Panama Is Facing An Uncertain Future
Panama Has Some Important Choices To Make
Panama is currently dealing with a number of issues that will determine whether or not the country will continue to be a top destination for tourists and retirees. Much of the future will depend on who is elected to run the country next year.
SECURITY REFORM
The current administration is hashing out details of new security reform which has some wondering if the new measures will lead to a return of Panama’s military. President Martin Torrijos was granted “special powers” by the National Assembly but has been pretty quiet about the details of his decisions. What is known is that though currently prohibited, future leaders will be able nominate a uniformed head of the National Police, a practice which is currently prohibited. These reforms have some expats worried that Panama will reinstate the military and leave the doors open to a situation which lead to the rise of General Noriega.
CINTA COSTERA CONTROVERSY
It has now come to light that the $190-million Coastal Beltway in Panama City may be the financial responsibility of area residents. The beltway is currently under construction through the bay of Panama and is expected to ease traffic problems in the capital. The Public Works Ministry believes residents of Punta Pacifica, Punta Paitilla, Marbella, Bella Vista and Calidonia should foot the bill for the work, since it will increase the values of their homes. Hundreds of people who bought houses or condos in this area are now shocked to learn they could be paying up to $8,000 a year (for 10 years) in taxes to pay for the project. For a country that is trying to encourage international investment, this hardly seems like a wise move. If you own a condo in these areas right now, good luck trying to sell it in the next ten years.
TOURISM LAWS CHANGING
Panama’s new tourism laws are due to come in to effect next month and if the current proposal remains intact, far fewer foreigners will be eligible for the pensioners visa. Currently to apply for a pensionado visa one must have a retirement income of $500 (plus $100 for every dependant) per month but the new law states that every person applying must have an income of at least $1000/month. The proposed law will exclude many foreigners who were once considering Panama as a retirement destination.
REAL ESTATE BOOM TO BUST
Real estate prices in Panama are certainly not what they used to be. The ever increasing prices are locking a lot of people out of being able to invest in this country. People who have already purchased here and are hoping to resell their units could have a very hard time if there are thousands of condo units on the market. Panama is building too fast and the demand is not increasing. Something will have to give. There is a economic downturn going on around the globe, and the US is seeing the worst real estate market in decades. Where will the people come from to fill the glut of condos being built? Panamanian developers just need to slow down and wait things out before they destroy the real estate sector for good.
NOT SO CHEAP LIVING
The cost of living is increasing around the world, but it is very apparent in Panama. The poverty rate in Panama is between 30 and 40 percent. That means more than a third of the population is having a very hard time meeting their basic needs. The poverty rate will increase as the cost of the basics rise. More poverty equals more unhappy, desperate people. The countries in Latin America with the highest crime rates are also the countries with some of the highest numbers of impoverished people. If the government doesn’t step in and help (cap electricity rates, subsidise more food products, etc – take a hint from Mexico) then there will be many more desperate Panamanians.
CORRUPTION CONTINUES
Transparency International gave Panama a 3.2 when rating the corruption perception in 2007. A 10 on the scale is highly clean, and a 0 is highly corrupt. Corruption is an every day occurrence in Panama and it ranges from crooked lawyers and police to crooked politicians and companies. Every foreigner moving to Panama has been told that money will grease any wheel. It can be very confusing and frustrating if you are actually trying to do the right thing and follow the rule of law. In many cases you can’t get anywhere by being honest and trying to do what’s right. Corruption can sometimes work in favour of the expat or tourist, but it can also ruin them.
RISING CRIMERATE
The crime rate in Panama is on the rise. Last year 444 people were murdered in Panama. Panama is quickly creeping up the list of countries with the highest murder rates per capita. High crime rates justifiably scare tourists and potential investors away, especially when crimes are committed against foreigners. In the past few weeks there have been a couple of cases where North Americans were shot during robberies in Panama. These are the types of crimes that will put an end to Panama’s potential as a tourism hot spot. With any luck, the proposed security reforms will help curb Panama increasing crime rate.
DIMINISHED SECURITY OF ASSEST PROTECTION
Panama has long been known as a top site for assets protection and offshore accounts. Recently the Supreme Court of Panama ruled that funds in Private Interest Foundations can be sequestered even when the PIF has nothing to due with the reason the person is being sued. The decision stems from a libel suit filed by HSBC against a Canadian retiree living in Panama. The Canadian made negative comments about the bank on an internet chat room (never mentioning he was speaking on behalf of his PIF) and the bank successfully petitioned to have the funds of his anonymous foundation sequestered. This decision may hinder the current ease that money launderers have hiding their money, but it’s going to scare off a lot of legitimate businesses and retirees who have opened bank accounts using a corporation or foundation. Panama is no longer a safe place to keep clean or dirty money.
MORE TALENT NEEDED
Panama needs more skilled workers and a better service culture if it wants to compete with other tourism and retirement destinations. The government can invest all the money it wants in tourism campaigns, but when travelers arrive and are greeted by a mono-lingual immigration officer and the clerk at the hotel they check in to would rather talk to her boyfriend on her cell phone then hand over the room keys, you certainly won’t see many repeat visitors.
Panama has an incredibly bright future if it treads carefully. The outcome of next year’s elections will probably say a lot about whether Panama wants to embrace tourists and retirees or if they’d be happier that we all just get out and stay out. We foreigners can suggest and complain all we want, but in the end it’s for the Panamanians to decide. This is not our country. We chose to live or visit and we have the same choice to leave. Many Panamanians do not have that same option.
| Written by Rebecca Tyre |  |
This post's rating:
(22 votes, average: 3.86 out of 5)
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Filed under: Culture, Living & Retirement, News, Politics, Real Estate on July 29th, 2008
Thank you for this comprehensive overview of Panama’s present and future challenges. I dearly hope that Panama does not revert back to a militaristic nightmare.
