Weekly Offshore Panama News – Nov. 30, 2013

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Welcome to the 8th edition of our Weekly Offshore Panama News roundup. First off, let’s wish our Panamanian friends a Happy Independence Day from Spain, as well as celebrating Thanksgiving with our friends in the U.S.

This week: India eyeing Central American investment, BanColombia stumble after acquisitions, Panamanian Government releasing more funds for infrastructure development, and UNESCO team investigating the viability of the Cinta Costera development. Catch up with this and more in our Weekly Offshore roundup from the isthmus!


India Sees Central America as Key to Economic Ambitions

With a rise in imports of 30% since 2011, Panama and Guatemala are increasingly seen as the two countries central to India’s springboard into Central and South America. Guatemala is leading the charge, with an increasingly lucrative commercial relationship with the Asian giant.

“The Central American nation has become the largest recipient of Indian products with 37% of what is sent to the region. Between January and September last year $180 million worth was imported to Guatemala and $12.7 million exported to India.

According to the president of India’s Chamber of Commerce and Industry of India, Hasu Patel, the goal is to promote Guatemala as a center of expansion into Central America.”

Source: Newsroom Panama


BanColombia Drops on $1.4 Billion Share Sale

Having recently acquired all of HSBC’s operations in Panama as part of a $2.2 billion dollar deal, BanColombia’s management has suffered a slight setback with their offering of shares to raise capital. Alongside Panama’s HSBC operations, the giant Colombian operation has also acquired another Central American lender recently. The timing of the shares for capital drive was considered a surprise by many analysts, with the company seeking to maintain growth.

“Bancolombia SA, the nation’s largest bank, fell the most in four months after saying it would sell shares to raise capital after paying $2.5 billion for two Central American lenders last month. The Medellin-based bank’s shares dropped 1.7 percent to 24,320 pesos at 11:41 a.m. in Bogota after earlier sliding 3 percent, the biggest intraday decline since July 10. It was the worst performer after Petrominerales Ltd. on the benchmark Colcap index, which declined 0.5 percent.

Bancolombia’s board instructed management to structure a public offering of 110 million shares in Colombia, worth 2.7 trillion pesos ($1.4 billion) at yesterday’s closing price, according to a U.S. regulatory filing. The transaction requires advance approval from Colombia’s financial regulator, according to the filing, which didn’t provide an estimated time frame.”

Source: Bloomberg


$103 Million Reserved for Cleaning the Bay of Panama

Always a beautiful but slightly ripe place to stand on a hot day, the Bay of Panama will finally receive a significant budget as part of the beautification of the seafront of Panama. This is in line with the government’s dedication to improving both infrastructure and appearance in the capital of the republic, with an eye on making Panama City an increasingly attractive option for businesses to relocate to.

“The cleaning up of the Bay of Panama will get another $103.8 million to partially finance the project Panama Bay Sanitation Phase Two. Cabinet Council approved on Tuesday, November 26, a loan agreement between Panama and the Andean Development Corporation (CAF).

The contract aims to build additional and complementary works of the phase one treatment plant for wastewater, an interceptor tunnel and the interconnection system, so that the scope of investments to expand phase one. It also ensures adequate interconnection of works of Phase 2 of the project to the sanitation system of the city.”

Source: Newsroom Panama


UNESCO Heritage Team Explore Impact of New Causeway

There is a measure of uncertainty surrounding the much-vaunted UNESCO World Heritage Site of Casco Viejo, with the award being reconsidered in the wake of developments at the Cinta Costera (Panama’s arterial ribbon road running on the coast in front of the capital). With new contracts being considered for further development of the region, there is concern over the future of historic areas of the city and the impact on neighborhoods and culture. The Panamanian government is sticking to their guns with a commitment to further enhancing the region and bringing in extra cash flow to the city.

“UNESCO’s World Heritage Committee is in Panama to help decide the fate of the designation of Casco Viejo as a world heritage site.

The mission was originally conceived in 2011, with the task of monitoring the impact of the marine viaduct connecting the Balboa and Avenida des Poetas on the old city. An earlier UNESCO mission in In October 2010 visited the site and warned of the negative impact of the construction of the proposed six lane highway which replaced original plans for a tunnel.
Strong opposition to the highway was overruled by President Ricardo Martinelli’s decision to go ahead with the highway which critics say is part of a plan to create a new high rise area similar to Punta Pacifica, and fronting Chorillo.”

Source: Newsroom Panama


Colon Free Zone Needs New Law

Owners and investors in Colon Zona Libre are calling for amendments and changes to the laws controlling the special tax zone, as over 65 years have elapsed without significant alteration to the legal makeup of the area. The government is currently taking the concerns into consideration.

“Current legislation in the Colon Free Zone is more than 65 years old. Luis Germán Gómez, president of the Colon Free Zone Users’ Association, believes that it is time for a change. They consider that one of the major barriers is not allowing Multinational Corporations (SEMs) to establish within the Free Zone. During a forum organized by the Chamber of Commerce of the United States and Capital Financiero, Gomez highlighted the case of Procter & Gamble, a company that operates in Panama but had to establish its logistics headquarters overseas due to the old legislation.”

Source: The Visitor Panama


Panama Celebrates its Independence from Spain

The 28th of November marks Panama’s independence from European colonialism and an end to Spanish rule on the isthmus. A day of festivities takes place and Panamanians celebrate the end of Fiestas Patrias, a month long series of holidays and national events. Ironically the national holiday has been moved to the 2nd, a Monday, to add a 3 day weekend to the calendar.

“While today marks the official Independence Day of Panama (from Spain, in 1821), this year we are celebrating it officially on December 2nd. Why? you ask. For the long weekend, of course!

Really, the entire month of November in Panama is filled with holidays, from the November 3rd Separation Day celebration (from Colombia in 1903), to the Fiestas Patrias (Colon Day and Flag Day), the entire country gets caught up in the festivities. This holiday season makes the US stretch from Thanksgiving to Christmas to New Years look like child’s play.”

Source: The Panama Gringo


Biden Praises Canal Expansion

During a visit to Panama to promote even closer economic and cultural ties between the United States of America and Panama, Vice President Joe Biden commented positively on the ongoing construction works for the Panama Canal. He talked about the expansion as a positive boon for shipbuilding, American ports, Panamanian trade and even the Free Zone in Colon.

“After a meeting with Biden, President Ricardo Martinelli mentioned the possibility of constructing a fourth set of locks for the canal. This future project would be done after the canal expansion is completed, which is estimated to cost $5,200 millions.
Biden did not talk about the fourth set of locks, but praised the expansion saying it would duplicate commerce, since ships of 106-160 feet of width could now pass. “The modernization of the canal is an investment for the future of Panama, as well as for the United States,” said Biden.”

Source: The Visitor Panama


Free Downloadable Ebook – Panama Business Handbook

Put together by our legal team at POLS, the Panama Business Handbook is part of a series of ebooks written on topics relevant to our readers. We are aiming to provide expats and investors with the information they need, for free! Our main focus this week is successfully starting, owning and running a business in Panama – especially if you’re new to the way of doing business here.

They include such titles as –

Feel free to “pay with a like” by using the social media sharing buttons on each ebook page. We have packed each ebook with detail, providing you with the introductory legal assistance you need for potentially making the decision to make Panama your base of operations. Follow the links above to download your ebooks now!

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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