destroyer's journey to the Western Hemisphere, however, reflects Russia's growing influence and anger with the U.S. for using warships to deliver aid to Georgia after its August war with Russia.

Panamanian Foreign Minister Samuel Lewis portrayed the Russian canal crossing as business as usual.

"Here there is no other message than that the canal is open to all of the world's ships," he said.

The warship is part of a fleet that is the first Russian navy deployment to the Western Hemisphere since the Cold War. Before arriving at the canal, it took part in joint exercises with Venezuela's navy.

Also on Friday, Russia said it was sending its sole aircraft carrier and several accompanying ships for combat training in the Atlantic and the Mediterranean.

The destroyer entered the canal Friday night and was expected to take eight hours to reach the Pacific. Following its passage, the Admiral Chabanenko will dock at what was once the base for all U.S. naval activities in South America.

The U.S. government handed over the Rodman Naval Station and the canal to Panama nearly a decade ago, and the waterway has since become a symbol of Panama's true independence.

When it opened in 1914, the canal was a symbol of America's growing global reach and became a major U.S. military outpost for generations. The 10-mile-wide (16-kilometer-wide), 50-mile-long strip along the canal was considered U.S. territory -- a fact that allowed Canal Zone native John McCain to run for the U.S. presidency.

Lewis said the canal maintains a neutral policy in world politics. He pointed out that the ship's passage came just a few days before U.S. Secretary of State Condoleezza Rice is scheduled to visit Panama.

Architects Head to Latin America to Weather the Economic Storm

2008-12-02T09:34:00.000-08:00

Even as financial troubles mount around the world, some architects are betting on Central and South America

In recent years, as many major U.S. architecture firms expanded internationally, they often bypassed Latin America in favor of Europe, China, and the Middle East. Gradually, though, that may be starting to change, as architects open offices and enlist for projects in Central and South American countries, where population and economic growth have been strong in recent years.

Even as financial troubles mount around the world, and increasingly put some Latin nations at risk, there's a sense that much of the region, which has been buffeted by severe recessions before, can weather the current crisis. At least that's what some architects believe.

"I'm continually surprised how much of a need there is for development," says Stephen Forneris, AIA, who heads the 10-employee office that Perkins Eastman opened in Guayaquil, Ecuador, in October. The city, which is Ecuador's largest and a busy port for shipments of chocolate, bananas, shrimp, and cement, has mushroomed from 300,000 people in 1970 to 3.5 million today, Forneris says.

Now cropping up there are stores selling luxury foreign goods, the kinds of watches and handbags purchased by big spenders on Miami shopping trips. More significantly, a growing middle-class in Ecuador, as well as in Peru and Colombia, is spurring the construction of discount stores, adds Forneris, who recently completed a 12-story mixed-use project in downtown Guayaquil. Among its tenants will be a new outpost of Juan Eljuri, an Ecuadorian-type Wal-Mart that sells clothes, housewares, and electronics. The building will house both the 45,000-square-foot store and the company's corporate offices, in addition to other tenants.

While the global credit freeze could theoretically curtail shopping habits, the overall effects "won't be as severe here," Forneris predicts. "Money has been hard to come by for years, so I don't know how much more credit can shrink for them."

The foreign influence on Costa Rica, meanwhile, is predominantly from U.S.-based personal-care products and technology companies looking to outsource jobs, says Joe Brancato, a managing principal with San Francisco-based Gensler, which opened an office in Escazu, Costa Rica, in 2006.

To accommodate clients, it helps to have local connections: all 22 employees in Brancato's office are native Costa Ricans, because they're familiar with the country's intricate building codes, he says. Plus, residents are often better equipped than transplants for the delicate task of convincing local contractors to start projects after construction plans are finalized, not before, as is often the case in Costa Rica. "You need to understand and embrace that this is a different culture, that they do things differently," Brancato says.

