Panama
Country facts
While some of its neighbours in Central America struggle with commodity-based economies, Panama is busy reinventing itself as a regional logistics and services hub.
That was a position it enjoyed in the 1970s, when an offshore financial industry briefly flourished. Then came the dark years of Manuel Noriega, a thuggish strongman toppled by an American invasion in 1989. Several undistinguished governments followed.
Several things have now come together to produce an extraordinary boom in Panama. The economy will expand by 11% this year and by over 9% in both 2008 and 2009, according to a forecast by LatinSource, a consultancy. That is faster than anywhere else in Latin America.
The first was the transfer of sovereignty over the Panama Canal in 1999. Since then, the canal has been run as a Panamanian business, rather than a branch of the United States' federal bureaucracy. President Martín Torrijos, who took office in 2004 (and whose father, a military ruler, negotiated the canal handover in the 1970s), pushed through a referendum last year which approved a $5.2 billion plan to expand the canal, doubling its capacity and enabling it to take much bigger ships. Work is due to start in August.
Other big projects are planned in the wake of the canal expansion. Occidental Petroleum, in partnership with Qatar Petroleum, plans an oil refinery, costing $7 billion, at Puerto Armuelles. A consortium led by Hutchison Whampoa, a Hong Kong company, plans to turn Balboa into the largest port in Latin America. China's government-owned shipping operator, COSCO, is competing to build a second mega-port, this one on the Caribbean coast—even though Panama recognises Taiwan. Copa, a local airline, aspires to turn Panama into an alternative regional hub for travellers deterred by the security hassles of Miami airport.
The second factor is that Mr Torrijos's government has been rather more effective than its predecessors. He has cleaned up the public finances, pushing through an unpopular reform of social security. He actively courts foreign investors. He has negotiated a free-trade agreement with the United States, which Panama hopes will soon be ratified by the American Congress. But he also has close ties to other regional leaders, including Cuba's Raúl Castro.
This week Spain's prime minister, José Luis Rodríguez Zapatero, was the latest foreign leader to drop by, with a coterie of businessmen in tow. New foreign direct investment more than doubled in 2006 compared with the previous year, accounting for 16% of GDP—a share that is twice as big as in any other country in the region, according to the UN Economic Commission for Latin America and the Caribbean.
The government has finally got around to developing the prime land once occupied by American military bases in the former Canal Zone. The UN is moving its regional headquarters into one; another will become a technology park. Last week the government signed a contract with London & Regional, a British property company, which plans to build housing and industrial units at the former Howard Air Force base. Some of the new housing is aimed at American retirees, who are flocking to Panama. Donald Trump, an American property developer, is planning a 68-storey hotel and resort.
But as the developers pile in, not everyone is cheering. Some worry that the property bubble will soon burst. Others note that a weak education system does not produce enough engineers or skilled workers. Contractors are likely to import skilled labour from abroad. But with 40% of Panamanians still living in poverty, and unemployment at 8.6% last year (though falling), that will not be popular.
A handful of families continue to control much of the country's wealth and benefit from cosy ties to government while most Panamanians struggle to make ends meet. Mr Torrijos proposes to increase the minimum wage of $300 a month. American diplomats worry that if the benefits of growth don't filter down, the resulting sense of injustice could fuel political radicalisation.
A bigger, related, worry is corruption. Foreign firms are beginning to complain that they are hampered by the informal links between government and local business oligarchs. Sam Taliaferro, an American who runs a property business catering to foreign retirees in Boquete, a hill resort, says that corruption threatens to choke off foreign investment. With three-dozen other investors, he has formed a group to campaign against what he sees as the gouging of foreign firms.
Though Mr Torrijos's government has a cleaner record than its predecessors, it has not been scandal-free. An uncle of the president controversially acquired vacant land, and went on to destroy protected mangrove swamp without the necessary permit. It is hard to judge how deep corruption goes, or how much of an impact it may have on foreign investment. But if Panama's boom is to propel it swiftly to developed-country status over the next decade or so, it would help if it rested on a stronger institutional foundation
http://www.economist.com/world/la/displaystory.cfm?story_id=9519426&CFID=8694858&CFTOKEN=51364303
Canal:
total length of the canal is 47.9 miles (77.1 kilometres).
Tourism
Is Panama City the Next South Beach?
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/16/AR2007021600623.html
The Latin metropolis of Panama City is that of a posh and urban-chic vibe, yet embraces you with the warm and friendly gestures of the South American culture. Tourists from all over the world are drawn to this unique city for more than its charm. And, it is also a wallet-friendly place to visit, for now, at least. The eyes of the business world have also noticed Panama City with the likes of Donald Trump building his own skyscraper. Prices will soon soar, especially when the Panama Canal locks project is finished. Either way, Panama City is fast becoming a hot destination for travelers and businesses.
News
Singapore's PSA to Build Container Terminal in Panama
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070312%5cACQDJON200703122137DOWJONESDJONLINE000591.htm
The Panama Canal is getting a new container port, along with its long awaited overhaul. Set to be built by Singapore's Port of Singapore Authority (PSA) International, the new facility is expected to double the port capacity of Panama over the next eight years. It will also be able to handle 450,000 twenty-foot equivalent units of containers annually.
Shipping Industry Complains About PanCanal Toll Hikes
The Panama News, by Eric Jackson (March 27, 2007)
http://www.thepanamanews.com/pn/v_13/issue_06/business_03.html
The Panama Canal Authority (ACP) has announced a hike in rates for ships that utilize the waterway of about 3.5% for the next 20 years. The shipping industry has publicly complained about the decision and threatens to cross with the Suez Canal. The ACP defends the increased rates for paying off the third locks system and contends that even with rates increases ranging from 26-34%, it is still cheaper to use the Panama Canal.
Links
Panama: Panama Information Online Guide
http://panama-information.executivehotel-panama.com/
This guide provides general, travel, and business information for Panama. Sections include business practices, security and service, economy, history, Internet, and much more. Although last revised in 2003, the guide still contains a lot of useful information.
Panama: go4PanamaBusiness
http://go4panamabusiness.com/
go4PanamaBusiness provides a series of trade leads on topics like construction, agriculture, automotive, and others. The site also contains Panama-based suppliers, buyers, and products as well as foreign-based suppliers, buyers and products. Trade leads can be posted after a free registration.
Books about business in Latin America:
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