Pioneers Leave Panama - Newsletter Edition

Written by Matt Landau

Wednesday, 14 October 2009 01:00

On Friday, September 25th, the same day that Panama's newly elected President Ricardo Martinelli threw out the ceremonial first pitch at a Yankees-Red Sox thriller in the Bronx, the fifth citizen of Panama died from dengue fever, a tropical hemorrhagic disease spread by infected mosquitoes in the developing world. Also on that day, the seizure of a 200-kilo cocaine raid was announced in one of Panama's most famous beach regions, a gang shootout in the capital's UNESCO historic district left an accidental tourist in the ICU, and a straying cow mauled in a highway co llision was eagerly dissected by locals desperate for food. The newsreel might come off as startling were it not for the fact that none of these incidents are particularly unusual to Panama nowadays save the ceremonial first pitch. This and other articles are exclusive to our Award-Losing Newsletter - which you can sign up for FREE on the left hand column of this page.

Before Yankee's Stadium, a more serious President Martinelli concluded his speech at the United Nations Headquarters declaring to world leaders that Panama is officially open for business. Martinelli's words of assurance read like a laundry list of success-spawning agents: "the Dubai of the Americas," he forecasted. "Friendly and flexible immigration and labor laws...a spirit of service and open doors...the ideal place to invest, establish companies and to live."

To foreigners who know Panama only by its Canal, the speech came off as decisively utopian. But to those on the inside those who have experienced the country first hand for several years, many of the President's words fell on frustrated ears. Beyond its growing pains are the less publicized obstacles of life in Panama as a foreigner: ironically many of the very aspects the President has touted now for some time.

Jim Forrester is a middle-aged Florida retiree who, after several investments in Costa Rica, chose the interior hills of Panama for their great climate and immaculate views. The region's renowned fishing didn't hurt either for Forrester who set the world record for striped marlin at 226.5 pounds in Costa Rica. "I felt safe coming here," Forrester said. "It was just a great alternative to retirement in the United States."

One might be tempted to call Forrester the model foreign investor were he not, after three successive years, prepared to leave Panama for good. "Banking and immigration," he says, "are the two biggest factors. The amount of hoops you need to jump through can be painful. We're still waiting on our investor visa. It's now been 18 months." Forrester is among a growing demographic of once Panama devotees who, over its years of record growth, feel that Panama takes its toll over time: that the infrastructure for investing, working, and relocation, is not nearly as foreigner-friendly as they're made to seem.

Forrester cited Panama's increasing transparency ties with the United States as the ultimate example of counter-reasons to continue investing. "I think the worst is yet to come," he said. "With the legislation being built now to circumvent privacy laws, the Panama constitution will soon be null and void. Which is exactly why a lot of people left the US."

These frustrations are echoed by many Panama devotees: many foreigners who have invested time, money, and passion into the country are now discouraged to the point of departure. Typical of them one particular international developer with ten years of Panama construction experience in commercial and residential real estate both in the City and beach who chose not to be named in this interview.

"As promoters of this country and over $10 million invested, we simply don't feel Panama has progressed enough in the right direction over the years to warrant further commitment. From a lifestyle point of view, it's gotten significantly more dangerous, crowded, and overpriced. From a developer's point of view, the amount of red tape and hurdles, assuming you are not a big fish, makes doing business maddening. Don't get me wrong, we love the country dearly, but trying to do business the right way is exhausting and we're just all tuckered out."

One of Panama City's strongest selling points is the historic district of Casco Viejo, which has seen a distinct rise in crime since Martinelli's inauguration. It was the night of his speech to the United Nations in New York City that, due to budget restraints, Casco Viejo's tourism police were limited in force and thus unable to stop a gunfight between two local gangs: this roughly four blocks from the heavily guarded presidential palace.

According to the United Nations Office on Drugs and Crime (UNODC), drug trafficking through Panama has more than quadrupled over the past decade: In 2000, the Republic seized just under 6,000 kilograms of cocaine. In 2007, that number jumped to more than 32,000 kilos with the unreported numbers in 2008 and 2009 staggering. Concerns that Mexican and Colombian cartels are increasingly using Panamanian turf are prevalent among foreigners and locals alike, particularly with express kidnappings, a cancer in nearby Costa Rica, becoming more common everyday.

While it can be easy to harp on all Panama's growing pains, there has been something of a resurgence in its high-profile real estate market: one which many expected to spiral downwards due to the economic recession. Real estate consultants like Kent Davis of the boutique agency Panama Equity say that in fact, there's a lot of activity. Davis believes that living in Panama takes some serious adjustments, but with hard work and iron patience, success is still feasible and alive. "I'm not the only person in town making sales, but movement overall was slower during the first three quarters," he says of the recession which has dogged many Panama sectors dependant on foreign direct investment to a halt. "The key is not to get frustrated by the local nuances. Patience is key, and you just have to keep telling yourself, â€˜this is Panama.'"

Some may argue that although Martinelli's efforts to organize and upgrade Panama seem grand and visionary, his plate is simply full with barriers too many in number to control. Corruption sits publicly at the top of the administration's concerns, but below it lie a myriad of systematic details to truly catapult Panama - in the eyes of its visitors - into something world class: income disparity, security, immigration, banking. Some of these issues were left out of Martinelli's UN speech to the world. Others were downright falsified.

With the onset of 2010, it is expected that some of Panama's long time foreigners are preparing to move on. They were an experimental bunch who enjoyed the fruits of Panama's nascent labor; a pioneering group with faith in a small emerging republic. And though many of them are ready for a new challenge, in their wake will surely arrive a new wave of Panama enthusiasts ready to pick up where their predecessors left off.

Note: Image found on www.backroads.com/trips/BCRI/

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Friendly immigration and labor laws?
written by fusionx , October 17, 2009

Unless Sr. Martinelli is making huge changes that no one knows about, that's the most rediculous statement he's made yet. Immigration, in the reality of the process, is the most tangled, spaghetti-like mess in the southern hemisphere. And the labor laws? I have to pay someone to fire them for theft. Tried and convicted, "here's your check - should I give it to your mother while you are in jail?". It's simply crazy.

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well though out
written by Alma S. , October 23, 2009

matt, a very well thought out article. i really appreciate your true and realistic approach to journalism. it is a hard thing to come by these days - someone without ulterior motifs. congratulations and we look forward to the next newsletter!

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Can Martinelli do it?
written by Panama Investment Group , November 24, 2009

Martinelli has a huge job cut out for him. For starters, he has changed cabinet ministers and directors, but the same government employees are running the day to day in the same corrupt and inefficient fashion - MIVI, Municipio, Bomberos...what a joke!

I truly, truly, hope Panama changes, it could really be a great place (and is) if you don't work and live here full time as a foreigner.

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