December, Panama, madness, road rage, traffic jams, inconsiderate drivers, emotional intelligence, cutting off, blocked intersections, blocking intersection

December Madness: Road Rage

Unfortunately, we are back in that time of  year when Panama’s road rage escalates and the traffic jams just seem to be crazy!  Everyone that has a car is out and about, and there does not seem to be a single day where there aren’t any traffic jams.  Obviously, Panama’s traffic in the central business district is pretty bad all year round – but December is nightmarish.

Every year, we see the government make the Corredor Norte & Corredor Sur (toll highways) free for some of the December period (often December 7 or 8 – Mother’s Day; and then again for Christmas – one year they made it free from the 19th to the 23rd!).  This is because some 2 million cars transit through Panama City every week.

It was so bad in 2016 that the Government changed the working hours of public offices so that they would leave work earlier and be able to get home before the worst of the traffic.  Hopefully this year it will be repeated, and we will see some employers offering alternative working hours to their staff to accommodate the Christmas traffic.

Road Rage

In Panama, all year round, it’s quite common to find drivers aggressively jumping queues, blocking intersections (even with the traffic cop directing the traffic), honking, flashing their lights, and speeding up to block you out as you try to change lanes or merge.  But this inconsiderate driving in bad traffic conditions seems to get worse in December.

What is essential to realise – while you cannot change or control how others respond & react in the traffic – you can control yourself! You can choose how you are going to view the problems around December traffic and stress.

Emotional Intelligence

Emotional intelligence – something that many times appears to be sorely lacking in Panama – is the capacity to perceive, access & manage yourself and understand others.  It’s quite similar to empathy – with the added bonus of being self-aware.

It’s important to note – this is not intellectual.

This is intelligence.

It refers to our ability to learn – to continually change and adapt the information we had and then choose to respond differently.  One of the biggest challenges with emotional intelligence is that there is communication between the emotional and rational centres of our brain – and they occur at different speeds.

The lymbic system, which receives and processes a stimulus (leading to an emotional response), actually receives and processes faster than the neocortex (rational brain).  So, inevitably, we react emotional BEFORE we have had a chance to think.

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So, while it’s true that Panama needs to come up with new solutions to the December madness that leads to the road rage in the first place – there’s also a place for self-regulation!

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In  my ideal world of PanUtopia, all driver’s ed courses would include the following education:

  1. Pause & count to 10 —
    1. The brain struggles to process more than one thought at a time.  So you cannot count to 10 AND be thinking about why you are so mad at the other person.
    2. This allows the anger and emotions to dissipate until you can engage the rational brain
    3. Don’t take this frustration home with you – release & let go before you walk in the door!
  2. Engage your brain – think & visualize the consecuences of how you are planning to respond
  3. Practice empathy – recognise that they are driving in their own circumstances
  4. Defensive driving – not simjply driving according to the rules, but awareness that others might not be following the rules. It’s better to be safe than to be right.
  5. General education about timeliness – if there’s always bad traffic in Panama (and we all know that there is) – always calculate your travel time to the worse possible scenario, so that you are always on time.  It’s not the traffic’s fault you are running late.

Solutions

So, let’s really talk solutions to this December madness.

More public transport

I would love to see Panama actually start planning and announcing public transport options during the peak traffic.  To know that during the December traffic, there will be buses running more often than during the rest of the year.

And I would like to see Panamanians using public transportation more during the Christmas period:

  • metro
  • buses
  • Uber/taxi
  • Pedestrian

Carpooling

I would love for Panama to simply do away with their not-so-well and not-so-brilliant carpooling legislation! Who would think that legislating carpooling would actually work?

The problem is that in other countries a police officer will not pull you over in the morning traffic to find out whether the person(s) travelling with you in the car are friends/family or an officially carpooling which is registered… they will simply be glad for less traffic on the road.  However, in Panama, the taxis and transport unions are so strong, that they have made it impossible for anyone to give a neighbour or co-worker a lift to work – because apparently that’s unfair competition with the public transport sector!

Who in their right mind thought that this was a good idea?

If we want to address the traffic nightmare, we need to accept that maybe, perhaps, a neighbour will ask you for petrol-money!  And that’s okay.  It’s one less car on the road.  It’s not an illegal taxi service!

Changed working hours

In past years, the government has changed public offices working hours in December, in order to alleviate the congestion at peak hours.  This means that public officials were getting out of work by 3.30 p.m., allowing them to be home before 5.00 when the rest of private enterprise was getting off work.

More TV time – educational videos

I would love to see the transport authorities / police spend money on educational videos!

  • how to use a roundabout (circular intersections  – rotaries – what do you call them?)
  • reminder that a passing lane is for “passing” – go back into the right lane if you are not passing
  • give me a comedy about the rudeness of queue jumping
  • pet peeve – teaching drivers NOT to block intersections – don’t move forward into an intersection until it’s clear to exit.  And give this education, especially, to the traffic cops that are directing traffic.  Yes – even if you are directing traffic, there’s still no reason to allow ANY car to block the intersection!
  • tailgating versus defensive driving
  • purpose & uses of indicators – maybe another tongue-in-cheek comedy routine

But really – be safe as you are out there driving in the December madness.

Remember – while you have no control over how others are driving – you are 100% responsible for your own responses.  How will you choose to drive this December?

Panama, traffic jams, car, cars, transport, network, train, metro, bus, buses, quality, life, work, employment, jobs, commute, commuting, driving, riding, stuck

Traffic jams

It’s 4.44 a.m. and I am awake with my hot chocolate. This, for me, is quite a normal time to be awake and up.  But that’s just my body clock – that loves getting up hours before dawn to welcome the day!  I love the quiet morning – no interruptions – just to sit and write.

Most Panamanians, however, have a waking time similar to this – with alarm clocks and a commute that I do not envy!  One friend tells me she leaves home before 5.50 a.m., otherwise she will be stuck in traffic for 2 hours.  If she leaves before then, it only takes 30 minutes.  So, she gets to work at 6.30 a.m. every morning!  But it’s better to be at work than stuck in traffic for hours!

Another lady in my office leaves home (Chorrera) every day before 5.20, so that she has a “hope” of getting on the unlicensed buses (known here as bus pirata), because at least then she can come with air-conditioning and sitting down.   All in order to get to the office before 8.00 a.m.  Most people that live in Chorrera are awake at 4.00 a.m. to get to work by 8.00 – to me that is simply unimaginable!

It’s quite normal for a Panamanian to spend 4 to 5 hours a day stuck in traffic on their way to and from work!  Imagine the quality of life they could have if they could recover 3-4 hours a day!

While it’s true that the Metro train runs from Los Andes to Albrook Mall in 20 minutes, that’s only a partial solution to Panama’s commuting problem!  Panama has built suburbs in three directions:

  1. Los Andes / Milla 8 / San Miguelito
  2. Tocumen / Pacora / 24 de diciembre
  3. Arraijan (pop. 300,000)  / Chorrera (pop 200,00)

Of these three areas, the current metro line only services the first of these.  The second metro line – under construction but “almost finished” will cover Tocumen, 24 de diciembre & Pacora – but will not actually go to the airport!  So, for now, we can forget about the option of coming into the airport and just catching the metro home!  Once again, I see no plans for any parking at the final station.

And the third line of the metro – that will take care of commuters from Chorrera & Arraijan, is still in planning phases – with the largest part of the plan being the bridge across the Canal for the train & more traffic.  Chorrera and Arraijan used to be in the same Province as Panama City – until the populations grew so much, that the west side of the bridge was divided off into a new province: Panamá Oeste.  Chorrera is now the capital of that province!  But it doesn’t “act” like a provincial capital in many ways.  It continues in its role of sleeping & housing satellite for Panama City.

As Ursula Kiener stated earlier this year in a tweet – building 20 bridges across the Canal isn’t going to solve the problem – the issue lies with having Chorrera & Arraijan simply as dormitory cities.  We need to start developing the rest of the country and creating jobs there.

But even if I look at New Zealand – and their commuting problem for Auckland’s central business district – is it really all that different? Twelve KM from New Lynn to CBD in about an hour – which is half the distance that commutes have from Tocumen or a third from Chorrera (34km) into Panama City’s CBD.

Panama attempts to solve the commuting issue by having all of the lanes of the Interamerican highway coming INTO town from 4.00 to 8.00 a.m. – meaning that if you want to go out of Panama City, you take the Puente Centenario!

Basic culture – driving:

And that’s without even talking about the traffic in downtown Panama City!  Unfortunately, Panamanians do not appear to have learned the basics of how to handle intersections – exacerbating the traffic jams and frustration for other drivers.

What’s worse — you watch the traffic cops telling drivers to pull up over the intersection while they wait in line… doing nothing to help in the education of drivers who are respecting an intersection.

 

Pet peeve # 2 – Panamanians do not seem to have learnt the correct way to use a roundabout!  Panama would be a slice closer to Utopia, if every driver would just follow the simple etiquette and rules for using a roundabout.

