Canal enlargement
The use that will be made of the funds originating from the Panama Canal is at the center of the debate on the project of enlargement of the waterway. According to the proposal of enlargement presented by the Panama Canal Authority (ACP), the expanded waterway would be able to contribute US$4,190 million to the National Treasure in the year 2025.

A bit of blackmail from Colón entered the debate. Some 300 people of the Movement of the Unemployed of Colón protested near the Presidency with the message: " We want the funds of Colón to remain in Colón". Carlos Grenal, a spokesman of the group, demanded that the government destine US$30-million from the total income of the Panama Canal this year so that 12,000 jobs are created, otherwise, he threatened a "No" vote in the referendum on the enlargement.

Bird flu precautions
In order to coordinate all the efforts to prevent and fight efficiently any eventual outbreak of Bird Flu in the region, 21 Central American ministers of Agriculture, Environment and Health met in Panama City to prepare and fortify the sanitary measures of Panama, Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua and Belize.

According to the Minister of Agricultural Development, Guillermo Salazar, in Central America this would most likely be related to migratory birds.

On the corruption front
The Comptroller, Dani Kuzniecky, ordered a "purification" of the State payroll after detecting a total of 480 cases of possible dual salaries and another 122 people who tried to work simultaneously in two public entities.

The Department of Hereditary Responsibility of the Comptroller’s Office (DRP), has emited resolutions dictating prison sentences of different cases of corruption in the public sector -- "hereditary wounds" -- which amounted to of US$54,595.968 in the period between May 1990 to May 2006, in which 714 people were found guilty of at least 417 of the cases.

Panama Wants refinery
Panama is making an aggresive bid to be the site of the proposed refinery for Central America. The main competitor seems to be Guatemala who Panama has accused of using "incorrect figures" that put Panama at a disadvantage. This was indicated by the Minister of Commerce and Industries, Alejandro Ferrer, who said that in the logistic aspect Panama was number one, in both the Atlantic and in the Pacific, and here Guatemala took second place in the Atlantic, and Honduras in the Pacific.

Transport of the product to Central American from a refinery in Panama is cheaper. Ferrer accompanied president Martin Torrijos to a meeting of presidents in the Dominican Republic, where it was agreed that the investors will have the last word on the location of the US$6,300 million project.

Master Plan for Western Suburbs.
A Master Plan of land use for the area of Howard and the adjoining tourist areas, as well as the sectors of Veracruz, Bique and Vacamonte in the district of Arraijan, was announced by the Minister of Housing, Balbina Herrera and Gilberto Ferrari, director of the Panama-Pacific Special Economic Area Agency.

Injustice
President Martin Torrijos admitted that the present justice administration system needs deep changes. Torrijos assured that processes inside some judicial offices advance quickly, while there are other cases "where investigations are dragged out and the presumption of innocence is only respected for those that have silver in their pockets and not for those that do not have money".

Teaching English
Some US$5-million a year is being invested by the government to teach English. This was reported by Juan Planells, director of the National Institute of Human Development (INADEH), who explained that this represents the financing of all the language-training programs with public funds.

Odd Statistic
At least 79 bank robberies during the last 19 years in Panama, have resulted in hauls worth US$18-million Less than US$1-million have been recovered.

U.S.A. "Supporting" Police
The US ambassador, William Eaton, confirmed recently that the U.S.A. is supporting the training of the Panamanian police guarding the borders with Costa Rica and of Colombia.

Low Mortgages
Housing with preferential interest continues to be the most built by developers, in spite of the fact that the legislation that creates this special regime expires in 2008. At present, 72% of the 6,000 housing units that will be built by 16 developers this year will have a price of between US$15,000 to US$62,500. Law No. 65 of 1981, that was modified in 2003 and that ends in 2008, establishes that homes valued at less than US$62,500 enjoy a special interest rate.

Not-so-good news for manufacturing industry
Panama's economy is growing at a rate far above that of the majority of Latin American countries, but this growth is not uniform. Whereas service-oriented industries, such as the port system, tourism and retail are experiencing a strong an upward trend, the manufacturing industry is in recession.