Another driver of Latin America's building boom is tourism. Despite a global drop in travel due to the economic downturn, Bryan Algeo, AIA, principal of WATG, an Irvine, California-based firm, says the Latin American tourism industry shouldn't be as badly affected as other parts of the world because the region's still relatively affordable compared with other destinations.

Plus, with demand for hotel rooms there far outstripping supply—there are just 500 luxury hotel rooms in all of Costa Rica, he says—developer interest should remain high. That's just one of the reasons his firm, which has designed hotels in 150 countries since its founding in 1946, is seeking more commissions in Latin America. "We go where the action is, and we see activity moving south," Algeo says.

In Panama, he adds, developers can't usually secure loans until they have pre-leased 75 percent of a project, insuring that the kinds of speculative buildings that can worsen downturns aren't constructed. His firm currently is working on Panama City Center, a $60 million project whose twin 22-story glass towers rise from a four-story podium that includes a casino and spa. Excavations are underway for the project, which is on track to open in 2010, according to Algeo.

Latin America's stabilizing political landscape is also fueling its appeal, says Alberto Aranda of Giancarlo Mazzanti Architects, a 12-year-old Bogota, Colombia, firm specializing in schools, libraries and stadiums and other state-sponsored commissions. He adds, however, that a gold-rush mentality may never totally catch on, as South American clients still typically pay far less than their American counterparts.

"There's a still a gap, and that gap makes us less competitive than the rest of the world," Aranda says. "It's not always attractive, economically speaking, for an American to come work here."

Source: BusinessWeek, C.J. Hughes

West Coast ports face struggle to maintain relevance

2008-11-28T09:51:00.000-08:00

The global financial slowdown has already slashed traffic, and a major Panama Canal expansion will bring new competition.

By Ronald D. White

November 28, 2008

The slowdown in international trade has left the docks at the nation's biggest seaport complex quieter than they've been in years.

Some workers, particularly non-union "casuals," at the Los Angeles and Long Beach ports wait for shifts that never come. Automobiles and other merchandise pile up as consumers dig in for a long economic winter.

But the problems at the twin ports, along with smaller West Coast harbors, extend beyond the nation's economic woes, maritime experts say, and changes on the horizon could leave the seaports struggling to keep customers.

That's the assessment of a recent report by London-based Drewry Supply Chain Consultants, a maritime industry research firm that has about 3,000 clients in more than 100 countries. West Coast ports will see increased competition from the Panama Canal, which is undergoing a bigger-than-expected expansion due to be completed in 2014, Drewry said. In addition, rising Chinese labor costs will push some manufacturing back to Mexico and South America.

Even if global trade returns to its formerly robust pace, Drewry said, "any new trade will probably pass the West Coast by. Volumes are unlikely to decline, but the days of strong growth on the Pacific Coast are behind us."

The implications are potentially enormous.

The ports of Los Angeles and Long Beach are directly or indirectly responsible for 886,000 jobs in California, according to a 2007 study by the Alameda Corridor Transportation Authority. The $256 billion in U.S. trade that moved through the ports that year, including $62.5 billion in California cargo, was also responsible for $6.7 billion in state and local tax revenues, the study said.

But times change, Drewry and other maritime experts say, and future economic conditions will shine a more favorable light on the all-water routes to East Coast and Gulf Coast ports by way of the Panama and Suez canals.

Some of that trend can be seen already.

A.P. Moller Maersk, the world's biggest shipping line, this year reduced its business from Asia to the U.S. West Coast in favor of stronger Asia-to-Europe trade. This month, the Denmark-based giant announced more changes.

Maersk said it would join with the world's third-largest shipping line, France's CMA CGM, and cut back its Asia-to-U.S. business by an additional 8% with new routes through the Panama and Suez canals.

The new business partnerships come at a time when the maritime industry is reeling from the global economic slowdown and credit crisis, delaying delivery of new vessels and killing deals considered too much of a revenue risk. Those pressures, Drewry says, will result in changes that will be difficult to unravel even as global trade eventually recovers.

