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Uncensored Panama Is Marked By Success, Marred By Challenges

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Written by Matt   
Tuesday, 19 April 2011 20:21

Summary: Panama makes large strides in certain arenas while taking dangerous steps back in others. Freedom of press and corruption taint Panama’s reputation in the world market whereas economy growth and emerging markets produce impressive headlines. In the spirit of globalization, hospital Panama often overlooks its own vibrant culture, online however in terms of pure numbers, the country appears, and now has appeared for roughly four years, on track for great success.

Overall, Panama still has the feel of a vastly improving third-world country

Traffic: Traffic in Panama’s interior remains well-handled while traffic in the nation’s capital is heavy (though not remarkably worse than any other emerging nation). With a new bus system, locals have a cleaner way of getting places but also a more expensive one: bus rides have increased from $0.25 (old American school buses) to $1.25 (new Volvo model) making transportation considerably more expensive for a number of Panamanians living in suburban areas. The new metro, Central America’s first, will take years to build and, in the process, seriously congest several main arteries of downtown Panama City. In other words, traffic in Panama City will get far worse before it has a chance to get better.

Prices: All goods and services have gotten more expensive in Panama, from gasoline to luxury real estate. Wages have incrementally increased. Taxi rides are still one of the best “bang for your buck” deals followed closely by manual labor, Asian imports and everything intended for local consumption in the Republic’s interior. While wages have increased, lower-class Panamanians are beginning to struggle to make ends meet: priced out of Panama City, losing the battle for the price of rice, unable to deal with inflation. Panamanians tend to be critical of President Ricardo Martinelli in this regard (among others).

Infrastructure: Panama is chock-full of infrastructure projects, which, on paper, make the country appear steroidal in its growth. Two completed projects already positively impacting society are the Cinta Costera and Corredor Norte (making the Caribbean coast significantly more accessible). The government is slated to spend close to $5B on infrastructure projects over the next several years including (but not limited to) a third bridge crossing the Panama Canal, underground parking lots in Panama City, and the cleaning of the Bay of Panama. Some concern hovers over Panama’s national debt, which, until several years ago, was low. Concern also surrounds Panama’s inevitable ensuing labor shortages as they relate to such massive projects and strictly protectionist immigration laws.

Tourism: Panama’s Tourism Authority has made it clear their priorities lie in and around three attraction pillars: gambling, shopping, and conventions. Tens of millions of marketing dollars are spent promoting Panama at travel conventions around the world as well as in traditional print media in the world’s most influential cities. Published tourist statistics in the Republic are still largely deceiving and unorganized, however tourism investment over the past five years in Panama was estimated at $2.9M.  Very few incentives exist for eco-friendly tourism enterprises though a small movement by IPAT has attempted to lure surfers by hosting large events and waving surfboard fees. Medical tourism has also seen growth as has convention-related tourism and cruise ships. Prohibitively expensive airline rates inhibit the flow of tourists connecting with other Central/South American countries.

Culture: Panama still has a long way to go in the preservation and maintenance of its rich heritage. Too often dollar signs and an obsession with modernity overshadow the need for preservation and appreciation of the arts. A new Frank Gehry-designed Biodiversity museum will fill a void as are currently various events in the historic district of Casco Viejo such as Art Block, GlamFest, and Jazz Fest. Panama’s National Culture Institute is still fairly inept when it comes to harnessing any cultural draw due to poor personnel. The strongest advocates of Panama culture appear to be mostly foreigners who have opened hotels and tour agencies in the Republic’s interior. The historic district of Casco Viejo is once again at the mercy of Panama’s President, facing threats of a highway, which would encircle the UNESCO World Heritage Site. The UN presented President Martinelli with proper concerns and warnings though, as with much of this administration, not much about the process is made public.