According to Sindicato de Industriales de Panamá (SIP), an increasing number of Panamanian manufacturing companies have filed for bankrupcy in recent years and the local branches of some international corporations have moved elsewhere in the region. Among them are Colgate-Palmolive, Clorox, Craft Foods and Acero Panamá –all of this despite the US$20.4 million the industry received via tax incentives last year.

According to the Office of the General Comptroller of the Republic, there are 2,925 companies in Panama, employing over 40,000 people.

Colombian president insists on building highway to Panama
Despite the vehement oposition of the Panamanian government and people, Colombian president Alvaro Uribe, reiterated his proposal to build a highway linking both countries. Mr. Uribe's first proposal was made late last year. The Panamanian government, headed by Martin Torrijos, promised to consider the idea with no compromise, which prompted Isthmial circles to rally against the idea.

Within a few days after Mr. Uribe's invitation, president Torrijos stated he would not support any construction.

Panamanians strongly opose the construction of a road linking both countries due to the current state of guerrilla warfare in Colombia; for environmental reasons (a road would imply the destruction of thousands of hectares the Darién National Park –declared a World Heritage Site by UNESCO) and sanitary reasons (the "Darién Gap" serves as a barrier against South American cattle illnesses, such as the foot-and-mouth disease.)

Only 152 kilometers separate the town of Yaviza, the last settlement on the Panamanian leg of the Pan American Highway, and the closest Colombian Highway. The idea of building the last segment of the Pan American Highway has surfaced intermintently throughout most of the 20th century, but been dismissed every time. A tourist ferry linking the ports cities of Colón (Panama) and Cartagena (Colombia)briefly served as an alternative to the problem during the 1990's, was always project failled due to financial problems.

Are Panamanians getting smaller?
Panama is one of the most prosperous countries in the region, but it is also true that two, very distinct "nations" coexist in this small republic of three million souls: a first world country, seen in places like Paitilla, Albrook or Boquete, and "third-world Panama", seen in San Miguelito, Curundú and in the Native American comarcas.

Whereas Panama as a whole is currently experiencing an annual growth of 6%, approximately 40% of the population sees little or any of the income generated by the Colón Free Zone, the Panama Canal, the country's fledging tourism industry or its strong banking sector. One of the results of this divide is a slight decrease in the average size of children ages 6-9 in recent years. The problem is more prevalent in indigenous areas, such as the Gnobe Buglé Native American nation, Bocas del Toro, Darién and the San Blas Islands, where children are three times more likely to suffer from growth retardation than in other parts of the country. Over 80% of the population in these areas is poor.

Income in Panama is unequally distributed. Whereas living standards equal those of western Europe in some regions, in others, life is similar to that in the poorest countries of Africa.

No more child labor
President Martín Torrijos recently outlawed a number of “dangerous and degrading” jobs performed by youths. Companies or individuals who from now on employ minors in dangerous positions (those involving diving, chemicals, etc.) will be harshly sanctioned with fines and prison. Child labor has been a fact of life in many poor areas, such as in the indigenous “Comarcas”. It has also been a problem among the urban poor.

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

Panama has many types of taxes. In this article, we will provide you with a summary of the major types of Panamanian taxes. Prior to relying on these summaries, consult with a Panamanian tax lawyer or accountant.

INCOME TAX
Panama's personal income tax is based on a sliding scale, ranging from a minimum of 2% after the first $3,000 to a maximum rate of 30% over $200,000.

The income tax only applies to Panamanian-sourced income. This is regardless of whether you are a Panamanian citizen or a temporary resident.

Taxable income includes wages, salaries, business profits, pensions & bonuses, income from copyrights, trademarks, sales of stocks, bonds, and other securities.

Deductions can be made for all medical expenses incurred in Panama, charitable donations, home mortgage interest, education expenses, and loans for home improvements.

Foreigners Temporarily Working in Panama: Foreigners who remain in Panama for 180 days or more in a calendar year are considered residents for income tax purposes regardless of their immigration status. They must pay income taxes. If the individual remains in Panama less than 180 days in a calendar year, they are taxed at a flat 15% rate, plus pay an education tax at a 2.75% rate.

