Energy News
Samba Bonita Power & Metals, a company of Panamanian capital, is carrying out feasibility studies in the province of Bocas del Toro, specifically in Changuinola, where a large deposit of shale was discovered in 1985 by the US Development Agency (AID) and by the old Institute of Hydraulic Resources and Electrification (IRHE). It is hoped the shale, which is similar to coal, can be used in Panama’s thermoelectric plants, thus reducing the consumption of petroleum products.

Energy Subsidies will place the greatest pressure this year on public finances. Last year the subsidy on cooking gas was US$38,8 -million, and fuel for public transportation US$20,8- million , while the subsidy on electricity reached US$25-million.

Canal Contribution
Contributions of the Panama Canal finance nearly 60% of the investment work assumed yearly by the central government, according to a recent statement by President Martin Torrijos.

To Save Banana Coop?
The transnational American company, Chiquita Brands presented the Panamanian Government a financial proposal to save the Cooperative of Multiple Services of Port Armuelles (Coosemupar) from bankruptcy. The company proposes to help the cooperative with US$4-million, in refundable aid. In exchange, the government is asked to put up the same amount so that the cooperative can invest, in 12 months, US$8-million to improve its productive process.

Paying for visitors
The government has appointed a commission to negotiate with the cruise ship lines the reactivation of the payment for each passenger that comes ashore in the country. From October of 2001 to September of 2005, the government paid between US$10.00 and US$12.00 for each traveler as part of an agreement to promote Panama as a tourist destination.

The present government does not seem to be in favor of continuing the arrangement. Neverthe-less, Matthew Sams, a representative of Royal Caribbean Cruise Lines, and a group of cruise ship companies that operate in the Caribbean, insisted recently on a new agreement for passenger quotas.

Food Costs Rise
Meats, composed of 12 different products, registered the major cost rise over the past 39 months, according to a report for April on the "Basic Family Food Basket" made by the Ministry of Economy and Finances. The increase of this group of products caused the "Basket" to reach US$205.73 representing an increase of US$4.19 or 2% with respect to April 2005.

Proposed New Port.
Some 26 businesses have so far acquired the list of requirements to participate in the international public qualification system for the design, landfill, construction, operation and administration of a new port terminal on the Pacific coast of Panama. Sale of these documents began on May 2.

Panama Ports Company, S.A. owned by the Hutchinson Whampoa Co, through its lawyers, placed a case of protection of constitutional guarantees before the Supreme Court against the order refusing it the right to compete in the list of companies pre-qualifying for the International Public Act No. LPI 0012006 that was dictated by the Panama Maritime Authority (AMP) that does not permit it to participate in the contest to administer the planned mega port.

The Good News
The Panamanian economy grew by 6.87% from January to March of 2006 and the sectors that contributed most to this growth were tourism, the Panama Canal and the Colon Free Zone. This is revealed in the Monthly Index of Economic Activity (IMAE) of the Department of Statistics and Census of the Comptroller’s Office.

Panama is the cheapest country and has the best conditions for executives to carry out their business, according to the results of a comparative study of the Central American nations, called AND& N Executive Index on cost of living, published in the April edition of the magazine Strategy & Business.

American Congresspersons in Washington yesterday supported the launching of the "Commitee of Support to Panama", during a session of the House of Representatives, which seeks to promote a series of economic, commercial and security objectives. In the act of official installation, and in the presence of the Panamanian chancellor, Samuel Lewis Navarro, the representative Jerry Seller, praised the values and purposes that both nations share.

The Bad News
After eight months of use, the Centennial Bridge has seen 127 traffic accidents, or one every 48 hours. The majority of these have been collisions and rollovers. Traffic Police Major Teófilo Moreno said drivers ignore the signs, specially for the speed limit.

A high tax rate, an inflexible work code, a slow judicial system, corruption and the high cost of procedures at the moment of doing business, continue weighing on the economic progress of the country, states an analysis of Panama by the Commerce Studies Center and the International Heritage Economy Foundation.

