Panama’s agriculture sector modernises and looks abroad

Thanks to infrastructure modernisation projects and the ratification of numerous trade deals in recent years, the agriculture sector in Panama is poised for growth. Free trade agreements (FTAs) with the US and several Central and South American countries, as well as an association agreement with the EU, have opened international markets to exports. A government-sponsored overhaul of agriculture transport logistics, including the construction of a “cold chain”, is expected to boost national competitiveness.

In its Strategic Plan 2010-14, the government identified agriculture as one of four areas of the economy that would drive growth, along with logistics, tourism and financial services. This is part due to the sector’s ability to create jobs – it accounted for 17% of employment as of 2011, the most recent data available. Moreover, a number of developments in recent years have set the stage for expansion.

Trade deals

In June 2012 Panama, along with five other Central American countries – Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua – signed an association agreement with the EU. The agreement included trade liberalisation provisions expected to contribute to growth in the fruit, vegetable and nuts market, according to an independent report commissioned by the EU. Europe is Panama’s second-largest trading partner, after the US, and the biggest importer of Panamanian agricultural products.

Panama has also entered into FTAs with the US and the members of the Pacific Alliance: Mexico, Colombia, Chile and Peru. Panama’s FTA with Mexico is expected to be signed in spring 2014. All of these deals have reduced or eliminated agricultural tariffs, expanding the markets to which Panama’s farmers have access.

Enhancing infrastructure

Major infrastructure projects will help the country take advantage of this market expansion. These include the Santa María irrigation system (at a cost of $200m), the La Villa dam ($200m), the Barú irrigation system ($140m), the San Pablo dam ($165m) and the Peralas dam ($105m). Additionally, the Ministry of Public Works has devoted substantial resources to improving roads in rural provinces such as Chiriquí ($60.3m), Veraguas ($42.7m), Los Santos ($41.1m) and Herrera ($40.6m).

The most important infrastructure project for the agricultural sector is the development of a cold chain, a continuous, temperature-controlled supply chain designed to preserve produce from harvest to market. It is an essential component of any modern agricultural industry, and one that has been missing in Panama. The cold chain, which will include refrigerated trucks, post-harvest treatment and storage centres, will initially be used to transport and store types of produce that are sensitive to changes in temperature and humidity, such as peppers, green beans, celery and cilantro.

In 2011 the government awarded a $75m contract to Consorcio Panamá Frío, a joint venture between Outsourcing of Venezuela and Mejores Acabados of Panama, to build four post-harvest centres. These are located in rural, agricultural regions in the towns of Volcán, Cerro Punta, Dolega and El Ejido. As of mid-2013, the government’s investment in the project, including the post-harvest centres, the distribution markets and other elements, totalled $287m.

The cold chain can be expected to significantly boost agricultural output and quality. According to Consorcio Panamá Frío, up to 40% of Panama’s agricultural output is lost to spoilage before it arrives at market. The lack of a modern, temperature-controlled supply chain has also reduced the shelf life and freshness of Panamanian goods. According to the government, the cold chain will guarantee food safety, quality and traceability and will bring Panama’s agriculture logistics and products into line with international standards such as the Codex Alimentarius, ISO 9000 and Food and Agriculture Organisation guidelines, making local goods more attractive to international buyers.

The government expects the cold chain to be fully operational by December 2013 and construction appears to be going to plan. As of mid-2013 distribution markets in David and Panama City had reached or nearly reached the final phases of construction, and Consorcio Panamá Frío had turned over two of the post-harvest centres to the government, meeting its deadlines. With the cold chain operational and markets newly opened to Panama’s produce, 2014 could be a year of significant growth for agriculture sector.

See also http://www.oxfordbusinessgroup.com

Panama's maturing tourism industry

Thanks to strong governmental support, investment and a wealth of natural resources, Panama’s tourism sector has developed rapidly over the past decade. Expansion is expected to continue, with the industry seen as an integral part of the government’s efforts to sustain GDP growth and create 860,000 new or better jobs by 2020.

Tourism’s recent success explains in part why the government has placed such emphasis on the sector. In 2002, Panama received 533,500 visitors, behind Costa Rica (1.1m), Guatemala (869,100), El Salvador (798,200) and Honduras (549,500), according to the Central American Tourism Council. By 2011, Panama had become the second-most-popular tourist destination in the region, with nearly 1.5m tourist arrivals, trailing only Costa Rica’s 2.2m.

International standing

The latest “Travel and Tourism Competitiveness Index” from the World Economic Forum underscores the sector’s development and highlights its competitive advantages. Panama’s global ranking rose from 56 in 2011 to 37 in 2013, coming in at fourth place in the Americas, behind the US, Canada and Barbados. This was largely thanks to strong scores in the categories of business impact of rules on foreign direct investment (fifth), natural resources (11th), air transport infrastructure (16th), policy rules and regulations (18th) and number of UNESCO World Heritage natural sites (18th).

