Panama Elects a New President

Panama elects a new President

A conservative business tycoon has won Panama’s presidential election, promising to guide the Central Latin American country through the global economic recession and widening the Panama Canal.

Reversing a recent trend of left-wing victories in the region, Ricardo Martinelli won 61% of the votes polled Sunday, election officials said. Balbina Herrera of the ruling center-left Revolutionary Democratic Party secured 37% vote

Martinelli, 57, led the opposition right-wing Alliance for Democratic Change to success with 37 seats in the 71-seat National Assembly, and announced he would work for a national unity government.
Herrera’s bloc had 23 seats.

Martinelli is the owner of the country’s largest supermarket chain, now as President he wants to build ports, highways and a Panama City subway.

He also pledged to oversee the $5-billion plan to widen the Panama Canal to enable larger ships to sail through it.

Martinelli assumes office July 1, succeeding President Martin Torrijos.

Panamanians went to the polls Sunday and overwhelming elected Ricardo Martinelli as president in one of the biggest landslides in Panama’s history. Just a short year ago the current PRD government looked like they were a lock to win a second 5 year term in the presidency. However, deteriorating economic conditions, rising crime and a growing backlash to perceived corruption made the PRD vulnerable. Mr. Martinelli took advantage of these weaknesses and ran an effective campaign that resulted in a sweeping victory.

Congratulations to Mr. Martinelli and his Alliance for Change party. Panama faces many challenges in the coming years and we wish him all the best. As a successful businessman he understands the current economic climate so we expect good things in the years ahead.
One of his proposals is already generating considerable controversy and much interest

Mr. Martinelli has proposed a Flat Tax (all income over a certain threshold is treated and taxed at the same rate, usually corporations pay a higher rate than do individuals).

You may be wondering why, if Panama is a tax haven as you may have heard, why do they need a flat tax?

Panama doe actually have a law that taxes individuals and businesses that make money in Panama. If your money comes from outside the country, than there is no tax payble on it, hence the label “Tax Haven”.

Like many countries that tax income, Panama’s tax laws are getting more confusing each year. If you ask 3 accounts a question about taxes you are likely to get three different answers. A simple Flat tax can eliminate the uncertainty about taxes and what you pay and what you don’t and how is it determined etc. etc. Mr. Martinelli as a business man and investor knows only too well it is uncertainty that hinders investors, and since Panama is out to attract investors, the easier it is for them to understand what they have to pay for taxes, and the less they have to do to keep their books and calculate the tax accurately, the more likely they are to invest in Panama.

Excerpt from the WSJ:

BOGOTA (Dow Jones)–Panamanian businessman and free-marketeer Ricardo Martinelli, the leading presidential candidate, proposes to impose a flat tax system in the country if elected, his top economic adviser said in an interview.

“We want to simplify the tax code because it will reduce the informal sector and tax evasion,” Frank De Lima, Martinelli’s top economic adviser, told Dow Jones Newswires in a telephone interview.

The flat tax rate, probably at between 12% and 17% for persons, with a full exemption for revenues below a certain level, and between 18% and 22% for companies, would have a neutral level on tax.

The story goes on and as of yet exactly what Martinelli intends to do with a Falt Tax is unknown but since he has now been elected as Panama’s next President, we are likely to hear much more about his proposed Flat Tax.

Again we see this as something which should prove to be beenficial to Panama in the long run.

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Canada and Panama

It has long been my contention, and that of many others, that the only way out of the recession gripping the world is to undertake more world trade, not less. The Canada Youth Trade Mission was one sign of the fact that Canada and Canadian businesses realize this. Too long have we limited our Canadian trading to the US, our largest trading partner by far.

For Canada, trading in the US is comfortable. They speak the same language, travel is fast and easy and they are a truly known entity. But it is a well known adage, “that when the US sneezes Canada catches a cold” but now the US has both a cold and the flu and Canada does not want pneumonia so it is time to expand our trading horizons. Free Trade with Panama has a good chance to be approved soon and both countries are making the most of this new closer relationship as you will see below.

New target to revitalize real estate
March 30th, 2009
Panama Star PANAMA. The traditional residential real estate market is slowing down in Panama and brokers are looking for clients in other areas that they previously thought were too specialized to venture into.
Now Canada has become a prime target for attracting businesses, in hopes of re-vitalizing the housing market.
The Association of Real Estate Agents ACOBIR (Asociación de Corredores de Bienes Raices) is contacting 500 companies in Canada, inviting them to visit the country and establish a branch here.
The president of ACOBIR, Osvaldo Marchena said that currently real estate agents are concentrating their efforts to attract multinational companies to Panama. Many of these economic groups see Panama as the ideal place to use as an exports platform.
Marchena said that currently due to the global financial situation many companies are looking for efficient places on which they can develop their operations. It is not until recently that officially the ACOBIR began marketing Panama’s advantages.
Initially Panama was exploiting the second home market, tapping into the needs of the baby boomers, who were looking for a place in which to pass the winter months. But, because of the global financial crisis the stream of buyers has dried up and the sector has slowed down.
Although the II Panaexpo Fair in Toronto, Canada will promote real estate developments in Panama, a new strategy was needed to run alongside.
According to Marchena the new strategy is to approach Canadian based multinationals to let them know the fiscal advantages that Panama offers in comparison with other countries in the region.
The potential free trade agreements (FTA) with Canada plays an important part to attract this group of potential buyers.
Marcena added that some multinationals are beginning to come to Panama such as Caterpillar, which at a global level has dismissed over 20,000 people, but it is still continuing with its Howard project, opening a training center for Latin America.
Dell has been here for a while and Sony also inaugurated regional training facilities.
Canada is a prime target as the Panama-Canada FTA appears to be moving along fast, and has the support of Canadian Prime Minister Steven Harper.
Marchena said that as part of the strategy ACOBIR launched a promotional campaign in Toronto, Canada and has made contact with 500 companies with the idea that they establish logistic centers here, but at the same time giving them the opportunity to create alliances with other enterprises.

