Weekly Offshore Panama News – Feb. 7, 2014

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Welcome to the Panama Weekly Offshore Roundup!

Panamanian Tourism Grew 5.6% in 2013

The march of tourism in Panama continues this week, with news that Panama’s tourist sector had expanded by over 40% in just 5 years. Alongside this benchmark figure came the news that tourist spending per capita is the highest in Central America, driven by Panama’s range of products and shopping options – something for which many Latin Americans are willing to travel. Over 2.2 million travellers visited Panama in 2013, helping to further stimulate an economy driven mainly by services and finance.

“The total growth of 5.6% was considered ‘very satisfactory’ by ATP Deputy General Administrator Ernesto Orillac. “We reached our goal; these figures are aligned with our growth in air connectivity from Europe and North and South America,” said Orillac.
We have the highest tourism expenditure in the region. Foreign currencies reflect a $3.3 billion contribution to our economy. Tourist spending has grown by 7.9%, with a real increase of U.S. $241.8 over the year 2012.

The statistical report that compares the number of visitors from 2009 to 2013 shows a 40.9% growth in this sector during this five-year period.”

Source: ANP Panama


Panama Needs Plan B in Case Canal Talks Fail

Senior Panama diplomats have issued statements addressing the need for a potential escape plan from their deal with foreign contractors, as part of the further breakdown of Canal negotiations. While this may be a simple negotiating tactic to further the desires of the Panamanian government, it could also signal a lack of confidence in the builders themselves. Currently negotiations are ongoing and have been held since the beginning of 2014.

““It’s important to send a message that Panama has to finish the canal and will finish the canal,” Ambassador Roberto Eduardo Arango said today in Madrid. “The Panama Canal and its administrators that are responsible to the nation have to have clear options on the table to go in the case of Plan B.”

A building group including Spain’s Sacyr SA (SCYR) and Milan-based Salini Impregilo SpA (SAL) threatened on Dec. 31 to halt work if it wasn’t paid for an estimated $1.6 billion in cost overruns. Panama’s President Ricardo Martinelli said last month that the $5.25 billion expansion would be completed even if the dispute with the building companies couldn’t be resolved.

Shares in Sacyr climbed 5.7 percent to 3.86 euros at 3:37 p.m. in Madrid while Salini Impregilo shares fell 1 percent to 4.38 euros in Milan.

The Panama Canal Authority said Jan. 31 that it would extend negotiations with the group known as GUPC until today. A spokesman for Sacyr said by phone today it was too early to speak about the outcome of the negotiations.”

Source: Bloomberg


Infrastructure Improvements in Panama: 2013 & 2014

Taking in the steps forward in air, road, and sea traffic, our article regarding Panama’s infrastructure improvements in the past year and the upcoming 12 months is a must read. While Panama hasn’t been afraid to invest, much of the work has been spent on sea and public transport links inside the Panama and Colon provinces. This discrepancy in spending may have to be addressed soon, as the country finds itself settling into a slower growth pattern.

“With vast ports such as Manzanillo and Colon to think about, Panama isn’t afraid to flex its sea power backed by the Panama Canal. Its commitment to expanding its economic proficiencies has led to deep water ports being aggressively enlarged on both sides of the canal, especially with the Panama Canal expansion project expected to be completed in 2014/15. The ability of the canal to carry ever larger “post-Panamax” ships is a step forward for trade through, into, and out of Panama – with exports and imports set to explode following completion of the mega-project.

Marinas and jetties are also being set up around Panama, as a burgeoning elite class seek to demonstrate their wealth more tangibly. This has been reflected in new marinas in all parts of the country, from the Caribbean in areas like Colon or Bocas del Toro, to the Pacific from the Islas Perlas and the capital itself.”

Read more about Panama infrastructure improvements


Panama to Free 32 of 35 North Koreans

Panama’s stock in the international arena has risen since it uncovered a North Korean freighter’s secret cargo in 2013, holding the crew ever since. The freight of missile and fighter parts, hidden underneath other cargo, was also confiscated but it now looks like the majority of the crew will be released back into North Korean custody. The handling of the scandal has been widely praised by international politicians.

“After months of investigation, Panama’s chief prosecutor said Thursday that she would not file charges against 32 of 35 crew members of a North Korean freighter that was seized in July when Soviet-era jets, engines and antiaircraft missiles from Cuba were found on board. Immigration authorities are preparing to return most of the crew members to North Korea. But the captain, first officer and political officer will remain in Panama and face arms trafficking charges.

Panamanian officials indicated in October that most of the crew would be released, but the prosecutor’s office completed its investigation only this week. The seizure of the freighter, the 450-foot Chong Chon Gang, near the Panama Canal caused a diplomatic quarrel among Panama, Cuba and North Korea. A United Nations Security Council committee has been investigating whether the shipment violated sanctions against North Korea over its nuclear weapons program.”

Source: New York Times


3 of our Most Read Articles in 2014

This month we’ve had a large amount of interest in a number of articles addressing the present, clearing up the past, and discussing the future. The first article we’ll take a look at focuses on a decision overturned, as Panama’s National Assembly removed an international taxation clause which would see corporate bodies and offshore corporations subject to more than just Panama’s low “local” taxation. Read more about the tax law here

Our second article centered on the benefits of opening a business in a tax haven such as Panama, with access to excellent banking facilities, secrecy laws, and simplified steps to establishing foundations and more. Continue reading about opening a business in Panama 

Panama’s Economic Outlook was our vision of the future, taking in the upcoming fiscal year for the republic as well as examining commentator’s views on reasons to invest over the upcoming year. 6 years of strong growth consistently have led to an unshakeable faith in the country’s potential – we break this sentiment down and get to the facts of the matter. Click the link to see our predictions for Panama in 2014.

About Manoj Chatlani

Manoj Chatlani is a Senior Partner at POLS Attorneys, a full-service law firm in Panama City, Panama. Specializing in offshore services, including asset protection, estate planning, offshore banking, and offshore corporations, as well as Panama immigration and real estate transactions, POLS Attorneys offers clients a streamlined solution to all their Panama legal needs. Manoj is a Panamanian lawyer and holds a law degree from USMA and earned a Masters in Communication Law and Panama Tax law.

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