Forecasts from the World Travel and Tourism Council (WTTC) indicate that the next decade should see the industry’s continuing maturity, as Panama looks to diversify its tourism offerings. According to the WTTC, the sector’s contribution to the economy stood at PAB4.68bn ($4.59bn), or 13.1% of GDP, in 2012, although these figures reflect the broader effects from investment and the supply chain, as well as induced income. The WTTC forecasts this figure will grow by 5.8% per year over the next decade, reaching PAB8.41bn ($8.24bn) or 13.4% of projected GDP, by 2023.

Funding growth

Capital expenditure in the sector has been and will likely continue to be a primary growth driver, with significant government investment in infrastructure and tourism development set to complement private sector outlays. The WTTC study predicted an 8.5% increase in capital investments in 2013 to $893.5m. That figure is anticipated to grow at a slightly slower pace of 6% per year up to 2023, by which time it will have nearly doubled to $1.6bn.

Investment has so far been heavily concentrated in the capital, Panama City, where the government is developing a $1.5bn metro and undertaking various initiatives to improve the city’s cultural offerings. Outlays include the $175.6m preservation and renovation of the historic walled city of Casco Viejo, one of the country’s two UNESCO world heritage cultural sites. Despite stimulating private sector investment in boutique hotels and cafes, the project has become controversial due to plans to extend the coastal highway, Cinta Costera, to the historic district, essentially wrapping a large roadway around the district’s sea wall.

Work on the historic district continues, while next door another development is set to add an entirely new dimension to the city, with the $100m Biomuseo, designed by Frank Gehry. The museum will highlight the role the isthmus has played in shaping world geography and climate while celebrating Panama’s biodiversity. There are hopes that the facility, which is scheduled to open in December of this year, will boost the profile of Panama City, just as Gehry’s Guggenheim Museum did for Bilbao, Spain.

With private sector developments taking advantage of Panama’s wealth of beaches and biodiversity, continued improvements to cultural offerings, and steady progress in other segments such as ecotourism, the country is well-positioned to meet growth forecasts for the next decade.

See in http://www.oxfordbusinessgroup.com

Publication of Law 1 of 2014 reestablishes local-source taxation

The territorial taxation system whereby only local-source income is subject to taxation was reinstated under Law 1 of 1984 upon publication of Official Gazette of Friday, January 10, 2014.   Approval Law 1 came after vocal opposition to previous Law 120 of 2013 from the Panama Bar Association, the Panama Association of Enterpreneurs (APEDE), and other groups of logistics and financial employers - including the pro-bearer share immobilization Panama Banking Association.

Law 1 abrogated Law 120 of 2013 which had been valid for 12 days and reinstated the validity of Article 694 of the Tax Code.  Under Article 694, income from the several activities abroad is considered foreign‑source and, therefore, is not taxable, such as:
•Invoicing from an office in Panama for sale of merchandise that does not enter Panama;
•Managing from Panama transactions that are executed abroad;
•Distributing dividends from non‑taxable income or income from activities conducted abroad;
•Passive income from loans or other financial transactions with foreign borrowers, even if the reimbursement is conducted in Panama;
•Settling of foreign assets under a Panamanian trust;
•Bank deposits of foreigners in Panama; and
•Securities of any kind issued by Panamanian corporations of fully foreign‑source income.

Taxable income is the difference resulting from subtracting deductible expenses from gross income. Deductible expenses are those incurred for the maintenance and production of the income (eg, office expenses and promotion), as well as others authorised by law. The taxpayer must allocate expenses to exempt, taxable, or foreign source income, maintaining separate accounting for each type of income to ensure approval in case of an audit. Taxpayers with both Panama  and foreign source income must prove to taxation authorities that expenses were indeed used for Panama source income in order to allow their deductibility. Under the "rule of proportionality", expenses made for both types of income may be deducted only in the proportion that they maintain to total income.

As in previous years, individuals and entities which have commercial activities in Panama with other Panama taxpayers or applied for Aviso de Operacion business licenses have to file their income tax returns before each March 31.

See also:
Law 1 of 2014 http://www.gacetaoficial.gob.pa/pdfTemp/27450_A/45163.pdf
Panama Administration will continue local-source taxation http://mypanamalawyer.blogspot.com/2014/01/panama-administration-will-continue.html
Panama Cabinet votes to revoke Law 120 of 1973 and reaffirm territorial taxation http://mypanamalawyer.blogspot.com/2014/01/panama-cabinet-votes-to-revoke-law-120.html
Panama Chapter of International Taxation of Low-Tax Transactions amazon_com
Panama taxation news http://mypanamalawyer.blogspot.com/search/label/taxation
Renta 2013 tax return filing freeware https://www.anip.gob.pa/descarga_renta.html

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MEF REQUESTS FOR THE REPEAL OF SECTIONS 2 AND 3 OF THE ACT NO. 120 OF 2013 

“It is subject to tax, the taxable income that occurs, from any source, within the territory of the Republic of Panama, whatever the place where it is perceptible.” 

   

"We are a country that has historically substantiated its criterion of income tax by applying the principle of territoriality," said the Minister in Charge of the Ministry of Economy and Finance (MEF), Gladys Cedeño Urrutia, after submitting to the National Assembly of Deputies, the abrogation of articles No. 2 and No. 3 of Act No. 120 of 2013. 