Part of the solution lies in a complete education of Panamanians regarding regard to the driving rules – not driving on the shoulder and creating a third lane when there are only two, not driving down a one-way street the wrong way to avoid the queue in the other street, and respect for fellow drivers.  Everyone is heading the same direction – getting to work.

Transport solutions

Public transport

The options in Panama at the moment are limited:

  1. Buses, including metro buses & “piratas” – referring to the unlicensed buses that run daily (who when they are deemed illegal actually protest and block the roads)
  2. Metro system – line 1 – running North-South – only available at the moment from San Isidro to Albrook Mall
  3. Taxis – which used to be relatively safe and comfortable – are now often not air-conditioned and people are concerned about their safety
  4. Uber & other apps – a better option, as long as you have a credit card for payment, since they are phasing out cash payments (although in today’s headlines – this is being extended again)
  5. Walking
  6. Cycling

I don’t know anyone in Panama that would cycle to work – especially since upon arriving at work they would need somewhere to shower.  The heat & humidity of the tropics does not make this a cool morning ride to work – and the fumes from the traffic are asphyxiating!  Not to mention the complete lack of cycle-friendly cars that would push you off the road in their angst to get to work “on time”.

Uber & taxis are certainly not options for a long commute – such as from Chorrera or Pacora, because they would break a hole in your pocket if you did that daily!

And so commuters are left only with walking (fine for short distances as long as there isn’t a tropical downpour), buses or their private vehicles.

Car-pooling or ride sharing

Car-pooling would seem like one obvious solutions to Panama’s public transport crisis more than one person travels in a car, and prevents the need for others to have to drive  themselves. Ride-sharing reduces each person’s travel costs such as: fuel costs, tolls, and the stress of driving.

While to me it may seem crazy – Panama prohibits carpooling or ride-sharing to work – unless you’ve registered for it!  The taxis and public transport didn’t want people to be able to do this, because they said that the driver would charge others for the ride (i.e. gas money) and that was taking money out of the pocket of public transport.

Really?

Seriously?

Would you LOOK at the transport problem that Panama has?

And you want to legislate carpooling & ride-sharing so that it’s done properly???

While every other country simply has a rule that there are carpooling lanes (i.e. if there are two or more people in a car they get a special fast lane) – Panama is sitting here complaining about the traffic problem without really solving it!

Rant over.

Parking for at Metro Stations

One of my pet peeves is the LACK of parking at the final metro stations – I’m talking Pacora (when they finish line 2), San Isidro (out past Los Andes) and whatever the plans are for the last station in Chorrera.  I understand that there is no parking at the station on Vía España or even San Miguelito’s “La Gran Estación”.

But I don’t understand the lack of planning of not ending the final station with a car park, so people can drive to the station, leave their car and hop on the train! So you don’t want to have security looking after the cars? Put a sign up – “leave cars at your own risk”.

But the reality of Panama’s situation – especially in a country where it rains 8-10 months of the year – people need a way to get from their home to the train station.  How do we expect commuters to get from their homes (often in suburbs and gated communities) to the train station to start the commute? They are not going to pay a taxi and most likely not going to walk 3 km to the train station!

Implementing solutions

While I agree that it would be fabulous if some of the companies and jobs were available in Chorrera, rather than everyone commuting into Panama City – I don’t realistically see that happening within the short term.

Headquarters for multinationals are already “out of town” – in the sense that they are not central business district – either in Panama Pacifico, ciudad del Saber or Costa del Este. Processing zones are constantly being developed in Don Bosco, Tocumen and Transistmica – areas which are highly industrial and strategically located for logistics between Colon and the airport.

But Panama needs to find that perfect mix between investing more heavily in public transport (buses, not just the metro) and offering commuters options of how to get from their homes onto the public transport network.  They need to make sure that walking to a bus stop is actually an option, not an obstacle course.  I am constantly amazed at how sidewalks simply “end”, leaving you in the middle of an overgrown or muddy patch of mire.

There has been a lot of criticism these last two years about how the walking infrastructure (foot paths & walkways) has taken away what little parking there was in the central business district.  Not to mention the horrendous flooding that badly planned and executed works have caused!  The current river flowing down Vía Argentina each time it rains has become a sad parody of  wake-boarding!

That aside – if we really want to improve the quality of life for Panamanians – we need to accept that public transport is what will provide that.  This means more trains & a metro system that allows people to get home within 30-40 minutes, rather than 2 hours, more buses (especially shorter routes that go through neighbourhoods) and taxis or Uber.

If we are going to go with more public transport – Panama needs bus stops that actually keep the water out when it’s raining – not tiny little roofs for a spring shower!  And the public foot paths need to be walkable – rather than dangerous obstacle courses!

Building more roads (corredores or bridges across the Canal) will not solve the problem – this requires a change of culture & expectations.  And this means – the solution will take a generation to re-educate!

So – when do we start?

 

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Promises Panama needs

Last week I published a post regarding my “wish list” for Panamanian politicians – what I wanted them to demonstrate in their character – compassion, creativity & courage.

André Conte responded that while he enjoyed it, more than “what do you want” he wanted the question to address “what do we all need?”

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So, while I’m not entirely sure that I have managed to truly answer his question, here is my attempt at responding to the issues that I think our 2019 elected politicians need to seriously address.

Many of these issues will not fall upon the legislators to respond – but rather upon the President, Cabinet, individual Ministers and heads of Government Departments.

Some will require incredible courage, such as the head of the Caja de Seguro Social – a crisis which I have been hearing about the past 25 years. And yet, it’s still in crisis! The leadership required here is one of an appointee – not an elected official!

And yet, here’s hoping that they step forward with compassion – the ability to connect to all the interested parties; creativity – to be able to draw upon all the solutions from all interested parties to solve the crisis; and courage – to confront the many interests that arise and actually implement a solution after having heard all interests, identified the needs of the institution and the public, and work to a long-term solution for the institution once and for all.  I maintain my opinion that every single politician and director or Minister needs coaching & mentoring in order to truly be effective in their roles with adequate support!

What I’ve seen of politicians so far

Unfortunately, my opinion of politicians is not very favourable.

It’s my belief that they are driven by their need for “job security” – which means that they are looking solely for reelection (to the same post or a “better” one), rather than driven by the needs of their communities.

Typically, this means that they are always looking for a building or project with their name on it – it’s irrelevant whether the community really needed it or not. They want something that they can point to and say “look what I did for you”.  Most constituents will look at that and think “wow, they built something”, without actually asking whether that was the priority of the community.

Bureaucrats, similarly, are driven by promotion & job security. This means that they will not do anything risky – even if change is needed – because that could get you fired. Likewise, in a situation of cronyism, they are unlikely to oppose elected politicians, because that will get you fired.  This means that they will simply toe the line – even if the line isn’t going anywhere!

Community interests & needs

Unfortunately, this typically means that neither the elected politicians nor the bureaucrats are studying the interests of the communities that they serve. And moreover, it means that no one is thinking or evaluating the long-term needs of the community or society as a whole.

For some areas of Panama’s political plans, I am aware that there have been agreements reached between political parties & bureaucrats regarding long-term plans. But this is the exception, rather than the rule.  Unless politicians are willing to give up their aspirations for reelection – focusing instead on the long-term needs of society, instead of a building with their name on it or hams for Christmas – what will be done?

How will projects actually be completed if there is not complete “buy-in” from all interested parties? Solutions that are reached by the different interest groups – and not simply decided by politicians with a 5-year plan.  This is one of the primary reasons why I will harp on, over and over, about the need for compassion (connection), creativity (the ability to brainstorm with all interested parties solutions – outside the box), and courage (motivation to move forward and overcome obstacles that arise along the way) for the leaders in driving a solution forward!

Because – if for once – someone were able to get all of the interest parties to agree upon the solution, which takes longer than 5 years to implement – it wouldn’t matter that the government changes.  The interest groups themselves would keep the projects and solutions on track through the change of government. But I haven’t seen a government yet capable of pulling off a solution of this magnitude!

So, what do I think we need?

Where do I start?  Which of all of the needs of Panama is clamouring the most for attention?  If we solved one of the problems, would that solve all the rest?  I know that O’Neill in Alcoa found a keystone problem, which when he solved then solved by itself all the rest of the problems within the company, but I am really hesitant to take a guess which one of the areas of government might have the biggest impact on all the rest of the areas!

Presidency

For want of a better place to start, I will start at the top!  And I will admit – this being PanUtopia – the size of the issues to be addressed overwhelms me as to who the right person for this job might be.  Because, in utopia… this person would be capable of handling a Cabinet of Ministers and keeping each one of them, and their respective subordinates, focused on the goals at hand and putting each of the areas I will touch upon in order!

Qualities I want in a President:

  1. compassionate – able to connect with empathy and understanding with communities and their leaders; able to connect with each member of the Cabinet and empower them to effectively do their jobs, because it’s not the President’s job to fix each of the problems that I will identify below; diplomatic – able to command a room and speak from the heart, capturing the attention and connecting with the audience;
  2. creative – able to sit down at a table with 15 people + assistants, and brainstorm solutions – calling in all the talents & abilities of those present – to create solutions that no one person individually could possibly come up with; analytical & logical – able to look through the numbers and lists and come up with priorities and rationally decide the most efficient course of action; well-read & educated – to learn from the experiences and draw from the experience of others that are not even in the room through extrapolation;
  3. courageous – secure enough in their identity to speak their truth and present their ideas and solutions; motivated to see the solution through any obstacles, knowing from the very beginning that obstacles would arise and that they would need to create solutions for those, and being willing to do the hard work consistently to see it through to completion.  Motivated to push through the days when things appear to be going wrong, not simply waiting until “things feel right”.