Dining, Nightlife, Entertainment: Panama City remains the nerve center for Panama’s culinary revolution and realistically for all of Central America. The quality of food and restaurant service has improved due to increased competition. Bars and nightclubs tend to have shorter and shorter lifespans. Prices at both dining and entertainment establishments have increased roughly 35% rivaling those of second-rate US/European cities. Prostitution still remains a strong mast of the Panama’s tourism industry even though it’s promoted entirely under the table. Attracting women mostly from Colombia, Panama has superceded Costa Rica as Central America’s sex tourism capital. As single tourist males, is virtually impossible to find a taxi driver at night who doesn’t actively pitch strip clubs or brothels. The historic district of Casco Viejo continues to be the hub of Panama’s alternative dining/nightlife scene. 

Safety: Panama still remains comparatively safe for visitors and investors. While there has been a sizeable increase in drug-related activity (seizures, homicides, corruption), these acts still mostly remain isolated both literally and figuratively speaking. Crime against tourists (still low) is distorted by a handful of ugly incidents such as the Playa Blanca cowboy attack, Wild Bill the Bocas del Toro serial killer, and murderous boat captain Javier Martin. Panama shows low crime against foreigners (muggings, express kidnappings, scams) compared to neighboring Costa Rica. However while homicides as a whole are down, the general sentiment is that crime targeting tourists (such as home invasions) is up.  Of all things, Panama’s accident-prone streets continue to be one of the most dangerous places a foreigner can spend their time.

Doing Business: It is one of Panama’s top self-proclaimed strengths, doing business in the capital, however the climate for entrepreneurs from abroad is highly deceiving. Limiting immigration laws, red tape, and a lack of service mentality seriously compromise the huge (and legitimate) opportunities to do business in Panama as a foreigner. Despite being promoted as world class, the ability to get financing, open a bank account and secure competent lawyer services is flawed. Panama’s banking district is surprisingly discombobulated (if not downright frustrating). However the amount of business opportunities still seem to outweigh the complications to date.

Emerging Markets: Healthy/active lifestyle businesses (such as restaurants and fitness companies) represent a growing and profitable trend. Also continuing to see growth are low-income housing developments (steadied by government financing), mining establishments, reforestation, telecommunications, and of course, trade as it pertains to the monumental expansion of the Panama Canal. A pending inclusion in NAFTA (the largest free trade agreement in the world) will open up a multitude of business opportunities (of all three countries awaiting legislation (Colombia, South Korea, Panama), Panama’s inclusion looks most imminent). A byproduct of NAFTA will be the dissolving of Panama banking privacy laws as foreigners know them. Tax-evading foreigners (primarily Americans) will begin flooding out of Panama if they have not done so already.

Conclusion: Overall, Panama still has the feel of a vastly improving third-world country. While an initial spurt of hype (2005) sparked the Panama’s real estate and tourism industry booms, most of this has died down and consumers have gotten more realistic. Panama’s largest challenges still seem to be leadership, security (as it pertains to increasing gang/drug violence), immigration, and the management of its brand internationally. Touches of Hong Kong and Costa Rica seem to be realistic expectations. Growth-wise, Panama’s interior is still comparatively ripe for picking. Panama’s location is still (as it always has been) its most valuable asset.



Comments (2)Add Comment
written by mark cole , June 05, 2011
Having lived and operated a business in Panama from 2001-2010, I feel somewhat qualified to comment that this is an accurate and well conceived report. It balances coverage of the perfect storm of conditions that have led to the recent extraordinary growth in Panama but it also recognizes the pitfalls that are ever present in the juega vivo culture. I have left Panama, returning to the "first" world, but I watch with great interest to see if Panama can take advantage of the opportunities that have befallen it or if they will, as so often in the past, self destruct. Time will tell.

With the death of Sam and the absence of Okke the burden of good reporting about Panama falls on the shoulders of Eric Jackson and yourself. Keep up the good work and Thanks...
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written by Houston , June 10, 2011
Interesting emerging market analysis. I think once the transportation problems in the capital are alleviated a lot of people will be glad they got in on the ground floor.
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Last Updated on Tuesday, 19 April 2011 20:29