RENTAL INCOME TAX
If you receive rental income on your property, you will be liable for income tax up to a maximum of 27% (on rental income greater than $30,000).

Exception: However, if you invest in one of the special "tourism zones," you may be exempt from income tax for 15 years.

TOURISM ZONE EXEMPTION
Income from the operation of a tourism project, approved by the IPAT (Panamanian Institute for Tourism) and located in a "Tourism Development Zone of National Interest" is granted a 15 year exemption.

This does not apply to housing projects. It does apply to a hotel, golf course, tennis courts, restaurants and discotheques attached to a hotel.

TOURISM INVESTMENT LAW
In 1994, Panama passed Law No. 8 the most modern and comprehensive legislation for the promotion of tourism investment in Latin America and the Caribbean. The law regulates public lodgings, receptive tourism agencies, tourist transport services of passengers, tourist restaurants, discos, nightclubs, specialized tourism centers, recreational parks, theme parks, zoos, convention centers, marine complexes, tourist development zones of national interest, etc.

Since the law was enacted, dozens of the world’s largest hotel chains have swept in to take advantage, including the Marriott, the Radisson, Holiday Inn, the Sheraton, and the Intercontinental.

But Panama’s attractive tourism investment laws are not just for big business.

With a minimum investment of $50,000 anywhere in Panama’s interior you can benefit from:

• A 20-year exemption of any import taxes due on materials, furniture, equipment, and vehicles.
• A 20-year exemption on real estate taxes for all assets of the enterprise.
• Exemption from any tax levied for the use of airports and piers.
• Accelerated depreciation for real estate assets (except the land) of 10% per year.

The investment amount does not include the price of the land.For projects in the metropolitan area, the minimum investment requirement is $300,000.

Process to Qualify: Once an interested party or corporation has completed the necessary forms, they must be submitted to IPAT (Panama Tourism Institute), where they will be reviewed by IPAT's Board of Directors. This board meets once a month, at which the Minister of Commerce serves as the Chair person. Upon approval, the benefits are granted to the developer.

INHERITANCE & GIFT TAXES
Inheritance taxes in Panama have been completely abolished.

However, taxes on gifts (inter vivos) of properties located in Panama are in effect, and the rate varies from 4% - 33% depending on the degree of relationship between the donor and the donee. This does not apply to property owned anywhere outside of Panama.

REAL PROPERTY TRANSFER TAX
Sellers pay a real estate transfer tax when title is transferred to the purchaser.

The tax rate is 2% of either the updated registered property value or the sales price --- whichever is higher.

The updated registered property value is the original purchase price (or value submitted to the Public Registry) plus 5% per annum of ownership.

Tip: If the property is owned by a corporation, the corporation's shares can be sold (instead of the property), eliminating the need to pay the transfer tax.

Offset: The Real Estate Transfer Tax can be offset as a direct credit against the income tax levied on the sale's Capital Gains.

Option:
(1) The taxpayer may select between paying the 2% real estate transfer tax over the sales price, increased by 5% per year of ownership, or (2) Paying income taxes at a 5% rate of the purchase value of the property, increased by 10% for each year of ownership.

If the taxpayer selects the second option, no further taxes on the Capital Gains will be levied.

(Read the second part of this article in our next issue).

You can find virtually anything at Salsipuedes.

In this day and age, when modern malls and exclusive boutiques are appearing all over the metropolitan area, an old Panama icon presently maintains its tradition. We refer to a street in the old section of Panama called Salsipuedes, which for as long as anyone can remember has been a colorful market.

When you say "Salsipuedes" you are actually saying the phrase, "Sal si puedes", which means "get out if you can". You may think the name refers to the labyrinth of small, wooden establishments on this narrow street in the Santa Ana neighborhood, which makes motor traffic impossible.

This quaint little bazar was created by Chinese merchants in the 19th century.

The truth is that the connotation of "Salsipuedes" was not always colorful. The earliest references to the street are found on one of the first maps of the new city of Panama, dated in the last decade of the 17th century (after the destruction of Old Panama in 1671, the "new" city was established in the present-day districts of San Felipe and Santa Ana). Being located in the poorest part of town, the name "Sal si puedes" was a reference to the dangerous nature of the area. Residents from San Felipe (the wealthiest part of the colonial city) were advised to avoid the street all together after dusk, if they wanted to remain alive.