The country urgently needs a law of fiscal resposibility so that public expense, the fiscal deficit and the public debt do not continue to grow. This is the opinion of business groups who believe a law of fiscal responsibility would limit governmental expense to 2%. At present, and due to the lack of legislation, the fiscal deficit is 3,5% recognized by the Ministry of Economic and Finances.

The recent rise of interest rates of 5% by the US Federal Reserve is impacting moderately on Panamanians, and therefore the banks have increased their rates by 1/4 of a point, that equals 25%. Nevertheless, there is some anxiety because the strategists of the FED have indicated that perhaps they have not finished with the series of rises that were initiated nearly two years ago to face US inflationary risks.

A total of 64 percent of the judicial files of prisoners in all the jails; whose population has reached 11,720, is stagnant, a situation that is generating serious problems in the penal system, according to its own authorities, because of overcrowding and the desperation of the inmates, a large percentage of whom have been waiting years expecting the courts to free them.

A hunger strike of thousands of prisoners in the penal system throughout the country put the government in checkmate, and 24 hours later it sat down at the negotiating table with the spokespersons of the protest, the relatives of the prisoners and the Ombudsman to negotiate a solution to the crisis. A commission will investigate the accusations of supposed corruption, poor quality of food and the situation of the legal processes.

By Steven Rich, MBA
Marketing Manager for Panama Offshore Legal Services.

Hundreds of foreigners residing here are starting up new businesses in Panama every year.

Panama offers many opportunities for business entrepreneurs. You can start a bar, restaurant, retail shop, hotel, bed & breakfast, tour guides, or provide tour-guide or professional services.

Maybe you are thinking about opening a new business full time? Or, you are retired and thinking of passing the time by engaging in a part-time business.

Whichever you do, Panamanian laws must be understood and complied with. That's why the following information will be useful for every reader who is thinking about starting a business in Panama.

LEGAL BUSINESS STRUCTURE
Your first consideration is to decide what type of business structure to use.

There are 3 normal business entities here in Panama:

Sole Proprietor where you and your spouse & family operate a business as sole owners.

Partnership where you team up with one or more persons in running the business.

Corporation where you register with the government as a company issuing stocks, having a Board of Directors and corporate officers.

While a sole proprietorship can be an oral agreement between close family members, the other two entities need the assistance of a Panamanian lawyer. That's because legal documents need to be prepared forming a Partnership or Corporation. If they are wrongly prepared, they will be legally null and void causing a business legal nightmare for its members.

Panama's growing economy is the result of a sound legal system that protects private investment.

Let's examine the different legal structures here in Panama:

Corporation (Sociedad Anonima)
Corporations are formed under the Law No. 32 of 1927 and the Commercial Code (Decree-Law No. 5 of 1997, Article 5).

A Panamanian corporation is formed by two persons (called Subscribers) or Nominees (who act on behalf of absent foreigners) who execute legal documents called the Articles of Incorporation. Those documents are filed with the Panama Public Registry office. After the corporation is formed, only one shareholder will be required.

Corporate shares are issued which can be of various classes, can have par value or not, may be officially registered, or can be discreet Bearer shares.

The corporation must have a resident Registered Agent (Panamanian lawyer).

There must be at least three Directors whose names must be in the Articles of Incorporation. Any changes of Directors must also be filed with the Public Registry. Unless the Articles are changed or the corporation merges or dissolves there will be no other filing requirements.

Foreign Corporation
If you already have a corporation in another country, it can do business in Panama by filing the following documents at the Public Registry Office:

1. A notarized Spanish translation of the Articles of Incorporation;
2. Board of Directors minutes authorizing the Panamanian registration;
3. Copies of the most recent financial statements;
4. A certificate from a Panamanian Consul confirming that the company is organized according to the laws of its place of incorporation;
5. Notification of the transfer of capital to the Panamanian operation.

