Panama's Recent Surge |
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| Written by Matt |
| Wednesday, 12 August 2009 07:17 |
 In summarizing the economic activity of Panama with regards to tourism and real estate, the past year has been marred by a substantial slowdown in both markets. Real estate agents who were once rolling in the dough started to experience a drought; hotels that were enjoying full occupancy began to take hits; service businesses saw a precipitous decline. The general gist was that while Panama industries weren't dying from the recession, they certainly weren't thriving either. But of late, a large percentage of the aforementioned seem to be experiencing a resurgence of sorts: a sharp blip on the radar due to, well, no one really knows exactly what.
When on the ground here in Panama, I get a good feel for the ebb and flow of traffic and areas of interest foreigners represent. From web statistics to daily interaction with tourists to communication with the country's experts, my radar is generally pretty accurate in terms of levels of real estate/tourism activity, and the perceived image of Panama outside of the country's borders. And right now, there certainly seems to be some new-found love in the air. While it can be hard to pinpoint reasons for Panama's recent resurgence, the following topics generally seem to come into play. Canal Expansion: The recent awarding of a Canal expansion contract could have been what some investors or director boards were waiting to hear. With over 200 franchises operating in Panama and an increasingly large amount of NGO's, non-profits, and headquartered corporations calling the isthmus their home, each relocation brings with it new housing demands, injected income, and international recognition. The some $3 billion announcement brings free press to Panama in a time of global gloom and also provides (both skilled and unskilled) jobs to those who may otherwise be out of work due to a slowing real estate sector. Anticipated Offshore Laws: Currently in the news for its battle against anti-offshore laws proposed by the OECD, Panama is one of the few remaining privacy havens remaining on earth. Panama's anonymous corporations (a $1k investment) can be used to buy real estate, own bank accounts, or simply protect assets. With so much old Panama money hidden in these networks, it would be naïve to think Panama's top dogs would simply open them up for inspection. Worst-case scenario, the next most plausible solution could be to amend the process of applying an anonymous corporation in Panama. We know people stockpiling corporation as if, quite literally, they're going out of style. {adsense} New President: Panama's new president Ricardo Martinelli has, in only a short amount time, given a lot of foreigners renewed faith in Panama as an investment and travel destination. His finely tuned awareness of Panama's image, understanding of business, and vision for a world-class country has already begun to stimulate the economy and its people. He's gone after high-profile richmen, he's brought light to the country's poor, and he's (so far at least) been a totem pole of positivity and progress. Besides engaging Panama's working class, Martinelli's work thus far has apparently stimulated outsiders as well. The Recession: Elsewhere in the world, people seem to finally be coming to grips with the global recession and as a result, many are looking for alternative places to live, travel, and invest their money. Panama appears on the radar for its low cost of living, good climate, strategic location, friendly people...etc: a place for the cherished money of recessiongoers to travel further, a place for tighter-fisted vacation budgets to extend. Younger, smarter people have begun to consider Panama - they've decided to come for tangible and realistic reasons (being that they like Panama), and not purely to buy a condo for one dollar then flip it for two. So is Panama still "booming" as so many magazines and newspapers like to say? Probably not. It's also not ailing terribly from the global recession. And while declines in Panama began somewhere inside a year ago, the latest pursuits are a testament to its long term potential.
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Comments (10)
  written by P.Sbaily , August 12, 2009 I too have my ear very close to the ground in Panama and agree that, of late there has been some spikes in real estate activity. While it's not everyone that's makes sales lately, the good agents will do well in this market (because it is a smaller market). I agree with your last line too "the lastest pursuits are a testamtent to its long term potential." The ability to survive in bad times so far is the sign of a sturdy economy.
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 written by Pete , August 12, 2009 I am interested in a project in Coste del Este called Green Bay Plaza; Tower #4. Anyone have any insight on this area, community and developer; Corcione?
Thanks, Ed report abuse
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 written by Patriot , August 14, 2009 Panama has unique dynamics. Just wait until this fall when possibly the SHTF in the U.S. after very draconian legislation gets passed such as HR 875, HR 1249, Health Care Reform, etc. If that happens, you will see a mass exodus of Americans trying to get out while they still can. Where will they go? Well Panama is on the radar for many retirees. Martinelli may make Panama LESS attractive for full time retirees. He is imposing social programs that must be paid for by someone, which usually ends up being the gringos. He wants to raise minimum wage? Well labor laws already favor the worker heavily making hiring Panamanians a bad experience. 4 weeks vacation per year right out of the gate? Give me a break! Expanding the police force? Oh you mean those cell phone, set belt checking, radar traps, try to bribe with $20 police force? Bad news. Gringos are trying to escape the police state. The nail in the coffin is Martinelli's $250Mil tax plan. He wants to reassess property values to collect more tax. Well 2.1% top rate is an ABSURD amount. Imagine owning a $300K house in Altos Del Maria and your tax burden will be upwards of $5,000 a year. Ouch! In uber-expensive California, the property tax rate is 1.2%. Put that into perspective. Do you think Martinelli will renew the 20 year tax exemption on new construction after it expires end of 2009? If he doesn't then he will crush the real estate market. Nice job, Mr. Prez. Don't get me wrong. Martinelli is a much better choice than his opponent, but he is no angel either.