A couple of centuries later, Salsipuedes was "gentrified" by the arrival of hundreds of middle-class Chinese merchants during the construction of the Panama Railroad in the mid-19th century, many of whom opened the first establishments in the area. Today, Salsipuedes is a colorful little bazaar where everything imaginable is found, from pins and needles and vegetables to a 1940’s issue of Harper’s Bazaar.

And today, you will have no trouble getting out alive.

Feeding monkeys?

May 31, 2006

The Editor

Dear Sir:
My name is Christian Gernez, a regular reader of your newspaper. The purpose of this letter is to express my concern about the cover of Vol. 12 No. 11 of The Visitor.

I think it is rather sad for a publication that is distributed in the majority of tourist venues in Panama to promote practices which are not coherent with responsible eco-tourism. I am referring to the photograph showing a group of tourists feeding wild animals.

First, I think it is unethical for an eco-tourist guide to motivate visitors to engage such an anti-environmental practice.

Second, I don’t think it is healthy for people to feed wild animals. I have personally witnessed tourists feeding primates with everything from chewing gum and potato chips to bananas. Not even bananas are recommended for monkeys living in the wild, since the ones we purchase at the supermarket are treated with all sorts of chemicals.

We need to realize that these animals are not pets and should not be treated as such. If these attitudes continue, one of these days the monkeys will end up attacking and injuring tourists.

Best wishes,

Christian Gernez

July 11, 2006

The Editor
The Visitor

Dear Sir:
In your last issue you have reprinted a blog by Andres Oppenheimer, suggesting that US retirees should be moved to Latin America to help both Latin America and Social Security.

I have recently moved to Panama to take advantage of some the things mentioned in this article. I now have a perspective on the realities:

1. Prescription drugs may cost less. I don't know I don't have any prescriptions. Over-the-counter drugs cost 3 to 4 times more than what I paid in Illinois.

2. I am feeling disadvantaged because I have do not have a car. I am terrified at the prospect of driving a car where the "Rules of the Road" are everyman for himself.

3. Panama City is very difficult to find your way around. Directional signs are vague and street signs are sporadic.

5. It is considered rude to say no, but strangely enough it is OK to say yes to something and then just not do it. This leaves us in a position of not having needs and expectations met and not knowing why.

6. Panama as a whole is not friendly to people in wheelchairs, using walkers or canes or simply walking on their own.

I know that I am a more adventurous type than most of the people I know who are my age. In fact, I do not know anyone besides myself that would be willing to move here.

In theory moving people that no longer have a need to work to places that have no available jobs does sound like a good idea but, taking older people and putting them in uncomfortable and confusing situations can hardly be a good thing.

For this idea to work the Latin American countries would have to make a commitment of time, resources and money to make the seniors feel more at home.

Shirley Ciric

By Rodrigo Julio Molina O.
Attorney at Law

Auctions allow foreigners to acquire property in Panama at lower-than-usual prices.

Expats in Panama can also participate in the auctions of seized, real estate properties carried out daily at local courts of justice. Auction announcements are posted on the message board of every court house and are published in local newspapers (each announcement is published for three consecutive days.) The same applies for movable assets as well.

Real estate auctions are held between 8:00 a.m. and 4:00 p.m. Bids and counter bids are accepted between 4:00 p.m. and 5:00 p.m. and the auctioneer will temporarily award the auction when he or she deems it appropriate to do so within the last hour of the auction.

Bidders are required to deposit 10% of the amount indicated as the base price. The sum deposited by each losing bidder is promptly reimbursed. Interested parties can participate in their own behalf or in the name of a corporation. Once granted, the property is immediately registered at the Public Registry by order of the judge.

In a recent auction organized by our law office, a U.S. citizen (competing against five local proposals) won an apartment in the residential district of El Cangrejo, in Panama City. The price submitted by the winner was US$30,501.00 (the base price was US$38,571). Today, the property’s value has risen threefold.

For more information, call 223-9348, or visit www.panamaoffshorecenter.com