Looking at that list… it’s kind of what I want in every Minister & Director of Government Agencies as well!  It’s not enough that it only be at the level of the President!

As you will see from the issues below – many of these issues are actually in the hands of bureaucrats – Ministers appointed by the President (not publicly elected officials) and heads of Departments.  While there will be necessary work with publicly elected officials (mayors, representatives and legislators), the majority of “decision making” and implementation will be effectively be within the executive branch of government!

How important is it, over the next 5 years, to legislate in theses matters (other than budget constraints) versus implementation of the decision-making?

Education

Unfortunately, earlier this year I wrote about the challenges facing Panama’s education system, and many of those challenges are still unattended.  Of the 1300+ schools without walls (just the roof held up on posts), there are more than 700 still outstanding. In a recent study of the 3rd grade education level, 1/3 can’t write, 50% can’t read and 60% don’t have requisite basic math skills expected!  That’s without even addressing the issues of modernisation of the system to meet the constantly changing global climate and advances in technology and work environments!

The biggest challenge, however, that I see — what is the vision that guides Panama’s education policies? How will the Minister of Education reach consensus with the educators and other interested parties (including even future employers and entrepreneurship opportunities) to establish the road map that will guide decision making in coming years?  What is the first and primary issue that should be dealt with in the education system that would work towards solving the myriad of issues that need to be faced: preparation of the teachers, infrastructure, participation in growth of the economy, technology?

This one area alone requires someone at its head that truly can get to the bottom of the issues within the Ministry and set a plan of action with the buy-in of the teachers & educators to achieve at least one phase of the plan by 2024!

Health

While I accept that the health issues are actually 2 separate issues, one being the Ministry of Health (and approval of imports of medication, as well as the State health network), there is the more pressing crisis of the CSS (Social Security).  This is a challenge from within as well as from the outside!  The competing interests are tearing it apart, as they have been doing for the past 30+ years!

There are issues regarding their finances & assets, issues with respect to the services (or failure) offered, the infighting and power struggles (national as well as regional and within hospitals), and the competing interests of the doctors, nurses, technicians, suppliers & patients.

This is definitely a scenario where I could see the identification of keystone habit (such as that described by O’Neill in his experience at Alcoa) would actually make a monumental difference to the whole organisation and could be the beginning of a solution!  However, O’Neill was lucky that he counted with the support of his Board – the ones responsible for bringing him on to solve the problem!  In the case of the CSS – this need for support from the Board would need to be addressed!

Housing

Panama currently faces the challenge of needing 200,000+ housing units – but the construction industry is faced with rising labour & material costs.  Construction permits dropped 50% in 2018, and while the country needs 15-16,000 additional homes each year, only some 14-15,000 a year were being built (before the drop in permits!).  Of the 100,000 homes promised by the current government during their term, some 45,000 have been built.

The head of housing will need to balance the interests & needs of the community (for housing) against those of the construction companies, infrastructure needs, and environmental concerns.

Infrastructure

Closely related to the need for housing are other infrastructure needs – even though in 2018-2019 some $2 billion of projects are underway.  This includes finishing line 2 of the Metro and starting line 3 to Arraijan & Chorrera.  But one of the questions being regularly asked is why Chorrera is merely a satellite of Panama City, rather than being designed and built as a separate center that provides employment and not merely sleeping quarters to workers for Panama City!

Two thousand km of roads were promised by the government and claimed to have been built, although it was later clarified that this was really only some 355 km that were completed.

The government also promised to eradicate latrines – but while 200,000 were promised, the results remain unknown.  Likewise, running water has not been installed to all communities in Panama, and many communities still find themselves off the electric grid and mobile phone coverage.

Energy

Closely related to the foregoing issues are the myriad of issues tied up in the energy sector.  I wrote about these issues a number of months ago.  The interest groups here are varied and with conflicting interests.  Needs include:

  • a long-term maintenance plan
  • transmission line #4
  • pricing
  • environmental policies and policing.

The sectors that are affected by energy include: construction, commerce, industry & consumers.

If Panama wants 75% renewable energy by 2050, it needs to change the legal framework and confront the investments recently made into gas-based energy projects, rather than green energy projects such as wind farms or solar power.  In 2016, 60% of the electricity produced in Panama was through hydroelectric plants (which while a renewable source, create significant environmental damage in large areas), 32% thermal, 7% wind and only 1% solar.  What is curious to note is that worldwide, countries with much less sunshine (take for example – Germany) have a much higher rate of solar power than our tropical nation!  Go figure!

Fiscal Policy

Panama’s current fiscal policy requires an overhaul – in order to:

  1. attract investment
  2. be fair on all the players in the market (including small & medium enterprises)
  3. tax monies should not be “lost” through poor management and corruption/theft
  4. in order to “balance the books” – decisions may need to be made to cut government overhead
  5. it may be necessary to down-size government offices, irrespective of how unpopular that may make government members!

Economy

Where to start?

Panama currently faces more unemployment, less investment, less loans being granted and less sales in commerce.  In 2018, the unemployment rate increased for the fifth consecutive year.

There is a serious lack of equality within the country, with many areas still in subsistence farming and well below the poverty line.  Only a few sectors are actually benefited by the current economic growth that is touted internationally.

Financing is barely available for the business sector, particularly small to medium enterprises.  Policies do not support or encourage growth, investment or expansion of companies.

Unemployment

Forty percent of the workforce is currently listed as “self-employed”, “on contract” or “part time” – with no stability.  The results in lower productivity and inability to participate in bank financing and other needs.

Special Zones

While the special zones were thriving, with global changes, they are failing to create a significant difference to the economy and generate employment. Policy changes and focus are necessary.

Tourism

While tourism generates about 10% of GDP and 130,000 jobs in the economy, hotels are currently suffering with a 46% occupancy rate. Once again, a concerted plan and creativity – from public and private sector together – is required to change the situation.

Agriculture

It would appear that the agricultural sector has been abandoned to subsistence farming – with not much technological or educational assistance to the sector.  Exceptions to this are the farms owned and operated by the major supermarkets, who basically produce exclusively for their own consumption.  But many areas of the country are abandoned, with little or no interest in exchanges of technology between countries and participation in projects for learning in the alienated communities that are relegated to subsistence.

Another concern, in the commercial enterprises of farming, is long-term sustainability and environmental accountability for farming methods – particularly long-term effects of runoff from the farms and damage to the surrounding environment.

Justice & Security

I can’t close without mentioning the concerns about the justice system and security issues in Panama.  There are many jokes and memes about “perception” – we “perceive” that there is a problem.  But let’s get real – there is a problem! Not a perception!

Security of citizens and tourists needs to be addressed not only in Panama City or Colon, but in the entire country. Gangs & drug trafficking need to be addressed, as do home invasions and robberies.

In the justice system, attention should be given to the Sistema Penal Accusatorio – which was introduced over the past few years.  It’s not that the system should be reverted to the previous system, which was full of its own flaws – but attention needs to be given to the concerns of the police force and prosecutors regarding their experience within the system. These concerns needs to be addressed across the board.

  • What needs to be fixed?
  • What simply needs to be tweaked?
  • How can members of the police force be educated and prepared better to work within the system?
  • Where are different parties frustrated by the process?

Change is never comfortable, but concerns should also be addressed.

Drawing this to a close

As I look at all of these needs, I recognise that Panama needs well-prepared teams within each area.  This is not an issue for “the President” to fix. I admit, I am sick of people saying “The President needs to come here and solve this problem”.  A country’s problems cannot depend solely on one person to solve them!

This is something that will require not just Ministers that are prepared to sit down at tables, but all interest groups that are well-versed in the myriad of issues and concerns of their specific industry and that are open to brain-storming solutions that take into account all of the interests in the matter, rather than simply being closed to “this is my position”.

Experienced negotiators and mediators – that are able to delve into the needs and interests of all parties will be required at each table – that can identify the need that lies below the stated position.  People that know how to ask questions and are willing to continue asking until truly connecting with the source of the interest, rather than accepting on face value a projected position at the negotiating table.

If any one of these problems is truly to be addressed and a solution found – all parties have to be prepared to see all sides of the issue and begin to accept that the solution may only truly be found by everyone working together to build a better country!

Communities themselves will need to start to believe that they possibly have a role to play in solving the problem, and actually in carrying the solution into effect.

This may require that everyone stops looking at their belly button and “what’s in it for me?” – and actually starts to look at

“how do we all participate in fixing these problems?”

Well, as always, this is PanUtopia!

