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.
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.
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.
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:
Panama’s Five Deadly Tourism Sins
A Parallel With Dubai That Panama Must Avoid
“The Earth is but a Country…”-The Bahá’í Temple in Panama
Garbage Problems Causing A Stink In Chiriqui