Officials at West Coast ports say that they are doing what they can to remain competitive. But Drewry and other authorities say the ports suffer from a number of problems, including a lack of land for expansion and rail capacity that is significantly lower than in the past, despite billions of dollars in investments.

The two largest ports -- Los Angeles and Long Beach -- also face steep and costly environmental hurdles to expansion projects that had slowed to a crawl until this year. Some of those plans face serious legal challenges from trucking and trade groups.

In the meantime, the Panama Canal expansion project has come a long way from something that generated amused smirks from the maritime community when it was first announced in 2006.

As a sign of the new esteem with which the project is now regarded, Panama Canal Authority Administrator and Chief Executive Alberto Aleman Zubieta was honored Monday with an excellence award at the Asia-Pacific Economic Cooperation Summit in Lima, Peru, for "successfully moving the canal from a profit-neutral utility to a business-oriented enterprise."

Now, Drewry says, West Coast market share is about to take a serious hit, "possibly forever," from a "rejuvenated, aggressive and soon-to-be widened Panama Canal" that will have locks capable of handling cargo ships carrying as many as 13,000 containers -- much larger than the 8,000-container ships it was originally expected to accommodate.

Drewry isn't the only one who thinks so.

"With the ability to handle most of the world's largest ships, the Panama Canal will begin to enjoy better economies of scale than its primary competitor, which is the transpacific intermodal route from Asia to the West Coast and to the rest of the U.S. by rail," said Asaf Ashar, head of the Washington office of the University of New Orleans' National Ports and Waterways Institute.

"It's cheaper to move cargo by ship than it is to transfer it to rail and go overland," Ashar said. "The logical conclusion is that market share will be lost."

Meanwhile, East Coast ports are frantically working to be prepared once the Panama Canal expansion is complete.

The American Assn. of Port Authorities, which represents most of the Western Hemisphere's major harbors, is devoting the current issue of its Seaport Magazine and an upcoming seminar in January to the shifting international trade routes and the Panama Canal expansion.

"It's become a very big deal," said Aaron Ellis, a spokesman for the trade group.

Port of Los Angeles Executive Director Geraldine Knatz said the port's willingness to address environmental concerns ended a logjam of expansion projects this year.

Saying that the port "should be investing $1 million a day in its capital spending plan" to increase efficiency and reduce pollution, Knatz said the facility was on pace to award $383 million in construction contracts this year.

Knatz said port officials were fully aware of the threat posed by projects such as the Panama Canal expansion, but she said the local ports had no choice in the way they must proceed.

"We're aware that some cargo has been diverted because of what we are trying to accomplish here," Knatz said, "but there is no way we would have been able to move forward at all with these construction projects if not for the steps we are taking to reduce pollution."

Latin America Combats Credit Crunch

2008-11-17T12:04:00.000-08:00

The global financial crisis is taking a toll on Latin American economies and their financial systems that will lead to a sharp reduction in lending for the remainder of this year and in 2009. In a bid to reduce the negative impact on economies and banks as much as possible, governments, central banks and multilateral entities have been very active in providing liquidity and financing for banks and companies.

Central Banks to the Rescue?
Central banks in many Latin American countries have acted swiftly to inject of liquidity into financial systems to ensure credit does not dry up as a result of the global crisis.

Central bankers, finance ministers and the Latin American Banking Federation have repeatedly assured companies and the public that the region is better prepared than ever to face this sort of crisis, thanks to sound macroeconomic fundamentals and large foreign reserves.

Central banks in the largest countries have agreed to work more closely with one another through technical cooperation and information sharing, but interest rate decisions are still made at the national level, not coordinated among countries.

The Role of State Banks
Governments in several nations have also aggressively used public-sector banks to provide credit and other types of financing to particularly vulnerable to the crisis or those that are important for economic growth.

Brazilian federal banks Banco do Brasil and Caixa Economica Federal and Sao Paulo state bank Nossa Caixa have together made several billion dollars worth of financing available for various industries, among them the country's important export and automotive sectors.

