Welcome to the Panama Weekly News Roundup! 2014 still feels fresh and news keeps on getting better for Panama’s economic sector, with delays to Nicaragua’s canal to the north, an end to their own Canal woes in sight, and a U.S. investment plan with real meat on its bones. As well as a repeal of a short sighted last minute addition to the tax code, it looks like Panama will be beginning 2014 strongly.
Nicaraguan Canal Mega-Project Faces Delays and Opposition
Doubled GDP. Tripled levels of employment. The statistics flooding out of Nicaragua make great investor bait at the beginning of the New Year, although the project is still beset with a number of problems and will now break ground in 2015. The final route approval is expected to come in Q3 of 2014, with a 190 mile estimated length costing $40 billion dollars. To put it into perspective, that is four times greater than the GDP of the entire country. The project has also landed President Ortega in hot water with some of his voters, due to his streamlining of a project considered to be a risk for the Central American nation.
“Nicaragua’s government has announced that its canal project, a rival to the canal in Panama, will be launched a year later than planned. The waterway’s path still needs to be defined but local politicians remain optimistic. Left-of-center president Daniel Ortega promised his people that the project will help Nicaragua, one of the poorest countries in the region, achieve its “economic independence.”
Source: Forbes
Navarro Launches Manifesto for 2014
Under the banner of “Plan for All”, Juan Carlos Navarro has unveiled the PRD’s (Democratic Revolutionary Party) strategy if it is successful in winning the 2014 national elections. Hinging on the economy and ending inequality in the country, the PRD are aiming to put a green and voter-friendly document in front of voters. They have also committed to “transparency” in finance but this may be sacrificed for longer term projects – such as a flagging education system in need of overhaul.
“The Democratic Revolutionary Party (PRD), introduced on Tuesday 7 January, the government plan of its presidential candidate, Juan Carlos Navarro, with a view to the 2014 elections. According to Samuel Lewis Navarro, a member of this group to perform this plan consultations were held nationally. He added that this document meets the needs of the Panamanian people, among those mentioned, health, basic food, education, water among other things. Lewis Navarro added involving a large number of people both PRD, and individuals.”
Source: Mi Diario
Light at End of Tunnel for Panama Canal?
A joint financing proposal may be the ACP and Panama Canal Consortium’s best hope of negotiating a settlement in the immediate future, with the builders tentatively agreeing to submit to cost overrun terms as originally signed. The deal has been dragging on since the two sides came to strong disagreement over the payment and compensation terms regarding any “out of contract” items, although it looks like a strike by the builders consortium has now been averted.
“The Panama Canal builders have agreed to abide by the terms set forth in the contract for filing claims of cost overruns in the construction of the third set of locks.
This is the first step negotiated by Ana Pastor, Spanish Minister of Public Works, who flew over this weekend to mediate a dispute between the Spanish-led consortium and the Panama Canal Authority over an extra $1.6 billion necessary to complete the expansion project.”
Source: The Panama Digest
Panama is Still a Tax Haven
Good news everyone! Panama is still a locally taxed nation after the repeal of legislation introduced by Panama’s National Assembly was introduced by the same body mere days later. The buzz on local networks and in the media was huge, with many declaring it to be a huge hammer blow to the country’s burgeoning economy. Indeed it provoked a scare amongst multinational corporations and foreigners. It is believed by some that the passing of the legislation was an attempt at a “smash and grab” style of politics, taxing a few notable and large sources of income before anyone noticed. However this has yet to be confirmed by credible sources.
“Word quickly traveled amongst the social networks that Panama was no longer going to just tax income earned inside Panama (called “territorial income tax”) as it has been doing since it became a nation in 1903. Worldwide income taxation would mean that all of the hundreds of thousands of Panama offshore corporations earning tax free income outside of Panama would have to start filing income tax returns declaring all of their income.”
U.S. launches initiative to increase exports to Latin America
The U.S. has heralded the arrival of an initiative to “Look South” and increase the volume of trade and number of trading partners in Latin America. The U.S. government has declared its intention to further tie the region into an expanding joint economy, with just 1% of U.S. businesses exporting their goods abroad. With growth rates of 7% in Panama and 4% in Colombia, the United States is seeking to take advantage of hugely positive growth south of its border. Reciprocal foreign investment in the United States is also expected to emerge as a trend following the announcement.
“The “Look South” initiative encourages American companies to do business with Mexico and the U.S.’s 10 other Free Trade Agreement partners, Pritzker told reporters Thursday before her Los Angeles speech announcing the initiative.
Pritzker said there are many untapped business opportunities south of Mexico, which the program hopes to open up for American companies. Currently, only 1% of U.S. businesses export their products, and out of those, 58% export to only one country, usually Canada or Mexico.”
Source: LA Times
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