Panama Trade, Deserts and Electricity
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Dear Panama E-Letter Subscribers:
Panama-Canada Free Trade Agreement, FDI Ratings and Travel to SariguaBy Matt Atlee Panama has signed a free trade agreement with Canada which would eliminate 90% of the tariffs currently imposed on Canadian products entering the Panamanian market, such as frozen potato products, beans, lentils, as well as some meat and pork cuts, fish, and seafood. The remaining tariffs will be phased out after 15 years. This was clearly an important agreement between Panamanian President Ricardo Martinelli and Canadian Prime Minister, Stephen Harper. The agreement should be important to Canadian businesses who might be interested in exporting machinery to Panama as Panama pushes forward with the Canal expansion project. The trade agreement is also important to Canada as its biggest trading partner, the United States, is experiencing a nasty recession. Canada is looking for other trading partners as trade slows with the U.S. Last year’s trade between Canada and Panama amounted to $149.1-million. Canadian direct investment in Panama today is about $111-million – most of that investment is in banking and engineering. Traditionally, Canada has been a big investor in the mining sector in Panama. A number of small Canadian mining companies have opened mines in the interior of Panama. The most famous being the Santa Rosa gold mine at Cañazas, which for many years was run by the Toronto based company, Greenstone. Greenstone also operated mines in Nicaragua and Honduras. FDI RatingsFDI (Foreign Direct Investment) Magazine recently released its research as to which countries in the Caribbean and Central America offer the best investment environment. This year’s winner was Puerto Rico followed closely by Costa Rica and the Dominican Republic. FDI Magazine analyzed six areas to determine which country offered the best investment environment: economic potential, human resources, cost efficiency, quality of life, friendlily business environment, and investment attraction strategy. Panama finished third in developing a coherent investment attraction strategy, with Costa Rica second and the Dominican Republic first. All three countries have developed very attractive free-trade zones that allow investors to operate in a 100% tax free business environment in areas such as income tax, construction tax and value-added tax. The Dominican Republic was rated high in economic potential because of its large labor force which has propelled the economy to an average GDP growth rate of 7% between 2005 and 2008. The Bahamas and Jamaica were rated as countries with the best infrastructure. Nicaragua and Haiti were rated highly in the category of cost effectiveness because of their low minimum wage and low industrial and office costs. Costa Rica was ranked in the top five in five categories: economic potential, quality of life, business friendliness, human resources and FDI strategy. Puerto Rico was strongest in business friendliness because of the high number of high-tech services, high-tech industries and knowledge-based sectors in its dynamic economy. Human Trafficking in PanamaHuman trafficking has been a problem in Panama going back to the 1990s when large numbers of Chinese citizens were smuggled through the country en route to the United States and Canada. This smuggling in people eventually caused a political break between President Ernesto Balladares – who was accused of being involved in trafficking – and the U.S. government. Today, it’s not Chinese but rather Africans that are being trafficked through Panama. Just this week a number of Somalians were caught in the Darien region of Panama. The Somalians entered Panama from Colombia with the help of a Panamanian guide. Travel to Sarigua
Sarigua is a National Park because of the indigenous communities that once lived there. There are archeological digs going on in the desert and important remnants of the earlier civilizations that once lived here have been found. You can see shell mounds and pottery shards that have been uncovered by researchers from the Smithsonian Institute. I would recommend visiting Sarigua during the dry seas; this is when the Sarigua desert is at its most dramatic. Electricity in Panama“The price of electricity must go down”, stated President Martinelli on Monday the 24th of August. Martinelli would like to see the price of electricity lowered, especially for those in the lower classes. The discussion over electricity has opened up a wider debate on the intersection of sate authority and the profits of multinational corporations who deliver most of Panama’s electricity. Jose Blandon, an influential member of the National Assembly, argues that multinational corporations are not respecting the regulatory system that the Panamanian state has in place to protect consumers. President Martinelli and Blandon see blatant disrespect as form of “savage capitalism” and want a friendlier relationship between the Panamanian community and multinational corporations. Everyone from business leaders to homeowners would like to see electricity costs go down, but so far rates have remained high. Written By Matt Atlee Panama 101 – E-Book – $69
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There is a desert in Panama: it’s called Sarigua and is located in the province of Herrera. The desert formed over time because of extreme deforestation: slash and burn agriculture will eventually create desert conditions. The day we went to Sarigua there was no one, which made Sarigua’s environmental desolation even more depressing.