General Partnership
General Partnerships are permitted in Panama. As with most countries, the partners will have unlimited civil liability. That means every partner can be sued even if only one of them commits an error in the course of business.

Limited Partnership
Limited Partnerships (called Sociedad de Responsibilidad) are also permitted in Panama. They are governed by the Commercial Code and Law No. 24 of 1966.

There may be from 2 to 20 partners with no restrictions as to their nationalities or domicile. Their Capital must be at least $2,000 up to $500,000. The names of the partners must be registered with the Public Registry Office including the amount of Capital each contributed. Each partner's civil liability for the Partnership's debts is limited to the amount subscribed to but unpaid. If the Partnership appoints an independent administrator, his/her name must also be registered. No meetings are required if the Partnership has 5 members or less. Otherwise, a meeting must be held at least once a year. There are no requirements for annual returns or filing of any accountings.

An alternative to a Sole Proprietorship is to create an Individual Limited Proprietorship (Empressa Individual de Responsibilidad Limitada). This is set up in the same manner as a Limited Partnership except having only one member. The individual transfers his/her assets to the business. Business civil liability is limited to the amount of the committed assets.

Civil Partnership
A Civil Partnership (Sociedad Civil) is allowed by the Commercial Code and Law No. 24 of 1966. The liability of the partners is unlimited. This type of partnership is often selected by professionals such as lawyers and accountants.

Commandite Company
The Commandite Company (Sociedad en Commandita) is a hybrid partnership and corporation also governed by the Commercial Code and Law No. 24 of 1966. At least one partner must have unlimited liability, while the liability of the limited partners is limited to the amount of capital subscribed. This type of legal structure is seldom used in Panama.

GOVERNMENT PERMITS & LICENSES
Once you have either formed a Panamanian Corporation, or a Partnership, or are acting as a Sole Proprietor, you will need to register your business with the government before opening for business.

The 6 steps provided below are the requirements for registering your business with the national and local governments:

1. Income Tax Registry
   This is called "Registro Fiscal" with the Panamanian government.
   The Panamanian government has a website explaining what is necessary to register in Spanish. Go to the govt. website at: www.dgi.gob.pa
   This is the government Revenue (Tax) Service where your company receives its income tax id number called the Direccion General de Ingresos.
   You will need to keep records of income and expenses and file an annual income tax (or corporate tax) return and pay any taxes owed.
2. Commercial License
   Another Panama government website will give you information regarding getting a commercial license in Spanish at: www.mici.gob.pa
   This Ministry is called the MINISTERIO de COMERCIO e INDUSTRIAS, translated as the Ministry of Commerce & Industry.
   This is otherwise known as your Business License. Every business in Panama is required to have one.
3. Municipal Taxes
   After getting your Panamanian government licenses, you need to register with your local municipality in order to pay your municipal taxes.
4. Social Security Number
   Then you must go to the Registro Patronal de la Caja de Seguro Social (CSS) to get a Social Security number for your business and for yourself.
5. Sanitary Permit
   If your business deals with food or beverages, you will need to get Permisos Sanitarios with the Ministerio de Salud.
   That translates as a Health Certificate from the Ministry of Health for permission to operate a sanitary business.
   Every employee (including owners & management) who prepare or serve food or beverages (or are in the vicinity of food or beverage preparation or service) must obtain two different Permits. One requires a medical & dental examination at a public hospital. The other is issued after attending a two day health & safety course.
6. Fumigation Certificate
   Every business which is open to the public must be fumigated. You will need to hire a private fumigation company every four months to fumigate against ants, roaches, and other bugs.
   You must then present a receipt from the fumigation company and obtain a Fumigation Certificate from your local municipality. This must be publicly displayed at your business entrance.

Hiring Emplyees
Now that you have obtained all of the required government permits and licenses, you are now ready to hire employees.