The income will be territorial, as set forth in article No. 694 of the Tax Code. "It is subject to tax, the taxable income that occurs, from any source, within the territory of the Republic of Panama, whatever the place where it is perceptible," reiterated the Minister in Charge, Cedeño. 

This action corrects any errors logged at the time of writing the articles 2 and 3 of the Act 120, and comes to restore the validity of article 694 of the Tax Code. This Law has retroactive effect from December 30th, 2013. 

www.mef.gob.pa

Panama Cabinet votes to revoke Law 120 of 1973 and reaffirm territorial taxation

The Legislature must now approve the bill, followed by its publication in the Official Gazette.

The Panama Cabinet approved a bill to revoke Law 120 of 2013 which had eliminated tax benefits to Panama companies and individuals performing transactions which take affect outside of the country.

The Presidency issued 2 press release which we transcribe verbatim.

See also  

Panama Administration will continue local-source taxation http://mypanamalawyer.blogspot.com/2014/01/panama-administration-will-continue.html

Law 120 of 2013 http://competenciafiscal.blogspot.com/2013/12/ley-120-de-2013-es-bomba-atomica-para.html

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Government reiterates compromise with tax territoriality

Thursday, January 02, 2014

The National Government, through Cabinet Council held on January 2nd, 2014, approved a Cabinet Resolution authorizing the Secretary of Economy and Finances to present to the National Assembly a Bill that revokes articles 2 and 3 of Law 120 from 2013 and restitutes article 694 of the Tax Code.  This Law will be of public order and has retroactive effects to December 30th, 2013.
The project will be presented on Monday, January 6th when the National Assembly retakes their regular period of sessions.
With this step the National Government reiterates their historic compromise to keep the principle of territoriality at the source, for purposes of calculating Income Tax applicable to natural and legal people that operate inside the Republic of Panama´s territory.

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The Cabinet Council revokes law establishing taxable income outside Panamanian territory

Thursday, January 02, 2014

• The disposition has retroactive effects since December 30th, 2013.

The Cabinet Council approved a resolution that revokes articles 2 and 3 of Law 120 from December 30th, 2013, establishing that all natural or legal people that received a taxable income outside Panamanian territory would pay taxes.
Through the aforementioned resolution, approved in an Extraordinary Cabinet Session, article 694 of the Tax Code is completely reestablished stating that: “it is object of this tax the taxable income produced, in any way, inside the territory of the Republic of Panama, regardless of the place received”.
This disposition highlights that this Law is of public order and is retroactive to December 30th, 2013 and will take effect once it is enacted.
According to the explanation of motives, this measure was taken “once the National Government is aware that the implementation of the world tax regimen in regards to Income Tax requires more discussion and debate, and that such modification changes completely the tax outlook of the country”.

Source: www.presidencia.gob.pa

Panama Administration will continue local-source taxation

The Panama Administration accepted its mistake in trying to impose worldwide taxation instead of the local-source taxation system in place under Article 694 of the Tax Code of 1957.

The President Ricardo Martinelli blamed current Revenue Authority (ANIP) administrator Luis Cucalon for the passage of Law 120 of 2013, while Vice-Minister Luis E. Camacho assumed responsibility and current Minister of Economy Frank De Lima (author of restrictions to bearer shares on behalf of the OECD) said more consultations were necessary.   The fact remains that several dozen legislators of the government Cambio Democratico party approved the law in its 3rd reading and failed to predict the onslaught of public opinion opposing this change to the Tax Code.

Article 694 of the Tax Code states that the obligation to pay the income tax will be for the "taxpayers" and defines it as:

"Taxpayer, as the term is used in this Title, is the individual or legal entity, national or foreign, who receives taxable income subject to the tax."

However, Law 120 replaced Paragraph 2 which stated since 1964 that "The income arising from the following activities are not deemed as earned within the territory of the Republic of Panama:

(a) To invoice, from an office established in Panama, the sale of merchandises or products for an amount higher than that for which such merchandises or products have been invoiced against the office established in Panama, provided such merchandises or products only move outside of Panamanian territory.

(b) To manage, from an office established in Panama, transactions that are performed, executed or have effects abroad.

(c) To distribute dividends or participation quotas of entities which do not require an Operations Notice or which do not generate taxable income in Panama, when such dividends or participations are earned from revenues not produced within the territory of the Republic of Panama, including those revenues earned from the activities mentioned in literals a and b of this paragraph."

Even if Law 120 still would have allowed banks and free zone companies not to pay income tax on foreign-source income, thousands of foreign individuals who had relocated as expatriates to Panama would have to pay Panama incme tax on foreign income or pensions.  Double taxation treaties would have provided some tax relief for citizens of a few countries.

The Panama Presidency issued a press release over the holidays.