Panama, politicians, re-election, reelection, promises, campaign promises,, preparation, hopes, dreams, compassion, creativity, courage

Politicians, Re-Election & Promises

The Reelection debate has quieted down a little bit recently in Panama – as political parties finish up their primaries, headed into the 2019 elections. But, what I am noticing is that within the political parties, we are still seeing a lot of “reruns”, rather than new blood.

So this idea “No a la re-elección” – while it’s popular with the average person on the streets, does not seem to truly have taken flight within the main parties.

Looking from the outside in – I recognise a pattern that comes up often when dealing with clients.  You ask the client “what do you want?” and they proceed to provide you with a list of “I don’t want“.

That.
Wasn’t.
The.
Question!

I didn’t ask “what don’t you want” – I asked “what do you want?”

Because, unfortunately, until we can clearly enunciate what it is that we DO want, we are just going to continue getting more of what we don’t want!

So… I am going to attempt to enunciate what I do want to see in our publicly elected officials in Panama.

I will remind the reader – this in PanUtopia – an alternative reality – what could be in a Utopian view of Panama.

PanUtopia-tea

So… come sit down with me… grab your cup of tea or coffee… and let’s dream & idealise for a moment what that perfect Panama might look like!

To start with, I want politicians with coherence & alignment – you might think a better word for this is integrity – where their passions & purpose drive their creation of solutions, and these are followed through with concerted actions.

Is that really too much to ask?

I don’t think so!  Hey, neuroscience says that it can be done!

Of course, that presupposes that we are talking about emotional intelligence – politicians that are actually self-aware and have self-control! They don’t freak out, shut down or stone wall when faced with obstacles to their plans.

But to be realistic, what I really want is heart-lead politicians!

I don’t mean all emotional – wear your heart on your sleeve – politicians.  No.  I mean that they are truly connected with their compassion (self & others) and connected from the heart (not their pocket) with the community.

This means that they listen to the dreams and desires of their communities – the ideals & values.  It means that they are really “chunking down” on what are the values that their community holds dear, and then using those values as a guiding light for their decision-making!

They have to establish trust & connection with their communities – understanding the wants and desires that drive the communities that they serve.

When I say I want a heart-lead politician – I mean I want someone with wise compassion. Not a people-pleaser or a yes-man – someone that has clear boundaries established by values and dreams.  That recognises that priorities may have to be established and not everyone will be in agreement with those priorities.  But whose passion for following the dreams, aspirations, purpose and values of the community drive what they are working on!

This person will need to be able to listen to criticism and handle being in the hot-seat.  And I mean listen to criticism. Not take it personally and get all defensive. Not brush it off and ignore it – but be open to listening to it, because perhaps there is something in there to be gathered and learned!  To respond to criticism, rather than to react!

Did I mention emotional intelligence?

I want a politician that accepts responsibility – that doesn’t play the “blame game” and does not justify & deny.  Who doesn’t use smoke screens & mirrors to confuse the crowds. If they make a mistake, I want them to be humble – to accept their mistake and acknowledge it – and then look at what repairs will need to be made.

I want a creative politicians

And by this, I mean I want them to put all their creative and problem-solving abilities at the service of their purpose & passion.  To allow their compassion & connection to others to indicate where solutions are required, and then to sit down with their teams and brain-storm how to bring these into effect.

I want a strong team leader that can guide others through the mental imagery of the creative process – connecting dreams & visions with reasoning, analysis, synthesis & cognition.

To set up a 5-year plan with vision & goals – and then to connect with their communities and interested parties (including the businesses and the construction industry) to make these plans & goals happen!  To take into account the concerns that the communities have and also the concerns of the business backbone – and then to think outside the box to find creative solutions to the issues and obstacles.

I want politicians with balanced perspectives – that understand that there are always going to be competing interests in a community – but that through their creativity can integrate views and find solutions that generate the greatest good!  Someone who brings to the table effective decision-making & problem-solving.

I want someone that knows that sometimes the right question is “who”, rather than “what”.  A person that recognises that they personally don’t have to have all of the answers – but rather that sometimes they should ask “who” – who is the right person for this project?  Who should I delegate this to?

And, finally, I want courageous politicians.

It’s all fine and well to have heart – and be lead by compassion.  It’s wonderful to allow that compassion to guide your creativity – to be the north-star for how you solve problems — but unless they are courageous, unless they dare to step out and actually put into motion all of these ideas… we will still have nothing!

So, I want these politicians that take action, that are deeply connected to their internal sense of security & safety, and that align their actions with their compassion & creativity!  I want to see full mobilization – willpower and quiet courage – from a relaxed and calm disposition.

Someone who is not worried about self-preservation – in terms of getting re-elected next term – but rather someone that is simply keeping their promises to the community.  Who limits their hunger from becoming greed. Who does not allow their aversions to become fear.

I understand… there are no perfect outcomes.

There will, inevitably, be mistakes and learning opportunities.

But I want someone that is open to learning from the failures – that is willing to communicate these situations.

So… you ask… what do I want from my politicians?

  • compassion – lead from the heart
  • creativity – putting all their intelligence & ideas at the service of their compassion
  • courageous – to actually put it all into action

And then, as a result of these 3 prime characteristics – I want

  • communication
  • caring
  • consistency
  • competency

I warned you… this is PanUtopia

But I also know that these skills and way of being can be learned!  So, knowing that in the primaries half of the politicians that are being elected are “more of the same” – I have a new wish… I wish all of these politicians would get some coach training, so that they could LEARN how to be lead by their hearts!

PanUtopia02

 

Panama, economic growth, Panama Canal, economy, industries, public debt, private investment, employment, laid off, lay offs, agriculture, infrastructure

Where did the economic growth go?

A few days ago Standard & Poor’s improved Panama’s risk rating to BBB – indicating that Panama has shown consistent economic growth and a stable fiscal policy.  This is in line with the rating which Panama has by Fitch. Nevertheless, this rating comes on the heels of news that Panama’s foreign investment dropped by 17% in the first quarter of 2018, compared to the same period in 2017.

A lot of people in Panama are asking themselves – where did the economic growth go?

Shops are closing.
People are getting laid off.
And what about the 30 days of strike by the construction workers and the millions that were lost by construction companies during those days that turned into weeks?

But the cost of living in Panama City is the highest in Latin America.

How do they measure risk?

What many fail to understand regarding this risk rating is that it takes into account global factors such as:  international debt management (with the World Bank), GDP, government fiscal policies, banking and financial transparency, and even private investment in infrastructure projects.

Panama, shipping, transportation, logisticsMany of these aspects are out of the reach of the average consumer on the streets in Panama.  They are not seeing in their pockets (no trickle down here), the efforts from the expansion of the Panama Canal and the ports. No one is talking about all the development that is happening on the Caribbean Coast since opening up the third bridge across the Canal in Colon.  And no one believes that corruption is truly being addressed, as mentioned in the S&P report.

But, the S&P takes into account international aspects, such as exchange of information policies, which have changed substantially over the past 5 years.  They also take into account the new regulations for stopping money laundering and the supervision of previously unregulated business areas (real estate, casinos, and even accountants and lawyers).

All these things that the little man on the street has no real interest in.

Addressing poverty:

In formal circles, there is talk about how this government has addressed poverty, and especially criticism of the report that “150,000 have now moved above the poverty line.” But, as many point out, this is simply because of an increase in welfare subsidies – it is not actually because of increased employment!   The poverty line in Panama is a mere $60.00 a month, and so with the subsidies introduced by this government, they have “effectively” moved people out from below this poverty line.

Panama, poverty, economy, economic growth, trickle downUnfortunately, however, they haven’t actually solved the problem.  They simply moved it to a different place!  While these families are now receiving the welfare subsidy, no new policies, training, education or other measures are being introduced to break the poverty cycle in these communities.  They are simply depending on welfare!

The perception (i.e. the reality of the common man on the street) is that unemployment has increased.

There are more people “camaroneando” – which is basically picking up odd jobs wherever they can!  The Panamanian word “camarón” apparently has it’s origins in “come around” – like “why don’t you come around on Saturday and mow the lawn for me?”

So, while on the one hand you have official government figures saying that they are making headway in addressing poverty, the average worker on the street would disagree.  If unemployment has increased and relying on odd-jobs has become a way of life for many more people, then “how is it that we are better off now than before?”

A more real criticism that I see is that most countries don’t establish an arbitrary figure to calculate their poverty line.  They use their GDP as a measure – anyone that is getting LESS than half of the GDP would be considered to be under the poverty line.  Assuming that Panama’s GDP is still somewhere around $14,000 a year, that means that anyone earning less than $600/month is under the poverty line.  How many people does THIS leave in “poverty”?  In other countries, they will call these the “working poor”.  How are Panama’s “working poor” doing?

And let’s be real: one of the World Bank’s criticisms of Panama in its recent visit was that Government (i.e. size) was growing faster than the economy and the taxable income.  In other words, our government is getting too big for the country – it’s costing more than it receives in taxes!

A $300M injection into the economy

One solution for this situation is a $300 million injection that the Government has requested (taking from Peter to pay Paul), by authorising an increase in the budget deficit.  This is apparently to assist businesses that were hardest hit by the construction strike earlier this year.

