The airline links Panama City and Barajas International Airport.

Spanish carrier Air Madrid recently announced its new destinations in Europe and the Middle East. Starting on March 27, visitors in Panama will be able to make connections to Paris, Frankfurt, Milan, Rome and Tel Aviv, and to the Spanish cities of Santiago de Compostela, Malaga and Palma de Mallorca. The airline has also added Fortaleza, Brazil, to its list of Latin American destinations.

Air Madrid, which started its non-stop service between Panama City's Tocumen Airport and Madrid's Barajas Interna-tional Airport in late 2004, also flies to Buenos Aires, San Jose, Bogotá, Cartagena de Indias, Quito, Guayaquil, Lima, Santiago and Toluca.

Seen here are Mr. Aitor Recalde, General Manager of Air Madrid (Panama) and Mr. Lourdes García (Sales Department).

By Sam Taliaferro, developer of Valle Escondido, Boquete

I often hear people (mostly gringos) say that Boquete is getting overrun with foreigners and that the infrastructure can’t handle it. Several weeks ago the U.S. Ambassador was in Boquete at a town hall meeting for the expat community and several people made comments about the infrastructure and they were concerned about their lifestyle deteriorating.

My count of the number of residential developments in the Boquete area last year was 28, up from just one in the year 2000. The number of lots in each ranging from 15-300 comes to a total of about 2000. I find another 10 small projects in the Boquete area added this year with another 300 or so lots. That brings the total number of project up to 37 with about 2300 lots. I would guess between 10-25% have been sold. This of course does not take into account the number of small farms sold to folks not buying property in master-planned communities. I would guess there are another 100 of these properties sold in the area based on Rhino and Boquete Highland sales numbers.

The number of projects and the number of sales would indicate that indeed we are growing very fast and that lack of infrastructure could become acute. With an increase of about 10% of project homes per year becoming available we could see a doubling of this number over the next 10 years.

Five years ago, the Valle Escondido retirement community was the only major residential project in Boquete. Today, 28 more are under construction.

But lets look at the gating factor for all of this growth, which is our capacity to construct homes. I know that the capacity for home construction in the area is very limited. Our construction company is probably the largest in the province with over 350 workers and we can only produce about 70 homes a year. I believe an optimistic estimate would be about 150 total homes were built in the Boquete area in 2005. I have heard numbers for building permits being in the thousands but I can assure you that this is false. No one buys building permits unless they are ready to build. Unfortunately the local municipal is not very forthcoming with this public information.

If the construction capacity can double over the next 12-18 months there could be 300 homes constructed a year. With 2300 lots it would take 8 years to build them if they all are sold. If all of these homes were occupied that would add only 5000 people to the local population over the next decade.

The real challenges we face are finding skilled workers to build these homes. Already we have to bring in workers from all over the province in order to meet our needs. 90% of this work force takes public transport and do not own automobiles so there is no real burden placed on the roads by workers. The main pressures placed on roads are from the many trucks that take materials to the various projects. The taxes paid by everyone for goods and fuel should be sufficient to maintain the roads if managed properly.

The point of this dissertation is that Boquete growth is slow by any normal standard of population growth even with the influx of several hundred immigrates a year added to the population. Can the town handle this? I think it can given the time period if the town managers begin to understand the issues and take action.

No one can deny that there is a “land rush” in Boquete, fueled by hundreds of foreign retirees seeking to find a cool, peaceful environment in the tropics. Can the infrastructure of this tiny Chiriquí mountain community withstand this apparent “gringo invasion?”

Wanted: World's retirees

By Brooke Ison and Mitra Taj
For the Tucson Citizen

Steve Arthur drives his black Toyota sport utility vehicle past the nine-hole golf course, the health spa and the church of his new neighborhood. The 1966 Amphitheater High School graduate points to the plot where his 3,000-square-foot home will be built.

"In any other place in the world, this is a national park," he says, indicating the lush mountains enfolding a cluster of quarter-million-dollar homes in the gated community of Valle Escondido in Boquete, Panama.

In mile-high Boquete, the tropics meet the mountains to create a landscape so lush even the air seems green. The weather is usually delightful. It's a far cry from Willcox, where Arthur grew up.

Last year, Arthur, a former TV producer, and his wife, Taylor, moved to Valle Escondido, the first of a growing number of gated retirement communities cropping up in the highlands and islands of Panama, a Central American country less than a third the size of Arizona.

Lured by Panama's natural beauty and foreigner-friendly tax system, Arthur and thousands of Americans like him are pumping hundreds of millions of dollars into the country of 3 million people.

In 1995, to encourage tourism as the departure of the U.S. military neared, Panama passed Law 8, exempting tourism-related businesses from taxes on profits and property. Second homes subleased part of the year and retirement communities such as Valle Escondido all fall under Panama's broad tourism umbrella.