See also:

Law 120 of 2013 http://competenciafiscal.blogspot.com/2013/12/ley-120-de-2013-es-bomba-atomica-para.html

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Articles 2 and 3 of Law 120 will be revoked

Tuesday, December 31, 2013

The Director of the National Authority of Income (Autoridad Nacional de Ingresos, in Spanish), Luis Cucalón accepted mistakenly including articles 2 and 3 of Law 120 from 2013 to Congress, which deals with territoriality of the incomes received outside Panama by national and legal Panamanians.  “Even though wrong things have been said about the scope of the law, I recognize that I made a mistake thinking Panama was ready to take that step”, he said.

Cucalón requested the President of the Republic to revoke article 2 and 3 of the aforementioned Law.  The request was accepted.

“I have asked the Director of the National Authority of Income to be more careful in the future.  I have accepted his recommendation to present a law that revokes articles 2 and 3 of Law 120 and reestablishes the ones revoked or modified by them, just like I accepted his request to sanction the Law with the incorporation of the articles proposed by him. I did it because I trust completely in Cucalón´s professionalism, hence the position.  The State´s unprecedented revenue are his best job reference”, said the President.

Panama: Expanding insurance uptake

Panama: Expanding insurance uptake

Latin America | 17 May 2013

Home to 3.5m people, Panama has one of the largest and most competitive insurance markets in Central America, with 30 companies vying for annual insurance premiums of around $1bn. Moreover, the sector continues to expand alongside broader economic growth.

According to the Insurance and Reinsurance Superintendent of Panama (SSRP), insurance premiums rose by 8.2% in 2012. Drivers of growth included the automotive segment, which expanded by 8.4% to $199.2m, giving it a 17.5% market share. Health coverage, which increased 14.9%, had the second-highest market share of 15.9% ($181.3m). It was followed by collective life insurance ($135.3m, 11.9% market share) and individual life insurance ($119.8m, 10.5% market share), which grew by 5.6% and 12.4%, respectively. Meanwhile, home fire insurance experienced one of the larger percentage increases, at 19.1% growth ($96.9m, 8.5% market share).

Despite market expansion in recent years, insurance coverage is still considered expensive and unnecessary by many people. While further educating uninsured segments of the population on the benefits of insurance coverage could stimulate growth in some middle- and lower-income communities in the short term, market penetration is expected to continue to rise alongside growth in per capita income and consumer purchasing power.

Nevertheless, even today, Panama is doing well compared to its neighbours, ranking third in Latin America in terms of insurance spending per capita. According to the Association of Insurance Supervisors of Latin America, in 2011 its per capita spending on premiums of $290.61 was topped only by Chile ($524.34) and Brazil ($329.29).

Panama has also attracted some of the biggest global names in insurance, including Mapfre, HSBC Insurance, ACE Group and Generali. The market is highly competitive, with no one firm holding a share greater than 20%, and only three accounting for more than 10% of premiums.

According to the SSRP, in 2012 the five largest providers in terms of revenue were Compañia Internacional de Seguros (17.6%, $200.4m), ASSA Compañia de Seguros (16.3%, $185.9m), Mapfre Panama (13.2%, $150.1m), Assicurazione Generali (8.3%, $94.2m) and Asegudora Ancon (6%, $68.7m).

In April 2012 insurance reform was passed through the approval of Law No 12 of 2012. The legislation addresses multiple aspects of the insurance sector, starting from the top, with a strengthening of the regulator. The SSRP was formerly an extension of the Ministry of Commerce and Industry but is now a fully autonomous agency with the ability to enforce regulations regarding financial viability as well as consumer protection.

Under the new framework, capital requirements for insurance companies have increased to $2.5m. This may make it more difficult for new firms to enter the market, although it will help ensure that investments will come from providers with a long-term commitment to the country, according to the Panama Insurance Association. The new law also provides for consumer protection in the insurance segment for the first time, allowing the SSRP to investigate customer complaints.

With a strengthened, modern regulatory framework, the SSRP is now trying to take the sector beyond Panama’s borders. Indeed, transforming the country into a centre for insurance and reinsurance companies in Central America has now become one of the main objectives of the SSRP. It may have already had some success, with Mapfre reportedly considering a consolidation of its Central American reinsurance operations to Panama.

For full text see http://www.oxfordbus inessgroup.com/

More information is available in http://www.oxfordbusinessgroup.com/product/report/report-panama-2013

Whatever happened to offshorelegal.org and panamalaw.org?

We keep receiving queries from people who purchased companies through offshorelegal.org and Panama Legal.  Those are generic names for websites with great SEO reach.

Each Panama corporation is required to have a resident agent.   Under Panama law:

- The Resident Agent must be a Panama lawyer accredited in http://www.organojudicial.gob.pa/abogado/s4abi.php or law firm,

- The law firm must have the name of its partners under the Code of Ethics.

Generic names like Panama law or similar should raise red flags with a prospective buyer of Panama corporations.   If these resident agents have no permanent office, this can be a problem for the shareholder of the company when KYC is needed from the nominee directors when opening bank accounts.   Bank constantly are required to update information they have on corporate shareholders, so a general power of attorney may not be sufficient to comply with bank requirements.