The sole purpose of this cash injection (they haven’t actually said what they will spend the money on other than “investment projects”) is to help the struggling economy.  Unfortunately, however, what is true is that the strike did affect two major infrastructure projects – the finishing of the expansion of the Tocumen International Airport and the Metro Line #2.

The government needs to have both of these megaprojects finished by January 2019, because of the World Youth Day celebrations that will take place in Panama!

Looking back over recent years

But, even if we look back at 2015, where Panama was still doing quite well in terms of growth (at least, it hadn’t slowed down as much as we are now seeing in 2018), we are still left with questions.  Where has this economic growth gone? Who is receiving all the money? Where is it going?

If the man on the street is saying we’re in recession – why are official figures still showing national growth?  Car sales have dropped by 9%. Foreign investment drops 17% in the first quarter.  But we’re still fine.  Panama is still growing.

Where?

If we look at 2015, foreign investment was about $5 billion.  For Panama, that means we’re flying! And yet, in 2015 unemployment was already starting to increase and we were already starting to see some shops closing or reducing their sizes.

dollar-1319600_640One reason for this change is the change in ownership of local businesses – Panamanians that owned Café Duran, Cervecería Nacional, the mills, the sugar mills, the milk companies, etc., all sold out for a profit.  They then took those profits and moved to Florida (or wherever).  That’s to say – they cashed out.  Now foreign companies own the production.   Add to that, foreign companies own all the major infrastructure (telephone, electricity, etc.), at least in partnership with the National Government (state owned enterprises).

So, if you took a look at the daily life of Panama – about 95% of the profits of any company in Panama are now headed overseas.  Twenty years ago, although we had none of the infrastructure that we have today (because of all the foreign investment that made this possible), all the profits remained in Panama.

All major infrastructure projects undertaken now in Panama are all foreign investors.  In fact, 45% of all foreign investment into Central America actually comes to Panama – not to the rest of the Central American countries!  But as soon as the project is finished, the company and all its capital leave Panama.  Panama gets the debt and the infrastructure it had built, but all the profits head back overseas.

Let’s blame the Venezuelan crisis

It’s really easy in Panama to fall into the game of just blaming all these woes on those foreigners that come to steal our jobs!  And yes, Panama has received thousands upon thousands of displaced Venezuelans over the past 10 years, and in recent years it has gotten considerably worse.  Yes, there are Venezuelans sending money home every week to their families in Venezuela, trying to keep them alive.  They are working in bars and beauty salons, they are picking up odd jobs anywhere that they can get them. And yes, it is true that violence has increased in Panama, as it has throughout all of Central America!

But really? We’re going to blame it on them?
For me, that fails to address deeper issues!

Panama has so much to offer but at the same time seems to be damned to be just another Latin American country.

So… where is the economic growth in Panama going?  I see it being sent back overseas… the money comes in as foreign investment, bribes are paid, an infrastructure project is built… and the money flows right back out again!

Hopefully I’m wrong!

What now?

I’m no economist and no expert in any of these matters.  I can only speak from where I am seated and what I see.

But I do notice some things that have solution:

  • addressing corruption – let’s stop the bleeding! You can’t save the patient on the operating table if you don’t stop the bleeding. It doesn’t matter how much money you pour into Panama, if we don’t stop the bleeding we have going on, the patient will die on the table!  Is this the biggest problem? Yes, probably!  The corrupt politicians.  The corrupt companies that participate with the bribes and kick backs.
  • addressing the lack of preparation for the new economy.  Panamanians are not ready for the new economy that is taking over world-wide.  Our education system is not up to date. The very mentality in the schools & universities is out-dated.  They are preparing everyone for an economy that existed 30 years ago, and in my personal opinion, not doing a very good job at that, either.
  • agriculture & production – Panama needs a local production and a pride in its own produce. Yes, we want variety & options – but so many countries have established home country brands that its nationals are proud to purchase “made in …”.  That doesn’t seem to exist here in Panama. And we are seeing less and less produced in Panama, and even tradesmen and artisans are shutting down as they cannot compete with the prices of imported goods.
  • science and innovation – related to the last two points – one of the things that I worry about the most in Panama is the lack of innovation and entrepreneurship in Panama.  I don’t see any biotech, a whole lot of clean energy, technology based companies – and especially not owned, operated and run by Panamanians.
  • Why is everyone so scared of entrepreneurship and dependent on someone else being the employer?  Where are all the entrepreneurs?
  • banking and finance – hand in hand with my last question – Panamanians will not change jobs and certainly will not go independent if they haven’t already purchased a home and car, because if they do, they will not qualify for financing from any financial institutions.  The banks will only lend you money if you have a check stub that you can show you receive your fortnightly check from a company and are on payroll.  You are considered “high risk” if you are independent, even if you have your tax returns to show.

 

 

Renewable energy in Panama

Introduction:

Panama is blessed with an abundance of sunshine and rain, allowing it to entertain renewable energy sources as the sole source of it’s electric supply.  Nonetheless, it continues to depend on a couple of carbon-based plants for its electrical demands, and the local energy authorities are under fire for proposed taxes and charges on solar power producers.

In late May, the headlines regarding the ASEP decision were all along these lines:  “While the rest of the world looks to consume and produce clean energy, the Panamanian Government – through ASEP – is trying to PUNISH anyone who installs solar panels or other clean energy generators in their homes or businesses.”  

Mientras el mundo apunta al mayor consumo y producción de ENERGÍAS LIMPIAS, en Panamá el Gobierno Nacional —a través de la ASEP— busca CASTIGAR a las personas que instalen paneles solares u otros generadores de energías limpias en sus hogares o negocios. #COMPARTEpic.twitter.com/JR0sC2bzgd

— ClaraMENTE (@ClaraMENTE507) May 26, 2018

At the beginning of June, ASEP opened the dialogue, indicating that they did not intend to penalise those who had solar panels for personal consumption, but that they were looking to ensure that anyone that was connected to the electrical network and infrastructure was paying appropriately for the infrastructure, and not simply getting a free ride simply because they principally had solar panels or other self-generating systems.  There was also criticism because of the pricing suggested out the outset for those who were generating more than they needed and were feeding this excess into the general network.  This ignores, in part, that since February of 2017, Panama has had its first commercial solar power plant “Central Fotovoltaica Bugaba“.

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The National Energy Plan – 2015-2050

In April 2015, the Panamanian Government published the 2015-2050 National Energy Plan which sought to place a new focus on solar and wind sources, rather than the traditional sources of hydro and carbon generators.  By 2050 it is hoped that Panama will rely, 70% on renewable energy (primarily wind & solar).  The move away from hydroelectric power comes after serious confrontations with indigenous groups and communities over the devastation and changes to the ecosystem.

For example, if you have a quick look at the following video, you can appreciate the Tabasará river during a normal rainy season (before the hydroelectric plant was built).

The two videos that follow are during the construction of the power plant on the Tabasará river, where you can appreciate the devastation down-river to the entire ecosystem and the change that this has generated for all of the communities that depend on the river.  Obviously, the videos of the construction are during the dry season, rather than rainy season (so it is no longer a raging river in full flood), but as you will see in the second video, the communities downstream from the project were left with almost stagnant water.

The communities also denounced and complained that they were being displaced from their homes and communities. Obviously, this had economic repercussions for these communities, as they lose their farm lands.  Even those who previously used the river for rafting and outdoor adventures during the dry season have said that they have totally closed down the Tabasará option and have had to find other rivers for rafting and adventure.

In a similar manner, Nata & Aguadulce were left without a drinking water supply when the local hydroelectric plant shut off their access to water during the summer of 2016, because the 2015 rains were not enough to fill up all of the reserves.

Support for private solar panels

In 2016, the ASEP took steps to support and promote solar panels in homes and projects.  At this time, ASEP promised users that they could reduce their consumption by 50% or even up to 100% through the installation of solar panels on the roofs of their homes or businesses.  Nevertheless, there were requirements for this, which involved the local electric companies:

  1. approval by the competent authorities (fire brigade, city council)
  2. design of the system and technical details regarding output and capacity, and all of this with
  3. a letter to the electric distribution company, requesting the installation of a bi-directional metre.

The electric company was then to install the bi-directional metre, (not to be charged to the consumer) which would compensate the output and input, measuring the net usage of the client of electricity and that produced by their system.  In these cases, the homes were not installing batteries or storage units, as the excess of their production was pushed back into the system for usage by others in the network, and then they consumed electricity when their solar system was not producing.  These were not stand-alone or self-sufficient units.

Regulation of self-production

Later in 2016, the ASEP informed that it might consider a limit of 500kW for residential production of solar power and then (after consulting the public and users) notified that it would not be doing so, but rather it would be leaving that to each homeowner to decide what production and consumption they required.

Is it really worth it?

Costs in 2016-2017 were still prohibitive – for a home consuming 500kW hours/month, the cost of installation would be approximately $9,800.00, which meant that the investment would be paid off in about 7-8 years. In 2018 we see the costs for a home consuming 400kW hours/month having installation costs of $4-5,000, almost half of the cost for 2016!  However, as many of those living in Panama know, our electric bills are quite high, so as those costs of installation come down (which they have over the past 24 months), solar power becomes more attractive as a residential alternative.  This is especially the case with those companies that are providing a 25-year guarantee on their panels!

