Welcome to the Panama Weekly News Roundup. Price controls hit Panama, and the country is buzzing with opinions on it. Construction lending is on the rise, and Nicaragua moves ahead with plans on building their own canal. Here’s the latest:
Panama Jumps on Price-Control Bandwagon
This week, the first action of new President Juan Carlos Varela kicked into full gear, as prices were frozen on 22 different food items nationwide. People have mixed opinions on this, and there are early complaints of many smaller stores not complying. Each food item on the list is considered a basic staple, and priced based on manufacturing costs and average income.
Every grocery store will have to offer a brand of each product at or below the established maximum sale price, and each product must have a sign that identifies it as part of the “Pocket First” program.
Melitón Arrocha, Panama’s minister for trade and industry pointed out that those retail stores that do not follow the new law will be fined up to US$1,000. The Authority for Consumer Protection and the Defense of Competition (ACODECO) will ensure that the price control law terms are complied with.
Source: Panam Post
Port Cities Prep for Wider Panama Canal
The new Panama Canal has big implications on not only Panama, but also the entire international shipping industry. Specifically, many west coast US ports, who currently do big business shipping from the America’s to Asia. This is not going unnoticed in the US, where ports are preparing to take an economic hit, and planning their next move to stay competitive.
Today, more than 70% of U.S. container traffic from Asia passes through Pacific ports, and as much as a third of those containers travel through Los Angeles and Long Beach by truck and train to consumers in the eastern half of the nation.
But once it is completed in early 2016, a wider canal will give shippers the option to bypass those ports and their more-expensive overland supply routes, and go directly to ports in New York, Baltimore, Norfolk, Miami and elsewhere. Because of cheaper per-unit shipping costs, as much as 25% of West-bound cargo from Asia could shift to the south and northeast, according to a report by brokerage firm JLL.
Source: The Wall Street Journal
Loans for construction in Panama grow by 32%
Since 2012, construction loans in Panama have skyrocketed, increasing by nearly a third in less than two years. Panama’s construction is booming these days, so the numbers aren’t a big surprise. It is, however, a great indicator of investor confidence in the country, especially in regards to the future. People, and businesses are building at a furious pace, and the demand looks to continue to grow, as economic forecasts predict sustainable growth for the future.
According to information published by the news portal Capital Financiero, this means that from January to April this year, this portfolio reported an increase of U.S. $ 932 million when compared with that reported in the year 2012 figure. But most important is that all loan segments that make up this type of loan growth reflected, which include loans to build interim housing, other buildings, infrastructure and domestic commercial real estate.
The line contains the highest amount financed by the banks was to Other (additions and renovations). During the first quarter of this year, earned about U.S. $ 1.586 million, followed by interim housing (U.S. $ 1,234 million), domestic commercial real estate (U.S. $ 631 million) and infrastructure (U.S. $ 377 million). The latter recorded a decrease in the amount borrowed of 36.42% from U.S. $ 593 million in 2012 to U.S. $ 377 million in 2014.
Source: GoGetIt News
A Tale of Two Canals: Will Nicaragua give Panama a Run for its Money?
Nicaragua is planning on building a canal. This much is clear. However with a massive costs, logistical issues, and environmental concerns, there are many that doubt that it’s feasible. This isn’t stopping the Nicaraguans from trying, as they made official announcements of plans to move ahead with the project, with major foreign investment help, specifically from the Chinese.
According to Simon Bennett, director of external relations at the International Chamber of Shipping and the International Shipping Federations, the jury’s still out on the feasibility of this new canal. However, it seems that all options are still being left on the table:
“Obviously, at a simple level it would provide competition to the Panama Canal that currently enjoys a quasi-monopoly. But that would all depend on whether or not a canal in Nicaragua will ever actually come to pass,” Bennett says. How much the canal would charge for tolls is another question, although a hypothetical one for now.
Continue reading about Nicaragua’s canal plans