For those of you thinking of hiring your expat buddies, Panama limits a company's work force to a maximum of 10% foreigners (non-Panamanian). Panamanian laws require that 90% of a company's employees be Panamanian citizens, or married to a Panamanian, or foreign persons residing here for at least 10 years.

But, there are exceptions:

1. Required technical or specialized staff unavailable in Panama increases your quota to 15% foreigners. You can also petition the Ministry of Labor for a higher quota.
2. Companies having less than 10 employees can employ 1 foreigner.
3. Companies can employ foreign Managers and Supervisors when the company does business abroad from Panama with prior approval by the Ministry of Labor.
   You must obtain a work permit from the Ministry of Labor for every foreign worker.

Panama’s Labor Laws
The Labor Code of 1971 deals with Labor Relations including the rights and duties of employers and employees. "Subordination" is the key concept of the law. Any relationship where one person is subordinate to another falls within the law. It makes no difference whether the relationship is or is not described as "employment".

There are certain basic employee rights which must be followed:

1. Written Employment Contract
2. Minimum Wage
3. Maximum Hours
4. Paid Vacation Time
5. Firing Employees

Employee Contracts
You must have your employees sign a written employment contract called an Inscripcion Contratos con trabajadores.

You must file two copies of the contract with the Ministerio de Trabajo y Desarrollo Laboral.

Employers can easily terminate the employee during the first two years. After that, employees have greater protection under the law. The law lists "just causes" for dismissal. Unlawful dismissals can result in minimal compensation payments. Both parties can contract for "fixed terms".

Minimum wage levels vary according to the employee's seniority.

Vacations: There are 11 public holidays per year. In addition, employees are entitled to a 30 day vacation every year.

13th Month: The law also requires a 30 day paid bonus every year which is known as "the 13th month". This bonus is estimated at one-salary day for every 11 days of work. The 13 month bonus is paid in 3 equal installments: April 15th, August 15th, and December 15th every year.

Unions
Unions are allowed in Panama. Unions can collectively negotiate on behalf of the employees. Strikes are lawful under defined circumstances after a majority vote of the member employees. Conciliation is mandatory before a strike can occur. However, only around 11% of the private sector employees are unionized.

Leasing Office or Business Premises
Panama's laws regarding leasing commercial space is similar to most English speaking countries.

1. It needs to be in Writing.
2. It needs to properly describe the location of the pre-mises.
3. It needs to address the amount and frequency of the lease payments, length of the lease period, whether there is a Security and/or Damage deposit, who pays for gas, water, electricity, and repairs. It will also contain provisions for late rent payments, tenant property damage, and renewal of the lease term.
4. It must be signed by the property owners (or legally authorized representatives) and the tenants.
5. All signatures must be Notarized before a Notary Public.

There are many more terms and conditions which should be included in a standard commercial lease which is why you should consult with a Panamanian attorney before signing one prepared by your landlord.

Business Bank Account
Even if you are a sole proprietor, you should never co-mingle your personal funds with business monies. That is why you'll need to open a bank account for your business.

Partnerships and Corporations definitely need to open separate Business or Corporate Bank Accounts.

When you open an account for a corporation, partnership, or a business most banks require the following information and documentation:

1. Most banks require a personal interview, while some banks may allow a telephone interview.
2. A clear copy of the account's Signatory and each corporate Director's Passport (must include the photo & personal information page, and Panama entry stamp page).
3. A clear copy of a second photo id (such as a driver's license or national id card).
4. Two bank references for each Director and account Signatory. These references must entail the satisfactory conduct of the account holder and that the banking relationship had been ongoing for a minimum of 2 years. It would be helpful if the references also confirm the person's residential address. Many Panamanian banks require the references be specifically addressed to that bank's branch. Some banks may accept only one bank reference letter (especially if you have done all of your banking with only one bank).
5. Two professional references for each Director and account Signatory. These references may be written by one's accountant, lawyer, stock broker, insurance broker, real estate broker, or employer. They should be written on their company letterhead. These must include the duration and nature of their business relationship with the applicant. Only an Original letter will be accepted.
6. Proof of Address: You must provide a copy of a utility bill (phone, water, electricity, cable TV, or Internet service) which contains your name and address.
7. A "Company Profile" letter must be submitted which briefly describes the type of business the account holder will engage in. This will include the location of the business, the products or services you are selling, the nature and expected volume of business, the origin of the funds to be deposited, an estimate of the monthly or annual amount of funds to be deposited, and the reason for opening a bank account in Panama.