“We are planning to use the same strategy in Latin America, Europe and Asia. These countries see Panama as a good place to be. For example in Tokyo the square meter for rent cost 1,600 euros, while the prices here are just a fraction in comparison.” said Marchena.
The projects that are taking place in Panama are very important, because when these groups come here they need to see a finished product, so depending on what they do there are places available in Costa del Este and Howard has already started the construction of warehouses.
“We are chasing the government asking them to sort out the infrastructure problems and to support the INADEH to train people for the companies to find the personnel they need to operate in Panama,” said Marchena.
The ACOBIR president said that another advantage of companies coming to Panama is that their executives will need housing, offices and distribution areas. Therefore if Panama only attracts 10 companies out of 500, it will have a great impact in the country.
CANADA
Panama received 17,000 Canadian visitors in 2005. In 2008, the number of visitors went up to 48,000.
The Panaexpo Fair was set up to promote Panamanian real estate in Canada.
This year, a second strategy is to encourage companies to set up shop here.

Full story can be found here:
http://www.laestrella.com.pa/mensual/2009/03/28/contenido/81062.asp

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Real Estate Boom in Panama Continues

I have been interviewing a lot of people in the real estate industry in preparation for the March Magazine and there is no doubt that the boom in real estate is alive and well. First of all in Panama there were never the excesses in the market that you saw in Dubai, in the United Arab emirates or London England or Las Vegas, Nevada and other places where the bubble exceeded all reason.  Secondly, retirement is a real issue and there are lots of people nearing retirement from all over the globe who find Panama interesting and attractive for a variety of reasons.

Many people want a second home to escape their own country at certain times of the year. In addition, many people are looking for a total change of lifestyle, in their retirement years and Panama is attractive to them. There is an incredible energy in Panama as business is still good. Many businesses from places around the world are moving here. Real estate is selling well, businesses are doing well, the banks are sell capitalized and ythere is little “sub-prime” debt except amongst the bigger international banks like Citi and HSBC.

Business in the canal and in the Free Zone is strong.  What’s not to like.

Come and see for yourself

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Expocomer

This huge Latin American Trade Fair held in Panama in early March 2009 has drawn participants from all over the world.  There are embassies from many, many countries including Korea, Brazil, France, Spain, Taiwan, mainland China, Holland.  But in addition to these embassies are businesses looking to do business in Panama or out of Panama.

I learned that Vietnam is famous for ceramics and tile and that Bolivia is ready to do business.  France is of course here to sell their famous skin care products and perfumes and their cars.

Brazil has a huge exhibition and there are so many products you could spend the entire day just getting to know what Brazil has on offer.

But Brazil is not alone. Spain too is here and Mexico and El Salvador.
One of the things that is clear from the huge number of exhibitors and the tremendous energy. No one sees Panama as having any problems in the days and weeks and months ahead. The crowds at night are huge as the business people of Panama finish their day jobs and come to see what else they can sell or add to their retail outlet. It is clearly business as usual, and business is booming.

From our vantage point with the Colon Free Zone there is a constant stream of business owners from other countries looking to set up operations in the Colon Free Zone

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Panama Expocomer

Panama Today Magazine was asked by the administration of the Colon Free Zone to be guests at their booth at Expocomer one of Latin America’s largest trade fairs. The Colon Free Zone is the second largest Free Trade Zone in the world, second only to Hong Kong and the largest one in the western hemisphere. We were introduced to the press as their publicists as they know that the trend is to the internet and the days of printing magazines are drawing to a close.

In Panama this trend is not yet evident as the Panamanians love their printed magazines, and there are literally hundreds of them. An interesting environment in which to launch an online magazine, but none the less, this is where we find ourselves. We know, and the Colon Free Zone knows, that growth is on the internet and the people who are looking at Panama today, check it out first on the internet.

The visionary management at the Colon Free Zone is aware that if they are going to grow dramatically in this tougher economic climate of 2009, then they must access the world and encourage their merchants to access the world’s markets through the internet. No longer can one safely sit and wait for the world to beat a path to Panama’s doors. There are a lot of people recognizintg that big changes in how the worlld does business are happening right now and you either wake up and realize things are changing dramtically or you will miss this opportunity.

Panama is currently in a very favored position in the world as a small population and large water resources really make them desirable as the world today is running out of water. Panama is alone in Latin America with drinkable tap water, a location which keeps them safe from many of the climatic problems such as hurricanes, and fierce winter ice and snow storms that trouble a great deal of the world, so they so far have weathered the economic downturn which is sweeping the world.

But money is fickle and it is very mobile, so to draw people with money and ideas to Panama, and to draw more business to the Colon Free Zone they have asked us to work with their merchants to make their world presence larger and to continue to make the Colon Free Zone known as one of the top destinations for companies wishing to participate in world trade.

We thank the Colon Free Zone for their confidence in us and we will continue to produce virtual magazines and brochures of the highest possible quality, so that the world will know Panama is ready to do business.

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