Chile's government acted to increase the available capital of the country's only state bank, BancoEstado, by 50%, to the tune of some $500 million. This is to ensure financing for small and medium-sized companies and mortgage lending at favorable rates for the middle class.

State-owned Mexican development banks Nafin, Bancomext and Sociedad Hipotecaria Federal put up close to $7 billion to support the local capital markets, real estate financing and debt issued by non-bank financial institutions and residential mortgage-backed securities.

Multilateral Moves
Several multilateral entities have also pledged billions of dollars in liquidity for Latin America's financial system, as well as increasing regional credit lines and lending volumes.

The Andean Development Corporation (CAF), Inter-American Development Bank (IDB) and Latin American Reserve Fund together promised $9.3 billion in liquidity to aid the region's financial systems.

The CAF raised its credit lines for financial institutions in its 17 member countries from $1.5 billion to $2 billion.The IDB is speeding up loan issues and expects to lend a record $12 billion in 2009, and also pledged a $20 million financing facility for the region's 600 microfinance institutions and their 8 million clients.

Outlook
High inflation, rapidly falling commodity prices and deteriorating consumer confidence are all contributing to the more adverse outlook for the region's banks. Mexico's banking sector is especially troubled, with the possibility of bad loans increasing to more than 10% of total loans in 2009.

But Latin American banks are well-capitalized in general and have reasonable access to liquidity. In contrast to the gloomy economic outlook for developed economies, the region’s banking sector will continue to attract investments from some international banks and private equity investors in the near term.

IMF and World Bank paint a bright future for Panama

2008-11-11T09:11:00.000-08:00

Contributed by Sam Taliaferro - Panama Guide

It does not come as a surprise that the Multi-national banks are touting Panama's strong financial position as they are also committing billions of dollars to the canal expansion project. At a recent meeting in Washington, Augusto de la Torre, chief World Bank economist for Latin America and the Caribbean, predicted that Panama would stand out as the fastest growing country in Latin America in spite of the impact of the financial crisis. The only cautious statement was "Estimates by the two financial institutions varied somewhat by the magnitude of the impact the global financial slowdown would have on Central America, as well as the effect recessions within the economies of key trading partners may have on the local economy."

We often hear about these banking entities being involved in high level projects in various countries but we don't know much more than what is put out by their press releases or the news media. So what really are these world banks and what is their purpose? I found an article from this week put out by the Global Policy forum, who's stated mission is to monitor policy making at the United Nations, promote accountability of global decisions, educate and mobilize for global citizen participation, and advocate on vital issues of international peace and justice.

It is interesting to note that both these financial institutions came about In 1944, as the end of World War II was coming into view and in the aftermath of financial disorder following the Great Depression, the two Bretton Woods institutions, the World Bank and the International Monetary Fund (IMF), were created. Interestingly, in the next week Brenton Woods III will take place because a similar economic situation is facing the U.S.. The report shines an unflatering light on the organiszations their continued failure to follow their mandates.

Here are some interesting excerpts from the article:

Both institutions have also played havoc with the development process of many developing countries, pushing them deep into debt and economic decline for a number of years."

However, over the years, both institutions deviated significantly from their respective mandates to become politicized, over-ambitious and grasping all decision-making in countries that fell in dire need of their resources.

At the same time, the management of these institutions is dominated by the US, a handful of European countries and Japan. While the institutions preach good governance and management, they have been unable to adapt themselves.

Panama: Boom or Bust?