With offshorelegal.org the trail stops with its dissolution.   Previously it listed several cellphone numbers and a toll free Panama number.   No lawyers or names are described in its archived website but the Public Registry shows 2 lawyers as its members.  Their Panama office at OBP is now occupied by a building company.

Ficha:

27627

Fecha Registro:

03-03-2008

Nombre de la Sociedad

PANAMA OFFSHORE LEGAL LAW FIRM. Título del Dignatario Nombre del Dignatario SOCIO MOISES GEORGE SOCIO AURELIO ARTURO TALAVERA Status: DISUELTA As nominees they usually list for their corporations, other corporations.  See also http://www.talkgold.com/forum/r284916-.html

Título del Dignatario

Nombre del Dignatario

PRESIDENTE	PRESIDENTIAL OFFSHORE SERVICES, S.A.
TESORERO	TREASURY OFFSHORE SERVICES, S.A.
SECRETARIO	SECRETARIAL OFFSHORE SERVICES, S.A.

Panamalaw.org does not list any lawyers in its archived website.  It has been linked to a civil partnership called Panama Legal.

Ficha:

24012

Fecha Registro:

26-06-2006

Nombre de la Sociedad

PANAMA LEGAL

The lawyer members are in Torre Delta, the old Bankboston building in Via Espana:

Título del Dignatario

Nombre del Dignatario

SOCIO	GISELA MARTINEZ SAENZ
SOCIO	ALFREDO MANUEL CARLES BROCE

See also http://www.panamaforum.com/legal-issues/30171-http-www-panamalaw-org-legit.html

Panama: Aviation growth soaring

Panama: Aviation growth soaring

Latin America | 31 Jul 2013

The government of Panama has made the development of its transportation and logistics sector a top priority, having identified it as one of our pillars of economic growth, along with tourism, finance and agriculture.

With this goal in mind, a number of transport infrastructure projects have been undertaken, including the expansion of the Panama Canal and the construction of a new metro in Panama City. Emphasis has been placed on the development of the aviation sector, with investments planned for new and existing airports, and continued expansion of the flagship carrier, COPA Airlines, is under way.

In line with Panama’s growing economy and status as an increasingly important connector between North and South America, passenger flows through Tocumen International Airport, the main port of entry, have increased rapidly in recent years. According to data from the Georgia Tech Logistics Institute in Panama City, the number of travellers handled by Tocumen doubled between 2005 and 2011, growing from 2.76m to 5.84m. This figure rose by nearly 20% in 2012, to reach 6.96m.

Expansion plans for Tocumen were announced at the end of 2012 and represent a significant step forward for the aviation industry. The $650m project will include the construction of a third runway, as well as a new South Terminal, which is expected to add 20 gates and double passenger capacity. This would follow on the opening of 12 new gates at the North Terminal earlier this year.

A large part of Tocumen’s increasing importance for regional transport is due to Panama’s COPA Airlines. COPA, which operates its hub-and-spoke system out of Tocumen, is responsible for more than 80% of the airport's daily operations, according to the airline. It is also considered one of the fastest-growing carriers in the region and over the next five years will be adding as many as 44 new Boeing 737-800s to its existing fleet of 83 aircraft. The fleet currently comprises 26 Ebraer 190s, 18 Boeing 737-300s and 39 Boeing 737-800s.

On the Pacific side of the country, construction of a new terminal at the Enrique Jimenez Airport in Colón is expected to be completed in July, with its total cost coming to $58.35m, according to information from the Civil Aviation Authority. The airport is already an important asset for the Colón Free Zone, a centre of business and logistics.

The new Scarlet Martinez Airport, meanwhile, is set to open just two months later, in September. Construction of the facility, which is located in the central provinces of Rio Hato and Cocle, is expected to cost more than $50m. The airport will primarily serve tourists looking to take advantage of Panama’s beach and environmental attractions.

By investing in airport infrastructure, Panama is well-positioned to capitalise on expected long-term air travel growth in the Americas. According to projections from Boeing, intra-Latin America air traffic is expected to rise on average by 6.5% per year between 2011 and 2031, while this figure stands at 5.1% for travel between North and Latin America.

Other local factors – including a rapidly expanding economy, a growing tourism sector and an increasingly important position in regional trade and finance – are expected to further drive demand for transportation services and support the government’s bid to make Panama a major air traffic hub within the Americas.

For full text see http://www.oxfordbus inessgroup.com/

More information is available in http://www.oxfordbusinessgroup.com/product/report/report-panama-2013

Panama: Reforming the education system

Panama: Reforming the education system

Latin America | 12 Jul 2013

Recent economic growth in Panama has been driven by public spending on large-scale infrastructure projects, but sustaining this expansion will likely prove difficult without improvements to the education system. While some reforms have been implemented in recent years, these initiatives have drawn criticism from teachers.

The World Economic Forum’s 2012-13 Global Competitiveness Report (GCR) ranks Panama 112th out of 144 countries surveyed in terms of the quality of the education system. This is far behind neighbouring Costa Rica (which ranked 26th) but is above other Latin American nations such as Nicaragua (121st) and Honduras (135th). Other key GCR rankings include the quality of primary education, on which Panama placed 115th, and the quality of mathematics and science education (125th). Of the reported challenges for conducting business in the country, the inadequately educated workforce was the third-greatest concern.