I have visited the country twice in the past month and each time arrived at Tocumen International at night. I have had two good looks at Panama City’s skyline from my plane about 2,000 feet above the Bay of Panama and noticed that there are very few lights on in any of those thousands of apartments being built at Punta Paitilla and Punta Pacifica and San Francisco.
I realize that many of these buildings are still under construction but I could still see many that were completed. It would be interesting to know how many of these thousands of apartments are still available from the developers and how many are for sale by previous owners.
When one views an entire sector(like Punta Pacifica) of buildings that appear to be all nearly empty, it raises some serious questions about the sustainability of the entire City condo market.
I agree with several of the things you mentioned in your article but I also feel you have been harsh and pessimistic with others. On the crime rate, this figure is still very low and in fact is much lower than many many American cities for example. On the security reform issue, this is somewhat “seige mentality”( normally encouraged by western governments). We are all nervous especially these days. Military rule and the resulting dangers I do recognise. I doubt very much if this country is about to retun to it’s old past history. Singapore is still officially run by a military style government and it is one of the best destinations in the world. In addition I actually know many destinations in this world where the immigration officers only speak English, many happen to be in America funnily enough. It is true the country needs more talent as do many more I could mention.If you wish to retire in Panama simply to have a cheap happy time in the sun there is maybe other prices to pay, nothing is perfect. It’s your choice and countries do not have to satisfy outsiders every needs.
i live in panama since 10 years ago, and panama is not going that bad! stop being so pessimistic
panama is a beautifull place i have a brother that is a businessman there and he has import friends from presidency and he said nothing is goin to change. panama istill a good place for vacation and your spring break.
My family and I have been looking into retiring in Panama….after reading this it is clear that there are many things to look into. Crime…Government…..ect.
I hope we will be safe on our visit next month….Where is a safe beach resort to stay at???
Hey, it’s not THAT bad in Panama, but you do need to do your research. I’ve been living part-time in Panama for 5 years and still love it. The biggest drag is that Panama’s relative success came too quickly and prices, traffic, noise all rose too quickly. The downsides of Panama were far less noticeable when new city apartments cost $80k.
A quick suggestion to the blogger.
Please prominently date your blog. That way, when 5 or 10 years from now someone comes across it, they will be able to put it in time perspective (if the dated comments aren’t attached)
Thanks for your perspective. We have lived in Panama for more than 4 years and love it here – warts and all.
RE: Crime
When Bill Gates walks in a room where I am, the average wealth of everyone in the rooms goes up, except Bill.
Similarly, if the murders recorded in Panama are concentrated in 1 or 2 areas, it affects the crime rate for the whole country, but….
In these cases, my personal wealth did not rise nor did the increase in murders in Ward 8 (for Wash, DC), Chorillo or Colon (for Panama), East New York (for Brooklyn) directly affect my safety, particularly if they result from internecine warfare amongst drug dealers. When I lived in those US cities, I knew areas that I should avoid. That precaution is a requirement for anyone living anywhere.
As much as I am saddened by the loss of life of anyone, anywhere, I suspect there are several American cities with much higher murder rates than Panama overall or even Panama City. Some context would be helpful, just as it would be helpful to put the “corruption perception index” in the context of other countries. How does Panama compare with other potential retirement destinations?
Your blog is well-written and, now that I have discovered it, I will return.
Greetings.
I heard that a tourism official was shot yesterday
but I can’t find any information about it.
Apparently he was the victim of a shoot out in
a bank robbery, did anyone hear about this?
Thanks
Nina
Thanks for the info!
Everyone feels the economic crisis nowadays!
Good Blog!
Nice to know people’s outlook and experiences.
I plan on moving there with my family soon!
Geez, lighten up. I just came back yesterday and things seemed good to me. Martinelli will be the next Prez. Most of Panama is smiling and happy. Developers get what they deserve…
I think you are way too pessimist , and that maybe you even have other reasons and intentions for writing negative articles about Panama, than just to inform in a professional
and objective way about this country.
I apreciate your concern about the future of Panama, but i think the crime rate and the cost of live if not to bad, of course could be better.
I guess instead to critic we can sugest ways to improve to be better, because I think we are on time to correct this
yes, of course the one who wrote this has other goal, not the information at all. This site was made to put panama in the worst light, and to overlook the good things that are happening here….god!!!! I’m amazed with your ignorance ma’am… I’m panamanian by the way, and I live like a king here, too easy, to good, without any crime or murder around me at all ever since I was born, and I’m almost 22 y/o…well however…by the way I consider myself very skylled, I learnt english on my own, nobody taught me…I know to speak french too, self-taught, and please don’t u think that it’s cause i don’t have the money to afford to pay a course, that’s just cause i don’t need it…and I’m learning german and portuguese….and I draw perfectly everything I see and I’m studying for biologist….and so on. In a mental exam I was told that my intellygence was over the average or normal…and I’m panamanian, so there are also skilled panamanian, so please stop cheatin the outsiders, anyway there are many ppl speaking english here, but if you’re not satisfied, well then learn yourself spanish, because the national language here is spanish not english or french…. and the military are coming back…???? that’s preposterous, what country are you talking about….???, here we don’t even have an army….please don’t believe those things she said, life in panama is in many aspects, almost in everything way too similar to life in the USA…this country is perfect to live…ah and I don’t work for tourism, It just annoys me to see someone trying to rebate my country unfairly….