2008-11-11T08:58:00.000-08:00

By Michael Manville for nuwireinvestor.com - While most of the world faces downward-sliding real estate markets and a global credit crunch, it is easy to assume that Panama's real estate market will follow. On the other hand, perhaps a speculative real estate boom has coincided with a variety of real geopolitical events that enhance the intrinsic value of Panama's real estate market in the wake of new trends related to globalization. Boom potential: Panama has been posed to grow exponentially in terms of tourism and real estate, particularly with baby boomers and other retirees and expatriates looking for affordable alternatives to well-established markets such as the Caribbean, Mexico and Costa Rica. Over the last several years, Panama has emerged as one of the hottest international destinations for tourism, real estate and business investment. Panama City hotels have doubled their rates and still there is almost no vacancy. Million- and billion-dollar projects are scheduled throughout the country, and real estate agencies have sprouted up on every corner. (more)

source: Panama Guide

One More Reason to Consider Retiring in Panama

2008-11-05T19:41:00.000-08:00

"The rich are looking to get their money out of the U.S."

2008-10-21T17:15:00.000-07:00

As a sign of the times this article from International Herald Tribune blog is about the high end of the real estate market slowing dramatically. Many falsely believed that those with money would still spend it as if nothing had happened to the economy. The truth is that the rich are like everyone else when it comes to money. When they see more going out than coming in they get concerned and pull back on spending.

As the U.S. is forced to become an even more socialist country many will be doing what is quoted at the end of the article. Sharon Simms, a luxury specialist in St. Petersburg, Florida, has also noticed a bump in international business, but with a twist. “For the first time I’m seeing U.S. citizens looking to get a percentage of their assets outside the United States,”.

This may well be the benefit that Panama will see from the economic shock and oncoming plan to redistribute wealth in the U.S. and Europe. No matter what the politicians promise about taxes, the fact is that somebody is going to have to pay for the mistakes that were made and those that have it will be the ones that have to pay. Unfortunately it won't be the bankers and rich politicians that got us into this mess that will pay. It will be those who through prudence, providence and hard work accumulated wealth and did not live beyond their means. But as this article points out, the rich will be looking at getting their assets and their asses out of harms way and Panama is poised with plenty of property and banks to take care of them. Read the story here.

Panama Sees $1.1 Billion in Foreign Direct Investment in First Six Months of 2008

2008-10-21T17:08:00.000-07:00

By Marianela Palacios Ramsbott for La Prensa - Foreign Direct Investment (FDI) entering Panama in the first semester of 2008 reached $1.1 billion dollars, representing an increase of 32.8% when compared to the same period of 2007, according to a report published by the General Comptroller of the Republic. The increases are primarily due to investments by banks and utilities of general license operating in the country. Other areas that have attracted great volumes of foreign investment during the past year are construction, the expansions of port facilities, the entrance of new cell telephone companies into the Panamanian market, as well as projects to increase the generation of electricity. And, according to the economic consulting firm Indesa, everything seems to indicate the flow of FDI will continue to grow strongly in the mid term, unless a strong recession in the United States and the global economic deceleration contracts international investments. “In order to expand the installed electrical generation capacity of 993 megawatts, as is predicted, will require an additional investment of $1.2 billion dollars in hydroelectric facilities over the next five years," said Indesa. And “for the period 2010-2011, $2.8 billion dollars or 53% of the total cost of the expansion of the Panama Canal will already have been invested." Between 2005 and 2007, foreign direct investment represented an average of 17.5% of the gross domestic product. But, according to estimations from Indesa, that indicator will jump to 52.3% in 2011. On the other hand, the United Nations Conference on Trade and Development (UNCTAD) anticipated recently that, in spite of the crisis in the United States, foreign direct investment in Latin America will continue growing this year and that Panama will not be the exception of that rule.

Editor's Comment: These are the kinds of numbers that cause economists to lose control of their bodily functions. Did you see the line about the expectation of seeing a level of foreign direct investment equal to 52% of the GDP in 2011? I mean, holy friggin' cow. Money is just pouring into this place in buckets. History will see this period as the golden times of an unprecedented expansion in Panama's relatively tiny national economy. Panama has had the fasting growing economy in Latin America for two years running. Sure, the crash in the US is going to have an impact, especially with regards to access to credit for large and ambitious construction projects, but overall I still think foreign investors will see Panama as a relative safe haven with attractive potentials for significant near to mid-term growth.