Overall, these results appear to be a slight decline from Panama’s standing in the 2009-10 GCR, when the country ranked 111th in terms of quality of the education system, 109th in primary education and 113th in mathematics and science education. However, this apparent drop was largely the result of additional countries being included in the survey, with Panama’s score on both quality of the education system and quality of primary education improving slightly over the period, from 2.9 (out of 7.0) to 3.0 and 2.8 to 2.9, respectively.

These gains may well have come as a result of reforms that began in 2010, with the restructuring of primary, middle and secondary school curricula. As of the end of 2012, the Ministry of Education (MEDUCA) reported that some 62.4% of middle schools had already completed the transformation. On top of a complete overhaul of the curriculum, the public school system is adopting a four-semester school year. The ministry has created the National Team for Curricular Innovation and Modernisation, formed by some of the system’s top teachers and professionals, to monitor and revise public school curricula on a more regular basis.

Changes continued in 2011, with the government setting up the National Teacher Training Programme (ENCAD) to improve teaching standards, particularly with regard to the use of technology in education. MEDUCA reported having successfully completed its first iteration of ENCAD training for 100% of teachers in 2012.

The signing of Executive Decree 920 in October 2012 has proved more controversial. Among other goals, the law aims to implement a more rigorous system for hiring and evaluating public school administrators and teachers. This has drawn strong criticism from teachers unions over the past six months, with some educators threatening strikes. The reaction was not unlike what transpired in Mexico in early 2013, which has passed similar legislation.

Despite weaknesses in the education system, Panama holds several advantages over some of its regional competitors when it comes to transforming itself into a knowledge-based economy. The country has a strong information and communications technology infrastructure plus a relatively high level of technological adoption. These factors helped Panama earn a ranking of 65 out of 145 countries in the World Bank’s 2012 Knowledge Economy Index.

Government budget expenditures on education also increased significantly in 2012, a trend that is expected to continue from 2013 to 2016, according to the Ministry of Economy and Finance (MEF). After spending $121.2m in 2010 and $122.3m in 2011, MEF figures show MEDUCA’s budget then nearly doubled in 2012, reaching $213.9m, while projections indicate budget allocations to MEDUCA should average $208.9m from 2013 to 2016.

While more funding does not always result in improvements, combined with the various reforms implemented throughout the past three years, the education system may just be able to turn a corner. This will help reduce reliance on outsourcing business and importing skilled labour, thus creating a more competitive and sustainable economy in the longer term.

For full text see http://www.oxfordbus inessgroup.com/

More information is available in http://www.oxfordbusinessgroup.com/product/report/report-panama-2013

4th Real Estate Forum to be held on Panama City Urban Zoning

At least once each year the AMCHAM Panama Real Estate Committee holds its Forum which addresses timely issues within the sector and offers information and solutions to attendees

The Real Estate Committee of the American Chamber of Commerce and Industry of Panama is pleased to announce the Fourth Annual Real Estate Forum to be held on October 16, 2013 from 11:30 am – 3:00 pm at the Miramar Inter-Continental Hotel.  The forum “Urban Zoning:  The Metro and the Streets.  Where do I park?”  will focus on urban planning in Panama City and how the new Metro and road infrastructure projects affect real estate in Panama City.  The speakers include  Henry Kardonski, General Manager , London and Regional Panama; Juan Manuel Vasquez, Director of Municipal Works and Construction , Panama City Mayor's Office ; Roberto Roy, Executive Secretary, Panama Metro Authority; and Jaime Ford, Minister of Public Works of the Republic of Panama.

Pamela Oakes, Chair of the AMCHAM Panama Real Estate Committee and event planner, said “we are very pleased to bring together these speakers whose projects affect our daily lives and will have a profound effect on real estate.  Panama is undertaking  major infrastructure projects such as building the country’s first metro  system and redesigning the city’s  roads and highways.  Proper planning is required to ensure that upon their conclusion the traffic  in Panama City improves and commuters will have better options.”

AMCHAM Panama’s Real Estate Committee has created and adopted an industry Code of Ethics to which all member real estate service providers must adhere in order to be part of an exclusive referral network. The Committee has become a good source of business for real estate service providers who have sworn to abide by AMCHAM’s Real Estate Committee’s Code of Ethics.

One of the Committee’s primary goals is to disseminate accurate information to the public about the Real Estate industry, so that investors may meet the challenges and avoid many of the problems involved in purchasing real estate and relocating to Panama.  At least once each year the Committee holds its Real Estate Forum with the valuable support of corporate sponsors, which addresses timely issues within the sector and offers information and solutions to attendees.

About The American Chamber of Commerce & Industry of Panama (AmCham Panama)

Founded in 1979, AMCHAM Panama http://www.panamcham.com is a non-profit, non-political, independent, voluntary association supported primarily by its members. Much of the organization's work is accomplished through the efforts of volunteer member committees which collaborate to help AMCHAM promote free enterprise in Panama. AmCham Panama has over 450 active members, from small local companies to major multinational companies based in the United States.