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 written by WMD , August 20, 2009 Patriot , you are funny. Are you one of those Gringos you mentioned? You can make fun of Panamenians,their country,their police. But why are you here? Because you want to do whatever you like and don't have to worry about police or laws, that you would need to deal with in U.S. Raise minimun wage? You bet, 4 weeks paid vacation, that is standard all across Europe and most of the world. The U.S. is the only country I know where they don't expect you get more than two weeks vacation and sometimes none the first year on a job. Even with the low vacation allowence it has way less productivity than many longer vacation taking countries.
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 written by La Mer , August 20, 2009 Good article, Matt!
Can someone tell me if there is currently a difference between the property tax applied to individual owners and the property tax applied to corporations, presuming that there is no 20 Year Tax Extemption plan in either case? report abuse
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 written by Patriot , August 22, 2009 WMD: Making fun of Panamanians? No, I'm telling it like it is. Social engineering does not work. Why do you think people are leaving the U.S.? Panama is taking the playbook right out of the U.S. Giving perks to lazy unmotivated people will only perpetuate the problem. So I am adamantly against any kind of minimum wage or mandatory vacation. And yes the Police are here to loot the people with their BS traffic laws. How about taking down those distracting billboards of girls with big titties or pulling over the pickup truck with an entire family riding in the back? It has nothing to do with safety but pilfering the people who have money. What is funny is your response WMD, especially the one about productivity. Panamanian productivity is the lowest I have seen anywhere. Giving them vacations and pay raises is a joke. You think that will raise their productivity?... LOL
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 written by lazaro , August 28, 2009 Property tax is applied to the property and whoever the registered owner is gets to pay it. It shouldn't matter whether the owner is a foundation, corporation or individual the amount should be the same but best check with a lawyer.
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 written by Jason Castro , October 15, 2009 Even with the low vacation allowence it has way less productivity than many longer vacation taking countries.
-WMD After a very quick search, Sweden is the only country I could find that has higher productivity than the Gringos. Are there others? Most likely, but your statement is completely inaccurate. report abuse
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 written by Dirk Gerhardt , December 17, 2009 Hey Patriot ; As a Panamanian, I must be honest and admit that the Panamanian worker is not very productive, but you must understand this is the product of our own culture. We are very easy going, (Proof is , even during the worst years of Noriega, we would protest from monday thru friday, and party on the weekend). We are not production oriented as a society due to the fact that in the work place there are no incentives for production. Think about this, a worker makes $350.00 dolars a month for working monday thru saturday 8am til 5pm, it's a set salary no matter if he or she produces a little or a lot. In the USA every major factory has a production incentive bonus in place to get the out put the Company requires.
To change the mentality of the Panamanian worker, we first need to change the money mongering mentality of the local and foreign companies that operate in the country. Give the worker a financial incentive, and he will produce, that's in any country in the world. As far as the police is concern, I agree they can be easily bribed, but they are facing the same situation as the rest of the work force, long hours risking their lives for very little money. In the same note the police in the USA are money making machines for the city they work in, and are far more robotic in the sense that there is no good reason in the world to justify a traffic violation, so it's a waste of time trying to get a brake from them no matter what. In the USA the Land of the Free is only a saying, there are sooooo many laws(more beign made every day) that living a life as a free man is impossible. In closing I admit Panama has many problems but it's still a free country to live in with a very friendly people in some of the best climate in the world. How you deal with the short comings is up to you. report abuse
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 written by chele , December 19, 2009 Having lived in Central America for the last 14 years I must say that the work ethic in Panama is the worst I have seen to date. This is a country that is full of spoiled lazy people....the Gringos made this country out of a jungle and the locals did nada!! So what has changed since the gringos left??? More corruption, drugs, money laundering and the Colombian Mafia....and of course more lazy rich people!!
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| Last Updated on Thursday, 15 October 2009 06:51 |
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