source: Panama-Guide.com

Construction Up 52% Compared To Last Year

2008-10-21T17:07:00.000-07:00

By GILBERTO PÉREZ for La Estrella - From January to August 2008 investment in construction rose 52%, from $726.2 million to $1.143 billion dollars compared to the same time period of the previous year, according to the primary monthly economic indicators of the General Comptroller of the Republic. Numbers reported by the Direction of Statistics and Census reveal that in the district of Arraiján growth was 133.2%, increasing from $21.3 million to $49.7 million dollars. In Colón growth was 84.2%, increasing from $19.2 million to $35.4 million dollars. And in Panama the increase was 54.3%. In addition in the areas of David, Bugaba, Chitré, Aguadulce and

Panama's annual GDP for the entire nation is just over $9 billion dollars, annual. This report says that in the first eight months of 2008 already more than $1.1 billion dollars has been spent on construction. That's an amazing number considering the tiny size of Panama's economy.

content compliements Panama-Guide.com

In Panama, a Home in the Mountains

2007-11-30T08:44:00.000-08:00

December 2, 2007

By KEVIN BRASS

ALTOS DE CERRO AZUL, Panama
The terrace of Rachelle and Ben Smith’s home is one of the few places on earth with views of both the Pacific and Atlantic oceans. On clear days, they sit there and watch the ships line up to enter the Panama Canal.

The area is also something of a bird paradise. Ornithologists regularly lead tours through the valleys, hoping for glimpses of the toucans, migratory birds and rare hummingbirds that regularly visit the treetops in the Smiths’ backyard. “The rope across there is for the monkeys,” Mr. Smith said, pointing to ropes strung through the tall pines around the house, near platforms covered with sliced bananas and bird feed.

The couple paid $150,000 in March 2006 for their three-bedroom, three-bath home. The house is situated on two acres of land, and it is a little more than an hour’s drive from Panama City.
In 2003, after Mr. Smith — who goes by “Smitty” — sold his plumbing business in Jacksonville, Fla., the couple spent three years living on a 38-foot sailboat called the Seawolf. But two years ago, while they were visiting relatives in the United States, their boat was destroyed by Hurricane Wilma.

Their initial search for a new home focused on the Caribbean and Costa Rica. But then they met Marie Farrell, a Panama native and an agent with ReMax in the Jacksonville area.

Fast-growing Panama is generally considered an easy place for foreigners to buy property, compared with other countries. English is commonly spoken, the United States dollar is the accepted currency, there are no restrictions on owning land in most areas and the government offers a long list of friendly discounts for pensionados, expatriates who have settled in Panama.
For the Smiths, Panama had an extra appeal — no hurricanes. “We were sick and tired of running from hurricanes,” said Mrs. Smith, 52.