Throughout 2017, ASEP continued to promote solar power for residential use, touting the benefits of being able to hook into the distribution system and get paid for any over-production.  And so we now (Feb 2018) find Provivienda (one of Panama’s real estate developers) offering a subdivision in Arraijan in which all homes come with their solar panels installed and connected to the system. This subdivision is expected to be completely self-sufficient to the needs of each home.

The regulations provide that where the consumer is using no more than they are producing (and supplying into the network), then there is no charge to them. Where their solar plant provides more electricity than what they have consumed, then they can expect to receive a payment from the electric company for up to 25% of their consumption (but no more).  So, for example – you produce 500kW/hours, but you only consume 400 – you will get paid on that 20% extra that you produced.  You consume 500kw/hour and you only produced 400 – you will have to pay the electric company for the consumption!

Commercial projects:

Smaller companies have already begun to invest in solar power plants, for commercial purposes, such as “Central Fotovoltaica Bugaba“.  2017 say some 72.4MW come online and 2018 some 78.8MW are expected to receive their commercial licenses and approvals for production.  For 2019-2021, a further 200MW have provisional licenses to build and come online.  There are already mini solar plants in Azuero, Llano Sánchez and Chiriqui.  If with all of these projects, they generate the estimated 383MW (with an investment of $422M over this period 2017-2021), this would be more than the production of Fortuna (which produces 300MW and is the largest in Panama so far).  The issue for Panama is the rainy season, because this brings down production to almost 20-40%, with a higher production during the dry season.  Therefore, most of the solar farms are located in the “arco seco” – the “dry arch” – in the Azuero Peninsula.

Wind Farms

Anyone who has driven out to Penonome from Panama City has appreciated the wind farm on the left-hand side of the highway.  As of March 2018, construction of a second windfarm in Cocle is under way, this one in Taobré.  This wind farm will have 20 Vestas turbines and 2 substations, and is expected to be built in 22 months.

Changes in Public Bids

Roll forward to February 2018 – and the ASEP announces that all bids for energy projects “from now on” will be on an equal footing – with no special exceptions being given for clean energy.  That means that the gas / thermo plants (such as those in Colon) will be competing cheek-to-cheek with solar and wind farms.  It would seem that this gives the thermo/carbon/gas projects an upper-hand as they are less capital intensive.  But the ASEP assures that this is not the case, because they will have to quantify and provide a bond covering the possibilities of contamination. So, while a solar plant will have a low contamination factor, the gas or thermo plants will have to adjust theirs costs to include for accidents and liabilities.

And then…

Roll forward to May 27, 2018, and everyone is in an uproar because it seems that ASEP now wants to start TAXING residences and businesses that have installed solar panels (connected into the system and producing energy for the system). On May 27th, they indicate that they are considering an “additional charge” to anyone that has solar panels on their home or business.  However, they didn’t go into what this “additional charge” was, which caused a massive back-lash as I mentioned at the very beginning of this article.

Given the reaction from the public and from conservation groups, ASEP took a step back, defending itself with “you didn’t understand what I said”.  They never did quite clarify what it was that they had said!  On the 1st of June, this then rolled into “we are not going to make any decisions on this until we have reached a consensus with all of the parties involved”.

Eventually, what came out was the following explanation:  if you have solar panels and are self-sufficient but you are still connected to the network, the distributor must have available at any and all times enough electricity for your home/business.  So, let’s say you need 400kW hours/month – they must produce enough for that.  But, since you have your solar panels, you aren’t actually using it and are not paying for it.  They want to charge for having it available to you, but you not using it!

Putting a tax on the sun

The reaction from some of the players (particularly owners of companies installing solar panels) was that the government was looking to put a tax on the sun!  Others point out that this clearly is a dis-incentive towards clean energy and favors the production of cheap oil/gas-based thermo electricity, rather than making the long-term investment into solar panels and self-production.  If the government wants private persons and companies to make the capital investment into solar power, then they cannot consider putting an additional tax on it.

The ASEP justifies their proposal as being simply a charge on those who are producing energy and pumping it into the network (and getting paid by the electric company for this).  But that’s not what they said they were going to tax. I’m still waiting for the dust to settle (maybe after the world cup fever has subsided next week), to find out what ASEP has really decided or whether the “let’s reach a consensus” is underway.

Reaching Utopia

With a new Metro line being finished in 2019, more electricity will be needed to run that! More buildings = more air-conditioners running. In a country in which 35% of the electricity goes towards air-conditioning, maybe it’s time for Panama to look not only at how it produces electricity, but how it can reduce wastage or improve geothermal covering of buildings to harness the energy!

Maybe it’s time to explore alternative options like turbines that create electricity simply from moving traffic (of course, that would mean that Panama’s traffic would need to move!).
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There are few voices (and even less articles) discussing the alternatives for the central business district, hotels and banks to contribute to the solution to the needs over the coming years.

  • There are many options for windows on buildings to generate electricity through special coverings.
  • There are green buildings, which are growing more plants to battle CO2 emissions.
  • There are options for paint and finishing on buildings which will assist in making them cooler and not using as much electricity and air-conditioning.

But there is so much to learn and there are no tax incentives for businesses to make these capital expenditures on long-term returns.

If there are less than 250 residences in all of Panama (in 2018) with solar panels, can I really expect that people will be forward thinking about what we need to do in order to work towards a solution?

Fighting the waste in Panama

As the tropical rain pours down outside, I am sitting here hoping that the tide is out. Otherwise, tomorrow morning we are going to wake up to news and images of the flooding throughout the lower parts of Panama City.

Unfortunately, Panama City has not done a great job of “city planning”, especially in respect to natural runoffs and areas of watershed. As the population and housing needs expand, the city has expanded. Encroaching on tidelands and mangrove forests. Though there has been a move now to curb the expansion into the mangroves, there has still been a lot of land-fill of the tidelands that were once the watersheds of the river basin. So, areas which were built 40-50 years ago, which have never flooded before, now flood regularly when the high tide and tropical rain meet.

Many people accuse the government of failing to deal with the issue of waste and rubbish blocking the sewage and storm water drains. But the issue is much bigger than this; there are

  • The typical issues of rubbish bags being opened by stray dogs, cats or vultures.
  • Failure to collect rubbish regularly (most weeks our rubbish is collected on a Sunday, or not). Sometimes we simply have to call and beg them to send a special truck to pick up because it’s been so long.
  • Homes here don’t have gardens and composting: and most people don’t even know what compost is anyway.
  • This is the tropics – you can’t just leave rubbish out for more than a day without it starting to turn rancid.
  • Re-cycling is virtually non-existent here and there is only a small culture of reuse and recycle.

I’m aware of this every Saturday when I go to the market with my own bags and I still have to refuse the offer of a plastic bag at each stall. I’m aware of this when I go to the supermarket and I see that most people are not carrying their own bags. And I’m aware of it when I see the rubbish on the sides of the streets.

This issue has not been addressed by recycling stations at the primary schools or outside supermarkets or gas stations.  Even trying to recycle paper and cardboard in Panama seems to be hard work! They don’t come and pick it up – you have to drive it over and drop it off. How many companies or homes are going to take the time to do that?

But I am even aware of it in my kitchen. Every maid so far has had to be trained not to simply throw away the peel and veggies that are “up to scratch”. They don’t realize that those ugly veggies that are not pretty enough for the salad can be used to make a fabulous vegetable broth!

And then they complain to me that I don’t have any bullion cubes for veggie broth! Really?  Admittedly, my cooked veggies from the broth that I then throw away (and keep only the broth) probably decompose much faster in the rubbish than the raw ones would have – they probably smell more as well.

But more than anything, I am appalled by the packaging at the supermarkets (not that I buy my veggies at the supermarket anymore) – the way that they individually wrap all in Styrofoam and glad-wrap! As if there wasn’t enough rubbish already.

But this is definitely a modern day problem, the same way that the floating island of rubbish is a problem in the middle of the Pacific Ocean and the plastic now found at the bottom of the Mariana Trench!

There are ingenious solutions found in a number of parts of the world, such as this solution to “flip-flops”:

It’s really easy to complain about the problem, it’s much harder to do something about it. Even on a personal level. I can make small choices:

  • a recycling bin in the yard (because I’m lucky enough to have a  yard)
  • the choice to take my own bags to the vegetable market and supermarkets and only buy fruit and veggies that are not pre-packaged
  • the conscious decision to hold onto the paper to take it to the recycling plant ourselves
  • metal / glass water bottles – which we refill regularly rather than buying bottled water

But the plastic bags, bottles and packaging issues need to be addressed on a massive scale if we are going to make any headway.  My little contribution is only a tiny grain of sand in the Sahara desert and that’s not enough.

Panama, business, money, entrepreneur, business index, economy, doing business, starting a business, economic indicators, ideal business environment, import, export, fintech, incubators, assistance

Panama’s money stories – the way forward

Ranking and Index: doing business in Panama

One of the difficulties that I see on the way forward, is that Panama is not the easiest country in which to set up a business (locally) and run it.