For additional information contact Maria Florencia Suarez +507 301-3881, email realestate @panamcham.com or go to http://www.panamcham.com/en/events/view/730

Real world list of Pensionado Visa requirements

Applying for a Pensionado Visa on behalf of a retiree receiving income above US$1000 monthly from Social Security involves filing the following:

1) Power of attorney and request by the attorney.  Power of attorney must include the information about the applicant (exact address, telephone number...) and full name of parents and nationality.  All the information about the attorney must be specified (Office address, telephone and fax number), complete information of cheques that are provided (number of checks, name of bank, date and amount) of all documents enclosed and the legal basis.  We cannot draft the Power of Attorney without the information requested in that form

2) Police record from the country of origin (only when the applicant has less than two years of continuous residence in Panama) of the applicant (for US citizens, only FBI Criminal History http://www.fbi.gov/about-us/cjis/criminal-history-summary-checks is admitted).

3) "Duly authenticated document, which certifies the following:

 -The applicant's condition as retired or pensioner from a foreign government, international organization or private entities.

 -That the applicant receives a monthly pension of no less than US$1000 or its equivalent in foreign currency, plus US$250 for each dependant

 -In the case of persons retired or receiving a pension from private entities, a document from the corresponding authority certifying the existence of said entity must be submitted" and a Panama bank statement showing the deposits made into the account.

4) Sworn statement about Personal Background signed by the applicant .

A) All documents issued abroad, should be submitted duly apostilled or authenticated by the Embassy or Consulate of Panama in the country that issued it and by the Ministry of Foreign Relations of Panama.

B) All documents issued abroad in language besides Spanish, must be translated by a certified interpreter recognized by the Minister of Government.

Once you arrive to Panama, you must provide :

a) Good Health Certificate from a Panama doctor, issued within the three months before the date of the application (must have date, signature and stamp with the name, signature and registered number of the physician)

b) Two (2) sets of photocopies of the entire passport, to authenticate before a Notary Public.

c) Five (5) recent passport-size pictures.

d) Two sets of copies of all documents submitted, except for the passport.

In addition, the following are required:

C) Every foreigner must be duly registered in Immigration Movement Section for which the following must be submitted:

* Two (2) passport-size pictures

* Copy of the page of general information in the passport and that which contains the last seal of entry into the country

* US$1 for registration

* Answer the registration questionnaire.

D) Once the application is filed and your picture has been taken at Immigration offices, your passport will be surrendered 2 business days for a Return Permit to be stamped.   This will allow you to travel outside of Panama and not have to wait in Panama for approval of your Pensionado visa.

When planning your trip, keep in mind it takes 2 weeks to prepare and translate all documents from the time they are received until you can go to Immigration to have your picture taken as part of the application process.

Upon filing of application, a 12-month application card is granted.   Delays of up to 12 months are taking place with the granting of all residence applications, depending on the nationality.

All applications are subject to the regulatory bodies' approval.  While serious law firms are diligent in following regulations in force, government officials may arbitrarily change rules and demand additional documents at any time during the application process.  Therefore, they cannot guarantee the outcome of each application.  Although Law 38 of 2000 forbids public officials from demanding documents outside those listed in a decree published in the Official Gazette, Immigration officials may demand the following items not listed in the Executive Decree related to Immigration:

a) Responsibility letter by applicant when a dependent is involved, authenticated by Notary,

b) Banking letter from a Panama bank where the pension installments are received.

c) Notarized letter by landlord - or notarized copy of public deed of property owned - showing domicile in Panama,

d) Copy of landlord identification, authenticated by Electoral Tribunal,

e) Notarized copy of utility bill showing domicile in Panama.

Based on applications filed as of June, 2013, and subject to changes

Juan Hombron and the Lucom estate dispute: Connecting the dots

GPI-HSM Agreement

Local media brings up again the issue of Juan Hombron and the 54 hectares which boundaries partially overlap those of finca 7022 (Cocle) of Hacienda Santa Monica, S.A., (La Estrella) formerly part of the Wilson Charles Lucom estate.  Lucom had signed in 2005 an Agreement (link) for the sale of the company shares to Grand Panama International, Ltd., a company owned by U.S. investors (SEC.gov).   Lucom passed away in 2006 without the agreement ever being annulled.

After the claims of Alberto Sudarsky and others over the beachfront of Juan Hombron in 2007 (link), daily La Prensa presented a news report about land claims in the same area awarded by the ANATI land titling authority (headed by former in-house counsel to the company of then Minister of Presidency Demetrio Papadimitriu (The Minister denied involvement).   ANATI awarded several parts of the 7022 beachfront to Trapp Real Estate Corporation and other shell companies in a few months of 2011 what takes other applicants several years, in what became object of a RICO claim in the U.S. against foreign nationals conspiring to the detriment of a U.S. national.  The RICO claim was dismissed by Florida courts in May 2012 (trusts_estates_prof).