Read the whole story here

Hard Rock International comes to Panama

2007-11-29T15:41:00.000-08:00

This is great news for Panama tourism. And guess what, there is a residential component (condo/hotel) to the project. Thanks to Martin Sosa for sending me this release.
"The Seminole Tribe of Florida and Seminole Hard Rock Entertainment, are very proud to announce the first Hard Rock Hotel in Central America," says Jim Allen, Chairman of Seminole Hard Rock Entertainment. "Panama, known as 'the Bridge of the World,' will continue Hard Rock's ongoing commitment for international expansion in interesting and strategic locations."
Hard Rock International and Lagomar Resort Announce Development of Hard Rock Hotel Panama Vibrant Resort Property to Offer a Four-Star, Luxury Environment Combined with Unique Rock Vibe 27 November 2007
ORLANDO, Fla., Hard Rock International and Lagomar Resort, S.A. announced today plans to develop a Hard Rock Hotel in Farallon, Panama. Hard Rock Hotel Panama will be situated along Playa Blanca Beach in Farallon. The newest location will be reflective of the luxurious brand, as well as Hard Rock's ongoing strategy to accelerate expansion of their properties worldwide.
With broad views of the Pacific Ocean, the resort will provide outstanding oceanfront views along 1,200 feet of Panama's coast. The tropical location, combined with Hard Rock's renowned, luxurious quality standard, offers another unique destination resort for one of the world's most globally recognized brands. This is Hard Rock's first hotel property in Latin America.
"The Hard Rock brand continues to expand to locations that offer key attractions including climate, beaches and natural beauty," said Hamish Dodds, president and CEO, Hard Rock International. "We feel this ideal Latin America location will be of interest to our growing clientele, and foresee this as a strategic business adventure reflective of Panama's developing tourism sector."
Hard Rock Hotel Panama will offer 445 luxurious guestrooms that range in size from 530 square feet, to 1,910 square foot 'rock-star suites' -- a signature trademark of the Hard Rock brand.
"We are excited to bring the Hard Rock Hotel experience to these pristine Pacific beaches," says Wayne Bryan, CEO of Lagomar Resort, S.A. "It's the right place to invest, with perfect weather and a forward-thinking government. Additionally, Hard Rock's blend of luxury and lifestyle provide an unparalleled visitor experience."
The surrounding natural landscape, including miles of sparkling white sand beaches, towering palms, and flowering plants indigenous to Latin America will undoubtedly serve as a complimentary backdrop for the hotel property and its amenities.
Several food and beverage outlets are planned for the resort, which will include a lobby bar/lounge and three unique restaurants inside the hotel. A luxury health spa will be open for guests, offering incomparable spa treatments exclusive to Hard Rock for visitors to unwind. Additionally, a business and conference center will be available, providing 25,000 square feet to accommodate large meetings. A smaller ballroom will also be on-site for more private, intimate affairs.
"The Seminole Tribe of Florida and Seminole Hard Rock Entertainment, are very proud to announce the first Hard Rock Hotel in Central America," says Jim Allen, Chairman of Seminole Hard Rock Entertainment. "Panama, known as 'the Bridge of the World,' will continue Hard Rock's ongoing commitment for international expansion in interesting and strategic locations."
Currently experiencing a real estate boom, properties in Panama are rapidly increasing in price and turning the country into a seemingly excellent destination for investments. Spectacular wildlife, scenic clouds forests, and beautiful beaches provide a wealth of options for travelers interested in water sports and leisure, or relaxation.About Hard Rock International With 121 high-energy Hard Rock Cafes and nine Hotels/Casinos in 47 countries, Hard Rock International is one of the world's most globally recognized brands. Beginning with an Eric Clapton guitar, Hard Rock owns the world's greatest collection of music memorabilia, which is displayed at its locations around the globe. Hard Rock is also known for its collectible fashion and music-related merchandise, Hard Rock Live performance venues and an award-winning website. In addition to the two flagship Seminole Hard Rock Hotels and Casinos in Tampa and Hollywood, Fla., Hard Rock Hotels/Casinos are located in Las Vegas, Biloxi, Orlando, Chicago, San Diego, Pattaya and Bali. Additional hotel and casino projects have been announced in Macau and Penang, both scheduled to open in 2009; Palm Springs and Atlanta, both scheduled to open in 2010; and Dubai, scheduled to open in 2011. Hard Rock International, Inc. is owned by Seminole Hard Rock Entertainment, Inc. For more information on Hard Rock, visit www.hardrock.com.About Lagomar Resorts, S.A. From the rain forests of Costa Rica to the desert oasis of Las Vegas, the Lagomar team brings a wealth of experience in envisioning and building world-class lifestyle destinations. Lagomar resorts boast everything from trend-setting design and environmentally-friendly construction to innovative financing in an effort to create a rewarding experience for everyone from guests to investors. For the past two years the team has been focused exclusively on the Panama project, covering thousands of miles of coastline to find the ideal place for a luxury resort destination. Together with the Hard Rock Hotel, Lagomar Resorts are committed to bringing an unequalled, ecologically conscious vacation experience to visitors from around the world. For more information on Lagomar visit www.lagomarpanama.com.