Panama scores a low #54 in “economic freedom” according to the Heritage.org, having a score of 67.0 – because of drops in property rights and government integrity (corruption).  On the other hand, the Fraser Institute and the Economic Freedom Network place Panama for 2017 at #30 in Economic Freedom.  Forbes lists Panama as #64 in “Best Countries for Business“.  Unfortunately, economic growth has depended on debt-financed infrastructure projects, while the economy has depended heavily on transportation and logistics services.

One of the biggest problems with all the infrastructure development and spending is the burden this creates on tax payers.  General government gross debt accounted for 39% of GDP in 2017, with a fiscal deficit of 3.1% (up substantially from 2% in 2016). That said, amazingly enough the IMF estimates Panama will have the highest per capita GDP in Latin America – USD 25.712 – in 2018.

That said, Panama continues to have the fastest growing economy in the region: our well-developed services sector accounts for over 75% of GDP.   Before the crash of 2008, Panama has the highest growth rate in Latin America (close to 11%) – with real estate prices and speculation leading the rush.  Since 2013, the GDP has slowed from previous levels of 6-8%, and following on from the #PanamaPapers scandal the banking and corporate services sectors have diminished considerably.  The services which continue to contribute to GDP include logistics, banking, the Colon Free Zone, insurance, container ports, tourism and offshore services to a lesser extent.

Unfortunately, Panama dropped (2016-2017) on the global entrepreneurship index from 32.2 to 26.1, and in the innovation index ranks also #63.  In human development, Panama also ranks similarly at #61.  Likewise, in the knowledge economy index, we come in at #64.

Having looked at these indexes, it is interesting to see how well Panama is moving with respect to FinTech, blockchain and the implementation of these technologies. As Panama seeks to leave behind the shroud of “shady deals” and “Panama Papers”, the Ministry of Economy & Finance has announced an initiative to regulate FinTech, blockchain, sandboxes, crypto-currencies, and crowd-funding enterprises.

Development of the Fintech industry in Panama

Bitcoin, blockchain, fintech, crypto, currency, FinTech, disruption, innovationUnbeknownst to most people, Panama is on the list of countries that are friendliest to Bitcoin and crypto worldwide!

Panafintech is the Panamanian Association of Fintech, who so far have organised five blockchain and fintech events.  Back in 2017 they organised an event for 300 people from banking and finance, to discuss blockchain – its scope and application.  It was at this event back in 2017 that Cryptobuyer announced that it was moving to the City of Knowledge and that it would be developing Blockchain Academy Latam.

Blockchain Academy offers training not only to developers and entrepreneurs, but also for financial institutions (such as banks), organizations, schools and the government.  It also offers a bootcamp in which it is possible to learn about cryptocurrencies, industry, mining, Blockchain, opening a digital wallet and other applications of the technology.

blockchain-3212312_1280Cryptobuyer is unique in Panama, offering the “Blockchain Academy Panama“, in which it offers training and certification in programming with blockchain, and has its offices in Ciudad del Saber.  Additionally, it has installed Bitcoin ATMS in parts of Panama, such as in Banistmo (since June 2017) and has installed Cryptobuyer Pay in various local businesses (so that they can accept payments in Bitcoin and other currencies).

Cryptobuyer also set up Blockchain Embassy Panama, which opened in 2017.  In addition to offering crypto clothing and merchandise, craft beers, hardware wallets and working space, the embassy also gives cryptocurrency workshops and presentations.

The first large-scale conference on fintech & blockchain was held May 5 & 6th, at Ciudad del Saber, and called “PanamChain“, with Andreas Antonopoulos  as the Keynote Speaker (author – Mastering Bitcoin (O’Reilly Media), speaker, educator) .  This event was organised by Cryptobuyer and Panafintech.

Coming up on May 24th, Panama will host its secondDigital Business Day“, offered by CAPAtec – the Panamanian Chamber of IT, Innovation & Telecommunications.  This is a “Microsoft Experience Day” – about AI, transforming customer experiences, using ChatBots, and “intelligent billing”.

Disruption & change of the market

Fintech additionally has a role to play in Panama’s “offshore industry”. At its simplest, financial technology – or fintech – applies technological innovations to financial processes, products and services. It could easily play a large role in the lucrative business of identity verification, eKYC and fraud detection. This could also directly impact in the banking industry, if Panamanian banks could work out how to incorporate this into their account opening process.

blockchain-3019120_1280Experts in blockchain have shown that banks could easily change their account opening process to a simple 5-step process relying on this system.  Some go so far as to claim blockchain technology could transform international financial transactions in much the way the Internet transformed communications. Of course, on some levels fintech competes with the traditional financial methods of delivering financial services.

Blockchain = distributed ledger technology  – provides decentralized networks that simply record transactions.  So, for example, IBM provides “Blockchain-as-a-service” for banks.  It is interesting to see how the blockchain industry could have helped Panama avoid the #PanamaPapers, as expressed by Otonomos BCC:

Our hope is that a decentralised database, which by its very nature is secure, tamperproof by third-parties and immutable even by its very authors, can be looked at by enlightened regulators around the world. This technological architecture could ultimately become a global, cross-jurisdictional database.
At Otonomos, which represents private company shares on blockchain and makes them programmable, we have engineered a decentralised solution that performs Know-Your-Customer checks at every stage of the ownership chain of company shares, and watermarks the shares with the UBO’s identity.
In addition, Otonomos has architectured our solution with the privacy of end-users in mind. We make public only such information regulators in a specific jurisdiction require to be publicly accessible, whilst masking non-publicly disclosed information.
Finally, we future-proofed our solution by letting third-party verification agents — typically organisations such as banks who by legal mandate from their Government can perform KYC checks -“stamp” people’s KYC at the blockchain level, resulting in a layered verification process in which every check fortifies a user’s KYC.

Nonetheless, it seems that tech giants are much further ahead in disrupting banks, as these lag behind in cloud computing, AI and big data.  Fintechs define the direction of innovation in financial services, but they face a challenge in their ability to scale (something that companies like Amazon or Facebook have already dealt with).  So, for example, Amazon Web Services provides cloud computing for Capital One and Nasdaq.  That’s because of the scope of the transactions that occur on a single day, which small start up fintech companies are not ready to handle.

If what we see internationally occurs in Panama, this means that large banks are acquiring fintech companies and digital banks, as strategic acquisitions – they are simply leveraging the competition to re-establish their leadership in the market.  So, for example, in Panama we have a small crypto-currency that was recently established:  Natan Edu – created by a group of young entrepreneurs, as a payment system in education, to allow payments of online courses.  This was created by Osmar Major and Marcos Pineda (22 and 24 years old respectively).  Will this be swallowed up by bigger players in the market?  Additionally, just this week, DigitalX (the first crypto-currency fund established in Australia) indicated that it is looking at Panama to establish the Latin American financial hub.

Response from the banking sector

Panama’s banking sector, however, has been very cautious in response to fintech, indicating that until it is fully regulated, they simply see the possibilities of further scandals for money laundering.  On this note, Panama’s banking Superintendence issued a notice to banks that the activity of exchange, investment, purchasing, and commercialization of “Bitcoin” or any other crypto-currency is unregulated in Panama.

As a result, some traders were threatened with having their bank accounts closed at local banks for receiving funds from their international crypto accounts!  This seems to be completely contrary to the way it is being dealt with, for example, in the US where Goldman Sachs and Morgan Stanley both announced that they were going to get involved in crypto-currencies.

Nonetheless, we find that Australia (leading with DigitalX), the UK and other jurisdictions have all introduced regulations in order to create the market conditions for development of fintech, blockchain and financial services.  For example, back in 2015-2016 the UK introduced their regulatory framework, working closely with the operators, so that fintech firms could set up.  This involved the Innovation hub (similar to what Panama wishes to do in the City of Knowledge), in which the businesses can understand the financial regulations and how these might apply to their business model.

As with the Innovation Hub in the UK, the City of Knowledge will simply provide guidelines, from which the startup would need to apply for the regulatory approval from the respective agency (possibly the Banking Superintendence or the Securities Commission).  Also copied from the UK is the idea of the “sand box” – where fintech startups can test their financial products and their business model in the market, and then work out the details of regulation as the market develops.

So, as Panama looks to regulate “Specialized Financial Entities”, as it is calling fintech companies, setting up crowd-funding enterprises, incubators and sand boxes, I hope that it doesn’t simply protect the interests of the existing players (like banks), but rather innovates to draw into the country investors, know-how, and entrepreneurs that are looking to build something special from Panama.

 

 

 

Panama, business, money, entrepreneur, business index, economy, doing business, starting a business, economic indicators, ideal business environment, import, export, fintech, incubators, assistance

Panama’s money stories, part 2

In Part 1 of Panama’s money stories, I highlighted some of the sordid details that Panama has been known for and the ways that Panama has been presented and vilified in the press internationally.  In this Part 2, I want to have a good look at what Panama has to offer, the strengths and weaknesses of Panama’s location, workforce, and infrastructure.  In Part 3, I am simply going to dream of “what could be” – well, because this is PanUtopia.