It will help if your Panamanian lawyer accompanies you to the bank in order to make sure the process goes smoothly.

Once all of these documents have been received, they will be forwarded to the bank's Compliance Officer who reviews the entire application to insure no money laundering will occur.

This process will go smoother and may have less required documents if you first go to the Panamanian bank where you already have a personal account as they already know you.

Taxes
Now that you are licensed, moved into your commercial space, hired employees and have a bank account; you need to worry about taxes.

I have prepared an entire Report on all of the major Taxes in Panama which will appear in the next issue of The Visitor/El Visitante.

Conclusion
There are many legal documents, government applications, contracts, and laws one must comply with in order to start a business in Panama. That is why you should consult with a Panamanian lawyer who is knowledgeable with Panama's Business, Labor, Tax, and Real Estate laws before going into business.

In Panama, the World Cup is a national celebration.

Although Panamanians are a bit disappointed at the fact that their national team did not make it to the 2006 Soccer World Cup in Germany, virtually every eye on the Isthmus will be glued to a TV set during the competition, which takes place June 9-July 9.

Unlike most Latin American countries, where soccer is almost a religion, Panama was, until recently, a "baseball country", a fact associated with the special relationship the country shared with the United States until 1999. Things started to change during the last five years, when experts began considering the potential of Panama’s soccer team after a number of regional victories.

Until the day Panama’s "Marea Roja" team is able to play in a World Cup, hopefully in 2010, at least when it comes to soccer, Isthmians will continue to pledge allegiance to the countries of origin of their fathers –a byproduct of Panama’s rich ethnic mix.

Panamanians, who by no means exhibit the same levels of fanatism seen in other countries, are fond of watching the World Cup with foreign visitors at select restaurants and sports bars.

A new procedure to correct crowded teeth without having to revert to extraction has been devised and developed by Panamanian orthodontist Dr. Pablo Rojas Pardini, a graduate of Columbia University, New York. The innovative wire-threading procedure was presented at the annual meeting of the American Association of Orthodontists in Orlando, in 2004, and in San Francisco in 2005.

Traditional methods
The widening of the inter-dental spaces in the anterior and posterior crowded cases is one of the major problems that orthodontists face. The decision to extract or not to extract a tooth often presents dilemmas, risks and limitations in these cases. Traditional, non-extraction methods in mild cases of crowded teeth entail the use of pressure to the "problem tooth" in order to create the inter-proximal space.

Before	After
Correction of an anterior cross bite associated with crowding or lack of anterior space.

Wire-threading procedure
Dr. Rojas Pardini’s innovative method consists of placing brackets on the labial of the properly aligned teeth, contrary to traditional techniques, which entailed the application of brackets on the ill-positioned tooth (lingual side.) When passing the wire from the labial side to the lingual side, in other words, joining the brackets with the wire in an interlaced manner, an opening tensional action is exercised upon the wire in order to make space for the ill-positioned tooth.

The wire is passed under the contact point and over the dental papilla and by changing the position on the bottom bracket, it is possible to obtain the desired position of the ill-positioned tooth.

The wire that surrounds the ill-positioned tooth creates continuous tension, which has been proven to be better accepted by surrounding tissue when compared to traditional methods, which use coil springs or arches.

The innovative method reduces the risk factors and limitations associated with many teeth crowding cases, especially those affecting the periodontal tissue, the Temporo mandibular joint and the patient’s facial features.