Since the U.S. military left in 1999 after the turnover of the Panama Canal, Panama has been scrambling to find its place in the 21st century and diversify its economy beyond activities traditionally centered on the canal, such as its international banking center and the duty-free zone.

Tourism is one option. There is also something called "residential tourism" - communities such as Valle Escondido. Boquete, a former coffee-producing town of 18,000, has been ranked among the best places in the world to retire by Modern Maturity and International Living magazines.

At the restaurant in the town center, Arthur sips a Diet Coke. "You come past those gates, and this place is like Disneyland," he says.

Retirees have options
Those who eschew the gated-community ethic have other options. Erland Hinsch, who speaks in a drawl combining his native Denmark with South Carolina, is building a home with his Panamanian wife. Hinsch is a retired textile engineer - a business faltering in the United States as textile production moves overseas.

Hinsch is hooked on the town's tranquil setting. He drives his 1985 Land Rover over the bumpy dirt road just as a drizzling rain begins to fall in Boquete. Called bajareques, these daily refreshing rains cleanse the town and leave it looking like a living, breathing postcard of pristine mountaintops rising into the low-lying clouds.

"You can live well here for $1,000 a month. You can have maids, cars, a house - you can't even blink for that in the United States," Hinsch says.

Hinsch is supervising construction of a two-story, 2,800-square-foot home, contracting Panamanians for the construction. The cost? About $45,000.

Of the gated communities, he says, "It is just way too American. You don't come down here to live like an American; you adapt to Panama's culture."

More and more retirees are looking south to enjoy their golden years.

Incentives lure retirees
Whichever living arrangements retirees choose, their incentives for coming to Panama remain the same: low cost of living, breathtaking beauty and a slew of enticements. Any retiree who can prove he has a pension of $500 a month for the primary applicant, plus $100 extra per dependent, would be granted a Panamanian pension visa, giving him residency.

Other benefits are also extended to retirees: duty-free importation of their primary vehicle and one car every two years after that, duty-free importation of household goods up to $10,000, discounts on loans and mortgages as well as discounts at movies, restaurants and travel agencies. Nor are they taxed on any income made outside Panama, thus allowing many retirees to have virtual businesses.

Cielo Paraiso is the newest and biggest of the two foreign-owned, gated communities in Boquete. Still in the developing stage, this 543-acre former cattle ranch offers lots of an acre or larger. Its developers, Canadians Colleen and Raideep Lal, say they are committed to preserving the natural beauty of the area.

Carving house lots only out of former pasture, not forest, and using the existing open space for the golf course, as well as drilling their own well so as not to tax the city's water system, the Lals say they see value in keeping the landscape intact and natural, where other developers just see money on the table.

"You risk jeopardizing the reason people come here if you try to put too much in," says Colleen Lal. They will sell only 147 lots in their 500-plus-acre development, she says.

Just down the road from Cielo Paraiso, Valle Escondido plans about 200 homes on 124 acres. Developer Sam Taliaferro says he gained the idea for his development from the book "Atlas Shrugged" by Ayn Rand, in which a capitalist creates a community within a hidden valley where like-minded individuals gather to create a new and better world.

Taliaferro emphasizes security as the main reason to live in a gated community. His development is protected by a guard station, roving nighttime guards, alarms connecting each home to the guard station and the geographic barrier of the mountains.

"You are considered rich, and therefore a target," says Taliaferro.

Taliaferro touts himself as a visionary. "Retirement will be the economic salvation of the country," the native Kentuckian says.

If 30,000 foreign retirees move to Panama, he figures, $6 billion will pour into the economy, about half of Panama's GDP in 2004. Half a billion annually, he says, would be spent maintaining the communities.

Taliaferro says he plans to capitalize on baby boomers entering retirement age by creating up to 20 retirement communities throughout the country. "Our plan is to make Panama the No. 1 destination for retirement outside the U.S. Unless the government does something very, very foolish to just stop it."

Recently he met with Panama's president, vice president and congressional departments to blunt proposed fiscal reforms, which would tax foreign investors along with Panamanians of all income levels.

"That's all I've been doing for two or three weeks now. Rewriting these laws to protect the foreign investors. And to protect the foreigners who come down here so that their pensions aren't taxed.

"The bottom line," says Taliaferro, "is, I can go anywhere. And so can other foreign investors."

Ocean Business Center, a company offering office leasing services, recently opened in Panama City, and it is headquartered at Edificio Ocean Business, Calle 47 and Avenida Aquilino de la Guardia. The company offers a variety of virtual and permanent locales for rent –an alternative for businessmen who seek to start operations in Panama in a rapid and expeditions manner.

For more information, call: 206-8800, ext. 6328.