Location, location, location

Like any good real estate investment, Panama has a great location.

It is the Bridge of the Americas and the Crossroads of the World: with the InterAmerican (or Pan-American) highway travelling East-West along the entire length of the Isthmus (well, except for the Darien Gap which Panama refuses to open – but that’s fodder for another post). Running North-South through the Istmus is the Panama Canal, recently expanded to allow post-Panamax ships to pass through.

The Pan-American highway has many stories to tell, haivng 14,000 miles of road (or roads) that traverse from Tierra del Fuego all the way to the Arctic Ocean. I remember at 8 years old a French couple that had started riding their motorbikes in Argentina and were heading up through Mexico, intending to get all the way to Alaska! pedal moped, riding bikes, interamerican highway, argentina, alaska, mexico, colombia, Panama, Bridge of the Americas

They were something like this – but much more worn and dirty! And fitted out to carry their bags on the back, and side-bags.  At 8 years old, I could only imagine the adventures they were having!  Roll forward to 2018 and we still get those bikers through Panama – perhaps riding better bikes, but with the same adventuresome spirits!

As the land bridge between the two continents, Panama boasts an incredible variety of species, both plant and animal life.  From North America, it has jaguars, tapirs and deer, from South America sloths, anteathers and armadillos, and from the oceans the giant sea turtles which lay their eggs in Bocas del Toro and even on the Casco Viejo beach in Panama City!

Panama, Isthmus, land bridge, Bridge of the Americas, Crossroads of the WorldPanama is blessed in its location: we are protected from the hurricane belt, getting pelted only by tropical storms and heavy rain.  While Panama rests on the Pedro Miguel fault line, it does not have a history of seismic activity.  You might read about the 1621 earthquake, or the 1991 Bocas del Toro earthquake (which actually happened in Costa Rica, but caused considerable damage in the neighbouring Bocas area).  This is one the strongest recorded earthquakes in Costa Rican history, registered at 7.7! But, as noted, it was actually in Costa Rica…

Since the 1500s (you might remember the pirate stories) Panama has played an important role in international trade routes: from Peru through to Spain, with the French and the United States heavily interested in participation in the possibilities of this location.  Even today, Taiwan and China dispute investment and participation in the Panamanian economy (the ports), and a US presence is continually felt under the terms of the 1979 treaty in spite of the removal of a military presence.

Hub of the Americas

Panama Canal, Miraflores, locks, logisticsFrom this location, Panama has become known as “the hub of the Americas” – one of the most significant transportation and logistics countries in the world.

As a travel hub, Panama has developed Tocumen International Airport to attract flights from Europe (KLM, Lufthansa, AirFrance, Iberia, Turkish Airlines, & Condor), China, and North, Central and South America.  The recent investment in the expansion of Tocumen is about 84% completed, with an expected completion in the third quarter of 2018.  This investment project was above US$900M, taking it up to 54 gates and extending the runway for larger aircraft. By 2025, the two terminals are expected to handle some 25 million passengers per year.

Panama has also become an important hub for telecommunications, with the Submarine Cables passing through Fort Amador and Colon (such as the Arcos Cable that connects Central America, Florida and the Caribbean and the South American Crossing cable).  In 2010, Panama became one of the first countries in the world to offer free wireless broadband access nationwide through the National Internet Network project, which provides free wifi at libraries, some busstops and other government sites.  In Panama City, connectivity is pretty easy to get, but there are generally fluctuations in the areas where there are not fibre-optic connections.  For businesses that rely on fibre-optic level connectivity, there are a limited number of neighbourhoods that can guarantee this service.

Panama, shipping, transportation, logisticsAs a logistics hub, Panama intends to make the most of its geographical location, creating the largest logistics conglomerate in Latin America. Shipping, logistics and trade contribute close to 35% to the national economy, making the concept of “hub” vital to Panama’s growth.  It uses the Canal, the ports on the Caribbean and Pacific Oceans (MIT, CCT, Cristobal, Balboa & PSA), the train line between the ports, and Tocumen International Airport (Copa, DHL, FEDEX & UPS), to provide multi-modal solutions.  This is all interconnected with the Colon Free zone and Panama Pacific zone.  The logistics industry is expected to create 10,000 or more jobs per year for the next 10 years or so – over 100,000 jobs in a growing industry!

Obviously, in order to fully develop this hub, Panama needs to continue investing in additional infrastructure for distribution and storage essential to the international business community.  Georgia Tech maintains a Logistics Innovation and Research Center in Panama, aimed at aiding the country to become the trade hub of the Americas.

Open for Business

Panamanians are complaining that the economy has really slowed, and yet it continues to be the 2nd fastest growing economy in Latin America. While the growth rate dropped from 11% in 2013 and 5.3% in 2016, it is still over 4.6% in the first quarter of 2018!  Infrastructure investments are underway in a number of areas, including the building of the second metro line in Panama City and the studies underway for another bridge across the Canal, which will include a metro rail bridge for the third line.

Depending on who you believe, and how the scoring is done, Panama ranks #3 in being “open for business”.  The World Bank rates Panama as 79th, taking into account a number of factors, and 39th for the ease of starting a new business.  Apparently registering for and paying taxes in Panama is one of the most difficult aspects of doing business in Panama!  But, hopefully that ranking will change, with the adoption of the online tax payment system implemented recently.  Panama is also ranked 54th in Economic Freedoms, which looks at rule of law, government size, regulatory efficiency and open market criteria.

That said, Panama continues to consolidate its position as a business hub, as the headquarters for more than 130 multinational companies!  The principal business and investment attractions for Panama are:

  • corporate headquarters & regional services
  • multimodal logistics
  • infrastructure development
  • maritime services
  • light manufacturing (free zones)
  • renewable energy investments
  • tourism

This translates into the following prime locations/special laws and incentives:

  1. Panama Pacific 
  2. Ciudad del Saber
  3. Colon Free Zone
  4. Special Free Trade Zones (dotted around the country)
  5. Multinational Headquarters

In terms of quality of life, Panama is ranked #1 in Central America and #4 in Latin America (UNDP).

Workforce & other challenges

workforce, employees, professional, training, educationAs I pointed out in my previous blog post about Panama’s money stories, corruption is probably the biggest obstacle that Panama faces – and it certainly is as far as perception goes. While Panama’s economy is stable and Panama has a well-developed services sector (most employment in the areas of banking, commerce, tourism and logistics), Panama continues to under-prepare its workforce for modern challenges. The poorly educated workforce ranks as the third obstacle in business for firms!

Education standards are considered to be poor by the World Economic Forum. The quality of public school education in Panama is still under fire, with a World Bank study indicating that upon completion of secondary school, the quality of the education is equivalent to 8 years of education, rather than 12.   Panama has taken important steps in improving the level of English in the public school education system, but still needs to modify the focus at Univeristy level.  Nonetheless, tertiary education is not in line with the needs of the marketplace – as social sciences, administration and law continue to be the predominant choices for students, rather than technology and sciences!

Back in 2016, news sources were reporting the problems employers faced at job fairs: while 72,000 jobs were on offer, only 25,000 people joined the labour market through these fairs, because they were under-qualified or lacked experience.  Call-centers in Panama provide about 14,000 jobs to the Panamanian workforce – the principal ones in Panama are Dell and HP.  But there continues to be a need for better qualified English-speakers for Call-Centers.  Even in 2018, Panama faces these same challenges in logistics, tourism and even the construction industry.  Among the listed skills required are “soft skills”, such as discipline, punctuality and others.

At the same time, it appears that Panamanian firms do not do well in offering formal training to their employees, which does not assist employees in getting the industry specific training that they need.  Training for tourism or customer services is virtually non-existent and foreigners are constantly complaining of the bad service in restaurants.

Retraining, especially in technical schools, is very low.  There is a “stigma” attached to working in “manual labour”, and yet a dearth of properly qualified electricians, plumbers and specialist construction workers. Improvement is especially necessary in the vocational and technical areas. Everyone is a “handyman” and “knows how to do it”, but the reality is that you wouldn’t be able to pass inspections!  And as Panamanians have sought to move out of “menial labour”, Nicaraguan, Colombian & other immigrants have taken the posts of maids and housekeepers.

There are laws protecting many professions, such as law, medicine, dentistry and engineering. This means that foreigners cannot practice in these professions in Panama.  Yet, one of the fallacies is that chemical engineering is reserved solely for Panamanians – but Chemical Engineering isn’t actually taught in Panamanian Universities! Guess how many chemical engineers we have…

Inflexible labour laws are another cause for complaint among prospective investors into Panama: firing is heaving regulated, labour mobility is limited and labor typically costs 41% more than the paid salary (including social security, holiday pay, liquidation costs, etc.).  Panama’s minimum wage is the highest in Central America, and it is often difficult to find fluent English speaking employees.  Panamanians typically have an intermediate to advanced level of English, but are seldom proficient in business writing and customer service level English.

 

All of that said, Panama continues to be one of the most attractive places in Latin America for investment.  And yet, with respect to innovation, Panama still has so much to learn.