For more information, call (507) 264-1625, or write to the following e-mail: rojaspardini@cwpanama.net

Nobody knows for sure when Panama City's Café Coca Cola (established in 1883) acquired the nickname that has made it famous for most of the 20th century. The truth is that it was one of the first places in the world outside the United States where the famous beverage was sold and served.

In 1906, Panama, along with Cuba, became one of the first countries to operate Coca-Cola bottling plants outside of North America, just in time to refresh the thousands of laborers brought to build the Canal during those years. Therefore, this year marks the 100th anniversary of Coca-Cola on the Isthmus.

By Andres Oppenheimer

Here's a proposal that would allow the United States to solve its immigration crisis, control sky-high healthcare costs and rebuild ties with Latin America in one stroke: Make it easier for millions of Americans to retire in style and pay lower medical bills south of the border.

Over the next 30 years, more than 100 million U.S. citizens will reach retirement age, and very few of them will be able to afford good housing, top-of-the-line medical services or -- much less -- personal care. Mexico, Central America (including Panama) and South America could offer all of that and much more. Doing so would catapult their economies and reduce their people's need to emigrate.

Before we get into why this -- or other plans to reduce the U.S.-Latin America income gap -- is much more likely to solve the immigration crisis than the $1.9 billion President Bush wants to spend on a 370-mile fence along the border and to deploy 6,000 National Guard troops, let's take a closer look at the alternative retirement option.

The upcoming retirement of about 100 million U.S. baby boomers will result in increased demand and ever-growing prices of retirement housing, nursing and healthcare bills for millions of Americans. Many of them are already seeking retirement alternatives overseas.

As Walter Russell Mead suggests in his recent book, Power, Terror, Peace & War, the United States should negotiate agreements with willing partners in the region to provide favorable deals to U.S. citizens willing to retire south of the border.

It could, among other things, offer reimbursement under Medicare for Americans seeking medical care in qualified and licensed healthcare facilities in Latin America, he writes.

Since these reimbursements would be much lower than those Americans would get in the United States, the U.S. government would save billions of dollars, which it could use to replenish Social Security coffers.

By creating hundreds of thousands of jobs for doctors, nurses, hospital technicians, restaurateurs construction workers, etc, Latin American economies would get a big boost. Florida, Arizona and Spain were sleepy economies before millions of retirees arrived and turned them into prosperous states or nations.

Some of this is already happening. More than one million Americans are already living in Mexico, many of them retirees seeking warm weather, lower property taxes and more affordable healthcare, The Dallas Morning News reported recently.

With the proper legal framework, this could be expanded to benefit both countries.

It would help solve the immigration crisis, because the current border enforcement plans are nothing but feel-good measures. They may help the Bush administration appease the Republican right in Congress, placate immigrant-bashing anchormen such as CNN's Lou Dobbs or draw public attention away from the Iraq war as we approach November's congressional elections, but they will do little to reduce the migration flow.

As long as the U.S.-Latin American income gap remains at its current levels -- the U.S. per capita income is $42,000 a year, compared with $10,100 in Mexico and $2,800 in Honduras -- you will have migrants coming to the United States.

If you build a 370-mile fence extension along the 2,000-mile border, immigrants will simply make a detour through other border crossings in the desert, dig tunnels or come through Canada. The result will be to make it more dangerous, human smugglers will charge more and migrants who make it across the border will never go back for fear of not being able to return.

And sending 6,000 additional troops to the border will be just as futile. As we reported here last week, the U.S. Border Patrol was expanded from 3,700 to 12,000 agents over the past 15 years, yet illegal border crossings doubled anyway.

My conclusion: Making it easier for U.S. senior citizens to retire south of the border or other proposals to narrow the North-South income gap are very realistic solutions to the immigration crisis. What's crazy (unless you work for Halliburton or other defense contractors) is to build useless walls or to send thousands of troops to get sun-tanned along the border.