Saturday, June 6, 2009

Times Online, Sunday May 3, 2009

Times Online, Sunday May 3, 2009

A multi-millionaire supermarket tycoon has won Panama's presidential elections, in a rare right-wing election triumph for a region that has become used to leftist leaders.

Ricardo Martinelli's success as a business magnate persuaded voters that he was the best person to help Panama survive the global recession, which has slowed the country's recent stellar economic growth.

The leader of the opposition conservative party Alliance for Change pledged to guide the country through the world economic crisis and an ambitious expansion of the Panama Canal.

Electoral Tribunal President Erasmo Pinilla called Martinelli the "indisputable winner" after preliminary results showed him with 61 percent support and governing party candidate Balbina Herrera with 37 percent. Former President Guillermo Endara was a distant third. The winner was announced with 87 percent of the votes counted. The government has struggled to rein in crime and high prices and Mr. Martinelli, 57, managed to win over many low-income voters as well as business leaders who regard him as an ally. "We can't continue to have a country where 40 percent of Panamanians are poor," the self-made millionaire and supermarket owner said in a victory speech. The U.S.-educated, pro-business Mr. Martinelli, who owns Panama's largest supermarket chain, said he would work for a national unity government because "that is what the country is counting on." “Tomorrow we will all be Panamanians and we will change this country so that it has a good health system, good education, good transportation and good security,” he said.

Ms Herrera, a 54-year-old, who served as housing minister under outgoing President Martin Torrijo’s, conceded defeat late on Sunday and promised to respect the results. She vowed to form "a responsible, but very energetic opposition, because we have stopped being a country of economic growth, with our house in order and a canal expansion plan in March."

Election officials said that with 53 percent of voting stations reporting, Mr Martinelli's coalition had won 37 seats in the 71-seat National Assembly and Ms Herrera's bloc had 23 seats.

Panamanians also elected a vice president, mayors and other local officials.

"Martinelli has received strong support and I believe that he can achieve the change he's promised," said Carlos Rodriguez, a 46-year-old taxi driver. "He has had great success as a businessman and now I hope he can do a good job in government."

The victor, whose five-year term starts July 1, will have to guide this poor Central American country through the global economic crisis and the $5.25 billion project to increase the Panama Canal's capacity and allow it to accommodate larger ships.

The canal is Panama's economic motor and both Mr Martinelli and Ms Herrera supported its expansion, but the world's economic woes have generated uncertainty over the project, which is receiving $2.3 billion in international financing. Approved in a 2006 referendum, the project is expected to create about 5,000 direct jobs between 2010 and 2011, when construction is at its peak, authorities says.

The previous government saw its popularity undermined by the global economic crisis, Panama's slowing growth and crime. Panama's economy had grown at an average annual rate of 8.7 percent over the past five years and unemployment fell from 12 percent to 5.6 percent, improvements fueled by foreign and state investment by the Torrijo’s government. But growth has slowed, with economists predicting growth of just 3 percent to 4 percent for the year.
Amid the growing economic gloom, Mr Martinelli played up his business experience as owner of the Super 99 supermarket chain. He vowed to attract foreign investment and promote free trade, particularly with Panama's main trading partner, the United States. Panama has agreed on a free trade accord with the U.S., but the pact has been held up in the U.S. Congress by concerns over Panamanian labor rights and banking rules that could help tax evaders.
Mr Martinelli, who has a degree from the University of Arkansas, lost in his first run for the presidency in 2004 and returned for Sunday's election at the head of a four-party conservative coalition.

Ms Herrera, who ran for the governing coalition led by the Democratic Revolutionary Party, had promised to spread the wealth from Panama City to the poorer province and indigenous communities.

Few problems were reported despite heavy turnout at the country's 2,382 voting stations, observers from the Organization of American States said in a preliminary report issued after polls closed. More than 2.2 million people were eligible to vote.

Reprinted with permission.

Sunday, March 29, 2009

Focus on Investors - Doing business in Panama with your eyes open!