The literal bequest in the Lucom will of the Hacienda Santa Monica, S.A., shares to a Nevis trust for sale to benefit the poor children of Panama, was construed by the Supreme Court of Panama Civil Section to mean that the deceased gifted all assets to his "dear wife" Hilda Piza as sole heir to do what she pleased.   With the passing away of Ms Piza, the road was clear for her descendants to arrange a shareholders agreement of October 24, 2012, under which the share ownership of Hacienda Santa Monica, S.A., was reorganized.   According to La Prensa of September 6, 2013, former Minister of Economy Alberto Vallarino acquired shares in the company, after the Lucom probate case (La Prensa).  The new board of Hacienda Santa Monica S.A. also includes board members from the neighboring Buenaventura company, with which a border dispute and several lawsuits for damages had ensued in civil court :

Título del Dignatario

Nombre del Dignatario

TESORERO	DIEGO VALLARINO
PRESIDENTE	FERNANDO DUQUE
SECRETARIO	JUAN CARLOS FABREGA
VICE-PRESIDENTE	SAMUEL URRUTIA CANTORAL
VOCAL	HECTOR INFANTE

Testamento Abierto

Reports about the future destiny of the Pacific beachfront of the property vary.  Ideas range from a tourist project to take advantage of the new Rio Hato airport, an environmental park (cambiodemocratico507) to a $5m naval station by Nov 2013 (minseg.gob.pa, presidencia.gob.pa ).
In the meantime, actions continue in the courts...

See also:
Las Uvas: Fever in the coast
Latin America's First "Branded City" Planned for Panama Gold Coast
Video: Inhabitants of Juan Hombron explain their side of the story
More about the Lucom dispute in Hacienda Santa Monica and Juan Hombron 

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Panama: Real estate on solid foundations

Panama: Real estate on solid foundations

Latin America | 7 Aug 2013

The real estate market in Panama is edging towards maturity, buoyed by the booming economy, a major national spend on infrastructure and ample liquidity in the financial system.

Initial estimates from the national statistics agency (Instituto Nacional de Estadística y Censo) suggest the sector expanded by 9% year-on-year in the first quarter of 2013, having notched up average growth of 7.8% in 2012 and 9% in 2011.

Panama City, home to nearly a third of the population, has been the centre of real estate activity over the past decade, with high-end residential, retail and commercial development combining to produce strong growth. New shopping malls and residential complexes have reshaped the skyline, alongside several hotels, evidence of the evolving tourism sector.

The city’s market for office space has been supported by strong macroeconomic growth and new business-friendly legislation, including the setting up of an incentive regime for multinational companies using Panama as a base for regional operations.

Vacancy rates for Class A office projects dropped to 7% from 12% in the second half of 2012, with the average monthly lease rate edging up from $23.30 per sq metre to $24.41, according to a study conducted by CB Richard Ellis (CBRE). New construction of Class A office space eased to pre-2009 levels in the same period, however, suggesting demand could now be levelling off.

CBRE’s study found Panama City’s residential market to be relatively stable. New unit construction eased, in keeping with a rising 76% absorption rate and falling sale prices for Class A real estate. The gross absorption rate across the wider market stood at 77%, with a total of 3346 units reserved from 4330 under construction.

However, there are signs that the retail market in Panama City could be edging towards occupancy saturation. Monthly lease rates fell from $41.31 per sq metre to $40.16 in the second half of last year, while vacancy levels in shopping centres rose from 6.1% to 9.1%. An additional 97,325 sq metres of new retail space was under construction as of late 2012.

Despite its overall impressive growth levels, Panama’s real estate market faces a number of challenges. The country ranked 75 out of 97 nations in the 2012 Global Real Estate Transparency Rankings, behind Mexico (43), Argentina (58) and Costa Rica (70). Jones Lang LaSalle, which publishes the list, described Panama’s transparency level as “low”, adding that a lack of both sophisticated investment vehicles and general market fundamentals were instrumental in determining the country’s position.

Panama also faces a major national housing shortage. The most recent estimates from the Ministry of Housing (Ministerio de Vivienda y Ordenamiento Territorial, MIV), published in 2010, put the shortfall at 136,665 units, against total national supply of 896,050.

The MIV launched a series of social housing programmes in 2010 as part of a target to reduce the shortfall to 30% and increase supply by 4.6%. Once completed, the five-year programme, backed by a $576m investment package, is expected to have benefitted an estimated 344,000 Panamanians. With $268.8m still to be spent, work is expected to accelerate during the second half of 2013 and through 2014.

The real estate sector is expected to continue maturing, with both the private and public sector helping to drive it forward. The government took a small, but significant step forward in May 2012, when it amended its regulations to create a new tax and financial framework covering the purchase and sale of real estate property. The legal changes paved the way for the introduction of key incentives aimed at supporting the housing market, including more favourable interest rates for first-time buyers and tax exemptions for residential home improvements. Ongoing support from the government, together with sustained growth in the private sector, will set the real estate market on course for further expansion in the medium to long term.

For full text see http://www.oxfordbus inessgroup.com/

More information is available in http://www.oxfordbusinessgroup.com/product/report/report-panama-2013