Trust experience and knowledge™.

Focus on Investors - Doing business in Panama with your eyes open!

Panama is a great place to live and work. In recent years Panama has been growing in popularity among investors, expatriates and retirees alike. Recently popular online publication “International Living” rated it as the No. 1 place to retire in the world, and for good reasons. According to the Economist Intelligence Unit, Panama's economy grew by a historical 11.2% in 2007 after increasing 8.7% during 2006 and this economic expansion is expected to continue in 2008. This is mainly due to substantial growth in the financial and construction sectors, tourism and the commercial expectations placed in the ongoing expansion of the Canal. Panama's dollar-based economy offers low inflation and zero foreign exchange risk. Its legal and regulatory regimes are business friendly. Its government is stable, democratic, and reform minded and actively seeks foreign investment in all sectors, especially services, tourism and retirement properties.

Panama offers a higher quality of living at a lower cost and with less crime than typical Central American destinations, although Panama City is rapidly getting to world pricing. Panama has a wealth of variety to offer whether it is beaches, lakes, mountains or the countryside and prices for real estate purchases with a range of choices for practically any budget.

The Colon Free Zone, the second largest in the world after Hong Kong, is a vital trading and transshipment center serving the region and the world. Panama has no restrictions on the outflow of capital or outward direct investment. Its accession to the World Trade Organization in mid-1997 opened up trade and lowered tariffs.

According to Panama's constitution, nationals and foreigners are treated equally under
the law. Both Panamanian and foreign companies must fulfill the same basic requirements to organize and operate most types of business activities in Panama. There are restrictions on foreigners participating in retail trade and practicing certain professions. In practice, however, there are legal ways to overcome these restrictions. Panama has one of the most modern and flexible corporate law frameworks in Latin America. Panama is an interesting and potentially profitable jurisdiction for licensing agreements and joint ventures as well as routine commercial operations for international companies.

Having listed all the good reasons to invest in Panama, the caveat is - you must be careful, so to paraphrase the famous line from the Wizard of Oz: “This ain’t exactly Delaware, Dorothy!”

Foreign investors, especially from the US and Canada, routinely drop their guard in a deceptively familiar legal environment of Panama, which is based on the Delaware Corporations Law and similar to the Wyoming Limited Liability Company Law, but allows bearer shares and untitled real estate sales.

Panama has a court and judicial system built around a civil code, rather than the Anglo-
American system of reliance upon case law and judicial precedent. Fundamental procedural rights in civil cases are broadly similar to those available in U.S. civil courts; however, the system can be inefficient and prone to abuse. Though the system is improving, many in the business community, both Panamanian and foreign, lack confidence in the Panamanian judicial system as an objective, independent arbiter in legal or commercial disputes, especially when the case involves powerful local figures with political influence. In a few cases the appearance of corruption has been so widely accepted as to constitute conventional wisdom. Arbitration is always a better choice at the Center for Mediation and Arbitration established by the Panamanian Chamber of Commerce or at various European or American arbitration centers and courts.

Since Spanish is the official language in Panama, always make sure the request your transactional documents in English as translations of the Spanish documents and never sign any agreements in Spanish if you do not speak and read the language! Legal documents are not interesting reading, but it is a must for a successful investment.

The Public Register of Panama provides much transparency to the company registrations, recordings of mortgages and liens and for transfer of title to properties, however, it also prone to misuse by unscrupulous parties.

Lastly, but just as importantly, Panama has many experienced attorneys and established laws firms; however, the conflicts of interest rules and ethical standards followed by the Panama Bar are not as stringent as those in the US. Hence again, caution must be exercised. At the very least, ask the partner of the firm to warrant to you that other members of the firm are not involved in representing parties adverse to your interests and transactions and do not use affiliated entities as trustees, if the firm is representing the seller in your purchase transaction. A good local bank can be easily hired as a trustee.

Use your common sense to build a team of advisors you can trust and you will do very well in beautiful Republica de Panama!

Copyright 2008, Juliette M. Passer, Esq.